As
filed with the Securities and Exchange Commission on September 10, 2019
File
No. 333-233066
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/A
AMENDMENT
NO. 1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
KIBUSH
CAPITAL CORP.
Nevada
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1400
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(State
or jurisdiction of
Incorporation
or organization)
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(Primary
Standard Industrial
Classification Code)
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(I.R.S.
Employer
Identification
No.)
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2215-B
Renaissance Drive
Las Vegas, NV 89119
(61) 398464288
(Address,
including zip code, and telephone number, including area code,
of
registrant’s principle executive offices)
Matheau
J. W. Stout, Esq.
201 International Circle, Suite 230
Hunt
Valley, Maryland 21030
(410)
429-7076
(Name, address, including zip code, and telephone number, including area code,
of
agent for service)
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: [ ]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[X]
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Emerging
growth company
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[X]
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
[ ]
Calculation
of Registration Fee
Title
of each Class of Securities To be Registered
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Amount
to be registered
(1)
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Proposed
maximum Offering price per share
(2)(3)(4)(5)
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Proposed
maximum aggregate Offering price
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Amount
of registration fee
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Common
Stock, $0.001 par value per share, to be offered by the issuer
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1,666,666,666
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$
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0.0003
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$
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500,000
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$
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60.60
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Total
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1,666,666,666
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0.0003
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$
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500,000
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$
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60.60
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(1)
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In
the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered
shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities
Act of 1933, as amended.
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(2)
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Estimated
solely for the purpose of computing the registration fee pursuant to Rule 457 of the Securities Act.
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(3)
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Offering
price has been arbitrarily determined by the Board of Directors.
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(4)
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The
offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with
Rule 457(o).
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(5)
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The
offering price has been calculated as the exercise price solely for the purpose of computing the amount of the registration
fee in accordance with Rule 457(g).
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The
Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
PRELIMINARY
PROSPECTUS
KIBUSH
CAPITAL CORP.
1,666,666,666
Shares of Common Stock Offered by the Company
$0.0003
per share
This
is the initial public offering of our common stock, par value $0.001 per share. We are selling up to 1,666,666,666 shares
of our common stock.
This
offering will terminate on the date which is 180 days from the effective date of this prospectus, although we may close the offering
on any date prior if the offering is fully subscribed or upon the vote of our board of directors.
We
currently expect the initial public offering price of the shares we are offering to be $0.0003 per share of our common
stock. As of September 10, 2019,
we do not have enough authorized shares of common stock to sell all 1,666,666,666 shares, and we expect to file for an increase
of our authorized shares of common stock by filing Articles of Amendment in Nevada at such time as this becomes needed.
The
Company is quoted on the OTC Pink market there is a limited established market for our stock. The offering price of the shares
has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other
established criteria for valuing a privately held company. In determining the number of shares to be offered and the offering
price, we took into consideration our capital structure and the amount of money we would need to implement our business plans.
Accordingly, the offering price should not be considered an indication of the actual value of our securities.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” for certain risks you should consider before
purchasing any shares in this offering. This prospectus is not an offer to sell these securities and it is not the solicitation
of an offer to buy these securities in any state where the offeror sale is not permitted.
The
offering is being conducted on a self-underwritten, best efforts basis, which means our management will attempt to sell the shares
being offered hereby on behalf of the Company. There is no underwriter for this offering.
Completion
of this offering is not subject to us raising a minimum offering amount. We do not have an arrangement to place the proceeds from
this offering in an escrow, trust or similar account. Any funds raised from the offering will be immediately available to us for
our immediate use.
Any
purchaser of common stock in the offering may be the only purchaser, given the lack of a minimum offering amount.
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
Company does not plan to use this offering prospectus before the effective date.
Proceeds
to Company in Offering
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Number
of
Shares
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Offering
Price (1)
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Underwriting
Discounts
&
Commissions
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Gross
Proceeds
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Per Share
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25% of Offering Sold
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416,666,666
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$
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0.0003
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$
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0
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$
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125,000
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50% of Offering sold
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833,333,333
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$
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0.0003
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$
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0
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$
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250,000
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75% of Offering Sold
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1,249,999,999
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$
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0.0003
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$
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0
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$
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375,000
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Maximum Offering sold
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1,666,666,666
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$
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0.0003
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$
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0
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$
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500,000
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(1)
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Assuming
an initial public offering price of $0.0003 per share, as set forth on the cover page of this prospectus.
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TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
In
making your investment decision, you should only rely on the information contained in this prospectus. We have not authorized
anyone to provide you with any other or different information. If anyone provides you with information that is different from,
or inconsistent with, the information in this prospectus, you should not rely on it. We believe the information in this prospectus
is materially complete and correct as of the date on the front cover. We cannot, however, guarantee that the information will
remain correct after that date. For that reason, you should assume that the information in this prospectus is accurate only as
of the date on the front cover and that it may not still be accurate on a later date. This document may only be used where it
is legal to sell these securities. The information contained in this prospectus is current only as of its date, regardless of
the time of delivery of this prospectus or of any sales of our shares of common stock.
You
should not interpret the contents of this prospectus to be legal, business, investment or tax advice. You should consult with
your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that
you should consider before investing in our common stock.
This
prospectus does not offer to sell, or ask for offers to buy, any shares of our common stock in any state or other jurisdiction
in which such offer or solicitation would be unlawful or where the person making the offer is not qualified to do so.
No
action is being taken in any jurisdictions outside the United States to permit a public offering of our common stock or possession
or distribution of this prospectus in those jurisdictions. Persons who come into possession of this prospectus in jurisdictions
outside the United States are required to inform themselves about, and to observe, any restrictions that apply in those jurisdictions
to this offering or the distribution of this prospectus. In this prospectus, unless the context otherwise denotes, references
to “we,” “us,” “our,” and the “Company” refer to Kibush Capital Corp.
OFFERING
SUMMARY, PERKS AND RISK FACTORS
OFFERING
SUMMARY
Type
of Stock Offering:
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Common
Stock
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Price
Per Share:
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$0.0003
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Minimum
Investment:
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$750.00
per investor (2,500,000 Share of Common Stock)
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Maximum
Offering:
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$500,000.00.
The Company will not accept investments greater than the
Maximum Offering amount.
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Maximum
Shares Offered:
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1,666,666,666
Shares of Common Stock, As
of September 10, 2019, we do not have enough authorized shares of common stock to sell
all 1,666,666,666 shares, and we expect to file for an increase of our authorized shares
of common stock by filing Articles of Amendment in Nevada at such time as this becomes
needed.
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Use
of Proceeds:
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See
the description in section entitled “USE OF PROCEEDS TO ISSUER” on page 19 herein.
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Voting
Rights:
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The
Shares have full voting rights.
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Length
of Offering:
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Shares
will be offered on a continuous basis until either (1) the maximum number of Shares or sold; (2) 180 days from the date of
registration by the Commission, (3) if Company in its sole discretion extends the offering beyond 180 days from the date of
registration by the Commission, or (4) the Company in its sole discretion withdraws this Offering.
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The
Offering
Common Stock Outstanding
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443,354,541 Shares
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Common Stock in this Offering
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1,666,666,666
Shares
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Stock to be outstanding after the offering (1)(2)
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2,110,021,207
Shares
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(1)
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The total number of Shares of Common Stock assumes that
the maximum number of Shares are sold in this offering.
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(2)
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As of September 10, 2019, we do not have enough authorized shares of common stock to sell
all 1,666,666,666 shares, and we expect to file for an increase of our authorized shares of common stock by filing Articles
of Amendment in Nevada at such time as this becomes needed.
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The
Company may not be able to sell the Maximum Offering Amount.
The
net proceeds of the Offering will be the gross proceeds of the Shares sold minus the expenses of the offering.
Our
common stock is quoted on OTCMarkets.com under trading symbol “DLCR.” We are not listed on any trading market or stock
exchange, and our ability to list our stock in the future is uncertain. Investors should not assume that the Offered Shares will
be listed. A consistent public trading market for the shares may not develop.
Investment
Analysis
There
is no assurance Kibush Capital Corp. will be profitable, or that management’s opinion of the Company’s future prospects
will not be outweighed in the by unanticipated losses, adverse regulatory developments and other risks. Investors should carefully
consider the various risk factors below before investing in the Shares.
RISK
FACTORS
The
purchase of the Company’s Common Stock involves substantial risks. You should carefully consider the following risk factors
in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative
investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise
all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks
and uncertainties may also have an adverse effect on the Company’s business and your investment in the Shares. An investment
in the Company may not be suitable for all recipients of this Prospectus. You are advised to consult an independent professional
adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully
whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available
to you.
The
discussions and information in this Prospectus may contain both historical and forward- looking statements. To the extent that
the Prospectus contains forward-looking statements regarding the financial condition, operating results, business prospects, or
any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating
results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements.
The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience
and results may differ from the Company’s current expectations.
Before
investing, you should carefully read and carefully consider the following risk factors:
Risks
Relating to the Company and Its Business
The
risks of Logging and Timber operations are
The
Weather, the Rainy Season in PNG are intense and can cause major disruption and damage.
The
Landowners whilst the company does everything possible to cover agreements with all Landowners, the risk is that those agreements
need management to ensure parties meet their responsibilities.
The
Equipment we are currently using is aged and susceptible to breakdowns during heavy usage.
The
Company Has A History of Losses
The
Company has suffered losses since its inception and there can be no assurance that the Company’s proposed plan of business
can be realized in the manner contemplated and, if it cannot be, shareholders may lose all or a substantial part of their investment.
There is no guarantee that it will ever realize any significant operating revenues or that its operations will ever be profitable.
The
Company Is Dependent Upon Its Management, Key Personnel and Consultants to Execute the Business Plan
The
Company’s success is heavily dependent upon the continued active participation of the Company’s current executive
officers as well as other key personnel and consultants. Loss of the services of one or more of these individuals could have a
material adverse effect upon the Company’s business, financial condition or results of operations. Further, the Company’s
success and achievement of the Company’s growth plans depend on the Company’s ability to recruit, hire, train and
retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the healthy
living, healthcare and online industries is intense, and the loss of any of such persons, or an inability to attract, retain and
motivate any additional highly skilled employees required for the expansion of the Company’s activities, could have a materially
adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material
adverse effect on the Company’s business, financial condition or results of operations.
Although
Dependent Upon Certain Key Personnel, The Company Does Not Have Any Key Man Life Insurance Policies On Any Such People
The
Company is dependent upon management in order to conduct its operations and execute its business plan; however, the Company has
not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, should
any of these key personnel, management or founders die or become disabled, the Company will not receive any compensation that
would assist with such person’s absence. The loss of such person could negatively affect the Company and its operations.
The
Company Is Subject To Income Taxes As Well As Non-Income Based Taxes, Such As Payroll, Sales, Use, Value-Added, Net Worth, Property
And Goods And Services Taxes.
Significant
judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business,
there are many transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes
that our tax estimates will be reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes
will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals
and (ii) any material differences could have an adverse effect on our consolidated financial position and results of operations
in the period or periods for which determination is made.
The
Company Is Not Subject To Sarbanes-Oxley Regulations And Lack The Financial Controls And Safeguards Required Of Public Companies.
The
Company does not have the internal infrastructure necessary, and is not required, to complete an attestation about our financial
controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are
no significant deficiencies or material weaknesses in the quality of our financial controls. The Company expects to incur additional
expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation,
testing and remediation required in order to comply with the management certification and auditor attestation requirements.
The
Company Has Engaged In Certain Transactions With Related Persons.
Please
see the section of this Prospectus entitled “Interest of Management and Others in Certain Related-Party Transactions and
Agreements”
Changes
In Employment Laws Or Regulation Could Harm The Company’s Performance.
Various
federal and state labor laws govern the Company’s relationship with our employees and affect operating costs. These laws
may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare
laws, unemployment tax rates, workers’ compensation rates, citizenship requirements, union membership and sales taxes. A
number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages,
overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from
the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.
The
Company’s Bank Accounts Will Not Be Fully Insured
The
Company’s regular bank accounts and the checking account used for this Offering each have federal insurance that is limited
to a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times.
In the event that any of Company’s banks should fail, the Company may not be able to recover all amounts deposited in these
bank accounts.
The
Company’s Business Plan Is Speculative
The
Company’s present business and planned business are speculative and subject to numerous risks and uncertainties. There is
no assurance that the Company will generate significant revenues or profits.
The
Company Will Likely Incur Debt
The
Company has incurred debt and expects to incur future debt in order to fund operations. Complying with obligations under such
indebtedness may have a material adverse effect on the Company and on your investment.
The
Company’s Expenses Could Increase Without a Corresponding Increase in Revenues
The
Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material
adverse effect on the Company’s consolidated financial results and on your investment. Factors which could increase operating
and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory
charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations
or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.
The
Company Will Be Reliant On Key Suppliers
The
Company intends to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with
such suppliers. Termination of those agreements, variations in their terms or the failure of a key supplier to comply with its
obligations under these agreements (including if a key supplier were to become insolvent) could have a material adverse effect
on the Company’s consolidated financial results and on your investment.
Increased
Costs Could Affect The Company
An
increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes
may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company.
The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases
could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to
offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect
on your investment.
Inability
to Maintain and Enhance Product Image
It
is important that the Company maintains and enhances the image of its existing and new products. The image and reputation of the
Company’s products may be impacted for various reasons including litigation, complaints from regulatory bodies resulting
from quality failure, illness or other health concerns. Such concerns, even when unsubstantiated, could be harmful to the Company’s
image and the reputation of its products. From time to time, the Company may receive complaints from customers regarding products
purchased from the Company. The Company may in the future receive correspondence from customers requesting reimbursement. Certain
dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company may become subject
to product liability lawsuits from customers alleging injury because of a purported defect in products or sold by the Company,
claiming substantial damages and demanding payments from the Company. The Company is in the chain of title when it manufactures,
supplies or distributes products, and therefore is subject to the risk of being held legally responsible for them. These claims
may not be covered by the Company’s insurance policies. Any resulting litigation could be costly for the Company, divert
management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the
Company’s business, results of operations, and financial condition. Any negative publicity generated as a result of customer
complaints about the Company’s products could damage the Company’s reputation and diminish the value of the Company’s
brand, which could have a material adverse effect on the Company’s business, results of operations, and financial condition,
as well as your investment. Deterioration in the Company’s brand equity (brand image, reputation and product quality) may
have a material adverse effect on its consolidated financial results as well as your investment.
If
We Are Unable To Protect Effectively Our Intellectual Property, We May Not Be Able To Operate Our Business, Which Would Impair
Our Ability To Compete
Our
success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual
property. The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders
of trademarks who file opposition notices, or otherwise contest trademark applications by the Company for its brands. Similarly,
domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name
or URL. Such challenges could have a material adverse effect on the Company’s consolidated financial results as well as
your investment.
Computer,
Website or Information System Breakdown Could Affect The Company’s Business
Computer,
website and/or information system breakdowns as well as cyber security attacks could impair the Company’s ability to service
its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on
the Company’s consolidated financial results as well as your investment.
Changes
In The Economy Could Have a Detrimental Impact On The Company
Changes
in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company’s revenue.
It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest
rates, higher unemployment and tax increases) may adversely affect customers’ confidence and willingness to spend. Any of
such events or occurrences could have a material adverse effect on the Company’s consolidated financial results and on your
investment.
The
Amount Of Capital The Company Is Attempting To Raise In This Offering Is Not Enough To Sustain The Company’s Current Business
Plan
In
order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount
raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we
are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations
will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining
assets, which could cause you to lose all or a portion of your investment.
Additional
Financing May Be Necessary For The Implementation Of Our Growth Strategy
The
Company may require additional debt and/or equity financing to pursue our growth and business strategies. These include, but are
not limited to enhancing our operating infrastructure and otherwise respond to competitive pressures. Given our limited operating
history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the
terms will be acceptable to us. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore,
the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the
ownership of existing shareholders and may reduce the price of our Shares.
Our
Employees, Executive Officers, Directors And Insider Shareholders Beneficially Own Or Control A Substantial Portion Of Our Outstanding
Shares
Our
employees, executive officers, directors and insider shareholders beneficially own or control a substantial portion of our outstanding
type of stock, which may limit your ability and the ability of our other shareholders, whether acting alone or together, to propose
or direct the management or overall direction of our Company. Additionally, this concentration of ownership could discourage or
prevent a potential takeover of our Company that might otherwise result in an investor receiving a premium over the market price
for his Shares. The majority of our currently outstanding Shares of stock is beneficially owned and controlled by a group of insiders,
including our employees, directors, executive officers and inside shareholders. Accordingly, our employees, directors, executive
officers and insider shareholders may have the power to control the election of our directors and the approval of actions for
which the approval of our shareholders is required. If you acquire our Shares, you will have no effective voice in the management
of our Company. Such concentrated control of our Company may adversely affect the price of our Shares. Our principal shareholders
may be able to control matters requiring approval by our shareholders, including the election of directors, mergers or other business
combinations. Such concentrated control may also make it difficult for our shareholders to receive a premium for their Shares
in the event that we merge with a third party or enter into different transactions, which require shareholder approval. These
provisions could also limit the price that investors might be willing to pay in the future for our Shares.
Our
Operating Plan Relies In Large Part Upon Assumptions And Analyses Developed By The Company. If These Assumptions Or Analyses Prove
To Be Incorrect, The Company’s Actual Operating Results May Be Materially Different From Our Forecasted Results
Whether
actual operating results and business developments will be consistent with the Company’s expectations and assumptions as
reflected in its forecast depends on a number of factors, many of which are outside the Company’s control, including, but
not limited to:
●
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whether
the Company can obtain sufficient capital to sustain and grow its business
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●
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our
ability to manage the Company’s growth
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●
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whether
the Company can manage relationships with key vendors and advertisers
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●
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demand
for the Company’s products and services
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●
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the
timing and costs of new and existing marketing and promotional efforts
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●
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competition
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●
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the
Company’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified
personnel
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●
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the
overall strength and stability of domestic and international economies
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|
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●
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consumer
spending habits
|
Unfavorable
changes in any of these or other factors, most of which are beyond the Company’s control, could materially and adversely
affect its business, consolidated results of operations and consolidated financial condition.
To
Date, The Company Has Had Operating Losses And May Not Be Initially Profitable For At Least The Foreseeable Future, And Cannot
Accurately Predict When It Might Become Profitable
The
Company has been operating at a loss since the Company’s inception, but has recently operated at a profit. The Company may
not be able to generate significant revenues in the future. In addition, the Company expects to incur substantial operating expenses
in order to fund the expansion of the Company’s business. As a result, the Company expects to continue to experience substantial
negative cash flow for at least the foreseeable future and cannot predict when, or even if, the Company might become profitable.
The
Company May Be Unable To Manage Their Growth Or Implement Their Expansion Strategy
The
Company may not be able to expand the Company’s product and service offerings, the Company’s markets, or implement
the other features of the Company’s business strategy at the rate or to the extent presently planned. The Company’s
projected growth will place a significant strain on the Company’s administrative, operational and financial resources. If
the Company is unable to successfully manage the Company’s future growth, establish and continue to upgrade the Company’s
operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties,
the Company’s consolidated financial condition and consolidated results of operations could be materially and adversely
affected.
The
Company Relies Upon Trade Secret Protection To Protect Its Intellectual Property; It May Be Difficult And Costly To Protect The
Company’s Proprietary Rights And The Company May Not Be Able To Ensure Their Protection
The
Company currently relies on trade secrets. While the Company uses reasonable efforts to protect these trade secrets, the Company
cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company’s
trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing
to protect trade secrets. Moreover, the Company’s competitors may independently develop equivalent knowledge, methods and
know-how. If the Company is unable to defend the Company’s trade secrets from others use, or if the Company’s competitors
develop equivalent knowledge, it could have a material adverse effect on the Company’s business. Any infringement of the
Company’s proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company’s
proprietary rights could result in the Company’s competitors offering similar products, potentially resulting in loss of
a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited
protection. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same
extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company’s proprietary
rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company’s
trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary
in the future to enforce the Company’s intellectual property rights, to protect the Company’s trade secrets or to
determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion
of resources and could materially adversely affect the Company’s future operating results.
The
Company’s Business Model Is Evolving
The
Company’s business model is unproven and is likely to continue to evolve. Accordingly, the Company’s initial business
model may not be successful and may need to be changed. The Company’s ability to generate significant revenues will depend,
in large part, on the Company’s ability to successfully market the Company’s products to potential users who may not
be convinced of the need for the Company’s products and services or who may be reluctant to rely upon third parties to develop
and provide these products. The Company intends to continue to develop the Company’s business model as the Company’s
market continues to evolve.
