Asfiled with the Securities and Exchange Commission on June 14, 2022

 

RegistrationNo. 333-

 

 

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

 

FORMS-1

REGISTRATIONSTATEMENT UNDER THE SECURITIES ACT OF 1933

 

LIFECLIPS, INC.

 

Wyoming		3861		46-2378100
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.

 

2875Northeast 191 Street, Suite 500 - #218

Aventura,FL

(800)292-8991

(Address,including zip code, and telephone number, including area code,

ofregistrant’s principal executive offices)

 

RegisteredAgents Inc.

30N Gould St Ste R

Sheridan,WY82801

(Name,address, including zip code, and telephone number, including area code, of agent service)

 

Copiesto:

 

JonathanLeinwand, Esq.

JonathanD. Leinwand, P.A.

18305Biscayne Blvd., Suite 200

Aventura,FL 33160

Phone:954-903-7856

Fax:954-252-4265

 

ApproximateDate of Commencement of Proposed Sale to the Public: As soon as possible after this Registration Statement becomes effective.

 

Ifany of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under theSecurities Act of 1933, as amended (the “Securities Act”), check the following box. ☒

 

Ifthis Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check thefollowing box and list the Securities Act registration statement number of the earlier effective registration statement for the sameoffering. ☐

 

Ifthis Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list theSecurities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicateby check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company”and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☒

 

Ifan emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complyingwith any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

CALCULATIONOF REGISTRATION FEE

 

Title of Each Class of Securities to be Registered		Amount to be Registered (1)				Proposed Maximum Offering Price Per Security(2) (3)				Proposed Maximum Aggregate Offering Price (2)				Amount of Registration Fee
Shares of Common Stock, par value $0.001 per share			510,000,000			$	.005			$	2,550,000			$	236.39

 

  

(1)

Represents 510,000,000 shares of Common Stock that have been and may be issued by the registrant to the selling stockholder named herein pursuant to a purchase agreement, dated as of March 16, 2022, between the registrant and the selling stockholder. Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement also covers any additional shares of Common Stock which may become issuable to prevent dilution from stock splits, stock dividends and similar events.

 

(2)	The proposed maximum offering price per share of Common Stock will be determined from time to time in connection with, and at the time of, the sale by the holder of such Common Stock.

 

(3)

Estimated solely for the purpose of calculating the amount of the registration fee with respect to the shares of Common Stock in accordance with Rule 457(c) under the Securities Act, on the basis of the last reported sales price per share of our Common Stock as reported by OTC Markets Group on June 6, 2022.

 

Wehereby amend this registration statement on such date or dates as may be necessary to delay our effective date until we will file a furtheramendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a)of the Securities Act of 1933, as amended or until this Registration Statement will become effective on such date as the Securities andExchange Commission, in accordance with Section 8(a) may determine.

 

 

 

Theinformation in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until the registrationstatement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities andthe selling stockholder is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

SUBJECTTO COMPLETION, DATED JUNE 14, 2022

 

PRELIMINARYPROSPECTUS

 

LIFECLIPS, INC.

 

510,000,000Shares OF COMMON STOCK

 

Thisprospectus relates to the resale of up to 510,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”),of Life Clips, Inc. (the “Company”, “we”, “us”, or “our”) by Mastiff Group, LLC (“Mastiff”or the “selling stockholder”).

 

Theshares of Common Stock to which this prospectus relates consist of shares that have been or may be issued to Mastiff pursuant to a purchaseagreement between us and Mastiff dated March 16, 2022 (the “Purchase Agreement”). We will also issue 150,000,000 sharesof our Common Stock to Mastiff as consideration for its irrevocable commitment to purchase our Common Stock under the Purchase Agreement.However, we will not issue to Mastiff any number of shares that would cause them to beneficially own more than 4.9% of the issued andoutstanding shares as calculated pursuant to Section 13(d) of the Securities Exchange Act.

 

Weare not selling any securities under this prospectus and we will not receive any proceeds from the sale of the shares by Mastiff. However,we may receive proceeds of up to $50,000,000 from the sale of certain of the shares to Mastiff under the Purchase Agreement, from timeto time in our discretion after the date the registration statement that includes this prospectus is declared effective and after satisfactionof other conditions in the Purchase Agreement.

 

Theselling stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act. The selling stockholdermay sell the shares of Common Stock described in this prospectus in a number of different ways and at varying prices. See “Planof Distribution” for more information about how the selling stockholder may sell the shares of Common Stock being registered pursuantto this prospectus.

 

Wewill pay the expenses of registering these shares, but all selling and other expenses incurred by the selling stockholder will be paidby the selling stockholder. See “Plan of Distribution.”

 

Our Common Stock is presently quoted on OTC MarketsGroup Inc. Pink Open Market (“OTC Markets”) under the symbol “LCLP.” On June 6, 2022, the last reportedsale price of our Common Stock on OTC Markets was $.005 per share.

 

Youshould read this prospectus, together with additional information described under the headings “Incorporation of Certain Informationby Reference” and “Where You Can Find More Information,” carefully before you invest in any of our securities.

 

Investingin the securities involves a high degree of risk. See “Risk Factors” beginning on page 7 of thisprospectus.

 

Neitherthe Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of thesecurities offered hereby or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminaloffense.

 

Thedate of this prospectus is June 14, 2022

 

 

TABLEOF CONTENTS

 

	Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	1
PROSPECTUS SUMMARY	3
SUMMARY CONSOLIDATED FINANCIAL INFORMATION	6
RISK FACTORS	7
USE OF PROCEEDS	14
COMMITTED EQUITY FINANCING	14
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
BUSINESS	25
EXECUTIVE COMPENSATION	37
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	38
LEGAL MATTERS	38
EXPERTS	39
WHERE YOU CAN FIND MORE INFORMATION	39
FINANCIAL STATEMENTS	F-1

 

 

AboutThis Prospectus

 

Theregistration statement on Form S-1, of which this prospectus forms a part and that we have filed with the Securities and Exchange Commission(the “SEC”), includes exhibits that provide more detail of the matters discussed in this prospectus.

 

Additionally,we incorporate by reference important information into this prospectus. You may obtain the information incorporated by reference withoutcharge by following the instructions under the section of this prospectus entitled “Where You Can Find More Information.”You should read this prospectus and the related exhibits filed with the SEC, together with the additional information described underthe headings “Incorporation of Certain Information by Reference” and “Where You Can Find More Information.”

 

Youshould rely only on the information contained in this prospectus and in any free writing prospectus prepared by or on behalf of us. Wehave not, and the selling stockholder has not, authorized anyone to provide you with information different from, or in addition to, thatcontained in this prospectus or any related free writing prospectus. This prospectus is an offer to sell only the securities offeredhereby but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus iscurrent only as of its date. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Neitherwe nor the selling stockholder are offering to sell or seeking offers to purchase these securities in any jurisdiction where the offeror sale is not permitted. Neither we nor the selling stockholder have done anything that would permit this Offering or possession ordistribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Personsoutside the jurisdiction of the United States who come into possession of this prospectus and any free writing prospectus related tothis Offering are required to inform themselves about and to observe any restrictions relating to this Offering and the distributionof this prospectus and any such free writing prospectus applicable to that jurisdiction.

 

Unlessthe context otherwise requires, the terms “Life Clips,” the “Company,” “we,” “us” and“our” refer to Life Clips, Inc. and our subsidiaries. We have registered our name, logo and the trademarks “Life Clips”and related trademarks in the United States. Other service marks, trademarks and trade names referred to in this prospectus are the propertyof their respective owners. Except as set forth above and solely for convenience, the trademarks and trade names in this prospectus arereferred to without the ®, © and TM symbols, but such references should not be construed as any indicator that their respectiveowners will not assert, to the fullest extent under applicable law, their rights thereto.

 

Thisprospectus includes industry and market data and other information, which we have obtained from, or is based upon, market research, independentindustry publications or other publicly available information. Although we believe each such source to have been reliable as of its respectivedate, we have not independently verified the information contained in such sources. Any such data and other information is subject tochange based on various factors, including those described below under the heading “Risk Factors” and elsewhere in this prospectus.

 

CAUTIONARYSTATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Certainstatements included or incorporated by reference in this prospectus constitute forward-looking statements within the meaning of applicablesecurities laws. All statements contained in this registration statement that are not clearly historical in nature are forward-looking,and the words “anticipate”, “believe”, “continue”, “expect”, “estimate”,“intend”, “may”, “plan”, “will”, “shall” and other similar expressions aregenerally intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended(the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). All forward-lookingstatements are based on our beliefs and assumptions based on information available at the time the assumption was made. These forward-lookingstatements are not based on historical facts but on management’s expectations regarding future growth, results of operations, performance,future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, businessprospects and opportunities. Forward-looking statements involve significant known and unknown risks, uncertainties, assumptions and otherfactors that may cause our actual results, levels of activity, performance or achievements to differ materially from those implied byforward-looking statements. These factors should be considered carefully and prospective investors should not place undue reliance onthe forward-looking statements. Although the forward-looking statements contained in this registration statement or incorporated by referenceherein are based upon what management believes to be reasonable assumptions, there is no assurance that actual results will be consistentwith these forward-looking statements. These forward-looking statements are made as of the date of this registration statement or asof the date specified in the documents incorporated by reference herein, as the case may be. Important factors that could cause suchdifferences, are incorporated by reference from our Annual Report on Form 10-K filed on October 14, 2021 and the other documents incorporatedby reference into this prospectus, which include risks related to:

 

●

The Pandemic

 

○

The COVID-19 coronavirus pandemic (“COVID-19”) may adversely affect our business, results of operations, financial condition, liquidity and cash flow.

 

○

It is unclear how such restrictions, which will contribute to a general slowdown in the global economy, will affect our business, results of operations, financial condition and our future strategic plans.

 

 

●

Our Business

 

○

We have a history of operating losses and there can be no assurance that we can achieve or maintain profitability.

 

○

We may not be able to continue as a going concern.

 

○

If we are unable to successfully compete in the marketplace, our business and financial condition could be materially adversely affected.

 

○

As regulation of cryptocurrencies is evolving, we may be negatively impacted by regulatory changes

 

○

Our business and strategic plans may require funding.

 

○

Our limited operating history does not afford investors a sufficient history on which to base an investment.

 

○

We rely on highly skilled personnel and, if we are unable to retain or motivate key personnel or hire additional qualified personnel, we may not be able to grow effectively.

 

○

If we fail to manage growth or prepare for product scalability and integration effectively, it could have an adverse effect on our employee efficiency, product quality, working capital level and results of operations.

 

○

Our management team may not be able to successfully implement our business strategies.

 

○

If we are unable to retain key executives and other key affiliates, our growth could be significantly inhibited, and our business harmed with a material adverse effect on our business, financial condition and results of operations.

 

○

Our financial results may not meet the expectation of investors and may fluctuate because of many factors and, as a result, investors should not rely on our revenue and/or financial projections as indicative of future results.

 

○

Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was not effective as of December 31, 2021. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

 

○

We are operating in a highly competitive market and we are unsure as to whether there will be any consumer demand for our services.

 

○

There is no assurance that the Company will operate profitability or will generate positive cash flow.

 

○

We may be unsuccessful in our efforts to use digital and other viral marketing to expand customer awareness of our services.

 

●

The Securities Markets and Investments in Our Securities

 

○

General securities market uncertainties resulting from COVID-19 and the Russian invasion of Ukraine.

 

○

Our executive officers and certain stockholders possess significant voting power, and through this ownership, could influence our Company and our corporate actions.

 

○

Liquidity of our common stock has been limited.

 

○

Our stock price may be volatile.

 

○

Our common stock is subject to price volatility unrelated to our operations.

 

○

A decline in the price of our common stock could affect our ability to raise working capital and adversely impact our ability to continue operations.

 

○

Sales of our currently issued and outstanding common stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.

 

○

Concentrated ownership of our common stock creates a risk of sudden changes in our common stock price.

 

○

If we issue additional shares or derivative securities in the future, it may result in the dilution of our existing shareholders.

 

○

We do not plan to declare or pay any dividends to our stockholders in the near future.

 

○

The requirements of being a public company may strain our resources and distract management.

 

○

Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and effect reported results of operations. “Penny Stock” rules may make buying or selling our common stock difficult.

 

 

Inaddition, risks related specifically to this offering are presented in the Risk Factors section of this prospectus on page 7.

 

Althoughwe believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levelsof activity or performance. You should not place undue reliance on forward-looking statements contained in this prospectus.

 

Weundertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statementswere made or to reflect the occurrence of unanticipated events, except as may be required by applicable securities laws.

 

PROSPECTUSSUMMARY

 

Thissummary highlights information contained elsewhere in this prospectus or incorporated by reference. It may not contain all of the informationthat you should consider before investing in our securities. You should read this entire prospectus carefully, including the “RiskFactors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, andthe financial statements and related notes included herein. This prospectus includes forward-looking statements that involve risks anduncertainties. See “Cautionary Note Regarding Forward-Looking Statements.”

 

CompanyStructure and History

 

LifeClips, Inc. (“Life Clips”, “LCLP”, “we,” “us,” “our,” and the “Company”)was incorporated in Wyoming on March 20, 2013 as Blue Sky Media Corporation and its principal business was developing, financing, producingand distributing motion pictures and related entertainment products. Following the Company’s October 2, 2015 acquisition of KlearKapture, Inc. (“Klear Kapture”), the Company continued Klear Kapture’s business of developing a body camera and anauditable software solution suitable for use by law enforcement. The Company changed its name to Life Clips, Inc. on November 3, 2015in order to better reflect its business operations at the time.

 

OnJuly 11, 2016, the Company completed its acquisition (the “Acquisition”) of all of the outstanding equity securities of BatterflyEnergy Ltd. (“Batterfly”), an Israel-based corporation that develops and distributes a single-use, cordless battery underthe brand name Mobeego for use with cellular phones and other mobile devices. Batterfly is now a wholly owned subsidiary of the Company.The Acquisition was completed pursuant to a Stock Purchase Agreement, dated as of June 10, 2016 (the “Purchase Agreement”),among the Company, Batterfly and all of the shareholders of Batterfly, as amended.

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”, “Subsidiary”),a developer of artificial intelligence (“AI”) applications for the healthcare industry and psychedelic research. CognitiveApps was incorporated in British Columbia on November 25, 2020. Its principal business is developing, financing, producing and distributingAI based technological solutions to the mental health and healthcare sector.

 

CognitiveApps sold all of its issued and outstanding capital stock to LCLP, becoming a wholly-owned subsidiary of LCLP.

 

OnAugust 25, 2021, LCLP closed its acquisition of Belfrics Holdings Limited and its related entities (collectively “Belfrics”)operating cryptocurrency exchanges and blockchain development services in Asia and Africa. The entities acquired are:

 

BelfricsGlobal PTE Ltd., a Singapore corporation

BelfricsBT Pvt Ltd, an India corporation

BelfricsCryptex Pvt Ltd, an India corporation

BelfricsTanzania Ltd, a Tanzania corporation

BelfricsNigeria Pvt Ltd, a Nigeria corporation

BelfricsBT SDN BHD, a Malaysia corporation

BelfricsHolding Limited, a Malaysia corporation

BelfricsAcademy SDN BHD, a Malaysia corporation

BelfricsInternational Ltd, a Malaysia corporation

BelfricsEurope SL, a Spain corporation

BelfricsKenya Pvt. Ltd, a Kenya corporation

IncryptsSDN BHD, a Malaysia corporation

BelfricsMalaysia SDN BHD

 

TheCompany issued the Belfrics shareholders a new class of preferred stock with an initial issuance price of $20,000,000 (Twenty MillionDollars) in the aggregate. The Belfrics shareholders can earn up to an additional $15,000,000 (Fifteen Million Dollars) by reaching certainmilestones.

 

 

Ourwebsite is https://lifeclips.com/. Information contained on our website does not constitute part of and is not incorporated into thisprospectus.

 

CompanyOverview

 

CognitiveApps provides an AI powered mental health analytics platform empowering businesses to measure, understand, and improve the mental well-beingof their employees, patients or customers. The Cognitive Apps solution is driven to achieve the Three Pillars: improved diagnostic outcomes,better and more personalized care for individuals, and to decrease the overall costs and time for the care. An individual only needsto record their voice on a handset, iPad, or tablet. The Cognitive Apps assessment is designed to be administered as often as daily,in order to provide a more granular picture of changes in mental health over time. As a result, the Cognitive apps assessment can beroutinely completed to monitor mental health and track variables that might be impacted by treatment.

 

CognitiveApps delivers a comprehensive approach to well-being, supporting the whole person. Cognitive apps currently has partnerships with Ehave(OTC: EHVVF), Mycotopia (OTC: TWGL), Welmind EMR, Betterhelp, Belshare, and Movefit.

 

Foundedin 2015, the Belfrics digital exchange platform, which was fully developed in-house, is one of the most compliant platforms in the cryptocurrencyindustry. Supported by the proprietary technology of Belrium Blockchain KYC solution, the KYC (“Know Your Customer”) andAML (“Anti-Money Laundering”) process of Belfrics Exchange is well accepted compliance solution. With 10 operational officesin 8 countries, Belfrics provides localized and personalized support to digital currency traders. Through its Blockchain Academy, Belfricsprovides continuous training to traders, developers and blockchain enthusiasts in more than 20 countries. Belfrics is licensed and regulatedby the Labuan Financial Services Authority (LFSA) in Malaysia.

 

Inaddition to the digital assets exchange services, Belfrics’ Belrium Blockchain is a core solution over which multiple decentralizedapplications (dApp) are built. The Blerium-based KYC solution (BKVS) received a patent from Nigeria Patent Authority and Capital MarketsAuthority of Kenya (CMA) granted a Sandbox license for Belfrics to test the KYC solution for financial institutions. Belfrics has developeddecentralized applications on Belrium blockchain for health, education and employment sectors.

 

Fora more thorough discussion of the Company’s business, see “Business” on page 25.

 

 

TheOffering

 

Issuer	Life Clips Inc.
Common Stock offered by the selling stockholder	Up to $50,000,000 worth of shares of our Common Stock, consisting of:
	●	35,460,739 shares of our Common Stock initially issued to the selling stockholder as consideration for its commitment to purchase shares of our Common Stock under the Purchase Agreement (the “Commitment Shares”),
	●	up to approximately 474,539,261 shares of Common Stock that we may sell to the selling stockholder, from time to time at our sole discretion, pursuant to the Purchase Agreement, described below.

 

Common Stock outstanding prior to this Offering	1,794,446,647 shares (as of June 3,2022)*
Common Stock outstanding immediately after this Offering	2,304,446,647 shares (as of June 3, 2022)*
Trading symbol	Our Common Stock is currently listed on OTC Markets under the symbol “LCLP.”
Use of proceeds	The selling stockholder will receive all of the proceeds from the sale of the shares offered for sale by it under this prospectus. We will not receive proceeds from the sale of the shares of our Common Stock by the selling stockholder through this prospectus. However, we may receive gross proceeds of up to $50.0 million from the sale of our Common Stock to the selling stockholder under the Purchase Agreement. We will not receive any cash proceeds from the issuance of the Commitment Shares, or any additional Commitment Shares issued pursuant to the Purchase Agreement, to the selling stockholder under the Purchase Agreement. We intend to use any proceeds from the selling stockholder that we receive under the Purchase Agreement for working capital, strategic and general corporate purposes. See “Use of Proceeds” on page 14 for more information.
Risk factors	Investing in our securities involves a high degree of risk. As an investor you should be prepared to lose your entire investment See “Risk Factors” beginning on page 7.

 

*The above discussion excludes:

 

●

A number of shares of Common Stock issuable from the conversion of Series B and Series C preferred

 

 

SUMMARYCONSOLIDATED FINANCIAL INFORMATION

 

The following tables present our summary consolidatedfinancial and other data as of and for the periods indicated. The summary consolidated statements of operations data for the fiscal yearsended June 30, 2021 and June 30, 2020, and the summary consolidated balance sheet data as of June 30, 2021 and June 30, 2020, are derivedfrom our audited consolidated financial statements incorporated by reference. The consolidated statement of operations data for the threeand nine months ended March 31, 2022 and 2021 and the summary consolidated balance sheet data as of March 31, 2022,are derived from our unaudited condensed consolidated financial statements incorporated by reference.

 

Thesummarized financial information presented below is derived from and should be read in conjunction with our audited consolidated financialstatements and our unaudited condensed consolidated financial statements incorporated by reference including the notes to those financialstatements, both of which are incorporated by reference in this prospectus along with the section entitled “Management’sDiscussion and Analysis of Financial Condition and Results of Operations.” Our historical results are not necessarily indicativeof our future results.

 

		March 31,				June 30,
		2022				2021				2020
Consolidated Balance Sheets Data:
Cash, operating		$	855,759			$	230,685			$	12,160
Cash, restricted			1,664,873				34,271				-
Total current assets			2,520,632				264,956				12,160
Total assets			50,624,450				303,378				12,160
Total current liabilities			11,412,917				7,827,665				18,708,560
Total liabilities			26,119,132				7,827,665				18,708,560
Total stockholders’ equity			24,505,318				(7,524,287	)			(18,696,400	)

 

		For the Three Months Ended								For the Nine Months Ended								For the Years Ended
		March 31,								March 31,								June 30,
		2022				2021				2022				2021				2021				2020
Statement of Operations:
Revenue		$	2,964,111			$	-			$	5,244,952			$	-			$	50,000			$	-
Operating expenses, excluding depreciation and amortization			1,709,204				91,239				3,868,479				286,629				599,590				326,614
Depreciation and amortization			-				11,783				154,399				15,878				99,960				22,890
Income/(Loss) from operations			(1,035,031	)			(91,239)				(1,592,465	)			(286,629 )				(3,479,037	)			(10,740,327	)
Net income/(loss) attributable to parent			3,372,853				4,807,112				(629,693)				8,543,125				(3,457,397	)			(10,740,327	)

 

 

 

RiskFactors

 

Aninvestment in our common stock involves a high degree of risk, including the potential loss of all or part of your investment. Beforemaking an investment decision to purchase our common stock, you should carefully read and consider all the risks and uncertainties describedbelow, some of which may be exacerbated by COVID-19, as well as other information included in this prospectus and the information incorporatedby reference into this prospectus. The occurrence of any of the following risks or additional risks and uncertainties that are currentlyimmaterial or unknown could have a material adverse effect on our business, results of operations, and financial condition and the priceof our Common Stock could decline, and you may lose all or part of your investment. The following risk factors are not necessarily presentedin order of relative importance and should not be considered to represent a complete set of all potential risks that could affect us.This prospectus contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differmaterially from those anticipated in forward-looking statements as a result of specific factors, including the risks and uncertaintiesdescribed below. See Cautionary Statement Regarding Forward-Looking Statements

 

Inevaluating the Company, its business and any investment in the Company, readers should carefully consider the following factors:

 

RisksRelated to this Offering

 

Itis not possible to predict the actual number of shares we will sell under the Purchase Agreement to the selling stockholder, or the actualgross proceeds resulting from those sales.

 

OnMarch 16, 2022, we entered into the Purchase Agreement with Mastiff Group LLC, pursuant to which the selling stockholder has committedto purchase up to $50,000,000 in shares of our Common Stock, subject to certain limitations and conditions set forth in the PurchaseAgreement. The shares of our Common Stock that may be issued under the Purchase Agreement may be sold by us to the selling stockholderat our discretion from time to time over a 24-month period commencing on the Commencement Date.

 

Wegenerally have the right to control the timing and amount of any sales of our shares of Common Stock to the selling stockholder underthe Purchase Agreement. Sales of our Common Stock, if any, to the selling stockholder under the Purchase Agreement will depend upon marketconditions and other factors to be determined by us. We may ultimately decide to sell to the selling stockholder all, some or no additionalamount of the shares of our Common Stock that may be available for us to sell to selling stockholder pursuant to the Purchase Agreement.

 

Becausethe purchase price per share to be paid by the selling stockholder for the shares of Common Stock that we may elect to sell to them underthe Purchase Agreement, if any, will fluctuate based on the market prices of our Common Stock it is not possible for us to predict, asof the date of this prospectus and prior to any such sales, the number of shares of Common Stock that we will sell to the selling stockholderunder the Purchase Agreement, the purchase price per share that the selling stockholder will pay for shares purchased from us under thePurchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by the selling stockholder under the PurchaseAgreement, if any.

 

Moreover,although the Purchase Agreement provides that we may sell up to an aggregate of $50,000,000 of our Common Stock to the selling stockholder,we are registering 510,000,000 shares of our Common Stock, which is fewer shares than necessary to realize the Total Commitment. Therefore,the actual gross proceeds from the sale of the shares may be substantially less than the $50,000,000 Total Commitment available to usunder the Purchase Agreement. If it becomes necessary for us to issue and sell to the selling stockholder under the Purchase Agreementmore shares than the shares being registered for resale under this prospectus in order to receive aggregate gross proceeds equal to theTotal Commitment of $50,000,000 under the Purchase Agreement, we must file with the SEC one or more additional registration statementsto register under the Securities Act the resale by the selling stockholder of any such additional shares of our Common Stock over the510,000,000 shares registered in this Registration Statement that we wish to sell from time to time under the Purchase Agreement, whichthe SEC must declare effective, in each case before we may elect to sell any additional shares of our Common Stock to the selling stockholderunder the Purchase Agreement. Any issuance and sale by us under the Purchase Agreement of a substantial number of shares of Common Stockin addition to the 510,000,000 shares of our Common Stock being registered for resale by the selling stockholder under this prospectuscould cause additional substantial dilution to our stockholders. The number of shares of our common stock ultimately offered for saleby the selling stockholder is dependent upon the number of shares of Common Stock, if any, we ultimately sell to the selling stockholderunder the Purchase Agreement.

 

Anyissuance and sale by us under the Purchase Agreement of a substantial number of shares of Common Stock in less than or greater than thenumber of shares of our Common Stock being registered for resale by the selling stockholder under this prospectus could cause substantialdilution to our stockholders. The number of shares of our common stock ultimately offered for sale by the selling stockholder is dependentupon the number of shares of Common Stock we ultimately sell to the selling stockholder under the Purchase Agreement.

 

 

Investorswho buy shares at different times will likely pay different prices.

 

Pursuantto the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares soldto the selling stockholder. If and when we do elect to sell shares of our Common Stock to the selling stockholder pursuant to the PurchaseAgreement, after the selling stockholder has acquired such shares, the selling stockholder may resell all, some or none of such sharesat any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares from the sellingstockholder in this Offering at different times will likely pay different prices for those shares, and so may experience different levelsof dilution and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a declinein the value of the shares they purchase from the selling stockholder in this Offering as a result of future sales made by us to theselling stockholder at prices lower than the prices such investors paid for their shares in this Offering.

 

Wemay require additional financing to sustain our operations and without it we may not be able to continue operations.

 

Subjectto the terms and conditions of the Purchase Agreement, we may, at our discretion, direct the selling stockholder to purchase up to $50,000,000of shares of our Common Stock under the Purchase Agreement from time-to-time over a 24-month period beginning on the Commencement Date.Although the Purchase Agreement provides that we may sell up to an aggregate of $50,000,000 of our Common Stock to the selling stockholderand we are registering 510,000,000 shares of our Common Stock. The purchase price per share for the shares of Common Stock that we mayelect to sell to the selling stockholder under the Purchase Agreement, if any additional shares, will fluctuate based on the market pricesof our Common Stock. Accordingly, it is not currently possible to predict the number of shares that will be sold to the selling stockholder,if any additional shares, the actual purchase price per share to be paid by the selling stockholder for those shares, or the actual grossproceeds to be raised in connection with those sales.

 

Assuminga purchase price of $.0098 per share (which represents the closing price of our Common Stock on OTC Markets on March 24, 2022), the purchaseby the selling stockholder of all of the remaining 433,469,388 shares available under the Purchase Agreement from and after the CommencementDate would result in aggregate gross proceeds to us of approximately $4,248,000, which is substantially less than the $50,000,000 TotalCommitment available to us under the Purchase Agreement.

