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xbrli:shares
AS-IP TECH, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
Three Months
ended
September 30, 2022
|
|
Three Months
ended
September 30, 2021
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net
loss
|
$
|
(279,523)
|
|
$
|
(290,234)
|
|
Adjustments to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
Increase (Decrease) in accounts payable
|
|
(1,024)
|
|
|
(360)
|
|
Increase (Decrease) in deferred revenue
|
|
-
|
|
|
-
|
|
Increase (Decrease) in related party payables
|
|
64,064
|
|
|
15,372
|
|
Increase (Decrease) in accrued interest, related parties
|
|
18,750
|
|
|
|
|
Increase in accrued interest
|
|
49,984
|
|
|
65,398
|
|
Net
cash used in operating activities
|
|
(147,749)
|
|
|
(209,824)
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Net
cash used by investing activities
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Proceeds from loans
|
|
-
|
|
|
25,000
|
|
Proceeds from issuance of common stock
|
|
44,731
|
|
|
-
|
|
Funds received pending issuance of common stock
|
|
-
|
|
|
290,057
|
|
Net
cash provided by financing activities
|
|
44,731
|
|
|
315,057
|
|
|
|
|
|
|
|
|
Net
Increase/(Decrease) in cash
|
|
(103,018)
|
|
|
105,233
|
|
Cash,
beginning of period
|
|
108,098
|
|
|
157,601
|
|
Cash,
end of period
|
$
|
5,080
|
|
$
|
262,834
|
|
|
|
|
|
|
|
|
Supplemental schedule
of non-cash activities:
|
|
|
|
|
|
|
Cash
paid for interest
|
$
|
-
|
|
$
|
-
|
The
accompanying notes are an integral part of these condensed
financial statements.
7
AS-IP TECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2022
(UNAUDITED)
Note 1.
Organization, Business and Summary of Significant Accounting
Policies
Organization and
Description of Business
AS-IP Tech, Inc. (the
“Company”) was formed on April 29, 1998 as a Delaware
corporation.
The Company’s
technology comprises two product lines called BizjetMobile and
fflya. The products deliver inflight connectivity for business
aviation and commercial airlines respectively. The Company receives
revenue share from sales by distributors of products and serviced
developed from its intellectual property.
Basis of
Presentation
The accompanying
unaudited interim condensed financial statements have been prepared
in accordance with generally accepted accounting principles in the
United States for interim financial information and in accordance
with the instructions to Form 10-Q and Article 8 of Regulation S-X.
In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation
have been included. The Company has early adopted ASU2020-06 on its
twelve months ended June 30, 2022 unaudited interim condensed
financial statements (See Convertible Financial Instruments and New
Accounting Pronouncements). Operating results for the three months
ended September 30, 2022 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2023.
Notes to the unaudited interim condensed financial statements that
would substantially duplicate the disclosures contained in the
audited financial statements for fiscal year 2022 have been
omitted. This report should be read in conjunction with the audited
financial statements and the footnotes thereto for the fiscal year
ended June 30, 2022 included in the Company’s Form 10-K as filed
with the Securities and Exchange Commission on October 12,
2022.
The functional
currency of the Company is the United States dollar. The unaudited
condensed financial statements are expressed in United States
dollars. It is management’s opinion that any material adjustments
(consisting of normal recurring adjustments) have been made which
are necessary for a fair financial statement presentation. The
results for the interim period are not necessarily indicative of
the results to be expected for the year.
For further
information, refer to the financial statements and footnotes
included in the Company’s Form 10-K for the year ended June 30,
2022.
Use of
Estimates
The preparation of
financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.
Such estimates and
assumptions impact, among others, the collectability of accounts
receivables, valuation allowance for deferred tax assets due to
continuing and expected future losses, and share-based
payments.
Making estimates
requires management to exercise significant judgment. It is at
least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the
date of the financial statements, which management considered in
formulating its estimate could change in the near term due to one
or more future confirming events. Accordingly, the actual results
could differ significantly from estimates.