The
Company Needs to Increase Brand Awareness
Due
to a variety of factors, the Company’s opportunity to achieve and maintain a significant market share may be limited. Developing
and maintaining awareness of the Company’s brand name, among other factors, is critical. Further, the importance of brand
recognition will increase as competition in the Company’s market increases. Successfully promoting and positioning the Company’s
brand, products and services will depend largely on the effectiveness of the Company’s marketing efforts. Therefore, the
Company may need to increase the Company’s financial commitment to creating and maintaining brand awareness. If the Company
fails to successfully promote the Company’s brand name or if the Company incurs significant expenses promoting and maintaining
the Company’s brand name, it would have a material adverse effect on the Company’s consolidated results of operations.
The
Company Faces Competition In The Company’s Markets From A Number Of Large And Small Companies, Some Of Which Have Greater
Financial, Research And Development, Production And Other Resources Than Does The Company
In
many cases, the Company’s competitors have longer operating histories, established ties to the market and consumers, greater
brand awareness, and greater financial, technical and marketing resources. The Company’s ability to compete depends, in
part, upon a number of factors outside the Company’s control, including the ability of the Company’s competitors to
develop alternatives that are superior. If the Company fails to successfully compete in its markets, or if the Company incurs
significant expenses in order to compete, it would have a material adverse effect on the Company’s consolidated results
of operations.
A
Data Security Breach Could Expose The Company To Liability And Protracted And Costly Litigation, And Could Adversely Affect The
Company’s Reputation And Operating Revenues
To
the extent that the Company’s activities involve the storage and transmission of confidential information, the Company and/or
third-party processors will receive, transmit and store confidential customer and other information. Encryption software and the
other technologies used to provide security for storage, processing and transmission of confidential customer and other information
may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such
security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper
access to the Company’s or these third parties’ systems or databases could result in the theft, publication, deletion
or modification of confidential customer and other information. A data security breach of the systems on which sensitive account
information is stored could lead to fraudulent activity involving the Company’s products and services, reputational damage,
and claims or regulatory actions against us. If the Company is sued in connection with any data security breach, the Company could
be involved in protracted and costly litigation. If unsuccessful in defending that litigation, the Company might be forced to
pay damages and/or change the Company’s business practices or pricing structure, any of which could have a material adverse
effect on the Company’s operating revenues and profitability. The Company would also likely have to pay fines, penalties
and/or other assessments imposed as a result of any data security breach.
The
Company Depends On Third-Party Providers For A Reliable Internet Infrastructure And The Failure Of These Third Parties, Or The
Internet In General, For Any Reason Would Significantly Impair The Company’s Ability To Conduct Its Business
The
Company will outsource some or all of its online presence and data management to third parties who host the actual servers and
provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted
access to the Internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency
of a third-party provider, or malicious electronic intrusion into the data center, its business would be significantly damaged.
As has occurred with many Internet-based businesses, the Company may be subject to ‘denial-of-service’ attacks in
which unknown individuals bombard its computer servers with requests for data, thereby degrading the servers’ performance.
The Company cannot be certain it will be successful in quickly identifying and neutralizing these attacks. If either a third-party
facility failed, or the Company’s ability to access the Internet was interfered with because of the failure of Internet
equipment in general or if the Company becomes subject to malicious attacks of computer intruders, its business and operating
results will be materially adversely affected.
The
Company’s Employees May Engage In Misconduct Or Improper Activities
The
Company, like any business, is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include
intentional failures to comply with laws or regulations, provide accurate information to regulators, comply with applicable standards,
report financial information or data accurately or disclose unauthorized activities to the Company. In particular, sales, marketing
and business arrangements are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing
and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing
and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve
improper or illegal activities which could result in regulatory sanctions and serious harm to the Company’s reputation.
Limitation
On Director Liability
The
Company may provide for the indemnification of directors to the fullest extent permitted by law and, to the extent permitted by
such law, eliminate or limit the personal liability of directors to the Company and its shareholders for monetary damages for
certain breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Risks
Relating to This Offering and Investment
The
Company May Undertake Additional Equity or Debt Financing That May Dilute The Shares In This Offering
The
Company may undertake further equity or debt financing, which may be dilutive to existing shareholders, including you, or result
in an issuance of securities whose rights, preferences and privileges are senior to those of existing shareholders, including
you, and also reducing the value of Shares subscribed for under this Offering.
An
Investment In The Shares Is Speculative And There Can Be No Assurance Of Any Return On Any Such Investment
An
investment in the Company’s Shares is speculative, and there is no assurance that investors will obtain any return on their
investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing
their entire investment.
The
Shares Are Offered On A “Best Efforts” Basis And The Company May Not Raise The Maximum Amount Being Offered
Since
the Company is offering the Shares on a “best efforts” basis, there is no assurance that the Company will sell enough
Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company
will raise enough money to satisfy the full Use Of Proceeds To Issuer which the Company has outlined in this Prospectus or to
meet the Company’s working capital needs.
If
The Maximum Offering Is Not Raised, It May Increase The Amount Of Long-Term Debt Or The Amount Of Additional Equity It Needs To
Raise
There
is no assurance that the maximum amount of Shares in this offering will be sold. If the maximum Offering amount is not sold, we
may need to incur additional debt or raise additional equity in order to finance our operations. Increasing the amount of debt
will increase our debt service obligations and make less cash available for distribution to our shareholders. Increasing the amount
of additional equity that we will have to seek in the future will further dilute those investors participating in this Offering.
We
Have Not Paid Dividends In The Past And Do Not Expect To Pay Dividends In The Future, So Any Return On Investment May Be Limited
To The Value Of Our Shares
We
have never paid cash dividends on our Shares and do not anticipate paying cash dividends in the foreseeable future. The payment
of dividends on our Shares will depend on earnings, financial condition and other business and economic factors affecting it at
such time that management may consider relevant. If we do not pay dividends, our Shares may be less valuable because a return
on your investment will only occur if its stock price appreciates.
The
Company May Not Be Able To Obtain Additional Financing
Even
if the Company is successful in selling the maximum number of Shares in the Offering, the Company may require additional funds
to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms,
or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously
harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek
to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to
the Company’s current shareholders and to you if you invest in this Offering.
The
Offering Price Has Been Arbitrary Determined
The
offering price of the Shares has been arbitrarily established by the Company based upon its present and anticipated financing
needs and bears no relationship to the Company’s present financial condition, assets, book value, projected earnings, or
any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares
or the Company, now or in the future.
The
Management Of The Company Has Broad Discretion In Application of Proceeds
The
management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering in
order to address changed circumstances and opportunities. As a result of the foregoing, the success of the Company will be substantially
dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of
the net proceeds hereof.
An
Investment in the Company’s Shares Could Result In A Loss of Your Entire Investment
An
investment in the Company’s Shares offered in this Offering involves a high degree of risk and you should not purchase the
Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason
in the near future.
There
Is No Assurance The Company Will Be Able To Pay Distributions To Shareholders
While
the Company may choose to pay distributions at some point in the future to its shareholders, there can be no assurance that cash
flow and profits will allow such distributions to ever be made.
There
a Limited Public Trading Market for the Company’s Shares
At
present, the Company’s common stock is quoted on OTCMarkets.com under the trading symbol “DLCR.” Our common
stock experiences fluctuation in volume and trading prices. There is no consistent and active trading market for the Company’s
securities and the Company cannot assure that a consistent trading market will develop. OTCMarkets.com provides significantly
less liquidity than a securities exchange such as the NASDAQ Stock Market. Prices for securities traded solely on OTCMarkets.com
may be difficult to obtain and holders of the Shares and the Company’s securities may be unable to resell their securities
at or near their original price or at any price. In any event, except to the extent that investors’ Shares may be registered
on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance
that Shares could be sold under Rule 144 or otherwise until the Company becomes a current public reporting company with the Securities
and Exchange Commission and otherwise is current in the Company’s business, financial and management information reporting,
and applicable holding periods have been satisfied.
Sales
Of A Substantial Number Of Shares Of Our Type Of Stock May Cause The Price Of Our Type Of Stock To Decline
If
our shareholders sell substantial amounts of our Shares in the public market, Shares sold may cause the price to decrease below
the current offering price. These sales may also make it more difficult for us to sell equity or equity-related securities at
a time and price that we deem reasonable or appropriate.
The
Company Has Made Assumptions In Its Projections and In Forward-Looking Statements That May Not Be Accurate
The
discussions and information in this Prospectus may contain both historical and “forward- looking statements” which
can be identified by the use of forward-looking terminology including the terms “believes,” “anticipates,”
“continues,” “expects,” “intends,” “may,” “will,” “would,”
“should,” or, in each case, their negative or other variations or comparable terminology. You should not place undue
reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained
in this Prospectus, based on past trends or activities, should not be taken as a representation that such trends or activities
will continue in the future. To the extent that the Prospectus contains forward-looking statements regarding the financial condition,
operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s
actual financial condition, operating results, and business performance may differ materially from that projected or estimated
by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual
future experience and results to differ from its current expectations. The differences may be caused by a variety of factors,
including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected
costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers,
loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital,
inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the
risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits
or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result
in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility
of the Company’s operating results and financial condition, adverse publicity and news coverage, inability to carry out
marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that
may be referred to in this Prospectus or in other reports issued by us or by third-party publishers.
You
Should Be Aware Of The Long-Term Nature Of This Investment
Because
the Shares have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction,
the Shares may have certain transfer restrictions. It is not currently contemplated that registration under the Securities Act
or other securities laws will be effected. Limitations on the transfer of the Shares may also adversely affect the price that
you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in
the Company. You will be required to represent that you are purchasing the Securities for your own account, for investment purposes
and not with a view to resale or distribution thereof.
Neither
The Offering Nor The Securities Have Been Registered Under Federal Or State Securities Laws, Leading To An Absence Of Certain
S-1pplicable To The Company
The
Company also has relied on exemptions from securities registration requirements under applicable state and federal securities
laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide.
Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their
own or in conjunction with their personal advisors.
The
Shares In This Offering Have No Protective Provisions.
The
Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares
or as a Shareholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger
or other similar transaction involving the Company. If there is a ‘liquidation event’ or ‘change of control’
the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in
the Offering that would permit you to require the Company to repurchase the Shares in the event of a takeover, recapitalization
or similar transaction.
You
Will Not Have Significant Influence On The Management Of The Company
Substantially
all decisions with respect to the management of the Company will be made exclusively by the officers, directors, managers or employees
of the Company. You will have a very limited ability, if at all, to vote on issues of Company management and will not have the
right or power to take part in the management of the Company and will not be represented on the board of directors or by managers
of the Company. Accordingly, no person should purchase Shares unless he or she is willing to entrust all aspects of management
to the Company.
No
Guarantee of Return on Investment
There
is no assurance that you will realize a return on your investment or that you will not lose your entire investment. For this reason,
you should read this Form S-1, Prospectus and all exhibits and referenced materials carefully and should consult with your own
attorney and business advisor prior to making any investment decision.
IN
ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT.
IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT THE COMPANY. MOREOVER, THE COMPANY CANNOT PREDICT WHETHER THE COMPANY
WILL SUCCESSFULLY EFFECTUATE THE COMPANY’S CURRENT BUSINESS PLAN. EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY
ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SECURITIES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS,
AMONG OTHER FACTORS, THE RISK FACTORS DISCUSSED ABOVE.
DILUTION
The
term ‘dilution’ refers to the reduction (as a percentage of the aggregate Shares outstanding) that occurs for any
given share of stock when additional Shares are issued. If all of the Shares in this offering are fully subscribed and sold, the
Shares offered herein will constitute approximately 36.36 % of the total Shares of stock of the Company. The Company anticipates
that subsequent to this offering the Company may require additional capital and such capital may take the form of Common Stock,
other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership
of the Shares sold herein in the Company.
If
you invest in our Common Stock, your interest will be diluted immediately to the extent of the difference between the offering
price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering.
As of the date of this Offering, the net tangible book value of the Company was approximately $-3,252,130, based on the number
of Shares of Common Stock [i/o common] issued and outstanding. as of the date of this Prospectus, that equates to a net tangible
book value of approximately $-.0073per share of Common Stock on a pro forma basis. Net tangible book value per share consists
of shareholders’ equity adjusted for the retained earnings (deficit), divided by the total number of Shares of Common Stock
outstanding. The pro forma net tangible book value, assuming full subscription in this Offering, would be $.0046 per share of
Common Stock.
Thus,
if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current shareholders will
have immediately increased by approximately $0.0027 without any additional investment on their part and the net tangible book
value per Share for new investors will be immediately diluted to $-.0046 per Share. These calculations do not include the costs
of the offering, and such expenses will cause further dilution.
The
following table illustrates this per Share dilution:
Offering price per Share*
|
|
$
|
0.0003
|
|
Net Tangible Book Value per Share before Offering (based on 443,354,541
|
|
$
|
-.0073
|
|
Decrease in Net Tangible Book Value per Share Attributable to Shares Offered Hereby (based on 250,000,000 Shares)
|
|
$
|
(.-013
|
)
|
Net Tangible Book Value per Share after Offering (based on 693,354,541 Shares)
|
|
$
|
-.0046
|
|
Dilution of Net Tangible Book Value per Share to Purchasers in this Offering
|
|
$
|
-.013
|
|
*Before
deduction of offering expenses
There
is no material disparity between the price of the Shares in this Offering and the effective cash cost to officers, directors,
promoters and affiliated persons for shares acquired by them in a transaction during the past year, or that they have a right
to acquire.
PLAN
OF DISTRIBUTION
We
are offering a Maximum Offering of up to 1,666,666,666 in Shares of our Common Stock. The offering is being conducted on
a best-efforts basis without any minimum number of shares or amount of proceeds required to be sold. There is no minimum subscription
amount required. The Company will not initially sell the Shares through commissioned broker-dealers, but may do so after the commencement
of the offering. Any such arrangement will add to our expenses in connection with the offering. If we engage one or more commissioned
sales agents or underwriters, we will supplement this Form S-1 to describe the arrangement. The Company will undertake one or
more closings on a rolling basis as funds are received from investors. Funds tendered by investors will be deposited in the Company’s
checking account. All subscribers will be instructed by the Company or its agents to transfer funds by wire, credit or debit cards
or ACH transfer directly to the Company. Except as stated above, subscribers have no right to a return of their funds. The Company
may terminate the offering at any time for any reason at its sole discretion, and may extend the Offering past the termination
date of 180 days from the date of registration by the Commission in the absolute discretion of the Company and in accordance with
the rules and provisions of the JOBS Act.
None
of the Shares being sold in this offering are being sold by existing securities holders.
After
the Registration Statement has been declared effective by the Securities and Exchange Commission (the “SEC”), the
Company will accept tenders of funds to purchase the Shares. No escrow agent is involved and the Company will receive the proceeds
directly from any subscription.
You
will be required to complete a subscription agreement in order to invest.
No
broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”), is being
engaged as an underwriter or for any other purpose in connection with this Offering.
This
offering will commence on the registration of this Prospectus, as determined by the Securities and Exchange Commission and continue
for a period of 180 days. The Company may extend the Offering for an additional time period unless the Offering is completed or
otherwise terminated by us, or unless we are required to terminate by application of the JOBS Act. Funds received from investors
will be counted towards the Offering only if the form of payment, such as a check, clears the banking system and represents immediately
available funds held by us prior to the termination of the subscription period, or prior to the termination of the extended subscription
period if extended by the Company.
If
you decide to subscribe for any Common Stock in this offering, you must deliver a funds for acceptance or rejection. The minimum
investment amount for a single investor is 2,500,000 Shares of Common Stock in the principal amount of $750.00. All subscription
checks should be sent to the following address:
In
such case, subscription checks should be made payable to Kibush Capital Corp. If a subscription is rejected, all funds will be
returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by the Company of a subscription,
a confirmation of such acceptance will be sent to the investor.
The
Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. The Company
maintains the right to accept subscriptions below the minimum investment amount or minimum per share investment amount in its
discretion. All monies from rejected subscriptions will be returned by the Company to the investor, without interest or deductions.
Each
investor must represent in writing that he/she/it meets the applicable requirements set forth above and in the Subscription Agreement,
including, among other things, that (i) he/she/it is purchasing the shares for his/her/its own account and (ii) he/she/it has
such knowledge and experience in financial and business matters that he/she/it is capable of evaluating without outside assistance
the merits and risks of investing in the shares, or he/she/it and his/her/its purchaser representative together have such knowledge
and experience that they are capable of evaluating the merits and risks of investing in the shares. Broker-dealers and other persons
participating in the offering must make a reasonable inquiry in order to verify an investor’s suitability for an investment
in the Company. Transferees of the shares will be required to meet the above suitability standards.
The
shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) is named on the list
of “specially designated nationals” or “blocked persons” maintained by the U.S. Office of Foreign Assets
Control (“OFAC”) at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, (ii)
an agency of the government of a Sanctioned Country, (iii) an organization controlled by a Sanctioned Country, or (iv) is a person
residing in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A “Sanctioned Country”
means a country subject to a sanctions program identified on the list maintained by OFAC and available at www.ustreas.gov/offices/enforcement/ofac/sdn
or as otherwise published from time to time. Furthermore, the shares may not be offered, sold, transferred, or delivered, directly
or indirectly, to any person who (i) has more than fifteen percent (15%) of its assets in Sanctioned Countries or (ii) derives
more than fifteen percent (15%) of its operating income from investments in, or transactions with, sanctioned persons or Sanctioned
Countries.
The
sale of other securities of the same class as those to be offered for the period of distribution will be limited and restricted
to those sold through this Offering. Because the Shares being sold are not publicly or otherwise traded, the market for the securities
offered is presently stabilized.
USE
OF PROCEEDS TO ISSUER
The
Use of Proceeds is an estimate based on the Company’s current business plan. We may find it necessary or advisable to reallocate
portions of the net proceeds reserved for one category to another, or to add additional categories, and we will have broad discretion
in doing so.
The
maximum gross proceeds from the sale of the Shares in this Offering are $500,000.00. The net proceeds from the offering, assuming
it is fully subscribed, are expected to be approximately $475,000.00 after the payment of offering costs including broker-dealer
and selling commissions, but before printing, mailing, marketing, legal and accounting costs, and other compliance and professional
fees that may be incurred. The estimate of the budget for offering costs is an estimate only and the actual offering costs may
differ from those expected by management.
Management
of the Company has wide latitude and discretion in the use of proceeds from this Offering. Ultimately, management of the Company
intends to use a substantial portion of the net proceeds for general working capital. At present, management’s best estimate
of the use of proceeds, at various funding milestones, is set out in the chart below. However, potential investors should note
that this chart contains only the best estimates of the Company’s management based upon information available to them at
the present time, and that the actual use of proceeds is likely to vary from this chart based upon circumstances as they exist
in the future, various needs of the Company at different times in the future, and the discretion of the Company’s management
at all times.
A
portion of the proceeds from this Offering may be used to compensate or otherwise make payments to officers or directors of the
issuer. The officers and directors of the Company may be paid salaries and receive benefits that are commensurate with similar
companies, and a portion of the proceeds may be used to pay these ongoing business expenses.
USE
OF PROCEEDS
|
|
|
10%
|
|
|
|
25%
|
|
|
|
50%
|
|
|
|
75%
|
|
|
|
100%
|
|
Fees
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
10,000
|
|
Equipment
|
|
|
40,000
|
|
|
|
115,000
|
|
|
|
240,000
|
|
|
|
365,000
|
|
|
|
490,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
50,000
|
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
375,000
|
|
|
$
|
500,000
|
|
The
Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company
and the discretion of the Company’s management. The Company may reallocate the estimated use of proceeds among the various
categories or for other uses if management deems such a reallocation to be appropriate.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans,
objectives, and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements.
These forward-looking statements generally are identified by the words believes, project, expects, anticipates, estimates, intends,
strategy, plan, may, will, would, will be, will continue, will likely result, and similar expressions. Forward-looking statements
are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects
on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability
of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also
be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Company
Overview and Plan of Operation
History
We
were incorporated in the State of Nevada on January 5, 2005 under the name Premier Platform Holding Company, Inc. The Company
changed its name to Paolo Nevada Enterprises, Inc. on February 4, 2005. On August 18, 2006, the Company completed a merger with
Premier Platform Holding Company, Inc., a Colorado corporation, where Paolo Nevada Enterprises, Inc. was the surviving entity.
On November 1, 2006, the Company changed its name to the David Loren Corporation. On July 5, 2013, More Superannuation Fund, an
Australian entity (“More”), obtained control of the Company from Beachwood Capital, LLC, a Nevada limited liability
company. On August 23, 2013, the Company changed its name to Kibush Capital Corporation.