 

Accordingly,in order to receive aggregate gross proceeds equal to the $50,000,000 Total Commitment available to us under the Purchase Agreement,we would need to issue and sell to the selling stockholder under the Purchase Agreement more than the number of shares of our CommonStock being registered, which, would require us to first (i) obtain stockholder approval to increase the number of authorized sharesof Common Stock by amending our Articles of Incorporation (unless the average per share purchase price paid by the selling stockholderfor all shares of Common Stock sold under the Purchase Agreement equals or exceeds $0.0197, in which case we would have sufficient authorizedshares of Common Stock), and (ii) to file with the SEC one or more additional registration statements to register under the SecuritiesAct the resale by the selling stockholder any such additional shares of our Common Stock we wish to sell from time to time under thePurchase Agreement, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our CommonStock to the selling stockholder under the Purchase Agreement.

 

Theextent to which we rely on the selling stockholder as a source of funding will depend on a number of factors including, the prevailingmarket price of our Common Stock and the extent to which we are able to secure working and other capital from other sources. If obtainingsufficient funding from the selling stockholder were to prove unavailable or prohibitively dilutive, we may need to secure another sourceof funding in order to satisfy our working and other capital needs. Even if we were to sell to the selling stockholder all of the sharesof Common Stock available for sale to the selling stockholder under the Purchase Agreement, we may still need additional capital to fullyimplement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailableor prohibitively expensive when we require it, the consequences may be a material adverse effect on our business, operating results,financial condition and prospects.

 

Salesof our common stock to the Selling Stockholder may cause substantial dilution to our existing stockholders, the sale of the shares ofour common stock acquired by the Selling Stockholder could cause the price of our common stock to decline, and the actual number of shareswe will issue under the Purchase Agreement, at any one time or in total, is uncertain.

 

Thisregistration statement relates to an aggregate amount of up to $50,000,000 of shares of our common stock that we may sell to the SellingStockholder from time to time prior to March 16, 2024. The number of shares ultimately offered for sale to the Selling Stockholder underthis prospectus supplement is dependent upon the number of shares we elect to sell to the Selling Stockholder under the Purchase Agreement.See “Committed Equity Financing” for more information about our obligations under the Purchase Agreement.

 

 

Dependingupon market liquidity at the time, sales of shares of our common stock under the Purchase Agreement may cause the trading price of ourcommon stock to decline. After the Selling Stockholder has acquired shares under the Purchase Agreement, it may sell all, some or noneof those shares. Sales to the Selling Stockholder by us pursuant to the Purchase Agreement under this prospectus supplement may resultin substantial dilution to the interests of other holders of our common stock. The sale of a substantial number of shares of our commonstock to the Selling Stockholder in this offering, or anticipation of such sales, could make it more difficult for us to sell equityor equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales. However, we have theright to control the timing and amount of any sales of our shares to the Selling Stockholder (other than the mandatory purchase noticedescribed above that we are obligated to issue), and the Purchase Agreement may be terminated by us at any time at our discretion withoutpenalty.

 

Theextent to which we rely on Mastiff as a source of funding will depend on a number of factors, including the prevailing market price ofour common stock and the extent to which we are able to secure working capital from other sources. The aggregate number of shares thatwe can sell to the Selling Stockholder under the Purchase Agreement may in no case exceed the number of shares authorized but not issuedor reserved unless the average per share purchase price paid by the selling stockholder for all shares of Common Stock sold under thePurchase Agreement equals or exceeds $0.0197 or we obtain stockholder approval increase the number of authorized shares of Common Stock.

 

Futuresales and issuances of our Common Stock or other securities might result in significant dilution and could cause the price of our CommonStock to decline.

 

Toraise capital, we may sell Common Stock, convertible securities or other equity securities in one or more transactions other than thosecontemplated by the Purchase Agreement, at prices and in a manner we determine from time to time. We may sell shares or other securitiesin another offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasingshares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additionalshares of our Common Stock, or securities convertible or exchangeable into Common Stock, in future transactions may be higher or lowerthan the price per share paid by investors in this offering.

 

Wecannot predict what effect, if any, sales of shares of our Common Stock in the public market or the availability of shares for sale willhave on the market price of our Common Stock. However, future sales of substantial amounts of our Common Stock in the public market,including shares issued upon exercise of outstanding options, warrants and convertible preferred shares, or the perception that suchsales may occur, could adversely affect the market price of our Common Stock.

 

Managementwill have broad discretion as to the use of the proceeds from the Offering, and uses may not improve our financial condition or marketvalue.

 

Becausewe have not designated the amount of net proceeds from the Offering to be used for any particular purpose, our management will have broaddiscretion as to the application of such net proceeds and could use them for purposes other than those contemplated hereby. Our managementmay use the net proceeds for corporate purposes that may not improve our financial condition or market value.

 

Risksrelated to our Business

 

Thefuture development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto doesnot grow as we expect, our business, operating results, and financial condition could be adversely affected.

 

Cryptoassets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, differentcrypto assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system,while Ethereum was designed to be a smart contract and decentralized application platform. Many other crypto networks—ranging fromcloud computing to tokenized securities networks—have only recently been established. The further growth and development of anycrypto assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usageof crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including:

 

●Many crypto networks have limited operating histories, have not been validated in production, and are still in the process ofdeveloping and making significant decisions that will affect the design, supply, issuance, functionality, and governance of theirrespective crypto assets and underlying blockchain networks, any of which could adversely affect their respective cryptoassets.

 

●Many crypto networks are in the process of implementing software upgrades and other changes to their protocols, which couldintroduce bugs, security risks, or adversely affect the respective crypto networks.

 

●Several large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, andenergy usage issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it couldadversely affect the underlying crypto assets.

 

 

●Security issues, bugs, and software errors have been identified with many crypto assets and their underlying blockchain networks,some of which have been exploited by malicious actors. There are also inherent security weaknesses in some crypto assets, such aswhen creators of certain crypto networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identifiedwith a crypto assets could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (avolunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains amajority of the compute or staking power on a crypto network, as has happened in the past, it may be able to manipulatetransactions, which could cause financial losses to holders, damage the network’s reputation and security, and adverselyaffect its value.

 

●The development of new technologies for mining, such as improved application-specific integrated circuits (commonly referred to asASICs), or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, couldreduce the security of blockchain networks, lead to increased liquid supply of crypto assets, and reduce a crypto’s price andattractiveness.

 

●If rewards and transaction fees for miners or validators on any particular crypto network are not sufficiently high to attract andretain miners, a crypto network’s security and speed may be adversely affected, increasing the likelihood of a maliciousattack.

 

●Many crypto assets have concentrated ownership or an “admin key”, allowing a small group of holders to have significantunilateral control and influence over key decisions relating to their crypto networks, such as governance decisions and protocolchanges, as well as the market price of such crypto assets.

 

●The governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are notdirectly compensated for their contributions. As a result, there may be a lack of consensus or clarity on the governance of anyparticular crypto network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, anyof which could result in unexpected or undesirable errors, bugs, or changes, or stymie such network’s utility and ability torespond to challenges and grow.

 

●Many crypto networks are in the early stages of developing partnerships and collaborations, all of which may not succeed andadversely affect the usability and adoption of the respective crypto assets.

 

Variousother technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’personal information, theft of users’ assets, and other negative consequences, and which required resolution with the attentionand efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particularif they are not resolved, the development and growth of crypto may be significantly affected and, as a result, our business, operatingresults, and financial condition could be adversely affected.

 

Cyberattacksand security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputationand our business, operating results, and financial condition.

 

Ourbusiness involves the collection, storage, processing, and transmission of confidential information, customer, employee, service provider,and other personal data, as well as information required to access customer assets. We have built our reputation on the premise thatour platform offers customers a secure way to purchase, store, and transact in crypto assets. As a result, any actual or perceived securitybreach of us or our third-party partners may:

 

●harm our reputation and brand;

●result in our systems or services being unavailable and interrupt our operations;

●result in improper disclosure of data and violations of applicable privacy and other laws;

●result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financialexposure;

●cause us to incur significant remediation costs;

●lead to theft or irretrievable loss of our or our customers’ fiat currencies or crypto assets;

●reduce customer confidence in, or decreased use of, our products and services;

●divert the attention of management from the operation of our business;

●result in significant compensation or contractual penalties from us to our customers or third parties as a result of losses to themor claims by them; and

●adversely affect our business and operating results.

 

 

Further,any actual or perceived breach or cybersecurity attack directed at other financial institutions or crypto companies, whether or not weare directly impacted, could lead to a general loss of customer confidence in the cryptoeconomy or in the use of technology to conductfinancial transactions, which could negatively impact us, including the market perception of the effectiveness of our security measuresand technology infrastructure.

 

Anincreasing number of organizations, including large merchants, businesses, technology companies, and financial institutions, as wellas government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticatedand highly targeted attacks, including on their websites, mobile applications, and infrastructure.

 

Attacksupon systems across a variety of industries, including the crypto industry, are increasing in their frequency, persistence, and sophistication,and, in many cases, are being conducted by sophisticated, well-funded, and organized groups and individuals, including state actors.The techniques used to obtain unauthorized, improper, or illegal access to systems and information (including customers’ personaldata and crypto assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly,and often are not recognized or detected until after they have been launched against a target. These attacks may occur on our systemsor those of our third-party service providers or partners. Certain types of cyberattacks could harm us even if our systems are left undisturbed.For example, attacks may be designed to deceive employees and service providers into releasing control of our systems to a hacker, whileothers may aim to introduce computer viruses or malware into our systems with a view to stealing confidential or proprietary data. Additionally,certain threats are designed to remain dormant or undetectable until launched against a target and we may not be able to implement adequatepreventative measures.

 

Althoughwe have developed systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectivelyrespond to known and potential risks, and expect to continue to expend significant resources to bolster these protections, there canbe no assurance that these security measures will provide absolute security or prevent breaches or attacks. We have experienced fromtime to time, and may experience in the future, breaches of our security measures due to human error, malfeasance, insider threats, systemerrors or vulnerabilities, or other irregularities. Unauthorized parties have attempted, and we expect that they will continue to attempt,to gain access to our systems and facilities, as well as those of our customers, partners, and third-party service providers, throughvarious means, including hacking, social engineering, phishing, and attempting to fraudulently induce individuals (including employees,service providers, and our customers) into disclosing usernames, passwords, payment card information, or other sensitive information,which may in turn be used to access our information technology systems and customers’ crypto assets. Threats can come from a varietyof sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. Certain threat actorsmay be supported by significant financial and technological resources, making them even more sophisticated and difficult to detect. Further,there has been an increase in such activities as a result of the novel coronavirus, or COVID-19, pandemic. As a result, our costs andthe resources we devote to protecting against these advanced threats and their consequences may continue to increase over time.

 

Althoughwe maintain insurance coverage that we believe is adequate for our business, it may be insufficient to protect us against all lossesand costs stemming from security breaches, cyberattacks, and other types of unlawful activity, or any resulting disruptions from suchevents. Outages and disruptions of our platform, including any caused by cyberattacks, may harm our reputation and our business, operatingresults, and financial condition.

 

Weare subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any lawsand regulations could adversely affect our brand, reputation, business, operating results, and financial condition.

 

Ourbusiness is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatoryinterpretations and guidance in the markets in which we operate, including those governing financial services and banking, trust companies,securities, broker-dealers and ATS, commodities, credit, crypto asset custody, exchange, and transfer, cross-border and domestic moneyand crypto asset transmission, consumer and commercial lending, usury, foreign currency exchange, privacy, data governance, data protection,cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, escheatment,antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terroristfinancing. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, crypto assets,and related technologies. As a result, they do not contemplate or address unique issues associated with the cryptoeconomy, are subjectto significant uncertainty, and vary widely across U.S. federal, state, and local and international jurisdictions. These legal and regulatoryregimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in aninconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving natureof our business and the significant uncertainty surrounding the regulation of the cryptoeconomy requires us to exercise our judgementas to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagreewith our conclusions. To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines,revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences, each of whichmay be significant and could adversely affect our business, operating results, and financial condition.

 

 

Inaddition to existing laws and regulations, various governmental and regulatory bodies, including legislative and executive bodies, inthe United States and in other countries may adopt new laws and regulations, or new interpretations of existing laws and regulationsmay be issued by such bodies or the judiciary, which may adversely impact the development of the cryptoeconomy as a whole and our legaland regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what productsor services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new licensingrequirements, or imposing a total ban on certain crypto asset transactions, as has occurred in certain jurisdictions in the past. Forexample, under recommendations from the Financial Crimes Enforcement Network, or FinCEN, and the Financial Action Task Force, or FATF,the United States and several foreign jurisdictions are likely to impose the Funds Travel Rule and the Funds Transfer Rule (commonlyreferred to collectively as the Travel Rule) on financial service providers in the cryptoeconomy. We may face substantial compliancecosts to operationalize and comply with the Travel Rule and may be further subject to administrative sanctions for technical violationsor customer attrition if the user experience suffers as a result. More recently, in December 2020, FinCEN released a proposed rule thatwould require us to collect personal information from the owners of self-custodied wallets that transfer cryptocurrencies to or receivecryptocurrencies from Belfrics, and report certain transactions to the federal government. There are substantial uncertainties on howthese requirements would apply in practice, and we may face substantial compliance costs to operationalize and comply with these rules.We may be further subject to administrative sanctions for technical violations or customer attrition if the user experience suffers asa result. Further E.U.-level legislation imposing additional regulatory requirements in relation to crypto-related activities is alsoexpected in the intermediate term which, among other things, may impose new or additional regulatory requirements on both crypto serviceproviders and issuers of certain crypto assets, which may impact our expansion into the E.U.

 

Weoperate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financialand other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respondto our competitors effectively.

 

Thecryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, changing customer needs,frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expectcompetition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Wecompete against a number of companies operating both within the United States and abroad, and both those that focus on traditional financialservices and those that focus on crypto-based services. Our main competitors fall into the following categories:

 

	●	Traditional financial technology and brokerage firms that have entered the crypto asset market in recent years and offer overlapping features targeted at our customers.
	●	Companies focused on the crypto asset market, some of whom adhere to local regulations and directly compete with our platform, and many who choose to operate outside of local rules and regulations or in jurisdictions with less stringent local rules and regulations and are potentially able to more quickly adapt to trends, support a greater number of crypto assets, and develop new crypto-based products and services due to a different standard of regulatory scrutiny.
	●	Crypto-focused companies and traditional financial incumbents that offer point or siloed solutions specifically targeted at institutional customers.

 

Ourprimary source of competition to date has been from companies, in particular those located outside the United States, who are subjectto significantly less stringent regulatory and compliance requirements in their local jurisdictions. Their business models rely on beingunregulated or only regulated in a small number of lower compliance jurisdictions, whilst also offering their products in highly regulatedjurisdictions, including the United States, without necessarily complying with the relevant regulatory requirements in such jurisdictions.

 

Todate, due to limited enforcement by U.S. and foreign regulators, many of these competitors have been able to operate from offshore whileoffering large numbers of products and services to consumers, including in the United States, Europe, and other highly regulated jurisdictions,without complying with the relevant licensing and other requirements in these jurisdictions, and seemingly without penalty. Due to ourregulated status in several jurisdictions and our commitment to legal and regulatory compliance, we have not been able to offer manyproducts and services that our unregulated or less regulated competitors are able to offer to a group that includes many of our customers,which may adversely impact our business, financial condition, and results of operations.

 

Itis part of our business model to be regulatorily compliant and to offer KYC (know your customer) and AML (anti-money laundering) featuresas integral parts of our blockchain and exchanges.

 

 

Manyinnovative start-up companies and larger companies have made, and continue to make, significant investments in research and development,and we expect these companies to continue to develop similar or superior products and technologies that compete with our products. Further,more traditional financial and non-financial services businesses may choose to offer crypto-based services in the future as the industrygains adoption. Our current and potential competitors may establish cooperative relationships among themselves or with third partiesthat may further enhance their resources.

 

Ourexisting competitors have, and our potential competitors are expected to have, various competitive advantages over us, such as:

 

	●	the ability to trade crypto assets and offer products and services that we do not support or offer on our platform (due to constraints from regulatory authorities, our banking partners, and other factors) such as tokens that constitute securities or derivative instruments under U.S. or foreign laws;
	●	greater name recognition, longer operating histories, larger customer bases, and larger market shares;
	●	larger sales and marketing budgets and organizations;

 

	●	more established marketing, banking, and compliance relationships;
	●	greater customer support resources;
	●	greater resources to make acquisitions;
	●	lower labor, compliance, risk mitigation, and research and development costs;
	●	larger and more mature intellectual property portfolios;
	●	greater number of applicable licenses or similar authorizations;
	●	established core business models outside of the trading of crypto assets, allowing them to operate on lesser margins or at a loss;
	●	operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and
	●	substantially greater financial, technical, and other resources.

 

Ifwe are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions ofour competitors, our business, operating results, and financial condition could be adversely affected.

 

Ifwe cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services,and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition.

 

Ourindustry has been characterized by many rapid, significant, and disruptive products and services in recent years. These include decentralizedapplications, DeFi, yield farming, staking, token wrapping, governance tokens, innovative programs to attract customers such as transactionfee mining programs, initiatives to attract traders such as trading competitions, airdrops and giveaways, staking reward programs, andnovel cryptocurrency fundraising and distribution schemes, such as “initial exchange offerings.” We expect new services andtechnologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currentlyprovide. We cannot predict the effects of new services and technologies on our business. However, our ability to grow our customer baseand net revenue will depend heavily on our ability to innovate and create successful new products and services, both independently andin conjunction with third-party developers. In particular, developing and incorporating new products and services into our business mayrequire substantial expenditures, take considerable time, and ultimately may not be successful. Any new products or services could failto attract customers, generate revenue, or perform or integrate well with third-party applications and platforms. In addition, our abilityto adapt and compete with new products and services may be inhibited by regulatory requirements and general uncertainty in the law, constraintsby our banking partners and payment processors, third-party intellectual property rights, or other factors. Moreover, we must continueto enhance our technical infrastructure and other technology offerings to remain competitive and maintain a platform that has the requiredfunctionality, performance, capacity, security, and speed to attract and retain customers, including large, institutional, high-frequencyand high-volume traders. As a result, we expect to expend significant costs and expenses to develop and upgrade our technical infrastructureto meet the evolving needs of the industry. Our success will depend on our ability to develop and incorporate new offerings and adaptto technological changes and evolving industry practices. If we are unable to do so in a timely or cost-effective manner, our businessand our ability to successfully compete, to retain existing customers, and to attract new customers may be adversely affected.

 

 

Werely on our proprietary blockchain, Belrium, which may not gain acceptance in the market which is dominated by transactions in Bitcoinand Ethereum.

 

Weprovide services based upon our Belrium Blockchain. The services provided on the Belrium Blockchain generate Belrium Tokens. While ourexchanges allow for the trading of Ethereum and Bitcoin making them interchangeable with Belrium, the acceptance of services providedby the Belrium blockchain are critical to our ability to generate revenue.

 

Useof Proceeds

 

Thisprospectus relates to shares of Common Stock that may be offered and sold from time to time by the selling stockholder. We will not receiveany proceeds from the resale of shares of Common Stock by the selling stockholder.

 

Wemay receive up to $50 million in gross proceeds pursuant to the Purchase Agreement. We estimate that the net proceeds to us from thesale of our Common Stock to the selling stockholder pursuant to the Purchase Agreement, less our fees and expenses would be up to $49.9million over an approximately 24-month period, assuming that we receive all $50 million in gross proceeds pursuant to the Purchase Agreement.See “Plan of Distribution” elsewhere in this prospectus for more information.

 

Weintend to use any proceeds from the selling stockholder that we receive under the Purchase Agreement for working capital, strategic andgeneral corporate purposes. We cannot specify with certainty all of the particular uses for the net proceeds that we will have from thesale of our shares pursuant to the Purchase Agreement. Therefore, our management will have broad discretion to determine the specificuse for the net proceeds and we may use the proceeds for purposes that are not contemplated at the time of this Offering.

 

Wewill incur all costs associated with this prospectus and the registration statement of which it is a part.

 

COMMITTEDEQUITY FINANCING

 

General

 

OnMarch 16, 2022, we entered into the Purchase Agreement and the Registration Rights Agreement with Mastiff. Pursuant to the Purchase Agreement,we have the right to sell to the selling stockholder up to a Total Commitment of $50,000,000 in shares of our Common Stock, subject tocertain limitations and conditions set forth in the Purchase Agreement. In accordance with our obligations under the Registration RightsAgreement, we have filed the registration statement that includes this prospectus with the SEC to register under the Securities Act theresale by the selling stockholder of shares of Common Stock that we have issued and may issue to the selling stockholder under the PurchaseAgreement.

 

Wedo not have further right to commence any sales of our Common Stock to the selling stockholder under the Purchase Agreement until theCommencement, which is the time when all of the conditions to our right to commence sales of our Common Stock to the selling stockholderset forth in the Purchase Agreement have been satisfied, including that the registration statement that includes this prospectus is declaredeffective by the SEC and the final form of this prospectus is filed with the SEC. From and after the Commencement, we will control thetiming and amount of any sales of our Common Stock to the selling stockholder. Actual sales of shares of our Common Stock to the sellingstockholder under the Purchase Agreement will depend on a variety of factors to be determined by us from time to time, including, amongothers, market conditions, the trading price of the Common Stock and determinations by us as to the appropriate sources of funding forour company and our operations.

 

Thepurchase price of the shares of Common Stock that we elect to sell to the selling stockholder pursuant to a Fixed Purchase under thePurchase Agreement will be equal to equal to seventy-five percent (75%) of the arithmetic average of the Closing Sale Prices for theCommon Stock during the five (5) consecutive Trading-Day period ending on the Fixed Purchase Date. There is no upper limit on the priceper share that the selling stockholder could be obligated to pay for the Common Stock under the Purchase Agreement.

 

ThePurchase Agreement prohibits us from directing the selling stockholder to purchase any shares of our Common Stock if those shares, whenaggregated with all other shares of our Common Stock then beneficially owned by the selling stockholder (as calculated pursuant to Section13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder), would result in the selling stockholder beneficiallyowning more than the Beneficial Ownership Cap of 4.99% of the outstanding Common Stock.

 

Becausethe purchase price per share to be paid by the selling stockholder for the shares of Common Stock that we may elect to sell to the sellingstockholder under the Purchase Agreement, if any, will fluctuate based on the market prices of our Common Stock for each Fixed Purchasemade pursuant to the Purchase Agreement, if any, as of the date of this prospectus it is not possible for us to predict the number ofshares of Common Stock that we will sell to the selling stockholder under the Purchase Agreement, the actual purchase price per shareto be paid by the selling stockholder for those shares, or the actual gross proceeds to be raised by us from those sales, if any. Asof March 18, 2022, there were 1,781,946,647 shares of our Common Stock outstanding, of which 1,693,675,551shares were held by non-affiliates.If all of the shares offered for resale by the selling stockholder under this prospectus were issued and outstanding as of March 18,2022, such shares would represent approximately 28.6% of the total number of shares of our Common Stock outstanding and approximately30% of the total number of outstanding shares held by non-affiliates, in each case as of March 18, 2022.

 

 

Thenet proceeds from sales, if any, under the Purchase Agreement, will depend on the frequency and prices at which the Company sells sharesof Common Stock to the selling stockholder. To the extent the Company sells shares under the Purchase Agreement, the Company currentlyplans to use any proceeds therefrom for costs of this transaction, for working capital, strategic and other general corporate purposes.

 

Theissuance of our Common Stock to the selling stockholder pursuant to the Purchase Agreement will not affect the rights or privileges ofour existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted. Althoughthe number of shares of our Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock owned byour existing stockholders will represent a smaller percentage of our total outstanding shares of our Common Stock after any such issuance.

 

Asconsideration for the selling stockholder’s irrevocable commitment to purchase shares of Common Stock upon the terms of and subjectto satisfaction of the conditions set forth in the Purchase Agreement, concurrently with the execution and delivery of the Purchase Agreement,the Company will issue to the selling stockholder up to 150,000,000 shares of Common Stock (the “Commitment Shares”),with 35,460,739 shares of Common Stock issued on the Closing Date, and the remainder, if any, to be issued on such Commitment Date(s)as directed by the selling stockholder pursuant to the Purchase Agreement, but will not issue to the selling stockholder any shares thatwould cause the selling stockholder to exceed the 4.99% beneficial ownership cap.

 

ThePurchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnificationobligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes ofsuch agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitationsagreed upon by the contracting parties.

 

Neitherthe Company nor the selling stockholder may assign or transfer its rights and obligations under the Purchase Agreement, and no provisionof the Purchase Agreement or the Registration Rights Agreement may be modified or waived by the parties.

 

Purchaseof Shares by Mastiff Group LLC

 

Uponthe terms and subject to the conditions set forth in the Purchase Agreement, we will have the right, but not the obligation, from timeto time at our sole discretion over the 24-month period from and after the Commencement Date, to direct the selling stockholder to purchaseup to a maximum amount of shares of Common Stock based on a percentage of total volume on the purchase at the applicable purchase priceper share to be calculated on the trading day the selling stockholder receives purchase notice from the Company (the “Fixed PurchaseDate”) in accordance with the Purchase Agreement (each, a “Fixed Purchase”), so long as (in addition to theconditions described elsewhere in this prospectus):

 

●

the closing sale price of the Common Stock on such VWAP Purchase Exercise Date is equal to or greater than $0.009 (subject to equitable adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after the date of the Purchase Agreement); and

 

●

all shares of Common Stock subject to all prior Fixed Purchase notices delivered by the Company to Mastiff, under the Purchase Agreement have theretofore been received by Mastiff, in electronic form as DWAC Shares.

 

Themaximum number of shares of Common Stock that Mastiff is required to purchase in any single VWAP Purchase under the Purchase Agreement(the “Fixed Purchase Maximum Amount”) means an amount equal to the product of (i) twenty percent (20%) of the average tradingvolume of the common stock on the principal trading market for the five (5) Trading Days immediately preceding the date of delivery ofa Fixed Purchase Notice (a “Purchase Notice Date”) multiplied by (ii) the volume weighted average price for the Common Stockduring regular trading hours during a Trading Day on the Trading Market on the Fixed Purchase Date. Such number of shares of Common Stockwhich, when aggregated with all other shares of Common Stock then beneficially owned by Mastiff and its affiliates (as calculated pursuantto Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in Mastiff beneficially owning a number ofshares of Common Stock equal to (or approximating as closely as possible without exceeding) the Beneficial Ownership Cap; and

 

Thepurchase price per share of Common Stock to be purchased by Mastiff, LLC in a Fixed Purchase (the “Fixed Purchase Price”)will be equal to seventy-five percent (75%) of the arithmetic average of the Closing Sale Prices for the Common Stock during the five(5) consecutive Trading-Day period ending on the Fixed Purchase Date for such Fixed Purchase, if the Common Stock is then listed on theTrading Market, (to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similartransaction that occurs. There is no upper limit on the price per share that Mastiff could be obligated to pay for the Common Stock weelect to sell to Mastiff in any VWAP Purchase under the Purchase Agreement.