New Accounting
Pronouncements
In
August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20
“Debt-Debt with “Conversion and Other Options” and ASC subtopic
815-40 “Hedging-Contracts in Entity’s Own Equity”. The standard
reduced the number of accounting models for convertible debt
instruments and convertible preferred stock. Convertible
instruments that continue to be subject to separation models are
(1) those with embedded conversion features that are not clearly
and closely related to the host contract, that meet the definition
of a derivative, and that do not qualify for a scope exception
8
from derivative accounting; and, (2) convertible debt instruments
issued with substantial premiums for which the premiums are
recorded as paid-in capital. ASU2020-06 removes from U.S. GAAP the
separation models for (1) convertible debt with a cash conversion
feature (“CCF”) and (2) convertible instruments with a beneficial
conversion feature (“BCF”). With the adoption of ASU2020-06,
entities will not separately present in equity an embedded
conversion feature these debts. The amendments in this update are
effective for fiscal years beginning after December 15, 2021,
including interim periods within those fiscal years. Early adoption
is permitted, but no earlier than fiscal years beginning after
December 15, 2020, including interim periods within those fiscal
years. The Company has chosen to early adopt this standard on its
year ended June 30, 2022 financial statements and did not record
BCF on the issuance of convertible notes with conversion rate below
the Company’s market stock price on the date of note issuance.
The Company has evaluated other recent accounting pronouncements
and believes that none of them have a material effect on the
Company’s financial statements.
Note 2. Going
Concern
The accompanying unaudited condensed financial statements have been
prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. As shown in the accompanying financial
statements, the Company has recurring operating losses, limited
funds and has accumulated deficits. These factors raised
substantial doubt about the Company’s ability to continue as a
going concern.
The Company may raise additional capital by the sale of its equity
securities, through an offering of debt securities, or from
borrowing from a financial institution. The Company does not have a
policy on the amount of borrowing or debt that the Company can
incur. Management believes that actions presently being taken to
obtain additional funding provides the additional opportunity for
the Company to continue as a going concern for the next twelve
months after these financial statements are issued. However, there
is no assurance of additional funding being available or on
acceptable terms, if at all. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded assets or the amounts of and
classification of liabilities that might be necessary in the event
the Company cannot continue in existence.
Note 3. Related
Party Transactions
As of September 30,
2022 and June 30, 2022, the Company has recorded as “related party
payables”, $769,842 and $484,938, respectively. A component of the
payables is advances made by the CFO to pay for operating expenses.
From July 1, 2016, interest has accrued on amounts due to the CFO
calculated quarterly at a rate of 6.5% per annum. As a result, in
the three months ended September 30, 2022 and September 30, 2021,
the Company recorded Interest - related party of $3,063 and $2,872
respectively. The increase of “Related party payables” at September
30, 2022 is due to the transfer of an amount of $228,811,
previously categorised as “Due to related parties” to “Related
party payables”. As a result, as at September 30, 2022 and June 30,
2022 respectively, the Company had “Due to related parties” of $0
and $228,811.
In the three months
ended September 30, 2022 and September 30, 2021 respectively, the
Company recorded commission revenue of $23,894 and $0 from the
BizjetMobile licensee, an entity affiliated through common
stockholders and directors.
In the three months
ended September 30, 2022 and September 30, 2021 respectively, the
Company incurred expenses of approximately $24,000 and $24,000
respectively to entities affiliated through common stockholders and
directors for management expenses.
In the three months
ended September 30, 2022 and September 30, 2021 respectively, the
Company incurred marketing expense of $58,316 and $56,282 to
entities affiliated through common stockholders and directors.
In the three months
ended September 30, 2022 and September 30, 2021 respectively, the
Company incurred expense of $55,000 and $24,000 to entities
affiliated through common stockholders and directors for program
service support.
9
In the three months
ended September 30, 2022 and September 30, 2021 respectively, the
Company incurred engineering service costs of $41,921 and $44,958
to entities affiliated through common stockholders, on normal
commercial terms in the course of the Company’s normal
business.
Note 4.