On
May 26, 2014, we became an initial subscriber to Aqua Mining Limited, a Papua New Guinea limited company (“Aqua Mining”)
resulting in a 49% interest, subsequently increasing to 90%. For the fiscal year ended September 30, 2017, Aqua Mining had revenues
of $75,664, $151,158 in assets and $896,538 in liabilities, of which $793,658 are loans from Kibush Corp. For the fiscal year
ended September 30, 2018, Aqua Mining had revenues of $81,042, $118,424 in assets and $1,177,679 in liabilities, of which $1,090,938
are loans from Kibush Corp.
The
Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).
Our
business is comprised of the importing and sale of exotic timber into the United States for sale to specialty markets within the
US and Canada. Timber importation and sales are run out of our United States based headquarters, located at 10685-B
Hazelhurst Dr. # 24866 Houston, TX 77043. Our Australian office is located at 7 Sarah Crescent, Templestowe, Victoria 3106,
Australia and primarily oversees timber logging and mining exploration through our subsidiary Aqua Mining.
The
Company is an exploration stage company and there is no assurance that a commercially viable mineral deposit exists on any of
our properties. Further exploration will be required before a final evaluation as to the economic and legal feasibility is determined.
Aqua
Mining
Logging
:
The
Company, through its subsidiary Aqua Mining, was successful in obtaining Government approval for the commercialization of timber
resources at Kubuna and Rigo, Papua New Guinea. The area that we have agreements with the landowners cover at Kubuna 40,000 hectares
and Rigo 25,000 hectares. We have commenced logging during the December quarter 2016, at Rigo and expect to commence at Kubuna
during 2019. Both sites are excellent resources covering many species of wood, mainly hardwoods kwila and rosewood, there are
a number of exotic wood types. It has taken us some time to establish the infrastructure at Rigo, but we have now completed the
access road works and established a base camp for 38 on-site workers.
Market
Mining
:
The
primary product is Gold and our market price based on the London Metals Exchange Daily Rate. This rate determines a market price
for all material sold within the Refinery Market. Outside of that market competition dictates the price available, and that competition
has effectively no difference in the quality of the material as it based on a gold percentage. A higher price can be obtained
by selling to the spot traders who can distribute the material at lower volumes to industry consumers.
Timber
:
Initially,
we focused on the domestic market in Papua New Guinea, where there are a number of major suppliers to the retail market place.
As our capacity increases, we are looking to export certain timber to the nearby Australian and Asian markets where demand is
greater than supply. These markets would be principally for Rosewood and Kwila.
We
have received a number of enquiries from the United States and Canada, for exotic timbers such as Terminalia Mersawa, White Planchonella,
Red Planchonella, Walnut, Pencil Cedar, Grey Canarium, Aglaia; White Cheesewood, Pink Satinwood, Erima, and Taun. We have opened
a sales and marketing office in Houston, Texas in preparation for selling commercial quantities of these exotic timbers in the
United States and Canada. Overall, markets in the USA would be for specialist manufacturers ranging from Musical Instruments,
Cabinetmakers, Sporting Goods, Boatbuilders, Car Manufacturers, Veneer Processing.
Within
those categories, in the United States and Canadian markets, the specialized uses for these specific exotic timbers are as follows:
Terminalia:
Veneer, plywood, furniture, musical instruments (electric guitar bodies), and turned objects.
Mersawa:
The major volume of mersawa will probably be used as plywood because conversion in this
form presents considerably less difficulty than does the production of lumber.
Planchonella:
The wood is hard and durable. It is used for fence posts, fuel, and tool handles. The bark and inner wood was used to treat toothache,
sore muscles, coughs, and many other ailments by American Indians.
Walnut:
Walnut wood is warm and rich in color and finishes well. Walnut is a fine-grained hardwood
that is dense and shock resistant. It polishes to a very smooth finish, making it ideal for furniture making and carving. Walnut
burl is often made into veneer and is highly prized by cabinet makers and car manufacturers.
Pencil
Cedar: One popular use for cedar wood is in clothing storage furnishings, such as wardrobes, chests and trunks. Part of the reason
cedar is aromatic is because it bears thujaplicin, a natural antibacterial and antifungal agent.
Grey
Canarium: The timber, being part of the kedondong trade group, is used for house building,
light or temporary constructions, doors, window frames, flooring, mouldings, interior finish, boxes, crates, furniture, joinery,
prahus and canoes, veneer and plywood.
Pink
Satinwood: Uses of timber are predominantly decorative, although it is used as a flooring material and for spars and masts in
boatbuilding. Common applications include turnery, carving, interior fittings, sporting goods, furniture and cabinetwork. Coachwood
is also found as a decorative veneer.
White
Cheesewood: Plywood center veneers, mouldings, lining, treated fascia and barge boards, carving, turnery, and pattern making.
Erima:
Joinery, furniture. packing cases, coffins, matchboxes, canoes, treated shingles.
Taun:
Sawn timber in general house framing, cladding, fascia and bargeboards, internal flooring, plywood; decorative lining, paneling,
joinery, cabinetwork, outdoor furniture, carving, turnery, veneers; suitable for steam bending, boat building, handles, cooperage.
Due
to the potential for direct sales of exotic timer in the United States and Canadian markets, the Company has recently focused
its efforts into the importation of exotic timber into the United States for sale to specialty markets located in the U.S. On
July 15, 2019, the Company hired Mr. John Feeney as Chief Import Officer (“CIO”) to oversee the importation of our
exotic timber for sale to US and Canadian markets due to the increased profit margins available. Some of the specialty exotic
timer markets our CIO is cultivating include major timber buyers within the United States such as Teaknaf, Global Teak, Majacob
Corp, and Anish Company Ltd.”
Teaknaf
Contact
Details:
United
States, 715 North Jackson Street
California
United
States
Global
Teak
Contact
Details:
39,
Cliffwood Dr
Allentown
08501
United
States
Majacob
Corp
Contact
Details:
2130
Hacienda
Hacienda
Heights 91745
California
United States
Anish
Company Ltd
Contact
Details:
4995
Coventry Dr.
Columbus
43232
Ohio
United States
Marketing
and Distribution:
As
the principal material is gold, the options are to sell either to a refinery and be paid the daily spot rate, or to sell to the
jewelry wholesale market. Both of these options exist internally within PNG however the wholesale market is quite small. There
are several options when the material is exported from PNG, again it could be to any refinery within the region and that rate
again would be the daily spot rate. The wholesale market outside the country would be significant and there are many opportunities
within Australia to sell at a higher than spot rate to that market. There may also be parties that would take up the material
on a contractual basis.
Most
of our timber products will be exported to the United States from our Timber Yard at Laloki (30 minutes North East from Port Moresby
PNG). In addition, some of our timber will be sold locally, as this facility is within easy reach of trade customers and gives
quick access to our wholesale customers. In addition, it provides an opportunity for retail sales to be made direct to end consumers.
We have developed marketing and distribution strategies based upon our experience working with the Paradise Gardens customer base
over the last 12 months.
Competition
The
mining industry is acutely competitive in all of its phases. We face strong competition from other mining companies in connection
with the acquisition of exploration stage properties or properties containing gold, jade and other mineral reserves. Many of these
companies have greater financial resources, operational experience and technical capabilities than us. It is our goal to find
undervalued properties and team up with local joint venture partners to streamline our time to market and costs. In PNG in particular
we are finding a number of such properties, as the enforcement of the Mining Act has forced traditional landowners to comply with
the relevant requirements of the act. Their ability to do so is limited as they do not have the financial, or management resources
to comply.
The
logging industry is very competitive in Papua New Guinea. We believe that our policy of working with the landowners and providing
direct employment to the local villagers appears to provide us with a competitive advantage of greater acceptance of our activities
by government officials, local businesses and local Papua New Guineans.
Raw
Materials, Principal Suppliers and Customers
We
are not dependent on any principal suppliers and our raw materials are produced principally through our own mining activities.
Our principal customers for our mining activities are refineries based in PNG.
We
are not dependent on any principal suppliers and our timber materials are produced principally through our own logging activities.
Our primary market for exotic timber is in the United States. On July 15, 2019, the Company hired Mr. John Feeney to serve as
Chief Import Officer (“CIO”) working out of our Houston, Texas office. Mr. Feeney will oversee all importation and
sales efforts to specialty markets within the United States and Canada. In addition, there are number of principal customers that
we are focused on with the domestic market in PNG. We have established that customer base over the last 12 months and the Company
is now concentrating on formalizing supply agreements to those customers.
Intellectual
Property
Intellectual
property is not a large part of our current business model as we are selling non-unique materials through primarily conventional
channels. One or more brands may yet be developed if we determine branding will benefit the Company.
Government
Regulations
Our
products and services are subject to foreign, federal, state, provincial and local laws and regulations concerning business activities
in general, including the laws of Papua New Guinea and Australia. Our operations will be affected from time to time in varying
degrees by domestic and foreign political developments, foreign, federal and state laws.
Aqua
Mining
As
the 90% owner of Aqua Mining [PNG] Limited, a Papua, New Guinea company, we are required to obtain approval from the Investment
Promotion Authority of Papua New Guinea to be recognized as a foreign investor.
Environmental
Regulations :
For
a Alluvial Mining Lease, we must comply with the provisions of the Mining Act pertaining to Environmental requirements. We are
subject to applicable environmental legislation including specific site conditions attached to the mining tenements imposed by
the PNG Government Department of Environment and Conservation (“DEC”), the terms and conditions of operating licenses
issued by the PNG Mineral Resources Authority (“MRA”) and DEC, and the environment permits for water extraction and
waste discharge issued by DEC. In the fourth quarter of fiscal 2014, the PNG Parliament approved a name change for the Department
of Environment and Conservation to the Conservation Environment Protection Authority and that change has become effective.
Under
our Logging TA, we must comply with the provisions of the Forestry Act 1991 pertaining to Environmental requirements. We are subject
to applicable environmental legislation including specific site conditions attached to the Logging TA imposed by the PNG Government
Department of Environment and Conservation (“DEC”), the terms and conditions of operating licenses issued by the PNG
Forest Authority (“FA”) and DEC, and the environment permits for water extraction and waste discharge issued by DEC.
In the fourth quarter of fiscal 2014, the PNG Parliament approved a name change for the Department of Environment and Conservation
to the Conservation Environment Protection Authority and that change has become effective.
Employees
As
of February 8, 2018, the Company has 33 full time employees.
Plan
of Operations
The
Company’s current plan of operation is to continue and expand our logging operations and to refocus on mining activities
after achieving sufficient cash flow from logging and timber sales.
The
Company has spent considerable time and effort understanding and developing processes for our logging, processing and sale of
finished products. The Company is now ready to deliver to the market place approximately 150 cubic meters of processed timber
for sale to both the wholesale and retail markets. We anticipate that the average sales revenue for processed timber will be approximately
$750.00 per cubic meter.
The
primary market for our exotic timber are specialty buyers in the United States and Canada, including four large buyers, namely
Teaknaf, Global Teak, Majacob Corp, and Anish Company, Ltd., all of which are located in the United States. On July 15, 2019,
the Company’s Board of Director’s appointed Mr. John Feeney as Chief Import Officer (“CIO”). Mr. Feeney
will work out of our Houston, Texas office overseeing all of our United States based importation and sale of exotic timber to
these specialty markets.
Within
the next 4 months, the Company plans to (1) acquire and place additional processing equipment in our new Timber yard at Laloki,
and (2) acquire additional logging equipment to be deployed as required in Rigo and Kubuna. We have placed deposits on various
processing equipment, but we may need to finance the balance of the processing equipment and the additional logging machinery.
Once the additional logging and processing equipment is placed, we believe that our capacity will increase to approximately 750
cubic meters per month. Moreover, the new processing equipment will allow us to customize our products to specific customer requirements
and offer additional value added timber products, which should help the Company increase profit margins on its timber sales.
With
current operations at Rigo, we are optimistic that we can sell an average quantity of 750 cubic meters of timber per month in
2019. To support this target, we have opened our United States import and sales office, hired a Chief Import Officer in Mr. John
Feeney. This move is consistent with our plan to develop export markets for our finished timber products to avoid relying too
heavily on sales to any one region, diversify our customer base and build a more stable sales market. In addition to Rigo and
Kubuna, we are investigating additional areas in PNG for potential timber operations to support our projected volume for the next
3 years.
Once
we have sustainable excess profits from our logging activities, we plan to renew our mining exploration efforts.
Results
of Operations
Six
Months Ended March 31, 2019 Compared to Six Months Ended March 31, 2018
Revenues
During
the six months ended March 31, 2019, we recognized $85,178 in revenue. We recognized $48,063 revenue during the six months ended
March 31, 2018. The increase in revenue is attributable to the success of our timber operations and mineral exploration activities.
Net
Loss
We
had a net loss for the six months ended March 31, 2019, of $245,371 and a net profit of $108,943 for the six months ended March
31, 2018. The loss for the period ended March 31, 2019 was more than the profit which occurred during the same period in 2018.
Our general and administrative expenses did decrease by $10,326 for the period ended March 31, 2019, as compared to the period
ended March 31, 2018.
Liquidity
and Capital Resources
As
of March 31, 2019, the Company had only $2,201 cash or cash equivalents on hand. However, as of that date, we had total current
assets of $19,454 and total current liabilities of $3,429,855 resulting in a working capital deficit of $3,410,401. As of March
31, 2018, the Company had total current assets of $11,074 and total current liabilities of $3,598,439 resulting in a working capital
deficit of $3,587,365. The decrease in working capital deficit arose mainly due to decrease in loans owing to related parties,
who provided advances to the Company for working capital purposes. The Company intends to fund its exploration through the revenues
from the logging activities and the sale of its equity securities. However, there can be no assurance that the Company will be
successful doing so. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.
Factors
Affecting Future Mineral Exploration Results
We
have generated no revenues from mining exploration, since inception. As a result, we have only a limited history upon which to
evaluate our future potential performance. Our potential must be considered by evaluation of all risks and difficulties encountered
by exploration companies which have not yet established business operations and anticipated results and situations of entering
active exploration activities.
Off-Balance
Sheet Arrangements
We
had no Off-Balance Sheet arrangements during the quarter ended March 31, 2019.
For
the year ended September 30, 2018 and September 30, 2017
Revenues
The
Company had $81,042 in revenue for the year ended September 30, 2018 and $75,664 for the year ended September 30, 2017. The increase
in revenue of $5,378 is attributable to the sale of timber.
Operating
expenses
The
Company had operating expenses of $393,910 for the year ended September 30, 2018 consisting of general and administrative expenses,
as compared with operating expenses of $637,348 for the year ended September 30, 2017 consisting of general and administrative
expenses. The decrease of $243,438 was attributable to the Company focusing primarily on its Logging Operations.
Net
Loss
The
Company had a net operating profit of $45,589 for the year ended September 30, 2018 compared with a net operating loss of $956,731
for the year ended September 30, 2017. The decrease of $1,002,320 was primarily attributable to the improved revenues from the
logging operations and a decrease in derivative financing expense.
Operating
Activities
Net
cash used in operating activities was $258,716 for the year ended September 30, 2018 compared to net cash used in operating activities
of $212,883 for the year ended September 30, 2017. The increase of $45,833 was a result improved revenue from the logging operations
and an increase in expenditure.
Investing
Activities
Net
cash used in investing activities was ($3,153) for the year ended September 30, 2018 compared to ($24,726) for the year ended
September 30, 2017. This increase resulted from the acquisition of Plant and Equipment for the logging operations.
Financing
Activities
Net
cash provided by financing activities was $288,468 for the year ended September 30, 2018 compared to $315,306 for the year ended
September 30, 2017. The decrease of $26,838 was mainly due to a decrease in the cost of derivative financing.
Liquidity
and Capital Resources
As
of September 30, 2018, the Company had total current assets of $7,935 and total current liabilities of $3,167,502 resulting in
a working capital deficit of $3,159,567. As of September 30, 2017, the Company had total current assets of $31,487 and total current
liabilities of $4,012,998 resulting in a working capital deficit of $3,981,511. The decrease in working capital deficit arose
mainly due to increase in loans owing to related parties, who provided advances to the Company for working capital purposes. The
Company had cash as of September 30, 2018 of $2,155. The Company intends to fund its exploration through the revenues from the
logging activities and the sale of its equity securities. However, there can be no assurance that the Company will be successful
doing so. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans,
lines of credit or any other sources. We currently believe that the Company will need approximately $500,000 over the next 12
months to implement our desired expansion of logging activities.
Going
Concern
The
Company is in the development stage and has insufficient revenues to cover its operating costs. As of September 30, 2018, the
Company had an accumulated deficit of $13,199,727 and a working capital deficiency and insufficient cash resources to meet its
planned business objectives. These and other factors raise substantial doubt about the Company’s ability to continue as
a going concern. Management’s plan for our continued existence includes selling additional stock through private placements
and borrowing additional funds to pay overhead expenses while maintaining marketing efforts to raise our sales volume. Our future
success is dependent upon our ability to achieve profitable operations, generate cash from operating activities and obtain additional
financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common
stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial
position, results of operations and our ability to continue as a going concern.
We
have only had operating losses which raise substantial doubts about our viability to continue our business and our auditors have
issued an opinion expressing the uncertainty of our Company to continue as a going concern. If we are not able to continue operations,
investors could lose their entire investment in our Company.
Contractual
Obligations
The
Company is not party to any contractual obligations other than indicated in Notes 5 and 6.
Off
Balance Sheet Arrangements
We
have no off-balance sheet arrangements other than as described above.
We
have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties.
We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity
or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do
not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support
to us or engages in leasing, hedging or research and development services with us.
Critical
Accounting Policies
We
have identified the policies outlined below as critical to our business operations and an understanding of our results of operations.
The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment
of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no
need for management’s judgment in their application. The impact and any associated risks related to these policies on our
business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operation
where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial
statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure
of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue
and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
Income
taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions
taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position
expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities.
Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits,
that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not
threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely
of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial
statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all or some portion, of such
assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax
positions as income tax expense. Since our inception, no such interest or penalties have been incurred.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
Our
financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
In connection with the preparation of the financial statements, we are required to make assumptions and estimates about future
events that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumption
and estimate on historical experience and other factors that management believes are relevant at the time our financial statements
are prepared. On a periodic basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial
statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined
with certainty, actual results could differ from the estimates and assumptions, and such differences could be material.
Use
of Estimates
The
preparation of the unaudited condensed consolidated financial statements 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 dates of
the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ
from those estimates. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected
by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external
factors could have an effect on our estimates that could cause actual results to differ from our estimates. In the opinion of
management, the condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s
financial position and the results of its operations and cash flows for the periods presented. Such adjustments are of a normal
recurring nature.
Cash
The
Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times,
the Company’s cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation. There
were no accounts that exceeded federally insured limits at December 31, 2018 and December 31, 2017.
Accounts
Receivable
Accounts
receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability
based on past credit history with customers and their current financial condition.
Impairment
of Long-Lived Assets
The
Company’s long-lived assets (consisting primarily of the fixed assets) are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated
by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Through December 31, 2018,
the Company had not experienced impairment losses on its long-lived assets.
Fixed
Assets
Fixed
assets are stated at cost less accumulated depreciation and amortization. Routine maintenance and repairs and minor replacement
costs are charged to expense as incurred, while expenditures that extend the life of these assets are capitalized. Depreciation
and amortization are provided for in amounts sufficient to write off the cost of depreciable assets to operations over their estimated
service lives. The Company uses the straight-line method of depreciation method for both financial reporting and tax purposes.
Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation and amortization will be
removed from the accounts and the resulting profit or loss will be reflected in the statement of income. The estimated lives used
to determine depreciation and amortization are:
Software
|
|
2-3 Years
|
Office Equipment
|
|
3-7 Years
|
Furniture and fixtures
|
|
8 Years
|
Waste and Recycling Equipment
|
|
5 Years
|
Leasehold Improvements
|
|
Varies by Lease
|
Service Equipment
|
|
5 Years
|
Leases
The
Company leases an office in Houston, Texas out of which our CIO oversees the importation and sale of exotic timber to US and Canadian
markets. Mr. Feeney’s work involves considerable travel, including meeting with prospective timber buyers throughout the
United States and Canada, and the Houston office serves as a central home base from which he can receive correspondence and communications
while on the road. The Company also utilizes office space in Australia from its Director Mr. Warren Sheppard, the space is physically
located at 7 Sarah Crescent Templestowe Victoria Australia. Management has determined that this arrangement is adequate for its
current and immediate foreseeable operating needs, as the United States office serves as a sales and import office, while timber
and mining operations are overseen from our Australian office.
Deferred
Financing Policy
The
Company presents deferred financing costs in the balance sheet as a direct deduction from the related debt liability rather than
as an asset. Amortization of the costs is reported as interest expense.
