UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 26, 2021
Life Clips, Inc.
(Exact Name of Registrant as Specified in its Charter)
Wyoming | 000-55697 | 46-2378100 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
18851 NE 29th Ave., Suite 700 - PMB# 348, Aventura, FL | 33180 | |
(Address of principal executive offices) | (Zip Code) |
(800) 292-8991
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
This Amendment No. 1 to the Current Report on Form 8-K (this “Amendment”) is being filed by Life Clips, Inc., a Wyoming Corporation (“Life Clips”) for the purpose of amending Item 2.01 Completion of Acquisition or Disposition of Assets and Item 9.01 Financial Statements and Exhibits of that certain Current Report on Form 8-K originally filed by Life Clips with the U.S. Securities and Exchange Commission (“SEC”) on August 26, 2021 (the “Original Form 8-K”) in connection with the completion of the acquisition of Belfrics Holdings Limited and its related entities (collectively “Belfrics”). As indicated in the Original Form 8-K, this Amendment is being filed to provide the financial statements and pro forma financial information required by Items 9.01(a) and (b) of Form 8-K, which were not previously filed with the Original Form 8-K as permitted by the rules of the SEC.
Item 2.01. Completion of Acquisition or Disposition of Assets
This Amendment to a Current Report on Form 8-K/A supplements the Current Report on Form 8-K filed with the SEC on August 26, 2021, regarding the purchase of Belfrics Holdings Limited and its related entities (collectively “Belfrics”). The purpose of this Amendment is to file the financial statements of Belfrics and the pro forma financial information required by Item 9.01 of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Belfrics financial statements as of and for the two (2) years ended, the related notes, and the related reports of independent accounting firms, as set forth in their report thereon, are incorporated herein by reference as Exhibit 99.1 hereto.
Belfrics unaudited consolidated financial statements as of June 30, 2021 and September 30, 2021, incorporated herein by reference as Exhibit 99.2 hereto.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information of the Company, giving effect to the Belfrics Acquisition, which includes the unaudited pro forma condensed combined balance sheet as of June 30, 2021 and the unaudited pro forma condensed combined statements of income for the year ended December 31, 2020 and for the six months ended June 30, 2021 and the related notes, are incorporated herein by reference as Exhibit 99.3 hereto.
The pro forma financial information included in this Form 8-K/A has been presented for informational purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Acquisitions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the Company will experience after the Acquisitions.
Exhibit No. | Exhibit Description | |
10.1 | Amended and Restated Acquisition Agreement | |
99.1 | Audited Financial Statements of Belfrics |
Sr.No. | Company | Auditor | For the years ended | ||||||
1 | Belfrics Global PTE Ltd | J Corporate Accountants Public Accountants and Chartered Accountants 18 Lorong Abu Talib Singapore 456855 | December 31, 2020 | June 30, 2019 Unaudited Report | |||||
2 | Belfrics BT Pvt Ltd | M. AHMED & ASSOCIATES Chartered Accountants http://www.mahmedassociates.in | March 31, 2021 | March 31, 2020 | |||||
3 | Belfrics Cryptex Pvt Ltd | M. AHMED & ASSOCIATES Chartered Accountants http://www.mahmedassociates.in | March 31, 2021 | March 31, 2020 | |||||
4 | Belfrics Tanzania Ltd | MKUKI CONSULTANTS Certified Public Accountants P.O. Box 1827, Dar es Salaam | December 31, 2020 | December 31, 2019 | |||||
5 | Belfrics Malaysia SDN BHD | CHENGCO PLT Chartered Accountants https://chengco.asia | December 31, 2020 | June 30, 2019 | |||||
6 | Belfrics Nigeria Pvt Ltd | Logic Professional Services Chartered Accountants https://www.lpsng.com/#aboutus | December 31, 2020 | December 31, 2019 | |||||
7 | Belfrics BT SDN BHD | CHENGCO PLT Chartered Accountants https://chengco.asia | December 31, 2020 | December 31, 2019 | |||||
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8 | Belfrics Holding Ltd | PFK Malaysia of PKF International Limited Accountants & business advisers http://pkfmalaysia.com | December 31, 2020 | December 31, 2019 | |||||
9 | Belfrics Academy SDN BHD | CMK and PFK Malaysia of PKF International Limited Accountants & business advisers http://pkfmalaysia.com | December 31, 2020 | June 30, 2019 | |||||
10 | Belfrics International Ltd | PFK Malaysia of PKF International Limited Accountants & business advisers http://pkfmalaysia.com | December 31, 2020 | December 31, 2019 | |||||
11 | Incrypts SDN BHD | CHENGCO PLT Chartered Accountants https://chengco.asia | December 31, 2020 | December 31, 2019 | |||||
12 | Belfrics Kenya Pvt. Ltd | Odhiambo Ochieng & Company Certified Public Accountants KUSI LANE, PARKLANDS-NAIROBI P.O.BOX 27220 - 100 NAIROBI | December 31, 2020 | December 31, 2019 | |||||
13 | Belfrics Europe SL | ECIJA & ASOCIADOS ABOGADOS BARCELONA, S.L., | December 31, 2020 | December 31, 2019 | |||||
Av. Diagonal, 458, planta 8ª 08006 Barcelona ·T +34 933 808 255 |
(no requirement to audit since yet to commence operations) |
99.2 | Unaudited Consolidated Financial Statements of Belfrics for the year ended June 30, 2021 and the period ending September 30, 2021 | |
99.3 |
Unaudited Pro Forma Combined Financial Information of Life Clips and Belfrics |
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104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LIFE CLIPS, INC. | |
Dated: December 8, 2021 | /s/ Victoria Rudman |
Victoria Rudman, Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 10.1
ACQUISITION AGREEMENT
by and between
Life Clips, Inc.
a Wyoming Corporation
and
Belfrics BT Pvt Ltd
Belfrics Cryptex Pvt Ltd
Belfrics Tanzania Ltd
Belfrics Nigeria Pvt Ltd
Belfrics BT SDN BHD
Belfrics Malaysia Sdn Bhd
Belfrics Holding Limted
Incrypts Sdn Bhd
Belfrics Academy SDN BHD
Belfrics International Ltd
Belfrics Europe S.L.
Belfrics Kenya Ltd
Belfrics Singapore Pte Ltd
(collectively the “Belfrics Entities”)
and
the Holders of the Equity Securities of the Belfrics Entities
AMENDED AND RESTATED ACQUISITION AGREEMENT
This Amended and Restated Acquisition Agreement (the “Agreement”) is dated as of this 11th day of November, 2021 by and among Life Clips, Inc., a Wyoming corporation, (“LCLP”), replacing and superseding the Acquisition Agreement executed by the Parties on August 25, 2021 in order to conform certain terms of that agreement to the Designation of Series C Preferred Stock as attached hereto.
Belfrics BT Pvt Ltd, an India corporation
Belfrics Cryptex Pvt Ltd, an India corporation
Belfrics Tanzania Ltd, a Tanzania corporation
Belfrics Nigeria Pvt Ltd, a Nigeria corporation
Belfrics BT SDN BHD, a Malaysia corporation
Belfrics Malaysia Sdn Bhd, a Malaysia corporation
Belfrics Holding Limited, a Malaysia corporation
Incrypts Sdn Bhd, a Malaysia corporation
Belfrics Academy SDN BHD, a Malaysia corporation
Belfrics International Ltd, a Malaysia corporation
Belfrics Europe SL, a Spain corporation
Belfrics Kenya Ltd, a Kenya corporation
Belfrics Singapore Pte Ltd, a Singapore corporation
(collectively the “Belfrics Entities”)
and all of the holders of the equity securities of Belfrics Entities identified on Exhibit C hereto (the “Sellers). (LCLP, the Belfrics Entities and the Sellers may be referred to herein as a “party” and collectively as the “parties.”)
RECITALS
WHEREAS, upon the terms and conditions set forth below, the Sellers desire to sell all of the issued and outstanding capital stock of the Belfrics Entities to LCLP, such that, following such transaction, the Belfrics Entities will be a 100% wholly-owned subsidiaries of LCLP; and
WHEREAS, for United States federal income tax purposes, the Parties to this Agreement intend that the transactions described in this Agreement shall qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and that this Agreement shall be, and is hereby, adopted as a “plan of reorganization” for purposes of Section 368(a) of the Code.
NOW THEREFORE, in consideration of the foregoing premises, the mutual representations, warranties, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Unless the context otherwise requires, the terms defined in this Section 1 will have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.
“Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with the indicated Person.
“Agreement” means this Acquisition and Share Exchange Agreement, including all Schedules and Exhibits hereto, as this Acquisition and Share Exchange Agreement may be from time to time amended, modified or supplemented.
“The Belfrics Entities Board” means the Board of Directors of The Belfrics Entities.
“Budget” means the budget of the expenditures necessary to attain the agreed upon goals and as set forth on Schedule 2.1(b).
“Business” means (i) the Belfrics Entities’ business as presently conducted; or (ii) LCLP’s business that it clearly intends to conduct in the future.
“Closing Date” has the meaning set forth in Section 3.
“Code” means the Internal Revenue Code of 1986, as amended.
“Commission” or “SEC” means the Securities and Exchange Commission of the United States of America.
“Equity Security” means any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of the Belfrics Entities, or any such warrant or right.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will then be in effect.
“Exhibits” means the several exhibits referred to and identified in this Agreement.
“GAAP” means, with respect to any Person, Accounting Principles Generally Accepted in the United States of America applied on a consistent basis with such Person’s past practices.
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“Governmental Authority” means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
“Indebtedness” means any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.
“IFRS” means the International Financial Reporting Standards as set by the IFRS Foundation and the International Accounting Standards Board.
“Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.
“Laws” means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.
“Material Contract” means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the type and nature that LCLP would be required to file with the Commission if it were a reporting issuer pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”).
“Material Adverse Effect” means, when used with respect to LCLP or the Belfrics Entities, as the case may be, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of Sellers or the Belfrics Entities, as the case may be, in each case taken as a whole or (b) materially impair the ability of LCLP or the Belfrics Entities, as the case may be, to perform their obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which LCLP or the Belfrics Entities, as the case may be, operate.
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“Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Authority.
“Organizational Documents” means (a) the articles or certificate of incorporation and the bylaws or code of regulations of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of formation and operating agreement of a limited liability company; (e) any other document performing a similar function to the documents specified in clauses (a), (b), (c) and (d) adopted or filed in connection with the creation, formation or organization of a Person; and (f) any and all amendments to any of the foregoing.
“Permitted Liens” means (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and material men and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves; (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business; and (d) Liens that would not have a Material Adverse Effect.
“Person” means natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.
“Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.
“Rule 144” means Rule 144 under the Securities Act, as the same may be amended from time to time, or any successor statute.
“Schedules” means the several schedules referred to and identified herein, setting forth certain disclosures, exceptions and other information, data and documents referred to at various places throughout this Agreement.
“Section 4(2)” means Section 4(2) under the Securities Act, as the same may be amended from time to time, or any successor statute.
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“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body.
“Survival Period” has the meaning set forth in Section 12.1.
“Taxes” means all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.
“Tax Group” means any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group of which the Belfrics Entities is now or was formerly a member.
“Tax Return” means any return, declaration, report, claim for refund or credit, information return, statement or other similar document filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Transaction Documents” means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.
ARTICLE 2
ACQUISITION CONSIDERATION
2.1 Consideration. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with any and all applicable laws, SELLERS will transfer, assign, convey, and set over unto LCLP, and LCLP will receive and accept from SELLERS, all of the right, title and interest to all of issued and outstanding shares of capital stock of the Belfrics Entities (the “The Belfrics Entities Stock”), free and clear of any Lien, in exchange for the following Acquisition Consideration:
(a) Preferred Shares. Exchange each issued and outstanding share of The Belfrics Entities common stock for 2,000,000 shares of LCLP Series C Preferred Shares, pursuant to the Designation set forth as Exhibit B.
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(b) Financing. The Company shall use its best efforts after Closing to provide The Belfrics Entities, as a wholly owned subsidiary, up to $10,000,000 in the form of an equity investment by Company into the subsidiary. The financing shall be in accordance with the Budget attached hereto as Schedule 2.1(b).
(c) Earn Out. Upon obtaining the milestones set forth on Schedule 2.1(c) the Sellers shall be entitled to up to an additional $15,000,000 of Series C Preferred Stock on a pro rata basis.
ARTICLE 3
CLOSING
3.1 Closing. The closing (the “Closing”) of this Acquisition Agreement will occur at the via the electronic exchange of documents, on or before July 30, 2021 (or at such later or earlier date agreed to in writing by the parties) (the “Closing Date”). At the Closing, Sellers will deliver to LCLP the Belfrics Entities Stock and LCLP shall deliver to Sellers the Consideration Shares.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby represents and warrants to LCLP:
4.1 Authority. Seller has the right, power, authority and capacity to execute and deliver this Agreement and each of the Transaction Documents to which Seller is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which such Seller is a party, and to perform such obligations under this Agreement and each of the Transaction Documents to which Seller is a party. This Agreement has been, and each of the Transaction Documents to which such Seller is a party will be, duly and validly authorized and approved, executed and delivered by Seller. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto, this Agreement is, and as of the Closing each of the Transaction Documents to which The Belfrics Entities is a party will have been, duly authorized, executed and delivered by The Belfrics Entities and constitute or will constitute the legal, valid and binding obligation of The Belfrics Entities, enforceable against The Belfrics Entities in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.
4.2 No Conflict. Neither the execution or delivery by The Belfrics Entities of this Agreement or any Transaction Document to which The Belfrics Entities is a party, nor the consummation or performance by The Belfrics Entities of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Organization Documents of The Belfrics Entities (if The Belfrics Entities is not a natural person); (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which The Belfrics Entities is a party or by which the properties or assets of The Belfrics Entities are bound; or (c) contravene, conflict with, or result in a violation of, any Law or Order to which The Belfrics Entities, or any of the properties or assets of The Belfrics Entities, may be subject.
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4.3 Ownership of The Belfrics Entities Stock. Sellers own, of record and beneficially, and has good, valid and indefeasible title to and the right to transfer to LCLP pursuant to this Agreement, the Sellers’s interests in The Belfrics Entities, free and clear of any and all Liens. There are no options, rights, voting trusts, stockholder agreements or any other contracts or understandings to which Sellers is a party or by which Sellers is bound with respect to the issuance, sale, transfer, voting or registration of the Shares. At Closing, LCLP will acquire good, valid and marketable title to all The Belfrics Entities Stock free and clear of any and all liens.
4.4 Litigation. There is no pending proceeding against The Belfrics Entities that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement and, to the knowledge of The Belfrics Entities, no such proceeding has been threatened, and no event or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Proceeding.
4.5 No Brokers or Finders. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Sellers will indemnify and hold LCLP harmless against any liability or expense arising out of, or in connection with, any such claim.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY THE BELFRICS ENTITIES
The Belfrics Entities represents and warrants to LCLP as follows:
5.1 Authority. The Belfrics Entities is duly formed and validly existing under the laws of the Province of British Columbia, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where the failure to be so organized, existing and in good standing or to have such authority or power will not, in the aggregate, either (i) have a material adverse effect on the business, assets or financial condition of The Belfrics Entities, or (ii) materially impair the ability of The Belfrics Entities to perform their material obligations under this Agreement (any of such effects or impairments, a “Material Adverse Effect”). The Belfrics Entities is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification, licensing or domestication necessary, except where the failure to be so qualified, licensed or domesticated will not have a Material Adverse Effect.
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5.2 Subsidiaries. The Belfrics Entities does not own directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise.
5.3 Articles of Incorporation and Bylaws. The copies of the Articles of Organization of The Belfrics Entities (the “Organizational Documents”) that have been delivered to LCLP prior to the execution of this Agreement are true and complete and have not been amended or repealed. The Belfrics Entities is not in violation or breach of any of the provisions of the Organizational Documents, except for such violations or breaches as, in the aggregate, will not have a Material Adverse Effect.
5.4 Authorization and Validity of this Agreement. The execution, delivery and performance by The Belfrics Entities of this Agreement is within The Belfrics Entities’ corporate powers, have been duly authorized by all necessary corporate action, and requires no authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality of government that has not been validly and lawfully obtained, filed or registered, as the case may be, except for those that, if not obtained or made would not have a Material Adverse Effect.
5.5 No Violation. None of the execution, delivery or performance by The Belfrics Entities of this Agreement or any other agreement or instrument contemplated hereby to which The Belfrics Entities is a party, nor the consummation by The Belfrics Entities of the transactions contemplated hereby will violate any provision of the Organizational Documents, or violate or be in conflict with, or constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the creation of imposition of any Lien under, any agreement or instrument to which The Belfrics Entities is a party or by which The Belfrics Entities is or will be bound or subject, or violate any laws.
5.6 Binding Obligations. Assuming this Agreement has been duly and validly authorized, executed and delivered by Sellers, LCLP, and The Belfrics Entities, this Agreement is, and as of the Closing each other agreement or instrument contemplated hereby to which The Belfrics Entities is a party, will have been duly authorized, executed and delivered by The Belfrics Entities and will be the legal, valid and binding Agreement of The Belfrics Entities and is enforceable against The Belfrics Entities in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.
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5.7 Capitalization and Related Matters.
(a) Capitalization. 100% of The Belfrics Entities Stock is owned by the SELLERS. There are no outstanding or authorized options, warrants, calls, subscriptions, rights (including any preemptive rights or rights of first refusal), agreements or commitments of any character obligating The Belfrics Entities to issue any Membership Interests or any other Equity Security of The Belfrics Entities. All issued and outstanding Membership Interests of The Belfrics Entities are duly authorized, validly issued, fully paid and non-assessable and have not been issued in violation of any preemptive or similar rights.
(b) No Redemption Requirements. There are no outstanding contractual obligations (contingent or otherwise) of The Belfrics Entities to retire, repurchase, redeem or otherwise acquire any outstanding shares of Membership Interests of, or other ownership interests in, The Belfrics Entities or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.
5.8 Sellers are the sole holder of record and beneficial owner of all issued and outstanding The Belfrics Entities Membership Interests Stock. Except as expressly provided in this Agreement, no other Person is entitled to any preemptive right, right of first refusal or similar right as a result of the issuance of the shares or otherwise. There is no voting trust, agreement or arrangement among any of the Holders of any Equity Securities of The Belfrics Entities affecting the exercise of the voting rights of any such Equity Securities.
5.9 Compliance with Laws and Other Instruments. Except as would not have a Material Adverse Effect, the business and operations of the Belfrics Entities have been and are being conducted in accordance with all applicable foreign, federal, state and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all courts and governmental agencies and instrumentalities. The Belfrics Entities is not, and is not alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of the Organizational Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which the Belfrics Entities is a party or by which any of the Belfrics Entities’ properties, assets or rights are bound or affected. To the knowledge of the Belfrics Entities, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which the Belfrics Entities is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof. The Belfrics Entities are not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Belfrics Entities, any event or circumstance relating to the Belfrics Entities that materially and adversely affects in any way its business, properties, assets or prospects or that prohibits the Belfrics Entities from entering into this Agreement or would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby.
5.10 Certain Proceedings. There is no pending Proceeding that has been commenced against the Belfrics Entities and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated in this Agreement. To the Belfrics Entities’ knowledge, no such Proceeding has been threatened.
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5.11 No Brokers or Finders. No person has, or as a result of the transactions contemplated herein will have, any right or valid claim against LCLP for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and Sellers will indemnify and hold LCLP harmless against any liability or expense arising out of, or in connection with, any such claim.
5.12 Board Recommendation. The Board of the Belfrics Entities has, by unanimous written consent, determined that this Agreement and the transactions contemplated by this Agreement, are advisable and in the best interests of the Belfrics Entities’ shareholder.
5.13 Assets. The Assets of the Belfrics Entities are as set forth on Exhibit A and are owned by the Belfrics Entities free and clear of any adverse interest, encumbrance or lien or any other thing that may prevent the Belfrics Entities from having good title thereto. Further, the Belfrics Entities represents and warrants that such assets have not been diminished or wasted in any way from date hereof through the closing date and that neither the Sellers nor the Belfrics Entities has allowed such assets to be encumbered in any way.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF LCLP
LCLP represents and warrants to Sellers and the Belfrics Entities as follows:
6.1 Organization and Qualification. LCLP is duly organized, validly existing and in good standing under the laws of the State of Wyoming, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, except where the failure to be so organized, existing and in good standing, or to have such authority and power, governmental licenses, authorizations, consents or approvals would not have a Material Adverse Effect. LCLP is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned, held or operated makes such qualification, licensing or domestication necessary, except where the failure to be so duly qualified, licensed or domesticated and in good standing would not have a Material Adverse Effect.
6.2 Authorization. LCLP has all requisite authority and power (corporate and other), to enter into this Agreement, to consummate the transactions contemplated by this Agreement, and to perform its obligations. The execution, delivery and performance by LCLP of this Agreement has been duly authorized by all necessary corporate action.
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6.3 No Violation. The execution or delivery by LCLP of this Agreement will not, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of LCLP; (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the imposition or creation of any Lien under, any agreement or instrument to which LCLP is a party or by which the properties or assets of LCLP are bound; (c) contravene, conflict with, or result in a violation of, any Law or Order to which LCLP, or any of the properties or assets owned or used by LCLP, may be subject; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by LCLP or that otherwise relate to the business of, or any of the properties or assets owned or used by, LCLP, except, in the case of clause (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect.
6.4 No Brokers or Finders. No Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against Sellers for any commission, fee or other compensation as a finder or broker, or in any similar capacity.
ARTICLE 7
COVENANTS OF THE BELFRICS ENTITIES AND SELLERS
7.1 Access and Investigation. Between the date of this Agreement and the Closing Date, the Belfrics Entities and Sellers will (a) afford LCLP and its agents, advisors and attorneys during normal business hours, full and free access to Company’s personnel, properties, contracts, books and records, and other documents and data, (b) furnish LCLP and its agents, advisors and attorneys with copies of all such contracts, books and records, and other existing documents and data as LCLP may reasonably request, and (c) furnish LCLP and its agents, advisors and attorneys with such additional financial, operating, and other data and information as LCLP may reasonably request.
7.2 Operation of the Business of the Belfrics Entities. Between the date of this Agreement and the Closing Date, the Belfrics Entities will:
(a) conduct its business only in the ordinary course of business;
(b) use its best efforts to preserve intact its current business organization and business relationships; and
(c) otherwise report periodically to LCLP concerning the status of its business, operations, and finances.
7.3 No Transfers of Equity Securities.
(a) Between the date of this Agreement and the Closing Date, Sellers shall not assign, transfer, mortgage, pledge or otherwise dispose of any or all of the Equity Securities (or any interest therein) or grant any Person the option or right to acquire such Equity Securities (or any interest therein).
(b) Between the date of this Agreement and the Closing Date, The Belfrics Entities shall not assign, transfer, mortgage, pledge or otherwise dispose of any Asset (or any interest therein) or grant any Person the option or right to acquire any Asset (or any interest therein).
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7.4 Notification. Between the date of this Agreement and the Closing Date, The Belfrics Entities will promptly notify LCLP in writing if LCLP becomes aware of any fact or condition that causes or constitutes a breach of any of the representations and warranties of LCLP, as the case may be.
7.5 Closing Conditions. Between the date of this Agreement and the Closing Date, each of LCLP, Sellers and The Belfrics Entities will use its commercially reasonable efforts to cause the conditions in Section 7 to be satisfied.
ARTICLE 8
INTELLECTUAL PROPERTY
8.1 Intellectual Property Rights.
(a) Seller owns, or has exclusively licensed or otherwise has the exclusive right to use all Intellectual Property necessary for or material to the Business, in each case:
(i) without current payment obligations to any third party,
(ii) without restrictions currently applied under any agreement, including, without limitation, a coexistence agreement or a settlement agreement,
(iii) free and clear of any liens in existence as of the date hereof, and
(iv) not currently subject to termination by any third party.
(b) Exhibit 8.1(b) sets forth a true and complete list of all Intellectual Property owned by or licensed to seller necessary for or material to the Business, including, without limitation:
(v) issued patents,
(vi) registered and unregistered trademarks,
(vii) registered and unregistered trade names,
(viii) registered and unregistered service marks,
(ix) registered and unregistered copyrights,
(x) registered and unregistered designs,
(xi) registered domain names,
(xii) all pending applications in respect of any of the foregoing, and
(xiii) all trade secrets.
8.2 Maintenance Of Intellectual Property Rights. The Belfrics Entities has undertaken to maintain its right, title, and interest in and to all Intellectual Property owned by it and used in the Business as required by applicable law, regulation, or rule, including, without limitation:
(a) duly registering and/or filing, as applicable, all necessary affidavits of continuing use with each applicable governmental authority in each jurisdiction,
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(b) paying all necessary maintenance fees that are due,
(c) submitting all information required to be disclosed to the appropriate governmental authority to the extent necessary so that no such agency would deem any proprietary right in any Intellectual Property invalid or unenforceable, and
(d) taking all other steps required by applicable law, regulation, or rule to continue all such rights in effect.
8.3 Licenses. The Belfrics Entities has made available to LCLP complete and correct copies of, and Schedule 8.3 sets forth as of the date hereof a true and complete list of all:
(a) license agreements relating to Intellectual Property used or reasonably anticipated to be used in the Business by which The Belfrics Entities is a licensee, as well as the status of each, and
(b) license agreements relating to Intellectual Property used or reasonably anticipated to be used in the Business by which The Belfrics Entities is a licensor, as well as the status of each.
(c) Licenses with any governmental authority used in the conduct of the business of the Belfrics Entities.
8.3 Infringement Of Third-Party Rights.
(a) Neither the Belfrics Entities nor any of its products or services has infringed on or otherwise violated, or is infringing on or otherwise violating, or could reasonably be construed as misappropriating, the Intellectual Property rights of any person.
(b) There is no suit, claim, action, administrative proceeding, investigation pending or, to the knowledge of the Belfrics Entities, threatened with respect to, and the Belfrics Entities has not been notified in writing of, any possible infringement or other violation by seller or any of its products or services of the Intellectual Property rights of any person and, to the knowledge of seller, there is no valid basis for any such claim.
(c) To the knowledge of the Belfrics Entities, there is no investigation pending or threatened with respect to any possible infringement or other violation by seller or any of its products or services of the Intellectual Property rights of any person.
(d) To the knowledge of the Belfrics Entities, there are no pending or threatened administrative proceedings challenging the validity or registration of any Intellectual Property.
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8.4 Infringement By Third Parties.
(a) To the knowledge of seller, no person or any product or service of any person is infringing on or otherwise violating any Intellectual Property rights of seller, and seller has at no time notified any third party of any such possible infringement or other violation.
(b) (b) Exhibit 8.5(b) sets forth as of the date hereof a true and complete list of all litigation, enforcement actions, or other administrative proceedings regarding any alleged infringement or violation of The Belfrics Entities’ rights in and to any Intellectual Property necessary for or material to the conduct of the Business, as well as dispositions of each (including, without limitation, settlement agreements and final opinions or orders).
8.6 No Conflicts Or Encumbrances. The execution and delivery of this agreement, the consummation of the transactions contemplated by this agreement, and the compliance with the provisions of this agreement do not and will not conflict with, result in any violation of or default under, or give rise to any:
(a) right, license, or encumbrance relating to any Intellectual Property owned or used by The Belfrics Entities or with respect to which seller now has or has had any agreement with any third party,
(b) right of termination, cancellation, or acceleration of any Intellectual Property right or obligation set forth in any agreement to or by which The Belfrics Entities is a party or bound, or any loss or encumbrance of any Intellectual Property or material benefit related thereto, or
(c) creation of a lien in or on any Intellectual Property or right.
8.7 Confidentiality.
(a) The Belfrics Entities has taken reasonable measures to maintain the confidentiality of its Intellectual Property, and every person employed by or contracted with The Belfrics Entities who has or had or may in the future have access to confidential or proprietary information (including, without limitation, agents, consultants, and independent contractors) has entered into a confidentiality and nondisclosure agreement with seller.