 

 

ConditionsPrecedent to Commencement and For Delivery of Fixed Purchase Notices

 

Ourright to deliver Fixed Purchase notices to the selling stockholder under the Purchase Agreement, and the selling stockholder’sobligation to Fixed Purchase notices delivered by us under the Purchase Agreement, are subject to (i) the initial satisfaction, at theCommencement, and (ii) the satisfaction, on the applicable Fixed Purchase Exercise Date for each Fixed Purchase after the CommencementDate, of the conditions precedent thereto set forth in the Purchase Agreement, all of which are entirely outside of the selling stockholder’scontrol, which conditions including the following:

 

●

the accuracy in all material respects of the representations and warranties of the Company included in the Purchase Agreement;

 

●

the Company having performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Purchase Agreement to be performed, satisfied or complied with by the Company;

 

●

the registration statement that includes this prospectus (and any one or more additional registration statements filed with the SEC that include shares of Common Stock that may be issued and sold by the Company to the selling stockholder under the Purchase Agreement) having been declared effective under the Securities Act by the SEC, and the selling stockholder being able to utilize this prospectus (and the prospectus included in any one or more additional registration statements filed with the SEC under the Registration Rights Agreement) to resell all of the shares of Common Stock included in this prospectus (and included in any such additional prospectuses);

 

●

the SEC shall not have issued any stop order suspending the effectiveness of the registration statement that includes this prospectus (or any one or more additional registration statements filed with the SEC that include shares of Common Stock that may be issued and sold by the Company to the selling stockholder under the Purchase Agreement) or prohibiting or suspending the use of this prospectus (or the prospectus included in any one or more additional registration statements filed with the SEC under the Registration Rights Agreement), and the absence of any suspension of qualification or exemption from qualification of the Common Stock for offering or sale in any jurisdiction;

 

●

there shall not have occurred any event and there shall not exist any condition or state of facts, which makes any statement of a material fact made in the registration statement that includes this prospectus (or in any one or more additional registration statements filed with the SEC that include shares of Common Stock that may be issued and sold by the Company to the selling stockholder under the Purchase Agreement) untrue or which requires the making of any additions to or changes to the statements contained therein in order to state a material fact required by the Securities Act to be stated therein or necessary in order to make the statements then made therein (in the case of this prospectus or the prospectus included in any one or more additional registration statements filed with the SEC under the Registration Rights Agreement, in light of the circumstances under which they were made) not misleading;

 

●

this prospectus, in final form, shall have been filed with the SEC under the Securities Act prior to Commencement, and all reports, schedules, registrations, forms, statements, information and other documents required to have been filed by the Company with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), shall have been filed with the SEC;

 

●

trading in the Common Stock shall not have been suspended by the SEC or the Principal Market, the Company shall not have received any final and non-appealable notice that the quotation of the Common Stock on the Principal Market shall be terminated on a date certain (unless, prior to such date, the Common Stock is listed or quoted on any other Eligible Market, as such term is defined in the Purchase Agreement), and there shall be no suspension of, or restriction on, accepting additional deposits of the Common Stock, electronic trading or book-entry services by DTC with respect to the Common Stock;

 

●

the Company shall have complied with all applicable federal, state and local governmental laws, rules, regulations and ordinances in connection with the execution, delivery and performance of the Purchase Agreement and the Registration Rights Agreement;

 

●

the absence of any statute, regulation, order, decree, writ, ruling or injunction by any court or governmental authority of competent jurisdiction which prohibits the consummation of or that would materially modify or delay any of the transactions contemplated by the Purchase Agreement or the Registration Rights Agreement;

 

 

●

the absence of any action, suit or proceeding before any arbitrator or any court or governmental authority seeking to restrain, prevent or change the transactions contemplated by the Purchase Agreement or the Registration Rights Agreement, or seeking material damages in connection with such transactions;

 

●

all of the shares of Common Stock that may be issued pursuant to the Purchase Agreement shall have been approved for listing or quotation on The Nasdaq Capital Market (or if the Common Stock is not then listed on The Nasdaq Capital Market, on any Eligible Market), subject only to notice of issuance;

 

●

no condition, occurrence, state of facts or event constituting a material adverse effect shall have occurred and be continuing;

 

●

the absence of any bankruptcy proceeding against the Company commenced by a third party, and the Company shall not have commenced a voluntary bankruptcy proceeding, consented to the entry of an order for relief against it in an involuntary bankruptcy case, consented to the appointment of a custodian of the Company or for all or substantially all of its property in any bankruptcy proceeding, or made a general assignment for the benefit of its creditors; and

 

●

the receipt by the selling stockholder of the opinions, bring-down opinions and negative assurances from outside counsel to the Company in the forms mutually agreed to by the Company and the selling stockholder prior to the date of the Purchase Agreement.

 

Terminationof the Purchase Agreement

 

Unlessearlier terminated as provided in the Purchase Agreement, the Purchase Agreement will terminate automatically on the earliest to occurof:

 

●

the first day of the month next following the 24-month anniversary of the Commencement Date;

 

●

the date on which the selling stockholder shall have purchased shares of Common Stock under the Purchase Agreement for an aggregate gross purchase price equal to its $50,000,000 Total Commitment under the Purchase Agreement;

 

●

the date on which the Common Stock shall have failed to be listed or quoted on the Principal Market or any other Eligible Market; and

 

●

the date on which the Company commences a voluntary bankruptcy case or any third party commences a bankruptcy proceeding against the Company, a custodian is appointed for the Company in a bankruptcy proceeding for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors.

 

Wehave the right to terminate the Purchase Agreement at any time after Commencement, at no cost or penalty, upon 10 trading days’prior written notice to the selling stockholder. We and the selling stockholder may also terminate the Purchase Agreement at any timeby mutual written consent.

 

Theselling stockholder also has the right to terminate the Purchase Agreement upon 10 trading days’ prior written notice to us, butonly upon the occurrence of certain events, including:

 

●

the occurrence of a Material Adverse Effect (as defined in the Purchase Agreement);

 

●

the occurrence of a Fundamental Transaction (as defined in the Purchase Agreement) involving the Company;

 

●

our failure to file with the SEC, or the SEC’s failure to declare effective, the registration statement that includes this prospectus or any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement, within the time periods set forth in the Registration Rights Agreement;

 

●

the effectiveness of the registration statement that includes this prospectus or any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement lapses for any reason (including the issuance of a stop order by the SEC), or this prospectus or the prospectus included in any additional registration statement we file with the SEC pursuant to the Registration Rights Agreement otherwise becomes unavailable to the selling stockholder for the resale of all of the shares of Common Stock included therein, and such lapse or unavailability continues for a period of 20 consecutive trading days or for more than an aggregate of 60 trading days in any 365-day period, other than due to acts of Mastiff;

 

●

trading in the Common Stock on the Principal Market (or if the Common Stock is then listed on an Eligible Market, trading in the Common Stock on such Eligible Market) has been suspended for a period of three consecutive trading days.

 

 

Notermination of the Purchase Agreement by us or by the selling stockholder will become effective prior to the first Trading Day immediatelyfollowing the applicable settlement date related to any pending Fixed Purchase that has not been fully settled in accordance with theterms and conditions of the Purchase Agreement, and will not affect any of our respective rights and obligations under the Purchase Agreementwith respect to any pending Fixed Purchase (as applicable), and both we and the selling stockholder have agreed to complete our respectiveobligations with respect to any such pending Fixed Purchase under the Purchase Agreement. Furthermore, no termination of the PurchaseAgreement will affect the Registration Rights Agreement, which will survive any termination of the Purchase Agreement.

 

NoShort-Selling or Hedging by Mastiff

 

Theselling stockholder has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedgingof our Common Stock during any time prior to the termination of the Purchase Agreement.

 

Prohibitionon Variable Rate Transactions

 

Subjectto specified exceptions included in the Purchase Agreement, we are limited in our ability to enter into specified variable rate transactionsduring the term of the Purchase Agreement. Such transactions include, among others, the issuance of convertible securities with a conversionor exercise price that is based upon or varies with the trading price of our Common Stock after the date of issuance.

 

Effectof Performance of the Purchase Agreement on our Stockholders

 

Allshares of Common Stock that have been or may be issued or sold by us to the selling stockholder under the Purchase Agreement that arebeing registered under the Securities Act for resale by the selling stockholder in this offering are expected to be freely tradable.The shares of Common Stock being registered for resale in this offering (excluding the up to 150,000,000 shares of Common Stock(the “Commitment Shares”), with 35,460,739 shares of Common Stock issued on the Closing Date, and the remainder, if any,to be issued on such Commitment Date(s) as directed by the selling stockholder pursuant to the Purchase Agreement) may be issued andsold by us to the selling stockholder from time to time at our discretion over a period of up to 24 months commencing on the CommencementDate. The resale by the selling stockholder of a significant amount of shares registered for resale in this offering at any given time,or the perception that these sales may occur, could cause the market price of our Common Stock to decline and to be highly volatile.Sales of our Common Stock, if any, by the selling stockholder under the Purchase Agreement will depend upon market conditions and otherfactors to be determined by us. We may ultimately decide to sell to the selling stockholder all, some or none of the shares of our CommonStock that may be available for us to sell to the selling stockholder pursuant to the Purchase Agreement.

 

Ifand when we do elect to sell shares of our Common Stock to the selling stockholder pursuant to the Purchase Agreement, after the sellingstockholder has acquired such shares, the selling stockholder may resell all, some or none of such shares at any time or from time totime in its discretion and at different prices. As a result, investors who purchase shares from the selling stockholder in this Offeringat different times will likely pay different prices for those shares, and so may experience different levels of dilution and in somecases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value of theshares they purchase from the selling stockholder in this Offering as a result of future sales made by us to the selling stockholderat prices lower than the prices such investors paid for their shares in this Offering. In addition, if we sell a substantial number ofshares to the selling stockholder under the Purchase Agreement, or if investors expect that we will do so, the actual sales of sharesor the mere existence of our arrangement with the selling stockholder may make it more difficult for us to sell equity or equity-relatedsecurities in the future at a time and at a price that we might otherwise wish to effect such sales.

 

Althoughthe Purchase Agreement provides that we may sell up to an aggregate of $50,000,000 of our Common Stock to the selling stockholder, weare registering 510,000,000 shares of our Common Stock. If after the Commencement Date we elect to sell to the selling stockholder allof the 510,000,000 shares of Common Stock being registered for resale under this prospectus that are available for sale by us to theselling stockholder in Fixed Purchases under the Purchase Agreement, depending on the market prices of our Common Stock the applicableFixed Purchase Valuation Period for each Fixed Purchase made pursuant to the Purchase Agreement, the actual gross proceeds from the saleof the shares may be substantially less than the $50,000,000 Total Commitment available to us under the Purchase Agreement. If it becomesnecessary for us to issue and sell to the selling stockholder under the Purchase Agreement more shares being registered for resale underthis prospectus in order to receive aggregate gross proceeds equal to the Total Commitment of $50,000,000 under the Purchase Agreement,we would have to register additional shares. As we have 5,000,000,000 shares authorized it may be necessary for us to increase our numberof authorized shares to receive the Total Commitment amount and have sufficient shares reserved for issuance pursuant to conversion ofour Series B and Series C Preferred Stock and our outstanding convertible debt.

 

 

Insuch case, in order to receive aggregate gross proceeds equal to the $50,000,000 Total Commitment available to us under the PurchaseAgreement, we would need to issue and sell to the selling stockholder under the Purchase Agreement more than the number of shares ofour Common Stock being registered, which, would require us to first (i) obtain stockholder approval to increase the number of authorizedshares of Common Stock by amending our Articles of Incorporation (unless the average per share purchase price paid by the selling stockholderfor all shares of Common Stock sold under the Purchase Agreement equals or exceeds $ 0.0197, in which case we would have sufficient authorizedshares of Common Stock), and (ii) to file with the SEC one or more additional registration statements to register under the SecuritiesAct the resale by the selling stockholder any such additional shares of our Common Stock we wish to sell from time to time under thePurchase Agreement, which the SEC must declare effective, in each case before we may elect to sell any additional shares of our CommonStock to the selling stockholder under the Purchase Agreement.

 

Thefollowing table sets forth the amount of gross proceeds we would receive from the selling stockholder from our sale of shares of CommonStock to the selling stockholder under the Purchase Agreement at varying purchase prices:

 

Assumed Average Purchase Price Per Share				Number of Registered Shares to be Issued if Full Purchase (1)				Percentage of Outstanding Shares After Giving Effect to the Issuance to the Selling Stockholder (2)				Gross Proceeds from the Sale of Shares to the Selling Stockholder Under the Purchase Agreement (3)
$	.005	(4)			510,000,000				22.13	%		$	2,550,000
$	0.02				510,000,000				22.13	%		$	10,200,000
$	0.03				510,000,000				22.13	%		$	15,300,000
$	0.04				510,000,000				22.13	%		$	20,400,000
$	0.05				510,000,000				22.13	%		$	25,500,000
$	0.075				510,000,000				22.13	%		$	38,250,000
$	0.10				500,000,000				21.79	%		$	50,000,000	(5)

  

(1)Although the Purchase Agreement provides that we may sell up to $50,000,000 of our Common Stock to the stockholder, we are only registering510,000,000 shares under this prospectus, which may or may not cover all of the shares we ultimately sell to the stockholder under thePurchase Agreement.

 

(2)The denominator is based on 1,794,446,647 shares outstanding as of June 3, 2022 adjusted to include the issuance of thenumber of shares set forth in the adjacent column that we would have sold to the selling stockholder in future sales, assuming the averagepurchase price in the first column for all shares issued. The numerator is based on the number of shares issuable pursuant to futuresales under the Purchase Agreement (that are the subject of this Offering) at the corresponding assumed average purchase price set forthin the first column.

 

(3)This amount assumes that the shares registered and sold do not include any of the commitment shares. We are obligated to issue up to150,000,000 commitment shares, but we may only issue that number of commitment shares to Mastiff such that their beneficial ownershipof the commitment shares does not exceed 1.99% of our total issued and outstanding shares.

 

(4)The closing sale price of our Common Stock on June 6, 2022.

 

(5)The number of registered shares to be issued are limited by the Total Commitment of $50,000,000 in shares of our Common Stock.

 

SELLINGSTOCKHOLDER

 

Thisprospectus relates to the offer and sale by the selling stockholder of up to 510,000,000 shares of common stock that have been and maybe issued by us to the selling stockholder under the Purchase Agreement. For additional information regarding the shares of common stockincluded in this registration statement, see the section titled “Committed Equity Financing” above. We are registering theshares of common stock included in this prospectus pursuant to the provisions of the Registration Rights Agreement we entered into withthe selling stockholder on March 16, 2022 in order to permit the selling stockholder to offer the shares for resale from timeto time. Except for the transactions contemplated by the Purchase Agreement and the Registration Rights Agreement, the selling stockholderhas not had any material relationship with us within the past three years. As used in this prospectus, the term “selling stockholder”means Mastiff Group LLC.

 

 

Thetable below presents information regarding the selling stockholder and the shares of common stock that may be resold by the selling stockholderfrom time to time under this prospectus. This table is prepared based on information supplied to us by the selling stockholder, and reflectsholdings as of May 11, 2022. The number of shares in the column “Maximum Number of Shares of Common Stock to be OfferedPursuant to this Prospectus” represents all of the shares of common stock being offered for resale by the selling stockholder underthis prospectus. The selling stockholder may sell some, all or none of the shares being offered for resale in this offering. We do notknow how long the selling stockholder will hold the shares before selling them, and we know of no existing arrangements between the sellingstockholder or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares of ourcommon stock offered by this prospectus.

 

Beneficialownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes shares of commonstock with respect to which the selling stockholder has voting power, including the power to vote or to direct the voting of such shares,and/or investment power, including the power to dispose or to direct the disposition of such shares. The percentage of shares of commonstock beneficially owned by the selling stockholder prior to the offering shown in the table below is based on an aggregate of 1,794,446,647shares of our common stock outstanding on June 3, 2022.

 

Becausethe purchase price per share to be paid by the selling stockholder for the shares of common stock that we may, in our discretion, electto sell to the selling stockholder from time to time after the date of this prospectus in Fixed Purchases pursuant to the Purchase Agreement,if any, will fluctuate based on the market prices of our common stock at the times we elect to sell such shares to the selling stockholderin Fixed Purchases under the Purchase Agreement, it is not possible for us to predict, as of the date of this prospectus and prior toany such Fixed Purchases under the Purchase Agreement, the actual number of shares of common stock that we will sell to the selling stockholderunder the Purchase Agreement, which may be fewer than the number of shares of common stock being offered for resale by the selling stockholderunder this prospectus. The fourth column assumes the resale by the selling stockholder of all of the shares of common stock being offeredpursuant to this prospectus.

 

Name of Selling Stockholder

Number of Shares of Common Stock Owned Prior to Offering

Maximum Number of Shares of Common Stock to be Offered Pursuant to this Prospectus

Number of Shares of Common Stock Owned After Offering

Number(1)

Percent(2)

Number(3)

Percent(2)

Mastiff Group LLC(4)

35,460,739

1.98

%

510,000,000

0

*

  

*Represents beneficial ownership of less than 1% of the outstanding shares of our common stock.

 

(1)

This number consists of the 35,460,739 Commitment Shares we initially issued to the selling stockholder on June 7, 2022 in consideration for its commitment to purchase shares of our common stock from time to time at our direction pursuant to the Purchase Agreement. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the offering all of the shares that the selling stockholder may be required to purchase from us at our election from time to time after the date of this prospectus pursuant to VWAP Purchases under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to conditions contained in the Purchase Agreement, the satisfaction of which are entirely outside of the selling stockholder’s control, including the registration statement that includes this prospectus becoming and remaining effective. Furthermore, the VWAP Purchases of common stock are subject to certain agreed upon maximum amount limitations set forth in the Purchase Agreement. Also, the Purchase Agreement prohibits us from issuing and selling any shares of our common stock to the selling stockholder to the extent such shares, when aggregated with all other shares of our common stock then beneficially owned by the selling stockholder, would cause the selling stockholder’s beneficial ownership of common stock to exceed the 4.99% Beneficial Ownership Limitation.

 

(2)	Applicable percentage ownership is based on 1,794,446,647 shares of our common stock outstanding as of June 3, 2022.

 

(3)	Assumes the sale of all shares being offered pursuant to this prospectus.

 

(4)

The business address of Mastiff, LLC is 139 Fulton Street, Suite 412, New York, NY 10038. Mastiff, LLC’s principal business is that of a private investor. Marissa Welner is the managing member of Mastiff, LLC and the beneficial owner of 15% of the membership interests in Mastiff, LLC. We have been advised that neither Ms. Welner nor Mastiff Group, LLC is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent broker-dealer, or an affiliate or associated person of a FINRA member or independent broker-dealer. The foregoing should not be construed in and of itself as an admission by Ms. Welner as to beneficial ownership of the securities beneficially owned directly by Mastiff Group, LLC.

 

 

PLANOF DISTRIBUTION

 

Theshares of common stock offered by this prospectus are being offered by the selling stockholder, Mastiff Group LLC. The shares may besold or distributed from time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriterswho may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiatedprices, or at fixed prices, which may be changed. The sale of the shares of our common stock offered by this prospectus could be effectedin one or more of the following methods:

 

●

ordinary brokers’ transactions;

 

●

transactions involving cross or block trades;

 

●

through brokers, dealers, or underwriters who may act solely as agents;

 

●

“at the market” into an existing market for our common stock;

 

●

in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;

 

●

in privately negotiated transactions; or

 

●

any combination of the foregoing.

 

Inorder to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensedbrokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for salein the state or an exemption from the state’s registration or qualification requirement is available and complied with.

 

Theselling stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

 

Theselling stockholder has informed us that it intends to use one or more registered broker-dealers to effectuate all sales, if any, ofour common stock that it has acquired and may in the future acquire from us pursuant to the Purchase Agreement. Such sales will be madeat prices and at terms then prevailing or at prices related to the then current market price. Each such registered broker-dealer willbe an underwriter within the meaning of Section 2(a)(11) of the Securities Act. The selling stockholder has informed us that each suchbroker-dealer will receive commissions from the selling stockholder that will not exceed customary brokerage commissions.

 

Brokers,dealers, underwriters or agents participating in the distribution of the shares of our common stock offered by this prospectus may receivecompensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent,of the shares sold by the selling stockholder through this prospectus. The compensation paid to any such particular broker-dealer byany such purchasers of shares of our common stock sold by the selling stockholder may be less than or in excess of customary commissions.Neither we nor the selling stockholder can presently estimate the amount of compensation that any agent will receive from any purchasersof shares of our common stock sold by the selling stockholder.

 

Weknow of no existing arrangements between the selling stockholder or any other stockholder, broker, dealer, underwriter or agent relatingto the sale or distribution of the shares of our common stock offered by this prospectus.

 

Wemay from time to time file with the SEC one or more supplements to this prospectus or amendments to the registration statement of whichthis prospectus forms a part to amend, supplement or update information contained in this prospectus, including, if and when requiredunder the Securities Act, to disclose certain information relating to a particular sale of shares offered by this prospectus by the sellingstockholder, including the names of any brokers, dealers, underwriters or agents participating in the distribution of such shares bythe selling stockholder, any compensation paid by the selling stockholder to any such brokers, dealers, underwriters or agents, and anyother required information.

 

Wewill pay the expenses incident to the registration under the Securities Act of the offer and sale of the shares of our common stock coveredby this prospectus by the selling stockholder. As consideration for its irrevocable commitment to purchase our common stock under thePurchase Agreement, (i) we have issued to the selling stockholder 35,460,739 shares of our common stock as the initial issuance of CommitmentShares upon execution of the Purchase Agreement.

 

 

Wealso have agreed to indemnify the selling stockholder and certain other persons against certain liabilities in connection with the offeringof shares of our common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable,to contribute amounts required to be paid in respect of such liabilities. The selling stockholder has agreed to indemnify us againstliabilities under the Securities Act that may arise from certain written information furnished to us by the selling stockholder specificallyfor use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities.Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controllingpersons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the SecuritiesAct and is therefore, unenforceable.

 

Weestimate that the total expenses for the offering will be approximately $87,447.

 

Theselling stockholder has represented to us that at no time prior to the date of the Purchase Agreement has the selling stockholder orits agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (assuch term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging transaction, which establishesa net short position with respect to our common stock. The selling stockholder has agreed that during the term of the Purchase Agreement,neither the selling stockholder, nor any of its agents, representatives or affiliates will enter into or effect, directly or indirectly,any of the foregoing transactions.

 

Wehave advised the selling stockholder that it is required to comply with Regulation M promulgated under the Exchange Act. With certainexceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participatesin the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is thesubject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in orderto stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketabilityof the securities offered by this prospectus.

 

Thisoffering will terminate on the date that all shares of our common stock offered by this prospectus have been sold by the selling stockholder.

 

Ourcommon stock is currently quoted on OTC Markets under the symbol “LCLP”.

 

MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-LookingStatements

 

Thefollowing discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subjectto certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operationsto differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-lookingstatements include, without limitation: our ability to successfully develop new products and services for new markets; the impact ofcompetition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certainapplications; delays our introduction of new products or services; and our failure to keep pace with our competitors.

 

Whenused in this discussion, words such as “believes”, “anticipates”, “expects”, “intends”and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying forward-lookingstatements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date ofthis report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that maysubsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reportsfiled with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affectour business.

 

GeneralInformation about Our Company

 

LifeClips, Inc. (the “Company”) was incorporated in Wyoming on March 20, 2013.

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”), a developerof artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporated inBritish Columbia, Canada on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technologicalsolutions to the mental health and healthcare sector. Cognitive Apps sold all of its issued and outstanding capital stock to the Company,becoming a 100% wholly owned subsidiary.

 

OnAugust 25, 2021, the Company closed its acquisition of Belfrics Holdings Limited and its related entities (collectively “Belfrics”).The new business of operating cryptocurrency exchanges and blockchain development services in Asia and Africa. Belfrics sold all of itsissued and outstanding capital stock to the Company, becoming a 100% wholly owned subsidiary.

 

 

Resultsof Operations for the Three Months Ended March 31, 2022 and 2021

 

Forthe three months ended March 31, 2022 and 2021, the Company had revenues of 2,964,111 and $0 respectively. This is as a direct resultof the acquisition of Belfrics and is primarily generated by Belfrics. 

 

Forthe three months ended March 31, 2022 and 2021, the Company had gross profit of $674,173 and $0, respectively. This is as a direct resultof the acquisition of Belfrics and is primarily generated by Belfrics.

 

Totaloperating costs were $1,709,204 compared with $91,239 for the three months ended March 31, 2022 and 2021, respectively. The increaseis directly related to higher professional fees, marketing expenses, payroll expenses, travel and meal expenditures, as well as othergeneral and administrative expenses, primarily due to the acquisition of Belfrics.

 

OtherIncome (Expense) was $4,389,106 when compared with $4,898,351 for the three months ended March 31, 2022 and 2021, respectively. The differenceof $509,245 is primarily due to a change in fair value of derivatives in 2021, and a change in fair value of contingent liability in2022. There were no derivative calculations required in 2022, which caused in an increase of $5,003,769. In 2022, management’sassessment of the stock milestones attainable by Belfrics resulted in an increase of $4,464,254.

 

Netincome for the three months ended March 31, 2022 was $3,354,075 as compared to net income of $4,807,112 for the three months ended March31, 2021.

 

Resultsof Operations for the Nine Months Ended March 31, 2022 and 2021

 

Forthe nine months ended March 31, 2022 and 2021, the Company had revenues of $5,244,952 and $0, respectively. This is as a direct resultof the acquisition of Belfrics and is primarily generated by Belfrics.

 

Forthe nine months ended March 31, 2022 and 2021, we had gross profit of $2,276,014 and $0, respectively. This is as a direct result ofthe acquisition of Belfrics and is primarily generated by Belfrics.

 

Totaloperating costs were $3,868,479 when compared with $286,629 for the nine months ended March 31, 2022 and 2021, respectively. The increaseis directly related to higher professional fees, marketing expenses, payroll expenses, travel and meal expenditures, as well as othergeneral and administrative expenses, primarily due to the acquisition of Belfrics.

 

OtherIncome (Expense) was $990,203 when compared with $8,829,754 for the nine months ended March 31, 2022 and 2021, respectively. This changeis primarily due to a change in fair value of derivatives of that decreased from $9,127,156 in 2021 to $1,577,001 in 2022. This is furtheroffset by a change in fair value of contingent liability not present in 2021, as well as a loss on impairment of intangibles. The contingentliability and the impairment is due to the acquisition of Belfrics.

 

NetLoss for the nine months ended March 31, 2022 was $602,262 as compared to Net Income of $8,543,125 for the nine months ended March 31,2021.

 

Liquidityand Capital Resources

 

Liquidityis the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of March 31, 2022 theCompany had cash on hand of $855,759, total assets of $50,624,450, total liabilities of $26,119,132 and total stockholder’s equityof $24,505,318. As all variable convertible notes payable were converted to a fixed value, the derivative liability of $1,577,001 wasfinal and ended on June 30, 2021. A loss on impairment of intangibles in the amount of $1,522,597 was recorded to impair cryptocurrencyassets.

 

 

TheCompany’s cash was generated from a Regulation A fundraising. The Company plans to raise additional working capital via additionalnotes or equity sales to ensure that it will have enough cash to fund its primary operation for the next twelve (12) months.

 

TheCompany has no agreements in place with its shareholders, officer and director or with any third parties to fund operations beyond theend of the Company’s March 31, 2022 period ended. The Company has not negotiated nor has available to it any other third partysources of liquidity.

 

Cashflows from operating activities for the nine-month periods ended March 31, 2022 and 2021 were $(1,211,776) and $(57,857), respectively.The change was primarily due to net loss and increased accounts payable being offset by changes in fair value of derivative liabilities,due to related parties, loss on impairment of intangibles and accrued expenses converted to stock, which are directly related to theacquisition of Belfrics.

 

Cashflows from investing activities totaled $(2,821,266) and $0 for the nine-month periods ended March 31, 2022 and 2021, respectively. Thechange was directly related to Belfrics’ purchase of intangible assets of $2,650,006, purchases of property and equipment of $279,908,offset by net cash acquired on acquisitions of $74,377 and due from related parties of 34,271.

 

Cashflows from financing activities totaled $4,651,000 and $85,000 for the nine-month periods ended March 31, 2022 and 2021, respectively.This is primarily due to the new proceeds from the Regulation A financing.

 

Forthe Years ended June 30, 2021 and June 30, 2020

 

TheCompany has revenue totaling $50,000 and $0 for the years ended June 30, 2021 and June 30, 2020, respectively. This new revenue is beinggenerated by our subsidiary, Cognitive Apps.

 

Costof goods sold for the years ended June 30, 2021 and June 30, 2020 was $0.

 

Operatingexpenses, which consisted of professional fees and general and administrative expenses, for the year ended June 30, 2021, were $599,590.This compares with operating expenses for the year ended June 30, 2020, of $326,614. The increase of $272,976 in operating expenses forthe year ended June 30, 2021 is related to increases in contractual executive salaries and subsidiary payroll expenses.

 

OtherIncome/(Expense) increased to ($2,929,447) for the year ended June 30, 2021 vs. ($10,413,713) for the year ended June 30, 2020. The increasewas directly related to the swings in derivative fair values from $(10,018,665) in 2020 to $7,274,230 in 2021. Additionally, there wasa $10,036,200 loss on impairment of intangibles and a $468,505 gain on Batterfly settlement for the year ended June 30, 2021. This wasoffset by an increase in interest expense of $173,120 when compared to the year ended June 30, 2020.