Capital
Leases
Assets
under capital leases are capitalized using interest rates determined at the inception of each lease and are depreciated over either
the useful life of the asset or the lease term, as appropriate, on a straight-line basis. The present value of the related lease
payments is recorded as a debt obligation.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria
established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably
assured. This occurs when the services are completed in accordance with the contracts we have with clients. In connection with
our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and recognized
as revenue in the period the services were performed. For managed service fees, we require that payment be received on the first
day of the service month. For repairs, maintenance and construction open-top services, we bill in arrears and include those billings
in unbilled revenue on the accompanying balance sheets. Certain revenue-producing transactions are subject to taxes, such as sales
tax, assessed by governmental authorities. Sales tax is recorded as a liability until it is paid to the state agency for which
the services were collected.
Deferred
Revenue
Prepayments
from customers before the period in which service is delivered are recorded as deferred revenue.
Fair
Value Measurements
The
Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value
as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair
value measurements.
ASC
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants
on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may
be used to measure fair value:
Level
1 — quoted prices in active markets for identical assets or liabilities
Level
2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level
3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The
fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term
nature.
Income
Taxes
We
record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset
and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences
of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss
and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply
to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a
valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.
We
recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will
be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that
we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters
will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing
of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the
amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made
and could have a material impact on our financial condition and operating results.
Recent
Accounting Pronouncements
In
February 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2017-02, Leases (Topic 842). ASU 2017-02 impacts any entity that enters into a lease with some specified scope exceptions.
The new standard establishes a right-of-use (ROU) model that requires the lessee to record a ROU asset and lease liability on
the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either a finance or operating,
with classification affecting the pattern of expense recognition in the statement of operations. The guidance updates and supersedes
Topic 840, Leases. For public entities, ASU 2017-02 is effective for fiscal years, and interim periods with those years,
beginning after December 15, 2018 and early adoption is permitted. A modified retrospective transition approach is required for
leases existing at, or entered into after the beginning of the earliest comparative period presented in the financial statements,
with certain practical expedients available. The Company has not yet implemented this guidance. However, based on the Company’s
current operating lease arrangements, the Company does not expect adoption of this standard to have a material impact on its financial
statements based on current obligations.
In
August 2017, the FASB issued ASU No. 2017-15, Statement of Cash Flows (Topic 230). This standard addresses the classification
of eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2017-15 will be effective
for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted.
We are currently evaluating the impact of this new guidance on our consolidated financial statements.
In
January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). This standard simplifies
how an entity is required to test for goodwill impairment. ASU 2017-04 will be effective for annual or interim goodwill impairment
tests in fiscal years beginning after December 15, 2019, with early adoption permitted after January 1, 2017. We are currently
evaluating the impact of this new guidance on our consolidated financial statements.
Additional
Company Matters
The
Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings.
The
Company is not presently involved in any other legal proceedings material to the business or financial condition of the Company.
The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant amount
of assets not in the ordinary course of business, in the next 12 months.
DIRECTORS,
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As
of December 31, 2018, the Kibush Capital Corp. had 37 full-time employees, who were not an executive officer of the Company, and
0 part-time employees.
The
following table presents information with respect to our officers, directors and significant employees as of August 1, 2019:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Warren
Sheppard
|
|
60
|
|
President,
Chief Executive Officer and director
|
|
|
|
|
|
Vincent
Appo
|
|
50
|
|
PNG
Operations Manager; Director of Aqua Mining
|
|
|
|
|
|
John
Feeney
|
|
32
|
|
Chief
Import Officer
|
Our
directors hold office until the next annual general meeting of the stockholders or until their successors are elected and qualified.
Our officers are appointed by our board of directors and hold office until their earlier death, retirement, resignation or removal.
Biographical
Information Regarding Officers and Directors
Warren
Sheppard has served as our President, Chief Executive Officer and director since July 5, 2013. Mr. Sheppard has had an Accountancy
Practice, primarily tax based in Australia for approximately the last 30 years. In addition Mr. Sheppard also has served in an
oversight capacity as Chief Executive Officer of Q6 Pty Ltd., a software development company, from 2005 to date, and in an oversight
capacity as Chief Financial Officer of Uniware Pty Ltd., an accounting software company, from 2001 to date; Westvantage Pty Ltd.,
a software company, from 2011 to date; Xceed Pty Ltd., an internet development company, from 2001 to date; Ozisp Pty Ltd., an
internet service provider company, from 2001 to date; and Altius Mining Ltd., a gold exploration mining company from 2008 to 2011,
devoting a few hours per month to these entities, none of which compete with the Company. Mr. Sheppard has served as director
of several Australian private companies as well as serving as Trustee of the Australian Aiding Australia Trust, More Superannuation
Fund and McMahon Superannuation Fund. Mr. Sheppard’s accounting background as well as his experience serving as chief executive
officer and chief financial officer and director of various Australian private companies led to his appointment to the board of
directors.
Vincent
Appo has been mining manager of the Company since October 2013. Prior thereto, from June 2012 to November 2013, Mr. Appo was
the Mine Operations Manager/Acting General Manager for Tolukuma Gold Mines Limited in Papua, New Guinea. Mr. Appo served as Consulting
Survey Project Manager for Dempsey Australia Ltd, Papua, New Guinea from May 2011 to December 2011, and Mine Technical Services
Manager/Acting Mine General Manager for Tolukuma Gold Mines Limited from January 2011 to July 2011 and for other gold mines in
Papua, New Guinea in various positions since 2002. From 1997 to 2002, Mr. Appo was Chief Surveyor for two companies in New Guinea.
Mr. Appo also serves as director of Aqua Mining, a subsidiary of the Company.
John
Feeney was appointed Chief Import Officer (CIO) on July 15, 2019 to lead the Company’s United States based import operations.
As CIO, Mr. Feeney oversees all Company efforts to import exotic timber and locate suitable buyers for our imported timber. Mr.
Feeney is based out of US headquarters in Houston, Texas. Mr. Feeney successfully completed a Bachelor’s Degree in Business
Administration and Marketing from Nova South Eastern University in 2010. His work experience includes Asset and Property Management,
Building Construction and Maintenance Supervision. From 2011 until 2019, Mr. Feeney served as Operations Manager for First Service
Residential, where he oversaw and managed 45 employees in the areas of administration, facilities maintenance and security. Prior
to his position with First Service Residential, Mr. Feeney held various administrative and management positions with Chartwell’s
and Nova South Eastern University.
Neither
Mr. Sheppard nor Mr. Appo, nor Mr. Feeney are directors in any other U.S. reporting companies nor have they been affiliated with
any company that has filed for bankruptcy within the last ten years. The Company is not aware of any proceedings to which he or
any of his associates is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest
adverse to it or any of its subsidiaries.
Executive
Compensation
Compensation
of Officers
Option
award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the
grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely
from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our
Principal Executive Officer and other executives for the most recent two years is as follows:
Executive
Compensation
Name
and Principal Position (a)
|
|
Year
(b)
|
|
|
Salary
(US$)
(c)
|
|
|
Bonus
(US$)
(d)
|
|
|
Stock
Awards
(US$)
(e)
|
|
|
Option
Awards
(US$)
(f)
|
|
|
Non-Equity
Incentive Plan
Compensation
(US$)
(g)
|
|
|
Nonqualified
Deferred
Compensation
Earnings
(US$)
(h)
|
|
|
All
Other
Compensation
(US$)
(i)
|
|
|
Total
(US$)
(j)
|
|
Warren Sheppard
|
|
|
2018
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
250,000
|
|
President & CEO
|
|
|
2017
|
|
|
|
250,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent Appo
|
|
|
2018
|
|
|
|
55,821
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
55,821
|
|
Operations Manager & Director of
Aqua Mining
|
|
|
2017
|
|
|
|
57,457
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
57,457
|
|
(1)
|
Mr.
Sheppard was appointed president and CEO on May 20, 2013. Mr. Sheppard earned a salary
of $250,000 during the fiscal years ended September 30, 2018 and September 30, 2017.
Mr. Sheppard earned no bonuses during the fiscal year ended September 30, 2018 and earned
no bonuses during the year ended September 30, 2017. The Company did not have the ability
to pay Mr. Sheppard’s earnings in during the fiscal year so those earnings were
accrued as a liability of the Company. Mr. Sheppard’s base compensation for the
fiscal years ended September 30, 2018 and 2017 may be converted into shares, but such
shares have not been issued. Mr. Sheppard has not waived his rights to these shares.
|
(2)
|
Mr.
Appo was appointed as operations manager on January 1, 2014 and became director of Aqua Mining on May 26, 2014. Mr. Appo earned
a salary of $55,821 (156,000 PGK) during fiscal year 2018 and $57,457 (182,000 PGK) during fiscal year 2017.
|
|
|
|
Mr.
Feeney was only hired as CIO as of July 15, 2019 and, as such, has not yet earned compensation as an officer.
|
Employment
Contracts
Warren
Sheppard: At the beginning of the fiscal year ended September 30, 2014, we entered into an employment agreement, dated October
1, 2013, with Warren Sheppard to serve as our President and as a director. The initial term of the agreement is five years, which
term shall automatically be renewed for additional two-year periods, unless the Company shall notify Mr. Sheppard at least 90
days prior to the expiration of the then current term or its desire not to renew the agreement. As the President, Mr. Sheppard
receives an annual base salary of $250,000 which shall not be decreased except in connection with the reduction of the salaries
of all executives of the Company. If the Company does not have sufficient funds to pay Mr. Sheppard’s salary, he shall be
paid in common stock of the Company in an amount equal to three times the amount of unpaid base salary based on the closing price
of the Company’s stock as of the final day of the fiscal year in which such salary was earned. In addition, Mr. Sheppard
shall be entitled to a bonus in the amount of $150,000 to be payable in common stock of the Company, upon the acquisition of a
subsidiary or business valued at greater than $1,000,000. Such acquisition bonuses will be issued based upon the closing price
of the Company’s stock as of the date of the closing of such an acquisition. Mr. Sheppard receives no separate compensation
to serve as a director of the Company. In the event Mr. Sheppard employment is terminated for whatever reason, he will be entitled
to salary and benefits that have accrued prior to the date of termination. There are no provisions for severance payments upon
termination in the agreement. Mr. Sheppard is subject to a non-solicitation prohibition for two years after his termination of
employment with the Company.
Neither
Mr. Appo nor Mr. Feeney has a written employment contract at this time.
Stock
Incentive Plan
In
the future, we may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and
granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be
established, have not been decided yet. Stock options or a significant equity ownership position in us may be utilized by us in
the future to attract one or more new key senior executives to manage and facilitate our growth.
Board
of Directors
Our
board of directors currently consists of two directors. None of our directors is “independent” as defined in Rule
4200 of FINRA’s listing standards. We may appoint additional independent directors to our board of directors in the future,
particularly to serve on committees should they be established.
Committees
of the Board of Directors
We
may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board
of Directors in the future, but have not done so as of the date of this Prospectus. Until such committees are established, matters
that would otherwise be addressed by such committees will be acted upon by the Board of Directors.
Director
Compensation
We
currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and
board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act
as independent board members, on either a per meeting or fixed compensation basis.
Limitation
of Liability and Indemnification of Officers and Directors
Our
Bylaws limit the liability of directors and officers of the Company to the maximum extent permitted by Nevada law. The Bylaws
state that the Company shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party
to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or
officer is or was serving at the request of the Company as a director, officer, partner, member, manager, trustee, employee or
agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.
The
Company believes that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified
parties. The Company also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising
out of his or her actions in connection with their services to us, regardless of whether our Bylaws permit such indemnification.
The
Company may also enter into separate indemnification agreements with its directors and officers, in addition to the indemnification
provided for in our Bylaws. These agreements, among other things, may provide that we will indemnify our directors and officers
for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by a director or executive
officer in any action or proceeding arising out of such person’s services as one of our directors or officers, or rendering
services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements
are necessary to attract and retain qualified persons as directors and officers.
There
is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted,
and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
For
additional information on indemnification and limitations on liability of our directors and officers, please review the Company’s
Bylaws, which are attached to this Prospectus.
SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The
following table sets forth information regarding beneficial ownership of our Common Stock as of December 31, 2018. None of our
Officers or Directors are selling stock in this Offering.
Beneficial
ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes
voting or investment power with respect to Shares of stock. This information does not necessarily indicate beneficial ownership
for any other purpose.
Unless
otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following
table possesses sole voting and investment power over their Shares of Common Stock. Percentage of beneficial ownership before
the offering is based on 443,354,541 Shares of Common Stock outstanding as of September 10, 2019.
Name and Position
|
|
Common
Shares Beneficially Owned Prior
to Offering
|
|
|
Percent
of
Class
|
|
|
Common
Shares
Beneficially
Owned After
Offering
|
|
|
Percent
of
Class#@
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warren Sheppard
|
|
|
150,584,894
|
|
|
|
33.96
|
%
|
|
|
150,584,894
|
|
|
|
7.13
|
%
|
CEO, President, Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neither
Mr. Appo nor Mr. Feeney are shareholders in the Company.
#Presumes
all 1,666,666,666 shares of common stock being offered are sold and issued.
@ Even if all 1,666,666,666
shares of common stock being offered are sold and issued, our Officer and Director, Warren Sheppard will retain majority voting
control of the Company through his ownership of 100% of the issued and outstanding shares of preferred stock, namely 3,000,000
shares of Series A preferred stock and 15,000,000 shares of Series B preferred stock.
INTEREST
OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
RELATED
PARTY TRANSACTIONS
Convertible
Notes Issued to the President and Director of Kibush Capital Corporation:
On
March 31, 2014, the Company issued a 12.50% Convertible Promissory Note due March 31, 2015 with a principal amount of $157,500
(the “March 2014 Note”) for cash. Interest on the March 2014 Note is accrued annually effective from March 31, 2014
forward. The March 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing
bid price, determined on the then current trading market for the ten business days prior to the conversion date.
On
June 30, 2014, the Company issued a 12.50% Convertible Promissory Note due June 30, 2015 with a principal amount of $110,741 (the
“June 2014 Note”) for cash. Interest on the June 2014 Note is accrued annually effective from June 30, 2014 forward.
The June 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing
bid price, determined on the then current trading market for the ten business days prior to the conversion date.
On
September 30, 2014, the Company issued a 12.50% Convertible Promissory Note due September 30, 2015 with a principal amount of
$98,575 (the “September 2014 Note”) for cash. Interest on the September 2014 Note is accrued annually effective from
September 30, 2014 forward. The September 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent
of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion
date.
On
September 30, 2015, the Company issued a 12.50% Convertible Promissory Note due September 30, 2016 with a principal amount of
$316,046 (the “September 2015 Note”) for cash. Interest on the September 2015 Note is accrued annually effective from
September 30, 2015 forward. The September 2015 Note is unsecured. The note is convertible into common stock at a price of 50 percent
of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion
date.
On
October 1, 2016, the Company issued an 8% Promissory Note due September 30, 2017 with a principal amount of $155,300 (the “October
2016 Note”) for cash received between the period September 30, 2014 and April 28,2015. No interest was to accrue on the first
two years of the loan, interest on the October 2016 Note is to be accrued annually effective from October 1, 2016 forward. The
October 2016 Note is unsecured. Cavenagh Capital Corporation is a shareholder in Kibush Capital Corporation.
For
the year ended September 30, 2018, Mr. Sheppard had loaned the Company $899,404.
For
the quarter ended December 31, 2018, Mr. Sheppard had loaned the Company $47,022.
For
the quarter ended March 31, 2019, Mr. Sheppard had loaned the Company $72,441.
SECURITIES
BEING OFFERED
The
Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company’s Articles of Incorporation
or Bylaws, each Shareholder shall be entitled to one vote for each Share held by such Shareholder on the record date of any vote
of Shareholders of the Company. The Shares of Common Stock, when issued, will be fully paid and non-assessable. Since it is anticipated
that at least for the next 12 months the majority of the Company’s voting power will be held by Management through their
combined beneficial ownership of 150.584.594 shares of Common Stock, the holders of Common Stock issued pursuant to this Prospectus
should not expect to be able to influence any decisions by management of the Company through the voting power of such Common Stock.
The
Company does not expect to create any additional classes of Common Stock during the next 12 months, but the Company is not limited
from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available
to holders of its common stock.
The
Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared,
if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company’s
Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company,
subject to the provisions of law, the Company’s Bylaws and the Certificate of Incorporation. Before payment of any dividend,
there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute
discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining
any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.
The
minimum subscription that will be accepted from an investor is $750.00 for the purchase of Two Million Five Hundred
Thousand (2,500,000) Shares (the ‘Minimum Subscription’).
A
subscription for $750.00 or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement
(electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check, wire, credit
or debit card, or ACH. The execution and tender of the documents required, as detailed in the materials, constitutes a binding
offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the Expiration Date or
until the offer is accepted or rejected by the Company, whichever occurs first.
Once
the minimum number of shares is sold, the Company can hold its first closing and funds can be released to the Company.
The
Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company
rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company’s
acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic
notification that the subscription was accepted.
There
are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification
of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating
against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of
securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding,
voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further
calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other
than those disclosed in this Prospectus. The Company has engaged Transfer Online to serve as the transfer agent and registrant
for the Shares. For additional information regarding the Shares, please review the Company’s Bylaws, which are attached
to this Prospectus.
DISQUALIFYING
EVENTS DISCLOSURE
Recent
changes to S-1 promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities
under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer
participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20%
or more of the voting power of the issuer’s outstanding voting equity securities, any promoter connected with the issuer
in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly
or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer’s interests, any general
partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating
in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or
solicitor has been subject to certain “Disqualifying Events” described in Rule 506(d)(1) of Regulation D subsequent
to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting
an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any
Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised
reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying
Events.
It
is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder
of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute
reasonable care. If such a finding were made, the Company may lose its ability to rely upon exemptions under S-1, and, depending
on the circumstances, may be required to register the Offering of the Company’s Common Stock with the SEC and under applicable
state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.
ERISA
CONSIDERATIONS
Trustees
and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer,
as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants
(together, “ERISA Plans”), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement
Income Security Act of 1974 (“ERISA”). An investment in the Shares by an ERISA Plan must be made in accordance with
the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits
to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar
with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless
it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment
in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would
be inconsistent with any of these criteria.
Fiduciaries
of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code,
Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account,
will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from
the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary
obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations
establishing criteria for determining whether the extent of a beneficiary’s independent control over the assets in his account
is adequate to relieve the ERISA Plan’s fiduciaries of their obligations with respect to an investment directed by the beneficiary.
Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment
transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control,
and must permit him to choose among a broad range of investment alternatives.
Trustees
and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising
control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA
and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA
or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions.
The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh
Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary,
participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine
the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries,
participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any
concern as to whether the investment would be a prohibited transaction.
Regulations
issued on November 13, 1986, by the Department of Labor (the “Final Plan Assets Regulations”) provide that when an
ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed
persons) makes an investment in an equity interest of an entity that is neither a “publicly offered security” nor
a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity
in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as “plan assets”).
Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans
are exempt from being designated as holding “plan assets.” Management anticipates that we would clearly be characterized
as an “operating” for the purposes of the regulations, and that it would therefore not be deemed to be holding “plan
assets.”
Classification
of our assets of as “plan assets” could adversely affect both the plan fiduciary and management. The term “fiduciary”
is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets.
Thus, classification of our assets as plan assets could make the management a “fiduciary” of an investing plan. If
our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute
violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability
not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are
classified as “plan assets,” certain transactions that we might enter into in the ordinary course of our business
might constitute “prohibited transactions” under ERISA and the Code.
Under
Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to
IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination
of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their “current
value” as of the close of the plan’s fiscal year in order to comply with certain reporting obligations under ERISA
and the Code. For purposes of such requirements, “current value” means fair market value where available. Otherwise,
current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary,
assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect
to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports.
There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan
or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.
The
income earned by a qualified pension, profit sharing or stock bonus plan (collectively, “Qualified Plan”) and by an
individual retirement account (“IRA”) is generally exempt from taxation. However, if a Qualified Plan or IRA earns
“unrelated business taxable income” (“UBTI”), this income will be subject to tax to the extent it exceeds
$1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be
taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject
to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI
to tax exempt shareholders, because they are participating only as passive financing sources.
EXPERTS
The
audited financial statements of, Kibush Capital Corp. for the years ended September 30, 2018 and 2017 included in this
registration statement have been so included in reliance upon the report of ShineWing Australia, an independent registered public
accounting firm, appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts
in auditing and accounting.