(b) The Belfrics Entities has provided buyer with copies of all forms of the confidentiality and nondisclosure agreements used by The Belfrics Entities, and has specifically identified in writing for buyer all confidentiality and nondisclosure agreements that deviate substantially from these forms with respect to seller’s Intellectual Property.
8.8 Assignment Of Intellectual Property Rights.
(a) Each of the former or current Key Personnel of The Belfrics Entities has assigned in whole or otherwise exclusively transferred and has pledged to undertake in the future all steps necessary to assign in whole or otherwise exclusively transfer to The Belfrics Entities or to The Belfrics Entities’ assigns, including buyer, all ownership and other rights of any nature whatsoever (to the extent permitted by law) of such person in any Intellectual Property owned, intended to be owned, or used by The Belfrics Entities.
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(b) None of the former or current Key Personnel of the Belfrics Entities have a valid claim against seller in connection with the involvement of such persons in the conception and development of any Intellectual Property owned, intended to be owned, or used by seller, and no such claim has been asserted or, to the knowledge of the Belfrics Entities, threatened.
(c) To the knowledge of the Belfrics Entities, none of the Key Personnel of the Belfrics Entities has any patents issued or applications pending for any device, process, design, or invention of any kind now used or needed by the Belfrics Entities in furtherance of the Business, which patents or applications have not been assigned to the Belfrics Entities.
8.9 Further Assurances. The Belfrics Entities warrants that it will execute and deliver, in any and all jurisdictions throughout the world, any instruments and perform any acts that may be reasonably necessary to fully effectuate and record the assignment of the rights, titles, and interests to the Intellectual Property assigned to LCLP pursuant to this agreement.
ARTICLE
9
Additional agreements
9.1 Appointment. Upon Closing, Praveenkumar Vijayakumar shall be appointed to the board of directors of LCLP. The term of the current members of the Board shall not be affected by this appointment.
ARTICLE 10
TERMINATION
10.1 Termination Events. This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by mutual consent of the Belfrics Entities and LCLP (acting jointly);
(b) by the Belfrics Entities, if any of the conditions have not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of the Belfrics Entities to comply with its obligations under this Agreement) and the Belfrics Entities has not waived such condition on or before the Closing Date; or (ii) by LCLP, if any of the conditions have not been satisfied as of the Closing Date or if satisfaction of such a condition is or becomes impossible (other than through the failure of LCLP to comply with its obligations under this Agreement) and LCLP has not waived such condition on or before the Closing Date;
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(c) by either the Belfrics Entities or LCLP (acting jointly), if there shall have been entered a final, non-appealable order or injunction of any Governmental Authority restraining or prohibiting the consummation of the transactions contemplated hereby;
(d) by LCLP, if, prior to the Closing Date, the Belfrics Entities or The Belfrics Entities is in material breach of any representation, warranty, covenant or agreement herein contained and such breach shall not be cured within 10 days of the date of notice of default served by LCLP claiming such breach; provided, however, that the right to terminate this Agreement pursuant to this Section shall not be available to LCLP if LCLP is in material breach of this Agreement at the time notice of termination is delivered;
10.2 Effect of Termination. Each party’s right of termination under Section 10.1is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 10.1, all further obligations of the parties under this Agreement will terminate.
ARTICLE 11
GENERAL PROVISIONS
11.1 Expenses. Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. In the event of termination of this Agreement, the obligation of each party to pay its own expenses will be subject to any rights of such party arising from a breach of this Agreement by another party.
11.2 Public Announcements. The Belfrics Entities may issue a press release disclosing the transactions contemplated hereby. LCLP and The Belfrics Entities shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other party with prior notice of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other party.
11.3 Confidentiality.
(a) Subsequent to the date of this Agreement, The Belfrics Entities and LCLP will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless (i) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (ii) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.
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(b) In the event that any party is required to disclose any information of another party pursuant to clause (i) or (ii) of Section 11.3(a), the party requested or required to make the disclosure (the “disclosing party”) shall provide the party that provided such information (the “providing party”) with prompt notice of any such requirement so that the providing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 11.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party’s information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party’s information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the providing party’s information.
(c) If the transactions contemplated by this Agreement are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request.
11.4 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given, (a) if delivered in person or by courier, (b) if sent by nationally recognized overnight delivery service, (c) if mailed by certified or registered mail, postage prepaid, return receipt requested, or (d) if transmitted by facsimile with receipt confirmed, as follows:
or to such other address as the Party to be notified shall have furnished to the other Parties in writing. Any notice given in accordance with the foregoing shall be deemed to have been given, (i) at the time of delivery, when delivered in person or by courier, (ii) one business day after sending by nationally recognized overnight delivery service, (iii) three business days following the date on which it shall have been mailed by certified or registered mail, postage prepaid, return receipt requested, or (iv) at the time of transmittal, when transmitted by facsimile with receipt confirmed.
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11.5 Arbitration. Any dispute or controversy under this Agreement shall be settled exclusively by arbitration in Miami-Dade County, Florida in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitration award in any court having proper jurisdiction.
11.6 Further Assurances. The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.
11.7 Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
11.8 Entire Agreement and Modification. This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party against whom the enforcement of such amendment is sought.
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11.9 Assignments, Successors, and No Third-Party Rights. No party may assign any of its rights under this Agreement without the prior consent of the other parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.
11.10 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
11.11 Section Headings, Construction. The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.
11.12 Governing Law. This Agreement will be governed by the laws of the State of Wyoming without regard to conflicts of laws principles.
11.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed and delivered this Acquisition Agreement as of the date first written above.
Belfrics BT Pvt Ltd, an India corporation
Belfrics Cryptex Pvt Ltd, an India corporation
Belfrics Tanzania Ltd, a Tanzania corporation
Belfrics Nigeria Pvt Ltd, a Nigeria corporation
Belfrics BT SDN BHD, a Malaysia corporation
Belfrics Malaysia Sdn Bhd, a Malaysia corporation
Belfrics Holding Limited, a Malaysia corporation
Incrypts Sdn Bhd, a Malaysia corporation
Belfrics Academy SDN BHD, a Malaysia corporation
Belfrics International Ltd, a Malaysia corporation
Belfrics Europe S.L., a Spain corporation
Belfrics Kenya Ltd, a Kenya corporation
Belfrics Singapore Pte Ltd, a Singapore corporation
By: | /s/ Praveenkumar Vijayakumar | |
Name: | Praveenkumar Vijayakumar | |
Title: | CEO |
LIFE CLIPS, INC. | ||
a Wyoming corporation | ||
By: | /s/ Robert Grinberg | |
Name: | Robert Grinberg | |
Title: | CEO |
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Exhibit A
Asset List
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Exhibit B
LCLP Series C Preferred Shares Designation
DESIGNATION OF SERIES C PREFERRED STOCK
OF LIFE CLIPS INC.
3,500,000 shares of the authorized and unissued Preferred Stock of the Life Clips Inc. (the “Corporation”) are hereby designated “Series C Preferred Stock” with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations.
1. Dividends.
1.1 Corporate Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation unless (in addition to the obtaining of any consents required elsewhere in the Articles of Incorporation) the holders of the Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series C Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series C Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series C Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series C Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Series C Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series C Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series C Preferred Stock dividend. The “Series C Original Issue Price” shall mean $10.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock.
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2. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.
2.1 Liquidation Payment Amount for Holders of Series C Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made to the holders of Series C Preferred Stock or Common Stock by reason of their ownership thereof, by pari passu with holders of Series A Preferred Stock, an amount per share equal to the Series C Original Issue Price, plus any dividends declared but unpaid thereon (the amount payable pursuant to this sentence is hereinafter referred to as the “Series C Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series C Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
2.2 Payments to Holders of Common Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Series C Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.
2.3 Deemed Liquidation Events.
2.3.1 Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of more than 50% of the outstanding shares of Series C Preferred Stock elect otherwise by written notice sent to the Corporation at least 3 days prior to the effective date of any such event:
(a) a merger, consolidation or share exchange in which:
(i) the Corporation is a constituent party or
(ii) a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,
except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or
(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
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2.3.2 Effecting a Deemed Liquidation Event.
(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the agreement or plan of merger, consolidation or share exchange for such transaction (the “Merger Agreement”) provides that the consideration payable to the shareholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.
(b) In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the Business Corporation Act within 90 days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Series C Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Series C Preferred Stock, and (ii) if the holders of more than 50% of the then outstanding shares of Series C Preferred Stock so request in a written instrument delivered to the Corporation not later than 120 days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its shareholders, all to the extent permitted by Wyoming law governing distributions to shareholders (the “Available Proceeds”), on the 150th day after such Deemed Liquidation Event (the “Redemption Date”), to redeem all outstanding shares of Series C Preferred Stock at a price per share equal to the Series C Liquidation Amount (the “Redemption Price”). The Redemption Price shall be paid in the same manner as the consideration received in the Deemed Liquidation Event and in the proportion in which consideration was received, unless agreed otherwise. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series C Preferred Stock, the Corporation shall ratably redeem each holder’s shares of Series C Preferred Stock to the fullest extent of such Available Proceeds, and shall redeem the remaining shares as soon as it may lawfully do so under Wyoming law governing distributions to shareholders. Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event.
Each holder of Series C Preferred Stock shall surrender the certificate or certificates representing such shares to the Corporation at the principal office of the Corporation, or at such other place as may be designated by the Corporation, on or before the Redemption Date, and thereupon, on the Redemption Date, the Corporation shall pay the Redemption Price for such shares in immediately available funds, by wire transfer to an account designated by such holder or by certified or bank check payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. Each stock certificate surrendered for redemption shall be canceled and retired. From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all dividends on the Series C Preferred Stock redeemed on the Redemption Date shall cease to accrue, all rights of the holders of the Series C Preferred Stock of the Corporation (except the right to receive the Redemption Price on surrender of their certificate or certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. Shares of Series C Preferred Stock that are subject to redemption but that have not been redeemed and the Redemption Price paid due to insufficient legally available funds shall continue to be entitled to the dividend, conversion and other rights, preferences, privileges and restrictions of such Series C Preferred Stock until such shares have been redeemed and the Redemption Price has been paid.
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2.3.3 Notice of Liquidating Event. Written notice of any Deemed Liquidating Event stating, as applicable, a payment date or Redemption Date, the place where such payment or redemption shall be made, the amount of each payment in liquidation or the Redemption Price and calling on such holder to surrender to the Corporation, in the manner and at the place designated, its certificate or certificates representing its shares of Series C Preferred Stock, shall be given not less than 10 days before the payment date or Redemption Date stated therein, to each holder of record of Series C Preferred Stock at such holder’s address as shown in the records of the Corporation; provided, that, to the extent permitted under Section B.4. hereof, any holder of Series C Preferred Stock may convert its shares of Series C Preferred Stock to Common Stock during such period at any time before the close of business on the last full day preceding the payment date or Redemption Date stated in such notice.
2.3.4 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the fair market value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity. The fair market value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.
3. Voting.
3.1 General. With regard to any matter upon which holders of the Common Stock of the Corporation have the right to vote, Series C Holders shall have to vote that number of shares into which the Series C shares of such holder may be converted into Common Stock as set forth in Section 4, below.
3.2 Election of Directors.
3.2.1 Directors of the Corporation. For so long as any shares of Series C Preferred Stock remain outstanding, at each meeting of the shareholders held for the election of directors, or on the taking of a written consent of shareholders for such purpose, the holders of Series C Preferred Stock shall be entitled to elect one member of the Board of Directors by plurality vote (each such director elected by the holders of Series C Preferred Stock, a “Series C Director”). In the case of any vacancy in the office of a Series C Director, the holders of Series C Preferred Stock, by plurality vote, may elect a successor to hold office for the unexpired term of the Series A Director whose place shall be vacant. Any Series C Director may be removed during the aforesaid term of office, either with or without cause, by the affirmative vote of the holders of more than 50% of the then outstanding shares of Series C Preferred or for cause by a vote of more than 50% of the then outstanding Common Shares of the Corporation.
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3.3 Series C Preferred Stock Protective Provisions. At any time when shares of Series C Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of more than 50% of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.3.1 liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation other than a Deemed Liquidation Event, or consent to any of the foregoing;
3.3.2 amend, alter or repeal any provision of the Articles of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series C Preferred Stock, including, but not limited to, any such amendment, alteration or repeal that changes the size of the board of directors;
3.3.3 create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Series C Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Series C Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock unless the same ranks junior to the Series C Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption; or
3.3.4 (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with the Series C Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Series C Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to the Series C Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with the Series C Preferred Stock in respect of any such right, preference or privilege.
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4. Conversion.
The holders of the Series C Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):
4.1 Right to Convert.
4.1.1 Conversion Ratio. Each share of Series C 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 that number 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 C Conversion Price. The “Series C Conversion Price” shall initially be equal to $10.00. Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below. “Fair Market Value” shall mean as of any date of determination, the 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 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 (the “Market Capitalization Threshold”). For example:
● | Average of 5 lowest closing prices over 20 trading days = $.50 | |
● | Fair Market Value = $.40 | |
● | Series C Conversion Price = $10.00 | |
● | Number of Series C Shares to Convert = 25,000 | |
● | Total Number of Common Shares outstanding = 150,000,000 | |
● | Common Shares Outstanding x Fair Market Value = 150,000,000 x .40 = $60,000,000 (above the Market Capitalization Threshold) | |
● | 25,000 (C Shares) x 10 (Conversion Price) = 250,000/.40 (Fair Market Value) = | |
● | Therefore 25,000 Series C Shares convert into 625,000 common shares |
4.1.2 Termination of Conversion Rights. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series C Preferred Stock.
4.1.3 Limitation on Conversion.
a. Notwithstanding anything to the contrary contained herein, a holder’s right to exercise that holder’s Conversion Rights shall be limited to the extent necessary to ensure that, following such exercise, the total number of shares of Common Stock then beneficially owned by such holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with such holder’s for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the “1934 Act”), does not exceed 4.9% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder.
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b. Notwithstanding Section 4.1.3(a), if the Corporation is a non-reporting issuer, the number of conversion shares that may be acquired by the Holder upon conversion of this Note (or otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following such conversion (or other issuance), the total number of shares of common stock of the Corporation then beneficially owned by the Holder and its affiliates and any other persons whose beneficial ownership of common stock of the Corporation would be aggregated with the Holder’s for purposes of Section 13(d) of the 1934 Act, does not exceed 9.999% of the total number of issued and outstanding shares of common stock of the Corporation (including for such purpose the shares of common stock issuable upon such conversion). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder.
4.2 Fractional Shares. Should the conversion of the Series C Preferred Stock result in the need for the issuance of Fractional Shares of Common Stock then such Fractional Shares shall be rounded up so that only whole shares are issued.
4.3 Mechanics of Conversion.
4.3.1 Notice of Conversion. In order for a holder of Series C Preferred Stock to voluntarily convert shares of Series C Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series C Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series C Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series C Preferred Stock represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Series C Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Series C Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Series C Preferred Stock converted.
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4.3.2 Reservation of Shares. The Corporation shall at all times when the Series C Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series C Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series C Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to the Articles of Incorporation. Before taking any action which would cause an adjustment reducing the Series C Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Series C Conversion Price.
4.3.3 Effect of Conversion. All shares of Series C Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and to receive payment of any dividends declared but unpaid thereon. Any shares of Series C Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of shares of Series C Preferred Stock accordingly.
4.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the Series C Conversion Price shall be made for any declared but unpaid dividends on the Series C Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.
4.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series C Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series C Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
4.4 Adjustments to Series C Preferred.
4.4.1 Adjustment for Reclassification, Exchange and Substitution. If the Common Stock issuable on the conversion of Series C Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than as provided for in Subsection 4.4.3), then and in each such event the holder of each share of Series C Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable on such reorganization, reclassification or other change, by holders of the number of shares of Common Stock into which such shares of Series C Preferred Stock might have been converted immediately before such reorganization, reclassification, or change.
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4.4.2 Sales, Reorganizations, Mergers or Consolidations. In case of any consolidation or merger of the Corporation with or into another entity, the sale, transfer or other disposition of all or substantially all of the assets of the Corporation to another person or the sale, transfer or other disposition of securities of the Corporation representing 50% or more of the combined voting power of the then outstanding securities of the Corporation (other than a consolidation, merger or sale treated as a Deemed Liquidating Event pursuant to Section 2 above), each share of Series C Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property that a holder of the number of shares of Common Stock of the Corporation deliverable on conversion of Series C Preferred Stock would have been entitled on such consolidation, merger or sale; and in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions of Section B.4. with respect to the rights and interest thereafter of the holders of Series C Preferred Stock, to the end that the provisions set forth in Section B.4. shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of Series C Preferred Stock.
4.4.3 Reverse Stock Splits, Redemptions and Repurchases. In case the Corporation shall at any time reduce the number of outstanding shares of Common Stock by reverse stock split, redemption, repurchase or otherwise without a corresponding combination of the Series C Preferred Stock, the Series C Conversion Price in effect immediately before such share reduction shall be proportionately increased.
4.4.4 Certificate of Adjustment. On the occurrence of each adjustment or readjustment of the Series C Conversion Price pursuant to this Section B.4., the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms thereof, and prepare and furnish to each holder of Series C Preferred Stock affected thereby a certificate setting forth such adjustment or readjustment and showing in detail the facts on which such adjustment or readjustment is based. The Corporation shall, on the written notice at any time of any holder of Series C Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (a) such adjustment or readjustment, (b) the Series C Conversion Price at the time in effect, and (c) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received on the conversion of such holder’s shares.
5. Acquired Shares. Any shares of Series C Preferred Stock that are acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Series C Preferred Stock following acquisition.
6. Preemptive Rights. Holders of Series C Preferred Stock shall not have preemptive rights to acquire shares of stock or securities convertible into shares of stock issued by the corporation.
7. Waiver. Any of the rights, powers, preferences and other terms of the Series C Preferred Stock set forth herein may be waived on behalf of all holders of Series C Preferred Stock by the affirmative written consent or vote of the holders of more than 50% of the shares of Series C Preferred Stock then outstanding.
8. Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Series C Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the Business Corporation Act, and shall be deemed sent upon such mailing or electronic transmission.
31 |
Exhibit C
Sellers
Praveenkumar Vijayakumar
Maya Praveen Kumar
Jabeer K M
32 |
Schedule 2.1(b)
33 |
Schedule 2.1(c)
Milestone criteria for Exchange division:
Total revenue generated
Total customers onboarded
Milestone 1
(a) | Total Revenue > $1 million per month = $2,000,000 in Series C Preferred Stock | |
(b) | total onboarded users > 100,000 = $2,000,000 in Series C Preferred Stock |
Milestone 2
(a) | Total Revenue generated > $2 million per month = $3,000,000 in Series C Preferred Stock | |
(b) | total onboarded users > 200,000 = $3,000,000 in Series C Preferred Stock |
Milestone criteria for Tech Division:
Total revenue generated
Total number of users onboarded for Decentralized Applications (“DApps”)
Milestone 1
(a) | Total revenue generated > $500,000 = $1,000,000 in Series C Preferred Stock | |
(b) | total onboarded users for all DApps > 100,000 = $1,000,000 in Series C Preferred Stock |
Milestone 2
(a) | Total revenue generated > $1,000,000 = $1,500,000 in Series C Preferred Stock | |
(b) | total onboarded users for all DApps > 200,000 = $1,500,000 in Series C Preferred Stock |
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Schedule 8.1(b)
1. patent approval form Belrium KYC solution from Federal Republic of Nigeria
2. Trademark certificates for Belfrics and Belrium logos and names
3. cryptocurrency trading platform source code (stored in github, gitlab and bitbucket)
4. Belrium blockchain source code: private and public (Stored in github, gitlab and bitbucket)
5. Belyo, Belshare, credible application source code (github, gitlab, bitbucket)
6. Website source codes - Belfrics.com, Belfrics.io, Belfricsbt.com, Belrium.com, Belrium.io, Belfricsgroup.com, belfricsacademy.com, bt18.io, belshare.com, belyo.io (source codes are in bitbucket)
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Schedule 8.3
1. MSC Malaysia Status Approval (BelfricsBT Sdn Bhd)
2. Money Broking license from LFSA Labuan, Malaysia (Forex license)
3. Crypto currency exchange activity approval, LFSA Labuan, Malaysia
4. Sandbox license, Capital Markets Authority, Kenya (Belrium Pvt Limited)
5. MOU with ICT Ministry, Tanzania
36 |
Exhibit 8.5(b)
None applicable
37 |
Exhibit 99.1
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
The directors present their report to the members together with the financial statements of the Company for the year ended 30 June 2019.
1. | DIRECTORS |
The directors in office at the date of this report are:-
Raju Sekar
Vijayakumar Praveenkumar
2. | ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS |
Except as disclosed in note 4 below, neither at the end of nor at any time during the financial year was the company a party to any arrangement whose object is to enable the director of the company to acquire benefits by means of the acquisition of shares or debentures of the company or of any other corporate body.
3. | DIRECTORS’ CONTRACTUAL BENEFITS |
Since the beginning of the financial year no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a Company in which he has a substantial financial interest (except in respect of professional fees and/or remuneration as shown in the financial statements).
4. | DIRECTORS’ INTEREST IN SHARES AND DEBENTURES |
The directors holding office as at 30 June 2019 and their interests in the share capital of the company as recorded in the register of directors’ shareholdings kept by the company under Section 164 of the Companies Act, Cap.50 is as follows:-
1 |
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
REPORT OF THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
5. | SHARE OPTIONS |
No options were granted during the financial year to take up unissued shares of the company. No shares were issued by virtue of the exercise of options. There were no unissued shares under option at the end of the financial year.
6. | AUDITORS |
The company has elected under Section 205C (3) of the Companies Act to have the financial statements exempted from audit requirements.
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS
Raju Sekar | |
DIRECTOR | |
|
|
Vijayakumar Praveenkumar | |
DIRECTOR |
Dated:
Singapore
2 |
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
STATEMENT BY DIRECTORS
REG NO: 201529263D
In the opinion of the directors:-
(a) | The accompanying balance sheet, statement of comprehensive income, statement of changes in equity and the cash flow statement, together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the company as at 30 June 2019 and of the results of the business of the Company for the financial year ended on that date; and |
(b) | At the date of this statement, having assurance of continued financial support from the Company’s shareholder and director, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. |
The Board of Directors has authorized these financial statements for issue on the date of this statement.
SIGNED ON BEHALF OF THE DIRECTORS
Raju Sekar | |
DIRECTOR | |
|
|
Vijayakumar Praveenkumar | |
DIRECTOR | |
Dated:
Singapore
3 |
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
STATEMENT BY AN EXEMPT PRIVATE COMPANY EXEMPT FROM AUDIT REQUIREMENTS
UNDER SECTION 205C (3) OF THE COMPANIES ACT
Name of Company: | BELFRICS GLOBAL PTE LTD |
Registration No: | 201529263D |
We, Raju Sekar and Vijayakumar Praveenkumar are being the director of the abovementioned company, hereby declare on behalf of the Board of Directors that:
a) | as at the end of the financial year 30 June 2019, the Company is exempt from audit requirements. | |
b) | No notice has been received from any member under Section 205B(6) requiring the Company to obtain an audit of its accounts in relation to the year; and | |
c) | The accounting and other records required to be kept by the Company in accordance with Section 199 of the Companies Act have been so kept. |
Raju Sekar | |
DIRECTOR | |
|
|
Vijayakumar Praveenkumar | |
DIRECTOR |
Dated:
Singapore
4 |
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
BALANCE SHEET
AS AT 30 JUNE 2019
|
NOTES |
2019
|
||||||
S$ | ||||||||
FIXED ASSETS | ||||||||
Software | 502,437 | |||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalent | 5 | 103 | ||||||
Director account | 368,134 | |||||||
Loan and advances | 1,058,787 | |||||||
1,427,024 | ||||||||
CURRENT LIABILITY | ||||||||
Sundry creditor | 124,751 | |||||||
Unsecured loan | 11,818 | |||||||
Other creditors | 1,856,808 | |||||||
1,993,377 | ||||||||
Net assets | (63,916 | ) | ||||||
EQUITY AND RESERVE |
||||||||
Share capital | 3 | 1,000 | ||||||
Retained earning | (64,916 | ) | ||||||
Share holder’s fund | (63,916 | ) |
The accompanying notes form a part of these accounts.
5 |
BELFRICS GLOBAL PTE LTD (Incorporated in Singapore) |
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
NOTES | 2019 | ||||
S$ | |||||
Revenue | - | ||||
Purchases | (136,569 | ) | |||
GROSS PROFIT | (136,569 | ) | |||
Administratiive expenses |
1,860 | ||||
Finance cost | (138,429 | ) | |||
Profit before tax | 6 | (138,429 | ) | ||
Profit after tax | (138,429 | ) | |||
Other comprehensive income | 73,513 | ||||
Total comprehensive income for the year | (64,916 | ) |
The accompanying notes form a part of these accounts.
6 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
SHARE | RETAINED | |||||||||||
CAPITAL | EARNINGS | TOTAL | ||||||||||
S$ | S$ | S$ | ||||||||||
Total comprehensive income for the year |
1,000 |
73,513 |
74,513 |
|||||||||
(138,429 | ) | (138,429 | ) | |||||||||
Balance at 30 June 2019 | 1,000 | (64,916 | ) | (63,916 | ) |
The accompanying notes form a part of these accounts.
7 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2019
The accompanying notes form a part of these accounts.
8 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
NOTES TO THE FINANCIAL STATEMENTS – 30 JUNE 2019
These notes form an integral part of and should be read in conjunction with the balance sheet, income statement, statement of changes in equity and cash flow statement.
1. | CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES |
The Company is domiciled and incorporated as a limited private company in the Republic of Singapore. Its registered office and principal place of business is located at 35 Selegie Road, #01-21, Parklane Shopping Mall, Singapore 188307.
The principal activities of the company are those of information technology. There have been no significant changes in the nature of these activities during the financial year.
The financial statements of the company for the year ended 30 June 2019 were authorized for issue in accordance with the resolution of the directors on
2 | SIGNIFICANT ACCOUNTING POLICIES |
a) | Basis of preparation |
The financial statements are prepared in accordance with the Singapore Financial Reporting Standards (“FRS”).
The financial statements are presented in Singapore dollars (which is also the functional currency of the company) and have been prepared on historical cost basis except as disclosed in the accounting policies below.
b) | Receivables |
Receivables are stated invoiced amount, less allowance for doubtful in collection and are written off when they are considered to be uncollectible. The net amount approximates fair value.
c) | Payables |
Payables are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the company.
Payables include trade and non-trade balances.
d) | Revenue recognition and revenue |
Revenue is recognized to the extent that it is probable that economic benefits will flow to the company and the revenue could be reliably measured.
Revenue for services is recognized upon their completion and acceptance by customers.
9 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
NOTES TO THE FINANCIAL STATEMENTS – 30 JUNE 2019
2. | SIGNIFICANT ACCOUNTING POLICIES - CONTINUED |
e) | Provisions |
Provisions are recognized when:-
(i) | the company has a present obligation (legal or constructive) as a result of a past event; | |
(ii) | it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and | |
(iii) | a reliable estimate can be made of the amount of the obligation. |
f) | Income Tax |
The tax expense is determined on the basis of tax effect accounting, using the liability method. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred income tax.
Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
(g) | Cash and cash equivalent |
Cash and cash equivalents comprise cash balances in hand and at bank.
(h) | Employee benefits | |
i) | Pension obligation |
The company contributes to the Central Provident Fund (CPF), a defined contribution plan regulated and managed by the Government of Singapore. The company’s contributions to CPF are charged to the income statement in the year to which the contributions relate.
ii) | Employee leave entitlement |
Employees are required to take their annual leave before end of the calendar year or face forfeiture of leave.