 

Asa result of the foregoing, we had a net loss of $3,479,037 for the year ended June 30, 2021. This compares with a net loss for the yearended June 30, 2020 of $10,740,327. The difference is primarily due to a 2021 net gain in derivatives of $7,274,230, compared to a netloss in derivatives of $10,018,665 for the year ended June 30, 2020. Additionally, there was a $10,036,200 loss on impairment of intangiblesfor the year ended June 30, 2021.

 

Inits audited consolidated financial statements as of June 30, 2021, the Company was issued an opinion by its auditors that raised substantialdoubt about the ability to continue as a going concern based on the Company’s current financial position. Our ability to achieveand maintain profitability and positive cash flow is dependent upon our ability to successfully develop and market our products and ourability to generate revenues.

 

 

Liquidityand Capital Resources

 

Asof June 30, 2021, we had cash and cash equivalents of $230,685. As of June 30, 2020, we had cash and cash equivalents of $12,160.

 

Netcash from operating activities was $(175,088) for the year ended June 30, 2021. This compares to net cash from operating activities of$(21,614) for the year ended June 30, 2020. The change of ($153,474) in our net cash from operating activities for the year ended June30, 2021 was primarily due to a change in net income /(loss) of $7,261,290, plus a change in the fair value of the derivative of $7,274,230,offset by a loss on impairment of intangibles of $10,036,200.

 

Cashflows from investing activities was $0 for the years ended June 30, 2021 and June 30, 2020.

 

Cashflows from financing activities was $400,000 for the year ended June 30, 2021, which compares to cash flows from financing activitiesof $0 for the year ended June 30, 2020. The increase in our cash flows from financing activities for the year ended June 30, 2021 wasdue to an increase in proceeds from convertible notes payable.

 

Wehave no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights ortechnologies or any other material capital expenditures. However, we will continue to evaluate acquisitions of and/or investments inproducts, technologies, capital equipment or improvements or companies that complement our business and may make such acquisitions and/orinvestments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any such acquisitionsand/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all. Due to the ongoing globaleconomic crisis, we believe it may be difficult to obtain additional financing if needed. Even if we are able to obtain additional financing,it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders,in the case of equity financing.

 

BUSINESS

 

OurCompany

 

LifeClips, Inc. (“Life Clips”, “LCLP”, “we,” “us,” “our,” and the “Company”)was incorporated in Wyoming on March 20, 2013 as Blue Sky Media Corporation and its principal business was developing, financing, producingand distributing motion pictures and related entertainment products. Following the Company’s October 2, 2015 acquisition of KlearKapture, Inc. (“Klear Kapture”), the Company continued Klear Kapture’s business of developing a body camera and anauditable software solution suitable for use by law enforcement. The Company changed its name to Life Clips, Inc. on November 3, 2015in order to better reflect its business operations at the time.

 

OnJuly 11, 2016, the Company completed its acquisition (the “Acquisition”) of all of the outstanding equity securities of BatterflyEnergy Ltd. (“Batterfly”), an Israel-based corporation that develops and distributes a single-use, cordless battery underthe brand name Mobeego for use with cellular phones and other mobile devices. Batterfly is now a wholly owned subsidiary of the Company.The Acquisition was completed pursuant to a Stock Purchase Agreement, dated as of June 10, 2016 (the “Purchase Agreement”),among the Company, Batterfly and all of the shareholders of Batterfly, as amended.

 

RecentDevelopments

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”, “Subsidiary”),a developer of artificial intelligence (“AI”) applications for the healthcare industry and psychedelic research. CognitiveApps was incorporated in British Columbia on November 25, 2020. Its principal business is developing, financing, producing and distributingAI based technological solutions to the mental health and healthcare sector.

 

CognitiveApps sold all of its issued and outstanding capital stock to LCLP, becoming a wholly-owned subsidiary of LCLP.

 

 

CognitiveApps provides an AI powered mental health analytics platform empowering businesses to measure, understand, and improve the mental well-beingof their employees, patients or customers. The Cognitive Apps solution is driven to achieve the Three Pillars: improved diagnostic outcomes,better and more personalized care for individuals, and to decrease the overall costs and time for the care. An individual only needsto record their voice on a handset, iPad, or tablet. The Cognitive Apps assessment is designed to be administered as often as daily,in order to provide a more granular picture of changes in mental health over time. As a result, the Cognitive apps assessment can beroutinely completed to monitor mental health and track variables that might be impacted by treatment.

 

CognitiveApps delivers a comprehensive approach to well-being, supporting the whole person. Cognitive apps currently has partnerships with Ehave(OTC: EHVVF), Mycotopia (OTC: TWGL), Welmind EMR, Betterhelp, Belshare, and Movefit.

 

OnAugust 25, 2021, LCLP closed its acquisition of Belfrics Holdings Limited and its related entities (collectively “Belfrics”)operating cryptocurrency exchanges and blockchain development services in Asia and Africa. The entities acquired are:

 

BelfricsGlobal PTE Ltd., a Singapore corporation

BelfricsBT Pvt Ltd, an India corporation

BelfricsCryptex Pvt Ltd, an India corporation

BelfricsTanzania Ltd, a Tanzania corporation

BelfricsNigeria Pvt Ltd, a Nigeria corporation

BelfricsBT SDN BHD, a Malaysia corporation

BelfricsHolding Limited, a Malaysia corporation

BelfricsAcademy SDN BHD, a Malaysia corporation

BelfricsInternational Ltd, a Malaysia corporation

BelfricsEurope SL, a Spain corporation

BelfricsKenya Pvt. Ltd, a Kenya corporation

IncryptsSDN BHD, a Malaysia corporation

BelfricsMalaysia SDN BHD

 

Pursuantto the definitive agreement previously executed between Belfrics and the Company, the Company issuing the Belfrics shareholders a newclass of preferred stock with an initial issuance price of $20,000,000 (Twenty Million Dollars) in the aggregate. The Belfrics shareholderscan earn up to an additional $15,000,000 (Fifteen Million Dollars) by reaching certain milestones. This description of the terms of theagreement is qualified in its entirety to the Acquisition Agreement between the parties filed as an exhibit to the Current Report onForm 8-K filed on July 15.

 

Foundedin 2015, the Belfrics digital exchange platform, which was fully developed in-house, is one of the most compliant platforms in the cryptocurrencyindustry. Supported by the proprietary technology of Belrium Blockchain KYC solution, the KYC (“Know Your Customer”) andAML (“Anti-Money Laundering”) process of Belfrics Exchange is well accepted compliance solution. With 10 operational officesin 8 countries, Belfrics provides localized and personalized support to digital currency traders. Through its Blockchain Academy, Belfricsprovides continuous training to traders, developers and blockchain enthusiasts in more than 20 countries. Belfrics is licensed and regulatedby the Labuan Financial Services Authority (LFSA) in Malaysia.

 

Inaddition to the digital assets exchange services, Belfrics’ Belrium Blockchain is a core solution over which multiple decentralizedapplications (dApp) are built. The Blerium-based KYC solution (BKVS) received a patent from Nigeria Patent Authority and Capital MarketsAuthority of Kenya (CMA) granted a Sandbox license for Belfrics to test the KYC solution for financial institutions. Belfrics has developeddecentralized applications on Belrium blockchain for health, education and employment sectors.

 

Withthe acquisitions of Cognitive Apps and Belfrics LCLP is transitioning away from the Mobeego business and will be concentrating on thebusinesses of Cognitive Apps and Belfrics.

 

CognitiveApps

 

Today’shealthcare providers need to find new ways to connect with their patients and improve processes across the continuum of care. Havingaccess to a complete patient history pulled from multiple sources is the first step on the journey to better communication, higher productivityand improved patient outcomes.

 

TheWorkforce Mental Health Analytical Platform designed by Cognitive Apps addresses this problem for mental health disorders in both hospitalsand clinics. It delivers a comprehensive approach to well-being, supporting the whole person, demonstrating care from the organizationand integrating with the whole ecosystem.

 

CognitiveApps provides instant, data-driven and actionable insight into the workforce dynamics and mental health of employees and patients. CognitiveApps uses AI-controlled mental health monitoring tools that use voice tone and context analysis to analyze tone and emotional state.User data is not stored but instantly deleted after the analysis and all storage and data solutions are HIPAA and GDPR-compliant.

 

 

CognitiveApps API is an AI-enabled technology that detects a user’s emotions and mental health and integrates the results into existingworkflows. It scans emotions, exhaustion, stress, depression, moods, and mental state through voice/text messages received from users.

 

CognitiveApps delivers its services through the Aiki chatbot. Aiki, is an AI-based interactive assistant that makes it easy to measure, understand,and improve the mental health of employees. The Aiki app uses voice analysis to screen for early signs of mental health conditions

 

CognitiveApps has filed an FDA pre-market notification 510 (k) process to make its solution a part of clinical workflow in modern mental healthcare facilities

 

Aikidelivers CBT (Cognitive Behavioral Therapy) and IPT (Interpersonal Psychotherapy) therapies using a Chatbot which and includes the voiceanalysis solution that takes in other health data from Apple and Google HealthKit to make a more accurate analysis of one’s mentalhealth. Aiki was developed to capitalize on the trend towards artificial intelligence platforms utilized by employers to raise awarenessof employees’ mental health. Cognitive Apps is developed by a team of licensed psychotherapists that makes use of vocal biomarkersto screen for early signs of mental health conditions, such as stress and depression. Aiki is available on Apple’s App Store.

 

 

 

LicensingAgreements

 

OnJanuary 6, 2021, Cognitive Apps (Licensor) entered into its first License Agreement with Ehave, Inc. (OTCBB: EHVVF), an Ontario corporation.The Licensor is contracted to provide access to its software and systems for a fee of $100,000. Payment for the License of $25,000 ispayable upon signing. The remaining subsequent payments for the first year of the License in the aggregate of $75,000 will be made inaccordance with an agreed upon schedule. All payment will be in shares of Ehave, Inc. common stock. The shares shall be priced basedupon the average closing price of the EHVVF common stock as quoted on its principal trading market for the 20 trading days immediatelyprior to the date upon which the payment is due.

 

Products

 

InApril 2021, Cognitive Apps launched its Yuru 3-in-1 tool for understanding and managing your mental health. Yuru is an innovative applicationin the field of psychological assistance that has been developed by a team of licensed psychotherapists. Yuru is a personal mental healthmonitor that screens early signs of mental health conditions, such as stress and depression. In just 10 seconds, it makes use of vocalbiomarkers to recognize your real current emotional state and mood, while tracking your mental health. Yuru also provides you with extensiveknowledge about human development and the psychology of everyday life. Yuru involves tracking of your emotions and mood, analysis ofyour mental state, and treatment for improving your mental well-being.

 

TheAiki mobile app product was launched on the Apple App Store the 1^st week of August 2021. The new AI-based intuitive mentalhealth ChatBot was announced in a press release on August 12^th. It was also available to Android users as of September. Aikiis an interactive assistant that makes it easy to measure, understand, and improve the mental health of employees. The product aims tocapitalize on the trend towards artificial intelligence platforms utilized by employers to raise awareness of employees’ mentalhealth.

 

Aikiuses proprietary voice tone analysis and context analysis, which is processed by Cognitive Apps’ AI. It is a next generation ChatBotfor understanding and managing individual mental health that includes:

 

	●	Tracking of emotions and mood
	●	Analysis of mental state
	●	Treatment for improving mental well-being

 

Aikiwill target corporate users who want to use Cognitive Apps voice biomarkers to target improved employee mental health. According to arecent article on BenefitsPro.comⁱ, research by Gallup shows mental health and emotional well-being have plunged to theirlowest levels since 2001. Another study charted a 50% rise in depression and a 60% drop in focus among all ages in the workplace at thestart of the year. Mental health at work was called one of the most far-reaching workplace issues of 2019 - well before COVID, whichcreates a tremendous opportunity for Aiki.

 

Sales

 

Theinitial results for Yuku on Apple’s App Store showed a weekly download conversion rate of 5.6% on more than 189,000 impressionsand 19,900 product page views. App Units were 8,500 with average sales per paying user of $28.10. App Units are the number of first-timepaid and free app purchases made on the App Store using iOS 8 and tvOS 9 or later. App updates and downloads from the same Apple ID ontoother devices, and redownloads to the same device are not counted.

 

TheAiki app remains in testing with only a limited number of downloads.

 

Competition,competitive position in the industry and methods of competition

 

TheAI and mental health apps industry is highly competitive. The Company faces intense competition from very large, international corporations,as well as from local and national companies. In addition, the Company faces competition from well-known companies that have large marketshare.

 

Theintensity of competition in the future is expected to increase and no assurance can be provided that the Company can sustain its marketposition or expand its business.

 

Manyof the Company’s current and potential competitors are well established and have longer operating histories, significantly greaterfinancial and operational resources, and name recognition, which the Company does not have.

 

CognitiveApps competitors include Sonde Health, Winterlight Labs, Uva.ai, Limeade, and RSquared.

 

 

GovernmentRegulation

 

FDAPre-Market Notification

 

Section510(k) of the Food, Drug and Cosmetic Act requires device manufacturers who must register, to notify FDA of their intent to market amedical device at least 90 days in advance. This is known as Premarket Notification - also called PMN or 510(k). This allows FDA to determinewhether the device is equivalent to a device already placed into one of the three classification categories. Thus, “new”devices (not in commercial distribution prior to May 28, 1976) that have not been classified can be properly identified. Specifically,medical device manufacturers are required to submit a premarket notification if they intend to introduce a device into commercial distributionfor the first time or reintroduce a device that will be significantly changed or modified to the extent that its safety or effectivenesscould be affected. Such change or modification could relate to the design, material, chemical composition, energy source, manufacturingprocess, or intended use.

 

CognitiveApps will be filing an application under Section 510(k) upon finalizing the diagnostic claims that will be made

 

HealthInsurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECHAct)

 

Theuse of individually identifiable health data by our business is regulated at federal and state levels. These laws and rules are changedfrequently by legislation or administrative interpretation. Various state laws address the use and maintenance of individually identifiablehealth data. Most are derived from the privacy provisions in the federal Gramm-Leach-Bliley Act and the Health Insurance Portabilityand Accountability Act, or HIPAA. HIPAA includes administrative provisions directed at simplifying electronic data interchange throughstandardizing transactions, establishing uniform health care provider, payer, and employer identifiers, and seeking protections for confidentialityand security of patient data. The rules do not provide for complete federal preemption of state laws, but rather preempt all inconsistentstate laws unless the state law is more stringent.

 

Theseregulations set standards for the security of electronic health information. Violations of these rules could subject us to significantcriminal and civil penalties, including significant monetary penalties. Compliance with HIPAA regulations requires significant systemsenhancements, training and administrative effort. HIPAA can also expose us to additional liability for violations by our business associates(e.g., entities that provide services to health plans).

 

TheHITECH Act, one part of the American Recovery and Reinvestment Act of 2009, significantly broadened the scope of the privacy and securityregulations of HIPAA. Among other requirements, the HITECH Act mandates individual notification in the event of a breach of unsecured,individually identifiable health information, provides enhanced penalties for HIPAA violations, requires business associates to complywith certain provisions of the HIPAA privacy and security rule, and grants enforcement authority to states’ Attorneys General inaddition to the HHS Office of Civil Rights. On January 17, 2013, HHS issued the omnibus final rule on HIPAA privacy, security, breachnotification requirements and enforcement requirements under the HITECH Act, and a final regulation for required changes to the HIPAAPrivacy Rule for the Genetic Information Nondiscrimination Act, or GINA. The omnibus final rule becomes effective on March 26, 2013,with an applicable compliance date of September 23, 2013.

 

Belfrics

 

TheBelfrics Group of Companies currently operates digital currency exchanges in several countries, including Malaysia, India, Kenya, Nigeriaand Tanzania in addition to providing other blockchain related technologies and solutions. We are licensed in Malaysia by Labuan FinancialServices Authority. The first exchange was started in Singapore in 2016, which was followed by expansion into Malaysia, India, Kenya,Nigeria and Tanzania.

 

DigitalCurrencies, Digital Assets and Decentralized Finance

 

Thecombined value of all digital currency assets put together has crossed $2.5 trillion as of April 2021. The growth of the digital currencymarket has been spectacular, and it has defied traditional wisdom. Physical assets are gradually being digitized and institutions arelooking for their place in the digital currency space. Cryptocurrency, digital assets, and non-fungible tokens (NFT) have created whatseems to be a wild west or gold rush atmosphere. However, irrespective of the billions of trading volume-share being enjoyed by the majorcryptocurrency exchanges, owing to the nature of cross-border capital exportability and importability of the digital currencies, thedigital currency exchanges will have to be regulated regionally.

 

Manydigital currency exchanges are currently available for trading digital assets. Among them, some of the most famous exchanges are Binance,Coinbase, Bitfinex and Kraken. Billions of dollars in volume are traded on these exchanges and money is moved from one hand to anotherin the form of digital currency, without many restrictions or oversight from regulators or central banks. While regulators continue tostudy the issue there is no clear regulatory framework for cryptocurrencies and digital assets, and the anonymity that cryptocurrenciesbestow creates a heightened risk for money laundering and other crime.

 

 

TheBelfrics Solution

 

Belfrics,equipped with its own Blockchain-based KYC solution, is among the few global exchanges equipped to track and monitor digital currencytransactions and effectively deliver inter-operable digital currency data transfer between exchanges and financial institutions. Withan in house developed trading platform and with regulatory compliance experience in Asia, Asia Pacific, Africa and Middle East, Belfricsis poised to comply with upcoming regulations when such frameworks are inevitably imposed on the industry. Our end-to-end Belrium identificationprocess is a strong measure to prevent financial client and market abuses. Belrium will be serving as a decentralized infrastructurefor KYC verifications. This system will provide the key assistance in the verification and identification process or the originator andbeneficiary of the transactions involved in further eliminating the risk of identifying the destination and the source of the funds thatwas received or sent by the client.

 

Belfricsis divided into several divisions:

 

Exchanges.We operate cryptocurrency exchanges in Malaysia, India, Kenya, Nigeria, Tanzania and Singapore. Currently, customers can trade in Bitcoin,Ethererum, Litecoin, Bitcoin cash, Ripple, Omisego, OX protocol, Storj, Golem, Belrium, Xereum, and USDT. These exchanges allow participantsto buy and sell cryptocurrencies and trade cryptocurrency pairs. Belfrics intends to add the following tokens during the first half of2022: Tron, Dodge, Stellar, Fantom, Dash, Cardano, Filetoken, DYDX, Link, WBTC, Paxgold, Matic, USDC, SHIBA.

 

Belfrics’sexchanges provide an online trading platform where buyers and sellers of cryptocurrencies can register an account, deposit their assetsand trade with each other seamlessly. The market is operated on a 24/7 basis. For each transaction, a trading fee is charged, which rangesfrom 0.2% to 0.5% on the traded volume. In addition to the trading fee, the exchange also charges for listing of tokens, ancillary servicesfor the tokens and payment gateway solutions.

 

Belfricsalso provides custodial services for crypto holdings by providing both hot and cold wallet services. Belfrics, will be using Ledger,the world leader in custodial wallet services. A “Hot Wallet” is a wallet that is connected to the internet, enabling itto broadcast transactions. A “Cold Wallet” or “Cold Storage” is storage in any fashion that is disconnected fromthe internet. Common examples include offline computers, USB drives, or paper records. In addition to the security provided by Belfricsand Ledger, Ledger covers all wallet holders with a considerable amount of insurance coverage. Belfrics will be taking additional insurancecoverage, specific to the exchange clients.

 

ForDecember 2021, Belfrics had volume of $1.1 billion in spot exchange and $450 million in Forex and dertivatives across its exchanges generatingrevenue of more than $2,000,000. Currently, revenue from Forex and derivatives is limited as Belfrics is has limited its charges whileit is onboarding customers during this initial phase of Forex implementation.

 

ThroughBT 18, we also provide a white label exchange platform that is a software solution for entrepreneurs looking to own and run a digitalcurrency exchange in their market without having to invest in software and infrastructure.

 

KYCSolutions. The Decentralized Belrium- KYC based Blockchain is based on the fusion of public and private blockchain technology. Thepublic blockchain enables global remittance and the private blockchain is targeted to aid KYC compliance.

 

Theevolving regulations related to KYC (Know Your Customer) compliance have made KYC-based systems more complex and have increased the timefor customer on-boarding. This is where Belrium is different. It offers customers a secure, private and decentralized ecosystem thataims to minimize the repetition related to KYC compliance, saving everybody involved considerable time and cost.

 

TheBelfrics blockchain is built to be KYC compliant and provide a means to safely store and verify one’s digital identity. Once verifiedthrough the Belrium blockchain different organizations can verify that user’s identity without having to take possession of theuser’s identity documents and risk them being disclosed to unauthorized third parties. The Belfrics blockchain is designed throughDelegated Proof of Stake (DPOS) consensus mechanism. Smart contracts deployed on Belrium blockchain empowers the distributed computerprograms to arrange on-line contractual agreements in a cryptographically secure fashion. These smart contracts - programs based on distributedpublic ledger - ensure that the Belrium blockchain remains transparent, decentralized, and protected from any kind of external effortsto manipulate the results. The Belrium KYC solution is meant to be reusable, convenient, private and secure.

 

Reusable- Reusable KYC lowers the total cost of ownership, as a user can share the verified claims with multiple entities. This dramaticallyreduces the overhead costs related to compliance and fraud prevention controls.

 

 

Convenient- Building a proprietary KYC capability is a costly, risky and time-consuming proposition. Companies of any size can simplify their userOnboarding experience by using Belrium – KYC compliant blockchain. Users can reuse their verified data several times.

 

Private- With Belrium, organizations easily obtain proof that identity information has been authenticated by a trusted institution. The companyin need of KYC receives only the necessary data to fulfil the request. By eliminating the sharing of unnecessary amount of data, Belriumworks to ensure user privacy.

 

Secure- Belrium stores a user’s personal information using high level encryption. The user reviews all requests for their informationand chooses whether to approve or deny each request. The data remains under the user’s full control and Belrium makes it virtuallyimpossible for malicious groups or hackers to gain access to the user’s information.

 

Researchand Development. Belfrics BT is the technology division of Belfrics, dedicated to the research and development of customized blockchainsolutions for government bodies and clients from the healthcare, manufacturing, supply chain, finance, banking and retail industries.With a team of more than 100 developers, consisting of both employees and independent contractors, most of whom have been technoprenuersand have worked with Silicon Valley startups prior, Belfrics BT has successfully been able to build their own blockchain, and work onlarge-scale blockchain solutions for governments and conglomerates from our clientele.

 

Learning.Belfrics Academy’s mission is to develop the global blockchain environment by bridging the knowledge gap and establishing itselfas a beacon for blockchain education. It also aims to revolutionize education through blockchain technology. It is estimated that therewill be a need for over 500,000 blockchain developers in the upcoming years, thus the need for effective education in this space is high.

 

In2017 Belfrics was selected to participate in the Central Bank of Bahrain’s regulatory sandbox. To empower innovation in FinTech,the Central Bank of Bahrain launched a FinTech Regulatory Sandbox in 2017, enabling companies to test their technology-based solutionsfor up to a year under supervision. The region’s first initiative of its kind, the Sandbox is an opportunity for FinTech businessesto expand and thrive in the Gulf. To be eligible, solutions need to demonstrate innovation, customer benefit, technical testing, andan intention to be deployed in Bahrain after the sandbox period ends.

 

Belfricsalso participates in regulatory sandbox created by the Capital Markets Authority of Kenya, as Belfrics seeks to be one of the most regulatorycompliant exchanges. To that end, Belfrics provides a unified KYC system with private/public hybrid model, providing data flow rightsthrough a permission side chain. Multiple nations/governments/entities and agencies can act as a node and share information as per requesthashed onto the blockchain.

 

Competition

 

Belfricswill be competing with both global and regional exchanges.

 

MajorGlobal Exchanges

 

Binance.com.(Malta)

Coinbase(US)

Kraken(US)

Bithumb(South Korea)

Bitfinex(Malta)

BitfuryGroup Limited (The Netherlands)

 

Regionalcompetitors

 

Wazirx(Binance owned-India)

Binance(Nigeria)

Localbitcoin(p2p, Tanzania)

Rain(Bahrain)

Bitoasis(UAE)

 

Binanceis the dominant exchange in most of the regions that we are operating. The major challenges in these unregulated regions are the bankingrelations. Owing to the sheer financial capability, Binance is able to garner good banking relationship with the banking institutions.India’s Wazirx has the advantage of using Binance liquidity as it is owned by Binance.

 

 

Thekey struggle for us during the last two years has been the banking relationships as services has been on and off due to the changingstrategy of banks towards cryptocurrencies. The banks have recently taken a positive approach to serve exchanges as the regulators aregearing for regularizing the digital currency space.

 

GovernmentRegulation

 

Weoperate globally in a complex and rapidly evolving regulatory environment and are subject to a wide range of laws and regulations enactedby U.S. federal, state, and local and foreign governments, and regulatory authorities. The breadth of laws, rules, and regulations weare subject to include financial services and banking, consumer protection, money transmission, virtual currency, stored value and prepaidaccess, electronic payments, payment services, securities, commodities, and unclaimed property, as well as bespoke digital asset andcryptocurrency laws that have been promulgated in some jurisdictions. These laws, rules, and regulations evolve frequently and may bemodified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover,the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the cryptoeconomy, requiresus to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that regulators may disagreewith our conclusions. We are not regulated as a federal bank regulated by the Office of the Comptroller of the Currency or a CFTC-regulatedfutures commission merchant, designated contract market, or derivatives clearing organization. In addition, our crypto asset exchangeis not an SEC-regulated national securities exchange or alternative trading system.

 

Globally,we are subject to increasingly strict legal and regulatory requirements relating to the detection and prevention of countering terroristfinancing, anti-money laundering, fraud, and other illicit activity, the regulation of competition, economic and trade sanctions, privacy,cybersecurity, information security, and data protection. These descriptions are not exhaustive, and these laws, regulations and rules(and the interpretations thereof) frequently change and are increasing in number.

 

Thelaws and regulations to which we are subject, including those pertaining to digital assets and crypto assets, are rapidly evolving andincreasing in scope. Therefore, we monitor these areas closely and invest significant resources in our legal, compliance, product, andengineering teams to ensure our business practices evolve to help us comply with the current laws, regulations, and legal standards towhich we are subject, as well as to plan and prepare for changes in interpretations thereof, as well as additional laws, regulationsand legal standards that are introduced in the future.

 

Anti-moneylaundering and counter-terrorist financing

 

Weare subject to various anti-money laundering and counter-terrorist financing laws, including the BSA in the United States, and similarlaws and regulations abroad. In the United States, as a money services business registered with FinCEN, the BSA requires us to amongother things, develop, implement, and maintain a risk-based anti-money laundering program, provide an anti-money laundering-related trainingprogram, report suspicious activities and transactions to FinCEN, comply with certain reporting and recordkeeping requirements, and collectand maintain information about our customers. In addition, the BSA requires us to comply with certain customer due diligence requirementsas part of our anti-money laundering obligations, including developing risk-based policies, procedures, and internal controls reasonablydesigned to verify a customer’s identity. Many states and other countries impose similar, and, in some cases, more stringent requirementsrelated to anti-money laundering and counter-terrorist financing. We have implemented a compliance program designed to prevent our platformfrom being used to facilitate money laundering, terrorist financing, and other illicit activity in countries, or with persons or entities,included on designated lists promulgated by OFAC and equivalent foreign authorities. Our compliance program includes policies, procedures,reporting protocols, and internal controls, and is designed to address legal and regulatory requirements as well as to assist us in managingrisks associated with money laundering and terrorist financing. Anti-money laundering regulations are constantly evolving and vary fromjurisdiction-to-jurisdiction. We continuously monitor our compliance with anti-money laundering and counter-terrorist financing regulationsand industry standards and implement policies, procedures, and controls in light of the most current legal requirements.

 

Privacyand protection of user data

 

Weare subject to a number of laws, rules, directives, and regulations relating to the collection, use, retention, security, processing,and transfer of personally identifiable information about our customers and employees in the countries where we operate. Our businessrelies on the processing of personal data in many jurisdictions and the movement of data across national borders. As a result, much ofthe personal data that we process, which may include certain financial information associated with individuals, is regulated by multipleprivacy and data protection laws and, in some cases, the privacy and data protection laws of multiple jurisdictions. In many cases, theselaws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries, and otherparties with which we have commercial relationships.