LEGAL
MATTERS
Matheau
J. W. Stout, Esq., Baltimore, Maryland, will issue to Kibush Capital Corp. its opinion regarding the legality of the common stock
being offered hereby. Matheau J. W. Stout, Esq. has consented to the references in this prospectus to its opinion.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common
stock being offered by this prospectus. This prospectus, which constitutes part of that registration statement, does not contain
all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration
statement. Some items included in the registration statement are omitted from the prospectus in accordance with the rules and
regulations of the SEC. For further information with respect to us and the common stock offered in this prospectus, we refer you
to the registration statement and the accompanying exhibits and schedules filed therewith. Statements contained in this prospectus
regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not
necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other
document filed as an exhibit to the registration statement.
A
copy of the registration statement and the accompanying exhibits and any other document we file may be inspected without charge
at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549 and copies of all or any
part of the registration statement may be obtained from this office upon the payment of the fees prescribed by the SEC. The public
may obtain information on the operation of the public reference facilities in Washington, D.C. by calling the SEC at 1-800-SEC-0330.
Our filings with the SEC are available to the public from the SEC’s website at www.sec.gov .
Upon
effectiveness of the registration statement of which this prospectus is a part, we will be subject to the information and periodic
reporting requirements of the Exchange Act and, in accordance therewith, we will file periodic information and other information
with the SEC. All documents filed with the SEC are available for inspection and copying at the public reference room and website
of the SEC referred to above. We maintain a website at www.thedispensingsolution.com. You may access our reports and other information
free of charge at this website as soon as reasonably practicable after such material is electronically filed with, or furnished
to, the SEC. The information contained in, or that can be accessed through, our website is not incorporated by reference and is
not a part of this prospectus.
March
31, 2019
CONTENTS
CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
|
|
Quarter
ended
March 31,
|
|
|
Quarter
ended
March 31,
|
|
|
6
months ended
March 31,
|
|
|
6
months ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net revenues
|
|
$
|
34,748
|
|
|
$
|
18,084
|
|
|
$
|
85,178
|
|
|
$
|
48,063
|
|
Cost of sales
|
|
|
-42,365
|
|
|
|
-47,608
|
|
|
|
-85,095
|
|
|
|
-89,091
|
|
Gross profit
|
|
|
7,617
|
|
|
|
-29,524
|
|
|
|
83
|
|
|
|
-41,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
127,778
|
|
|
|
112,851
|
|
|
|
228,724
|
|
|
|
239,050
|
|
Total
operating expenses
|
|
|
127,778
|
|
|
|
112,851
|
|
|
|
228,724
|
|
|
|
239,050
|
|
Profit/Loss from
operations
|
|
|
-135,395
|
|
|
|
-142,375
|
|
|
|
-228,641
|
|
|
|
-280,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amortisation of
Debt Discount
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Interest expense
|
|
|
-24,793
|
|
|
|
-37,905
|
|
|
|
-50,138
|
|
|
|
-63,172
|
|
Other income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Change
in fair value of derivative liabilities
|
|
|
1,332
|
|
|
|
278,066
|
|
|
|
23,432
|
|
|
|
437,251
|
|
Total other expense,
net
|
|
|
-23,461
|
|
|
|
240,161
|
|
|
|
-26,706
|
|
|
|
374,079
|
|
Profit/Loss before
provision for income taxes
|
|
|
-158,856
|
|
|
|
97,786
|
|
|
|
-255,347
|
|
|
|
94,001
|
|
Provision for
income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net profit/loss
from operations
|
|
|
-158,856
|
|
|
|
97,786
|
|
|
|
-255,347
|
|
|
|
94,001
|
|
Less:
Loss attributable to non-controlling interest
|
|
|
6,910
|
|
|
|
7,645
|
|
|
|
9,976
|
|
|
|
14,942
|
|
Net
profit/loss attributable to Holding Company
|
|
$
|
-151,946
|
|
|
$
|
105,431
|
|
|
$
|
-245,371
|
|
|
$
|
108,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Weighted average
common shares outstanding basic and diluted
|
|
|
233,177,226
|
|
|
|
186,657,041
|
|
|
|
233,177,226
|
|
|
|
186,657,041
|
|
INTERIM
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,201
|
|
|
$
|
2,155
|
|
Trade
Debtors
|
|
|
17,253
|
|
|
|
5,781
|
|
Total
current assets
|
|
|
19,454
|
|
|
|
7,936
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
105,951
|
|
|
|
112,612
|
|
Other assets
|
|
|
52,320
|
|
|
|
50,171
|
|
Total
assets
|
|
$
|
177,725
|
|
|
$
|
170,718
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
-
|
|
|
|
-
|
|
Accrued expenses
|
|
|
778,221
|
|
|
|
611,899
|
|
Convertible notes
payable
|
|
|
91,166
|
|
|
|
91,166
|
|
Loan from related
party
|
|
|
1,857,029
|
|
|
|
1,737,566
|
|
Derivative
liabilities
|
|
|
703,439
|
|
|
|
726,871
|
|
Total
current liabilities
|
|
|
3,429,855
|
|
|
|
3,167,502
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit:
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.001 par value; 50,000,000 shares authorized; 23,000,000 shares issued and outstanding at March 31, 2019 and 23,000,000
shares issued and outstanding at September 30, 2018
|
|
|
23,000
|
|
|
|
23,000
|
|
Common stock, $0.001 par value; 975,000,000
shares authorized at March 31, 2019 and September 30, 2018; 443,354,541
|
|
|
443,355
|
|
|
|
443,355
|
|
Additional paid-in
capital
|
|
|
9,842,517
|
|
|
|
9,842,517
|
|
Accumulated
deficit
|
|
|
-13,445,097
|
|
|
|
-13,199,727
|
|
Total stockholders’
deficit, including non-controlling interest
|
|
|
-3,136,225
|
|
|
|
-2,890,855
|
|
Non-Controlling
interest
|
|
|
-115,905
|
|
|
|
-105,929
|
|
Total
stockholders’ deficit
|
|
|
-3,252,130
|
|
|
|
-2,996,784
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
177,725
|
|
|
$
|
170,718
|
|
CONSOLIDATED
STATEMENT OF CASH FLOWS
(Unaudited)
|
|
6 months
ended
March 31,
|
|
|
6 months
ended
March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
-245,371
|
|
|
$
|
108,942
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile
net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,679
|
|
|
|
8,509
|
|
Change in fair value
of derivative instruments
|
|
|
-23,432
|
|
|
|
-437,251
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Others asset
|
|
|
-
|
|
|
|
-
|
|
Accounts receivable
|
|
|
-12,282
|
|
|
|
17,281
|
|
Accrued expenses
|
|
|
125,000
|
|
|
|
62,500
|
|
Accrued interest
|
|
|
50,138
|
|
|
|
37,905
|
|
Deposits
|
|
|
-
|
|
|
|
-
|
|
Net
cash used in operating activities
|
|
|
-99,268
|
|
|
|
-202,114
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
-
|
|
|
|
-3,153
|
|
Net
cash used in investing activities
|
|
|
-
|
|
|
|
-3,153
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from related
party loans, net of debt discounts
|
|
|
117,183
|
|
|
|
213,388
|
|
Effective
of exchange rates on cash
|
|
|
-17,869
|
|
|
|
-11,253
|
|
Net
cash provided by financing activities
|
|
|
99,314
|
|
|
|
202,135
|
|
Net
change in cash
|
|
|
46
|
|
|
|
-3,132
|
|
Cash, beginning
of period
|
|
|
2,155
|
|
|
|
5,784
|
|
Cash, end of
period
|
|
$
|
2,201
|
|
|
$
|
2,652
|
|
KIBUSH
CAPITAL CORPORATION
CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ DEFICIT
for
the period SEPTEMBER 30, 2018, December 31, 2018 and March 31, 2019 (Unaudited)
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid
In
|
|
|
Non
Controlling
|
|
|
Accumulated
|
|
|
Accumulated
Other Comprehensive
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Interest
|
|
|
Deficit
|
|
|
Income
|
|
|
Deficit
|
|
Balance
at September 30, 2017
|
|
|
3,959,541
|
|
|
|
3,960
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,467,573
|
|
|
|
-74,541
|
|
|
|
-13,245,316
|
|
|
|
-
|
|
|
|
-3,825,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for repayment of convertible note
|
|
|
439,395,000
|
|
|
|
439,395
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-120,056
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
319,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Preferred stock
issued for repayment of back salary (29.11.16) adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
145,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
145,000
|
|
Write back accruals
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
350,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
350,000
|
|
Exchange rate variation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-31,388
|
|
|
|
45,589
|
|
|
|
-
|
|
|
|
14,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2018
|
|
|
443,354,541
|
|
|
|
443,355
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,842,517
|
|
|
|
-105,929
|
|
|
|
-13,199,727
|
|
|
|
-
|
|
|
|
-2,996,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate variation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
|
|
|
|
-
|
|
|
|
1
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-3,066
|
|
|
|
-93,425
|
|
|
|
-
|
|
|
|
-96,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2018
|
|
|
443,354,541
|
|
|
|
443,355
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,842,517
|
|
|
|
-108,994
|
|
|
|
-13,293,152
|
|
|
|
-
|
|
|
|
-3,093,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange rate variation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-1
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-6,910
|
|
|
|
-151,946
|
|
|
|
-
|
|
|
|
-158,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2019
|
|
|
443,354,541
|
|
|
|
443,355
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,842,517
|
|
|
|
-115,905
|
|
|
|
-13,445,097
|
|
|
|
-
|
|
|
|
-3,252,130
|
|
NOTE
1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Business
Kibush
Capital Corporation (formerly David Loren Corporation) (the “Company”) includes its 90% owned subsidiary Aqua Mining
(PNG). See Basis of Presentation below. The Company has two primary businesses: (i) mining exploration within Aqua Mining, and
(ii) timber operations in Papua New Guinea by Aqua Mining.
Basis
of Presentation
The
Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the
United States of America (“U.S. GAAP”).
The
consolidated financial statements of the Company include the accounts of the Company, and all entities in which a direct or indirect
controlling interest exists through voting rights or qualifying variable interests. All intercompany balances and transactions
have been eliminated in the consolidated financial statements.
Certain
information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted
by the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosure is adequate
to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction
with the financial statements of the Company for the year ended September 30, 2018.
Change
in Fiscal Year End
The
Company’s fiscal year end is from October 1 to September 30 of each year.
Going
Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. As at March 31, 2019, the Company
has an accumulated deficit of $13,445,097 and $13,199,727 as of September 30, 2018 and has not earned sufficient revenues to cover
operating costs since inception and has a working capital deficit. The Company intends to fund its mining exploration through
equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements
for the year.
The
ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing
to continue mining exploration and execution of its business plan. In response to these problems, management intends to raise
additional funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Functional
and Reporting Currency
The
consolidated financial statements are presented in U.S. Dollars. The Company’s functional currency is the U.S. Dollar. The
functional currency of Aqua Mining is the Papua New Guinean kina. Assets and liabilities are translated using the exchange rate
on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars
using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate
component of other comprehensive income/(loss) within stockholders’ equity.
The
functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use
of another currency. Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets
and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency
differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences
as a separate component of other comprehensive income/(loss) within stockholders’ equity.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
summary of the principal accounting policies are set out below:
Cash
The
Company maintains its cash balances in interest and non-interest bearing accounts which do not exceed Federal Deposit Insurance
Corporation limits.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of Kibush Capital and Aqua Mining. All intercompany accounts
and transactions have been eliminated.
Other
Comprehensive Income and Foreign Currency Translation
FASB
ASC 220-10-05, Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distribution to owners.
The
accompanying consolidated financial statements are presented in United States dollars.
Use
of Estimates
The
preparation of financial statements in conformity with Generally Accepted Accounting Principles in the United States of America
(“GAAP”) requires management to make certain 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. Significant estimates made by management are, recoverability of long-lived
assets, valuation and useful lives of intangible assets, valuation of derivative liabilities, and valuation of common stock, options,
warrants and deferred tax assets. Actual results could differ from those estimates.
Non-Controlling
Interests
Investments
in associated companies over which the Company has the ability to exercise significant influence are accounted for under the consolidation
method, after appropriate adjustments for intercompany profits and dividends.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It requires an acquirer to recognize, at
the acquisition date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their
full fair values as of that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required
to re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting
gain or loss in earnings. The acquisition-related transaction and restructuring costs will no longer be included as part of the
capitalized cost of the acquired entity but will be required to be accounted for separately in accordance with applicable generally
accepted accounting principles. U.S. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
A
non-controlling interest in a subsidiary is an ownership interest in a consolidated entity that is reported as equity in the consolidated
financial statements and separate from the Company’s equity. In addition, net income/(loss) attributable to non-controlling
interests is reported separately from net income attributable to the Company in the consolidated financial statements. The Company’s
consolidated statements present the full amount of assets, liabilities, income and expenses of all of our consolidated subsidiaries,
with a partially offsetting amount shown in non-controlling interests for the portion of these assets and liabilities that are
not controlled by us.
Property
and Equipment
Property
and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Plant
equipment
|
2
to 15 years
|
Motor
Vehicle
|
4
to 15 years
|
Maintenance
and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement
or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting
gains or losses are reflected in the consolidated statement of operations.
Impairment
of Long-Lived Assets
In
accordance with FASB ASC 360-10-5, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates
the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate that such carrying
values may not be recoverable. The Company uses its best judgment based on the current facts and circumstances relating to its
business when determining whether any significant impairment factors exist. The Company considers the following factors or conditions,
among others, that could indicate the need for an impairment review:
|
●
|
Significant
under performance relative to expected historical or projected future operating results;
|
|
|
|
|
●
|
Significant
changes in its strategic business objectives and utilization of the assets;
|
|
|
|
|
●
|
Significant
negative industry or economic trends, including legal factors;
|
If
the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or
more of the above indicators of impairment, the Company’s management performs an undiscounted cash flow analysis to determine
if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the asset’s
carrying amount and its fair value, and the impairment is charged to operations in the period in which the long-lived asset impairment
is determined by management.
The
carrying value of the Company’s investment in Joint Venture contract with leaseholders of certain Mining Leases in Papua
New Guinea represents its ownership, accounted for under the equity method. The ownership interest is not adjusted to fair value
on a recurring basis. Each reporting period the Company assesses the fair value of the Company’s ownership interest in Joint
Venture in accordance with FASB ASC 325-20-35. Each year the Company conducts an impairment analysis in accordance with the provisions
within FASB ASC 320-10-35 paragraphs 25 through 32.
Fair
Value of Financial Instruments
The
carrying amounts of the Company’s cash, accounts payable and accrued expenses approximate their estimated fair values due
to the short-term maturities of those financial instruments. The Company believes the carrying amount of its notes payable approximates
its fair value based on rates and other terms currently available to the Company for similar debt instruments
Beneficial
Conversion Features of Debentures
In
accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the
debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public
on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at
the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures and related accruing
interest is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized
over the remaining outstanding period of related debt using the interest method.
Derivative
Financial Instruments
We
apply the provisions of FASB ASC 815-10, Derivatives and Hedging (“ASC 815-10”). Derivatives within the scope
of ASC 815-10 must be recorded on the balance sheet at fair value. During the year ended September 30, 2014, the Company issued
convertible debt and recorded derivative liabilities related to a reset provision associated with the embedded conversion feature
of the convertible debt. The Company computed the fair value of these derivative liabilities on the grant date and various measurement
dates using the Black-Scholes pricing model. Due to the reset provisions within the embedded conversion feature, the Company determined
that the Black-Scholes pricing model was the most appropriate for valuing these instruments.
In
applying the Black-Scholes valuation model, the Company used the following assumptions during the period ended March 31, 2019:
|
|
For the period
ended
|
|
|
|
March
31, 2019
|
|
Annual dividend yield
|
|
|
-
|
|
Expected life (years)
|
|
|
0.50
– 1.00
|
|
Risk-free interest rate
|
|
|
1.7
|
%
|
Expected volatility
|
|
|
22
|
%
|
The
inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy
level is based upon the lowest level of input that is significant to the fair value measurement.
The
Company determines the fair value of its derivative instruments using a three-level hierarchy for fair value measurements which
these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs
reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.
This hierarchy requires the use of observable market data when available. These two types of inputs have created the following
fair-value hierarchy:
Level
1 — Valuation based on unadjusted quoted market prices in active markets for identical securities. Currently, the Company
does not have any items as Level 1.
Level
2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the
measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.
Currently, the Company does not have any items classified as Level 2.
Level
3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve
management judgment. The Company used the Black-Scholes option pricing models to determine the fair value of the instruments.
The
following table presents the Company’s embedded conversion features of its convertible debt measured at fair value on a
recurring basis as of March 31, 2019, and as of September 30, 2018:
|
|
Carry
Value at
|
|
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
Embedded
conversion features - notes
|
|
$
|
703,439
|
|
|
$
|
726,871
|
|
Total derivative
liability
|
|
$
|
703,439
|
|
|
$
|
726,871
|
|
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
Change
in fair value included in other income (expense), net
|
|
|
23,432
|
|
|
|
606,150
|
|
The
following table provides a reconciliation of the beginning and ending balances for the Company’s derivative liabilities
measured at fair value using Level 3 inputs:
|
|
For
the period ended
|
|
|
For
the year ended
|
|
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
Embedded Conversion Features - Notes:
|
|
|
|
|
|
|
|
|
Balance at beginning of
year
|
|
$
|
726,871
|
|
|
$
|
1,333,021
|
|
Change in derivative liabilities
|
|
|
-46,864
|
|
|
|
-1,212,300
|
|
Net change in
fair value included in net loss
|
|
|
23,432
|
|
|
|
606,150
|
|
Ending balance
|
|
$
|
703,439
|
|
|
$
|
726,871
|
|
The
Company re-measures the fair values of all its derivative liabilities as of each period end and records the net aggregate gain/loss
due to the change in the fair value of the derivative liabilities as a component of other expense, net in the accompanying consolidated
statement of operations. During the years ended September 30, 2018 and the 6 months ended March 31, 2019, the Company recorded
a net increase (decrease) to the fair value of derivative liabilities balance of $ 606,150 and $23,432, respectively.
Loss
per Share
The
Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings
(loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common
shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no
common share equivalents are included because their effect would be anti-dilutive.
Income
Taxes
Income
taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities
are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered
or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or
all of the deferred tax assets will not be realized.
Mineral
Property, Mineral Rights (Claims) Payments and Exploration Costs
Pursuant
to EITF 04-02, “Whether Mineral Rights are Tangible or Intangible Assets and Related Issues”, the Company has an accounting
policy to capitalize the direct costs to acquire or lease mineral properties and mineral rights as tangible assets. The direct
costs include the costs of signature (lease) bonuses, options to purchase or lease properties, and brokers’ and legal fees.
If the acquired mineral rights relate to unproven properties, the Company does not amortize the capitalized mineral costs, but
evaluates the capitalized mineral costs periodically for impairment. The Company expenses all costs related to the exploration
of mineral claims in which it had secured exploration rights prior to establishment of proven and probable reserves.
Accounting
Treatment of Mining Interests
At
this time, the Company does not directly own or directly lease mining properties. However, the Company does have contractual rights
and governmental permits which allow the Company to conduct mining exploration on the properties referenced in this report. These
contractual relationships, coupled with the government permits issued to the Company (or a subsidiary), are substantially similar
in nature to a mining lease. Therefore, we have treated these contracts as lease agreements from an accounting prospective.
Research
and Development
Research
and development costs are recognized as an expense in the period in which they are incurred. The Company incurred no research
and development costs for the quarter ended March 31, 2019.
Recent
Accounting Pronouncements
In
October 2018, FASB issued Accounting Standards Update 2018-16, Derivaties and Hedging (Topic 805): Inclusion of the Secured Overnight
Financing Rate (SOFR) Overight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU amends
ASC 815 to add the OIS rate based on the SOFR as a fifth US benchmark interest rate. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements.
In
October 2018, FASB issued Accounting Standards Update 2018-17: Consolidation (Topic 810): Targeted Improvements to Related Party
Guidance for Variable Interest Entities. This standard expands the application of a specific private company accounting alternative
related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. We do not expect
the adoption of this ASU to have a material effect on our consolidated financial statements.
In
November 2018, FASB issued Accounting Standards Update 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction
between Topic 808 and Topic 606. The ASU amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between
collaborative arrangement participants. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements.
In
November 2018, FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit
Losses. The ASU changes the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2021, including interim
periods within those fiscal years. Thus, the effective date for such entities’ annual financial statements is now aligned
with that for these interim financial statements. We are currently evaluating the impact that the standard will have on our consolidated
financial statements and related disclosures.