(i) | Operating lease |
Rental lease is charged to the income statement on a straight-line basis over the lease term. Lease incentives, if any recognized as an integral part of net consideration agreed for the use of the leased asset. Penalty payments on early termination, if any, are recognized in the income statement when incurred.
10 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
NOTES TO THE FINANCIAL STATEMENTS – 30 JUNE 2019
2. | SIGNIFICANT ACCOUNTING POLICIES - CONTINUED |
(j) | Related party |
Related party refers to a party that has the ability to control the other party or exercise significant influence over the other party in making financial and operating decision.
(k) | Impairment of assets |
The carrying amounts of the company’s assets subject to impairment are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is defined as the higher of value in use and net selling price.
Any impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to equity.
(i) | Financial instruments |
Financial instruments carried on the balance sheet include, trade debtors, trade creditors, amount due to director, accrual and cash and cash equivalents. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.
(j) | Grant |
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied.
11 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
NOTES TO THE FINANCIAL STATEMENTS – 30 JUNE 2019
3. | SHARE CAPITAL |
2019 | ||||
S$ | ||||
Issued and fully paid | ||||
Ordinary shares | 1,000 |
The holders of ordinary shares are entitled to receive dividends as and when declared by the company. All ordinary shares carry one vote per share without restrictions. The ordinary share has no par value.
4. | AMOUNT DUE BY DIRECTOR |
The amount due by director is unsecured, interest free, non-trade in nature and repayable on demand.
5. | CASH AND CASH EQUIVALENT |
2019 | ||||
S$ | ||||
Cash in hand | 103 |
6. | TAXATION |
2019 | ||||
S$ | ||||
Accounting (loss) | (138,429 | ) | ||
Tax at 17% | (23,533 | ) | ||
Deferred tax | 23,533 | |||
Income tax expenses | - |
12 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
NOTES TO THE FINANCIAL STATEMENTS – 30 JUNE 2019
7. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES |
Though the company has no written risk management policies and guidelines, the directors have adopted policies that seek to mitigate these risks in a cost-effective manner.
Credit risk
The company’s credit risk is negligible. There was no concentration of credit risk.
Liquidity risk
The company monitors and maintains a level of cash and bank balances deemed adequate to finance the Company’s operations.
Interest rate risk
The company has no significant exposure to market risk for changes in interest rates because it has no borrowings from any external sources.
Fair value
The carrying amounts of the company’s financial assets and liabilities as reflected in the balance sheet approximate their fair value.
13 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
CONTENTS
INDEX | PAGE | |
REPORT OF THE DIRECTORS |
1-2
|
|
STATEMENT BY DIRECTORS |
3 |
|
STATEMENT BY AN EXEMPT PRIVATE COMPANY |
4 | |
BALANCE SHEET |
5 | |
INCOME STATEMENT |
6 | |
STATEMENT OF CHANGES IN EQUITY |
7 | |
CASH FLOW STATEMENT |
8 | |
NOTES TO THE FINANCIAL STATEMENTS |
9-13
|
14 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
Registration No. 201529263D
ANNUAL REPORT FOR THE YEAR ENDED
30 JUNE 2019
15 |
BELFRICS GLOBAL PTE LTD
(Incorporated in Singapore)
DETAILED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2019
2019 | ||||
S$ | ||||
Revenue | - | |||
Purchases | (136,569 | ) | ||
Gross (loss) | (136,569 | ) | ||
Less: Administrative expenses |
||||
Secreterial fee | 1,860 | |||
1,860 | ||||
Net (loss) before tax | (138,429 | ) |
This statement does not form part of the accounts.
16 |
BELFRICS TANZANIA LIMITED
DAR ES SALAAM
AUDITED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED 31ST DECEMBER, 2019.
MKUKI Consultants
Certified Public Accountants & Tax Consultants
Dar es Salaam
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
CONTENTS | PAGE | |
Report of Directors | 2 – 4 | |
Statement of Directors’ Responsibilities | 5 | |
Independent Auditors report | 6 - 7 | |
Financial statements: | ||
Statement of financial position | 8 | |
Statement of Profit or Loss and Other comprehensive income | 9 | |
Statement of Changes in Equity | 10 | |
Statement of cash flows | 11 | |
Notes to the financial statements | 12 - 22 |
1 |
FOR THE YEAR ENDED 31 DECEMBER 2019
1. | The Directors of Belfrics Tanzania Limited present their report together with the financial statements for the year ended 31 December 2019, which disclose the state of affairs of the entity as at 31 December 2019 and the results of the operation for the year ended on that date. |
2. | INCORPORATION AND REGISTERED OFFICE |
Belfrics Tanzania Limited is a private company that was registered on 2nd February, 2018 and given registration number 141049 by registrar of companies under the Companies Act, 2002 Cap 212 of the laws of Tanzania. Its registered office is Plot 38 South Ursino, New Bagamoyo Road, Kinondoni Dar es Salaam
3. | PRINCIPAL ACTIVITY |
Belfrics Tanzania Limited carries on business of ICT in Blockchain Technology. The company operates in Plot 38 South Ursino, New Bagamoyo Road, Kinondoni Dar Es Salaam and other parts in the United Republic of Tanzania.
4. | COMPOSITION OF THE BOARD OF DIRECTORS |
The directors of the company who held office during the year and up to the date of this report are:
Name | Nationality | Position | ||
Praveen Kumar Vijayakumar | Non Tanzanian | Director | ||
Aziz Rashid Chonya | Tanzanian | Director |
Directors’ interest in the shares of the company
None of the Directors have any beneficial interest in the issued share capital of the company as at 31 December 2019.
5. | CORPORTAE GOVERNANCE |
The Board consists of four directors. The Board takes overall responsibility for the Company, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters and reviewing the performance of management business plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures is operative, and for compliance with sound corporate governance principles. The company is committed to the principles of effective corporate governance. The directors also recognize the importance of integrity, transparency and accountability.
2 |
6. | CAPITAL STRUCTURE AND SHAREHOLDING |
Capital Structure
The Company’s capital structure for the year is shown below:
Authorized, :
The authorized share capital of the company is Tanzania Shillings One Billion (Tshs.100,000,000) divided into Five Hundred Thousand (500,000) ordinary shares at Tanzania Shillings Two Hundred (Tshs. 200) each.
Shareholding
The authorized share capital is held by:
Name | Number |
2019 Nominal value
|
||||||
TZS | ||||||||
Praveerkumar Vijayakumar | 499,999 | 99,999,800 | ||||||
Aziz Rashid Chonya | 1 | 200 | ||||||
Total | 500,000 | 100,000,000 |
7. | RESULTS AND DIVIDEND |
The performance of the Company for the year is set out on page 7 of these financial statements. During the year no dividend was declared and approved.
8. | RISK MANAGEMENT AND INTERNAL CONTROL |
The Board accepts final responsibility for the risk management and internal control system of the company. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an going basis in order to provide reasonable assurance regarding:
● | The business is owned by two shareholders | |
● | The safeguarding of the company’s assets | |
● | Compliance with applicable laws and regulations | |
● | The reliability of accounting records | |
● | Business sustainability under normal as well as adverse conditions; and | |
● | Responsible behaviors towards all stakeholders |
The efficiency of any internal control system is dependent on strict observance of prescribed measure. There is always a risk of non-compliance of such measures by staff.
Whilst no system, of internal control can provide absolute assurance against misstatement or losses, the company system is designed to provide the Board with reasonable assurance that the procedures in place are operating effectively.
The Board assessed the internal control systems throughout the financial year ended 31 December 2019 and is of the opinion that they met accepted criteria. The Board is directly responsible for risk and internal control assessment as a separate audit committee is not considered necessary.
3 |
To the Directors of
BELFRICS TANZANIA LIMITED
Report on the financial statement
We have audited the accompanying financial statements of Belfrics Tanzania Limited as set out on page 8 to 24, which comprise the statement of financial position as at 31 December 2019 and the statement of Profit or loss and other comprehensive income, a statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Directors’ responsibility for the financial statements
Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the Companies Act, Cap 212 Act NO.12 of 2002. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the company’s financial affairs at 31 December 2019 and of its loss and cash flows for the year then ended in accordance with International Financial Reporting Standards and the Companies Act, CAP 212 Act No. 12 of 2002.
6 |
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31st DECEMBER 2019
NOTE | 2019 | 2018 | ||||||||
Sales Revenue | 6 | 10,649,747 | 9,738,284 | |||||||
Cost of Sales | 7 | - | - | |||||||
Gross Profit | 10,649,747 | 9,738,284 | ||||||||
Administrative Costs | ||||||||||
Operating costs | 8 | 111,199,841 | 118,576,704 | |||||||
Finance charges | 9 | 882,587 | - | |||||||
Depreciation of Non-current assets | 13 | 7,591,384 | 2,530,461 | |||||||
119,673,812 | 121,107,165 | |||||||||
Net Profit before tax | (109,024,065 | ) | (111,368,881 | ) | ||||||
Less: Corporate tax provision | - | - | ||||||||
Net Profit for the year | (109,024,065 | ) | (111,368,881 | ) | ||||||
Other Comprehensive Income | - | - | ||||||||
Total comprehensive income for the year | (109,024,065 | ) | (111,368,881 | ) |
Notes and related statements forming part of these financial statements are set out on pages 13 to 24
9 |
STATEMENT OF CHANGE IN EQUITY
FOR THE YEAR ENDED 31st DECEMBER 2019
Share Capital | Retained Earnings | Total | ||||||||||
TZS | TZS | TZS | ||||||||||
As at 1 January 2019 | 100,000,000 | (111,368,881 | ) | (11,368,881 | ) | |||||||
Profit for the year | - | (109,024,065 | ) | (109,024,065 | ) | |||||||
Additions for the year | - | - | - | |||||||||
As at 31 September 2019 | 100,000,000 | (220,392,946 | ) | (120,392,946 | ) | |||||||
As at 1 January 2018 | 100,000,000 | - | 100,000,000 | |||||||||
Profit for the year | - | (111,368,881 | ) | (111,368,881 | ) | |||||||
Additions for the year | - | - | - | |||||||||
As at 31 September 2018 | 100,000,000 | (111,368,881 | ) | (11,368,881 | ) |
Notes and related statements forming part of these financial statements are set out on pages 12 to 24.
10 |
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31st DECEMBER 2019
2019 | 2018 | |||||||
Profit / Loss as per Account | (109,024,065 | ) | (111,368,881 | ) | ||||
Add back: | ||||||||
Depreciation | 7,591,384 | 2,530,461 | ||||||
(101,432,681 | ) | (108,838,420 | ) | |||||
Change in Working Capital | ||||||||
(Increase)/Decrease in Trade and Other Receivables | - | - | ||||||
Increase/(Decrease) in Trade and Other Payables | - | 876,999,558 | ||||||
Cash Flows from Operation | (101,432,681 | ) | (768,161,138 | ) | ||||
Tax Paid | - | (1,500,000 | ) | |||||
- | (1,500,000 | ) | ||||||
Net Cash Flows from Operating Activities | (101,432,681 | ) | (769,661,138 | ) | ||||
Less: Investing Activities | ||||||||
Purchase of property, plant and equipment | - | (48,331,071 | ) | |||||
Cash flow after Investing activities | - | (48,331,071 | ) | |||||
Financing Activities | ||||||||
Capital | - | 100,000,000 | ||||||
Shareholder Loan | 95,161,325 | 724,266,897 | ||||||
Cash Flows After financing activities | 95,161,325 | 824,266,897 | ||||||
Cash and Cash Equivalent | (6,271,356 | ) | 6,274,688 | |||||
Add: Opening Cash / Bank | 6,274,688 | - | ||||||
Net Cash and cash Equivalent | 3,332 | 6,274,688 |
Notes and related statements forming part of these financial statements are set out on pages 12 to 24.
11 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. | REPORTING ENTITY |
Belfrics Tanzania Limited (‘the Company’) is incorporated in Tanzania under the Companies Act 2002 as a private limited liability company, and is domiciled in Tanzania. The financial statements of the Company are for the year ended 31 December 2019.
2. | BASIS OF PREPARATION AND GOING CONCERN Statement of Compliance |
The financial statements are prepared in accordance with International Financial Reporting Standard (IFRS) and its international adopted by the International Accounting Standards Board (IASB) and comply with the requirements of the Tanzanian Companies Act, 2002.
Basis of preparation
The financial statements are prepared under the historical cost conversion and in accordance with International Financial Reporting Standards. The financial statements are presented in Tanzania shillings (TZS), except where otherwise indicated.
The preparation of financial statements in conformity with IFRSs requires management to make judgement, estimates and assumptions that affect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparently from other sources. Actual results may differ from these estimates.
The estimate and underlying assumption are reviewed on ongoing basis. Revision to accounting estimate are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.
Going Concern
The financial statements are prepared on the basis of accounting policies applicable to a going concern basis. This basis presumes that funds will be available to finance future operation and that the realization of assets and settlement of liabilities will occur in the ordinary course of business.
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
a) | Revenue recognition |
Revenue comprised amounts commissioned for the services supplied in Block chain capacity building and trainings (Belfrics Academy) during the year, excluding value added tax and trade discount. Revenue is recognised when the company has delivered the services to the customer has accepted the performance of the work to be satisfactory and collectability of the related receivables is reasonably assured.
12 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
b) | Foreign currencies |
(i) | Functional and presentation currency |
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates or the currency that mainly influences sales price for goods and services, and labour, material or other costs of providing goods and services (“the functional currency”). The financial statements are presented in Tanzania Shillings, which is the Company’s functional and presentation currency.
(ii) | Transactions and balances |
Transactions denominated in currencies other than functional currency are translated into the Tanzanian Shillings using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities at the reporting date, which are expressed in foreign currencies, are translated into Tanzanian Shillings at the spot rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit and loss. Non- monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gains or losses on change in fair value of the item.
c) | Depreciation |
Item of property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided so as to write off the cost of fixed assets on straight line basis over their expected useful lives. The principal annual rates used for this purpose, which are consistent with those used in prior period are as follows:
Office Tools | 12.50 | % | ||
Furniture and Equipments | 12.50 | % | ||
Computer and Software | 37.50 | % |
d) | Cash and cash equivalents |
For purpose of the cash flow statement cash and cash equivalent comprise cash in hand, deposit held on call with the banks.
e) | Trade and other receivable |
Trade receivable are recognised initially at fair value and subsequently measured at amortised cost using effective interest method, less provision for impairment. A provision for impairment of the trade receivable is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets carrying amounts and the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the profit and loss account.
13 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
f) | Trade and other payable |
Payable are obligation for pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
g) | Taxation |
Income earned from provision of technical services to mining companies is subject to withholding tax as a final tax on the same basis as individuals. Income from technical mining services is recognised gross of such taxes and the withholding tax is included under tax charge for the year.
Income tax expense is the charge to the profit and loss account in respect of the current income tax. Current tax is the amount of income tax payable on the taxable profit for the period determined in accordance with the Tanzania Income Tax Act, 2004
h) | Employee Benefits |
The company has defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity.
Under the defined contribution, the Company contributes to a publicly administered pension plan (NSSF) on a mandatory basis. The Company has no further payment obligation once the contributions have been paid. The contributions are recognised as an employee benefits when they are due.
i) | Financial instruments |
i) | Financial assets |
Initial recognition and measurement
Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available-for- sale financial assets, as appropriate. The Company determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
The Company’s financial assets include cash and short-term deposits (included under cash and cash equivalents), trade and other receivables. All the Company’s financial assets are classified as loans and receivables.
Subsequent measurement
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
14 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
The EIR amortisation is not included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss if applicable.
De-recognition
A financial asset, or where applicable a part of a financial asset or part of a group of similar financial assets is derecognised when:
● | The rights to receive cash flows from the asset have expired; | |
● | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‗pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
When the Company has transferred its rights to receive cash flows from an asset, or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset.
i) | Financial assets (continued) |
In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‗loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
15 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
i) | Financial instruments (continued) |
Financial assets carried at amortised cost (continued)
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in profit or loss.
Financial assets, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss.
ii) | Financial liabilities |
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings measured at amortised cost, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings measured at amortised cost, plus directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables and interest bearing borrowings.
Subsequent measurement
After initial recognition, trade and other payables and interest-bearing borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in profit or loss.
16 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
i) | Financial instruments (continued) | |
ii) | Financial liabilities (continued) |
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in profit or loss.
iii) | Offsetting of financial instruments |
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
j) | Changes in accounting policies |
New and amended standards that became effective
The accounting policies adopted are consistent with those used in the previous year. The following new and amended standards and interpretations that became effective for the Company during the year did not have any impact on the accounting policies, financial position or performance of the Company:
a) | Amendments to IAS 19 Defined Benefit Plans: Employee Contributions | |
b) | Annual Improvements 2010-2012 Cycle | |
● | IFRS 2 Share-based Payment | |
● | IFRS 3 Business Combinations | |
● | IFRS 8 Operating Segments | |
● | IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets | |
● | IAS 24 Related Party Disclosures | |
c) | Annual Improvements 2011-2013 Cycle | |
● | IFRS 3 Business Combinations | |
● | IFRS 13 Fair Value Measurement | |
● | IAS 40 Investment Property |
Standards issued or amended but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
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BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2019, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.
The Company plans to adopt the new standard on the required effective date. During 2019, the Company has performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of IFRS 9. The Company expects a higher
Standards issued or amended but not yet effective (continued)
loss allowance resulting in a negative impact on equity and will perform a detailed assessment in the future to determine the extent.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2019, when the IASB finalises their amendments to defer the effective date of IFRS 15 by one year. Early adoption is permitted. The Company plans to adopt the new standard on the required effective date using the full retrospective method. During 2019, the Company performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Company is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments. The Company is still assessing the impact the new standard will have on its revenue.
Amendments to IAS 7 Statement of cash flows
The improvements to disclosures require companies to provide information about changes in their financing liabilities. The amendments will help investors to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes (such as foreign exchange gains or losses).
The improvements are part of the Board’s Disclosure Initiative—a portfolio of projects aimed at improving the effectiveness of disclosures in financial reports.
18 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
j) | Changes in accounting policies (continued) |
The IAS 7 amendments become mandatory for annual periods beginning on or after 1 January 2019. The impact of the amendments is being assessed by the Company.
IFRS 16 Leases
The scope of the new standard includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. The key features of the new standard are:
● | The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions) in a similar way to finance leases under IAS 17. | |
● | Lessees recognise a liability to pay rentals with a corresponding asset, and recognise interest expense and depreciation separately. |
Standards issued or amended but not yet effective (continued)
● | The new standard includes two recognition exemptions for lessees – leases of ‘low- value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less). | |
● | Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events. | |
● | Lessor accounting is substantially the same as today’s lessor accounting, using IAS 17’s dual classification approach. |
The new standard is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. The new standard permits a lessee to choose either a full retrospective or a modified retrospective transition approach. The new standard’s transition provisions permit certain reliefs.
The new standard requires lessees and lessors to make more extensive disclosures than under IAS 17. The impact of the new standard is being assessed by the Company.
Other standards issued but not yet effective
The following new and amended standards are not expected to have an impact on the financial statements of the Company:
a) | Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests | |
b) | Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation | |
c) | IFRS 14 Regulatory Deferral Accounts | |
d) | Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants | |
e) | Amendments to IAS 27: Equity Method in Separate Financial Statements | |
f) | Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Annual Improvements 2012-2014 Cycle - These improvements are effective for annual periods beginning on or after 1 January 2019. |
19 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
j) | Changes in accounting policies (continued) |
g) | They include: |
● | IFRS 5 Non-current Assets Held for Sale and Discontinued Operations | |
● | IFRS 7 Financial Instruments: Disclosures - Servicing contracts and Applicability of the amendments to IFRS 7 to condensed interim financial statements | |
● | IAS 19 Employee Benefits | |
● | IAS 34 Interim Financial Reporting |
h) | Amendments to IAS 1 Disclosure Initiative | |
i) | Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception |
4. | SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS |
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgments
In the process of applying the Company’s accounting policies, management has made the judgments, apart from those involving estimations, which have had significant effects on the amounts recognized in the financial statements.
Operating lease commitments – Company as lessee
The Company has entered into lease agreements for office space. The Company has determined that it does not retain significant risks and rewards of ownership of these properties and so accounts for them as operating leases.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments may, however, change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Asset useful lives
Critical estimates are made by the directors in determining depreciation rates for property, plant and equipment and their residual values. The depreciation rates are based on the estimated useful lives of the assets. The rates used are set out in Note 3(c) and the carrying amounts of property, plant and equipment are set in Note 14.
20 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
Impairment of non-financial assets
Impairment exists when the carrying amount of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of the cash flow.
Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities.
The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues, depending on the conditions prevailing in the country.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of the deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
5. | FINANCIAL RISK MANAGEMENT |
The Company has exposure to the following risks from its use of financial instruments:
- | Credit risk | |
- | Liquidity risk | |
- | Market risk |
The company’s Director have overall responsibility of the establishment and oversight of the company’s risk management framework.
Credit risk
The company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered.
Liquidity risk
The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation. All liquidity policies and procedures are subject to review and approval by the Board of Directors.
21 |
BELFRICS TANZANIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019 (Continued)
Market Risk
Market risk is the risk that changes in the market prices, such as foreign exchange rates, interest rates etc. will affect the company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
22 |
23 |
24 |
BELFRICS TANZANIA LIMITED
DAR ES SALAAM
AUDITED FINANCIAL STATEMENTS
FOR
THE YEAR ENDED 31ST DECEMBER, 2020.
MKUKI Consultants
Certified Public Accountants & Tax Consultants
Dar es Salaam
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
CONTENTS | PAGE | |
Report of Directors | 3 – 5 | |
Statement of Directors’ Responsibilities | 6 | |
Independent Auditors report | 7 - 8 | |
Financial statements: | ||
Statement of financial position | 9 | |
Statement of Profit or Loss and Other comprehensive income | 10 | |
Statement of Changes in Equity | 11 | |
Statement of cash flows | 12 | |
Notes to the financial statements | 13 - 25 |
2 |
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2020
1. | The Directors of Belfrics Tanzania Limited present their report together with the financial statements for the year ended 31 December 2020, which disclose the state of affairs of the entity as at 31 December 2020 and the results of the operation for the year ended on that date. |
2. | INCORPORATION AND REGISTERED OFFICE |
Belfrics Tanzania Limited is a private company that was registered on 2nd February, 2018 and given registration number 141049 by registrar of companies under the Companies Act, 2002 Cap 212 of the laws of Tanzania. Its registered office is Plot 38 South Ursino, New Bagamoyo Road, Kinondoni Dar es Salaam
3. | PRINCIPAL ACTIVITY |
Belfrics Tanzania Limited carries on business of ICT in Blockchain Technology. The company operates in Plot 38 South Ursino, New Bagamoyo Road, Kinondoni Dar Es Salaam and other parts in the United Republic of Tanzania.
4. | COMPOSITION OF THE BOARD OF DIRECTORS |
The directors of the company who held office during the year and up to the date of this report are:
Name | Nationality | Position | ||
Praveen Kumar Vijayakumar | Non Tanzanian | Director | ||
Azizi Rashid Chonya | Tanzanian | Director |
Directors’ interest in the shares of the company
None of the Directors have any beneficial interest in the issued share capital of the company as at 31 December 2020.
5. | CORPORTAE GOVERNANCE |
The Board consists of four directors. The Board takes overall responsibility for the Company, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters and reviewing the performance of management business plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures is operative, and for compliance with sound corporate governance principles. The company is committed to the principles of effective corporate governance. The directors also recognize the importance of integrity, transparency and accountability.
3 |
6. | CAPITAL STRUCTURE AND SHAREHOLDING |
Capital Structure
The Company’s capital structure for the year is shown below:
Authorized, :
The authorized share capital of the company is Tanzania Shillings One Billion (Tshs.100,000,000) divided into Five Hundred Thousand (500,000) ordinary shares at Tanzania Shillings Two Hundred (Tshs. 200) each.
Shareholding
The authorized share capital is held by:
Name | Number |
2020 Nominal value
|
||||||
TZS | ||||||||
Praveerkumar Vijayakumar | 499,999 | 99,999,800 | ||||||
Azizi Rashid Chonya | 1 | 200 | ||||||
Total | 500,000 | 100,000,000 |
7. | RESULTS AND DIVIDEND |
The performance of the Company for the year is set out on page 7 of these financial statements. During the year no dividend was declared and approved.
8. | RISK MANAGEMENT AND INTERNAL CONTROL |
The Board accepts final responsibility for the risk management and internal control system of the company. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an going basis in order to provide reasonable assurance regarding:
● | The business is owned by two shareholders | |
● | The safeguarding of the company’s assets | |
● | Compliance with applicable laws and regulations and supervisory requirements. | |
● | The reliability of accounting records | |
● | Business sustainability under normal as well as adverse conditions; and | |
● | Responsible behaviors towards all stakeholders |
The efficiency of any internal control system is dependent on strict observance of prescribed measure. There is always a risk of non-compliance of such measures by staff.
Whilst no system, of internal control can provide absolute assurance against misstatement or losses, the company system is designed to provide the Board with reasonable assurance that the procedures in place are operating effectively.
The Board assessed the internal control systems throughout the financial year ended 31 December 2019 and is of the opinion that they met accepted criteria. The Board is directly responsible for risk and internal control assessment as a separate audit committee is not considered necessary.
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5 |
6 |
To the Directors of
BELFRICS TANZANIA LIMITED
Report on the financial statement
We have audited the accompanying financial statements of Belfrics Tanzania Limited as set out on page 8 to 24, which comprise the statement of financial position as at 31 December 2020 and the statement of Profit or loss and other comprehensive income, a statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Directors’ Responsibility For The Financial Statements
Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the Companies Act, Cap 212 Act NO.12 of 2002. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion the accompanying financial statements give a true and fair view of the state of the company’s financial affairs at 31 December 2020 and of its loss and cash flows for the year then ended in accordance with International Financial Reporting Standards and the Companies Act, CAP 212 Act No. 12 of 2002.
7 |
8 |
9 |
STATEMENT OF COMPREHENSIVE INCOME |
FOR THE FINANCIAL YEAR ENDED 31st DECEMBER 2020 |
NOTE | 2020 | 2019 | ||||||||
Sales Revenue | 6 | 2,036,404 | 10,649,747 | |||||||
Cost of Sales | 7 | - | - | |||||||
Gross Profit | 2,036,404 | 10,649,747 | ||||||||
Administrative Costs | ||||||||||
Operating costs | 8 | 65,541,600 | 111,199,841 | |||||||
Finance charges | 9 | 394,296 | 882,587 | |||||||
Depreciation of Non-current assets | 13 | 7,591,384 | 7,591,384 | |||||||
73,527,280 | 119,673,812 | |||||||||
Net Profit before tax | (71,490,876 | ) | (109,024,065 | ) | ||||||
Less: Corporate tax provision | - | - | ||||||||
Net Profit for the year | (71,490,876 | ) | (109,024,065 | ) | ||||||
Other Comprehensive Income | - | - | ||||||||
Total comprehensive income for the year | (71,490,876 | ) | (109,024,065 | ) |
Notes and related statements forming part of these financial statements are set out on pages 13 to 24
10 |
STATEMENT OF CHANGES IN EQUITY |
FOR THE FINANCIAL YEAR ENDED 31st DECEMBER 2020 |
Share Capital | Retained Earnings | Total | ||||||||||
TZS | TZS | TZS | ||||||||||
As at 1 January 2020 | 100,000,000 | (220,392,946 | ) | (120,392,946 | ) | |||||||
Profit for the year | - | (71,490,876 | ) | (71,490,876 | ) | |||||||
Additions for the year | - | - | - | |||||||||
As at 31 September 2020 | 100,000,000 | (291,883,823 | ) | (191,883,823 | ) | |||||||
As at 1 January 2019 | 100,000,000 | (111,368,881 | ) | (11,368,881 | ) | |||||||
Profit for the year | - | (109,024,065 | ) | (109,024,065 | ) | |||||||
Additions for the year | - | - | - | |||||||||
As at 31 September 2019 | 100,000,000 | (220,392,946 | ) | (120,392,946 | ) |
Notes and related statements forming part of these financial statements are set out on pages 12 to 24.