 

 

IntellectualProperty

 

Theprotection of our technology and intellectual property is an important aspect of our business. We rely upon a combination of patents,trademarks, trade secrets, copyrights, confidentiality procedures, contractual commitments, and other legal rights to establish and protectour intellectual property. We generally enter into agreements with our employees and consultants that contain confidentiality provisionsto control access to, and invention or work product assignment provisions to clarify ownership of, our proprietary information. We mayalso in the future agree to license our patents to third parties as part of various patent pools and open patent projects.

 

Wehave a patent registered in Nigeria, RP: F/P/2019/166 covering blockchain based KYC verification solution.

 

Descriptionof our Capital Stock

 

Thefollowing description summarizes important terms of our capital stock and our other securities. For a complete description, you shouldrefer to our Certificate of Incorporation and bylaws, forms of which are incorporated by reference to the exhibits to the registrationstatement of which this prospectus is a part, as well as the relevant portions of the Wyoming Business Corporations Act (“WyomingBCA”). Please also see “Effect of Certain Provisions of our Bylaws” below.

 

CapitalStock

 

TheCompany has two classes of stock: common and preferred. The Company’s Certificate of Incorporation authorizes the issuance of upto 5,000,000,000 shares of Common Stock, par value $0.001 per share, and 10,000,000 shares of blank check preferred stock, par value$0.0001 per share.

 

CommonStock

 

General

 

As of June 3, 2022, therewere 1,794,446,647 of Common Stock issued and outstanding.

 

VotingRights

 

Holdersof Company’s Common Stock are entitled to one vote per share on each matter submitted to vote of the Company’s stockholders.Holders of Common Stock do not have cumulative voting rights.

 

Dividends

 

Subjectto preferences that may be applicable to any then-outstanding preferred stock, holders of common stock are entitled to share in all dividendsthat the board of directors, in its discretion, declares from legally available funds. We have not historically declared or paid cashdividends on our common stock.

 

OtherRights

 

Stockholdersdo not have any preemptive rights or other similar rights to acquire additional shares of Company’s Common Stock or other securities.In the event of liquidation, dissolution or winding up, subject to preferences that may be applicable to any then-outstanding preferredstock, each outstanding share of Common Stock entitles its holder to participate ratably in all remaining assets of the Company thatare available for distribution to stockholders after providing for each class of stock, if any, having preference over the common stock.

 

Alloutstanding shares of Common Stock are fully paid and non-assessable.

 

 

TransferAgent and Registrar

 

Thetransfer agent and registrar for our common stock is Securities Transfer Corporation, 2901 N. Dallas Parkway, Suite 380, Plano, TX 75093,469-633-0101.

 

Quotation

 

Ourcommon stock is quoted on the OTC Markets Pink Open Tier under the symbol “LCLP.”

 

PreferredStock

 

TheCompany is authorized to issue from time to time, in one or more series, 10,000,000 shares of “blank check” preferred stock,par value $0.0001 per share, subject to any limitations prescribed by law, without further vote or action by the shareholders. Each suchseries of preferred stock shall have such number of shares, designations, preferences, voting powers, qualifications, and special orrelative rights or privileges as shall be determined by the Company’s board of directors, which may include, among others, dividendrights, voting rights, liquidation preferences, conversion rights and preemptive rights. As of June 3, 2022, there were threeseries of preferred stock designated:

 

SeriesA. There are 5,000,000 Series A Preferred Shares authorized and 5,000,000 outstanding. The Series A Preferred are not convertible intocommon shares, but have voting rights equal to 400 common shares for each Series A Preferred Share.

 

SeriesB. There are 5,760,000 Series B Preferred Shares authorized and 5,760,000 issued and outstanding. The Series B shares have the followingrights:

 

	●	Stated/Liquidation value of $1.00 per share
	●	Dividends equal to 15% of the net profit generated by the Company’s Cognitive Apps subsidiary
	●	Voting rights equal to that number of common shares into which the Series B Preferred shares are convertible into common shares.
	●	After 12 months from issuance are convertible into common shares based upon 80% of average of the 5 lowest closing prices for a share of Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding the conversion date.
	●	The right to elect one director as a class

 

SeriesC. There are 3,500,000 Series B Preferred Shares authorized and 2,000,000 issued and outstanding. The Series C shares have the followingrights:

 

●

Stated/Liquidation value of $10.00 per share

 

	●	Voting rights equal to that number of common shares into which the Series B Preferred shares are convertible into common shares.
	●	After 12 months from issuance are convertible into common shares based upon 80% of average of the 5 lowest closing prices for a share of Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding the conversion date.
	●	The right to elect one director as a class

 

Disclosureof Commission Position on Indemnification for Securities Act Liabilities

 

Insofaras indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling personspursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policyas expressed in the Securities Act and is, therefore, unenforceable.

 

Properties

 

TheCompany’s operations are currently being conducted out of the Company’s office located at 875 Northeast 191 Street, Suite500 - #218, Aventura, FL 33180. The Company’s office space is being rented for a price of $135 per month.

 

TheCognitive Apps subsidiary’s operations are currently being conducted out of offices located at 263 W, 49^th Avenue, Vancouver,BC, V5Y2Z8, Canada. Cognitive Apps does not pay any rent for this space.

 

 

TheBelfrics Entities subsidiary’s main corporate operations are currently being conducted out of the Belfrics Holding Limited officesat Suite C, Lot 3, Level 1, Lazenda Phase 3, OKK Abudllah, Labuan. Belfrics holds eight leases in various locations for a total priceof $11,860 per month.

 

TheCompany considers the current spaces to be adequate and will reassess its needs based upon the future growth of the Company.

 

LegalProceedings

 

OnJanuary 11, 2017, the Company received a default notice related to a $500,000 promissory note (the “Batterfly Acquisition Note”)issued to the sellers of Batterfly Energy, Ltd. (“Batterfly”) as partial consideration for the Company’s July 11, 2017acquisition of Batterfly. The Batterfly Acquisition Note required the Company to make a payment of $250,000 on October 6, 2017 and $250,000on February 13, 2017. The default letter states that the Company failed to pay the $250,000 payment due on October 6, 2017, which beganto accrue interest of 11% from October 6, 2017. In addition, the default notice states that the Company owes $20,000 in aggregate totwo of the Batterfly shareholders related to consulting fees associated with the Batterfly acquisition. Finally, the default notice statesthat a payment of $250,000, as well as an additional payment of $20,000 must be paid by January 23, 2017. The Company filed a claim againstthe sellers of Batterfly with the London Court of International Arbitration (LCIA Arbitration No: 173692) and on September 7, 2017 theparties entered into a Stipulation for Stay of Arbitration in the matter as they seek to negotiate a settlement of their claim. The claimwas settled in August 2019 for which the Company agreed to issue 62,991,567 shares of common stock to the sellers of Batterfly.

 

Allshares were issued on June 16, 2021 and as per the agreement, fully releasing the Company of any and all liens, including but not limitedto, the Batterfly promissory note of $500,000, which was removed from our liabilities.

 

Otherthan as set forth above, we are not a party to any material legal proceedings, nor is our property the subject of any material legalproceeding.

 

Directors,Executive Officers and Corporate Governance

 

Setforth below are the names of the directors and officers of the Company, all positions and offices with the Company held, the period duringwhich he/she has served as such, and the business experience during at least the last five years:

 

Name and Address		Age		Date Appointed to Office		Position(s)
Robert Grinberg		50		January 13, 2021		Director and Chief Executive Officer
Victoria Rudman		52		January 16, 2017		Director and Chief Financial Officer
William Singer (1)		48		March 1, 2017		Director, EVP Sales and Marketing
Dr. Manideep Gopishetty (2).		28		December 17, 2021		Director
Praveenkumar Vijayakumar (2)		45		December 17, 2021		Director

 

(1)	On July 28, 2021, William Singer submitted a letter of resignation from the Company’s Board of Directors, dated and effective as of July 15, 2021. The resignation was not the result of any disagreements with the Company.

 

(2)

On December 17, 2021, Dr. Manideep Gopishetty and Praveenkumar Vijayakumar were appointed to the Life Clips’ Board of Directors. Dr. Gopishetty was appointed pursuant to the acquisition of Cognitive Apps Software Solutions and Mr. Vijayakumar was appointed pursuant to the acquisition of Belfrics Holdings and its affiliated companies.

 

Nodirector or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had abankruptcy petition filed against it. No director or executive officer has been convicted of a criminal offense within the past fiveyears or is the subject of a pending criminal proceeding. No director or executive officer has been the subject of any order, judgmentor decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type ofbusiness, securities or banking activities. No director or officer has been found by a court to have violated a federal or state securitiesor commodities law.

 

BusinessExperience. Information concerning the directors, officers and key employees of the Corporation follows.

 

RobertGrinberg, 50. Mr. Grinberg began his professional career in the financial services industry in 1991. In 1997, he opened his own independentbroker-dealer, Program Trading Corp. He further evolved his business model and became a private investor placing millions of dollarsto work in various industries, from oil and gas, health care, logistics, biotech, to digital therapeutics. Robert has been privatelyfinancing companies since 2004. He has extensive knowledge of securities trading, private placements, and public financing.

 

 

In2018 Mr. Grinberg, along with a group of investors, acquired a multi-level company in South Florida, Stemtech.com. with a sales forceof over 30 thousand strong in more than twenty countries. That same year he and a group of investors formed a partnership with SensiMagazine. Sensi publishes print and digital magazines, creates community events, and connects people in local markets with a focus onfun-loving, healthy lifestyles.

 

VictoriaRudman – Director, Chief Financial Officer and Interim Chief Executive Officer

 

Ms.Victoria Rudman has been the Company’s Chief Financial Officer, Secretary, Treasurer and a Director since January 16, 2017, andits Interim Chief Executive Officer since April 3, 2018. Ms. Rudman has over 20 years of professional experience in multiple aspectsof leadership, operations, accounting, finance, taxation and fiscal management.

 

Ms.Rudman has spent most of her career in Fortune 50 global investment bank and retail brokerage firms as well as small cap public companiesand startup ventures. She served as Chairman and CEO of Intelligent Living Inc. from 2011-2014. Previously, Victoria held various technologycontrollership positions at Morgan Stanley and acted as a Vice President at Bear Stearns and Director of Business Planning & Strategyat Visual Networks, where she was the lead project manager for the entire technology business enterprise, including IPO and strategicM&A. Victoria holds a Bachelor of Business Administration in Public Accounting from Pace University, Lubin School of Business.

 

Dr.Charles Adelson – Director

 

Dr.Charles Adelson graduated from the University of Central Florida in Orlando, where he received a B.S. in Micro and Molecular Biology.Dr. Charles Adelson went on to receive his Doctor of Medical Dentistry at Nova Southeastern University’s School of Dental Medicine.He continued his studies there after completing a three-year postdoctoral surgical residency with extensive training in implant placement,periodontal surgery, and regenerative bone therapy. Dr. Charles Adelson has participated in several medical missions sponsored by theWomen of Hope. He traveled to both the inner cities and the rural areas of Jamaica, providing dental care to orphan children. In additionto dentistry and philanthropy, Dr. Adelson is as well an experienced businessman owning several commercial properties throughout SouthFlorida.

 

Dr.Gopishetty- Director

 

Dr.Gopishetty is the co-founder and CEO of Cognitive Apps Solutions Inc., an AI-based mental health startup. Prior to founding CognitiveApps, Dr. Gopishetty worked with companies to develop healthcare commercialization strategies, designing the commercialization roadmapand advising on the execution of the strategies. He has also consulted for Sun Pharma, Novartis and Sanofi. Dr. Gopishetty received hisDoctor of Medicine (MD) from Heidelberg University Zaporozhye State Medical University, and MBA from University Canada West.

 

PraveenkumarVijayakumar- Director

 

PraveenkumarVijayakumar is the founder and CEO of Belfrics Holdings and its affiliated companies providing proprietary blockchain solutions. He startedBelfrics in 2014 and it has expanded to have a presence in more than 10 countries. Prior to founding Belfrics he was Country Head atAlpari Forex (INDIA) Pvt. Ltd. and Associate Vice President at Suhil Finance. Mr. Vijaykumar received a Bachelor of Technology in PolymerTechnology, School of Technology and Applied Science and has a Master of Business Administration from University of Essex.

 

Termof Office

 

Directorshold office until the annual meeting of the Corporation’s stockholders and the election and qualification of their successors.Officers hold office, subject to removal at any time by the Board, until the meeting of directors immediately following the annual meetingof stockholders and until their successors are appointed.

 

FamilyRelationships

 

Mr.Grinberg is married to Ms. Rudman’s sister. There are no other family relationships among our officers and directors.

 

 

BoardCommittees

 

Wepresently do not have an audit committee, compensation committee or nominating committee or any committee performing similar functions,as our management believes that until this point it has been premature at the early stage of our management and business developmentto form an audit, compensation or nominating committee. Until these committees are established, the functions of these committees willbe performed by our Board of Directors.

 

DirectorIndependence

 

Wecurrently have one independent director, as the term “independent” is defined by the rules of the NYSE American.

 

ExecutiveCompensation

 

Thedescription of our executive compensation is incorporated by reference from Part III, Item 11 of the Company’s Annual Report onForm 10-K as filed with the SEC on October 14, 2021 (see “Incorporation of Certain Information by Reference”).

 

SecurityOwnership of Certain Beneficial Owners and Management and

RelatedStockholder Matters

 

Thefollowing sets forth the number of shares of our $0.001 par value common stock beneficially owned by (i) each person who, as of December31, 2021, was known by us to own beneficially more than five percent (5%) of its common stock; (ii) our individual Directors and (iii)our Officers and Directors as a group. A total of 1,742,647,934 common shares were issued and outstanding as of March 18, 2022.

 

Name and Address of Beneficial Owner(1)		Common Stock Beneficial Ownership				Percent of Class(2)				Outstanding Series A Preferred Stock (3)				Percent of Class				Outstanding Series B Preferred Stock (4)				Percent of Class				Outstanding Series C Preferred Stock (5)				Percent of Class
Named Executive Officers and Directors:
Robert Grinberg(6)			29,877,687				1.7	%			3,000,000				60.0	%			-				0.0	%			-				0.0	%
Victoria Rudman(7)			41,495,000				2.4	%			2,000,000				40.0	%			-				0.0	%			-				0.0	%
Dr. Charles Adelson(8)			4,000,000				0.2	%			-				0.0	%			-				0.0	%			-				0.0	%
Dr. Manideep Gopishetty(9)			-				0.0	%			-				0.0	%			1,150,000				20.0	%			-				0.0	%
Praveenkumar Vijayakumar(10)			-				0.0	%			-				0.0	%			-				0.0	%			1,100,000				55.0	%
All executive officers and directors as a group (five people)			75,372,687				4.3	%			5,000,000				100.0	%			1,150,000				20.0	%			1,100,000				55.0	%
Other 5% Stockholders			None

 

(1)All ownership is beneficial and of record, unless indicated otherwise.

 

 

(2)The Beneficial owner has sole voting and investment power with respect to the shares shown

 

(3)Each share of Series A Preferred Stock entitles the holder to 400 votes on all matters submitted to a vote of the Company’s stockholders.See “Description of Capital Stock” above.

 

(4)Each share of Series B Preferred Stock has a stated value of $1.00 per share and entitles the holder to convert to common stock, followinga one year holding period, at 80% of the average of the 5 lowest closing prices over the last 20 trading days. See “Descriptionof Capital Stock” above.

 

(5)Each share of Series C Preferred Stock has a stated value of $1.00 per share and entitles the holder to convert to common stock, followinga one year holding period, at 80% of the average of the 5 lowest closing prices over the last 20 trading days. See “Descriptionof Capital Stock” above.

 

(6)Robert Grinberg was issued Preferred Series A shares in accordance with Certificate of Action Without Meeting dated June 18, 2021.

 

(7)Victoria Rudman was granted 7,500,000 shares of restricted common stock on June 30, 2017; all of which have vested. Ms. Rudman’semployment contract ended on June 30, 2019. For settlement of this and all open and outstanding salary and board fee accruals, the Boardconsented on June 30, 2021 to (i) pay $15,000 in cash and (ii) issue 33,995,000 shares of the Company’s common stock.

 

Ms.Rudman’s 1,000,000 shares of Preferred Series A shares were issued in accordance with Certificate of Action Without Meeting datedJune 18, 2021. The additional 1,000,000 shares were issued pursuant to a resolution of the Board of Directors at a regularly scheduledmeeting.

 

(8)Dr. Charles Adelson was appointed as a director on August 29, 2017 and was removed as a director on April 29, 2022. Mr. Adelsonwas awarded a total of 1,000,000 stock options; all of which have vested. For settlement of this and all open and outstanding board feeaccruals, the Board consented on June 30, 2021 to issue 3,000,000 shares of the Company’s common stock.

 

(9)Dr. Manideep Gopishetty was appointed as a director on 12/17/2021. Dr. Gopishetty was issued a total of 1,150,000 shares of Series BPreferred Stock upon acquisition of the Cognitive Apps subsidiary.

 

(10)Praveenkumar Vijayakumar was appointed as a director on 12/17/2021. Mr. Vijayakumar was issued a total of 1,100,000 shares of SeriesC Preferred Stock upon acquisition of the Belrfrics Group subsidiary

 

CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

Asof December 31, and June 30, 2021, $4,246,617 and $1,155,550, respectively, was due to related parties for Belfrics only and is primarilycomprised of loans from the Belfrics only entities’ shareholders and are advances due on demand with no interest.

 

AtJune 30, 2021, the Company reported $34,271 due from related party, a Cog Apps shareholder. As of December 31, 2021, the amount has beenrepaid in full.

 

FamilyRelationships

 

Mr.Robert Grinberg is married to a sibling of Ms. Victoria Rudman. No director or executive officer has been a director or executive officerof any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it. No director or executive officerhas been convicted of a criminal offense within the past five years or is the subject of a pending criminal proceeding. No director orexecutive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspendingor otherwise limiting his involvement in any type of business, securities or banking activities. No director or officer has been foundby a court to have violated a federal or state securities or commodities law.

 

LEGALMATTERS

 

Thevalidity of the Common Stock offered by this prospectus will be passed upon by Jonathan D Leinwand, P.A.

 

 

Experts

 

Theconsolidated financial statements of Life Clips, Inc. as of December 31, 2021 and 2020, and for each of the years then ended, have beenincorporated by reference from our Annual Report on Form 10-K as filed with the SEC on April 16, 2021, in reliance upon the report ofAccell Audit and Compliance, PA, independent registered public accounting firm. Such report is incorporated by reference upon the authorityof said firm as experts in accounting and auditing.

 

WhereYou Can Find More Information

 

Wefile annual, quarterly and other reports, proxy statements and other information with the SEC. Our Annual Report on Form 10-K, QuarterlyReports on Form 10-Q, and Current Reports on Form 8-K, including any amendments to those reports, and other information that we filewith or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act can be accessed free of charge through the Internet.The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers thatfile electronically with the SEC at http://www.sec.gov. You may access the registration statement of which this prospectus isa part at the SEC’s Internet site.

 

Wemake available through our website, free of charge, copies of our SEC filings as soon as reasonably practicable after we electronicallyfile or furnish them to the SEC on our website, http://lifeclips.com. We have not incorporated by reference into this prospectusthe information on our website, and you should not consider it to be a part of this prospectus.

 

Thisprospectus forms part of a registration statement we have filed with the SEC relating to, among other things, the Common Stock. As permittedby SEC rules, this prospectus does not contain all the information we have included in the registration statement and the accompanyingexhibits and schedules we have filed with the SEC. You may refer to the registration statement, exhibits and schedules for more informationabout us and the Common Stock. The statements this prospectus make pertaining to the content of any contract, agreement or other documentthat is an exhibit to the registration statement necessarily are summaries of their material provisions, and we qualify them in theirentirety by reference to those exhibits for complete statements of their provisions. The registration statement, exhibits and schedulesare available through the SEC’s website.

 

 

LIFECLIPS, INC.

 

INDEXTO FINANCIAL STATEMENTS

 

Indexto Consolidated Financial Statements

 

CONTENTS

 

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of June 30, 2021 and 2020	F-3
Consolidated Statements of Operations And Comprehensive Income/(Loss) for the years ended June 30, 2021 and 2020	F-4
Consolidated Statements of Changes in Shareholders’ Deficit for the years ended June 30, 2021 and 2020	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2021 and 2020	F-6
Notes to Consolidated Financial Statements	F-7

 

Consolidated Balance Sheets as of March 31, 2022 and June 30, 2021	F-17
Consolidated Statements of Operations (unaudited) For the Three and Nine Months ended March 31, 2022 and 2021	F-18
Consolidated Statements of Changes in Shareholders’ Deficit (unaudited) for the three months ended March 31, 2022 and 2021	F-19
Consolidated Statements of Cash Flows (unaudited) for the nine months ended March 31, 2022 and 2021	F-20
Notes to Unaudited Condensed Consolidated Financial Statements	F-21

 

 

Reportof Independent Registered Public Accounting Firm

 

 

Tothe Board of Directors and

Stockholders of Life Clips, Inc.

 

Opinionon the Financial Statements

 

Wehave audited the accompanying balance sheets of Life Clips, Inc. (the Company) as of June 30, 2019 and 2018, and the related statementsof operations, changes in shareholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referredto as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial positionof the Company as of June 30, 2019 and 2018, and the results of its operations and its cash flows for the years ended June 30, 2019 and2018, in conformity with accounting principles generally accepted in the United States of America.

 

Basisfor Opinion

 

Thesefinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sfinancial 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 securitieslaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

Weconducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Companyis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regardingthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovides a reasonable basis for our opinion.

 

SubstantialDoubt about the Company’s Ability to Continue as a Going Concern

 

 

Theaccompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note3, the Company has incurred net losses and has minimal revenues. These factors, and the need for additional financing in order for theCompany to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinionis not modified with respect to that matter.

 

Wehave served as the Company’s auditor since 2019.

 

Tampa, Florida

 

November23, 2020

 

3001N. Rocky Point Dr. East, Suite 200 i Tampa, Florida 33607 i 813.367.3527

 

 

LIFECLIPS, INC.

CONSOLIDATEDBALANCE SHEETS

 

		June 30, 2021				June 30, 2020
ASSETS
Current assets
Cash		$	230,685			$	12,160
Accounts Receivable
Due from Related Party			34,271				-
Other Current Assets
Total Current Assets			264,956				12,160
Right-of-Use Asset
Investments - Ehave Inc			38,422				-
Property and Equipment, net
Intangible Assets
Total Assets		$	303,378			$	12,160
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Liabilities
Current liabilities
Accounts Payable		$	399,670			$	357,388
Accrued Expenses and Interest Payable			521,521				1,379,655
Due to Related Party			1,155,550				763,050
Deferred Revenue			50,000				-
Convertible Note Payable, less discount of $80,369 at June 30, 2021			3,582,872				-
Convertible Note Payable - In Default			541,051				2,428,960
Notes Payable - In Default			-				530,000
Derivative Liability - Convertible Notes Payable			1,577,001				13,249,507
Lease Liability
Total Current Liabilities			7,827,665				18,708,560
Non-Current Liabilities:
Lease Liability, Long-Term
Convertible Note Payable
Contingent Liability, Long-Term
Total Liabilities			7,827,665				18,708,560
Commitments and Contingencies (Note 11)			-				-
Shareholders’ deficit
Preferred Stock - Series A ($0.001 par value; 5,000,000 shares authorized, 4,000,000 and 1,000,000 shares issued and outstanding, respectively)			4,000				1,000
Preferred Stock - Series B ($0.001 par value; 5,760,000 shares authorized, 5,760,000 and 0 shares issued and outstanding, respectively)			5,760				-
Preferred stock value
Common Stock, ($0.001 par value; 5,000,000,000 shares authorized, 1,322,822,904 and 1,259,831,337 shares issued and outstanding, respectively)			1,322,823				1,259,831
Common stock to be issued			125,032				125,032
Additional paid in capital			23,866,298				9,218,935
Accumulated other comprehensive loss			(67,965	)			-
Accumulated deficit			(32,780,235	)			(29,301,198	)
Total shareholders’ deficit			(7,524,287	)			(18,696,400	)
Total liabilities and shareholders’ deficit		$	303,378			$	12,160

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LIFECLIPS, INC.

CONSOLIDATEDSTATEMENTS OF OPERATIONS AND COMREHENSIVE INCOME/(LOSS)

Forthe Years Ended

 

		June 30, 2021				June 30, 2020
Revenues
License Income		$	50,000			$	-
Cost of Goods Sold			-				-
Gross Profit			50,000				-
Operating Costs
Professional Fees			527,604				317,790
Marketing Expense
Travel and Meal Expenditures
Payroll Expense			68,588				-
General and Administrative Expenses			3,398				8,824
Total Operating Costs			599,590				326,614
Loss from Operations			(549,590	)			(326,614	)
Other Income/(Expense)
Gain on Batterfly Settlement			468,505				-
Loss on Extinguishment of Debt			(67,814	)			-
Loss on Impairment of Intangibles			(10,036,200	)			-
Interest Expense			(568,168	)			(395,048	)
Change in Fair Value of Derivative			7,274,230				(10,018,665	)
Change in Fair Value of Contingent Liability
Gain on Forgiveness
Debt Discount Amortization
Other Income
Total Other Income (Expense)			(2,929,447	)			(10,413,713	)
Income/(Loss) Before Income Taxes			(3,479,037	)			(10,740,327	)
Provision for Income Taxes			-				-
Net Income/(Loss)		$	(3,479,037	)		$	(10,740,327	)
Other Comprehensive Income/(Loss):
Foreign Currency Translation Adjustment			(6,387	)			-
Change in Fair Value of Investment			(61,578	)			-
Comprehensive Income/(Loss )		$	(3,547,002	)		$	(10,740,327	)
Earnings/(Loss) Per Share: Basic and Diluted		$	(0.00	)		$	(0.01	)
Weighted Average Number of Common Shares Outstanding: Basic and Diluted			1,262,254,090				1,259,831,337

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LIFECLIPS, INC.

CONSOLIDATEDSTATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

 

		Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				Deficit
																										Common Stock				Additional				Accumulated Other								Total
		Preferred - Series A								Preferred - Series B								Common Stock								To Be				Paid-In				Comprehensive				Accumulated				Shareholders’
		Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				Deficit
Balances as of June 30, 2019			1,000,000			$	1,000				-			$	-				1,259,831,337			$	1,259,831			$	125,032			$	9,218,935			$	-			$	(18,560,871	)		$	(7,956,073	)
Net Loss			-				-				-				-				-				-				-				-				-				(10,740,327	)			(10,740,327	)
Balances as of June 30, 2020			1,000,000				1,000				-				-				1,259,831,337				1,259,831				125,032				9,218,935				-				(29,301,198	)			(18,696,400	)
Series A Preferred Shares			3,000,000				3,000				-				-				-				-				-				(3,000	)			-				-				-
Cognitive Apps Acquisition Shares			-				-				5,760,000				5,760				-				-				-				10,010,329				-				-				10,016,089
Mobeego Settlement Shares Issued			-				-				-				-				62,991,567				62,992				-				(31,497	)			-				-				31,495
Cognitive Apps Acquisition Warrants			-				-				-				-				-				-				-				20,111				-				-				20,111
Derivatives Debt Extinguishment			-				-				-				-				-				-				-				4,546,090				-				-				4,546,090
Warrants issued with Convertible Notes Payable			-				-				-				-				-				-				-				105,330				-				-				105,330
Foreign Currency Translation Adjustment			-				-				-				-				-				-				-				-				(6,387	)			-				(6,387	)
Change in Value of Investment			-				-				-				-				-				-				-				-				(61,578	)			-				(61,578	)
Net Income			-				-				-				-				-				-				-				-				-				(3,479,037)				(3,479,037	)
Balances as of June 30, 2021			4,000,000			$	4,000				5,760,000			$	5,760				1,322,822,904			$	1,322,823			$	125,032			$	23,866,298			$	(67,965	)		$	(32,780,235	)		$	(7,524,287)

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LIFECLIPS, INC.