Stockholders’ Deficit
As of September 30,
2022, the Company had 500,000,000 shares of authorized common
stock, $0.0001 par value, with 279,184,653 shares issued and
outstanding, and 50,000 shares in treasury. Treasury shares are
accounted for by the par value method.
As of September 30,
2022, the Company had 50,000,000 shares of authorized preferred
stock, $0.0001 par value, with no shares issued and
outstanding.
During the three
month period ended September 30, 2022, the Company received
subscriptions for capital of $44,728, and together with the
subscriptions for capital outstanding as of June 30, 2022 of
$1,196, has issued 209,280 shares of common stock at $0.10 per
share, and 277,800 shares of common stock at $0.09 per share.
Note 5.
Loans
Loans in the
Company’s balance sheet are made up of:
Unsecured loans
The Company has an unsecured loan from a third party with balance
outstanding at September 30, 2022 of $38,462 (June 30, 2022
$36,601). Interest is calculated at a rate of 20% per annum with
interest of $1,861 and $1,526 taken up in the three months ended
September 30, 2022 and 2021 respectively. The Company makes
principal and interest payments for the loan when funds are
available.
The Company has an outstanding unsecured loan from a shareholder
totalling $10,833 at September 30, 2022 and $10,000 at June 30,
2022. The terms of the loan provides that if it is not repaid by
the loan anniversary (December 31 each year), the Company will
issue 33,334 shares of common stock in lieu of interest. Interest
of $833 and $1,538 was taken up in the three months ended September
30, 2022 and 2021 based on the share price on balance dates.
Convertible
notes
The Company has convertible notes totalling $1,603,625 and
$1,537,585 as of September 30, 2022, and June 30, 2022
respectively. The holders of the convertible notes have the right
of conversion from the date of issuance.
Convertible notes outstanding as of September 30, 2022 and June 30,
2022 are summarized below:
|
Details
|
Maturity
Date
|
Balance at
Sep. 30,
2022
|
Balance at
June 30,
2022
|
|
20% Convertible Notes
totalling $337,500 plus accrued interest
|
Dec. 31,2023
|
$692,818
|
$659,293
|
|
20% Convertible Notes
totalling $22,500 plus accrued interest
|
At
call
|
31,688
|
31,126
|
|
20% Convertible Notes
totalling $200,000 plus accrued interest
|
Dec. 31,2023
|
272,869
|
259,666
|
|
20% Related Party
Convertible Notes totalling $375,000 plus accrued interest
|
Dec. 31,2023
|
506,250
|
487,500
|
|
0% Convertible Notes
totalling $100,000
|
Dec. 31,2023
|
100,000
|
100,000
|
|
Total convertible
notes
|
|
1,603,625
|
1,537,585
|
In 2018, the Company
issued Convertible Notes which totalled $607,500, to fund the
development of its fflya systems. Two issues were made as
follows:
10
The first convertible
note for $337,500. Terms of the issue are:
-Interest
rate: 20% per annum.
-Conversion
price: $0.03 per share.
-Maturity
date: December 1, 2020, which has now been extended to December 31,
2023, conditional on the holders advancing an additional $200,000
on terms set out under 4 below, and outstanding interest to be
compounded.
In July 2021, related
party contractors agreed to accept convertible notes totalling
$375,000 to reduce the debts they are owed, as follows:
-Interest
rate: 20% per annum, payable monthly in arrears in shares
-Conversion
price: $0.015 per share
-Maturity
date: December 31, 2023
Two convertible notes
for $200,000. Terms of the issue are:
-Interest
rate: 20% per annum.
-Conversion
price: $0.015 per share.
-Maturity
date: December 1, 2023, and outstanding interest to be
compounded.
Note 6. Subsequent
Events
On October 27, 2022
the Company issued a Form 8-K to announce that as noted in the June
30, 2022 10-K, it had renegotiated the terms of arrangements with
ASiQ Pty. Ltd., the original developers of the Company’s
BizjetMobile technology and airline version of the technology
designated fflya.