11 |
STATEMENT OF CASH FLOW |
FOR THE FINANCIAL YEAR ENDED 31st DECEMBER 2020 |
2020 | 2019 | |||||||
Profit / Loss as per Account | (71,490,876 | ) | (109,024,065 | ) | ||||
Add back: | ||||||||
Depreciation | 7,591,384 | 7,591,384 | ||||||
(63,899,492 | ) | (101,432,681 | ) | |||||
Change in Working Capital | ||||||||
(Increase)/Decrease in Trade and Other Receivables | (1,800,000 | ) | - | |||||
Increase/(Decrease) in Trade and Other Payables | (177,210,211 | ) | - | |||||
Cash Flows from Operation | (242,909,703 | ) | (101,432,681 | ) | ||||
Tax Paid | - | - | ||||||
- | - | |||||||
Net Cash Flows from Operating Activities | (242,909,703 | ) | (101,432,681 | ) | ||||
Less: Investing Activities | ||||||||
Purchase of property, plant and equipment | - | - | ||||||
Cash flow after Investing activities | - | - | ||||||
Financing Activities | ||||||||
Capital | - | - | ||||||
Shareholder Loan | 246,651,539 | 95,161,325 | ||||||
Cash Flows After financing activities | 246,651,539 | 95,161,325 | ||||||
Cash and Cash Equivalent | 3,741,836 | (6,271,356 | ) | |||||
Add: Opening Cash / Bank | 3,332 | 6,274,688 | ||||||
Net Cash and cash Equivalent | 3,745,168 | 3,332 |
Notes and related statements forming part of these financial statements are set out on pages 12 to 24.
12 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
1. | REPORTING ENTITY |
Belfrics Tanzania Limited (‘the Company’) is incorporated in Tanzania under the Companies Act 2002 as a private limited liability company, and is domiciled in Tanzania. The financial statements of the Company are for the year ended 31 December 2020.
2. | BASIS OF PREPARATION AND GOING CONCERN |
Statement of Compliance
The financial statements are prepared in accordance with International Financial Reporting Standard (IFRS) and its international adopted by the International Accounting Standards Board (IASB) and comply with the requirements of the Tanzanian Companies Act, 2002.
Basis of preparation
The financial statements are prepared under the historical cost conversion and in accordance with International Financial Reporting Standards. The financial statements are presented in Tanzania shillings (TZS), except where otherwise indicated.
The preparation of financial statements in conformity with IFRSs requires management to make judgement, estimates and assumptions that affect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgement about carrying values of assets and liabilities that are not readily apparently from other sources. Actual results may differ from these estimates.
The estimate and underlying assumption are reviewed on ongoing basis. Revision to accounting estimate are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.
Going Concern
The financial statements are prepared on the basis of accounting policies applicable to a going concern basis. This basis presumes that funds will be available to finance future operation and that the realization of assets and settlement of liabilities will occur in the ordinary course of business.
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
a) | Revenue recognition |
Revenue comprised amounts commissioned for the services supplied in Block chain capacity building and trainings ( Belfrics Academy ) during the year, excluding value added tax and trade discount. Revenue is recognised when the company has delivered the services to the customer has accepted the performance of the work to be satisfactory and collectability of the related receivables is reasonably assured.
13 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
b) | Foreign currencies |
(i) | Functional and presentation currency |
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates or the currency that mainly influences sales price for goods and services, and labour, material or other costs of providing goods and services (“the functional currency”). The financial statements are presented in Tanzania Shillings, which is the Company’s functional and presentation currency.
(ii) | Transactions and balances |
Transactions denominated in currencies other than functional currency are translated into the Tanzanian Shillings using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities at the reporting date, which are expressed in foreign currencies, are translated into Tanzanian Shillings at the spot rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit and loss. Non- monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gains or losses on change in fair value of the item.
c) | Depreciation |
Item of property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is provided so as to write off the cost of fixed assets on straight line basis over their expected useful lives. The principal annual rates used for this purpose, which are consistent with those used in prior period are as follows:
Office Tools | 12.50 | % | ||
Furniture and Equipments | 12.50 | % | ||
Computer and Software | 37.50 | % |
d) | Cash and cash equivalents |
For purpose of the cash flow statement cash and cash equivalent comprise cash in hand, deposit held on call with the banks.
e) | Trade and other receivable |
Trade receivable are recognised initially at fair value and subsequently measured at amortised cost using effective interest method, less provision for impairment. A provision for impairment of the trade receivable is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets carrying amounts and the present value of the estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the profit and loss account.
14 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
f) | Trade and other payable |
Payable are obligation for pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
g) | Taxation |
Income earned from provision of technical services to mining companies is subject to withholding tax as a final tax on the same basis as individuals. Income from technical mining services is recognised gross of such taxes and the withholding tax is included under tax charge for the year.
Income tax expense is the charge to the profit and loss account in respect of the current income tax. Current tax is the amount of income tax payable on the taxable profit for the period determined in accordance with the Tanzania Income Tax Act, 2004
h) | Employee Benefits |
The company has defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity.
Under the defined contribution, the Company contributes to a publicly administered pension plan (NSSF) on a mandatory basis. The Company has no further payment obligation once the contributions have been paid. The contributions are recognised as an employee benefits when they are due.
i) | Financial instruments |
i) Financial assets
Initial recognition and measurement
Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available-for- sale financial assets, as appropriate. The Company determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
The Company’s financial assets include cash and short-term deposits (included under cash and cash equivalents), trade and other receivables. All the Company’s financial assets are classified as loans and receivables.
Subsequent measurement
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
15 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
The EIR amortisation is not included in finance income in profit or loss. The losses arising from impairment are recognised in profit or loss if applicable.
De-recognition
A financial asset, or where applicable a part of a financial asset or part of a group of similar financial assets is derecognised when:
● | The rights to receive cash flows from the asset have expired; | |
● | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‗pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
When the Company has transferred its rights to receive cash flows from an asset, or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset.
i) | Financial assets (continued) |
In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‗loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
16 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
i) | Financial instruments (continued) |
Financial assets carried at amortised cost (continued)
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets’ carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in profit or loss.
Financial assets, together with the associated allowance, are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss.
ii) | Financial liabilities |
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings measured at amortised cost, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings measured at amortised cost, plus directly attributable transaction costs.
The Company’s financial liabilities include trade and other payables and interest bearing borrowings.
Subsequent measurement
After initial recognition, trade and other payables and interest-bearing borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in profit or loss.
17 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
i) | Financial instruments (continued) |
ii) | Financial liabilities (continued) |
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in profit or loss.
iii) | Offsetting of financial instruments |
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
j) | Changes in accounting policies |
New and amended standards that became effective
The accounting policies adopted are consistent with those used in the previous year. The following new and amended standards and interpretations that became effective for the Company during the year did not have any impact on the accounting policies, financial position or performance of the Company:
a) | Amendments to IAS 19 Defined Benefit Plans: Employee Contributions | |
b) | Annual Improvements 2010-2012 Cycle | |
● | IFRS 2 Share-based Payment | |
● | IFRS 3 Business Combinations | |
● | IFRS 8 Operating Segments | |
● | IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets | |
● | IAS 24 Related Party Disclosures | |
c) | Annual Improvements 2011-2013 Cycle | |
● | IFRS 3 Business Combinations | |
● | IFRS 13 Fair Value Measurement | |
● | IAS 40 Investment Property |
Standards issued or amended but not yet effective
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
18 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2019, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.
The Company plans to adopt the new standard on the required effective date. During 2019, the Company has performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Company in the future. Overall, the Company expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of IFRS 9. The Company expects a higher
Standards issued or amended but not yet effective (continued)
loss allowance resulting in a negative impact on equity and will perform a detailed assessment in the future to determine the extent.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2019, when the IASB finalises their amendments to defer the effective date of IFRS 15 by one year. Early adoption is permitted. The Company plans to adopt the new standard on the required effective date using the full retrospective method. During 2019, the Company performed a preliminary assessment of IFRS 15, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Company is considering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitor any further developments. The Company is still assessing the impact the new standard will have on its revenue.
Amendments to IAS 7 Statement of cash flows
The improvements to disclosures require companies to provide information about changes in their financing liabilities. The amendments will help investors to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes (such as foreign exchange gains or losses).
The improvements are part of the Board’s Disclosure Initiative—a portfolio of projects aimed at improving the effectiveness of disclosures in financial reports.
19 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
4. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
j) | Changes in accounting policies (continued) |
The IAS 7 amendments become mandatory for annual periods beginning on or after 1 January 2019. The impact of the amendments is being assessed by the Company.
IFRS 16 Leases
The scope of the new standard includes leases of all assets, with certain exceptions. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. The key features of the new standard are:
● | The new standard requires lessees to account for all leases under a single on-balance sheet model (subject to certain exemptions) in a similar way to finance leases under IAS 17. | |
● | Lessees recognise a liability to pay rentals with a corresponding asset, and recognise interest expense and depreciation separately. |
Standards issued or amended but not yet effective (continued)
● | The new standard includes two recognition exemptions for lessees – leases of ‘low- value’ assets (e.g., personal computer) and short-term leases (i.e., leases with a lease term of 12 months or less). | |
● | Reassessment of certain key considerations (e.g., lease term, variable rents based on an index or rate, discount rate) by the lessee is required upon certain events. | |
● | Lessor accounting is substantially the same as today’s lessor accounting, using IAS 17’s dual classification approach. |
The new standard is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. The new standard permits a lessee to choose either a full retrospective or a modified retrospective transition approach. The new standard’s transition provisions permit certain reliefs.
The new standard requires lessees and lessors to make more extensive disclosures than under IAS 17. The impact of the new standard is being assessed by the Company.
Other standards issued but not yet effective
The following new and amended standards are not expected to have an impact on the financial statements of the Company:
a) | Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests | |
b) | Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation | |
c) | IFRS 14 Regulatory Deferral Accounts | |
d) | Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants | |
e) | Amendments to IAS 27: Equity Method in Separate Financial Statements | |
f) | Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Annual Improvements 2012-2014 Cycle - These improvements are effective for annual periods beginning on or after 1 January 2019. |
20 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
j) | Changes in accounting policies (continued) |
g) | They include: |
● | IFRS 5 Non-current Assets Held for Sale and Discontinued Operations | |
● | IFRS 7 Financial Instruments: Disclosures - Servicing contracts and Applicability of the amendments to IFRS 7 to condensed interim financial statements | |
● | IAS 19 Employee Benefits | |
● | IAS 34 Interim Financial Reporting |
h) | Amendments to IAS 1 Disclosure Initiative | |
i) | Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception |
4. | SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS |
The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgments
In the process of applying the Company’s accounting policies, management has made the judgments, apart from those involving estimations, which have had significant effects on the amounts recognized in the financial statements.
Operating lease commitments – Company as lessee
The Company has entered into lease agreements for office space. The Company has determined that it does not retain significant risks and rewards of ownership of these properties and so accounts for them as operating leases.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments may, however, change due to market changes or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
Asset useful lives
Critical estimates are made by the directors in determining depreciation rates for property, plant and equipment and their residual values. The depreciation rates are based on the estimated useful lives of the assets. The rates used are set out in Note 3(c) and the carrying amounts of property, plant and equipment are set in Note 14.
21 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
Impairment of non-financial assets
Impairment exists when the carrying amount of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of the cash flow.
Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities.
The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues, depending on the conditions prevailing in the country.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of the deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
5. | FINANCIAL RISK MANAGEMENT |
The Company has exposure to the following risks from its use of financial instruments:
- | Credit risk | |
- | Liquidity risk | |
- | Market risk |
The company’s Director have overall responsibility of the establishment and oversight of the company’s risk management framework.
Credit risk
The company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered.
Liquidity risk
The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation. All liquidity policies and procedures are subject to review and approval by the Board of Directors.
22 |
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020 (Continued)
Market Risk
Market risk is the risk that changes in the market prices, such as foreign exchange rates, interest rates etc. will affect the company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
23 |
BELFRICS NIGERIA PVT LIMITED
Financial Statements — 31 December 2019
Together with Directors’ and Auditors’ Reports
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Legal and Administrative details
Board of Directors: | Appointed |
● | Vijayankumar Praveenkumar | Chairman | |
● | Oyeniyi Chris Ayodeji | Director | |
● | Ukachukwu Jeremiah | Director | |
● | Evoh Victor | Director | |
● | Okoro Nkiruka | Director |
Company Secretary: | A & E Law Partnership | |
1st Floor UACN Building, Central Business District | ||
Abuja - FCT | ||
Incorporation Number: | RC: 1471641 | |
Date of incorporation: | 15th Feb 2018 | |
Date of Commencement: | 1st March 2018 | |
Constitution: | Limited Liability Company | |
Registered Office: |
10, Mustapha Akande Close 69 Road, Gwarimpa Estate Abuja, FCT |
|
Auditors: |
Logic Professional Services (Chartered Accountants) Rear wing, 4th Floor |
|
17/19, Allen Avenue Ikeja, Lagos |
1 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Financial Highlights | ||||||||
2018 | ||||||||
2019 |
(10 months from Inception) |
|||||||
|
|
|||||||
Revenue | 133,355.07 | 1,870,332.00 | ||||||
Other Income | - | 107,400.00 | ||||||
Operating Expenses | 10,864,879.2 | 32,269,893.00 | ||||||
EBITDA | (10,731,524.1 | ) | (30,292,161.00 | ) | ||||
Profit before Income Tax | (11,775,719.2 | ) | (32,022,343.00 | ) | ||||
Profit After Tax | (11,775,719.2 | ) | (32,022,343.00 | ) | ||||
EPS | (0.59 | ) | (1.60 | ) | ||||
Declared Dividend | - | |||||||
Share Capital | 20,000,000.00 | 20,000,000.00 | ||||||
Total Equity | 3,955,634.70 | 9,307,932.00 |
In the year ending 31 December 2019, with comparable year 2018 figures.
2 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Directors’ Report
For the period ended 31 December 2019
The directors present their ten months report on affairs of the Company, together with the financial statements and auditors’ report for the period ended 31 December 2019.
Principal Activity and Business Review
The principal activity of the Company continues to be fintech operations with specialization in blockchain technology, offering services as online financial advisers, as a broker and foreign exchange services.
Turnover
was N133,355 for the period ended 31 December 2019 while Profit/ (loss) before tax was (N11,775,719).
During the period, the Company generated income from its sole business activities.
Operating Results
The following is a summary of the Company’s operating results and retained earnings:
2019
|
2018
|
|||||||
RETAINED EARNINGS, beginning of period | (32,0022,343 | ) | - | |||||
Profit/(loss) for the year | (11,775,719 | ) | (32,022,343 | ) | ||||
RETAINED EARNINGS, end of period | (43,798,062 | ) | (32,022,343 | ) |
Directors and Their Interests
The directors who served during the period, together with their interests in the shares of the Company as at 31 December 2019 were as follows:
Date appointed |
Number of Ordinary
shares of |
|||||
Mr. Vijayankumar Praveenkumar | 14th February 2018 | 16,000,000 | ||||
Mr. Chris Oyeniyi | 14th February 2018 | - | ||||
Mr. Ukachukwu Jeremiah | 14th February 2018 | - | ||||
Mr. Evoh Victor | 14th February 2018 | - | ||||
Mrs. Okoro Nkiruka | 14th February 2018 | - |
The directors not allotted shares in the Company as at 31 December 2019 do not have a diluting effect on the current shareholding structure of the Company as at year-ending 31st December 2019.
3 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
In accordance with Section 277 of the Companies and Allied Matters Act, 1990, none of the directors has notified the Company of any declarable interests in contracts with the Company.
Analysis of Shareholding Structure
Shareholder | Position | No. of Shares held as at 31st Dec. 2019 | ||||
Vijayankumar Praveenkumar | Chairman | 16,000,000 | ||||
Kannankattu Mangalatu | Ordinary Shareholder | 6,000,000 | ||||
Chris Oyeniyi | Executive Director | - | ||||
Ukachukwu Jeremiah | Executive Director | - | ||||
Evoh Victor | Executive Director | - | ||||
Okoro Nkiruka | Executive Director | - | ||||
TOTAL | 22,000,000 |
Fixed Assets
The Company had fixed assets as at the year end.
Charitable Contributions
The Company made no charitable contributions and gifts to any charitable institutions and organisations during the year. No donation was made to political parties.
Employment of Disabled Persons
The Company has no disabled persons in its employment. However, applications for employment by disabled persons will be fully considered bearing in mind the respective aptitudes and abilities of the applicants concerned. In the event of members of staff becoming disabled, every effort will be made to ensure that their employment with the Company continues and that appropriate training is arranged. It is the policy of the Company that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee Consultation and Training
The Company places considerable value on the involvement of its employees and has continued its practice of keeping them informed on matters affecting them as employees and on the various factors affecting the performance of the Company. The Company has in-house training sessions when and where necessary with additional facilities from educational institutions for the training of its employees.
Health, Safety and Welfare at Work
The Company places a high premium on the health, safety and welfare of its employees in their place of work. Medical facilities are provided for employees at the Company’s expense up to stated limits.
Post Balance Sheet Events
There are no post balance sheet events which could have had a material effect on the state of affairs of the Company as at 31 December 2019 and profit for the year ended on that date, that have not been adequately provided for.
Auditors
In accordance with Section 357(2) of the Companies and Allied Matters Act, 1990, the auditors, Logic Professional Services were appointed and have expressed their interest and will continue in office as Auditors of the Company.
4 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Statement of Director’s Responsibilities
For the preparation and approval of the Financial Statements
The Directors of Belfrics Nigeria Pvt Limited are responsible for the preparation of the financial statements that give a true and fair view of the financial position of the Company as at 31 December 2019, and the results of its operations, cash flows and changes in equity for the year ended, in compliance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011.
In preparing the financial statements, the Directors are responsible for:
● | properly selecting and applying accounting policies; | |
● | presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; | |
● | providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and | |
● | making an assessment of the Company’s ability to continue as a going concern. |
The Directors are responsible for:
● | designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; | |
● | maintaining adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS; | |
● | maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; | |
● | taking such steps as are reasonably available to them to safeguard the assets of the Company; and preventing and detecting fraud and other irregularities. |
Going Concern:
The Directors have made an assessment of the Company’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead.
The financial statements of the Company for the year ended 31 December 2019 were approved by directors on 7 July, 2020
5 |
INDEPENDENT AUDITOR’S REPORT
To the Members of Belfrics Nigeria Pvt Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Belfrics Nigeria Pvt Limited (“the Company”), which comprise the balance sheets as at 31 December 2019, the profit and loss accounts, statement of cash flows and statement of changes in equity for the period then ended, the statement of accounting policies and the notes to the financial statements as set out on pages 8 to 18.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements give a true and fair view of the financial position of Belfrics Nigeria Pvt Limited (“the Company”) as at 31 December 2019, and of the Company’s financial performance and cash flows for the period then ended in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria.
6 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Statement of Significant Accounting Policies
These financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities issued by the International Accounting Standards Board. They are presented in the currency units of Nigeria. A summary of the significant accounting policies, all of which have been applied consistently throughout the current and preceding year, is set out below:
(a) | Basis of Accounting |
The financial statements are prepared under the historical cost convention.
(b) | Revenue |
Revenue is commission based, and is recognized when the related services have been rendered. Any unearned revenues are deferred and amortized to the income statement over the period to which it relates. Also, Revenue is measured at the fair value of the consideration received or receivable, net of discounts and sales-related taxes collected on behalf of the government of Nigeria.
(c) | Fixed Assets |
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following rates are used for the depreciation of property, plant and equipment:
% | ||||
Furniture & Fittings | 25 | |||
Office equipments | 25 | |||
Motor vehicles | 25 | |||
Computer Software | 50 |
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised accordingly to reflect the new expectations.
(d) | Intangible Assets |
Intangible assets are stated at cost less accumulated amortization and any accumulated impairment losses. It is amortized over its estimated life of five years using the straight-line method. If there is an indication that there has been a significant change in amortization rate, useful life or residual value of an intangible asset, the amortization is revised accordingly to reflect the new expectations.
(e) | Inventories |
The company does not deal in inventory and holds no form of inventory as its entire operations is service based.
(f) | Impairment of Assets |
At each reporting date, property, plant and equipment and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognized immediately in profit or loss.
7 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Similarly, at each reporting date, inventories are assessed for impairment by comparing the carrying amount of each item of inventory (or group of similar items) with its selling price less costs to complete and sell. If an item of inventory (or group of similar items) is impaired, its carrying amount is reduced to selling price less costs to complete and sell, and an impairment loss is recognized immediately in profit or loss.
If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount (selling price less costs to complete and sell, in the case of inventories), but not in excess of the amount that would have been determined had no impairment loss been recognized for the asset (or group of related assets) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(g) | Leases |
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the company. All other leases are classified as operating leases.
Rights to assets held under finance leases are recognized as assets of the company at the fair value of the leased property (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are deducted in measuring profit or loss. Assets held under finance leases are included in property, plant and equipment, and depreciated and assessed for impairment losses in the same way as owned assets.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the lease.
(h) | Trade and Other Receivables |
Most sales are made on cash & carry and few on the basis of normal credit terms, and the receivables do not bear interest. Where credit is extended beyond normal credit terms, receivables are measured at amortized cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognized immediately in profit or loss.
(i) | Trade Payables |
Trade payables are obligations on the basis of normal credit terms and do not bear interest, essentially the fiat currency balances in each individual client account or the fiat valuation of the currencies held at the end of the period.
(j) | Taxation |
Income tax payable is provided on taxable profits at the current rate.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases (known as temporary differences). Deferred tax liabilities are recognized for all temporary differences that are expected to increase taxable profit in the future. Deferred tax assets are recognized for all temporary differences that are expected to reduce taxable profit in the future, and any unused tax losses or unused tax credits. Deferred tax assets are measured at the highest amount that, on the basis of current or estimated future taxable profit, is more likely than not to be recovered. The net carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current assessment of future taxable profits. Any adjustments are recognized in profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (tax loss) of the periods in which it expects the deferred tax asset to be realized or the deferred tax liability to be settled, on the basis of tax rates that have been enacted or substantively enacted by the end of the reporting period.
(k) | Cash at Bank and in hand |
For the purpose of reporting cash flows, cash at bank and in hand includes cash on hand and cash balances with banks
(l) | Borrowing costs, Bank Loans and Overdrafts |
All borrowing costs are recognized in profit or loss in the period in which they are incurred. Interest expenses are recognized on the basis of the effective interest method and are included in finance costs.
8 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Statement of Comprehensive Income for the period ended 31 December 2019
Notes |
2019
|
2018
|
||||||||
Revenue – (Brokerage commissions) | 1 | 133,355.07 | 1,870,332.00 | |||||||
Other income | - | 107,400.00 | ||||||||
Total Revenue | 133,355.07 | 1,977,732.00 | ||||||||
Operating expenses | 2 | (10,864,879.18 | ) | (32,269,893.00 | ) | |||||
Depreciation | (1,015,765.75 | ) | (1,591,078.00 | ) | ||||||
Finance Costs | (28,429.34 | ) | (139,104.00 | ) | ||||||
Profit/(loss) before tax | 3 | (11,775,719.20 | ) | (32,022,343.00 | ) | |||||
Provision for Tax | 4 | - | - | |||||||
Profit/ (Loss) for the year | (11,775,719.20 | ) | (32,022,343.00 | ) | ||||||
Retained earnings at start of the year | (32,022,343.00 | ) | - | |||||||
Retained Earnings End of Period | (43,798,062.20 | ) | (32,022,343.00 | ) | ||||||
Earnings per share | 5 | (0.59 | ) | (1.60 | ) |
The statement of significant accounting policies on page 8 and the accompanying notes on pages 15 to 18 form an integral part of this Statement of Comprehensive Income.
9 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Statement of financial position as at 31 December 2019
|
Notes |
2019
|
2018
|
|||||||
Non-Current Assets | ||||||||||
Office Equipment | 10 | 2,119,543.75 | 2,516,461.00 | |||||||
Furniture & Fittings | 2,770,458.50 | 3,289,271.00 | ||||||||
Computer Software | - | 100,035.00 | ||||||||
4,890,002.25 | 5,905,767.00 | |||||||||
Current assets | ||||||||||
Trade and other receivables | 7 | - | 107,400.00 | |||||||
Prepayments | 7(a) | - | 3,450,000.00 | |||||||
Cash and cash equivalents | 6 | 1,642.94 | 2,022,907.00 | |||||||
1,642.94 | 5,580,307.00 | |||||||||
TOTAL ASSETS | 4,891,645.19 | 11,486,074.00 | ||||||||
EQUITY & LIABILITIES | ||||||||||
Equity | ||||||||||
Share Capital | 9(a) | 20,000,000.00 | 20,000,000.00 | |||||||
Deposit for shares | 9(b) | 27,753,696.92 | 21,330,275.00 | |||||||
Retained earnings | (43,798,062.20 | ) | (32,022,343.00 | ) | ||||||
TOTAL EQUITY | 3,955,634.72 | 9,307,932.00 | ||||||||
Current liabilities | ||||||||||
Trade & Other Payables | 8 | 507,890.47 | 1,399,743.00 | |||||||
Tax Payable | 8(a) | 428,120.00 | 778,400.00 | |||||||
936,010.47 | 2,178,143.00 | |||||||||
TOTAL LIABILITIES | 936,010.47 | 2,178,143.00 | ||||||||
TOTAL EQUITY & LIABILITIES | 4,891,645.19 | 11,486,074.00 |
10 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
11 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Attributable to equity holders of the company
Share Capital | Deposit for Shares | Retained Earnings | Total Equity | |||||||||||||
Opening balance: | ||||||||||||||||
Issue of ordinary shares of N1/share | 20,000,000.00 | 21,330,275.00 | (32,022,343.00 | ) | 9,307,932.00 | |||||||||||
Profit for the year | ||||||||||||||||
Profit or loss | (11,775,719.20 | ) | (11,775,719.20 | ) | ||||||||||||
Transactions recorded directly in equity | ||||||||||||||||
Additional Capital invested by the Director | 6,423,421.92 | 6,423,421.92 | ||||||||||||||
Balance as at 31st December 2019 | 20,000,000.00 | 27,753,696.92 | (43,798,062.20 | ) | 3,955,634.72 |
12 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Statement of Cash Flows for the year ended 31 December 2019
Notes |
2019
|
2018
|
||||||||
Cash flows from operating activities | ||||||||||
Profit / (Loss) for the year | (11,775,719.20 | ) | (32,022,343.00 | ) | ||||||
- Finance costs | 28,429.34 | 139,104.00 | ||||||||
Adjustments for non-cash income and expenses: | ||||||||||
- Depreciation | 915,730.75 | 1,520,113.00 | ||||||||
- Amortization | 100,035.00 | 70,965.00 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
- Decrease / (Increase) in trade and other receivables | 107,400.00 | (107,400.00 | ) | |||||||
- Increase / (Decrease) in trade and other payables | (1,242,132.53 | ) | 1,399,743.00 | |||||||
Cash generated from operations | (11,866,256.64 | ) | (28,999,818.00 | ) | ||||||
Income tax paid | - | - | ||||||||
Net cash from operating activities |
(11,866,256.64 | ) | (28,999,818.00 | ) | ||||||
Cash flows from investing activities |
||||||||||
Purchases of property, plant & equipment | - | (7,325,846.00 | ) | |||||||
Purchases of intangible assets | - | (171,000.00 | ) | |||||||
Net cash used in investing activities | (7,496,846.00 | ) | ||||||||
Cash flows from financing activities | ||||||||||
Proceeds from Directors initial capital | - | 27,511,570.00 | ||||||||
Proceed from Directors deposit | 9,844,992.58 | 11,008,000.00 | ||||||||
Net cash used in financing activities | 38,519,570.00 | |||||||||
Net increase / (decrease) in cash and cash equivalents | (2,021,264.06 | ) | (2,022,907.00 | ) | ||||||
Cash and cash equivalents pre-incorporation- (beginning) | 2,022,907.00 | - | ||||||||
Cash and cash equivalents at end of year | 1,642.94 | 2,022,907.00 |
13 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
Notes to the Financial Statements
For the period ended 31 December 2019
1. | Revenue |
2019 | 2018 | |||||||
N |
|
|||||||
Total Commission | 133,355 | 1,870,332 |
Revenue represents the value of commissions earned on every sell and buy trades on the Belfrics exchange from all customers during the period covered.