CONSOLIDATEDSTATEMENTS OF CASH FLOWS)

Forthe Years Ended

 

		June 30, 2021				June 30, 2020
Cash Flows From Operating Activities:
Net Income/(Loss)		$	(3,479,037	)		$	(10,740,327	)
Adjustments to Reconcile Net Income/(Loss) to Net Cash From Operating Activities:
Changes in Fair Value of Derivative Liabilities			(7,274,230	)			10,018,665
Stock Issued for Services
Change in Fair Value of Contingent Liability
Change in Fair Value of Investments
Depreciation
Amortization of Debt Discount			99,960				22,890
Loss on Extinguishment of Debt			67,814				-
Gain on Batterfly Settlement			(468,505	)			-
Loss on Impairment of Intangibles			10,036,200				-
Changes in Assets and Liabilities:
Accounts Receivable			(100,000	)			-
Other Current Assets
Right of Use Asset
Accounts Payable			42,282				5,001
Accrued Expenses and Interest Payable			492,199				372,157
Deferred Revenue			50,000				-
Due to Related Party			392,500				300,000
Due from Related Parties			(34,271	)			-
Net Cash From Operating Activities			(175,088	)			(21,614	)
Cash Flows From Investing Activities:
Purchases of Property and Equipment
Due from Related Parties
Purchase of Intangible Assets
Net Cash Acquired on Acquisitions
Net Cash From Investing Activities
Cash Flows From Financing Activities:
Issuance of Stock
Proceeds From Convertible Notes Payables			400,000				-
Proceeds From Notes Payable			35,000				-
Payments on Notes Payable			(35,000	)			-
Net Cash From Financing Activities			400,000				-
Effect of Exchange Rate on Cash			(6,387	)			-
Net Change in Cash			218,525				(21,614	)
Cash at Beginning of Period			12,160				33,774
Cash at End of Period		$	230,685			$	12,160
Supplemental Disclosures of Cash Flow Information:
Cash Paid for:
Interest		$	-			$	-
Income Taxes		$	-			$	-
Non-cash Investing and Financing Activities
Accrued Interest Converted to Convertible Notes Payable
Value of Common Stock Issued for Convertible Notes Payable
Due to Related Parties Converted to Accounts Payable
Accounts Receivable Settled in Investments		$	100,000				-
Accrued Interest Converted to Convertible Notes Payable		$	1,350,333				-

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LifeClips, Inc.

Notesto Consolidated Financial Statements

June30, 2021 and 2020

 

NOTE1. ORGANIZATION AND OPERATIONS

 

LifeClips, Inc. (the “Company”) was incorporated in Wyoming on March 20, 2013 as Blue Sky Media Corporation and its principalbusiness was developing, financing, producing and distributing motion pictures and related entertainment products. Following the Company’sOctober 2, 2015 acquisition of Klear Kapture, Inc. (“Klear Kapture”), the Company continued Klear Kapture’s businessof developing a body camera and an auditable software solution suitable for use by law enforcement. The Company changed its name to LifeClips, Inc. on November 3, 2015 in order to better reflect its business operations at the time.

 

OnJuly 11, 2016, the Company completed its acquisition (the “Acquisition”) of all of the outstanding equity securities of BatterflyEnergy Ltd. (“Batterfly”), an Israel-based corporation that develops and distributes a single-use, cordless battery underthe brand name Mobeego for use with cellular phones and other mobile devices. Batterfly is now a wholly owned subsidiary of the Company.The Acquisition was completed pursuant to a Stock Purchase Agreement, dated as of June 10, 2016 (the “Purchase Agreement”),among the Company, Batterfly and all of the shareholders of Batterfly, as amended. The Company has decided to retire its core product,Mobeego batteries, and continue pursuing alternative business opportunities that will re-energize the business within the next 12 months.

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”, “Subsidiary”),a developer of artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporatedin British Columbia on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technologicalsolutions to the mental health and healthcare sector.

 

CognitiveApps sold all of its issued and outstanding capital stock to LCLP, such that, becoming a 100% wholly-owned subsidiary of LCLP.

 

NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basisof Presentation and Consolidation – The consolidated financial statements of the Company have been prepared in accordance withaccounting principles generally accepted in the United States of America (“GAAP”). The Company consolidates the financialstatements of its wholly-owned subsidiary and all intercompany transactions and account balances have been eliminated in consolidation.

 

Useof Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the dateof the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from these estimates.

 

Cashand Cash Equivalents – For financial statement presentation purposes, the Company considers all short-term investments witha maturity date of three months or less to be cash equivalents.

 

Investments – The Company’sinvestments in marketable securities are measured at fair value with unrealized gains and losses recognized in other comprehensive income/(loss).The Company received a total of 960,559 shares of Ehave, Inc.’s common stock as payment for a licensing agreement. These shareshad a total value of $100,000 upon issuance. Subsequent to issuance, the stock price of the shares decreased and an unrealized loss onthe investment of $61,578 was recognized, decreasing the asset value to $38,422 at June 30, 2021.

 

IncomeTax – The Company accounts for income taxes under Accounting Standards Certifications (“ASC”) 740 “IncomeTaxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributableto differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respectivetax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the yearsin which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilitiesof a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferredtax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

Basicand Diluted Net Income (Loss) Per Share – The Company computes net income (loss) per share in accordance with ASC 260 “EarningsPer Share” (“ASC 260”). ASC 260 requires presentation of both basic and diluted earnings per share “EPS’on the face of the consolidated statements of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders(numerator) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings pershare assume the conversion, exercise or issuance of all common stock instruments such as options, warrants and convertible securities,unless the effect is to reduce a loss or increase earnings per share. Diluted EPS excludes all dilutive potential shares if their effectis anti-dilutive.

 

FairValue of Financial Instruments – The Company measures assets and liabilities at fair value based on an expected exit priceas defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale ofan asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair valuemay be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair valuemeasurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs,used in valuation techniques, are assigned a hierarchical level.

 

Thefollowing are the hierarchical levels of inputs to measure fair value:

 

	●	Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
	●	Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
	●	Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

F-7

 

 

Thecarrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and interest,certain notes payable and notes payable – due to related parties, approximate their fair values because of the short maturity ofthese instruments.

 

TheCompany accounts for its derivative liabilities, at fair value, on a recurring basis under Level 3 (See Note 7). The Company accountsfor its investments, at fair value, on a recurring basis under Level 1 (See Note 5)

 

EmbeddedConversion Features – The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivativesand Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accountedfor as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivativetreatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” forconsideration of any beneficial conversion feature.

 

DerivativeFinancial Instruments – The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreigncurrency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instrumentsare derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted foras liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, withchanges in the fair value reported as charges or credits to income.

 

Foroption-based simple derivative financial instruments, the Company uses the Monte Carlo option-pricing model to value the derivative instrumentsat inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments shouldbe recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

DebtIssue Costs and Debt Discount – The Company may record debt issue costs and/or debt discounts in connection with raising fundsthrough the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized tointerest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amountsis immediately expensed.

 

StockBased Compensation – ASC 718 “Compensation-Stock Compensation” prescribes accounting and reporting standardsfor all stock-based compensation plan payments awarded to employees, including employee stock options, restricted stock, employee stockpurchase plans and stock appreciation rights, which may be classified as either equity or liabilities. The Company should determine ifa present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle incash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the presentobligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transactionshould be recognized as a liability; otherwise, the transaction should be recognized as equity.

 

TheCompany accounts for stock-based compensation issued to nonemployees and consultants in accordance with the provisions of ASC 505-50“Equity-Based Payments to Non-Employees”. Measurement of share-based payment transactions with nonemployees shallbe based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instrumentsissued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performancecompletion date.

 

Recognitionof Licensing Revenues – The Company recognizes licensing revenue in accordance with Accounting Standards Update (“ASU”)No. 2014-09 “Revenue from Contracts with Customers”. The Company recognizesas revenues the amount of the transaction price that is allocated to the respective performance obligations when the performance obligationis satisfied, or as it is satisfied. The Company primarily sells disposable and recyclable cell phone batteries. The Company’sperformance obligation is satisfied when the goods have been delivered, which is at a point in time. The Company applies the followingfive steps in order to determine the appropriate amount of revenue recognized as it fulfills its obligations under each of its agreements:

 

	●	identify the contract with a customer;
	●	identify the performance obligations in the contract;
	●	determine the transaction price;
	●	allocate the transaction price to performance obligations in the contract; and
	●	recognize revenue as the performance obligation is satisfied.

 

Specificallyfor licensing arrangements, the Company determines the nature of its Subsidiary’s promise in granting a license iseither to provide a right to access intellectual property, which is satisfied over time and for which revenue is recognized over time,or to provide a right to use our intellectual property, which is satisfied at a point in time and for which revenue is recognized ata point in time. The scope and applicability of the guidance about when to recognize revenue for sales-based or usage-based royaltiespromised in exchange for a license of intellectual property and whether restrictions of time, geographical region, or use on a licenseof intellectual property do not affect the identification of performance obligations.

 

RecentlyIssued Accounting Pronouncements – Financial Accounting Standards Board, or FASB ASU 2016-02 “Leases (Topic 842)”-In February 2016, the FASB issued ASU 2016-02, which will require lessees to recognize almost all leases on their consolidated balancesheet as a right-of-use asset and a lease liability. For consolidated income statement purposes, the FASB retained a dual model, requiringleases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those appliedin current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but updated to alignwith certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning afterDecember 15, 2018, including interim periods within those fiscal years. The Company adopted this in Fiscal Year 2020.

 

SubsequentEvents – The Company follows the guidance in ASC 855 “Subsequent Events” for the disclosure of subsequentevents. The Company will evaluate subsequent events through the date when the consolidated financial statements are issued. Pursuantto ASU 2010-09 of the FASB ASC, the Company as an SEC filer considers its consolidated financial statements issued when they are widelydistributed to users, such as through filing them on EDGAR.

 

F-8

 

 

NOTE3. UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN

 

Theaccompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assetsand the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financialstatements, the Company has minimal revenues, net accumulated losses since inception and an accumulated deficit of $32,780,235.These factors raise doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concernis dependent on management funding operating costs. The consolidated financial statements do not include any adjustments that might benecessary if the Company is unable to continue as a going concern.

 

Theimpact of the COVID-19 pandemic has had, and is expected to continue to have, an adverse effect on our business and our financial results.The COVID-19 pandemic has negatively affected global economy, disrupted consumer spending and global supply chains and created significantvolatility and disruption of financial markets. The pandemic had and will continue to have an adverse effect on our business and financialperformance. The extent of the impact of the COVID-19, including our ability to execute our business strategies as planned, will dependon future developments, including the duration and severity of the pandemic, which are uncertain and cannot be predicted. The COVID-19pandemic could also adversely affect our liquidity and ability to access the capital markets. Uncertainty regarding the duration of theCOVID-19 pandemic may adversely impact our ability to raise additional capital, or require additional capital.

 

NOTE4. ACQUISITION OF SUBSIDIARY

ACQUISITION OF SUBSIDIARIES

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”, “Subsidiary”),a developer of artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporatedin British Columbia on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technologicalsolutions to the mental health and healthcare sector.

 

CognitiveApps sold all of its issued and outstanding capital stock to LCLP, such that, becoming a 100% wholly-owned subsidiary of LCLP.

 

Inexchange for the acquisition, the subsidiary received the following consideration:

 

(a)Preferred Shares. Exchange each issued and outstanding share of Cognitive Apps common stock for 5,760,000 shares of LCLP SeriesB Preferred Shares. The Series B Preferred Shares are convertible based on 80% of average of the 5 lowest closing prices for a shareof Common Stock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately precedingsuch date. Notwithstanding the foregoing, in no case shall the fair market value multiplied by the total number of shares issued andoutstanding be less than $5,000,000. The fair value on the date of acquisition was calculated at $10,016,089.

 

(b)Warrants. In addition to the Acquisition Preferred Shares, the Shareholders, on a pro-rata basis, will receive warrants to purchasea total of 3,500,000 shares of the common shares of the Company at an exercise price of $0.10. The fair value of the warrantson the date of acquisition was calculated at $20,111.

 

(c)Financing. The Company shall use its best efforts after Closing to provide Cognitive Apps, as a wholly owned subsidiary, up to$1,000,000 in the form of an equity investment by Corporation into the subsidiary.

 

CognitiveApps had no operations and no significant assets recorded at the acquisition date. Based on the calculated purchase price of $10,036,200,the entire amount was allocated to intangible assets. Due the lack of historical operations and uncertainty regarding future operations,the Company impaired the full value of the intangible asset acquired. Also, as there were no previous operations, there are no pro formadisclosures to present.

 

NOTE5. RELATED PARTY TRANSACTIONS

 

AtJune 30, 2021 and 2020, due to related parties was $1,155,550 and $763,050, respectively. At June 30, 2021, this was comprisedof unpaid compensation of $776,050 to Victoria Rudman, $164,500 to William Singer, $90,000 to Charles Adelson, and $125,000 toRobert Grinberg.

 

Asof June 30, 2021, the board approved to pay these and any other amounts due by converting them to common stock.

 

F-9

 

 

At June 30, 2021 and 2020, due from related partywas $34,271 and $0, respectively. This amount is due from a Subsidiary shareholder.

 

NOTE6. NOTES PAYABLE – IN DEFAULT

 

AtJune 30, 2020, the Company had two notes payable in the amount of $530,000, with the following terms:

 

	1.	The Batterfly Acquisition Note required the Company to make two payments of $250,000 on October 6, 2017 and February 13, 2017. Upon failure to pay the payment due, the balance began to accrue at 11% interest per annum.
	2.	On July 14, 2016, the Company issued a new promissory note to NUWA Group, LLC (“NUWA”), from which the Company received $30,000 in gross proceeds, has a maturity date of October 14, 2016, and bears interest at 5% per annum. This promissory note does not have a conversion feature.

 

Asof June 30, 2021, all of the above Notes Payable were settled with shares of the Company’s Common Stock.

 

NOTE7. CONVERTIBLE NOTES PAYABLE

 

OnJune 15, 2021, the Company entered into six Note Exchange Agreements to amend and restate 35 variable conversion notes, most of whichwere in default, with interest rates ranging from 3.85% to 22% to a fixed conversion rate of $0.01 with an interest rateof 8%. A total of $3,288,241 in principal and interest was converted from the variable to fixed conversion price, reducing theneed for derivative calculations to the 5 remaining notes that one holder declined to exchange.

 

Asof June 30, 2021, the Company entered into two new notes payable with Leviston Resources LLC in the amount of $375,000, with thefollowing terms:

 

	1.	On April 22, 2021, the Company entered into a Future Advance Convertible Promissory Note for $275,000, with a maturity date of April 22, 2023 and an interest rate of 10%. The note also allows for a second draw of up to $250,000.
	2.	On June 29, 2021, the Company entered into a Promissory Note for $100,000, with a maturity date of December 23, 2022 and an interest rate of 4%.

 

F-10

 

 

ConvertibleNotes

 

Asof June 30, 2021, the amount of the Company’s convertible notes in-default decreased to $541,051 when compared to June 30, 2020amount of $2,428,960, as follows:

 

SCHEDULE OF CONVERTIBLE NOTES

Balance at June 30, 2021				Balance at June 30, 2020				Due Date		Interest Rate at June 31, 2021
$	541,051			$	1,931,806			Range from 05/13/2017 to 01/20/2022		Range from 3.85% to 22%		Conversion price equal to fifty percent (50%) of the lowest trading price during the twenty (20) trading day period prior to the date of conversion - $0.0018 and at June 30, 2021, convertible into 133.9 million shares not including interest.
	-				332,154			06/09/2017		18%		Conversion price equal to seventy five percent (75%) of the lowest trading price during the five (5) trading day period prior to the date of conversion - $0.0046 and at June 30, 2021, convertible into 65.9 million shares not including interest.
	-				165,000			Range from 01/27/2018 to 11/15/2019		Range from 18% to 22%		Conversion price equal to fifty percent (50%) of the lowest trading price during the five (5) trading day period prior to the date of conversion - $0.0024 and at June 30, 2021, convertible into zero shares not including interest.
	3,288,241				-			06/15/2023		8%		Conversion price equal to $0.01 and at June 30, 2021, convertible into 328.8 million shares not including interest.
	375,000				-			Range from 04/22/2023 to 12/23/2022		Range from 4% to 10%		Conversion price equal to $0.015 (the Qualified Regulation A Offering Subscription Price), and at June 30, 2021, convertible into 23.33 million shares not including interest.
$	4,204,292			$	2,428,960

 

TheCompany evaluated the convertible promissory notes under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generallyrequires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separateaccounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract.The material embedded derivative consists of the embedded conversion feature. The conversion option bears risks of equity which werenot clearly and closely related to the host debt agreement and required bifurcation.

 

DebtDiscount

 

TheCompany recorded the debt discount to the extent of the gross proceeds raised and expensed immediately the remaining fair value of thederivative liability, as it exceeded the gross proceeds of the note.

 

Totalamortization of debt discount amounted to $99,960 and $22,890 for the years ended June 30, 2021 and 2020, respectively.

 

As of June 30, 2021 and 2020, the debt discountswere $80,369 and $0, respectively.

 

F-11

 

 

NOTE8. DERIVATIVE FINANCIAL INSTRUMENTS

 

TheCompany’s convertible promissory notes and detachable warrants gave rise to derivative financial instruments. The notes embodiedcertain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics.These terms and features consist of the embedded conversion option. Additionally, the detachable warrants contained terms and featuresthat gave rise to derivative liability classification. As of June 30, 2021, the Company does not have enough authorized shares to settleall potential conversion and warrant transactions.

 

Thefollowing tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2021and 2020 and the amounts that were reflected in income related to derivatives for the period ended:

SCHEDULE OF COMPONENTS OF DERIVATIVE LIABILITIES 

		June 30, 2021
The financings giving rise to derivative financial instruments		Indexed Shares* (in millions)				Fair Values
Embedded derivatives			563			$	1,577,001
Total			563			$	1,577,001

 

*includingprincipal and interest

 

		June 30, 2020
The financings giving rise to derivative financial instruments		Indexed Shares* (in millions)				Fair Values
Embedded derivatives			68,617			$	13,249,507
Total			68,617			$	13,249,507

 

*includingprincipal and interest

 

Thefollowing table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivativefinancial instruments by type of financing for the years ended June 30, 2021 and 2020:

SCHEDULE OF GAIN (LOSS) OF DERIVATIVE INSTRUMENTS 

The financings giving rise to derivative financial instruments and the gain (loss) effects:		June 30, 2021				June 30, 2020
		For the Years Ended
The financings giving rise to derivative financial instruments and the gain (loss) effects:		June 30, 2021				June 30, 2020
Embedded derivatives		$	7,274,230			$	(10,018,665	)
Total		$	7,274,230			$	(10,018,665	)

 

Currentaccounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classifiedin liabilities and carried at fair value with changes recorded in income. The Company has selected the Binomial Lattice Model, whichapproximates the Monte Carlo Simulations, valuation technique to fair value the compound embedded derivative because it believes thatthis technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likelyconsider in transactions involving compound embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions,credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatilityand risk-free rates. The Binomial Lattice Model technique is a level three valuation technique because it requires the development ofsignificant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired,the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market priceon the valuation date and the applicable conversion price.

 

F-12

 

 

Significantinputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcatedfrom the convertible notes and classified in liabilities:

SCHEDULE OF SIGNIFICANT INPUTS AND RESULTS FROM VALUATION ASSUMPTIONS 

		June 30, 2021				June 30, 2020
Quoted market price on valuation date		$	0.0046			$	0.0003
Range of effective contractual conversion rates		$	0.0018			$	0.00005 - $0.00029
Contractual term to maturity			NA				NA
Market volatility:
Volatility			NA				NA
Risk-adjusted interest rate			NA				NA

 

Thefollowing table reflects the issuances of compound embedded derivatives and detachable warrants and changes in fair value inputs andassumptions related to the embedded derivatives and detachable warrants during the years ended June 30, 2021 and 2020.

SCHEDULE OF CHANGES IN FAIR VALUE INPUTS AND ASSUMPTIONS RELATED TO COMPOUND EMBEDDED DERIVATIVES 

		Year Ended				Year Ended
		June 30, 2021				June 30, 2020
Balances at beginning of period		$	13,249,507			$	3,230,842
Issuances:
Embedded derivatives			50,000				-
Conversions:
Embedded derivatives			-				-
Reclassifications to equity:
Embedded derivatives			(4,448,276	)			-
Changes in fair value inputs and assumptions reflected in income			(7,274,230	)			10,018,665
Balances at end of period		$	1,577,001			$	13,249,507

 

NOTE9. EQUITY

 

AuthorizedCapital

 

OnSeptember 28, 2017, the Company filed Articles of Amendment authorizing 5,000,000, shares of common stock, par value $0.001 per share(the “Common Stock”) and 20,000,000 shares of Preferred Stock, par value $0.001 (the “Preferred Stock”). TheBoard may issue shares of Preferred Stock in one or more series and fix the rights, preferences and privileges thereof, including votingrights, terms of redemption, redemption prices, liquidation preferences, number of shares constituting any series or the designationof such series, without further vote or action by the stockholders.

 

F-13

 

 

PreferredStock

 

EffectiveMay 19, 2017, the Company amended its Articles of Incorporation to designate 1,000,000 shares of preferred stock as Series A PreferredStock, with a par value of $0.001 per share (the “Series A Stock”). Each share of Series A Stock ranks, with respect to dividendrights and rights upon liquidation, winding up or dissolution of the Company, the same as the common stock of the Company, par value$0.001 per share (the “Common Stock”) and is not entitled to any specific dividends or other distributions, other than thosedeclared by the Board of Directors. Each share of Series A Stock has 400 votes on any matter submitted to the shareholders of the Company,and the Series A Stock votes together with the holders of the outstanding shares of all other capital stock of the Company (includingthe Common Stock and any other series of preferred stock then outstanding), and not as a separate class, series or voting group on anysuch matter. The Series A Preferred Stock is not transferrable by the holder, and may be redeemed by the Company at any time for thepar value. In the event that the holder of Series A Preferred Stock who is an employee or officer of the Company leaves their positionas an employee or officer of the Company for any reason, the Series A Preferred Stock held by that holder will be automatically cancelledand will revert to being authorized and unissued shares of Series A Preferred Stock. The Series A Stock is not convertible into any otherclass of shares of the Company.

 

OnJune 16, 2021, the Board determined that it would be in the best interest of the Company to increase the Company’s authorized SeriesA Preferred stock to 5,000,000 (Five Million) shares.

 

Additionally,the Board authorized 5,760,000 (Five Million Seven Hundred and Sixty Thousand) shares of the Company’s Series B preferred pursuantto the acquisition of its Subsidiary. In exchange for the acquisition, the subsidiary received as consideration these Preferred Sharesin exchange for each issued and outstanding share of Cognitive Apps common stock at $1.00 per share.

 

Eachshare of Series B Preferred Stock shall be convertible, at the option of the holder thereof, beginning 12 months from the date of issuance,and thereafter at any time and from time to time, and without the payment of additional consideration by the holder thereof, into thatnumber of fully paid and nonassessable shares of Common Stock (whether whole or fractional) that have a Fair Market Value, in the aggregate,equal to the Series B Conversion Price. The “Series B Conversion Price” shall initially be equal to $1.00. Such initial SeriesB Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subjectto adjustment as provided below. “Fair Market Value” shall mean as of any date of determination, the 80% of average of the5 lowest closing prices for a share of Common Stock on the principal exchange or market on which such shares are then trading for the20 trading days immediately preceding such date. Notwithstanding the foregoing, in no case shall the Fair Market Value multiplied bythe total number of shares issued and outstanding be less than $5,000,000.

 

Stockand Incentive Plan

 

OnApril 20, 2017, the Company adopted the Life Clips, Inc. 2017 Stock and Incentive Plan under which the Company may issue nonqualifiedstock options, incentive stock options, stock appreciation rights, restricted stock grants and units, performance units and awards ofcash. A maximum of 20,000,000 shares of common stock may be issued under the plan, representing in excess of 35% of the number of theCompany’s currently outstanding shares. Awards under the plan will be made at the discretion of the Board of Directors, althoughno awards have been made to date. Accordingly, the Company cannot currently determine the amount of awards that will be made under theplan.

 

Warrants

 

TheCompany did not issue any warrants during the year ended June 30, 2020.

 

OnApril 5, 2021, as part of its acquisition of Cognitive Apps, the Company issued the shareholders of the subsidiary warrants to purchasea total of 3,500,000 shares of the Company’s common stock.

 

Additionally,on April 22, 2021, the Company issued the holder of a convertible note payable, warrants to purchase a total of 30,000,000 shares ofthe Company’s common stock.

 

Thefollowing table shows the warrants outstanding at June 30, 2021:

 SCHEDULE OF WARRANT OUTSTANDING

		Number of Warrants				Weighted Average Exercise Price				Weighted Average Remaining Life (Years)				Average Intrinsic Value
Outstanding, June 30, 2020			-			$	-				-			$	-
Granted			33,500,000				0.10				5.00				-
Outstanding, June 30, 2021			33,500,000				0.10				4.75				-
Exercisable, June 30, 2021			33,500,000			$	0.10				4.75			$	-

 

NOTE10. INCOME TAX PROVISION

 

Incometaxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currentlydue. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which willbe either taxable or deductible when the assets or liabilities are recovered or settled.

 

TheCompany accounts for income taxes in accordance with the provisions of ASC 740, Accounting for Uncertainty in Income Taxes. TheCompany accounts for income taxes using an asset and liability approach to calculate deferred income taxes. The asset and liability approachrequires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences betweenthe carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assetsfor which management believes it is more likely than not that the net deferred asset will not be realized.

 

F-14

 

 

AtJune 30, 2021, the Company has a net operating loss carry-forward of $(22,694,075) available to offset future taxable incomeexpiring through 2035. Utilization of future net operating losses may be limited due to potential ownership changes under Section382 of the Internal Revenue Code.

 

Inassessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all ofthe deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generationof future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduledreversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferredincome tax asset balances to warrant the application of a full valuation allowance as of June 30, 2021.

 

Theeffects of temporary differences that gave rise to significant portions of deferred tax assets at June 30, 2021 and 2020 are approximatelyas follows:

 SCHEDULE OF DEFERRED TAX ASSETS

		June 30, 2021				June 30, 2020
Net Operating Loss Carryforward		$	32,780,235			$	29,301,198
Above multiplied by tax rate of			21	%			21	%
Gross Deferred Tax Assets			6,883,849				6,153,251
Less Valuation Allowance			(6,883,849	)			(6,153,251	)
Total Deferred Tax Assets – Net		$	-			$	-

 

Areconciliation of income taxes computed at the statutory rate to the income tax amount recorded is as follows:

 SCHEDULE OF RECONCILIATION OF INCOME TAXES

		2021				2020
		Year ended June 30
		2021				2020
Income tax expense (benefit) at statutory rate		$	(730,598	)		$	(2,255,469	)
Tax Cuts and Job Act Impact			-				-
Decrease in valuation allowance			730,598				2,255,469
Income tax expense		$	-			$	-

 

TheCompany had no gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.It has not accrued any interest or penalties associated with income taxes. The Company files income tax returns in the United Statesfederal jurisdiction. With few exceptions, it is no longer subject to U.S. federal, state or non-U.S. income tax authorities on tax returnsfiled before January 31, 2012. No tax returns are currently under examination by tax authorities.

 

NOTE11. COMMITTMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

 

Fromtime to time, the Company may be a party to other legal proceedings. Management currently believes that the ultimate resolution of thesematters will not have a material adverse effect on consolidated results of operations, financial position, or cash flow.

 

F-15

 

 

NOTE12. SUBSEQUENT EVENTS

 

OnJuly 1, 2021, the Company entered into a Note Exchange Agreement to amend and restate the remaining 5 variable conversion notes, allof which were in default, with interest rates ranging from 18% to 22% to a fixed rate $0.01 with an interest rate of 8%. A total of $1,085,824in principal and interest was converted from the variable to fixed conversion price, reducing the need for future derivative calculations.

 

OnJuly 20, 2021 a Form 1-A Regulation A Offering Circular dated June 9, 2021 and its exhibits were filed with and qualified by the Securitiesand Exchange Commission (the “SEC”). During the months of July and August 2021, the Company entered into Subscription Agreementswith Investors to offer shares of its common stock at a purchase price of $0.015 per share for total gross proceeds of up to $5,000,000.Proceeds to date are $3,125,000 with a total of 208,333,333 shares.