11
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This quarterly report
on Form 10-Q includes “forward-looking statements” as defined by
the Securities and Exchange Commission. These statements may
involve known and unknown risks, uncertainties and other factors
which may cause actual results, performance or achievements to be
materially different from future results, performance or
achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve
assumptions and describe future plans, strategies and expectations,
are generally identifiable by use of the words “may,” “will,”
“could”, “should,” “expect,” “anticipate,” “estimate,” “believe,”
“intend” or “project” or the negative of these words or other
variations on these words or comparable terminology. These
forward-looking statements are based on assumptions that may be
incorrect. Actual results could differ materially from those
expressed or implied by the forward-looking statements as a result
of various factors. The company undertakes no obligation to
update publicly any forward-looking statements for any reason, even
if new information becomes available or other events occur in the
future.
The following
discussion should be read in conjunction with the Company’s Form
10-K for the fiscal year ended June 30, 2022.
OVERVIEW
The Company’s
inflight connectivity technology is targeted at two distinct
markets. BizjetMobile and CrewX are designed for business jets and
has been sold in North America, Europe and the Middle East. The
Company’s fflya system is designed for, and marketed to, low-cost
airlines in Europe and Asia. Further details of BizjetMobile and
fflya are included in the Form10-K for the year ended June 30,
2022.
As noted above, the
Company’s arrangements in regard to BizjetMobile have been
re-negotiated and as a result, revenue has re-commenced in the
quarter ended September 30, 2022.
The Company has
continued investing in the development and marketing of the airline
versions of its fflya and CrewX technology. As previously noted,
the Company has secured its launch fleet, Wizz Air Hungary Airlines
Limited, to provide its fflya system for 19 of its United Kingdom
based A320 and A321 aircraft for a minimum three years under a
previously agreed revenue sharing arrangement.
RESULTS OF
OPERATIONS
THREE MONTHS ENDED
SEPTEMBER 30, 2022 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30,
2021
In the three months
period ended September 30, 2022, the Company recorded revenue of
$23,894, compared to revenue of $0 in the corresponding three-month
period ended September 30, 2021, as the Company received the first
commissions under the new license arrangements with ASiQ Pty.
Ltd.
The Company incurred
operating costs of $231,057 in the three months ended September 30,
2022 and $203,214 in the three months ended September 30, 2021.
Main components are engineering, installation, technical support
and marketing expenses. In the three months ended September 30,
2022, the Company recorded an operating loss of $207,163 compared
to an Operating Loss of $203,214 in the three months ended
September 30, 2021.
The development and
marketing costs have been funded in part through interest bearing
convertible notes. As a result, the Company’s Other Expenses,
included interest of $72,360 in the three months ended September
30, 2022, compared to interest cost of $87,020 in the three months
ended September 30, 2021. The decreased expense was a result of
some of the convertible notes being replaced with shares of the
Company’s common stock, effective June 30, 2022. After interest
costs, the Company recorded a Net Losses of $279,523 and $290,234
in the three months ended September 30, 2022 and 2021
respectively.
12
LIQUIDITY AND
CAPITAL RESOURCES
The Company’s primary
sources of liquidity are cash received from issue of common stock
and accounts payable for expenses incurred with related parties.
Without the continuation of these sources of funding, as stated in
Note 2 above, the Company’s ability to continue as a going concern
is in substantial doubt. This will continue until the company is
able to generate sufficient cash flow from its operations.
The cash and cash
equivalents balance was $5,080 at September 30, 2022. The Company
reported revenue of $23,894 in the three months ended September 30,
2022 compared to $0 in the three month period ended September 30,
2021 as a result of revenue from BizjetMobile re-commencing. The
Company incurred a loss of $279,523 from operating activities for
the three months to September 30, 2022, compared to a loss of
$290,234 from operating activities for the three months to
September 30, 2021. Net cash used in operating activities for the
three months ended September 30, 2022 was $147,749 compared to
$209,824 during the three months ended September 30, 2021.
Operating cash requirement in the three months ended September 30,
2022 decreased mainly through higher related party payables.