2. | Operating Expense |
Admin Expenses | 205,838.64 | 3,296,800.00 | ||||||
Internet Subscriptions | 216,800.00 | 149,000.00 | ||||||
IT Services | 62,500.00 | 132,500.00 | ||||||
Legal & Professional Fees | 750,000.00 | 1,717,360.00 | ||||||
Media & Printing | 29,350.00 | 129,300.00 | ||||||
Miscellaneous Expense | - | 7,777,965.00 | ||||||
Office Rental Prepaid | 3,450,000.00 | 3,450,000.00 | ||||||
Office Stationeries | 50,800.00 | 178,480.00 | ||||||
Office Supplies | 22,800.00 | 79,420.00 | ||||||
Postage & Courier | 30,000.00 | 56,627.50 | ||||||
Repairs & Maintenance | 121,815.00 | 116,200.00 | ||||||
Staff Salaries | 4,760,821.23 | 12,010,000.00 | ||||||
Subscription & Registrations | - | 550,000.00 | ||||||
Taxes | 16,532.31 | 68,390.88 | ||||||
Telephone & Communication | 26,500.00 | 32,000.00 | ||||||
Training | 5,000.00 | 361,000.00 | ||||||
Transportation | 90,652.50 | 80,900.00 | ||||||
Travel & Accommodation | 854,669.50 | 1,685,090.00 | ||||||
Utilities - Electricity | 170,800.00 | 398,860.00 | ||||||
Total |
10,864,879 | 32,269,893 |
14 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
3. | Profit on Ordinary Activities before Taxation |
3(a) Profit/ (loss) before taxation is stated after charging the following:
2019
|
2018
|
|||||||
Depreciation | 1,015,766 | 1,591,078 | ||||||
Finance cost | 28,429 | 139,104 |
ii. | Higher-paid employees of the Company, other than directors, whose duties were wholly or mainly discharged in Nigeria, received remuneration (excluding pension contributions) in the following ranges: |
2019 Number |
2018 Number |
|||||||
|
1 | 1 | ||||||
|
- | - | ||||||
N 50,000 - Upwards | 3 | 3 |
4. | Tax Provision |
The Directors advise that there is no requirement to provide for tax, which they consider being a realistic appraisal of the tax liability as there are substantial amount of losses during the period under review and can be carried forward into the future. In the opinion of the Directors, the probability of significant exposure in excess of the amounts captured as losses is remote and accordingly, no further provisions have been made.
5. | Earnings per Share |
Earnings
per share are based on the profit/(loss) for the year of N(11,775,719.20), and on 20,000,000 ordinary shares being the
number of shares in issue during the year.
6. | Cash & Bank Balances |
2018 | ||||||||
|
||||||||
Cash at Hand | - | 10,800 | ||||||
Cash at Bank | 1,642.94 | 2,012,107 | ||||||
1,642.94 | 2,022,907 |
15 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
7. | Trade and Other Receivables |
The company does not have any trade receivable as it does not provide any of its customers margins. Customers trade only after fiat deposit or cryptocurrencies are confirmed and credited to their account.
7(a) Prepayment figures is the rental payment apportioned for the second year.
8. | Trade and Other Payables |
2019 | 2018 | |||||||
Customer Balances | 507,890 | 1,399,743 | ||||||
Tax Liabilities | 428,120 | 778,400 | ||||||
936,010 | 2,178,143 |
The schedule of balances in individual customer wallets per each asset class is as detailed below:
BTC | BET | NGN | BCH | LTC | XRP | ETH | BEL | |||||||||||||||||||||||||||
0.0323843 | 52 | 0.00 | 0.2674665 | 0.119652 | 0 | 1.08837906 | 196.82 | |||||||||||||||||||||||||||
NGN358:$1 | NGN358:$1 | NGN358:$1 | NGN358:$1 | NGN358:$1 | NGN358:$1 | NGN358:$1 | NGN358:$1 | TOTAL | ||||||||||||||||||||||||||
84,846.87 | 74,462.56 | 0.00 | 14,463.49 | 1,305.20 | 0.00 | 51,966.25 | 281,846.24 | 508,890.47 |
9.(a) | Share Capital |
2019 | ||||
|
||||
Authorised: | ||||
1,000,000 ordinary shares of |
20,000,000 | |||
Allotted, called-up and fully paid: | ||||
1,000,000 ordinary shares of |
20,000,000 |
The share capital is contributed as follows:
2019 | ||||
● Mr. Vijayankumar Praveenkumar | 16,000,000 | |||
● Mr. Kannankattu Mangalatu | 6,000,000 | |||
22,000,000 |
(b) Deposit for shares
During the course of the year 2019, the existing shareholder has injected more capital beyond the existing authorized share capital of 20,000,000. Whilst an increase in share capital would be processed with the Corporate Affairs Commission of Nigeria CAC to accommodate the excess above the current share capital, the excess has currently been classified as deposit for shares in the accounts of the Company at the end of the period.
16 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2019
Together with Directors’ and Auditors’ Reports
10. | Fixed Assets |
The movement on these accounts during the year was as follows:
Computer Software | Office Equipment | Furniture & Fittings | TOTAL | |||||||||||||
COST: |
|
|
|
|
||||||||||||
Cost | 171,000.00 | 3,175,346.00 | 4,150,500.00 | 7,496,846.00 | ||||||||||||
Accumulated depreciation | (70,965.00 | ) | (658,884.00 | ) | (861,229.00 | ) | (1,591,078.00 | ) | ||||||||
Additions | - | - | - | - | ||||||||||||
Disposals | - | - | - | - | ||||||||||||
Beginning of Period | 100,035.00 | 2,516,462.00 | 3,289,271.00 | 5,905,768.00 | ||||||||||||
DEPRECIATION: | ||||||||||||||||
Beginning of period | (70,965.00 | ) | (658,884.00 | ) | (861,229.00 | ) | (1,591,078.00 | ) | ||||||||
Charged for the period | (100,035.00 | ) | (396,918.25 | ) | (518,812.50 | ) | (1,015,765.75 | ) | ||||||||
End of period | (171,000.00 | ) | (1,055,802.25 | ) | (1,380,041.50 | ) | (2,606,843.75 | ) | ||||||||
CARRYING AMOUNT | ||||||||||||||||
31-12-2019 | - | 2,119,543.75 | 2,770,458.50 | 4,890,002.25 |
13. | Contingencies |
The Company is not engaged in any lawsuits that may have arisen in the normal course of its business; thus no provision has been made in these financial Statements.
17 |
BELFRICS NIGERIA PVT LIMITED
Financial Statements — 31 December 2020
Together with Directors’ and Auditors’ Reports
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Legal and Administrative details
Board of Directors: | Appointed | ||
● | Vijayankumar Praveenkumar | Chairman | |
● | Oyeniyi Chris Ayodeji | Director | |
● | Ukachukwu Jeremiah | Director | |
● | Evoh Victor | Director | |
● | Okoro Nkiruka | Director |
Company Secretary: | A & E Law Partnership | |
1st Floor UACN Building, Central Business District Abuja - FCT | ||
Incorporation Number: | RC: 1471641 | |
Date of incorporation: | 15th Feb 2018 | |
Date of Commencement: | 1st March 2018 | |
Constitution: | Limited Liability Company | |
Registered Office: |
10, Mustapha Akande Close 69 Road, Gwarimpa Estate Abuja, FCT |
|
Auditors: |
Logic Professional Services (Chartered Accountants) Rear wing, 4th Floor |
|
17/19, Allen Avenue Ikeja, Lagos |
1 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Financial Highlights |
2020 | 2019 | |||||||
|
|
|||||||
Revenue | - | 133,355.07 | ||||||
Other Income | - | - | ||||||
Operating Expenses | (341,250 | ) | (10,864,879.2 | ) | ||||
EBITDA | (351,686.24 | ) | (10,731,524.1 | ) | ||||
Profit before Income Tax | (351,686.24 | ) | (11,775,719.2 | ) | ||||
Profit After Tax | (351,686.24 | ) | (11,775,719.2 | ) | ||||
EPS | (0.02 | ) | (0.59 | ) | ||||
Declared Dividend | - | |||||||
Share Capital | 20,000,000.00 | 20,000,000.00 | ||||||
Total Equity | 5,073,046.14 | 3,955,634.70 |
In the year ending 31 December 2020, with comparable year 2019 figures.
2 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Directors’ Report
For the period ended 31 December 2020
The directors present their ten months report on affairs of the Company, together with the financial statements and auditors’ report for the period ended 31 December 2020.
Principal Activity and Business Review
The principal activity of the Company continues to be fintech operations with specialization in blockchain technology, offering services as online financial advisers, as a broker and foreign exchange services.
The Company has generated no income from any business activities in the year and its going concern is currently in doubt.
Operating Results
The following is a summary of the Company’s operating results and retained earnings:
2020 | 2019 | |||||||
|
|
|
|
|
|
|
||
RETAINED EARNINGS, beginning of period | (43,798,062 | ) | (32,022,343 | ) | ||||
Profit/(loss) for the year | (351,686.24 | ) | (11,775,719 | ) | ||||
RETAINED EARNINGS, end of period | (44,149,748 | ) | (43,798,062 | ) |
Directors and Their Interests
The directors who served during the period, together with their interests in the shares of the Company as at 31 December 2020 were as follows:
Number of Ordinary shares of | ||||||
Date appointed |
|
|||||
Mr. Vijayankumar Praveenkumar | 14th February 2018 | 16,000,000 | ||||
Mr. Chris Oyeniyi | 14th February 2018 | - | ||||
Mr. Ukachukwu Jeremiah | 14th February 2018 | - | ||||
Mr. Evoh Victor | 14th February 2018 | - | ||||
Mrs. Okoro Nkiruka | 14th February 2018 | - |
The directors not allotted shares in the Company as at 31 December 2020 do not have a diluting effect on the current shareholding structure of the Company as at year-ending 31st December 2020.
3 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
In accordance with Section 277 of the Companies and Allied Matters Act, 1990, none of the directors has notified the Company of any declarable interests in contracts with the Company.
Analysis of Shareholding Structure
Shareholder | Position | No. of Shares held as at 31st Dec. 2020 | ||||
Vijayankumar Praveenkumar | Chairman | 16,000,000 | ||||
Kannankattu Mangalatu | Ordinary Shareholder | 6,000,000 | ||||
Chris Oyeniyi | Executive Director | - | ||||
Ukachukwu Jeremiah | Executive Director | - | ||||
Evoh Victor | Executive Director | - | ||||
Okoro Nkiruka | Executive Director | - | ||||
TOTAL | 22,000,000 |
Fixed Assets
The Company had fixed assets as at the year end.
Charitable Contributions
The Company made no charitable contributions and gifts to any charitable institutions and organisations during the year. No donation was made to political parties.
Employment of Disabled Persons
The Company has no disabled persons in its employment. However, applications for employment by disabled persons will be fully considered bearing in mind the respective aptitudes and abilities of the applicants concerned. In the event of members of staff becoming disabled, every effort will be made to ensure that their employment with the Company continues and that appropriate training is arranged. It is the policy of the Company that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee Consultation and Training
The Company places considerable value on the involvement of its employees and has continued its practice of keeping them informed on matters affecting them as employees and on the various factors affecting the performance of the Company. The Company has in-house training sessions when and where necessary with additional facilities from educational institutions for the training of its employees.
Health, Safety and Welfare at Work
The Company places a high premium on the health, safety and welfare of its employees in their place of work. Medical facilities are provided for employees at the Company’s expense up to stated limits.
Post Balance Sheet Events
There are no post balance sheet events which could have had a material effect on the state of affairs of the Company as at 31 December 2020 and profit for the year ended on that date, that have not been adequately provided for.
Auditors
In accordance with Section 357(2) of the Companies and Allied Matters Act, 1990, the auditors, Logic Professional Services were appointed and have expressed their interest and will continue in office as Auditors of the Company.
4 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Statement of Director’s Responsibilities
For the preparation and approval of the Financial Statements
The Directors of Belfrics Nigeria Pvt Limited are responsible for the preparation of the financial statements that give a true and fair view of the financial position of the Company as at 31 December 2020, and the results of its operations, cash flows and changes in equity for the year ended, in compliance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011.
In preparing the financial statements, the Directors are responsible for:
● | properly selecting and applying accounting policies; | |
● | presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; | |
● | providing additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and | |
● | making an assessment of the Company’s ability to continue as a going concern. |
The Directors are responsible for:
● | designing, implementing and maintaining an effective and sound system of internal controls throughout the Company; | |
● | maintaining adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company, and which enable them to ensure that the financial statements of the Company comply with IFRS; | |
● | maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS; | |
● | taking such steps as are reasonably available to them to safeguard the assets of the Company; and | |
● | preventing and detecting fraud and other irregularities. |
Going Concern:
The Directors have made an assessment of the Compnay’s ability to continue as a going concern and have no reason to believe the Company will not remain a going concern in the year ahead.
The financial statements of the Company for the year ended 31 December 2020 were approved by directors on 21 June, 2021
5 |
INDEPENDENT AUDITOR’S REPORT
To the Members of Belfrics Nigeria Pvt Limited
Report on the Financial Statements
We have audited the accompanying financial statements of Belfrics Nigeria Pvt Limited (“the Company”), which comprise the balance sheets as at 31 December 2020, the profit and loss accounts, statement of cash flows and statement of changes in equity for the period then ended, the statement of accounting policies and the notes to the financial statements as set out on pages 8 to 18.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, these financial statements give a true and fair view of the financial position of Belfrics Nigeria Pvt Limited (“the Company”) as at 31 December 2020, and of the Company’s financial performance and cash flows for the period then ended in accordance with Statements of Accounting Standards applicable in Nigeria and in the manner required by the Companies and Allied Matters Act of Nigeria.
6 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Statement of Significant Accounting Policies
These financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities issued by the International Accounting Standards Board. They are presented in the currency units of Nigeria. A summary of the significant accounting policies, all of which have been applied consistently throughout the current and preceding year, is set out below:
(a) | Basis of Accounting |
The financial statements are prepared under the historical cost convention.
(b) | Revenue |
Revenue is commission based, and is recognized when the related services have been rendered. Any unearned revenues are deferred and amortized to the income statement over the period to which it relates. Also, Revenue is measured at the fair value of the consideration received or receivable, net of discounts and sales-related taxes collected on behalf of the government of Nigeria.
(c) | Fixed Assets |
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following rates are used for the depreciation of property, plant and equipment:
% | ||||
Furniture & Fittings | 25 | |||
Office equipments | 25 | |||
Motor vehicles | 25 | |||
Computer Software | 50 |
If there is an indication that there has been a significant change in depreciation rate, useful life or residual value of an asset, the depreciation of that asset is revised accordingly to reflect the new expectations. However, in the current year under review, no depreciation has been charged on the assets as the company never operated in year.
(d) | Intangible Assets |
Intangible assets are stated at cost less accumulated amortization and any accumulated impairment losses. It is amortized over its estimated life of five years using the straight-line method. If there is an indication that there has been a significant change in amortization rate, useful life or residual value of an intangible asset, the amortization is revised accordingly to reflect the new expectations.
(e) | Inventories |
The company does not deal in inventory and holds no form of inventory as its entire operations is service based.
(f) | Impairment of Assets |
At each reporting date, property, plant and equipment and intangible assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss. If there is an indication of possible impairment, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognized immediately in profit or loss.
7 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Similarly, at each reporting date, inventories are assessed for impairment by comparing the carrying amount of each item of inventory (or group of similar items) with its selling price less costs to complete and sell. If an item of inventory (or group of similar items) is impaired, its carrying amount is reduced to selling price less costs to complete and sell, and an impairment loss is recognized immediately in profit or loss.
If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount (selling price less costs to complete and sell, in the case of inventories), but not in excess of the amount that would have been determined had no impairment loss been recognized for the asset (or group of related assets) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
(g) | Leases |
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the company. All other leases are classified as operating leases.
Rights to assets held under finance leases are recognized as assets of the company at the fair value of the leased property (or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are deducted in measuring profit or loss. Assets held under finance leases are included in property, plant and equipment, and depreciated and assessed for impairment losses in the same way as owned assets.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the lease.
(h) | Trade and Other Receivables |
Most sales are made on cash & carry and few on the basis of normal credit terms, and the receivables do not bear interest. Where credit is extended beyond normal credit terms, receivables are measured at amortized cost using the effective interest method. At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable. If so, an impairment loss is recognized immediately in profit or loss.
(i) | Trade Payables |
Trade payables are obligations on the basis of normal credit terms and do not bear interest, essentially the fiat currency balances in each individual client account or the fiat valuation of the currencies held at the end of the period.
(j) | Taxation |
Income tax payable is provided on taxable profits at the current rate.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and their corresponding tax bases (known as temporary differences). Deferred tax liabilities are recognized for all temporary differences that are expected to increase taxable profit in the future. Deferred tax assets are recognized for all temporary differences that are expected to reduce taxable profit in the future, and any unused tax losses or unused tax credits. Deferred tax assets are measured at the highest amount that, on the basis of current or estimated future taxable profit, is more likely than not to be recovered. The net carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current assessment of future taxable profits. Any adjustments are recognized in profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the taxable profit (tax loss) of the periods in which it expects the deferred tax asset to be realized or the deferred tax liability to be settled, on the basis of tax rates that have been enacted or substantively enacted by the end of the reporting period.
(k) | Cash at Bank and in hand |
For the purpose of reporting cash flows, cash at bank and in hand includes cash on hand and cash balances with banks
(l) | Borrowing costs, Bank Loans and Overdrafts |
All borrowing costs are recognized in profit or loss in the period in which they are incurred. Interest expenses are recognized on the basis of the effective interest method and are included in finance costs.
8 |
Belfrics
Nigeria PVT Limited
Financial
Statements -- 31 December 2020
Together
with Directors’ and Auditors’ Reports
Statement
of Comprehensive Income for the period ended 31 December 2020
2020
2019
Notes
N
N
Revenue –
(Brokerage commissions)
1
-
133,355.07
Other income
-
-
Total Revenue
-
133,355.07
Operating expenses
2
(341,250.00
)
(10,864,879.18
)
Depreciation
-
(1,015,765.75
)
Finance Costs
(10,436.24
)
(28,429.34
)
Profit/(loss) before tax
3
(351,686.24
)
(11,775,719.20
)
Provision for Tax
4
-
-
Profit/ (Loss) for the year
(351,686.24
)
(11,775,719.20
)
Retained earnings at start of the year
(43,798,062.20
)
(32,022,343.00
)
Retained Earnings End of Period
(44,149,748.44
)
(43,798,062.20
)
Earnings per share
5
(0.02
)
(0.59
)
The statement of significant accounting policies on page 8 and the accompanying notes on pages 15 to 18 form an integral part of this Statement of Comprehensive Income.
9 |
Belfrics
Nigeria PVT Limited
Financial
Statements -- 31 December 2020
Together
with Directors’ and Auditors’ Reports
Statement
of financial position as at 31 December 2020
2020
2019
Notes
N
N
Non-Current Assets
Office Equipment
10
2,119,543.75
2,119,543.75
Furniture & Fittings
2,770,458.50
2,770,458.50
Computer Software
-
-
Current assets
4,890,002.25
4,890,002.25
Trade and other receivables
7
-
-
Prepayments
7(a)
-
-
Cash and cash equivalents
6
183,043.89
1,642.94
183,043.89
1,642.94
TOTAL ASSETS
5,073,046.14
4,891,645.19
EQUITY & LIABILITIES
Equity
Share Capital
9(a)
20,000,000.00
20,000,000.00
Deposit for shares
9(b)
27,972,696.92
27,753,696.92
Retained earnings
(42,899,650.78
)
(43,798,062.20
)
TOTAL EQUITY
5,073,046.14
3,955,634.72
Current liabilities
Trade & Other Payables
8
-
507,890.47
Tax Payable
8(a)
-
428,120.00
-
936,010.47
TOTAL LIABILITIES
-
936,010.47
TOTAL EQUITY & LIABILITIES
5,073,046.14
4,891,645.19
10 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
11 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Attributable to equity holders of the company
Share Capital | Deposit for Shares | Retained Earnings | Total Equity | |||||||||||||
Opening balance: | ||||||||||||||||
Issue of ordinary shares of N1/share | 20,000,000.00 | 27,753,696.92 | (43,798,062.20 | ) | 3,955,634.72 | |||||||||||
Profit for the year | ||||||||||||||||
Profit or loss | (351,686.24 | ) | (351,686.24 | ) | ||||||||||||
Transactions recorded directly in equity | ||||||||||||||||
Additional Capital invested by the Director | 219,000 | 219,000 | ||||||||||||||
Revaluation Surplus on Assets | 1,250,097.66 | 1,250,097.66 | ||||||||||||||
Balance as at 31st December 2020 | 20,000,000.00 | 27,972,696.92 | (42,899,650.78 | ) | 5,073,046.14 |
12 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Statement of Cash Flows for the year ended 31 December 2020
2020 | 2019 | |||||||||
Notes | N | N | ||||||||
Cash flows from operating activities | ||||||||||
Profit / (Loss) for the year | (351,686.24 | ) | (11,775,719.20 | ) | ||||||
- Finance costs | 10,436.24 | 28,429.34 | ||||||||
Adjustments for non-cash income and expenses: | ||||||||||
- Depreciation | - | 915,730.75 | ||||||||
- Amortization | - | 100,035.00 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
- Decrease / (Increase) in trade and other receivables | - | 107,400.00 | ||||||||
- Increase / (Decrease) in trade and other payables | - | (1,242,132.53 | ) | |||||||
Cash generated from operations | (341,250.00 | ) | (11,866,256.64 | ) | ||||||
Income tax paid | - | - | ||||||||
Net cash from operating activities | (341,250.00 | ) | (11,866,256.64 | ) | ||||||
Cash flows from investing activities | ||||||||||
Purchases of property, plant & equipment | - | - | ||||||||
Purchases of intangible assets | - | - | ||||||||
Net cash used in investing activities | - | |||||||||
Cash flows from financing activities | ||||||||||
Proceeds from Directors initial capital | - | - | ||||||||
Proceed from Directors deposit | 219,000.00 | 9,844,992.58 | ||||||||
Net cash used in financing activities | 219,000.00 | 9,844,992.58 | ||||||||
Net increase / (decrease) in cash and cash equivalents | 181,400.95 | (2,021,264.06 | ) | |||||||
Cash and cash equivalent (beginning) | 1,642.94 | 2,022,907.00 | ||||||||
Cash and cash equivalents at end of year | 183,043.89 | 1,642.94 |
13 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
Notes to the Financial Statements
For the period ended 31 December 2020
1. | Revenue |
2020
|
2019
|
|||||||
Total Commission | - | 133,355 |
Revenue represents the value of commissions earned on every sell and buy trades on the Belfrics exchange from all customers during the period covered.
2. | Operating Expense |
Admin Expenses | - | 205,838.64 | ||||||
Internet Subscriptions | - | 216,800.00 | ||||||
IT Services | - | 62,500.00 | ||||||
Legal & Professional Fees | - | 750,000.00 | ||||||
Media & Printing | - | 29,350.00 | ||||||
Miscellaneous Expense | - | - | ||||||
Office Rental Prepaid | - | 3,450,000.00 | ||||||
Office Stationeries | - | 50,800.00 | ||||||
Office Supplies | - | 22,800.00 | ||||||
Postage & Courier | - | 30,000.00 | ||||||
Repairs & Maintenance | - | 121,815.00 | ||||||
Staff Salaries | - | 4,760,821.23 | ||||||
Subscription & Registrations | - | - | ||||||
Taxes | - | 16,532.31 | ||||||
Telephone & Communication | - | 26,500.00 | ||||||
Training | - | 5,000.00 | ||||||
Transportation | 341,250 | 90,652.50 | ||||||
Travel & Accommodation | - | 854,669.50 | ||||||
Utilities - Electricity | - | 170,800.00 | ||||||
Total | 341,250 | 10,864,879.18 |
14 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
3. | Profit on Ordinary Activities before Taxation |
3(a) Profit/ (loss) before taxation is stated after charging the following:
2020
|
2019
|
|||||||
Depreciation | - | 1,015,766 | ||||||
Finance cost | - | 28,429 |
ii. | Higher-paid employees of the Company, other than directors, whose duties were wholly or mainly discharged in Nigeria, received remuneration (excluding pension contributions) in the following ranges: |
2020 Number |
2019 Number |
|||||||
|
- | - | ||||||
|
- | - | ||||||
N 50,000 - Upwards | - | - |
4. | Tax Provision |
The Directors advise that there is no requirement to provide for tax, which they consider being a realistic appraisal of the tax liability as there are substantial amount of losses during the period under review and can be carried forward into the future. In the opinion of the Directors, the probability of significant exposure in excess of the amounts captured as losses is remote and accordingly, no further provisions have been made.
5. | Earnings per Share |
Earnings
per share are based on the profit/(loss) for the year of N(351,686.24), and on 20,000,000 ordinary shares being the
number of shares in issue during the year.
6. | Cash & Bank Balances |
2020 | 2019 | |||||||
N | N | |||||||
Cash at Bank | 183,043.89 | 1,642.94 | ||||||
183,043.89 | 1,642.94 |
15 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
7. | Trade and Other Receivables |
The company does not have any trade receivable as it does not provide any of its customers margins. Customers trade only after fiat deposit or cryptocurrencies are confirmed and credited to their account.
7(a) Prepayment figures is the rental payment apportioned for the second year.
8. | Trade and Other Payables |
2020 | 2019 | |||||||
Customer Balances | - | 507,890 | ||||||
Tax Liabilities | - | 428,120 | ||||||
- | 936,010 |
9.(a) Share Capital
2020 | ||||
N | ||||
Authorised: | ||||
1,000,000 ordinary shares of |
20,000,000 | |||
Allotted, called-up and fully paid: | ||||
1,000,000 ordinary shares of |
20,000,000 |
The share capital is contributed as follows:
2020 | ||||
● Mr. Vijayankumar Praveenkumar | 16,000,000 | |||
● Mr. Kannankattu Mangalatu | 6,000,000 | |||
22,000,000 |
(b) Deposit for shares
During the course of the year 2020, the existing shareholder has injected more capital beyond the existing authorized share capital of 20,000,000. Whilst an increase in share capital would be processed with the Corporate Affairs Commission of Nigeria “CAC” to accommodate the excess above the current share capital, the excess has currently been classified as deposit for shares in the accounts of the Company at the end of the period.