In
December 2018, FASB issued Accounting Standards Update 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. The
amendments are designed to make lessors adoption of the new leases standard easier such as accounting policy election on sales
tax, exclude variable payments for all lessor costs, and clarification on lessor costs. We are currently evaluating the impact
that the standard will have on our consolidated financial statements and related disclosures.
Other
accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption
until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
NOTE
3 – INVESTMENTS IN SUBSIDIARIES
The
Company owns interests in the following entities which was recorded at their book value since they were related party common control
acquisitions.
|
|
Investment
|
|
|
Ownership
%
|
|
|
|
|
|
|
|
|
Aqua Mining (PNG)
|
|
|
34
|
|
|
|
90
|
%
|
As
Aqua Mining (PNG) Ltd was acquired from a related entity, Five Arrows Limited (see Note 10 – Business Combinations), the
shares were recorded in the accounts at their true cost value.
NOTE
4 – PROPERTY AND EQUIPMENT
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Plant Equipment
|
|
|
65,869
|
|
|
|
65,869
|
|
Motor Vehicle
|
|
|
111,585
|
|
|
|
111,585
|
|
|
|
|
177,454
|
|
|
|
177,454
|
|
Less accumulated
depreciation
|
|
|
-71,503
|
|
|
|
-64,842
|
|
|
|
$
|
105,951
|
|
|
$
|
112,612
|
|
Depreciation
expense was approximately $16,618 for the year ended September 30, 2018 and $6,678 for the 6 months ended March 31, 2019.
NOTE
5 – CONVERTIBLE NOTES PAYABLE
|
|
March
31, 2019
|
|
|
|
Note
face amount
|
|
|
Debt
Discount
|
|
|
Net
Amount of Note
|
|
2011
Note
|
|
$
|
22,166
|
|
|
$
|
-
|
|
|
$
|
22,166
|
|
2012
Note
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
2013
Note
|
|
|
12,000
|
|
|
|
-
|
|
|
|
12,000
|
|
2014
Note
|
|
|
9,000
|
|
|
|
-
|
|
|
|
9,000
|
|
2016
Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2017
Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
91,166
|
|
|
$
|
-
|
|
|
$
|
91,166
|
|
|
|
September
30, 2018
|
|
|
|
Note
face amount
|
|
|
Debt
Discount
|
|
|
Net
Amount of Note
|
|
2011
Note
|
|
$
|
22,166
|
|
|
$
|
-
|
|
|
$
|
22,166
|
|
2012
Note
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
2013
Note
|
|
|
12,000
|
|
|
|
-
|
|
|
|
12,000
|
|
2014
Note
|
|
|
9,000
|
|
|
|
-
|
|
|
|
9,000
|
|
2016
Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2017
Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
91,166
|
|
|
$
|
-
|
|
|
$
|
91,166
|
|
2011
Note
On
May 1, 2011, the Company issued a 2.00% Convertible Note due April 30, 2012 with a principal amount of $32,000 (the “2011
Note”) for cash. Interest on the 2011 Note is accrued annually effective from May 1, 2011 forward. The 2011 Note is unsecured
and repayable on demand. The 2011 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $22,166.
2012
Note
On
January 2, 2012, the Company issued a 2.00% Convertible Note due January 1, 2013 with a principal amount of $48,000 (the “2012
Note”) for cash. Interest on the 2012 Note is accrued annually effective from January 2, 2012 forward. The 2012 Note is
unsecured and repayable on demand. The 2012 Note is senior in right to all existing and future indebtedness which is subordinated
by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part
into Common Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $48,000.
2013
Note
On
January 3, 2013, the Company issued a 2.00% Convertible Note due January 2, 2014 with a principal amount of $12,000 (the “2013
Note”) for cash. Interest on the 2013 Note is accrued annually effective from January 3, 2013 forward. The 2013 Note is
unsecured and repayable on demand. The 2013 Note is senior in right to all existing and future indebtedness which is subordinated
by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part
into Common Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $12,000.
2014
Note
On
August 25, 2014, the Company issued two 12.00% Convertible Promissory Note due February 25, 2015 with a principal amount of $50,000
each (the “2014 Note”) for cash. Interest on the 2014 Note is accrued annually effective from August 25, 2014 forward.
The 2014 Note is unsecured.
The
notes are convertible at a conversion price the lesser of (a) $0.25 per share, or (b) the price per share as reported on the Over-the-Counter
Bulletin Board on the conversion date. The Note Holders also received Warrants to purchase an aggregate of 800,000 shares of our
common stock at an initial exercise price of $0.25 per share. Each of the Warrants has a term of five (5) years.
The
embedded conversion feature of the 2014 Notes and Warrants were recorded as derivative liabilities in accordance with relevant
accounting guidance due to the variable conversion price of the 2014 Notes. The fair value on the grant date of the embedded conversion
feature of the convertible debt was $145,362 as computed using the Black-Scholes option pricing model.
The
Company established a debt discount of $100,000, representing the value of the embedded conversion feature inherent in the convertible
debt and warrant, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using
the straight-line method over the terms of the debt, which approximates the effective-interest method. For the year ended September
30, 2014, the Company recorded amortization of the debt discount of $19,566. The balance of the debt discount was $80,434 at September
30, 2014. For the quarter ended March 31, 2019, the Company recorded amortization of the debt discount of $0. The balance of the
debt discount was $0 at March 31, 2019. The face amount of the outstanding note as of March 31, 2019, is $9,000.
2016
Notes
On
January 5, 2016, the Company issued a $47,615 Convertible Promissory Note to the McGee Law Firm for services rendered. The Note
was due on October 31, 2016 and carried interest at 12.0% per annum. On or after May 1, 2016, at the option of the holder, the
then outstanding amount of the Note was convertible into common stock of the Company at a conversion price equal to the lesser
of $0.01 per share or 50% of the three lowest closing prices average for the 10 business days prior to the conversion date.
On
August 11, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction with
an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due August 11, 2017 with a principal
amount of $30,000. Interest on the 2016 Note is accrued annually effective from September 1, 2016 forward. This Note was unsecured
and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001. The face amount of the outstanding note as of March 31, 2019, is $0.
On
September 13, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction
with an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due September 13, 2017 with a principal
amount of $15,836.32. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured
and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0.
On
August 23, 2016, the Company issued a 9.00% Convertible Promissory Note due August 23, 2017 with a principal amount of $25,000
for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and
repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms
and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock
at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0.
On
September 17, 2016, the Company issued a 9.00% Convertible Promissory Note due September 17, 2017 with a principal amount of $25,000
for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and
repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms
and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock
at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0. As of March 31, 2019,
the note has been discounted by $0.
2017
Notes
On
October 28, 2016, the Company restructured a portion a Convertible Promissory Note issued on August 25, 2014 in conjunction with
an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due October 28, 2017 with a principal
amount of $35,000. Interest on the 2016 Note is accrued annually effective from November 1, 2016 forward. The 2017 Note is unsecured
and repayable on demand. The 2017 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of March 31, 2019, is $0. As of March 31, 2019,
the note has been discounted by $0.
NOTE
6 – LOAN FROM RELATED PARTY
Convertible
Notes Issued to the President and Director of Kibush Capital Corporation:
|
|
March
31, 2019
|
|
|
|
Note
face
|
|
|
Debt
|
|
|
Net
Amount
|
|
|
|
|
amount
|
|
|
|
Discount
|
|
|
|
of
note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
from related party
|
|
$
|
1,857,029
|
|
|
$
|
0
|
|
|
$
|
1,857,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,857,029
|
|
|
$
|
0
|
|
|
$
|
1,857,029
|
|
|
|
September
30, 2018
|
|
|
|
Note
face
|
|
|
Debt
|
|
|
Net
Amount
|
|
|
|
amount
|
|
|
Discount
|
|
|
of
note
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
from related party
|
|
$
|
1,737,566
|
|
|
$
|
0
|
|
|
$
|
1,737,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,737,566
|
|
|
$
|
0
|
|
|
$
|
1,737,566
|
|
On
March 31, 2014, the Company issued a 12.50% Convertible Promissory Note due March 31, 2015 with a principal amount of $157,500
(the “March 2014 Note”) for cash. Interest on the March 2014 Note is accrued annually effective from March 31, 2014
forward. The March 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing
bid price, determined on the then current trading market for the ten business days prior to the conversion date.
On
June 30, 2014, the Company issued a 12.50% Convertible Promissory Note due June 30, 2015 with a principal amount of $110,741 (the
“June 2014 Note”) for cash. Interest on the June 2014 Note is accrued annually effective from June 30, 2014 forward.
The June 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing bid
price, determined on the then current trading market for the ten business days prior to the conversion date.
On
September 30, 2014, the Company issued a 12.50% Convertible Promissory Note due September 30, 2015 with a principal amount of
$98,575 (the “September 2014 Note”) for cash. Interest on the September 2014 Note is accrued annually effective from
September 30, 2014 forward. The September 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent
of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion
date.
On
October 1, 2016, the Company issued an 8% Promissory Note due September 30, 2017 with a principal amount of $155,300 (the “October
2016 Note”) for cash received between the period September 30, 2014 and April 28,2015. No interest was to accrue on the
first two years of the loan, interest on the October 2016 Note is to be accrued annually effective from October 1, 2016 forward.
The October 2016 Note is unsecured. Cavenagh Capital Corporation is a shareholder in Kibush Capital Corporation.
NOTE
7 – STOCKHOLDER’S DEFICIT
Common
Stock
On
August 22, 2013, the Company’s Board authorized a 225:1 reverse stock split. All share and per share data in the accompanying
financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.
On
October 12, 2013, the Company issued by director’s resolution, 10,000,000 shares of newly issued common stock for the purchase
of a Memorandum of Understanding (dated September 2, 2013) from a related company (Five Arrows Limited); which gave Kibush Capital
Corporation the right to acquire 80% ownership in Instacash Pty Ltd, an Australian Currency Services provider, and corporate trustee
of the Instacash Trust. As this transaction was with a related party, the value was recorded at the par value of the stock i.e.
$0.001 per share of common stock.
Between
October 23, 2013 and September 30, 2014, the Company issued a total of 3,274,000 shares of common stock upon the requests from
convertible note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
On
February 28, 2014, the Company issued by director’s resolution, 40,000,000 shares of newly issued common stock to conclude
a Assignment and Bill of Sale (dated February 14, 2014) from a related company (Five Arrows Limited); which gave Kibush Capital
Corporation the right to enter into a Joint Venture contract with the leaseholders of certain Mining Leases in Papua New Guinea.
As this transaction was with a related party, the value was recorded at par value of the stock i.e. $0.001 per share of common
stock.
Between
November 1, 2014 and March 31, 2015, the Company issued a total of 4,560,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth in the loans.
The conversion rate was $0.001.
Between
April 1, 2016 and September 30, 2016, the Company issued a total of 190,114,175 shares of common stock upon the requests from
convertible note holders to convert principal totaling $190,114 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
Between
October 1, 2016 and December 31, 2016, the Company issued a total of 208,879,614 shares of common stock upon the requests from
convertible note holders to convert principal totaling $208,880 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
Between
January 1, 2017 and March 31, 2017, the Company issued a total of 9,375,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $9,375 into the Company’s common stock based on the terms set forth in the loans.
The conversion rate was $0.001.
Between
April 1, 2017 and June 30, 2017, the Company issued a total of 405,000,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $405,000 into the Company’s common stock based on the terms set forth in the
loans. The conversion rate was $0.001.
On
August 23, 2017, the Company’s Board authorized a 1:25 reverse stock split. All share and per share data in the accompanying
financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.
Between
October 1, 2017 and December 31, 2017, the Company issued a total of 180,395,000 shares of common stock upon the requests from
convertible note holders to convert principal totaling $180,395 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
Between
January 1, 2018 and March 31, 2018, the Company issued a total of 139,000,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $139,000 into the Company’s common stock based on the terms set forth in the
loans. The conversion rate was $0.001.
Between
April 1, 2018 and June 30, 2018, the Company issued a total of 120,000,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $120,000 into the Company’s common stock based on the terms set forth in the
loans. The conversion rate was $0.001.
Preferred
Stock
Preferred
stock includes 50,000,000 shares authorized at $0.001 par value, of which 10,000,000 have been designated Series A and 5,000,000
designated as Series B. A total of 3,000,000 shares of Series A preferred stock are issued and outstanding as of March 31,
2019, and September 30, 2018. A total of 20,000,000 shares of Series B preferred stock were outstanding as of March 31, 2019.
NOTE
8 – INCOME TAXES
The
provision/(benefit) for income taxes for the 6 months ended March 31, 2019 and the year ended September 30, 2018 was as follows
(assuming a 15% effective tax rate).
|
|
|
6
months ended
March
31,
|
|
|
|
September
30,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
Current
Tax Provision
|
|
|
|
|
|
|
|
|
Federal-Taxable
Income
|
|
|
-
|
|
|
|
-
|
|
Total
current tax provisions
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred
Tax Provision
|
|
|
|
|
|
|
|
|
Federal- Loss
carry forwards
|
|
$
|
-
|
|
|
$
|
6,838
|
|
Change
in valuation allowance
|
|
$
|
-
|
|
|
$
|
6,838
|
|
Total
deferred tax provisions
|
|
$
|
-
|
|
|
$
|
-
|
|
As
of September 30, 2018, the Company had approximately $13,199,727 in tax loss carry forwards that can be utilized future periods
to reduce taxable income, and the carry forward incurred for the year ended September 30, 2018 will expire by the year 2035.
As
of March 31, 2019, the Company had approximately $13,445,097 in tax loss carry forwards that can be utilized future periods to
reduce taxable income, and the carry forward incurred for the year ended September 30, 2019 will expire by the year 2036.
The
Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized
tax benefits.
The
federal income tax returns of the Corporation are subject to examination by the IRS, generally for three years after they are
filed.
NOTE
9 – RELATED PARTY TRANSACTIONS
Details
of transactions between the Corporation and related parties are disclosed below.
The
following transactions were carried out with related parties:
|
|
March
31, 2019
|
|
|
September
30, 2018
|
|
|
|
|
|
|
|
|
Loan
from related party
|
|
$
|
1,857,029
|
|
|
$
|
1,737,566
|
|
Convertible
Loans (B)
|
|
$
|
91,166
|
|
|
$
|
91,166
|
|
Total
|
|
$
|
1,948,195
|
|
|
$
|
1,828,732
|
|
(a)
From time to time, the president and stockholder of the Company provides advances to the Company for its working capital purposes.
These advances bear no interest and are due on demand.
(b)
See Note 6 for details of Convertible notes.
NOTE
10 – BUSINESS COMBINATIONS
Set
out below are the controlled and non-controlled members of the group as of March 31, 2019, which, in the opinion of the directors,
are material to the group. The subsidiaries as listed below have share capital consisting solely of ordinary shares, which are
held directly by the Company; the country of incorporation is also their principal place of business.
Name
of Entity
|
|
Country
of
Incorporation
|
|
Acquisition
Date
|
|
Voting
Equity
Interests
|
|
|
|
|
|
|
|
|
|
|
Aqua
Mining (PNG) Ltd
|
|
Papua
New Guinea
|
|
28-Feb-2014
|
|
|
90
|
%
|
NOTE
11 – LEGAL PROCEEDINGS
We
are not presently a party to any litigation.
NOTE
12 - CONTINGENT LIABILITIES
None.
NOTE
13 – SUBSEQUENT EVENTS
None.
NOTE
14 – INVENTORY
Inventories
are valued at cost. Cost is determined using the first-in, first-out method. The cost of finished goods and work-in-progress comprises
raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes
borrowing costs. There are three types of inventory in three stages of completion. Raw materials comprise of logs that are on
the ground and at the log pond; Work-in-progress comprise of rough sawn timber at the Rigo site whilst Finished goods are planed,
straightened timber at Laloki for sale. Each would have a different wholesale value depending on the level of processing.
Management
is unable to verify the stocktake and valuation at year end. Accordingly, for the year ended September 30, 2018, and for the 6
months ended March 31, 2019 we written down the amounts to zero to accommodate that situation.
September 30, 2018
CONTENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of Kibush Capital Corporation
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheet of Kibush Capital Corporation and its subsidiaries (the “Company”)
as of September 30, 2018, and the related consolidated statements of operations, stockholders’ equity and cash flows for
the year then ended, and the related notes and schedules (collectively referred to as the “financial statements”).
In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September
30, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
Going
concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1 to the financial statements, the Company reported a net profit of $45,589, net current assets deficiency with its current
liabilities exceeding its current assets by $3,159,567, accumulated deficit of $13,199,727 as of September 30, 2018 from recurring
net losses and significant short term debt maturing in less than one year. All these factors raise substantial doubt about its
ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1 to the
financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
ShineWing Australia
Chartered Accountants
We have served as the Company’s auditor since 2017.
Melbourne, Australia
February 4, 2019
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Shareholders of Kibush Capital Corporation
We
have audited the accompanying consolidated balance sheet of Kibush Capital Corporation (the “Company”) as of September
30, 2017, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity
and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audit.
The
financial statements of Kibush Capital Corporation as of September 30, 2016, were audited by other auditors whose report dated
February 7, 2017, on those statements included an explanatory paragraph that described factors raising substantial doubt about
its ability to continue as a going concern as discussed in Note 1 to the accounts.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement. We were not engaged to examine management’s assertion about the effectiveness of the Company’s
internal control over financial reporting as of September 30, 2017 and 2016. Our audit included consideration of internal control
over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly,
we do not express an opinion thereon. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of September 30, 2017, and the consolidated results of their operations
and their cash flows for the years then ended, in conformity with the accounting principles generally accepted in the United States
of America.