 

OnAugust 26, 2021, the Company filed a Form 8-K announcing that it closed its acquisition of Belfrics Holdings Limited and its relatedentities (collectively “Belfrics”) operating cryptocurrency exchanges and blockchain development services in Asia and Africa.The entities acquired are:

 

BelfricsGlobal PTE Ltd., a Singapore corporation

BelfricsBT Pvt Ltd, an India corporation

BelfricsCryptex Pvt Ltd, an India corporation

BelfricsTanzania Ltd, a Tanzania corporation

BelfricsNigeria Pvt Ltd, a Nigeria corporation

BelfricsBT SDN BHD, a Malaysia corporation

BelfricsHolding Limited, a Malaysia corporation

BelfricsAcademy SDN BHD, a Malaysia corporation

BelfricsInternational Ltd, a Malaysia corporation

BelfricsEurope SL, a Spain corporation

BelfricsKenya Pvt. Ltd, a Kenya corporation

IncryptsSDN BHD, a Malaysia corporation

BelfricsMalaysia SDN BHD

 

Pursuantto the definitive agreement previously executed between Belfrics and the Company, the Company issuing the Belfrics shareholders a newclass of preferred stock with an initial issuance price of $20,000,000 (Twenty Million Dollars) in the aggregate. The Belfrics shareholderscan earn up to an additional $15,000,000 (Fifteen Million Dollars) by reaching certain milestones. This description of the terms of theagreement is qualified in its entirety to the Acquisition Agreement between the parties filed as an exhibit on Form 8-K filed on July15, 2021.

 

Foundedin 2014, the Belfrics digital exchange platform, which was fully developed in-house, is one of the most compliant platforms in the cryptocurrencyindustry. Supported by the proprietary technology of Belrium Blockchain KYC solution, the KYC (“Know Your Customer”) andAML (“Anti-Money Laundering”) process of Belfrics Exchange is a well accepted compliance solution. With 10 operational officesin 8 countries, Belfrics provides localized and personalized support to digital currency traders. Through its Blockchain Academy, Belfricsprovides continuous training to traders, developers and blockchain enthusiasts in more than 20 countries. Belfrics is licensed and regulatedby the Labuan Financial Services Authority (LFSA) in Malaysia.

 

OnSeptember 26, 2021, the Company entered into a 1.75% Secured Promissory Note with Belfrics Global Pte Ltd, its wholly-owned subsidiary.The note was for a principal amount of $1,000,000, and due and payable on June 30, 2022. As collateral security for the obligations tomake full and timely payment of the Principal, and all accrued interest and other amounts payable under the Note, Belfrics deposited250,000 (two hundred and fifty thousand) Belrium tokens in the wallet of the Escrow Agent, Jonathan D. Leinwand, P.A. Upon payment ofthe amount due, the Belrium tokens shall be released and returned to Belfrics.

 

 

LifeClips, Inc.

ConsolidatedBalance Sheets

 

			March 31,				June 30,
		2022				2021
			(Unaudited)				(Audited)
ASSETS
Current Assets
Cash		$	855,759			$	230,685
Accounts Receivable			1,254,154				-
Due from Related Party			-				34,271
Other Current Assets			410,719				-
Total Current Assets			2,520,632				264,956
Right-of-Use Asset			264,243				-
Investments - Ehave Inc			8,549				38,422
Property and Equipment, net			1,255,943				-
Intangible Assets			46,575,083				-
Total Assets		$	50,624,450			$	303,378
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable		$	3,182,560			$	399,670
Accrued Expenses and Interest Payable			259,224				521,521
Deferred Revenue			-				50,000
Due to Related Party			4,110,515				1,155,550
Convertible Note Payable			3,492,293				3,582,872
Convertible Note Payable - In Default			-				541,051
Note Payable			250,000				-
Derivative Liability - Convertible Notes Payable			-				1,577,001
Lease Liability			118,325				-
Total Current Liabilities			11,412,917				7,827,665
Non-Current Liabilities:
Lease Liability, Long-Term			147,392				-
Convertible Note Payable			-				-
Contingent Liability, Long-Term			14,558,823				-
Total Liabilities			26,119,132				7,827,665
Commitments and Contingencies (Note 11)			-				-
Stockholders’ Equity
Preferred Stock - Series A ($0.001 par value; 5,000,000 shares authorized, 5,000,000 and 4,000,000 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively)			5,000				4,000
Preferred Stock - Series B ($0.001 par value; 5,760,000 shares authorized, 5,760,000 shares issued and outstanding at March 31, 2022 and June 30, 2021)			5,760				5,760
Preferred Stock - Series C ($0.001 par value; 3,500,000 shares authorized, 2,000,000 and zero shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively)			2,000				-
Preferred Stock, value			2,000				-
Common Stock, ($0.001 par value; 5,000,000,000 shares authorized, 1,781,946,647 and 1,322,822,904 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively)			1,781,947				1,322,823
Common Stock To Be Issued			54,887				125,032
Additional Paid-In Capital			56,133,617				23,866,298
Accumulated Other Comprehensive Loss			(95,396	)			(67,965	)
Accumulated Deficit			(33,382,497	)			(32,780,235	)
Total Stockholders’ Equity			24,505,318				(7,524,287	)
Total Liabilities and Stockholders’ Equity		$	50,624,450			$	303,378

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LifeClips, Inc.

CONSOLIDATEDSTATEMENTS OF OPERATIONS AND COMREHENSIVE LOSS

Forthe Three and Nine Months ended March 31, 2022 and 2021

(Unaudited)

 

			For the three month				For the three month				For the nine month				For the nine month
		period ended				period ended				period ended				period ended
		March 31, 2022				March 31, 2021				March 31, 2022				March 31, 2021
Revenues
Commissions and Fees		$	2,043,268			$	-			$	3,647,085			$	-
Investment Advisory			662,478				-				1,022,798				-
Administrative Services			257,922				-				504,290				-
License Income			-				-				50,000				-
App Development Income			443				-				20,779				-
Total Revenues			2,964,111				-				5,244,952				-
Cost of Goods Sold			2,289,938				-				2,968,938				-
Gross Profit			674,173				-				2,276,014				-
Operating Costs:
Professional Fees			368,192				90,373				1,089,325				283,827
Marketing Expense			995,918				-				1,835,499				-
Payroll Expense			175,197				-				488,435				-
Other General and Administrative Expenses			132,651				866				371,512				2,802
Travel and Meal Expenditures			37,246				-				83,708				-
Total Operating Costs			1,709,204				91,239				3,868,479				286,629
Loss from Operations			(1,035,031	)			(91,239	)			(1,592,465	)			(286,629	)
Other Income/(Expense):
Interest Expense			(75,119	)			(105,418	)			(244,212	)			(297,402	)
Change in Fair Value of Derivative			-				5,003,769				1,577,001				9,127,156
Change in Fair Value of Contingent Liability			4,464,254				-				1,229,876				-
Gain on Forgiveness			-				-				15,525				-
Loss on Impairment of Intangibles			-				-				(1,522,597	)			-
Debt Discount Amortization			-				-				(80,369	)			-
Other Income			(29	)							14,979
Total Other Income (Expense)			4,389,106				4,898,351				990,203				8,829,754
Income/(Loss) Before Income Taxes			3,354,075				4,807,112				(602,262	)			8,543,125
Provision for Income Taxes			-				-				-				-
Net Income/(Loss)		$	3,354,075			$	4,807,112			$	(602,262	)		$	8,543,125
Other Comprehensive Loss:
Foreign currency translation adjustment			34,785				-				7,116				-
Change in Value of Investment			(16,007	)			-				(34,547	)			-
Comprehensive Loss		$	3,372,853			$	4,807,112			$	(629,693	)		$	8,543,125
Earnings/(Loss) Per Share: Basic and Diluted			- **				- **				- **				- **
Weighted Average Number of Common Shares Outstanding: Basic and Diluted			1,642,083,987				1,259,831,337				1,642,083,987				1,259,831,337

 

**	Less than $0.01

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LIFECLIPS, INC.

CONSOLIDATEDSTATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

Forthe three months ending March 31, 2022 and 2021

 

																																			Common Stock				Additional				Accumulated Other								Total Stockholders’
		Preferred - Series A								Preferred - Series B								Preferred - Series C								Common Stock								To Be				Paid-In				Comprehensive				Accumulated				Equity/
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				(Deficit)
Balances as of December 31, 2021			4,000,000			$	4,000				5,760,000			$	5,760				2,000,000			$	2,000				1,742,647,934			$	1,742,648			$	54,887			$	55,770,035			$	(114,174	)		$	(36,736,572	)		$	20,728,584
Stock issued for Cash			-				-				-				-				-				-				-				-				-				-				-				-			$	-
Stock Issued for Services			-				-				-				-				-				-				1,422,930				1,423				-				22,700				-				-			$	24,123
Accrued Expenses Converted to Stock			-				-				-				-				-				-				-				-				-				-				-				-			$	-
Preferred Stock Issuance			1,000,000				1,000				-				-				-				-				-				-				-				-				-				-			$	1,000
Debt Converted to Stock			-				-				-				-				-				-				37,875,783				37,876				-				340,882				-				-			$	378,758
Belfrics Acquisition Shares			-				-				-				-				-				-				-				-				-				-				-				-			$	-
Foreign Currency Translation Adjustment			-				-				-				-				-				-				-				-				-				-				34,785				-			$	34,785
Change in Fair Value of Investment			-				-				-				-				-				-				-				-				-				-				(16,007	)			-			$	(16,007	)
Net Income (Loss)			-				-				-				-				-				-				-				-				-				-				-				3,354,075			$	3,354,075
Balances as of March 31, 2022			5,000,000			$	5,000				5,760,000			$	5,760				2,000,000			$	2,000				1,781,946,647			$	1,781,947			$	54,887			$	56,133,617			$	(95,396	)		$	(33,382,497	)		$	24,505,318

 

																																		Common Stock				Additional				Accumulated Other								Total Stockholders’
		Preferred - Series A								Preferred - Series B								Preferred - Series C								Common Stock								To Be				Paid-In				Comprehensive				Accumulated				Equity/
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				(Deficit)
Balances as of December 31, 2020			1,000,000			$	1,000				-			$	-				-			$	-				1,259,831,337			$	1,259,831			$	125,032			$	9,218,935			$	-			$	(25,565,185	)		$	(14,960,387	)
Net Income			-				-				-				-				-				-				-				-				-				-				-				4,807,112				4,807,112
Balances as of March 31, 2021			1,000,000			$	1,000				-			$	-				-			$	-				1,259,831,337			$	1,259,831			$	125,032			$	9,218,935			$	-			$	(20,758,073	)		$	(10,153,275	)

 

Forthe nine months ending March 31, 2022 and 2021

 

																																		Common Stock				Additional				Accumulated Other								Total Stockholders’
		Preferred - Series A								Preferred - Series B								Preferred - Series C								Common Stock								To Be				Paid-In				Comprehensive				Accumulated				Equity/
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				(Deficit)
Balances as of June 30, 2021			4,000,000			$	4,000				5,760,000			$	5,760				-			$	-				1,322,822,904			$	1,322,823			$	125,032			$	23,866,298			$	(67,965	)		$	(32,780,235	)		$	(7,524,287	)
Stock issued for Cash			-				-				-				-				-				-				282,777,734				282,778				10,555				4,106,667				-				-				4,400,000
Stock Issued for Services			-				-				-				-				-				-				4,591,893				4,592								47,146				-				-				51,738
Accrued Expenses Converted to Stock			-				-				-				-				-				-				46,045,000				46,045								907,531				-				-				953,576
Common Stock Issued from Prior Periods			-				-				-				-				-				-				13,500,000				13,500				(80,700	)			67,200				-				-				-
Preferred Stock Issuance			1,000,000				1,000				-				-				-				-				-				-				-				-				-				-				1,000
Debt Converted to Stock			-				-				-				-				-				-				112,209,116				112,209								1,126,549				-				-				1,238,758
Belfrics Acquisition Shares			-				-				-				-				2,000,000				2,000				-				-				-				26,012,226				-				-				26,014,226
Shares issued during the period acquisition Belfrics and Cognitive																							2,000																26,012,226												26,014,226
Foreign Currency Translation Adjustment			-				-				-				-				-				-				-				-				-				-				7,116				-				7,116
Change in Fair Value of Investment			-				-				-				-				-				-				-				-				-				-				(34,547	)			-				(34,547	)
Net Loss			-				-				-				-				-				-				-				-				-				-				-				(602,262	)			(602,262	)
Balances as of March 31, 2022			5,000,000			$	5,000				5,760,000			$	5,760				2,000,000			$	2,000				1,781,946,647			$	1,781,947			$	54,887			$	56,133,617			$	(95,396	)		$	(33,382,497	)		$	24,505,318

 

																																		Common Stock				Additional				Accumulated Other								Total Stockholders’
		Preferred - Series A								Preferred - Series B								Preferred - Series C								Common Stock								To Be				Paid-In				Comprehensive				Accumulated				Equity/
		Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount				Issued				Capital				Loss				Deficit				(Deficit)
Balances as of June 30, 2020			1,000,000			$	1,000				-			$	-				-			$	-				1,259,831,337			$	1,259,831			$	125,032			$	9,218,935			$	-			$	(29,301,198	)		$	(18,696,400	)
Net Income			-				-				-				-				-				-				-				-				-				-				-				8,543,125				8,543,125
Balances as of March 31, 2021			1,000,000			$	1,000				-			$	-				-			$	-				1,259,831,337			$	1,259,831			$	125,032			$	9,218,935			$	-			$	(20,758,073	)		$	(10,153,275	)

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LifeClips, Inc.

ConsolidatedStatements of Cash Flows

Forthe Nine Months Ended

(Unaudited)

 

			March 31, 2022				March 31, 2021
Cash Flows From Operating Activities:
Net Income/(Loss)		$	(602,262	)		$	8,543,125
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Changes in Fair Value of Derivative Liabilities			(1,577,001	)			(9,127,156	)
Stock Issued for Services			51,738				-
Change in Fair Value of Contingent Liability			(1,229,876	)			-
Loss on Impairment of Intangibles			1,522,597				-
Change in Fair Value of Investments			(4,674	)			-
Depreciation			74,030
Amortization of Debt Discount			80,369				15,878
Debt Foregiveness			(15,525	)			-
Changes in Assets and Liabilities:
Accounts Receivable			(1,254,154	)			-
Other Current Assets			1,215,993				-
Right of Use Asset			1,474				-
Accounts Payable			(658,048	)			3,771
Accrued Expenses and Interest Payable			1,233,563				281,525
Due to Related Parties			-				225,000
Deferred Revenue			(50,000	)			-
Net Cash From Operating Activities			(1,211,776	)			(57,857	)
Cash Flows From Investing Activities:
Purchases of Property and Equipment			(279,908	)			-
Due from Related Parties			34,271				-
Purchase of Intangible Assets			(2,650,006	)			-
Net Cash Acquired on Acquisitions			74,377				-
Net Cash From Investing Activities			(2,821,266	)			-
Cash Flows From Financing Activities:
Issuance of Stock			4,401,000				-
Proceeds From Notes Payables							35,000
Proceeds From Convertible Notes Payables			250,000				50,000
Net Cash From Financing Activities			4,651,000				85,000
Effect of Exchange Rate on Cash			7,116				-
Net Change in Cash			625,074				27,143
Cash at Beginning of Period			230,685				12,160
Cash at End of Period		$	855,759			$	39,303
Non-cash Investing and Financing Activities
Accrued Interest Converted to Convertible Notes Payable		$	542,284			$	-
Value of Common Stock Issued for Convertible Notes Payable		$	1,238,758			$	-
Due to Related Parties Converted to Accounts Payable		$	3,105,486			$	-
Value of Common Stock Issued for Accrued Interest		$	953,576			$	-

 

Theaccompanying notes are an integral part of these consolidated financial statements.

 

 

LifeClips, Inc.

Footnotesto Consolidated Financial Statements

March31, 2022

 

NOTE1. ORGANIZATION AND OPERATIONS

 

LifeClips, Inc. (the “Company”) was incorporated in Wyoming on March 20, 2013.

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”), a developerof artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporated inBritish Columbia, Canada on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technologicalsolutions to the mental health and healthcare sector. The Company acquired all of the issued and outstanding capital stock of CognitiveApps, making it a 100% wholly owned subsidiary.

 

OnAugust 25, 2021, the Company closed its acquisition of Belfrics Holdings Limited and its related entities (collectively “Belfrics”).Belfrics operates cryptocurrency exchanges and blockchain development services in Asia and Africa. The Company acquired all of the issuedand outstanding capital stock of Belfrics, making it a 100% wholly owned subsidiary.

 

TheBelfrics entities acquired are:

 

	1.	Belfrics Global PTE Ltd., a Singapore corporation
	2.	Belfrics BT Pvt Ltd, an India corporation
	3.	Belfrics Cryptex Pvt Ltd, an India corporation
	4.	Belfrics Tanzania Ltd, a Tanzania corporation
	5.	Belfrics Nigeria Pvt Ltd, a Nigeria corporation
	6.	Belfrics BT SDN BHD, a Malaysia corporation
	7.	Belfrics Holding Limited, a Malaysia corporation
	8.	Belfrics Academy SDN BHD, a Malaysia corporation
	9.	Belfrics International Ltd, a Malaysia corporation
	10.	Belfrics Europe SL, a Spain corporation
	11.	Belfrics Kenya Pvt. Ltd, a Kenya corporation
	12.	Incrypts SDN BHD, a Malaysia corporation
	13.	Belfrics Malaysia SDN BHD, a Malaysia corporation

 

Foundedin 2014, Belfrics internally developed a cryptocurrency digital exchange platform. Supported by the proprietary technology of BelriumBlockchain KYC solution, the KYC (“Know Your Customer”) and AML (“Anti-Money Laundering”) process of BelfricsExchange is a well-accepted compliance solution. With 10 offices in 8 countries, Belfrics provides localized and personalized supportto digital currency traders. Through its Blockchain Academy, Belfrics provides continuous training to traders, developers, and blockchainenthusiasts in more than 20 countries. Belfrics is licensed and regulated by the Labuan Financial Services Authority (LFSA) in Malaysia.

 

F-21

 

 

NOTE2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basisof Presentation and Consolidation – The consolidated financial statements of the Company have been prepared in accordance withaccounting principles generally accepted in the United States of America (“GAAP”). The Company consolidates the financialstatements of its wholly owned subsidiaries and all intercompany transactions and account balances have been eliminated in consolidation.

 

ForeignCurrency Translation – The Company’s subsidiaries have 7 different functional currencies in addition to the U.S. Dollar,but its reporting currency is in U.S. Dollars. The currencies are Canadian Dollars, Euro, Indian Rupee, Kenyan Shilling, Malaysian Ringgit,Nigerian Naira, and Tanzanian Shilling. The balance sheet accounts are translated at exchange rates in effect at the end of the periodand income statement accounts are translated at average exchange rates for the period. Translation gains and losses are included as aseparate component of stockholders’ equity.

 

Useof Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimatesand assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the dateof the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from these estimates.

 

Cashand Cash Equivalents – For financial statement presentation purposes, the Company considers all short-term investments witha maturity date of three months or less to be cash equivalents.

 

Investments– The Company’s investments in marketable securities are measured at fair value with unrealized gains and losses recognizedin other comprehensive loss. The Company received a total of 960,559 shares of Ehave, Inc.’s common stock as payment fora licensing agreement. These shares had a total value of $100,000 upon issuance. Subsequent to issuance, the stock price of the sharesdecreased and an unrealized loss on the investment of $80,789 was recognized, decreasing the asset value to $19,211 at March 31, 2022.

 

IntangibleAssets – The Company had no intangibles at June 30, 2021. At March 31, 2022, the Company’s intangible assets consistedof approximately $46.6 million of cryptocurrency that is recorded at historical cost and not amortized due to its indefinite life. Inaddition, the Company had an immaterial amount of other intangibles which are recorded at cost based on third party expenditures. TheCompany will begin amortizing the other intangibles over their estimated remaining useful life when it begins revenue-producing applications.Useful lives of intangible assets are determined after considering the specific facts and circumstances related to each intangible asset.Factors that will be considered when determining useful lives include the contractual term of any agreement related to the asset, thehistorical performance of the asset, the long-term strategy for using the asset, any laws or other local regulations that could impactthe asset, the historical performance of the asset, the long-term strategy for using the asset, any laws or other local regulations thatcould impact the useful life of the asset, and other economic factors, including competition and specific market conditions. Indefinitelife intangibles are reviewed for impairment when circumstances suggest there could be an impairment, but at least annually.

 

Propertyand Equipment – Property and equipment includes computers and software, furniture and fittings, and office equipment. Depreciationis provided based on the estimated useful life of assets on a straight line basis which ranges from three years to five years.

 

Leases- The Company accounts for leases in accordancewith Accounting Standards Update (“ASU”) No. 2016-02, “Leases” (Topic 842). Based on this standard, theCompany determines if an agreement is a lease at inception. Leases are included in the right of use asset, less current portion of leaseliability, and long-term lease liability, in the Company’s consolidated balance sheets. Finance leases are included in right-of-useassets, lease liability and lease liability, long-term in the Company’s consolidated balance sheets.

 

Aspermitted under Topic 842, the Company has made an accounting policy election not to apply the recognition provisions to short term leases(leases with a lease term of 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonablycertain to exercise); instead, the Company will recognize the lease payments for short-term leases on a straight-line basis over thelease term.

 

Impairmentof Long-Lived Assets – When facts and circumstances indicate that the carrying value of long-lived assets may not be recoverable,management will assess the recoverability of the carrying value by preparing estimates of revenues and the resulting gross profit andcash flows. These estimated future cash flows are consistent with those Belfrics uses in its internal planning. If the sum of the expectedfuture cash flows (undiscounted and without interest charges) is less than the carrying amount, the Company recognizes an impairmentloss. The impairment loss recognized, if any, is the amount by which interest charges are less than the carrying amount, or the amountby which the carrying amount of the asset (or asset group) exceeds the fair value. Belfrics may use a variety of methods to determinethe fair value of these assets, including discounted cash flow models, which are consistent with the assumptions to support what managementbelieves to be the fair value of these assets, including discounted cash flow models, which are consistent with the assumptions managementbelieves hypothetical marketplace participants would use.

 

IncomeTax – The Company accounts for income taxes under Accounting Standards Certifications (“ASC”) 740 “IncomeTaxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributableto differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respectivetax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the yearsin which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilitiesof a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferredtax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

F-22

 

 

Basicand Diluted Net Income (Loss) Per Share – The Company computes net income (loss) per share in accordance with ASC 260 “EarningsPer Share” (“ASC 260”). ASC 260 requires presentation of both basic and diluted earnings per share “EPS’on the face of the consolidated statements of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders(numerator) by the weighted average number of shares of common stock outstanding during the period. If applicable, diluted earnings pershare assume the conversion, exercise or issuance of all common stock instruments such as options, warrants and convertible securities,unless the effect is to reduce a loss or increase earnings per share. Diluted EPS excludes all dilutive potential shares if their effectis anti-dilutive.

 

FairValue of Financial Instruments – The Company measures assets and liabilities at fair value based on an expected exit priceas defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale ofan asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair valuemay be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair valuemeasurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs,used in valuation techniques, are assigned a hierarchical level.

 

Thefollowing are the hierarchical levels of inputs to measure fair value:

 

	●	Level 1 – Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
	●	Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
	●	Level 3 – Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

 

Thecarrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and interest,certain notes payable and notes payable – related party, approximate their fair values because of the short maturity of these instruments.

 

TheCompany accounts for its derivative liabilities, at fair value, on a recurring basis under Level 3 (See Note 10). The Company accountsfor its investments, at fair value, on a recurring basis under Level 1 (See Note 2)

 

EmbeddedConversion Features – The Company evaluates embedded conversion features within convertible debt under ASC 815 “Derivativesand Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accountedfor as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivativetreatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” forconsideration of any beneficial conversion feature.

 

DerivativeFinancial Instruments – The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreigncurrency risks. The Company evaluates all of its financial instruments, including stock purchase warrants, to determine if such instrumentsare derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted foras liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, withchanges in the fair value reported as charges or credits to income.

 

Foroption-based simple derivative financial instruments, the Company uses the Monte Carlo option-pricing model to value the derivative instrumentsat inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments shouldbe recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

 

DebtIssue Costs and Debt Discount – The Company may record debt issue costs and/or debt discounts in connection with raising fundsthrough the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized tointerest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amountsis immediately expensed.

 

F-23

 

 

StockBased Compensation – ASC 718 “Compensation-Stock Compensation” prescribes accounting and reporting standardsfor all stock-based compensation plan payments awarded to employees, including employee stock options, restricted stock, employee stockpurchase plans and stock appreciation rights, which may be classified as either equity or liabilities. The Company should determine ifa present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle incash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the presentobligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transactionshould be recognized as a liability; otherwise, the transaction should be recognized as equity.

 

TheCompany accounts for stock-based compensation issued to nonemployees and consultants in accordance with the provisions of ASC 505-50“Equity-Based Payments to Non-Employees”. Measurement of share-based payment transactions with nonemployees shallbe based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instrumentsissued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performancecompletion date.

 

Recognitionof Revenues – The Company recognizes revenue in accordance with ASU No. 2014-09 “Revenue from Contracts with Customers”(“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standardrequires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Theamount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Companyapplies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii)determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract;(iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction priceto the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

TheCompany only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitledto in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and whichof these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocatedto the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’sperformance obligations are transferred to customers at a point in time, typically upon delivery.

 

Commissionand fee revenues are recorded on a trade-date basis when the Company satisfies its performance obligation. The Company receives commissionson cryptocurrency transaction initiated on its platform. When the digital assets are traded, upon the execution of the order, a fee ischarged instantly.

 

Investmentadvisory revenue is recognized as the services related to the underlying assignment are completed.

 

Administrativeservices are provided as one-time and also on a recurring basis. The monies are collected in advance and the revenue is recognized uponcompletion.

 

Appdevelopment revenue is recognized in full when the development is completed or in stages when the development is based on stage-wisedelivery.

 

RecentlyIssued Accounting Pronouncements – Management has evaluated other recently issued accounting pronouncements and does not believethat any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and relateddisclosures.

 

SubsequentEvents – The Company follows the guidance in ASC 855 “Subsequent Events” for the disclosure of subsequentevents. The Company will evaluate subsequent events through the date when the financial statements are issued. Pursuant to ASU 2010-09of the FASB ASC, the Company, as an SEC filer considers its financial statements issued when they are widely distributed to users, suchas through filing them on EDGAR.

 

F-24

 

 

NOTE3. UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN

 

Theaccompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlementof liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, the Company has$5.2 millionin revenues, net accumulated losses since inception and an accumulated deficit of $33,382,497.These factors raise doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concernis dependent on management funding operating costs. The financial statements do not include any adjustments that might be necessary ifthe Company is unable to continue as a going concern.

 

NOTE4. ACQUISITION OF SUBSIDIARIES

 

BELFRICS

 

OnAugust 25, 2021, the Company acquired 100% of Belfrics in consideration of the issuance of 2,000,000 shares of the Company’s SeriesC preferred stock, with the opportunity to earn an additional 1,500,000 shares of the Company’s Series C preferred stock. The considerationpaid for Belfrics had a face value of $26,014,226, with the opportunity to acquire an additional $15,000,000 face value of the preferredstock. Giving effect to the formula converting the preferred stock to common stock, the value of the consideration paid at the time ofclosing was $41,802,925.

 

VotingRights. Majority voting control of the Company lies in the Series A Preferred stock (“Series A”). The 5,000,000 sharesof Series A have voting power equal to 2 billion common shares. These shares are held by Robert Grinberg, the Company’s CEO andVictoria Rudman, the Company’s CFO. Therefore, even if all preferred shares and other dilutive instruments were converted to commonshares, the Series holders would still have majority voting rights.

 

Board Composition. There was no change inthe composition of the Board of the Company immediately after the acquisition. The principal of the Belfrics Entities hasthe right to be appointed to the Board. However, as of the date of filing, the original board of directors remains in place post-acquisition.

 

Executives/SeniorManagement. There was no change in senior management after the acquisition. Mr. Grinberg remains CEO and Ms. Rudman remains CFO.None of the Belfrics’ principals became an executive officer of the parent company.

 

Basedon the forgoing, management has determined that Life Clips, Inc. is both the legal and accounting acquirer as there was no change incontrol or management.