16 |
Belfrics Nigeria PVT Limited
Financial Statements -- 31 December 2020
Together with Directors’ and Auditors’ Reports
10. Fixed Assets
The movement on these accounts during the year was as follows:
Computer Software | Office Equipment | Furniture & Fittings | TOTAL | |||||||||||||
N | N | N | N | |||||||||||||
COST: | ||||||||||||||||
Cost | 171,000.00 | 3,175,346.00 | 4,150,500.00 | 7,496,846.00 | ||||||||||||
Accumulated depreciation | (171,000.00 | ) | (1,055,802.25 | ) | (1,380,041.50 | ) | (2,606,843.75 | ) | ||||||||
Additions | - | - | - | - | ||||||||||||
Disposals | - | - | - | - | ||||||||||||
Beginning of Period | - | 2,119,543.75 | 2,770,458.50 | 4,890,002.25 | ||||||||||||
DEPRECIATION: | ||||||||||||||||
Beginning of period | (171,000.00 | ) | (1,055,802.25 | ) | (1,380,041.50 | ) | (2,606,843.75 | ) | ||||||||
Charged for the period | - | - | - | - | ||||||||||||
End of period | (171,000.00 | ) | (1,055,802.25 | ) | (1,380,041.50 | ) | (2,606,843.75 | ) | ||||||||
CARRYING AMOUNT | ||||||||||||||||
31-12-2020 | - | 2,119,543.75 | 2,770,458.50 | 4,890,002.25 |
13. Contingencies
The Company is not engaged in any lawsuits that may have arisen in the normal course of its business; thus no provision has been made in these financial Statements.
17 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
REPORTS AND FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
CHENGCOPLT
201806002622
(LLP00l7004-LCA) & AF0886
CHARTERED ACCOUNTANTS
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
CORPORATE INFORMATION
Director | : | Praveenkumar Vijayakumar |
Company secretary | : | Yap Wai Bing (MAICSA 7023640) |
Registered office | : | Unit l 3A-08, Menara Kl |
Lorong 3/137C | ||
Off Jalan Klang Lama | ||
58200 Kuala Lumpur | ||
Principal business address | : | B1-16-6, Soho Suites |
Jalan Perak | ||
50450 Kuala Lumpur | ||
Auditors | : | CHENGCOPLT |
201806002622 | ||
(LLP00l 7004-LCA) & AF 0886 | ||
No. 8-2 & 10-2, Jalan 2/114 | ||
Kuchai Business Centre | ||
Off Jalan Klang Lama | ||
58200 Kuala Lumpur |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
CONTENTS | PAGES | |
Director’ report | 1-4 | |
Statement by director | 5 | |
Statutory declaration | 5 | |
Independent auditors’ report | 6-8 | |
Statement of financial position | 9 | |
Statement of comprehensive income | 10 | |
Statement of changes in equity | 11 | |
Statement of cash flows | 12 | |
Notes to the financial statements | 13-27 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
DIRECTOR’S REPORT
For the financial year ended 31 December 2020
The director has pleasure in submitting their report together with the audited financial statements of the Company for the financial year ended 31 December 2020.
Principal activities
The Company is principally engaged in providing information technology services and related activities. There has been no significant change in the nature of its activity during the financial year.
Results | RM | |||
Net loss for the financial year | 353,687 |
In the opinion of the directors, the results of the operations of the Company during the financial year have not been substantially affected by any item, transaction or event of material and unusual nature.
Dividends
No dividends have been paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividend in respect of the current financial year.
Reserves and provisions
There were no material transfers to or from reserves or provisions during the financial year.
Issue of shares and debentures
During the financial year, the Company did not issue any new shares or debentures.
Options granted over unissued shares
No options have been granted by the Company to any parties during the financial year to take up any unissued shares of the Company.
No shares have been issued during the financial year by virtue of the exercise of any options to take up unissued shares of the Company. At the end of the financial year, there were no unissued shares of the Company under options.
1 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Director
The director in office during the financial year and during the period from the end of the financial year to the date of the report is:
Praveenkumar Vijayakumar
Director’s interests
No director holding office at 31 December 2020 had any interest in the shares and options over shares of the Company during the year.
By virtue of the Company being a wholly-owned subsidia1y of Belfries Malaysia Sdn. Bhd., the directors’ interests in shares in the holding company and its related corporations during the year as required by Section 59(3) of the Companies Act, 2016 to be disclosed in the directors’ report, is deemed to have been complied with, as such interests are disclosed in the directors’ report of the holding company.
Director’ benefits
Since the date of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than the benefit shown under directors’ remuneration) by reason of a contract made by the Company with the directors or with a finn of which the director is a member, or with a company in which the director has a substantial financial interest.
Neither during, nor at the end of the financial year, did there subsist any arrangement to which the Company was a patty, whereby the directors might acquire benefits by means of the acquisition of shares 111, or debentures of, the Company or any other body corporate.
Director’s remuneration
The details of director’s remuneration paid are set out in Note 17 to the financial statements.
Other statutory information
Before the financial statements of the Company were prepared, the director took reasonable steps:
(a) | to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that no known bad debts to be written off and that no allowance for doubtful debts is required; and |
(b) | to ensure that any current assets, which were unlikely to be realised in the ordinary course of business including the values of current assets as shown in accounting records of the Company had been written down to an amount which the current assets might be expected so to realise. |
2 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Other statutory information (cont’d)
At the date of this report, the directors are not aware of any circumstances:
(a) | which would require the writing off of bad debts or making of allowance for doubtful debts in the financial statements of the Company; or |
(b) | which would render the values attributed to current assets in the financial statements of the Company misleading; or |
(c) | which have arisen and render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or |
(d) | not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements of the Company misleading. |
At the date of this report, there does not exist:
(a) | any charge on the assets of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or |
(b) | any contingent liability of the Company which has arisen since the end of the financial year. |
Other than as disclosed in Note 2 to the financial statements, no contingent or other liability has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Company to meet its obligations as and when they fall due.
In the opinion of the director, no item, transaction, or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Company for the financial year in which this report is made.
Indemnities to directors, officers or auditors
There was no indemnity given to or insurance effected for the director, officer or auditors of the Company during the financial year.
Auditors’ remuneration
Details of auditors’ remuneration are set out in Note 15 to the financial statements.
Holding company
The company is a wholly-owned subsidiary of Belfries Malaysia Sdn. Bhd., a company incorporated in Malaysia.
Significant events during the reporting period
The details of significant events during the reporting period are disclosed in Note 19 to the financial statements.
3 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Auditors
The auditors, CHENGCO PLT, have expressed their willingness to continue in office.
Signed on behalf of the board of director in accordance with a resolution of the director,
4 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
STATEMENT BY DIRECTOR
PURSUANT TO SECTION 251(2) OF THE COMPANIES ACT, 2016
I, Praveenkumar Vijayakumar, being the director of Belfricsbt Sdn. Bhd., do hereby state that in my opinion, the financial statements as set out on pages 9 to 2 7 , are drawn up in accordance with Malaysian Private Entity Reporting Standard and the requirements of the Companies Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Company as at 31 December 2020 and of the results of its financial performance and cash flows of the Company for the financial year ended 31 December 2020.
Signed on behalf of the board of director in accordance with a resolution of the director,
5 |
|
CHENGCO PLT 201806002622 (LLP0017004-LCA) & AF0886 |
Wisma Cheng & Co | |
No. 8-2 & 10-2, Jalan 2/114, Kuchai Business Centre, Off Jalan Klang Lama, 58200 Kuala Lumpur. | |
Tel: 03-7984 8988 Fax: 03-7984 4402 | |
Email: enquiry@chengco.asia Website: www.chengco.asia |
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBER OF BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Belfricsbt Sdn. Bhd., which comprise the statement of financial position as at 31 December 2020, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 9 to 27.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2020, and of its financial performance and its cash flows for the financial year then ended in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act, 2016 in Malaysia.
Basis of Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities
We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial statements, which indicates that the Company incurred a net loss of RM353,687 (2019: RM157,757) for the current financial year and as at 31 December 2020, the Company’s current liabilities exceeded its current assets by RM630,510 (2019: RM240,386) and has capital deficiencies of RM442,119 (2019: RM88,432). As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Information Other than the Financial Statements and Auditors’ Report Thereon
The director of the Company is responsible for the other information. The other information comprises the director’s report but does not include the financial statements of the Company and our auditors’ report thereon.
Kuala Lumpur (HQ) • Cheras Selatan • Pandan lndah • lpoh • Taiping • Penang • Seremgan • Melaka • Batu Pahat • Johor Bahru • K.Terengganu • Sabah • Labuan
6 |
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBER OF BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Report on the Audit of the Financial Statements (con’d)
Information Other than the Financial Statements and Auditors’ Report Thereon (cont’d)
Our opinion on the financial statements of the Company does not cover the director’s report and we do not express any forn1 of assurance conclusion thereon.
In connection with our audit of the financial statements of the Company, our responsibility is to read the director’s report and, in doing so, consider whether the director’s report is materially inconsistent with the financial statements of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a mate1ial misstatement of the director’s report, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Director for the Financial Statements
The director of the Company is responsible for the preparation of financial statements of the Company that give a true and fair view in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act, 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Company, the director is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Fi,wncial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement, whether due to fraud or e1Tor, and to issue an auditors’ repoti that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
● | Identify and assess the risks of material misstatement of the financial statements of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from e1Tor, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
7 |
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBER OF BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
Report on the Audit of the Financial Statements (con’d)
Auditors’ Responsibilities for the Audit of the Financial Statements (cont’d)
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: (cont’d)
● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. |
● | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
● | Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
● | Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
8 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
The accompanying notes form an integral part of these financial statements
9 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 31 December 2020
2020 | 2019 | |||||||||||
Notes | RM | RM | ||||||||||
Revenue | 13 | 794,748 | 311,067 | |||||||||
Cost of sales | (593,421 | ) | (196,922 | ) | ||||||||
Gross profit | 201,327 | 114,145 | ||||||||||
Other operating income | 14 | 1 | - | |||||||||
General and administration expenses | (555,015 | ) | (263,400 | ) | ||||||||
Loss before tax | 15 | (353,687 | ) | (149,255 | ) | |||||||
Tax expense | 16 | - | (8,502 | ) | ||||||||
Net loss for the financial year, representing total comprehensive loss for financial year | (353,687 | ) | (157,757 | ) |
The accompanying notes form an integral part of these financial statements
10 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2020
Share capital | Retained profits/ (Accumulated losses) | Total | ||||||||||
RM | RM | RM | ||||||||||
At 1 January 2019 | 50,000 | 19,325 | 69,325 | |||||||||
Net loss for the financial year, representing total comprehensive loss for the financial year | - | (157,757 | ) | (157,757 | ) | |||||||
At 31 December 2019 and 1 January 2020 | 50,000 | (138,432 | ) | (88,432 | ) | |||||||
Net loss for the financial year, representing total comprehensive loss for the financial year | - | (353,687 | ) | (353,687 | ) | |||||||
At 31 December 2020 | 50,000 | (492,119 | ) | (442,119 | ) |
The accompanying notes form an integral part of these financial statements
11 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
STATEMENT OF CASH FLOWS
For the financial year ended 31 December 2020
2020 | 2019 | |||||||||||
Note | RM | RM | ||||||||||
Cash flows from operating activities | ||||||||||||
Loss before tax | (353,687 | ) | (149,255 | ) | ||||||||
Adjustments for: | ||||||||||||
Depreciation of property, plant and equipment | 7 | 20,000 | 8,333 | |||||||||
Loss on foreign exchange (unrealised) | 3,609 | 621 | ||||||||||
Operating loss before working capital changes | (330,078 | ) | (140,301 | ) | ||||||||
Changes in: | ||||||||||||
Deposits | (19,789 | ) | (33,883 | ) | ||||||||
Other payables and accruals | (33,370 | ) | 313,385 | |||||||||
Cash (used in)/generated from operations | (383,237 | ) | 139,201 | |||||||||
Tax paid | - | (13,881 | ) | |||||||||
Net cash (used in)/from operating activities | (383,237 | ) | 125,320 | |||||||||
Cash flows from investing activities | ||||||||||||
Acquisition of property, plant and equipment | - | (100,000 | ) | |||||||||
Acquisition of intangible assets | (60,175 | ) | (31,054 | ) | ||||||||
Net cash used in investing activities | (60,175 | ) | (131,054 | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Director’s financing | 467,171 | 225,715 | ||||||||||
Advance from related company | (4,725 | ) | (253,241 | ) | ||||||||
Net cash from/(used in) financing activities | 462,446 | (27,526 | ) | |||||||||
Net increase/(decrease) in cash and cash equivalents | 19,034 | (33,260 | ) | |||||||||
Effect of exchange rate changes | 129 | (621 | ) | |||||||||
Cash and cash equivalents at beginning of financial year | 15,842 | 49,723 | ||||||||||
Cash and cash equivalents at end of financial year | 10 | 35,005 | 15,842 |
The accompanying notes form an integral part of these financial statements
12 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
1. | General information |
The Company is a private limited company, incorporated and domiciled in Malaysia. The registered office of the Company is located at Unit 13A-08, Menara Kl, Lorong 3/137C, Off Jalan Klang Lama, 58200 Kuala Lumpur. | |
The Company is principally engaged in providing information technology services and related activities. There has been no significant change in the nature of its activity during the financial year. The principal place of business of the Company is located at B1-16-6, Soho Suites, Jalan Perak, 50450 Kuala Lumpur. | |
The financial statements were authorised for issue by the board of directors in accordance with a resolution of the directors on 30 September 2021. | |
The financial statements are expressed in Ringgit Malaysia (“RM”). |
2. | Going concern |
The Company incurred a net loss ofRM353,687 (2019: RM157,757) for the current financial year and as at 31 December 2020, the Company’s current liabilities exceeded its current assets by RM630,5l 0 (2019: RM240,386) and has capital deficiencies of RM442,l 19 (2019: RM88,432). These factors indicate the existence of material uncertainty which may cast significant doubt on the ability of the Company to continue as a going concern. The validity of the going concern assumption on which these financial statements are prepared depends on the continuous financial support from the shareholders and the ability of the Company to achieve future profitable operations and cash flows to meet its liabilities of the Company as and when they fall due. The financial statements of the Company have been prepared on a going concern basis and do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. | |
3. | Compliance with Financial Reporting Standards and the Companies Act, 2016 |
The financial statements of the Company have been prepared in compliance with Malaysian Private Entities Reporting Standard (“MPERS”) issued by the Malaysian Accounting Standards Board (“MASB”) and the requirements of the Companies Act, 2016 in Malaysia. | |
4. | Basis of preparation of financial statements |
The financial statements of the Company have been prepared using cost basis. | |
Management has used estimates and assumptions in measuring the reported amounts of assets and liabilities at the end of the reporting year and the reported amounts of revenues and expenses during the reporting year. Judgements and assumptions are applied in the measurement, and hence, the actual results may not coincide with the reported amounts. |
13 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5. | Significant accounting policies |
5.1 | Property, plant and equipment |
Operating tangible assets that are used for more than one accounting period in the production and supply of goods and services, for administrative purpose or for rental to others are recognised as property, plant and equipment when the Company obtain control of the asset. These include assets constructed or acquired for environmental protection purpose and investment propetty measured on the cost model. The assets, including major spares, stand-by equipment and servicing equipment, are classified into appropriate classes based on the nature. Any subsequent replacement of a significant component in an existing asset is capitalised as a new component in the asset and the old component is derecognised. | |
All property, plant and equipment are initially measured at cost. For a purchased asset, cost comprises purchases price plus all directly attributable costs incun-ed in bringing the asset to its present location and condition for management’s intended use. For a self-constructed asset, costs comprise all direct and indirect cost of construction (including provision for restoration and cost of major inspection) but excludes internal profits. | |
All prope1ty, plant and equipment are subsequently measured at cost less accumulated depreciation and accumulated impairment losses. | |
All property, plant and equipment are depreciated by allocating the depreciable amount of a significant component or of an item over the remaining useful life. The depreciation methods used and useful lives of the respective classes of property, plant and equipment are as follows: |
Method | Useful life (years) | ||
Computer software | Straight-line | 5 |
At the end of each reporting year, the residual values, useful lives and depreciation methods for the property, plant and equipment are reviewed for reasonableness. Any change in estimate of an item is adjusted prospectively over its remaining useful life, commencing in the cun-ent financial year. | |
The carrying amounts of items of property, plant and equipment are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss arising from the derecognition of items of property, plant and equipment, detennined as the difference between the net disposal proceeds, if any, and the can-ying amounts of the item, is recognised in profit or loss. Neither the sale proceeds nor any gain on disposal is classified as revenue. | |
5.2 | Impairment of non-financial assets |
An impairment loss arises when the carrying amount of a Company’s asset exceeds its recoverable amount. | |
At the end of each reporting date, the Company assesses whether there is any indication that a stand alone asset or a cash-generating unit may be impaired by using external and internal sources of infonnation. If any such indication exists, the Company estimates the recoverable amount of the assets or cash-generating unit. |
14 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (cont’d) |
5.2 | Impairment of non-financial assets (cont’d) |
If an individual asset generates independent cash inflows, it is tested for impainnent as a stand-alone asset. If an asset does not generate independent cash inflows, it is tested for impainnent together with other assets in a cash-generating unit, at the lowest level in which independent cash inflows are generated and monitoring for internal management purposes. | |
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and the value in use. The Company detennines the fair value less costs to sell of an asset or a cash-generating unit in a hierarchy based on: (i) price in a binding sale agreement; (ii) market price traded in an active market; and (iii) estinrnte of market price using the best available infonnation. The value in use is estimated by discounting the net cash inflows (by an appropriate discount rate) of the asset or unit, using reasonable and supportable management budgets and forecasts of five years and extrapolation of cash inflows for period beyond the five-year forecast or budget. | |
For an asset measured on a cost-based model, any impainnent loss is recognised in profit or loss. | |
For a cash-generating unit, any impairment loss is allocated to the assets of the unit pro rata based on the relative carrying amounts of the assets. | |
The Company reassesses the recoverable amount of an impaired asset or a cash-generating unit if there is any indication that an impairment loss recognised previously may have reversed. Any reversal of impairment loss for an asset carried at a cost-based model is recognised in profit or loss, subject to the limit that the revised can-ying amount does not exceed the amount that would have been detennined had no impairment loss been recognised previously. | |
5.3 | Share capital and distributions |
(a) | Share capital |
Ordinai-y shares issued that can-y no mandatory contractual obligation: (i) to deliver cash or another financial asset; or (ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Company, are classified as equity instruments. | |
When ordinary shares are issued in a private placement or in a right issue to existing shareholders, they are recorded at the issued price, for ordinary shares issued in exchange for non-monetary assets, they are measured by reference to the fair values of the assets received. | |
When ordinary shares and other equity instruments are issued as consideration transferred in a business combination or as settlement of an existing financial liability, they are measured at their fair value at the date of the exchange transaction. | |
Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax effect. |
15 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (cont’d) |
5.3 | Share capital and distributions (cont’d) |
(b) | Distributions |
Distributions to holders of an equity instrument are debited directly in equity, net of any related income tax effect. | |
A dividend declared is recognised as a liability only after it has been appropriately authorised, which is the date when the Board of Directors declares an interim dividend, or in the case of proposed final dividend, the date the shareholders of the Company approve the proposed final dividend in an annual general meeting of shareholders. | |
5.4 | Financial instruments |
(a) | Initial recognition and measurement |
The Company recognises a financial asset or a financial liability (including derivative instruments) in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the instrument. | |
On initial recognition, all financial assets and financial liabilities are measured at fair value, which is generally the transaction price, plus transaction costs if the financial asset or financial liability is not measured at fair value through profit or loss. For instruments measured at fair value through profit or loss, transaction costs are expensed to profit or loss when incurred. | |
(b) | Derecognition of financial instruments |
A financial asset, whether as a single item or as a part, is derecognised when, and only when, the conceptual rights to receive the cash flows from the financial asset expire, or when the Company transfers the contractual rights to receive cash flows of the financial asset, including circumstances when the Company acts only as a collecting agent of the transferee, and retains no significant risks and rewards of ownership of the financial asset or no continuing involvement in the control of the financial asset transferred. | |
A financial liability is derecognised when, and only when, it is legally extinguished, which is either when, the obligation specified in the contract is discharged or cancelled or expires. A substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. For this purpose, the Company considers a modification as substantial if the present value of the revised cash flows of the modified tenns discounted at the original effective interest rate differs by 10% or more when compared with the carrying amount of the original liability. | |
(c) | Subsequent measurement of financial assets |
For the purpose of subsequent measurement, the Company classifies financial assets into two categories, namely: (i) financial assets at fair value through profit or loss; and (ii) financial assets at amortised cost. |
16 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (cont’d) |
5.4 | Financial instruments (cont’d) |
(c) | Subsequent measurement of financial assets (cont’d) |
After initial recognition, the Company measures investments in quoted preference shares, quoted ordinary shares and derivatives that are assets at their fair values by reference to the active market prices, if observable, or otherwise by a valuation technique, without any deduction for transaction costs it may incur on sale or other disposal. | |
Investments in debt instruments, whether quoted or unquoted, are subsequently measured at amortised cost using the effective interest method. Investments in unquoted equity instruments and whose fair value cannot be reliably measured are measured at cost. | |
Other than financial assets measured at fair value through profit or loss, all other financial assets are subject to review for impailn1ent in accordance with 5.4(g). | |
(d) | Subsequent measurement of financial liabilities |
After initial recognition, the Company measures all financial liabilities at amortised cost using the effective interest method. | |
(e) | Fair value measurement of financial instruments |
The fair value of a financial asset or a financial liability is detennined by reference to the quoted market price in an active market, and in the absence of an observable market price, by a valuation technique using unobservable mputs with reasonable and supportable assumptions. | |
(I) | Recognition of gains and losses |
Fair value changes of financial assets and financial liabilities classified as at fair value through profit or loss are recognised in profit or loss when they arise. | |
For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognised in profit or loss only when the financial asset or financial liability is derecognised or impaired, and through the amortisation process of the instrument. | |
(g) | Impairment and uncollectibility of financial assets |
The Company applies the incurred loss model to recognise impairment losses of financial assets. At the end of each reporting period, the Company examines whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Evidences of trigger loss events include: (i) significant difficulty of the issuer or obligor; (ii) a breach of contract, such as a default or delinquency in interest or principal payment; (iii) granting exceptional concession to a customer; (iv) it is probable that a customer will enter bankruptcy or other financial reorganisation; (v) the disappearance of an active market for that financial asset because of financial difficulties; or (vi) any observable market data indicating that there may be measurable decrease in the estimated future cash flows from a group of financial assets. |
17 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (cont’d) |
5.4 | Financial instruments (cont’d) |
(g) | Impairment and uncollectibility of financial assets (cont’d) |
For a non-current loan and receivable carried at amortised cost, the revised estimated cash flows are discounted at the original effective interest rate. Any impairment loss is recognised in profit or loss and a corresponding amount is recorded in a loss allowance account. Any subsequent reversal of impaim1ent loss of the financial asset is reversed in profit or loss with a corresponding adjustment to the allowance account, subject to the limit that the reversal should not result in the revised ca1Tying amount of the financial asset exceeding the amount that would have been detennined had no impainnent loss been recognised previously. | |
For short-tenn trade and other receivables, where the effect of discounting is immaterial, impairment loss is tested for each individually significant receivable wherever there is any indication of impairment. Individually significant receivables for which no impairment loss is recognised are grouped together with all other receivables by classes based on credit risk characteristics and aged according to their past due periods. A collective allowance is estimated for a class group based on the Company’s experiences of loss ratio in each class, taking into consideration current market conditions. | |
For an unquoted equity investment measured at cost less impairment, the impairment is the difference between the asset’s carrying amount and the best estimate (which will necessarily be an approximation) of the amount (which might be zero) that the Company expects to receive for the asset if it were sold at the reporting date. The Company may estimate the recoverable amount using an adjusted net asset value approach. | |
5.5 | Tax assets and liabilities |
A current tax for current and prior financial year, to the extent unpaid, recognised as a cmTent tax liability. If the amounts already paid in respect of current and prior financial year exceed the amount due for those periods, the excess is recognised as a current tax asset. A current tax liability (asset) is measured at the amount the entity expects to pay (recover) using tax rates and laws that have been enacted or substantially enacted by the reporting date. | |
A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from; (a) the initial recognition of goodwill; or (b) the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit (or tax loss). The exceptions for initial recognition differences include items of prope11y, plant and equipment that do not qualify for capital allowances and acquired intangible assets that are not deductible for tax purposes. |
18 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (cont’d) |
5.5 | Tax assets and liabilities (cont’d) |
A defen-ed tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the defen-ed tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (or tax loss). The exceptions for the initial recognition differences include non-taxable government grants received and reinvestment allowances and investment tax allowances on qualifying prope1iy, plant and equipment. | |
A defen-ed tax asset is recognised for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. Unused tax credits do not include unabsorbed reinvestment allowances and unabsorbed investment tax allowances because the Company treats these as paii of initial recognition differences. | |
Defen-ed taxes are measured using tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting year. The measurement of deferred taxes reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting year, to recover or settle the carrying amount of its assets or liabilities. For an investment property measured at fair value, if the Company does not have a business model to hold the property solely for rental income, the deferred tax liability on the fair value gain is measured based on the presumption that the property is recovered through sale at the end of the reporting year. | |
At the end of each repo1iing year, the carrying amount of a deferred tax asset is reviewed, and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of a part or all of that deferred tax asset to be utilised. Any such reduction will be reversed to the extent that it becomes probable that sufficient taxable profit will be available. | |
A current or deferred tax is recognised as income or expense in profit or loss for the financial year, except to the extent that the tax arises from items recognised outside profit or loss. For an income or expense item recognised in other comprehensive income, the current or deferred tax expense or tax income is recognised in other comprehensive income. For items recognised directly in equity, the related tax effect is also recognised directly in equity. | |
5.6 | Intangible assets |
Cryptocurrencies | |
The Company recognises cryptocun-ency and related assets as intangible assets where it is a resource controlled by the Company (that is, the Company has the power to obtain the economic benefits that the asset will generate and to restrict the access of others to those benefits) as a result of past events and from which future economic benefits are expected to flow to the Company. It is identifiable because it can be sold, exchanged and transferred individually, and not in cash or any physical fom1. |
19 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (Cont’d) |
5.6 | Intangible assets (Cont’d) |
Cryptocurrencies (Cont’d) | |
On initial recognition, the cryptographic assets are recognised at cost. Subsequently, the assets will be carried at cost less any impairment. | |
5.7 | Revenue recognition and measurement |
The Company measures revenue from a sale of goods transaction at the fair value of the consideration received or receivable, which is usually the invoice price, net of any trade discounts and volume rebates given to the customer in a sale transaction. | |
Revenue from a sale of goods is recognised when: (i) the Company has transferred to the buyer the significant risks and rewards of the goods; (ii) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) the amount of the revenue can be measured reliably; (iv) it is probable that the economic benefits associated with the transaction will flow to the Company; and (v) the costs incurred or to be incurred in respect of the transaction can be measured reliably. | |
5.8 | Employee benefits |
The Company recognises a liability when an employee has provided service in exchange for employee benefits to be paid in the future and an expense when the Company consumes the economic benefits arising from service provided by an employee in exchange for employee benefits. | |
(a) | Short-term employee benefits |
Wages and salaries are usually accrued and paid on a monthly basis and are recognised as an expense, unless they relate to cost of producing inventories or other assets. | |
Paid absences (annual leave, maternity leave, paternity leave, sick leave, etc.) are accrued in each financial period if they are accumulating paid absences that can be carried forward, or in the case of non-accumulating paid absences, recognised as and when the absences occur. | |
(b) | Post-employment benefits - defined contributions plans |
The Company make statutory contributions to approved provident funds and the contributions made are charged to profit or loss in the financial period to which they relate. When the contributions have been paid, the Company has no further payment obligations. |
20 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
5 | Significant accounting policies (Cont’d) | |
5.9 | Cash and cash equivalents | |
Cash and cash equivalents consist of cash at bank and cash in hand that are used by the Company in the management of their short term commitments. | ||
5.10 | Related party | |
A related party is a person or entity that is related to the Company. A related party transaction is a transfer of resources, services or obligations between the Company and its related party, regardless of whether a price is charged. | ||
(a) | A person or a close member of that person’s family is related to a reporting entity if that person: | |
(i) | is a member of the key management personnel of the reporting entity or of a parent of the reporting entity. | |
(ii) | has control or joint control over the reporting entity, or | |
(iii) | has significant influence over the reporting entity. | |
(b) | An entity is related to a reporting entity if any of the following conditions applies: | |
(i) | the entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). | |
(ii) | one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the entity is a member). | |
(iii) | both entities are joint ventures of the same third entity. | |
(iv) | one entity is a joint ventures of a third party and the other entity is an associate of the third entity. | |
(v) | the entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity. | |
(vi) | the entity is controlled or jointly controlled by a person identified in (a). | |
(vii) | the entity, or any member of a group of which is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. | |
(viii) | a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). | |
6. | Critical judgement and estimation uncertainty | |
6.1 | Judgements and assumptions applied | |
The directors are of the opinion that any instances of application of judgements are not expected to have a significant effect on the amounts recognised in the financial statements. |
21 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
6. | Critical judgement and estimation uncertainty (cont’d) |
6.2 | Estimation uncertainty |
A related party is a person or entity that is related to the Company. A related party transaction is a transfer of resources, services or | |
The measurement of some assets and liabilities requires management to use estimates based on various observable inputs and other assumptions. The areas or items that are subject to significant estimation uncertainties of the Company are in measuring: (a) depreciation of property, plant and equipment; and (b) measurement of income taxes. | |
(a) | Depreciation of property, plant and equipment |
The costs of an item of property, plant and equipment is depreciated on the straight-line method or another systematic method that reflects the consumption of the economic benefits of the asset over its useful life. Estimates are applied in the selection of the depreciation method, the useful lives and the residual values. The actual consumption of the economic benefits of the property, plant and equipment may differ from the estimates applied and this may lead to gain or loss on an eventual disposal of an item of property, plant and equipment. | |
(b) | Measurement of income taxes |
Significant judgement is required in determining the Company’s provision for current and deferred taxes because the ultimate tax liability for the Company as a whole is uncertain. When the final outcome of the taxes payable is determined with the tax authorities, the amount might be different from the initial estimates of the taxes payable. Such differences may impact the current and deferred taxes in the financial period when such determination is made. The Company will adjust for the differences as over-or under-provision of current or deferred taxes in the current financial year in which those differences arise. |
7. | Property, plant and equipment |
Cost |
Computer
software RM |
|||
At 1 January 2019, 31 December 2019, 1 January 2020and 31 December 2020 | 100,000 | |||
Accumulated depreciation | ||||
At 1 January 2019 | - | |||
Charge for the financial year | 8,333 | |||
At 1 31 December 20I9 and I January 2020 Charge for the financial year | 8,333 | |||
At 31 December 2020 | 20,000 | |||
Carrying amount | 28,333 | |||
At 31 December 20I9 | 91,667 | |||
At 31 December 2020 | 71,667 |
22 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
8. | Intangible assets |
2020 | 2019 | |||||||
RM | RM | |||||||
Cryptocurrencies | 116,724 | 60,287 | ||||||
At beginning of the financial year | 60,287 | 29,233 | ||||||
Additions | 60,175 | 31,054 | ||||||
Effect on foreign exhange | (3,738 | ) | - | |||||
At end of the financial year | 116,724 | 60,287 |
9. | Amounts due from/(to) related companies/a director/ |
The amounts are non-trade in nature, non-interest bearing, unsecured and recoverable/(repayable) on demand. | |
10. | Cash and cash equivalents |
2020 | 2019 | |||||||
RM | RM | |||||||
Cash in hand | 4,000 | 15,000 | ||||||
Cash at bank | 31,005 | 842 | ||||||
35,005 | 15,842 |
Cash and cash equivalents are denominated in the following currencies:
2020 | 2019 | |||||||
RM | RM | |||||||
Ringgit Malaysia | 33,689 | 15,563 | ||||||
United States Dollar | 1,316 | 279 | ||||||
35,005 | 15,842 |
23 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
11. | Share capital |
Number of ordinary shares | 2020 | 2019 | ||||||||||||||
2020 | 2019 | RM | RM | |||||||||||||
Issued and fully paidOrdinary shares | 50,000 | 50,000 | 50,000 | 50,000 |
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. |
12. | Other payables and accruals |
2020 | 2019 | |||||||
RM | RM | |||||||
Other payables | 18,320 | 18,320 | ||||||
Accruals | 21,122 | 17,122 | ||||||
Deposits received | 262,630 | 300,000 | ||||||
302,072 | 335,442 |
13. | Revenue |
Revenue derived from services rendered, represents the invoiced value of goods sold less discounts. It is recognised at a point in time when the services have been rendered to the customers, where performance obligation has been completed. | |
14. | Other operating income |
2020 | 2019 | |||||||
RM | RM | |||||||
Interest income | 1 | - |
24 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
15. | Loss before tax |
2020 | 2019 | |||||||
RM | RM | |||||||
This is stated after charging: | ||||||||
Auditors’ remuneration | 4,000 | 4,000 | ||||||
Depreciation of property, plant and equipment | 20,000 | 8,333 | ||||||
Loss on foreign exchange (unrealised) | 3,609 | 621 | ||||||
Staff costs: | ||||||||
Salaries and allowances | 40,408 | 93,271 | ||||||
EIS contribution | 117 | 185 | ||||||
EPF contribution | 6,863 | 8,785 | ||||||
SOCSO contribution | 659 | 1,251 |
16. | Tax expense | ||
(a) | Major components of tax expense |
2020 RM |
2019 RM |
|||||||
Income tax | - | - | ||||||
Current financial year | - | 8,502 | ||||||
Under provision in prior financial year | - | 8,502 |
25 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
16. | Tax expense (cont’d) |
(b) | Relationship between tax expense and accounting profit/(loss) |
Reconciliation between tax expense and the product of accounting profit/(loss ) multiplied by the ) applicable tax rate is as follows: |
2020 | 2019 | |||||||
RM | RM | |||||||
Loss before tax | (353,687 | ) | (149,255 | ) | ||||
Income tax calculated at tax rate of 17% | (60,127 | ) | (25,373 | ) | ||||
Tax effects of: | ||||||||
Expenses not deductible for tax purposes | 3,400 | 7,613 | ||||||
Under provision of income tax in prior financial year | - | 8,502 | ||||||
Deferred tax assets not recognised during the financial year | 56,727 | 17,760 | ||||||
- | 8,502 |
The amounts of temporary differences for which no deferred tax assets have been recognised in the statement of financial position are as follows: |
2020
RM |
2019
RM |
|||||||
Unitilised tax losses | 66,936 | 10,209 |
Deferred tax assets have not been recognised in respect of these items as it is not probable that the future taxable profit of the Company will be available against which the deductible temporary differences can be utilised. |
17. | Related party disclosures |
Key management personnel compensation |
2020 | 2019 | |||||||
RM | RM | |||||||
Directors’ remuneration | ||||||||
Salaries | 100,000 | 30,000 |
26 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2020
18. | Categories of financial instruments |
2020 | 2019 | |||||||
RM | RM | |||||||
Financial assets | ||||||||
Amortised cost | ||||||||
Amount due from a related parties | 336,884 | 332,159 | ||||||
Cash and cash equivalents | 35,005 | 15,842 | ||||||
371,889 | 348,001 | |||||||
Financial liabilities | ||||||||
Measured at amortised cost | ||||||||
Other payables and accruals | 302,072 | 335,442 | ||||||
Amount due to a director | 753,352 | 286,181 | ||||||
Amount due to related company | 647 | 647 | ||||||
1,056,071 | 622,270 |
19. | Significant events during the reporting period |
On 11 March 2020, the World Health Organisation declared the Coronavirus (“Covid-19) outbreak as of its rapid spread across the globe. On 16 March 2020, the Malaysian Government has imposed Movement Control Order (“MCO”) starting from 18 March 2020 to curb the spread of the Covid-19 outbreak in Malaysia. The Covid-19 outbreak also resulted in travel restriction, lockdown and other precautionary measures imposed in various countries. The emergence of the Covid-19 outbreak has brought significant economic uncertainties in Malaysia and markets which the Company operates. | |
Up to the date of this report, the directors are in opinion that, the enforcement of MCO in Malaysia and spread of the COVID-19 throughout the world is expected to have material impact on the Company’s operations and trading results based on current assessment. Management is proactively managing the Company’s businesses, maintaining vigilance and will take the necessary actions to ensure their long-term sustainability. |
27 |
BELFRICSBT SON. BHD.