The
accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and
negative cash flows from operations the past two years. These factors raise substantial doubt about its ability to continue as
a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
ShineWing Australia
Chartered Accountants
Melbourne, February 14, 2018
KIBUSH
CAPITAL CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
For
the years ended September 30,
|
|
2018
|
|
|
2017
|
|
Net revenues
|
|
$
|
81,042
|
|
|
$
|
75,664
|
|
Cost of sales
|
|
|
(163,001
|
)
|
|
|
(104,219
|
)
|
Gross profit
|
|
|
(81,959
|
)
|
|
|
(28,555
|
)
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
-
|
|
|
|
-
|
|
General and administrative
|
|
|
393,910
|
|
|
|
637,348
|
|
Total operating expenses
|
|
|
393,910
|
|
|
|
637,348
|
|
Loss from operations
|
|
|
(475,869
|
)
|
|
|
(665,903
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
-
|
|
|
|
-
|
|
Interest expense
|
|
|
(116,080
|
)
|
|
|
(189,998
|
)
|
Other income
|
|
|
-
|
|
|
|
134,005
|
|
Change in fair value of derivative liabilities
|
|
|
606,150
|
|
|
|
(260,737
|
)
|
Total other expense, net
|
|
|
490,070
|
|
|
|
(316,730
|
)
|
Loss before provision for income taxes
|
|
|
14,201
|
|
|
|
(982,633
|
)
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
Net loss from Operations
|
|
$
|
14,201
|
|
|
$
|
(982,663
|
)
|
Less: Loss attributable to non-controlling interest
|
|
|
31,388
|
|
|
|
25,903
|
|
Gain/Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
Less Net loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
Net loss attributable to Holding Company
|
|
|
45,589
|
|
|
|
(956,730
|
)
|
|
|
|
|
|
|
|
|
|
Operating Basic and diluted loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
Discontinued Operating basic and diluted loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Weighted average common shares outstanding basic and diluted
|
|
|
233,177,226
|
|
|
|
148,736,452
|
|
“See
notes to financial statements”
KIBUSH
CAPITAL CORPORATION
CONSOLIDATED
BALANCE SHEET
September
30,
|
|
2018
|
|
|
2017
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,155
|
|
|
$
|
5,784
|
|
Cash in Transit
|
|
|
-
|
|
|
|
-
|
|
Trade Debtors
|
|
|
5,780
|
|
|
|
25,703
|
|
Inventory – Raw Materials
|
|
|
-
|
|
|
|
-
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
-
|
|
TOTAL CURRENT ASSETS
|
|
$
|
7,935
|
|
|
$
|
31,487
|
|
Property and equipment, net
|
|
|
112,612
|
|
|
|
122,155
|
|
Investment in unconsolidated Joint Venture/Mining Rights
|
|
|
-
|
|
|
|
-
|
|
OTHER ASSETS
|
|
|
50,171
|
|
|
|
34,031
|
|
TOTAL CURRENT ASSETS AND TOTAL ASSETS
|
|
|
170,718
|
|
|
|
187,673
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY):
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
|
-
|
|
|
|
-
|
|
Accrued Expenses
|
|
|
611,899
|
|
|
|
1,134,446
|
|
Promissory Notes Payable
|
|
|
-
|
|
|
|
-
|
|
Convertible notes payable
|
|
|
91,166
|
|
|
|
128,466
|
|
Loans from Related Parties
|
|
|
1,737,566
|
|
|
|
1,417,065
|
|
Derivative Liabilities
|
|
|
726,871
|
|
|
|
1,333,021
|
|
TOTAL CURRENT LIABILITIES
|
|
$
|
3,167,502
|
|
|
|
4,012,998
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 50,000,000 shares authorized; Series A 3,000,000 shares issued and outstanding at September 30, 2018 and 2017, respectively
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
Preferred stock, $0.001 par value; 50,000,000 shares authorized; Series B 20,000,000 shares issued and outstanding at September 30, 2018 and 2017,
respectively
|
|
|
20,000
|
|
|
|
20,000
|
|
Common stock, $0.001 par value; 439,395,000 shares authorized at September 30, 2018 and $0.001 par value; 975,000,000 shares authorized at September 30, 2017, respectively; 443,354,541 and 3,959,541 shares issued and outstanding at September 30, 2018 and 2017, respectively
|
|
|
443,355
|
|
|
|
3,960
|
|
Additional paid-in capital
|
|
|
9,842,517
|
|
|
|
9,467,573
|
|
Accumulated Operating deficit
|
|
|
(13,199,727
|
)
|
|
|
(13,245,316
|
)
|
Total stockholders’ deficit
|
|
$
|
(2,890,855
|
)
|
|
$
|
(3,750,784
|
)
|
Non-Controlling interest
|
|
$
|
(105,929
|
)
|
|
$
|
(74,541
|
)
|
Total stockholders’ deficit, including non-controlling interest
|
|
|
(2,996,784
|
)
|
|
|
(3,825,324
|
)
|
Total liabilities and stockholders’ deficit
|
|
|
170,718
|
|
|
|
187,673
|
|
“See
notes to financial statements”
KIBUSH
CAPITAL CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For
the years ended September 30,
|
|
2018
|
|
|
2017
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
45,589
|
|
|
$
|
(956,731
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
16,618
|
|
|
|
20,425
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
62,200
|
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
Gain/Loss from discontinued operations
|
|
|
-
|
|
|
|
-
|
|
Change in fair value of derivative instruments
|
|
|
(606,150
|
)
|
|
|
260,737
|
|
Stock based payments
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
|
|
|
|
|
Others asset
|
|
|
-
|
|
|
|
-
|
|
Inventory Raw Materials
|
|
|
-
|
|
|
|
-
|
|
Accounts receivable
|
|
|
19,922
|
|
|
|
(25,703
|
)
|
Accounts payable
|
|
|
-
|
|
|
|
-
|
|
Accrued expenses
|
|
|
149,225
|
|
|
|
321,775
|
|
Accrued interest
|
|
|
116,080
|
|
|
|
104,414
|
|
Deposits
|
|
|
-
|
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(258,716
|
)
|
|
|
(212,883
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
Goodwill on Consolidation
|
|
|
-
|
|
|
|
-
|
|
Paradise Gardens
|
|
|
-
|
|
|
|
(1,812
|
)
|
Purchase of property and equipment
|
|
|
(3,153
|
)
|
|
|
(22,914
|
)
|
Net cash used in investing activities
|
|
|
(3,153
|
)
|
|
|
(24,276
|
)
|
Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of convertible debt, net of debt discounts
|
|
|
-
|
|
|
|
-
|
|
Repayment of loan from related party
|
|
|
-
|
|
|
|
-
|
|
Proceeds from related party loans, net of debt discounts
|
|
|
288,468
|
|
|
|
315,306
|
|
Net cash provided by financing activities
|
|
|
288,468
|
|
|
|
315,306
|
|
Effective of exchange rates on cash
|
|
|
(30,228
|
)
|
|
|
(72,135
|
)
|
Net change in cash
|
|
|
(3,629
|
)
|
|
|
5,563
|
|
Cash, beginning of year
|
|
|
5,784
|
|
|
|
221
|
|
Cash, end of year
|
|
$
|
2,155
|
|
|
$
|
5,784
|
|
“See
notes to financial statements”
KIBUSH
CAPITAL CORPORATION
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)
For
the years ended September 30, 2018 and 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Non
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Preferred
Stock
|
|
|
Paid-in
|
|
|
Controlling
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Interest
|
|
|
Deficit
|
|
|
Income
|
|
|
Deficit
|
|
Balance
at September 30, 2016
|
|
|
267,513,362
|
|
|
|
267,513
|
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
9,136,631
|
|
|
|
-48,367
|
|
|
|
-12,288,586
|
|
|
|
-
|
|
|
|
-2,930,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for repayment of convertible note
|
|
|
623,254,614
|
|
|
|
623,255
|
|
|
|
|
|
|
|
|
|
|
|
-555,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preference Share B issued
for Consideration at $0.001 per share
|
|
|
|
|
|
|
|
|
|
|
20,000,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
Common stock 1:25 split
|
|
|
(886,808,435
|
)
|
|
|
(886,808
|
)
|
|
|
|
|
|
|
|
|
|
|
886,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Exchange rate variation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-1
|
|
Net
Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-25,903
|
|
|
|
-956,730
|
|
|
|
|
|
|
|
-982,633
|
|
Balance at September
30, 2017
|
|
|
3,959,541
|
|
|
|
3,960
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,467,573
|
|
|
|
-74,541
|
|
|
|
-13,245,316
|
|
|
|
-
|
|
|
|
-3,825,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
for repayment of convertible note
|
|
|
439,395,000
|
|
|
|
439,395
|
|
|
|
|
|
|
|
|
|
|
|
-120,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
319,339
|
|
Class B Preferred stock
issued for repayment of back salary (29.11.16) adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,000
|
|
Write back accruals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
Exchange rate variation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-31,388
|
|
|
|
45,589
|
|
|
|
|
|
|
|
14,201
|
|
Balance at September
30, 2018
|
|
|
443,354,541
|
|
|
|
443,355
|
|
|
|
23,000,000
|
|
|
|
23,000
|
|
|
|
9,842,517
|
|
|
|
-105,929
|
|
|
|
-13,199,727
|
|
|
|
-
|
|
|
|
-2,996,784
|
|
“See
notes to financial statements”
KIBUSH
CAPITAL CORPORATION
NOTES
TO FINANCIAL STATEMENTS
NOTE
1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Business
Kibush
Capital Corporation (formerly David Loren Corporation) (the “Company”) includes its 90% owned subsidiary Aqua Mining
(PNG). See Basis of Presentation below. The Company has two primary businesses: (i) mining exploration within Aqua Mining, and
(ii) timber operations in Papua New Guinea by Aqua Mining.
Basis
of Presentation
The
Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the
United States of America (“U.S. GAAP”).
The
consolidated financial statements of the Company include the accounts of the Company, and all entities in which a direct or indirect
controlling interest exists through voting rights or qualifying variable interests. All intercompany balances and transactions
have been eliminated in the consolidated financial statements.
Change
in Fiscal Year End
The
Board of Directors of the Company approved on September 14, 2014, a change in the Company’s fiscal year end from December
31 to September 30 of each year.
Going
Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal course of business. As at September 30, 2017, the Company
has an accumulated deficit of $13,245,316 and $13,199,727 as of September 30, 2018, and has not earned sufficient revenues to
cover operating costs since inception and has a working capital deficit. The Company intends to fund its logging operatons through
equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements
for the year.
The
ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing
to continue mining exploration and execution of its business plan. In response to these problems, management intends to raise
additional funds through public or private placement offerings.
These
factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Functional
and Reporting Currency
The
consolidated financial statements are presented in U.S. Dollars. The Company’s functional currency is the U.S. Dollar. The
functional currency of Aqua Mining is the Papua New Guinean kina. Assets and liabilities are translated using the exchange rate
on the respective balance sheet dates. Items in the income statement and cash flow statement are translated into U.S. Dollars
using the average rates of exchange for the periods involved. The resulting translation adjustments are recorded as a separate
component of other comprehensive income/(loss) within stockholders’ equity.
The
functional currency of foreign entities is generally the local currency unless the primary economic environment requires the use
of another currency. Gains or losses arising from the translation or settlement of foreign-currency-denominated monetary assets
and liabilities into the functional currency are recognized in the income in the period in which they arise. However, currency
differences on intercompany loans that have the nature of a permanent investment are accounted for as translation differences
as a separate component of other comprehensive income/(loss) within stockholders’ equity.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
summary of the principal accounting policies are set out below:
Cash
The
Company maintains its cash balances in interest and non-interest bearing accounts which do not exceed Federal Deposit Insurance
Corporation limits.
Principles
of Consolidation
The
accompanying consolidated financial statements include the accounts of Kibush Capital and Aqua Mining. All intercompany accounts
and transactions have been eliminated.
Other
Comprehensive Income and Foreign Currency Translation
FASB
ASC 220-10-05, Comprehensive Income , establishes standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distribution to owners.
The
accompanying consolidated financial statements are presented in United States dollars.
Reclassifications
Reclassifications
have been made to prior year consolidated financial statements in order to conform the presentation to the statements as of and
for the period ended September 30, 2014.
On
June 10, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915) –
Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic
810, Consolidation , which eliminates the concept of a development stage entity (DSE) in its entirety from current accounting
guidance. The Company has elected early adoption of this new standard.
Use
of Estimates
The
preparation of financial statements in conformity with Generally Accepted Accounting Principles in the United States of America
(“GAAP”) requires management to make certain 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. Significant estimates made by management are, recoverability of long-lived
assets, valuation and useful lives of intangible assets, valuation of derivative liabilities, and valuation of common stock, options,
warrants and deferred tax assets. Actual results could differ from those estimates.
Non-Controlling
Interests
Investments
in associated companies over which the Company has the ability to exercise significant influence are accounted for under the consolidation
method, after appropriate adjustments for intercompany profits and dividends.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It requires an acquirer to recognize, at
the acquisition date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their
full fair values as of that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required
to re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting
gain or loss in earnings. The acquisition-related transaction and restructuring costs will no longer be included as part of the
capitalized cost of the acquired entity but will be required to be accounted for separately in accordance with applicable generally
accepted accounting principles. U.S. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
A
non-controlling interest in a subsidiary is an ownership interest in a consolidated entity that is reported as equity in the consolidated
financial statements and separate from the Company’s equity. In addition, net income/(loss) attributable to non-controlling
interests is reported separately from net income attributable to the Company in the consolidated financial statements. The Company’s
consolidated statements present the full amount of assets, liabilities, income and expenses of all of our consolidated subsidiaries,
with a partially offsetting amount shown in non-controlling interests for the portion of these assets and liabilities that are
not controlled by us.
For
our investments in affiliated entities that are included in the consolidation, the excess cost over underlying fair value of net
assets is referred to as goodwill and reported separately as “Goodwill” in our accompanying consolidated balance sheets.
Goodwill may only arise where consideration has been paid.
Property
and Equipment
Property
and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives as follows:
Plant
equipment
|
|
2
to 15 years
|
Motor
Vehicle
|
|
4
to 15 years
|
Maintenance
and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement
or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting
gains or losses are reflected in the consolidated statement of operations.
Impairment
of Long-Lived Assets
In
accordance with FASB ASC 360-10-5, Accounting for the Impairment or Disposal of Long-Lived Assets , the Company evaluates
the carrying value of its long-lived assets for impairment whenever events or changes in circumstances indicate that such carrying
values may not be recoverable. The Company uses its best judgment based on the current facts and circumstances relating to its
business when determining whether any significant impairment factors exist. The Company considers the following factors or conditions,
among others, that could indicate the need for an impairment review:
|
●
|
Significant
under performance relative to expected historical or projected future operating results;
|
|
|
|
|
●
|
Significant
changes in its strategic business objectives and utilization of the assets;
|
|
|
|
|
●
|
Significant
negative industry or economic trends, including legal factors;
|
If
the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or
more of the above indicators of impairment, the Company’s management performs an undiscounted cash flow analysis to determine
if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the asset’s
carrying amount and its fair value, and the impairment is charged to operations in the period in which the long-lived asset impairment
is determined by management.
The
carrying value of the Company’s investment in Joint Venture contract with leaseholders of certain Mining Leases in Papua
New Guinea represents its ownership, accounted for under the equity method. The ownership interest is not adjusted to fair value
on a recurring basis. Each reporting period the Company assesses the fair value of the Company’s ownership interest in Joint
Venture in accordance with FASB ASC 325-20-35. Each year the Company conducts an impairment analysis in accordance with the provisions
within FASB ASC 320-10-35 paragraphs 25 through 32.
Fair
Value of Financial Instruments
The
carrying amounts of the Company’s cash, accounts payable and accrued expenses approximate their estimated fair values due
to the short-term maturities of those financial instruments. The Company believes the carrying amount of its notes payable approximates
its fair value based on rates and other terms currently available to the Company for similar debt instruments
Beneficial
Conversion Features of Debentures
In
accordance with FASB ASC 470-20, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios, we recognize the advantageous value of conversion rights attached to convertible debt. Such rights give the
debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public
on the day the loan is made to us. The beneficial value is calculated as the intrinsic value (the market price of the stock at
the commitment date in excess of the conversion rate) of the beneficial conversion feature of debentures and related accruing
interest is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized
over the remaining outstanding period of related debt using the interest method.
Derivative
Financial Instruments
We
apply the provisions of FASB ASC 815-10, Derivatives and Hedging (“ASC 815-10”). Derivatives within the scope
of ASC 815-10 must be recorded on the balance sheet at fair value. During the year ended September 30, 2014, the Company issued
convertible debt and recorded derivative liabilities related to a reset provision associated with the embedded conversion feature
of the convertible debt. The Company computed the fair value of these derivative liabilities on the grant date and various measurement
dates using the Black-Scholes pricing model. Due to the reset provisions within the embedded conversion feature, the Company determined
that the Black-Scholes pricing model was the most appropriate for valuing these instruments.
In
applying the Black-Scholes valuation model, the Company used the following assumptions during the year ended September 30, 2018:
|
|
For the year ended
|
|
|
|
September 30, 2018
|
|
Annual dividend yield
|
|
|
-
|
|
Expected life (years)
|
|
|
0.50 – 1.00
|
|
Risk-free interest rate
|
|
|
1.7
|
%
|
Expected volatility
|
|
|
55
|
%
|
The
inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy
level is based upon the lowest level of input that is significant to the fair value measurement.
The
Company determines the fair value of its derivative instruments using a three-level hierarchy for fair value measurements which
these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs
reflect market
data
obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires
the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy:
Level
1 — Valuation based on unadjusted quoted market prices in active markets for identical securities. Currently, the Company
does not have any items as Level 1.
Level
2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the
measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.
Currently, the Company does not have any items classified as Level 2.
Level
3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve
management judgment. The Company used the Black-Scholes option pricing models to determine the fair value of the instruments.
The
following table presents the Company’s embedded conversion features of its convertible debt measured at fair value on a
recurring basis as of September 30, 2017, and as of September 30, 2018:
|
|
Carry Value at
|
|
|
Carry Value at
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded conversion features - notes
|
|
$
|
726,871
|
|
|
$
|
1,333,021
|
|
|
|
|
|
|
|
|
|
|
Total derivative liability
|
|
$
|
726,871
|
|
|
$
|
1,333,021
|
|
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
September 30, 2017
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
Change in fair value included in other income (expense), net
|
|
|
606,150
|
|
|
|
-260,737
|
|
The
following table provides a reconciliation of the beginning and ending balances for the Company’s derivative liabilities
measured at fair value using Level 3 inputs:
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Embedded Conversion Features - Notes:
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
$
|
1,333,021
|
|
|
$
|
986,700
|
|
Change in derivative liabilities
|
|
$
|
(1,212,300
|
)
|
|
$
|
607,058
|
|
Net change in fair value included in net loss
|
|
|
606,150
|
|
|
|
-260,737
|
|
Ending balance
|
|
$
|
726,871
|
|
|
$
|
1,333,021
|
|
The
Company re-measures the fair values of all its derivative liabilities as of each period end and records the net aggregate gain/loss
due to the change in the fair value of the derivative liabilities as a component of other expense, net in the accompanying consolidated
statement of operations. During the years ended September 30, 2018 and 2017, the Company recorded a net increase (decrease) to
the fair value of derivative liabilities balance of $ 606,150 and $ (260,737), respectively.
Loss
per Share
The
Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings
(loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common
shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no
common share equivalents are included because their effect would be anti-dilutive.
Income
Taxes
Income
taxes are accounted for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future consequences of differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities
are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered
or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some portion or
all of the deferred tax assets will not be realized.
Mineral
Property, Mineral Rights (Claims) Payments and Exploration Costs
Pursuant
to EITF 04-02, “Whether Mineral Rights are Tangible or Intangible Assets and Related Issues”, the Company has an accounting
policy to capitalize the direct costs to acquire or lease mineral properties and mineral rights as tangible assets. The direct
costs include the costs of signature (lease) bonuses, options to purchase or lease properties, and brokers’ and legal fees.
If the acquired mineral rights relate to unproven properties, the Company does not amortize the capitalized mineral costs, but
evaluates the capitalized mineral costs periodically for impairment. The Company expenses all costs related to the exploration
of mineral claims in which it had secured exploration rights prior to establishment of proven and probable reserves.
Accounting
Treatment of Mining Interests
At
this time, the Company does not directly own or directly lease mining properties. However, the Company does have contractual rights
and governmental permits which allow the Company to conduct mining exploration on the properties referenced in this report. These
contractual relationships, coupled with the government permits issued to the Company (or a subsidiary), are substantially similar
in nature to a mining lease. Therefore, we have treated these contracts as lease agreements from an accounting prospective.
Research
and Development
Research
and development costs are recognized as an expense in the period in which they are incurred. The Company incurred no research
and development costs for the years ended September 30, 2018 and 2017, respectively.
Recent
Accounting Pronouncements
In
October 2018, FASB issued Accounting Standards Update 2018-16, Derivaties and Hedging (Topic 805): Inclusion of the Secured Overnight
Financing Rate (SOFR) Overight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU amends
ASC 815 to add the OIS rate based on the SOFR as a fifth US benchmark interest rate. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements.
In
October 2018, FASB issued Accounting Standards Update 2018-17: Consolidation (Topic 810): Targeted Improvements to Related Party
Guidance for Variable Interest Entities. This standard expands the application of a specific private company accounting alternative
related to VIEs and changes the guidance for determining whether a decision-making fee is a variable interest. We do not expect
the adoption of this ASU to have a material effect on our consolidated financial statements.
In
November 2018, FASB issued Accounting Standards Update 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction
between Topic 808 and Topic 606. The ASU amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between
collaborative arrangement participants. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements.
In
November 2018, FASB issued Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit
Losses. The ASU changes the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2021, including interim
periods within those fiscal years. Thus, the effective date for such entities’ annual financial statements is now aligned
with that for these interim financial statements. We are currently evaluating the impact that the standard will have on our consolidated
financial statements and related disclosures.
In
December 2018, FASB issued Accounting Standards Update 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors. The
amendments are designed to make lessors adoption of the new leases standard easier such as accounting policy election on sales
tax, exclude variable payments for all lessor costs, and clarification on lessor costs. We are currently evaluating the impact
that the standard will have on our consolidated financial statements and related disclosures.
NOTE
3 – INVESTMENTS IN SUBSIDIARIES
The
Company owns interests in the following entities which was recorded at their book value since they were related party common control
acquisitions.
|
|
Investment
|
|
|
Ownership %
|
|
|
|
|
|
|
|
|
|
|
Aqua Mining (PNG)
|
|
|
34
|
|
|
|
90
|
%
|
As
Aqua Mining (PNG) Ltd was acquired from a related entity, Five Arrows Limited (see Note 10 – Business Combinations), the
shares were recorded in the accounts at their true cost value.
NOTE
4 – PROPERTY AND EQUIPMENT
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Plant Equipment
|
|
|
65,869
|
|
|
|
58,363
|
|
Motor Vehicle
|
|
|
111,585
|
|
|
|
111,585
|
|
|
|
|
177,454
|
|
|
|
169,948
|
|
Less accumulated depreciation
|
|
|
-64,842
|
|
|
|
-47,792
|
|
|
|
$
|
112,612
|
|
|
$
|
122,156
|
|
Depreciation
expense was approximately $16,618 for the year ended September 30, 2018 and $20,425 for the year ended September 30, 2017.