The cash flow of the
Company from financing activities for the three months ended
September 30, 2022 was $44,731 as a result of funds received for
common stock. In the three months ended September 30, 2021, the
cash flow from financing activities was $315,057 mainly from funds
received pending issue of common stock and increased loans.
The Company may raise
additional capital by the sale of its equity securities, through an
offering of debt securities, or from borrowing from a financial
institution or other funding sources. The Company does not have a
policy on the amount of borrowing or debt that the Company can
incur. There are no guarantees on the company’s ability to raise
additional capital and hence its ability to continue as a going
concern.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS
AND PROCEDURES
(a) Evaluation of disclosure controls
and procedures.
Our management,
including the Company’s President, and the Company’s Chief
Financial Officer, have evaluated the effectiveness of the design
and operation of our disclosure controls and procedures (as defined
in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal
controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) as of the end of the period covered by
this Quarterly Report on Form 10-Q.
Based upon that
evaluation, our management concluded that our disclosure controls
and procedures as of the end of the period covered by this report
are ineffective and have material weaknesses as set out in the June
30, 2021 Form 10-K, such that the information required to be
disclosed by us in the reports filed under the Securities Exchange
Act of 1934 is (i) recorded, processed, summarized and reported
within the time periods specified in SEC’s rules and forms and (ii)
accumulated and communicated to our management to allow timely
decisions regarding disclosure. A controls system cannot provide
absolute assurance however, that the effectiveness of the controls
system are met and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud if any,
within a company have been detected.
(b) Changes in internal
controls.
The Company’s
management, including the President and Chief Financial Officer,
evaluated whether any changes in our internal controls over
financial reporting, occurred during the quarter ended September
30, 2022. Based on that evaluation, our management concluded that
no change occurred in the Company’s internal controls over
financial reporting during the quarter ended September 30, 2022
that has materially affected, or is reasonably likely to materially
affect, the Company’s internal controls over financial
reporting.
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
None
ITEM 1A. RISK
FACTORS
The Company is a
smaller reporting company and is not required to provide this
information.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three
months ended September 30, 2022, the Company issued 487,080 shares
of common stock valued at $45,927 for cash that were not registered
under the Securities Act of 1933. The offer, sale and issuance of
these securities was made in reliance upon the exemption from the
registration requirements of the Securities Act provided for by
Section 4(2) thereof for transactions not involving a public
offering. Appropriate legends have been affixed to the securities
issued in these transactions. The purchasers of the securities had
adequate access, through business or other relationships, to
information about the Company. The proceeds from the share sales
have been used for the Company’s airline program and operating
costs.
ITEM 3. DEFAULTS
UPON SENIOR SECURITIES
None
ITEM 4. MINE
SAFETY DISCLOSURES
None
ITEM 5. OTHER
INFORMATION
None
ITEM 6. EXHIBITS
AND REPORTS ON FORM 8-K
(a) Exhibits:
|
Exhibit
No.
|
|
Description
|
|
|
|
|
|
31.1
|
|
Certification of the
President under Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley
Act of 2002)
|
|
31.2
|
|
Certification of the
Chief Financial Officer under Rule 13a-14(a) (Section 302 of the
Sarbanes-Oxley Act of 2002)
|
|
32.1
|
|
Certification
Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350)
|
|
32.2
|
|
Certification
Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350)
|
(b) Reports on Form
8-K was filed in the quarter ended September 30, 2022:
None.
14
SIGNATURES
In accordance with
the Exchange Act, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
AS-IP TECH,
INC.
|
SIGNATURES:
|
TITLE
|
DATE
|
|
|
|
|
|
By:
/s/ Ronald
J. Chapman
|
Director
|
November 14, 2022
|
|
Ronald J. Chapman
|
|
|
|
|
|
|
|
|
|
|
|
By:
/s/ Philip
A. Shiels
|
Director
|
November 14, 2022
|
|
Philip A. Shiels
|
|
|
|
|
|
|
|
|
|
|
|
By:
/s/ Graham
O. Chappell
|
Director
|
November 14, 2022
|
|
Graham O.
Chappell
|
|
|
15