 SCHEDULEOF LEGAL AND ACCOUNTING ACQUIRER

Consideration
Series C Preferred Stock		$	26,014,226
Contingent Liability, at time of closing			15,788,699
Preferred Shares		$	41,802,925
Fair value of net identifiable assets (liabilities) acquired:
Cash		$	74,377
Other Current Assets			1,626,712
Intangibles			45,447,674
Property and Equipment			1,050,065
Right-of-Use Asset			97,189
Total fair value of net identifiable assets		$	48,296,017
Accounts payable and accrued expenses		$	335,452
Due to Related Party			6,060,451
Lease Liability			97,189
Total fair value of net identifiable liabilities		$	6,493,092
Fair value of net identifiable assets (liabilities) acquired		$	41,802,925
Goodwill		$	-

 

Thepurchase accounting is preliminary and may change once the assessment of the purchase price allocation becomes final.

 

F-25

 

 

COGNITIVEAPPS

 

OnApril 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. (“Cognitive Apps”), a developerof artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporated inBritish Columbia, Canada on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technologicalsolutions to the mental health and healthcare sector. Cognitive Apps sold all of its issued and outstanding capital stock to the Company,becoming a 100% wholly owned subsidiary.

 

Inexchange for the acquisition, Cognitive Apps received the following consideration:

 

(a)Preferred Shares. Exchange each issued and outstanding share of Cognitive Apps common stock for 5,760,000 shares of Series B Preferred(“Series B”). The Series B are convertible based on 80% of the average of the 5 lowest closing prices for a share of commonstock on the principal exchange or market on which such shares are then trading for the 20 trading days immediately preceding such date.Notwithstanding the foregoing, in no case shall the fair market value multiplied by the total number of shares issued and outstandingbe less than $5,000,000. The fair value on the date of acquisition was calculated at $10,016,089.

 

(b)Warrants. In addition to the Series B shares, the previous Cognitive Apps shareholders, on a pro-rata basis, will receive warrantsto purchase a total of 3,500,000 shares of the common shares of the Company at an exercise price of $0.10. The fair value of the warrantson the date of acquisition was calculated at $20,111.

 

CognitiveApps had no operations and no significant assets recorded at the acquisition date. Based on the calculated purchase price of $10,036,200,the entire amount was allocated to intangible assets. Due to the lack of historical operations and uncertainty regarding future operations,the Company impaired the full value of the intangible asset acquired. Also, as there were no previous operations, there are no pro formadisclosures to present.

 

ProForma Disclosures

 

Thefollowing unaudited pro forma financial results reflects the historical operating results of the Company, including the unaudited proforma results of Belfrics and Cognitive Apps for the nine months ended March 31, 2022 and the year ended June 30, 2021 (Note the Companyacquired Belfrics on August 25, 2021). The pro forma financial information set forth below reflects adjustments to the historical dataof the Company to give effect to each of these acquisitions and the related equity issuances as if each had occurred on July 1, 2020.The pro forma information presented below does not purport to represent what the actual results of operations would have been for theperiods indicated, nor does it purport to represent the Company’s future results of operations.

 

Thefollowing table summarizes on an unaudited pro forma basis the Company’s results of operations for the nine months ended March31, 2022 and for the year ending June 30, 2021:

 SCHEDULEOF PRO FORMA BASIS

		March 31, 2022				June 30, 2021
Revenues		$	5,244,952			$	170,897
Net Loss			(602,262	)			(3,698,228	)
Net loss per share- basic and diluted		$	(0.0004	)		$	(0.0029	)
Weighted average number of shares of common stock outstanding- basic and diluted			1,642,083,987				1,259,831,337

 

Thecalculations of pro forma net revenue and pro forma net loss give effect to the business combinations for the period from July 1, 2020until the respective closing dates for (i) the historical net revenue and net income (loss), as applicable, of the acquired businesses,(ii) incremental depreciation and amortization for each business combination based on the fair value of property and equipment and identifiableintangible assets acquired and the related estimated useful lives.

 

F-26

 

 

NOTE5. LEASES

 

Inconnection with the acquisition of Belfrics, Inc. on August 25, 2021, the Company acquired four facilities’ leases.

 

Additionally,two new leases have been added as of March 31, 2022.

 

Theproperties’ location, square footage, lease commencement date, expiration date, terms and payments are as follows:

 SCHEDULEOF LOCATION SQUARE FOOTAGE LEASE COMMENCEMENT DATE EXPIRATION DATE TERMS AND PAYMENTS

Belfrics Holding Ltd

Belfrics International Ltd

Belfrics BT SDN BHD

Belfrics Kenya Ltd

Belfrics Cryptex Pvt Ltd

Belfrics BT Pvt Ltd

Location

OKK Abudllah, Labuan

OKK Abudllah, Labuan

OKK Abudllah, Labuan

Chiromo Road, Nairobi

Bangalore, India

Bangalore, India

Square Footage

300 sq ft

700 sq ft

300 sq ft

974 sq ft

3,123 sq ft

3,123 sq ft

Lease commencement date

January 1, 2020

January 1, 2020

January 1, 2020

January 1, 2018

October 15, 2021

January 1, 2022

Lease expiration date

December 31, 2022

December 31, 2022

December 31, 2022

April 1, 2023

October 14, 2024

December 31, 2024

Lease terms

3 years

3 years

3 years

5 years

3 years

3 years

Monthly lease payments

$

717

$

837

$

717

$

804

$

3,139

$

3,139

 

Right-of-useasset is summarized below:

 

		Belfrics Holding Ltd				Belfrics International Ltd				Belfrics BT SDN BHD				Belfrics Kenya Ltd				Belfrics Cryptex Pvt Ltd				BelfricsBT Pvt Ltd (India)				Total
Office Lease		$	11,225			$	13,096			$	11,225			$	61,643			$	115,085			$	115,085			$	327,359
Less accumulated amortization			(4,842	)			(5,649	)			(4,842	)			(21,139	)			(17,789	)			(8,855	)			(63,116	)
Right-of-use, net		$	6,383			$	7,447			$	6,383			$	40,504			$	97,296			$	106,230			$	264,243

 

Operatinglease liability is summarized below:

SCHEDULE OF OPERATING LEASE LIABILITY 

		Belfrics Holding Ltd				Belfrics International Ltd				Belfrics BT SDN BHD				Belfrics Kenya Ltd				Belfrics Cryptex Pvt Ltd				Belfrics BT Pvt Ltd (India)				Total
Office Lease		$	6,383			$	7,447			$	6,383			$	40,504			$	98,279			$	106,721			$	265,717
Less: current portion			(6,383	)			(7,447	)			(6,383	)			(27,866	)			(35,523	)			(34,723	)			(118,325	)
Long term portion		$	-			$	-			$	-			$	12,638			$	62,756			$	71,998			$	147,392

 

Maturityof lease liabilities are as follows:

SCHEDULE OF MATURITY OF LEASE LIABILITIES 

		Belfrics Holding Ltd				Belfrics International Ltd				Belfrics BT SDN BHD				Belfrics Kenya Ltd				Belfrics Cryptex Pvt Ltd				Belfrics BT Pvt Ltd (India)				Total
Year ending June 30, 2022		$	2,161			$	2,521			$	2,161			$	9,553			$	9,417			$	18,834			$	44,647
Year ending June 30, 2023			4,322				5,042				4,322				31,843				39,081				39,081				123,691
Year ending June 30, 2024			-				-				-				-				54,868				54,868				109,736
Totalfuture minimum lease payments			6,483				7,563				6,483				41,396				103,366				112,783				278,074
Less imputed interest			(100	)			(116	)			(100	)			(892	)			(5,087	)			(6,062	)			(12,357	)
PVof Payments		$	6,383			$	7,447			$	6,383			$	40,504			$	98,279			$	106,721			$	265,717

 

Totalrent expense for the three and nine months period ended March 31, 2022 was $11,543 and $27,734, respectively.

 

NOTE6. PROPERY AND EQUIPMENT

 

Asof June 30, 2021, the Company had no property and equipment. Property and equipment as of March 31, 2022 consisted of the following:

 SCHEDULE OF PROPERTY AND EQUIPMENT

		March 31, 2022
Software Development Fees		$	1,162,510
Plant and Machinery			105,715
Furniture and Fittings			43,744
Computers and Software			18,004
Accumulated Depreciation			(74,030	)
Total		$	1,255,943

 

Totaldepreciation expense for the nine months period ended March 31, 2022 was $74,030.

 

F-27

 

 

NOTE7. RELATED PARTY TRANSACTIONS

 

Asof March 31, 2022 and June 30, 2021, $4,110,515 and $1,155,550, respectively, was due to related parties and is primarilycomprised of loans from the Belfrics entities’ shareholders and are advances due on demand with no interest.

 

AtJune 30, 2021, the Company reported $34,271 due from related party, a Cog Apps shareholder. As of March 31, 2022, the amount has beenrepaid in full.

 

NOTE8. NOTES PAYABLE

 

AtMarch 31, 2022, the Company had a $250,000 note payable at 4% interest due October 28, 2022.

 

NOTE9. CONVERTIBLE NOTES PAYABLE

 

ConvertibleNotes

 SCHEDULEOF CONVERTIBLE NOTES

Balance at March 31, 2022				Balance at June 30, 2021				Due Date		Balance at March 31, 2022
$	-			$	541,051			Range from 05/13/2017 to 01/20/2022			Range from 3.85% to 22%			Conversion price equal to fifty percent (50%) of the lowest trading price during the twenty (20) trading day period prior to the date of conversion. This was converted to the below line item including interest.
	2,400,639				3,288,241			06/15/2023			8%			Conversion price equal to $0.01. At March 31, 2022, convertible into 240 million shares not including interest.
	1,066,654				-			07/01/2023			8%			Conversion price equal to $0.01. At March 31, 2022, convertible into 106.7 million shares not including interest.
	25,000				375,000			Range from 12/23/2022 to 04/22/2023			Range from 4% to 10%			Conversion price equal to $0.015. At December 31, 2021, $350,000 was converted into 23.3 million shares, excluding interest.
	-				(80,369	)		Less: Discount
$	3,492,293			$	4,123,923

 

TheCompany evaluated the convertible promissory notes under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generallyrequires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separateaccounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract.The material embedded derivative consists of the embedded conversion feature. The conversion option bears risks of equity which werenot clearly and closely related to the host debt agreement and required bifurcation. See Note 10 for further discussion.

 

DebtDiscount

 

TheCompany recorded the debt discount to the extent of the gross proceeds raised and expensed immediately the remaining fair value of thederivative liability, as it exceeded the gross proceeds of the note.

 

Totalamortization of debt discount amounted to $0 and $35,904 for the nine months ended March 31, 2022 and 2021, respectively.

 

Thedebt discount was $0 and $80,369 at March 31, 2022 and June 30, 2021, respectively.

 

F-28

 

 

NOTE10. DERIVATIVE FINANCIAL INSTRUMENTS

 

Asof March 31, 2022, the Company no longer has any derivatives.

 

TheCompany’s convertible promissory notes and detachable warrants gave rise to derivative financial instruments. The notes embodiedcertain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics.These terms and features consist of the embedded conversion option. Additionally, the detachable warrants contained terms and featuresthat gave rise to derivative liability classification. As of June 30, 2021, the Company does not have enough authorized shares to settleall potential conversion and warrant transactions.

 

Thefollowing tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2021and the amounts that were reflected in income related to derivatives for the period ended:

SCHEDULEOF COMPONENTS OF DERIVATIVE LIABILITIES

		June 30, 2021
The financings giving rise to derivative financial instruments		Indexed Shares* (in millions)				Fair Values
Embedded derivatives			563			$	1,577,001
Total			563			$	1,577,001

 

*	including principal and interest

 

Thefollowing table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivativefinancial instruments by type of financing for the period ended June 30, 2021:

SCHEDULEOF GAIN (LOSS) OF DERIVATIVE INSTRUMENTS

 

The financings giving rise to derivative financial instruments and the gain (loss) effects:		June 30, 2021
Embedded derivatives		$	7,103,673
Total		$	7,103,673

 

Currentaccounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classifiedin liabilities and carried at fair value with changes recorded in income. The Company has selected the Binomial Lattice Model, whichapproximates the Monte Carlo Simulations, valuation technique to fair value the compound embedded derivative because it believes thatthis technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likelyconsider in transactions involving compound embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions,credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatilityand risk-free rates. The Binomial Lattice Model technique is a level three valuation technique because it requires the development ofsignificant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired,the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market priceon the valuation date and the applicable conversion price.

 

Significantinputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcatedfrom the convertible notes and classified in liabilities:

 SCHEDULEOF SIGNIFICANT INPUTS AND RESULTS FROM VALUATION ASSUMPTIONS

		June 30, 2021
Quoted market price on valuation date		$	0.0046
Range of effective contractual conversion rates		$	0.0018
Contractual term to maturity			NA
Market volatility:
Volatility			NA
Risk-adjusted interest rate			NA

 

Thefollowing table reflects the issuances of compound embedded derivatives and detachable warrants and changes in fair value inputs andassumptions related to the embedded derivatives and detachable warrants during the nine months ended March 31, 2022 and the year endedJune 30, 2021.

 SCHEDULEOF CHANGES IN FAIR VALUE INPUTS AND ASSUMPTIONS RELATED TO COMPOUND EMBEDDED DERIVATIVES

						Year Ended
		March 31, 2022				June 30, 2021
Balances at beginning of period		$	1,577,001			$	13,249,507
Issuances:
Embedded derivatives			-				50,000
Issuances: Embedded derivatives			-				50,000
Conversions:
Embedded derivatives			-				-
Conversions: Embedded derivatives
Reclassifications to equity:
Embedded derivatives			-				(4,448,276	)
Reclassifications to equity: Embedded derivatives			-				(4,448,276	)
Changes in fair value inputs and assumptions reflected in income			(1,577,001	)			(7,274,230	)
Balances at end of period		$	-			$	1,577,001

 

F-29

 

 

NOTE11. EQUITY

 

AuthorizedCapital

 

OnSeptember 28, 2017, the Company filed an Article of Amendment authorizing 5,000,000,000 shares of common stock, par value $0.001 pershare (the “Common Stock”) and 20,000,000 shares of Preferred Stock, par value $0.001 (the “Preferred Stock”).The Board may issue shares of Preferred Stock in one or more series and fix the rights, preferences and privileges thereof, includingvoting rights, terms of redemption, redemption prices, liquidation preferences, number of shares constituting any series or the designationof such series, without further vote or action by the stockholders.

 

PreferredStock

 

EffectiveMay 19, 2017, the Company amended its Articles of Incorporation to designate 1,000,000 shares, which increased to 5,000,000 on June 16,2021, of preferred stock as Series A Preferred Stock, with a par value of $0.001 per share. Each share of Series A ranks, with respectto dividend rights and rights upon liquidation, winding up or dissolution of the Company, the same as the common stock of the Company,par value $0.001 per share and is not entitled to any specific dividends or other distributions, other than those declared by the Boardof Directors. Each share of Series A has 400 votes on any matter submitted to the shareholders of the Company, and the Series A votestogether with the holders of the outstanding shares of all other capital stock of the Company (including the Common Stock and any otherseries of preferred stock then outstanding), and not as a separate class, series or voting group on any such matter. The Series A isnot transferrable by the holder, and may be redeemed by the Company at any time for the par value. In the event that the holder of SeriesA who is an employee or officer of the Company leaves their position as an employee or officer of the Company for any reason, the SeriesA held by that holder will be automatically cancelled and will revert to being authorized and unissued shares of Series A. The SeriesA is not convertible into any other class of shares of the Company.

 

Additionally,the Board authorized 5,760,000 shares of the Company’s Series B Convertible Preferred Stock (“Series B”) pursuant tothe acquisition of Cognitive Apps.

 

Eachshare of Series B shall be convertible, at the option of the holder thereof, beginning 12 months from the date of issuance, and thereafterat any time and from time to time, and without the payment of additional consideration by the holder thereof, into that number of fullypaid and nonassessable shares of common stock (whether whole or fractional) that have a fair market value, in the aggregate, equal tothe Series B conversion price.

 

TheSeries B conversion price shall initially be equal to $1.00 and shall be subject to adjustment as provided below. Fair market value shallmean, as of any date of determination, 80% of average of the 5 lowest closing prices for a share of common stock on the principal exchangeor market on which such shares are then trading for the 20 trading days immediately preceding such date. Notwithstanding the foregoing,in no case shall the fair market value multiplied by the total number of shares issued and outstanding be less than $5,000,000.

 

Inconjunction with the acquisition of Belfrics, the Company filed a designation authorizing and designating 3,500,000 shares of SeriesC Convertible Preferred Stock (“Series C”).

 

F-30

 

 

Eachshare of Series C shall be convertible, at the option of the holder thereof, beginning 12 months from the date of issuance, and thereafterat any time and from time to time, and without the payment of additional consideration by the holder thereof, into that number of fullypaid and non-assessable shares of common stock (whether whole or fractional) that have a fair market value, in the aggregate, equal tothe Series C conversion price.

 

TheSeries C conversion price shall initially be equal to $10.00 and shall be subject to adjustment as provided below. Fair market valueshall mean, as of any date of determination, 80% of average of the 5 lowest closing prices for a share of common stock on the principalexchange or market on which such shares are then trading for the 20 trading days immediately preceding such date. Notwithstanding theforegoing, in no case shall the fair market value multiplied by the total number of shares issued and outstanding be less than $5,000,000.

 

Stockand Incentive Plan

 

OnApril 20, 2017, the Company adopted the Life Clips, Inc. 2017 Stock and Incentive Plan under which the Company may issue nonqualifiedstock options, incentive stock options, stock appreciation rights, restricted stock grants and units, performance units and awards ofcash. A maximum of 20,000,000 shares of common stock may be issued under the plan, representing in excess of 1% of the number of theCompany’s currently outstanding shares. Awards under the plan will be made at the discretion of the Board of Directors, althoughno awards have been made to date. Accordingly, the Company cannot currently determine the amount of awards that will be made under theplan.

 

NOTE12. COMMITMENTS AND CONTINGENCIES

 

Fromtime to time, the Company may be a party to other legal proceedings. Management currently believes that the ultimate resolution of thesematters will not have a material adverse effect on consolidated results of operations, financial position, or cash flow.

 

NOTE13. SUBSEQUENT EVENTS

 

OnApril 6, 2022, the Company and its subsidiary, Belfrics, entered into a satisfaction and release agreement, wherein the Companyaccepted payment of 1,000,000BEL (Belrium Tokens) for the forgiveness of $3,000,000in notes plus interest.

 

OnApril 10, 2022, the Company entered into an exchange agreement with Seven Knots, LLC. The Company exchanged 62,903BEL, in satisfaction of thenote held by Seven Knots resulting in the Company reducing its notes payable by $250,000, including interest payableof $6,247.

 

OnApril 10, 2022, the Company entered into three exchange agreements: one with Keystone Capital Partners, LLC, and two withMastiff Group, LLC. The Company exchanged 748,222BEL, reducingits convertible debt, including interest, by $3,042,699.

 

OnApril 10, 2022, the Company entered into an exchange agreement with Keystone Capital Partners, LLC. The Company exchanged 38,876BEL, for Keystone’ssubscription for 10,555,600common stock shares with an aggregate purchaseprice of $158,334received by the Companyon November 19, 2021, as part of the original Regulation A offering.

 

OnApril 12, 2022, the Company entered into three exchange agreements with Crest Ventures, LLC, Long Side Ventures, LLC, and TaconicGroup, LLC. The Company exchanged 141,750BEL, for outstandingconvertible debt, held by Crest, Long Side and Taconic, in the aggregate amount including interest, of $565,438.

 

OnApril 21, 2022, the Company received $125,000 from Keystone Capital Partners, LLC as part of the Regulation A Tier 2 offering, for whichit issued 12,500,000 shares of common stock on April 29, 2022.

 

 

PROSPECTUS

 

LifeClips, Inc.

 

510,000,000shares of Common Stock

 

June 7, 2022

 

 

PARTII

 

INFORMATIONNOT REQUIRED IN THE PROSPECTUS

 

Item13. Other Expenses of Issuance and Distribution.

 

Thefollowing table sets forth all expenses to be paid by the Company, other than underwriting discounts and commissions, upon the completionof this Offering. All amounts shown are estimates except for the SEC filing fee.

 

		Approximate Amount
SEC registration fee		$	447
Legal fees and expenses			70,000
Accounting fees and expenses			10,000
Transfer agent and registrar fees			3,500
Miscellaneous			3,500
Total		$	87,447

 

Item14. Indemnification of Directors and Officers.

 

Section 17-16-856 ofthe Wyoming General Corporation Law provides that a corporation may indemnify directors and officers as well as other employeesand individuals against expenses including attorneys' fees, judgments, fines and amounts paid in settlement in connection with variousactions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right ofthe corporation, a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposedto the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause tobelieve their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification onlyextends to expenses including attorneys' fees incurred in connection with the defense or settlement of such actions, and the statuterequires court approval before there can be any indemnification where the person seeking indemnification has been found liable to thecorporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's certificateof incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.

 

The Company's Certificateof Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Wyoming General Corporation Law,as amended from time to time, each person that such section grants us the power to indemnify. 

 

The Wyoming GeneralCorporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shallnot be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director,except for liability for:

 

- any breach of the director'sduty of loyalty to the corporation or its stockholders;

 

- acts or omissions not ingood faith or which involve intentional misconduct or a knowing violation of law;

 

- payments of unlawful dividendsor unlawful stock repurchases or redemptions; or

 

- any transaction from whichthe director derived an improper personal benefit.

 

The Company's Certificateof Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personallyliable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of thisprovision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existingat the time of such repeal or modification.

 

See also the undertakings set out in response to Item 17 herein.

 

 

Item15. Recent Sales of Unregistered Securities.

 

OnAugust 17, 2021, we issued 1,000,000 shares of Common Stock to Leviston Resources pursuant to the partial conversion of a note.

 

OnDecember 29, 2021, we issued 476,474 shares of Common Stock to Atlanta Capital Partners in payment of services rendered

 

OnJanuary 12, 2022, we issued 2,833,798 shares of Common Stock to RT Acquisitions LLC pursuant to to the partial conversion of a note.

 

OnFebruary 7, 2022, we issued 515,169 shares of Common stock to Alan Cooper for services rendered.

 

OnFebruary 9, 2022, we issued 35,041,985 shares of Common Stock to Crest Ventures in conversion of a note.

 

Allof the securities referred to, above, were offered and sold without registration under the Securities Act of 1933, as amended (the “SecuritiesAct”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act as provided in Regulation D promulgated thereunder.All of the foregoing securities as well the Common Stock issuable upon conversion or exercise of such securities, have not been registeredunder the Securities Act or any other applicable securities laws and are deemed restricted securities, and unless so registered, maynot be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act.

 

Theoffering and sales of securities did not involve a public offering; the Company made no solicitation in connection with the sale otherthan communications with the investors; the Company obtained representations from the investors regarding their investment intent, experienceand sophistication; and the investors either received or had access to adequate information about the Company in order to make an informedinvestment decision.

 

Item16. Exhibits and Financial Statement Schedules.

 

(a)See the Exhibit Index on the page immediately preceding the signature page hereto for a list of exhibits filed as part of this registrationstatement on Form S-1, which Exhibit Index is incorporated herein by reference.

 

(b)No financial statement schedules are provided because the information called for is not required or is shown either in the financialstatements or the notes thereto.

 

Item17. Undertakings.

 

Theundersigned registrant hereby undertakes:

 

Theundersigned 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 of 1933, as amended (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-effectiveamendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registrationstatement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securitiesoffered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering rangemay be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculationof Registration Fee” table in the effective registration statement; and

 

(iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement orany material change to such information in the registration statement.; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii)above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reportsfiled with or furnished to the Securities and Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the SecuritiesExchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filedpursuant to Rule 424(b) that is part of 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 bea new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemedto 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 thetermination of the offering.

 

(4)That, for the purpose of determining liability under the Securities Act to any purchaser:

 

(A)Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of thedate the filed prospectus was deemed part of and included in the registration statement; and

 

(B)Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance onRule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information requiredby Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier ofthe date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offeringdescribed in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter,such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statementto which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offeringthereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registrationstatement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that ispart of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede ormodify any statement that was made in the registration statement or prospectus that was part of the registration statement or made inany such document immediately prior to such effective date.

 

(5)That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuantto Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuantto Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registrationstatement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.

 

(6)Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling personsof the registrant pursuant to any charter provision, by law or otherwise, the registrant has been advised that in the opinion of theSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore,unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expensesincurred 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 jurisdictionthe question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by thefinal adjudication of such issue.

 

EXHIBITINDEX

 

Thefollowing documents are being filed with the Commission as exhibits to this registration statement on Form S-1.

 

Exhibit Number		Description
3.1(i)		Articles of Incorporation of Life Clips, Inc., as Amended
3.2(ii)		Amended Bylaws of Life Clips, Inc.
5.1*		Opinion of Jonathan D. Leinwand, P.A.
10.1		Executive Employment Agreement, dated as of June 30, 2017, by and between Life Clips, Inc. and Victoria Rudman incorporated by reference to Form 10-K filed by Life Clips on July 11, 2-18
10.2		Stock Purchase Agreement with Batterfly Energy Ltd., incorporated by reference to Form 8-K filed by Life Clips on June 14, 2016
10.3		Amendment to Stock Purchase Agreement with Batterfly Energy Ltd. incorporated by reference to Form 8-K filed by Life Clips on July 7, 2016
10.4		Executive Employment Agreement, dated as of June 23, 2021, by and between Life Clips, Inc. and Robert Grinberg.
10.5		Executive Employment Agreement, dated as of June 23, 2021, by and between Life Clips, Inc. and Victoria Rudman.
10.6		Belfrics Acquisition Agreement incorporated by reference to Form 8-K filed on July 15, 2021
10.7		Amended and Restated Acquisition Agreement dated November 11, 2021, by and between Life Clips, Inc. and the “Belfrics Entities”, incorporated by reference to Form 8-K filed by Life Clips on December 8, 2021.
10.8		Intellectual Property License Agreement, dated as of October 22, 2021, by and between Life Clips, Inc. and Software Research Labs LLC. Incorporated by reference to Form 1-A filed February 1, 2022
10.9		Common Stock Purchase Agreement, dated as of March 16, 2022, by and between Life Clips, Inc. and Mastiff Group LLC
10.10		Registration Rights Agreement, dated as of March 16, 2022, by and between Life Clips, Inc. and Mastiff Group LLC
10.11*		Amendment to Common Stock Purchase Agreement, dated as of March 16, 2022
23.1*		Consent of Accell Audit & Compliance, P.A.
23.2*		Consent of Jonathan D. Leinwand, P.A. (contained in Exhibit 5.1 filed herewith)
107		Filing Fee Table

 

*Filed herewith.

 

 

SIGNATURES

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this registration statementto be signed on its behalf by the undersigned, thereunto duly authorized, in the Miami, Florida, on June 14, 2022.

 

	LIFE CLIPS, INC.
	By:	/s/ Robert Grinberg
		Name: Robert Grinberg
		Title: Chief Executive Officer and Director (Principal Executive Officer)
	By:	/s/ Victoria Rudman
		Name: Victoria Rudman
		Title: Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

 

POWEROF ATTORNEY

 

KNOWALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert Grinberg and Victoria Rudman,or either of them, as his true and lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for himand in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement (includingpost-effective amendments and any related registration statements filed pursuant to Rule 462 and otherwise), and to file the same withall exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-factand agents and full power and authority to do and perform each and every act and thing requisite and necessary to be done in connectiontherewith, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming that said attorney-in-factand agent, or any substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.

 

Pursuantto the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in thecapacities and on the dates indicated.

 

Signature		Title		Date
/s/ Robert Grinberg		Chief Executive Officer and Director		June 14, 2022
Robert Grinberg		(Principal Executive Officer)
/s/ Victoria Rudman		Chief Financial Officer and Treasurer		June 14, 2022
Victoria Rudman		(Principal Financial Officer and Principal Accounting Officer)
/s/ Dr. Manideep Gopishetty		Director		June 14, 2022
Dr. Manideep Gopishetty
/s/ Praveenkumar Vijayakumar		Director		June 14, 2022
Praveenkumar Vijayakumar