NOTE
5 – CONVERTIBLE NOTES PAYABLE
|
|
September 30, 2018
|
|
|
|
Note Face Amount
|
|
|
Debt Discount
|
|
|
Net Amount of Note
|
|
|
|
|
|
|
|
|
|
|
|
2011 Note
|
|
$
|
22,166
|
|
|
$
|
-
|
|
|
$
|
22,166
|
|
2012 Note
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
2013 Note
|
|
|
12,000
|
|
|
|
-
|
|
|
|
12,000
|
|
2014 Note
|
|
|
9,000
|
|
|
|
-
|
|
|
|
9,000
|
|
2016 Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2016 Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2017 Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
91,166
|
|
|
$
|
-
|
|
|
$
|
91,166
|
|
|
|
September 30, 2017
|
|
|
|
Note Face Amount
|
|
|
Debt Discount
|
|
|
Net Amount of Note
|
|
|
|
|
|
|
|
|
|
|
|
2011 Note
|
|
$
|
22,166
|
|
|
$
|
-
|
|
|
$
|
22,166
|
|
2012 Note
|
|
|
48,000
|
|
|
|
-
|
|
|
|
48,000
|
|
2013 Note
|
|
|
12,000
|
|
|
|
-
|
|
|
|
12,000
|
|
2014 Note
|
|
|
9,000
|
|
|
|
-
|
|
|
|
9,000
|
|
2016 Note
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
2016 Note
|
|
|
25,000
|
|
|
|
-
|
|
|
|
25,000
|
|
2016 Note
|
|
|
12,300
|
|
|
|
-
|
|
|
|
12,300
|
|
Total
|
|
$
|
128,466
|
|
|
$
|
-
|
|
|
$
|
128,466
|
|
2011
Note
On
May 1, 2011, the Company issued a 2.00% Convertible Note due April 30, 2012 with a principal amount of $32,000 (the “2011
Note”) for cash. Interest on the 2011 Note is accrued annually effective from May 1, 2011 forward. The 2011 Note is unsecured
and repayable on demand. The 2011 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $22,166. As of September
30, 2018, the note has been discounted by $0.
2012
Note
On
January 2, 2012, the Company issued a 2.00% Convertible Note due January 1, 2013 with a principal amount of $48,000 (the “2012
Note”) for cash. Interest on the 2012 Note is accrued annually effective from January 2, 2012 forward. The 2012 Note is
unsecured and repayable on demand. The 2012 Note is senior in right to all existing and future indebtedness which is subordinated
by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part
into Common Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $48,000. As of September
30, 2018, the note has been discounted by $0.
2013
Note
On
January 3, 2013, the Company issued a 2.00% Convertible Note due January 2, 2014 with a principal amount of $12,000 (the “2013
Note”) for cash. Interest on the 2013 Note is accrued annually effective from January 3, 2013 forward. The 2013 Note is
unsecured and repayable on demand. The 2013 Note is senior in right to all existing and future indebtedness which is subordinated
by its terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part
into Common Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $12,000. As of September
30, 2018, the note has been discounted by $0.
2014
Note
On
August 25, 2014, the Company issued two 12.00% Convertible Promissory Note due February 25, 2015 with a principal amount of $50,000
each (the “2014 Note”) for cash. Interest on the 2014 Note is accrued annually effective from August 25, 2014 forward.
The 2014 Note is unsecured.
The
notes are convertible at a conversion price the lesser of (a) $0.25 per share, or (b) the price per share as reported on the Over-the-Counter
Bulletin Board on the conversion date. The Note Holders also received Warrants to purchase an aggregate of 800,000 shares of our
common stock at an initial exercise price of $0.25 per share. Each of the Warrants has a term of five (5) years.
The
embedded conversion feature of the 2014 Notes and Warrants were recorded as derivative liabilities in accordance with relevant
accounting guidance due to the variable conversion price of the 2014 Notes. The fair value on the grant date of the embedded conversion
feature of the convertible debt was $145,362 as computed using the Black-Scholes option pricing model.
The
Company established a debt discount of $100,000, representing the value of the embedded conversion feature inherent in the convertible
debt and warrant, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using
the straight-line method over the terms of the debt, which approximates the effective-interest method. For the year ended September
30, 2014, the Company recorded amortization of the debt discount of $19,566. The balance of the debt discount was $80,434 at September
30, 2014. For the year ended September 30, 2018, the Company recorded amortization of the debt discount of $0. The balance of
the debt discount was $0 at September 30, 2018. The face amount of the outstanding note as of September 30, 2018, is $9,000.
2016
Notes
On
January 5, 2016, the Company issued a $47,615 Convertible Promissory Note to the McGee Law Firm for services rendered. The Note
was due on October 31, 2016 and carried interest at 12.0% per annum. On or after May 1, 2016, at the option of the holder, the
then outstanding amount of the Note was convertible into common stock of the Company at a conversion price equal to the lesser
of $0.01 per share or 50% of the three lowest closing prices average for the 10 business days prior to the conversion date.
On
August 11, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction with
an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due August 11, 2017 with a principal
amount of $30,000. Interest on the 2016 Note is accrued annually effective from September 1, 2016 forward. This Note was unsecured
and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001. The face amount of the outstanding note as of September 30, 2018, is $0. As of September 30, 2018,
the note has been discounted by $0.
On
September 13, 2016, the Company restructured a portion a Convertible Promissory Note issued on January 5, 2016 in conjunction
with an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due September 13, 2017 with a principal
amount of $15,836.32. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured
and repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $0. As of September
30, 2018, the note has been discounted by $0.
On
August 23, 2016, the Company issued a 9.00% Convertible Promissory Note due August 23, 2017 with a principal amount of $25,000
for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and
repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms
and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock
at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $0. As of September
30, 2018, the note has been discounted by $0.
On
September 17, 2016, the Company issued a 9.00% Convertible Promissory Note due September 17, 2017 with a principal amount of $25,000
for cash. Interest on the 2016 Note is accrued annually effective from October 1, 2016 forward. The 2016 Note is unsecured and
repayable on demand. The 2016 Note is senior in right to all existing and future indebtedness which is subordinated by its terms
and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common Stock
at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $0. As of September
30, 2018, the note has been discounted by $0.
2017
Notes
On
October 28, 2016, the Company restructured a portion a Convertible Promissory Note issued on August 25, 2014 in conjunction with
an assignment of that Note. The restructured Note was a 9.00% Convertible Promissory Note due October 28, 2017 with a principal
amount of $35,000. Interest on the 2016 Note is accrued annually effective from November 1, 2016 forward. The 2017 Note is unsecured
and repayable on demand. The 2017 Note is senior in right to all existing and future indebtedness which is subordinated by its
terms and at the option of the Lender, the principal along with any accrued interest may be converted in whole or part into Common
Stock at a price of $0.001.
As
this note carries a conversion rate that is less than market rate, the rules of beneficial conversion apply. The difference between
the conversion rate and the market rate is classified as a discount on the note and accreted over the term of the note, which
with respect to this note is 12 months. The face amount of the outstanding note as of September 30, 2018, is $0. As of September
30, 2018, the note has been discounted by $0.
NOTE
6 – LOAN FROM RELATED PARTY
Convertible
Notes Issued to the President and Director of Kibush Capital Corporation:
|
|
September 30, 2017
|
|
|
|
Note face amount
|
|
|
Debt Discount
|
|
|
Net Amount of note
|
|
|
|
|
|
|
|
|
|
|
|
Loan from related party
|
|
$
|
1,417,065
|
|
|
$
|
0
|
|
|
$
|
1,417,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,417,065
|
|
|
$
|
0
|
|
|
$
|
1,417,065
|
|
|
|
September 30, 2018
|
|
|
|
Note face amount
|
|
|
Debt Discount
|
|
|
Net Amount of note
|
|
|
|
|
|
|
|
|
|
|
|
Loan from related party
|
|
$
|
1,737,566
|
|
|
$
|
0
|
|
|
$
|
1,737,566
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,737,566
|
|
|
$
|
0
|
|
|
$
|
1,737,566
|
|
On
March 31, 2014, the Company issued a 12.50% Convertible Promissory Note due March 31, 2015 with a principal amount of $157,500
(the “March 2014 Note”) for cash. Interest on the March 2014 Note is accrued annually effective from March 31, 2014
forward. The March 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing
bid price, determined on the then current trading market for the ten business days prior to the conversion date.
The
embedded conversion feature of the March 2014 Notes was recorded as derivative liabilities in accordance with relevant accounting
guidance due to the variable conversion price of the March 2014 Notes. The fair value on the grant date of the embedded conversion
feature of the convertible debt was $305,039 as computed using the Black-Scholes option pricing model. The fair value was $165,542
for the year ended September 30, 2018.
The
Company established a debt discount of $157,500, representing the value of the embedded conversion feature inherent in the convertible
debt, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using the straight-line
method over the terms of the debt, which approximates the effective-interest method. For the year ended September 30, 2014, the
Company recorded amortization of the debt discount of $78,966. The balance of the debt discount was $78,534 at September 30, 2014.
As of September 30, 2018, the balance of the debt discount was $0.
On
June 30, 2014, the Company issued a 12.50% Convertible Promissory Note due June 30, 2015 with a principal amount of $110,741 (the
“June 2014 Note”) for cash. Interest on the June 2014 Note is accrued annually effective from June 30, 2014 forward.
The June 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent of the average closing bid
price, determined on the then current trading market for the ten business days prior to the conversion date.
The
embedded conversion feature of the June 2014 Note was recorded as derivative liabilities in accordance with relevant accounting
guidance due to the variable conversion price of the June 2014 Note. The fair value on the grant date of the embedded conversion
feature of the convertible debt was $213,207 as computed using the Black-Scholes option pricing model. The fair value was $116,395
for the year ended September 30, 2018.
The
Company established a debt discount of $110,741 representing the value of the embedded conversion feature inherent in the convertible
debt, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using the straight-line
method over the terms of the debt, which approximates the effective-interest method. For the year ended September 30, 2014, the
Company recorded amortization of the debt discount of $27,913. The balance of the debt discount was $82,828 at September 30, 2014.
As of September 30, 2018, the balance of the debt discount was $0.
On
September 30, 2014, the Company issued a 12.50% Convertible Promissory Note due September 30, 2015 with a principal amount of
$98,575 (the “September 2014 Note”) for cash. Interest on the September 2014 Note is accrued annually effective from
September 30, 2014 forward. The September 2014 Note is unsecured. The note is convertible into common stock at a price of 50 percent
of the average closing bid price, determined on the then current trading market for the ten business days prior to the conversion
date.
The
embedded conversion feature of the September 2014 Notes was recorded as derivative liabilities in accordance with relevant accounting
guidance due to the variable conversion price of the September 2014 Note. The fair value on the grant date of the embedded conversion
feature of the convertible debt was $181,771 as computed using the Black-Scholes option pricing model. The fair value was $103,608
for the year ended September 30, 2018.
The
Company established a debt discount of $98,575 representing the value of the embedded conversion feature inherent in the convertible
debt, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using the straight-line
method over the terms of the debt, which approximates the effective-interest method. For the year ended September 30, 2014, the
Company recorded amortization of the debt discount of $0. The balance of the debt discount was $98,575 at September 30, 2014.
As of September 30, 2018, the balance of the debt discount was $0.
As
of September 30, 2014, and 2013, cumulative interest of $96,579 and $0 respectively, has been accrued on these notes.
The
Company established a debt discount of $61,273 representing the value of the embedded conversion feature inherent in the convertible
debt, as limited to the face amount of the debt. The debt discount is being amortized over the life of the debt using the straight-line
method over the terms of the debt, which approximates the effective-interest method. For the year ended September 30, 2018, the
Company recorded amortization of the debt discount of $0. The balance of the debt discount was $0 at September 30, 2018.
On
October 1, 2016, the Company issued an 8% Promissory Note due September 30, 2017 with a principal amount of $155,300 (the “October
2016 Note”) for cash received over the period between September 30, 2014 and April 28,2015. No interest was to accrue on
the first two years of the loan, interest on the October 2016 Note is to be accrued annually effective from October 1, 2016 forward.
The October 2016 Note is unsecured. Cavenagh Capital Corporation is a shareholder in Kibush Capital Corporation.
NOTE
7 – STOCKHOLDER’S DEFICIT
Common
Stock
On
August 22, 2013, the Company’s Board authorized a 225:1 reverse stock split. All share and per share data in the accompanying
financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.
On
October 12, 2013, the Company issued by director’s resolution, 10,000,000 shares of newly issued common stock for the purchase
of a Memorandum of Understanding (dated September 2, 2013) from a related company (Five Arrows Limited); which gave Kibush Capital
Corporation the right to acquire 80% ownership in Instacash Pty Ltd, an Australian Currency Services provider, and corporate trustee
of the Instacash Trust. As this transaction was with a related party, the value was recorded at the par value of the stock i.e.
$0.001 per share of common stock.
Between
October 23, 2013 and September 30, 2014, the Company issued a total of 3,274,000 shares of common stock upon the requests from
convertible note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
On
February 28, 2014, the Company issued by director’s resolution, 40,000,000 shares of newly issued common stock to conclude
a Assignment and Bill of Sale (dated February 14, 2014) from a related company (Five Arrows Limited); which gave Kibush Capital
Corporation the right to enter into a Joint Venture contract with the leaseholders of certain Mining Leases in Papua New Guinea.
As this transaction was with a related party, the value was recorded at par value of the stock i.e. $0.001 per share of common
stock.
Between
November 1, 2014 and March 31, 2015, the Company issued a total of 4,560,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $3,274 into the Company’s common stock based on the terms set forth in the loans.
The conversion rate was $0.001.
Between
April 1, 2016 and September 30, 2016, the Company issued a total of 190,114,175 shares of common stock upon the requests from
convertible note holders to convert principal totaling $190,114 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
Between
October 1, 2016 and December 31, 2016, the Company issued a total of 208,879,614 shares of common stock upon the requests from
convertible note holders to convert principal totaling $208,880 into the Company’s common stock based on the terms set forth
in the loans. The conversion rate was $0.001.
Between
January 1, 2017 and March 31, 2017, the Company issued a total of 9,375,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $9,375 into the Company’s common stock based on the terms set forth in the loans.
The conversion rate was $0.001.
Between
April 1, 2017 and June 30, 2017, the Company issued a total of 405,000,000 shares of common stock upon the requests from convertible
note holders to convert principal totaling $405,000 into the Company’s common stock based on the terms set forth in the
loans. The conversion rate was $0.001.
On
August 23, 2017, the Company’s Board authorized a 1:25 reverse stock split. All share and per share data in the accompanying
financial statements and footnotes has been adjusted retrospectively for the effects of the stock split.
Preferred
Stock
Preferred
stock includes 50,000,000 shares authorized at $0.001 par value, of which 10,000,000 have been designated Series A and 5,000,000
designated as Series B. A total of 3,000,000 shares of Series A preferred stock are issued and outstanding as of September 30,
2017, and September 30, 2018. These Series A preferred shares are owned by our Officer and Director, Warren Sheppard. A
total of 20,000,000 shares of Series B preferred stock were outstanding as of September 30, 2017, September 30, 2018. These Series B preferred shares are owned by our Officer and Director, Warren Sheppard. Through his
ownership of the 3,000,000 shares of Series A and 15,000,000 shares of Series B preferred Stock, Mr. Sheppard will retain majority
voting control over the Company even if his ownership of common stock falls below 51% as a result of this Offering. No shares of
preferred stock are offered for sale in this Offering.
NOTE
8 – INCOME TAXES
The
provision/(benefit) for income taxes for the year ended September 30, 2018 and 2017 was as follows (assuming a 15% effective tax
rate)
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
Current Tax Provision
|
|
|
|
|
|
|
|
|
Federal-
|
|
|
|
|
|
|
|
|
Taxable Income
|
|
|
-
|
|
|
|
-
|
|
Total current tax provisions
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Provision
|
|
|
|
|
|
|
|
|
Federal-
|
|
|
|
|
|
|
|
|
Loss carry forwards
|
|
$
|
6,838
|
|
|
$
|
143,510
|
|
Change in valuation allowance
|
|
$
|
6,838
|
|
|
$
|
143,510
|
|
Total deferred tax provisions
|
|
$
|
-
|
|
|
$
|
-
|
|
As
of September 30, 2018, the Company had approximately $13,199,727 in tax loss carry forwards that can be utilized future periods
to reduce taxable income, and the carry forward incurred for the year ended September 30, 2018 will expire by the year 2035.
The
Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized
tax benefits.
The
federal income tax returns of the Corporation are subject to examination by the IRS, generally for three years after they are
filed.
NOTE
9 – RELATED PARTY TRANSACTIONS
Details
of transactions between the Corporation and related parties are disclosed below.
The
following transactions were carried out with related parties:
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
Loan from related party
|
|
$
|
1,737,566
|
|
|
$
|
1,417,065
|
|
Convertible Loans (B)
|
|
$
|
91,166
|
|
|
$
|
128,466
|
|
Total
|
|
$
|
1,828,732
|
|
|
$
|
1,545,531
|
|
(a)
From time to time, the president and stockholder of the Company provides advances to the Company for its working capital purposes.
These advances bear no interest and are due on demand.
(b)
See Note 6 for details of Convertible notes.
NOTE
10 – BUSINESS COMBINATIONS
Set
out below are the controlled and non-controlled members of the group as of September 30, 2018, which, in the opinion of the directors,
are material to the group. The subsidiaries as listed below have share capital consisting solely of ordinary shares, which are
held directly by the Company; the country of incorporation is also their principal place of business.
Name of Entity
|
|
Country of Incorporation
|
|
Acquisition Date
|
|
Voting Equity Interests
|
|
Aqua Mining (PNG) Ltd
|
|
Papua New Guinea
|
|
28-Feb-2014
|
|
|
90
|
%
|
NOTE
11 – LEGAL PROCEEDINGS
We
are not presently a party to any litigation.
NOTE
12 - CONTINGENT LIABILITIES
None.
NOTE
13 – SUBSEQUENT EVENTS
None.
NOTE
14 – INVENTORY
Inventories
are valued at cost. Cost is determined using the first-in, first-out method. The cost of finished goods and work-in-progress comprises
raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes
borrowing costs. There are three types of inventory in three stages of completion. Raw materials comprise of logs that are on
the ground and at the log pond; Work-in-progress comprise of rough sawn timber at the Rigo site whilst Finished goods are planed,
straightened timber at Laloki for sale. Each would have a different wholesale value depending on the level of processing.
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
Registrant estimates that expenses in connection with the distribution described in this Registration Statement will be as shown
below. All expenses incurred with respect to the distribution will be paid by the Company.
Expense
|
|
|
|
|
|
|
|
Legal fees and expenses:
|
|
$
|
25,000
|
|
Accounting fees and expenses:
|
|
$
|
|
|
Total:
|
|
$
|
25,000
|
|
Item
14. Indemnification of Directors and Officers
See
the Bylaws of the Company as shown on Exhibit 3.2 herein.
Agreements
We
intend to modify the compensation agreements with selected officers and directors, pursuant to which we will agree, to the maximum
extent permitted by law, to defend, indemnify and hold harmless the officers and directors against any costs, losses, claims,
suits, proceedings, damages or liabilities to which our officers and directors become subject to which arise out of or are based
upon or relate to our officers and directors engagement by the Company.
Item
15. Recent Sales of Unregistered Securities
Item
16. Exhibits
The
exhibits and financial statement schedules filed as part of this registration statement are as follows:
Item
17. Undertakings
The
undersigned Registrant hereby undertakes:
(1)
|
To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
i.
|
To
include any prospectus required by Section 10(a) (3) of the Securities Act;
|
|
ii.
|
To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement;
|
|
iii.
|
To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof;
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
|
(4)
|
That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant
to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on
Rule 430B or other than prospectuses filed in reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be
part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however,
that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
|
(5)
|
For
determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
i.
|
Any
preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424 (Sec. 230-424);
|
|
ii.
|
Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the registrant;
|
|
iii.
|
The
portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and iv. Any other communication that
is an offer in the offering made by the undersigned registrant to the purchaser.
|
(6)
|
That,
for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
|
(7)
|
That
for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering thereof
|
(8)
|
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such issue.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment to the registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the City Templestowne, in Victoria, Australia on September
10, 2019.
|
KIBUSH CAPITAL CORP.
|
|
|
Date:
September 10, 2019
|
/s/
Warren Sheppard
|
|
By:
|
Warren
Sheppard
|
|
Its:
|
Chief
Executive Officer; Director
|
In
accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons
in the capacities and on the dates stated.
Signature
|
|
Capacity
in Which Signed
|
|
Date
|
|
|
|
|
|
/s/
Warren Sheppard
|
|
Chief
Executive Officer
|
|
September 10, 2019
|
Warren
Sheppard
|
|
(Principal
Executive Officer Principal Accounting Officer and Director)
|
|
|
|
|
|
|
|
/s/
Warren Sheppard
|
|
Chief
Financial Officer
|
|
September 10, 2019
|
Warren
Sheppard
|
|
(Principal
Accounting Officer and Director)
|
|
|
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