[Company No.: 201701041174 (1255347-V)]
(Incorporated in Malaysia)
DETAILED STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 31 December 2020
2020 | 2019 | |||||||
RM | RM | |||||||
REVENUE | 794,748 | 311,067 | ||||||
LESS: COST OF SALES | ||||||||
Purchases | - | 38,823 | ||||||
Software development charges | 593,421 | 158,099 | ||||||
593,421 | 196,922 | |||||||
GROSS PROFIT | 201,327 | 114,145 | ||||||
ADD: OTHER OPERATING INCOME | 1 | - | ||||||
Interest income | 1 | - | ||||||
LESS: GENERAL AND ADMINISTRATIVE EXPENSES | ||||||||
Accounting fee | 11,670 | - | ||||||
Auditors’ remuneration | 4,000 | 4,000 | ||||||
Bank charges | 3,844 | 510 | ||||||
Bootcamp program expenses | 29,732 | - | ||||||
Business promotion expenses | - | 2,500 | ||||||
Commission | - | 9,600 | ||||||
Communication expenses | 2,435 | |||||||
Consulting expenses | 252,806 | 5,975 | ||||||
Depreciation of property, plant and equipment | 20,000 | 8,333 | ||||||
Director’s salaries | 100,000 | 30,000 | ||||||
Documentation fees | - | 53 | ||||||
Gmail services charges | 10,013 | |||||||
Loss on foreign exchange (unrealised) | 3,609 | 621 | ||||||
Printing and stationery | - | 95 | ||||||
Secretarial fees | - | 1,655 | ||||||
SST expenses | - | 60 | ||||||
Staff costs: | ||||||||
Salaries and allowances | 40,408 | 93,271 | ||||||
EPF contribution | 6,863 | 8,785 | ||||||
EIS contribution | 117 | 185 | ||||||
SOCSO contribution | 659 | 1,251 | ||||||
Tax agent fees | - | 922 | ||||||
Telephone charges | - | 320 | ||||||
Travelling expenses | 3,000 | 95,199 | ||||||
Upkeep of office | 5,095 | 65 | ||||||
Upkeep of website | I0,811 | - | ||||||
Visa processing charges | 49,953 | - | ||||||
555,015 | 263,400 | |||||||
LOSS BEFORE TAX | (353,687 | ) | (149,255 | ) |
This Statement is prepared for the purpose of the Management’s use only and does not form part of the statutory audited financial statements.
Belfries Holding Limited
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Reports and Financial Statements
For The Financial Year Ended
31 December 2019
(In US Dollars)
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Contents | Pages | |
Statement by Director | 1 | |
Report of the independent auditors | 2-4 | |
Statement of profit or loss and other comprehensive income | 5 | |
Statement of financial position | 6 | |
Statement of changes in equity | 7 | |
Statement of cash flows | 8 | |
Notes to the financial statements | 9-23 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT BY DIRECTOR
I, Praveenkumar Vijayakumar, being the Director of BELFRICS HOLDING LIMITED, do hereby state that in my opinion, the financial statements set out on pages 5 to 23 are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Company as at 31 December 2019 and of its financial performance and cash flows for the financial year ended on that date.
|
|
Praveenkumar Vijayakumar |
Dated | 01 OCT 2021 |
1 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Disclaimer of Opinion
We were engaged to audit the financial statements of BELFRICS HOLDING LIMITED, which comprise the statement of financial position as at 31 December 2019 of the Company, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 5 to 23.
We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for Disclaimer of Opinion
1. | Intangible assets |
The intangible asset as of 31 December 2019 of USD3,332,030 consists of Belrium cryptocurrency for which we are unable to obtain sufficient appropriate audit evidence in order to satisfy ourselves as to the accuracy, existence, completeness, rights and obligation and valuation of this intangible asset.
2. | Consolidation |
The Company has 100% equity interests in Belfics International Limited but did not prepare consolidated financial statements of the Group, which represents a departure from Malaysian Financial Reporting Standard (MFRS) 10, Consolidated and Separate Financial Statements.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial statements, which indicates that the Company incurred a net loss of USD118,346 during the financial year ended 31 December 2019 and, as of that date, the Company’s current liability exceeded its current asset by USD3,482,139 and there is a deficiency in shareholders’ funds of USD110,146. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Tel +6087-442 212 • Fax +6087-428 828 • Email: pkfl<k@pkfmalaysia.com • Web: www.pkfmalaysia.com Level 1 • Lot 8 Block F • Saguking Commercial Building • Jalan Palau-Palau • 87000 Labuan F.T. • Malaysia
PKF Malaysia is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any other individual member or correspondent firm or firms.
2 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
(continued)
Responsibility of the Director for the Financial Statements
The Director of the Company is responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Labuan Companies Act, 1990 in Malaysia. The Director is also responsible for such internal control as the Director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Company, the Director is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Director either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our responsibility is to conduct and audit of the Company’s financial statements in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, and to issue an auditors’ report. However, because of the matters described in the Basis of Disclaimer of Opinion section of our report, we are not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Independence and Other Ethical Responsibilities
We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By laws and the IESBA Code.
3 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Other Matter
This report is made solely to the members of the Company, as a body, in accordance with Section 117 of the Labuan Companies Act, 1990 and for no other purpose. We do not assume responsibility to any other person for the content of this report. The financial statements of the Company as at 31 December 2018, are unaudited.
|
|
|
PKF | DIVAHARAN SIVARAMAN KANNAN | |
AAL 0039 | 03446/08/2023 J | |
CHARTERED ACCOUNTANTS | CHARTERED ACCOUNTANT |
Federal Territory of Labuan
Dated | 01 OCT 2021 |
4 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
1.1.2019 |
Unaudited 30.11.2018 |
|||||||||||
to 31.12.2019 | to 31.12.2018 | |||||||||||
Note | USD | USD | ||||||||||
Revenue | - | - | ||||||||||
Administrative expenses | (8,309 | ) | (1,800 | ) | ||||||||
Other operating expense | 5 | (110,037 | ) | |||||||||
Loss before taxation | 6 | (118,346 | ) | (1,800 | ) | |||||||
Income tax expense | 7 | - | - | |||||||||
Total comprehensive loss for the financial year/period |
(118,346 | ) | (1,800 | ) |
5 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019
|
Note |
31.12.2019 USD |
Unaudited 31.12.2018 USD |
|||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Investment in subsidiary | 8 | 39,963 | - | |||||||||
Intangible assets | 9 | 3,332,030 | 3,332,030 | |||||||||
3,371,993 | 3,332,030 | |||||||||||
Current asset |
||||||||||||
Cash at cash equivalents | 10 | 1,801 | - | |||||||||
1,801 | - | |||||||||||
TOTAL ASSETS |
3,373,794 | 3,332,030 | ||||||||||
EQUITY AND LIABILITY |
||||||||||||
Equity attributable to owners of | ||||||||||||
the parent | ||||||||||||
Share capital |
11 | 10,000 | 10,000 | |||||||||
Accumulated losses | 12 | (120,146 | ) | (1,800 | ) | |||||||
TOTAL EQUITY | (110,146 | ) | 8,200 | |||||||||
Current liability |
||||||||||||
Trade and other payables | 13 | 3,483,940 | 3,323,830 | |||||||||
TOTAL LIABILITY | 3,483,940 | 3,323,830 | ||||||||||
TOTAL EQUITY AND LIABILITY |
3,373,794 | 3,332,030 |
6 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
Share capital USD |
Accumulated Losses USD |
Total USD
|
||||||||||
At 30 November 2018 (date of incorporation) (unaudited) | 10,000 | - | 10,000 | |||||||||
Total comprehensive loss for the financial period | - | (1,800 | ) | (1,800 | ) | |||||||
At 31 December 2018 (unaudited) | 10,000 | (1,800 | ) | 8,200 | ||||||||
Total comprehensive loss for the financial year |
- | (118,346 | ) | (118,346 | ) | |||||||
At 31 December 2019 | 10,000 | (120,146 | ) | (110,146 | ) |
7 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
Note |
31.12.2019 USD |
Unaudited 31.12.2018 USD |
||||||||||
Cash flows from operating activities | ||||||||||||
Loss before taxation Adjustments for: | (118,346 | ) | (1,800 | ) | ||||||||
Impairment loss on investments | 110,037 | - | ||||||||||
Operating loss before working capital changes | (8,309 | ) | (1,800 | ) | ||||||||
Change in payables* | 160,110 | (8,200 | ) | |||||||||
Net cash from operations | 151,801 | (10,000 | ) | |||||||||
Cash flow from investing activity | ||||||||||||
Acquisition of intangible assets * | - | - | ||||||||||
Acquisition of investment in subsidiary | (150,000 | ) | - | |||||||||
Net cash used in investing activity | (150,000 | ) | - | |||||||||
Cash flow from financing activity | ||||||||||||
Issuance of ordinary shares | - | 10,000 | ||||||||||
Net cash from financing activity |
- | 10,000 | ||||||||||
Net increase in cash and cash equivalents | 1,801 | - | ||||||||||
Cash and cash equivalents at beginning of financial year/period | - | - | ||||||||||
Cash and cash equivalents at end of financial year/period | 10 | 1,801 |
Non-cash transactions
* | Acquisition of intangible assets - The Company acquired intangible assets of USDNil from a director of the Company (2018: USD3,332,030). This amount has not been paid in cash and reflected within amounts due from a director in trade and other payables as reflected in Note 13. |
8 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
1. | General information |
The Company was registered under the Labuan Companies Act, 1990 on 30 November 2018. The Company is principally engaged in investment holding and investment in cryptocurrency.
The registered office of the Company is located at Level 9F(2), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 F.T. Labuan,Malaysia.
2. | Basis of preparation |
The financial statements of the Company are prepared under the historical cost convention, other than as disclosed in the notes to the financial statements, and in accordance with the Malaysian Financial Reporting Standards (‘MFRSs’) in Malaysia and International Financial Reporting Standards. The Company did not present financial statements for previous perioas.
The financial statements of the Company for the financial year ended 31 December 2019 are the first set of financial statements prepared in accordance with MFRS, including MFRS 1 - First-time Adoption of Malaysia Financial Reporting Standards. The adoption of MFRS had no impact on the amounts reported in these financial statements. The presentation currency of these financial statements is in United States Dollars (USO) which is the Company’s functional currency.
The financial statements are also prepared on the going concern basis. However, as at 31 December 2019, the Company incurred a net foss of USD118,346. As at that date, the Company’s current liability exceeded its current asset by USD3,482,139 and there is a deficiency in shareholders’ funds of USD110,146. The ability of the Company to continue as a going concern and meet its obligations is therefore dependent on the financial support of the shareholders who are also the Directors of the Company and the achievement of future profitable operations by the Company.
Without such financial support and the achievement of future profitable operations, the Company may not be able to continue as a going concern and adJustments may have to be made to reflect the situation that assets may need to be realised other than the amounts at which they are currently recorded in the Statement of Financial Position. In addition, the Company may have to provide for future liabilities that might arise. The Directors are of the opinion that the Company will be able to achieve future profitable operations and have undertaken to provide continuing financial support to the Comi:>any, and therefore believe that it is appropriale for the financial statements of the Company to be prepared on the going concern basis.
(a) | Adoption of new and revised MFRSs |
During the financial year, the Company adopted certain new accounting standards and amendments to standards issued by the Malaysian Accounting Standards Board that are mandatory for current financial year. These standards and amendment to standards did not have any material impact and are therefore not disclosed.
(b) | Standards issued but not yet effective |
Certain new accounting standards and interpretations have been issued but not yet effective for 31 December 2019 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the Company in the current or future reporting periods.
9 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
3. | Significant accounting judgments and estimates |
The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
(i) | Impairment of investment in subsidiary company |
Investment in subsidiary company is reviewed for impairment annually in accordance with its accounting policy as disclosed in Note 4 (f)(ii) to the financial statements, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Significant judgement is required in the estimation of the recoverable amounts which is based on the net tangible assets of the subsidiary.
(ii) | Impairment of intangible asset |
The Company tests for impairment of indefinite useful life intangible asset at each reporting date. Where the Directors estimates the recoverable amount of the asset based on it’s higher of value in use (VIU) OR fair value less costs to dispose (“FVLCD”) is lower than it’s carrying amount, an adjustment for impairment is affected.
4. | Significant accounting policies |
(a) | Foreign currency transactions |
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each financial year end, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising in the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period.
10 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(a) | Foreign currency transactions (continued) |
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(b) | Income taxes |
Tax expense for the financial year represents the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
(c) | Financial instruments |
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) | Financial assets |
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI) and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practicar expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
11 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(i) | Financial assets (continued) |
For purposes of subsequent measurement, financial assets are classified in four categories:
● | Financial assets at amortised cost (debt instruments) | |
● | Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) | |
● | Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) | |
● | Financial assets at fair value through profit or loss |
The Company only has financial assets at amortised cost.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company measure financial assets at amortised cost if both of the following conditions are met:
● | The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and | |
● | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding |
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
● | The rights to receive cash flows from the asset have expired; or | |
● | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
12 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(i) | Financial assets (continued) |
Derecognition (continued)
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continue to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
(ii) | Financial liabilities |
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of IFRS 9, are recognised in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities measured at amortised cost.
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
The Company has no financial liabilities in this category.
13 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(ii) | Financial liabilities (continued) |
Financial liabilities measured at amortised cost
The Company’s financial liabilities measured at amortised cost include trade and other payables.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(d) | Intangible assets |
Intangible asset of the Company consists of investment in cryptocurrency which has indefinite useful life and is tested for impairment annually, or more frequently if events and circumstances indicate that the carrying amount may be impaired. This Intangible asset is not amortised.
(e) | Cash and cash equivalents |
Cash comprises cash in hand and at banks. Cash equivalents are highly liquid investments which are readily convertible to cash with short periods to maturity and are subject to an insignificant risk of changes in value.
(f) | Impairment |
(i) | Impairment of financial assets |
The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
14 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(f) | Impairment (continued) |
(i) | Impairment of financial assets (continued) |
ECLs are recognised in two (2) stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL).For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Company applies the low credit risk simplification. At every reporting date, the Company evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Company reassesses the internal credit rating of the debt instrument. In addition, the Company considers that there has been a significant increase in credit risk when contractual payments are more than one year past due. It is the Company’s policy to measure ECLs on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The Company considers a financial asset in default when contractual payments are one year past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
15 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(f) | Impairment (continued) |
(ii) | Impairment of non-financial assets |
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Company makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless that asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
16 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(g) | Equity instruments |
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are classified as equity.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised as an appropriation of retained profits upon declaration, and are only taken up as liabilities upon the necessary approval being obtained.
(h) | Provisions |
Provisions are recognised when the Company has present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of the amount can be made.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. Where the effect of the time value of money is material, provisions are discounted using a current per tax rate that reflects, where appropriate, the risks specific to the liability and the present value of the expenditure expected to be required to settle the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.
(i) | Fair value measurement |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transactions to sell the asset or transfer the liability takes place either:
(i) | In the principal market for the asset or liability, or |
(ii) | In the absence of a principal market, in the most advantageous market for the asset or liability. |
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
17 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
4. | Significant accounting policies (continued) |
(i) | Fair value measurement (continued) |
The fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) | Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities |
(ii) | Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable |
(iii) | Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable |
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
5. | Other operating expense |
1.1.2019 to 31.12.2019 USD
|
Unaudited 30.11.2018 to 31.12.2018 USD |
|||||||
Impairment loss on investment in subsidiary (Note 8) | 110,037 | - |
18 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
6. | Loss before taxation |
1.1.2019 to 31.12.2019 USD |
Unaudited 30.11.2018 to 31.12.2018 USD |
|||||||
Other than as disclosed in Note 5, loss before taxation is arrived at after charging | ||||||||
Auditors’ remuneration: | 3,800 | - |
7. | Income tax expense |
1.1.2019 to 31.12.2019 USD |
Unaudited 30.11.2018 to 31.12.2018 USD |
|||||||
Current taxation | ||||||||
- Labuan Business Activity Tax Act | - | - |
For the current and prior financial year, the Company is subject to tax charged at the rate of Twenty Four Percent (24%) upon any profit before taxation pursuant to Section 2B(1A) of the Labuan Business Activity Tax (Amendment) Act, 2020 as it is unable to satisfy the economic substance regulations under the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018. However, the Company made losses for both financial years and therefore not subject to tax.
8. | Investment in subsidiary |
31.12.2019 USD |
Unaudited 30.11.2018 to 31.12.2018 USD |
|||||||
Unquoted share at cost | 150,000 | |||||||
Less: Allowance for impairment | (110,037 | ) | ||||||
39,963 |
Detail of the subsidiary company, which is incorporated in Malaysia is as follows:
Group’s effective percentage of equity capital
|
||||||||||||
Name of subsidiary company | 2019 | 2018 |
Principal activity
|
|||||||||
% | % | |||||||||||
Belfries International Limited
|
100 | - | Dormant |
The Company acquired 100% equity interests in Belfries International Limited on 1 April 2020 for a total consideration of USD150,000.
19 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
9. | Intangible assets |
Cryptocurrency | ||||
USD | ||||
Cost | ||||
At 30 November 2018 (date of incorporation) | - | |||
Additions | 3,332,030 | |||
At 1 January 2019/31 December 2019 | 3,332,030 |
Cryptocurrency has indefinite useful life and is not amortised. This cryptocurrency consisting of 1,196,420 Belrium coins at USO 2.785 per coin was acquired in 20 December 2018 from a director of the Company.
10. | Cash and cash equivalents |
31.12.2019 USD |
Unaudited 31.12.2018 USD |
|||||||
Cash at banks/Cash and cash equivalents | 1,801 | - |
11. | Share capital |
Issued and fully paid |
31.12.2019 USD |
Unaudited 31.12.2018 USD |
||||||
Ordinary share | 10,000 | 10,000 |
12. | Accumulated losses |
The Company’s policy is to treat all gains and losses that pass through the statement of comprehensive income (i.e. non-owner transactions or events) as revenue reserves. Other than retained profits, all other revenue reserves are regarded as non-distributable in the form of cash dividends to shareholders. Accumulated losses is the opposite of retained profits and when an entity in the Company is in an accumulated loss position, it is prohibited from disturbing cash dividends to shareholders.
20 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
13. | Trade and other payables |
31.12.2019 USD |
Unaudited 31.12.2018 USD |
|||||||
Other payables | ||||||||
Accruals | 9,375 | 1,800 | ||||||
Amount due to a director | 3,474,565 | 3,322,030 | ||||||
Total trade and other payables | 3,483,940 | 3,323,830 |
Amount due to a director includes an amount of USD3,332,030 on acquisition of intangible assets as explained in Note 9 and is unsecured, interest free and repayable on demand.
14. | Related party disclosures |
Control relationship
The Company has no immediate parent. Related party transactions
The Group’s and Company’s related party transactions are as follows:
31.12.2019 USD |
Unaudited 31.12.2018 USD |
|||||||
With a director: | ||||||||
- Purchase of cryptocurrency | - | 3,332,030 | ||||||
With a related party: | ||||||||
- Mining fee | 1,575 | - |
The terms and conditions and prices of the above transaction are mutually agreed between the parties.
15. | Financial instruments |
(a) | Categories of financial instruments |
31.12.2019 USD |
31.12.2018 USD |
|||||||
Financial asset | ||||||||
Debt instruments measured at amortised cost | ||||||||
Cash at banks | 1,801 | - |
21 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
15. | Financial instruments (continued) |
(a) | Categories of financial instruments (continued) |
Financial liability |
31.12.2019 USD |
31.12.2018 USD |
||||||
Financial liability measured at amortised cost | ||||||||
Trade and other payables | 3,483,940 | 3,323,830 |
(b) | Financial risk management |
The Company is exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk and liquidity risk.
The Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the management team.
The following sections provide details regarding the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risk.
(i) | Credit risk |
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. For other financial assets (including cash and bank balances), the Company minimises credit risk by dealing exclusively with high credit rating counterparties.
The Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure.
As at the reporting date, the Company’s maximum exposures to credit risk are represented by the carrying amount of each class of financial assets recognised in the statement of financial position.
Cash and cash equivalents
The cash and cash equivalents are held with bank. As at the end of the reporting period, the maximum exposure to credit risk is represented by its carrying amount in the statement of financial position.
The bank has low credit risk. Consequently, the Company are of the view that loss allowance is not material and hence, it is not provided for.
22 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2019
14. | Financial instruments (continued) |
(b) | Financial risk management (continued) |
(ii) | Liquidity risk |
Liquidity risk arises mainly from general funding and business activities. The Company maintains a level of cash and cash equivalents deemed adequate by the Director to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):
Carrying amount | Contractual undiscounted cash flows |
Within 1 year |
1-5 Years |
|||||||||||||
2019 | USD | USD | USD | USD | ||||||||||||
Trade and other payables | 3,483,940 | 3,483,940 | 3,483,940 | - |
Carrying amount | Contractual undiscounted cash flows |
Within 1 year |
1-5 Years |
|||||||||||||
2018 | USD | USD | USD | USD | ||||||||||||
Trade and other payables | 3,323,830 | 3,323,830 | 3,323,830 | - |
15. | Fair value information |
The financial assets and financial liabilities maturing within the next twelve (12) months approximated their fair values due to the relatively short-term maturity of the financial instruments.
16. | Subsequent event |
On 9 July 2020, the Company had acquired Belfircs Academy Sdn. Bhd. with 100% equity interest.
23 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
DETAILED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019
1.1.2019 to |
30.11.2018 to |
|||||||
31.12.2019 | 31.12.2018 | |||||||
USD | USD | |||||||
Revenue | - | - | ||||||
Less: Administrative expenses | ||||||||
Auditors’ remuneration | 3,800 | - | ||||||
Bank charges | 84 | - | ||||||
Mining Fee | 1,575 | - | ||||||
Professional fee | 2,850 | 1,800 | ||||||
8,309 | 1,800 | |||||||
Less: Other operating expense | ||||||||
Impairment loss on investment in subsidiary | 110,037 | - | ||||||
Loss before taxation | (118,346 | ) | (1,800 | ) |
This Statement is prepared for management purposes only and does not form part of the statutory audited financial statements of the Company.
24 |
Belfries Holding Limited
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Reports and Financial Statements
For The Financial Year Ended
31 December 2020
(In US Dollars)
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Contents | Pages | |
Statement by Director | 1 | |
Report of the independent auditors | 2-4 | |
Statement of profit or loss and other comprehensive income | 5 | |
Statement of financial position | 6 | |
Statement of changes in equity | 7 | |
Statement of cash flows | 8 | |
Notes to the financial statements | 9-23 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT BY DIRECTOR
I, Praveenkumar Vijayakumar, being the Director of BELFRICS HOLDING LIMITED, do hereby state that in my opinion, the financial statements set out on pages 5 to 23 are drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of the Company as at 31 December 2020 and of its financial performance and cash flows for the financial year ended on that date.
|
|
Praveenkumar Vijayakumar |
Dated | 01 OCT 2021 |
1 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Disclaimer of Opinion
We were engaged to audit the financial statements of BELFRICS HOLDING LIMITED, which comprise the statement of financial position as at 31 December 2020 of the Company, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 5 to 23.
We do not express an opinion on the accompanying financial statements of the Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Basis for Disclaimer of Opinion
1. | Intangible assets |
The intangible asset as of 31 December 2020 of USD3,332,030 consists of Belrium cryptocurrency for which we are unable to obtain sufficient appropriate audit evidence in order to satisfy ourselves as to the accuracy, existence, completeness, rights and obligation and valuation of this intangible asset.
2. | Consolidation |
The Company has 100% equity interests in Belfics International Limited but did not prepare consolidated financial statements of the Group, which represents a departure from Malaysian Financial Reporting Standard (MFRS) 10, Consolidated and Separate Financial Statements.
Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the financial statements, which indicates that the Company incurred a net loss of USD32,466 during the financial year ended 31 December 2020 and, as of that date, the Company’s current liability exceeded its current asset by USD3,500,951 and there is a deficiency in shareholders’ funds of USD142,612. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Tel +6087-442 212 • Fax +6087-428 828 • Email: pkfkk@pkfmalaysia.com • Web: www.pkfmalaysia.com Level 1 • Lot 8 Block F • Saguking Commercial Building • Jalan Patau-Patau • 87000 Labuan F.T. • Malaysia
PKF Malaysia is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any other individual member or correspondent firm or firms.
2 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
(continued)
Responsibility of the Director for the Financial Statements
The Director of the Company is responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Labuan Companies Act, 1990 in Malaysia. The Director is also responsible for such internal control as the Director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Company, the Director is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Director either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our responsibility is to conduct and audit of the Company’s financial statements in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, and to issue an auditors’ report. However, because of the matters described in the Basis of Disclaimer of Opinion section of our report, we are not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
Independence and Other Ethical Responsibilities
We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By laws and the IESBA Code.
3 |
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
Other Matter
This report is made solely to the members of the Company, as a body, in accordance with Section 117 of the Labuan Companies Act, 1990 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
|
|
|
PKF | DIVAHARAN SIVARAMAN KANNAN | |
AAL 0039 | 03446/08/2023 J | |
CHARTERED ACCOUNTANTS | CHARTERED ACCOUNTANT |
Federal Territory of Labuan
Dated |
01 OCT 2021
|
4 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
Note |
2020 USD |
2019 USD |
||||||||||
Revenue | - | - | ||||||||||
Administrative expenses | (7,107 | ) | (8,309 | ) | ||||||||
Other operating expense | 5 | (25,359 | ) | (110,037 | ) | |||||||
Loss before taxation | 6 | (32,466 | ) | (118,346 | ) | |||||||
Income tax expense | 7 | - | - | |||||||||
Total comprehensive loss for the financial year | (32,466 | ) | (118,346 | ) |
5 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020
|
Note |
2020 USD |
2019 USD |
|||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Investment in subsidiary | 8 | 26,309 | 39,963 | |||||||||
Intangible assets | 9 | 3,332,030 | 3,332,030 | |||||||||
3,358,339 | 3,371,993 | |||||||||||
Current asset |
||||||||||||
Cash and cash equivalents | 10 | 4,284 | 1,801 | |||||||||
4,284 | 1,801 | |||||||||||
TOTAL ASSETS |
3,362,623 | 3,373,794 | ||||||||||
EQUITY AND LIABILITY |
||||||||||||
Equity attributable to owners of the parent | ||||||||||||
Share capital |
11 | 10,000 | 10,000 | |||||||||
Accumulated losses | 12 | (152,612 | ) | (120,146 | ) | |||||||
TOTAL EQUITY | (142,612 | ) | (110,146 | ) | ||||||||
Current liability |
||||||||||||
Trade and other payables | 13 | 3,505,235 | 3,483,940 | |||||||||
TOTAL LIABILITY | 3,505,235 | 3,483,940 | ||||||||||
TOTAL EQUITY AND LIABILITY |
3,362,623 | 3,373,794 |
6 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
Share capital |
Accumulated
Losses |
Total |
||||||||||
USD | USD | USD | ||||||||||
At 1 January 2018 | 10,000 | (1,800 | ) | 8,200 | ||||||||
Total comprehensive loss for the financial year |
- | (118,346 | ) | (118,346 | ) | |||||||
At 31 December 2019 | 10,000 | (120,146 | ) | (110,146 | ) | |||||||
Total comprehensive loss for the financial year |
- | (32,466 | ) | (32,466 | ) | |||||||
At 31 December 2020 | 10,000 | (152,612 | ) | (142,612 | ) |
7 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
Note |
2020 USD |
2019 USD |
||||||||||
Cash flows from operating activities | ||||||||||||
Loss before taxation | (32,466 | ) | (118,346 | ) | ||||||||
Adjustments for: | ||||||||||||
Impairment loss on investments | 25,359 | 110,037 | ||||||||||
Operating loss before working capital changes | (7,107 | ) | (8,309 | ) | ||||||||
Change in payables | 21,295 | 160,110 | ||||||||||
Net cash from operations | 14,188 | 151,801 | ||||||||||
Cash flow from investing activity | ||||||||||||
Acquisition of investment in subsidiary | (11,705 | ) | (150,000 | ) | ||||||||
Net cash used in investing activity | (11,705 | ) | (150,000 | ) | ||||||||
Net increase in cash and cash equivalents | 2,483 | 1,801 | ||||||||||
Cash and cash equivalents at beginning of the financial year | 1,801 | - | ||||||||||
Cash and cash equivalents at end of financial year | 10 | 4,284 | 1,801 |
8 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
1. | General information |
The Company was registered under the Labuan Companies Act, 1990 on 30 November 2018. The Company is principally engaged in investment holding and investment in cryptocurrency.
The registered office of the Company is located at Level 9F(2), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 F.T. Labuan, Malaysia.
2. | Basis of preparation |
The significant accounting policies adopted by the Company are consistent with those adopted in previous financial year unless otherwise stated.
The financial statements of the Company are prepared under the historical cost convention, other than as disclosed in the notes to the financial statements, and in accordance with the Malaysian Financial Reporting Standards (‘MFRSs’) in Malaysia and International Financial Reporting Standards. The financial statements are prepared in United States Dollars (USO) which is the Company’s functional currency.
The financial statements are also prepared on the going concern basis. However, as at 31 December 2019, the Company incurred a net loss of USD32,466. As at that date, the Company’s current liability exceeded its current asset by USD3,500,951 and there is a deficiency in shareholders’ funds of USD142,612. The ability of the Company to continue as a going concern and meet its obligations is therefore dependent on the financial support of the shareholders who are also the Directors of the Company and the achievement of future profitable operations by the Company.
Without such financial support and the achievement of future profitable operations, the Company may not be able to continue as a going concern and adjustments may have to be made to reflect the situation that assets may need to be realised other than the amounts at which they are currently recorded in the Statement of Financial Position. In addition, the Company may have to provide for future liabilities that might arise. The Directors are of the opinion that the Company will be able to achieve future profitable operations and have undertaken to provide continuing financial support to the Company, and therefore believe that it is appropriate for the financial statements of the Company to be prepared on the going concern basis.
(a) | Adoption of new and revised MFRSs |
During the financial year, the Company adopted certain new accounting standards and amendments to standards issued by the Malaysian Accounting Standards Board that are mandatory for current financial year. These standards and amendment to standards did not have any material impact and are therefore not disclosed.
(b) | Standards issued but not yet effective |
Certain new accounting standards and interpretations have been issued but not yet effective for 31 December 2020 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the Company in the current or future reporting periods.
9 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
3. | Significant accounting judgments and estimates |
The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
(i) | Impairment of investment in subsidiary company |
Investment in subsidiary company is reviewed for impairment annually in accordance with its accounting policy as disclosed in Note 4 (f)(ii) to the financial statements, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Significant judgement is required in the estimation of the recoverable amounts which is based on the net tangible assets of the subsidiary.
(ii) | Impairment of intangible asset |
The Company tests for impairment of indefinite useful life intangible asset at each reporting date. Where the Directors estimates the recoverable amount of the asset based on it’s higher of value in use (VIU) OR fair value less costs to dispose (“FVLCD”) is lower than it’s carrying amount, an adjustment for impairment is affected.
4. | Significant accounting policies |
(a) | Foreign currency transactions |
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each financial year end, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising in the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period.
10 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(a) | Foreign currency transactions (continued) |
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.
(b) | Income taxes |
Tax expense for the financial year represents the expected tax payable on the taxable income for the financial year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
(c) | Financial instruments |
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) | Financial assets |
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI) and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
11 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(i) | Financial assets (continued) |
For purposes of subsequent measurement, financial assets are classified in four categories:
● | Financial assets at amortised cost (debt instruments) | |
● | Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments) | |
● | Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments) | |
● | Financial assets at fair value through profit or loss |
The Company only has financial assets at amortised cost.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Company. The Company measure financial assets at amortised cost if both of the following conditions are met:
● | The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and | |
● | The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding |
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
● | The rights to receive cash flows from the asset have expired; or |
● | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. |
12 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(i) | Financial assets (continued) |
Derecognition (continued)
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continue to recognise the transferred asset to the extent of its continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
(ii) | Financial liabilities |
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of IFRS 9, are recognised in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities measured at amortised cost.
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.
The Company has no financial liabilities in this category.
13 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(c) | Financial instruments (continued) |
(ii) | Financial liabilities (continued) |
Financial liabilities measured at amortised cost
The Company’s financial liabilities measured at amortised cost include trade and other payables.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(d) | Intangible assets |
Intangible asset of the Company consists of investment in cryptocurrency which has indefinite useful life and is tested for impairment annually, or more frequently if events and circumstances indicate that the carrying amount may be impaired. This Intangible asset is not amortised.
(e) | Cash and cash equivalents |
Cash comprises cash in hand and at banks. Cash equivalents are highly liquid investments which are readily convertible to cash with short periods to maturity and are subject to an insignificant risk of changes in value.
(f) | Impairment |
(i) | Impairment of financial assets |
The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
14 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(f) | Impairment (continued) |
(i) | Impairment of financial assets (continued) |
ECLs are recognised in two (2) stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL).For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For debt instruments at fair value through OCI, the Company applies the low credit risk simplification. At every reporting date, the Company evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Company reassesses the internal credit rating of the debt instrument. In addition, the Company considers that there has been a significant increase in credit risk when contractual payments are more than one year past due. It is the Company’s policy to measure ECLs on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The Company considers a financial asset in default when contractual payments are one year past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
15 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(f) | Impairment (continued) |
(ii) | Impairment of non-financial assets |
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Company makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless that asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.
16 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(g) | Equity instruments |
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are classified as equity.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised as an appropriation of retained profits upon declaration, and are only taken up as liabilities upon the necessary approval being obtained.
(h) | Provisions |
Provisions are recognised when the Company has present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of the amount can be made.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. Where the effect of the time value of money is material, provisions are discounted using a current per tax rate that reflects, where appropriate, the risks specific to the liability and the present value of the expenditure expected to be required to settle the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.
(i) | Fair value measurement |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transactions to sell the asset or transfer the liability takes place either:
(i) | In the principal market for the asset or liability, or |
(ii) | In the absence of a principal market, in the most advantageous market for the asset or liability. |
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
17 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
4. | Significant accounting policies (continued) |
(i) | Fair value measurement (continued) |
The fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
(i) | Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities |
(ii) | Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable |
(iii) | Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable |
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
5. | Other operating expense |
2020
USD
|
2019
USD |
|||||||
Impairment loss on investment in subsidiary (Note 8) | 25,359 | 110,037 |
6. | Loss before taxation |
2020 USD |
2019 USD |
|||||||
Other than as disclosed in Note 5, loss before taxation is arrived at after charging | ||||||||
Auditors’ remuneration: | 3,800 | 3,800 |
18 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
7. | Income tax expense |
2020 USD |
2019 USD |
|||||||
Current taxation | ||||||||
- Labuan Business Activity Tax Act | - | - |
For the current and prior financial year, the Company is subject to tax charged at the rate of Twenty Four Percent (24%) upon any profit before taxation pursuant to Section 2B(1A) of the Labuan Business Activity Tax (Amendment) Act, 2020 as it is unable to satisfy the economic substance regulations under the Labuan Business Activity Tax (Requirements for Labuan Business Activity) Regulations 2018. However, the Company made losses for both financial years and therefore not subject to tax.
8. | Investment in subsidiary |
2020 USD |
2019 USD |
|||||||
Unquoted share at cost | 161,705 | 150,000 | ||||||
Less: Allowance for impairment | (135,396 | ) | (110,037 | ) | ||||
26,309 | 39,963 |
Detail of the subsidiary company, which is incorporated in Malaysia is as follows:
Group’s
effective
equity capital
|
||||||||||||
Name of subsidiary company | 2020 | 2019 |
Principal activity
|
|||||||||
% | % | |||||||||||
Belfrics International Limited | 100 | 100 | Dormant | |||||||||
Belfrics International Limited | 100 | - | Dormant |
2020
The Company acquired 100% equity interests in Belfries Academy Sdn. Bhd. on 9 July 2020 for a total consideration of USD11,705.
2019
The Company acquired 100% equity interests in Belfries International Limited on 1 April 2020 for a total consideration of USD150,000.
19 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
8. | Investment in subsidiary (continued) |
Movement of the allowance for Impairment account is as follows:
USD | ||||
At 1 January 2018 | - | |||
Charge for the financial year (Note 5) | 110,037 | |||
At 31 December 2019 | 110,037 | |||
Charge for the financial year (Note 5) | 25,359 | |||
At 31 December 2020 | 135,396 |
9. | Intangible assets |
Cryptocurrency | ||||
USD | ||||
Cost | ||||
At 1 January 2019/31 December 2019/ - 31 December 2020 | 3,332,030 |
Cryptocurrency has indefinite useful life and is not amortised. This cryptocurrency consisting of 1,196,420 Belrium coins at USO 2.785 per coin was acquired in 20 December 2018 from a director of the Company.
10. | Cash and cash equivalents |
2020 USD |
2019 USD |
|||||||
Cash at banks/Cash and cash equivalents | 4,284 | 1,801 |
11. | Share capital |
Issued and fully paid |
2020 USD |
2019 USD |
||||||
Ordinary share | 10,000 | 10,000 |
12. | Accumulated losses |
The Company’s policy is to treat all gains and losses that pass through the statement of comprehensive income (i.e. non-owner transactions or events) as revenue reserves. Other than retained profits, all other revenue reserves are regarded as non-distributable in the form of cash dividends to shareholders. Accumulated losses is the opposite of retained profits and when an entity in the Company is in an accumulated loss position, it is prohibited from disturbing cash dividends to shareholders.
20 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
13. | Trade and other payables |
2020 USD |
2019 USD |
|||||||
Other payables | ||||||||
Accruals | 16,502 | 9,375 | ||||||
Amount due to a director | 3,488,733 | 3,474,565 | ||||||
Total trade and other payables | 3,505,235 | 3,483,940 |
Amount due to a director includes an amount of USD3,332,030 on acquisition of intangible assets as explained in Note 9 and is unsecured, interest free and repayable on demand.
14. | Related party disclosures |
Control relationship
The Company has no immediate parent.
Related party transactions
The Group’s and Company’s related party transactions are as follows:
2020 USD |
2019 USD |
|||||||
With a related party: | ||||||||
- Mining fee | 3,150 | 1,575 |
The terms and conditions and prices of the above transaction are mutually agreed between the parties.
15. | Financial instruments |
(a) | Categories of financial instruments |
2020 USD |
2019 USD |
|||||||
Financial asset | ||||||||
Debt instruments measured at amortised cost | ||||||||
Cash at banks | 4,284 | 1,801 |
Financial liability |
2020 USD |
2019 USD |
||||||
Financial liability measured at amortised cost
|
||||||||
Trade and other payables | 3,505,235 | 3,483,940 |
21 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
15. | Financial instruments (continued) |
(b) | Financial risk management |
The Company is exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk and liquidity risk.
The Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the management team.
The following sections provide details regarding the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risk.
(i) | Credit risk |
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. For other financial assets (including cash and bank balances), the Company minimises credit risk by dealing exclusively with high credit rating counterparties.
The Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure.
As at the reporting date, the Company’s maximum exposures to credit risk are represented by the carrying amount of each class of financial assets recognised in the statement of financial position.
Cash and cash equivalents
The cash and cash equivalents are held with bank. As at the end of the reporting period, the maximum exposure to credit risk is represented by its carrying amount in the statement of financial position.
The bank has low credit risk. Consequently, the Company are of the view that loss allowance is not material and hence, it is not provided for.
(ii) | Liquidity risk |
Liquidity risk arises mainly from general funding and business activities. The Company maintains a level of cash and cash equivalents deemed adequate by the Director to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
22 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
NOTES TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2020
15. | Financial instruments (continued) |
(b) | Financial risk management (continued) |
(ii) | Liquidity risk (Continued) |
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):
Carrying amount | Contractual undiscounted cash flows |
Within 1 year |
1-5 Years |
|||||||||||||
2020 | USD | USD | USD | USD | ||||||||||||
Trade and other payables | 3,505,235 | 3,505,235 | 3,505,235 | - |
Carrying amount | Contractual undiscounted cash flows |
Within 1 year |
1-5 Years |
|||||||||||||
2019 | USD | USD | USD | USD | ||||||||||||
Trade and other payables | 3,483,940 | 3,483,940 | 3,483,940 | - |
16. | Fair value information |
The financial assets and financial liabilities maturing within the next twelve (12) months approximated their fair values due to the relatively short-term maturity of the financial instruments.
23 |
BELFRICS HOLDING LIMITED
(Co. No. LL15351)
(Registered in the Federal Territory of Labuan)
DETAILED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020
2020 USD |
2019 USD |
|||||||
Revenue | - | - | ||||||
Less: Administrative expenses | ||||||||
Auditors’ remuneration | 3,800 | 3,800 | ||||||
Bank charges | 157 | 84 | ||||||
Mining Fee | 3,150 | 1,575 | ||||||
Professional fee | - | 2,850 | ||||||
7,107 | 8,309 | |||||||
Less: Other operating expense | ||||||||
Impairment loss on investment in subsidiary | 25,359 | 110,037 | ||||||
Loss before taxation | (32,466 | ) | (118,346) |
This Statement is prepared for management purposes only and does not form part of the statutory audited financial statements of the Company.
24 |
Belfries Academy Sdn. Bhd
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
Reports and Financial Statements
For The Financial Period
From 4 April 2018 (Date of Incorporation)
to 30 June 2019
(In Ringgit Malaysia)
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
Contents | Pages | |
Directors' report | 1-4 | |
Statement by Directors | 5 | |
Statutory declaration | 5 | |
Report of the independent auditors | 6-9 | |
Statement of comprehensive income | 10 | |
Statement of financial position | 11 | |
Statement of changes in equity | 12 | |
Statement of cash flows | 13 | |
Notes to the financial statements | 14-25 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
DIRECTORS' REPORT
The Directors hereby submit their report and the audited financial statements of the Company for the financial period from 4 April 2018 (Date of Incorporation) to 30 June 2019.
Principal activity
The Company was incorporated on 4 April 2018 and principally engaged in carrying out education business related to blockchain during the financial period.
Results | RM | |
Loss for the financial period | 39,986 |
Reserves and provisions
There were no material transfers to or from reserves and provisions during the financial period except as disclosed in the financial statements.
Dividends
No dividend has been paid, declared or proposed since the date of incorporation. The Directors do not recommend any dividends for the current financial period ended 30 June 2019.
Directors
The Directors who have held office during the financial period and up to the date of this report are:
Maya Praveen Kumar (Named as First Director on 4 April 2018)
Praveenkumar Vijayakumar (Named as First Director on 4 April 2018)
1 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
DIRECTORS' REPORT
Directors' interests in shares
Being a wholly owned subsidiary company of another Malaysian incorporated company, information in respect of Directors' interest in shares of holding company or related corporations are disclosed in the Directors' report of the holding company pursuant to the provision of Section 59 (3) of the Companies Act, 2016.
Directors' benefits
Since the date of incorporation, no Director of the Company has received nor become entitled to receive any benefit by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than that as disclosed in Note 13 to the financial statements.
There were no arrangements during and at the end of the financial period, which had the object of enabling the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of the Company or any other body corporate.
Directors' remuneration
There was no remuneration given to any Director of the Company during the financial period.
Indemnity and insurance for Directors and officers
There was no indemnity given to or liability insurance effected for any Director or officer of the Company during the financial period.
Issues of shares and debentures
The Company did not issue any new shares or debentures during the financial period.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the financial period.
Other statutory information
Before the financial statements of the Company were made out, the Directors took reasonable steps to ascertain that:
(i) | all known bad debts had been written off and adequate allowance had been made for doubtful debts; and |
(ii) | all current assets have been stated at the lower of cost and net realisable value. |
2 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
DIRECTORS' REPORT
Other statutory information (continued)
At the date of this report, the Directors are not aware of any circumstances:
(i) | which would render the amount written off for bad debts, or the amount of the allowance for doubtful debts in the financial statements of the Company inadequate to any substantial extent; or |
(ii) | which would render the value attributed to the current assets in the financial statements of the Company misleading; or |
(iii) | which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate; or |
(iv) | not otherwise dealt with in this report or the financial statements, which would render any amount stated in the financial statements of the Company misleading. |
As at the date of this report, there does not exist:
(i) | any charge on the assets of the Company that has arisen since the end of the financial period which secures the liabilities of any other person; or |
(ii) | any contingent liability in respect of the Company that has arisen since the end of the financial period. |
No contingent liability or other liability of the Company has become enforceable, or is likely to become enforceable within the period of twelve (12) months after the end of the financial period which, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet its obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Company for the financial period ended 30 June 2019 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of the financial period and the date of this report.
Holding company
The Directors regard Belfries Malaysia Sdn. Bhd., a company incorporated in Malaysia, as the holding company of the Company.
3 |
4 |
5 |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of BELFRICS ACADEMY SON. BHD., which comprise the statement of financial position as at 30 June 2019, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial period from 4 April 2018 (Date of Incorporation) to 30 June 2019, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 10 to 25.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 30 June 2019, and of its financial performance and its cash flows for the financial period from 4 April 2018 (Date of Incorporation) to 30 June 2019 in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act, 2016 in Malaysia.
Basis for Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities
We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ("By-Laws") and the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Information Other than the Financial Statements and Auditors' Report Thereon
The Directors are responsible for the other information. The other information comprises the Directors' Report but does not include the financial statements of the Company and our auditors' report thereon.
Our opinion on the financial statements of the Company does not cover the Directors' Report and we do not express any form of assurance conclusion thereon.
Tel +6088-266 723 • Fax +6088-267 721 • Email: pkfkk@pkfmalaysia.com • Web: www.pkfmalaysia.com
Lot 23-1 & 25-1 • 1st Floor • Lintas Plaza • Lorong Lintas Plaza •88300 Kota Kinabalu • Sabah • Malaysia
CMK is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.
6 |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
(continued)
Information Other than the Financial Statements and Auditors' Report Thereon
(continued)
In connection with our audit of the financial statements of the Company, our responsibility is to read the Directors' Report and, in doing so, consider whether the Directors' Report is materially inconsistent with the financial statements of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the Directors' Report, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements of the Company that give a true and fair view in accordance with Malaysian Private Entities Reporting Standard and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Company, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
7 |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia) (continued)
Auditors' Responsibilities for the Audit of the Financial Statements (continued)
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
(i) | Identify and assess the risks of material misstatement of the financial statements of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
(ii) | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. |
(iii) | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. |
(iv) | Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
(v) | Evaluate the overall presentation, structure and content of the financial statements of the Company, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
8 |
9 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIOD FROM 4 April 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
4.4.2018 to |
||||||
30.6.2019 | ||||||
Note |
RM |
|||||
Revenue | 1,255 | |||||
Administrative expenses | (41,241 | ) | ||||
Loss before taxation | 5 | (39,986 | ) | |||
Tax expense | 6 | - | ||||
Loss for the financial period | (39,986 | ) |
10 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019
30.6.2019 | ||||||
Note | RM | |||||
Current assets | ||||||
Trade and other receivables | 7 | 48,181 | ||||
Cash at bank | 8 | 653 | ||||
Total current assets | 48,834 | |||||
TOTAL ASSETS | 48,834 | |||||
Equity | ||||||
Share capital | 9 | 50,000 | ||||
Accumulated losses | 10 | (39,986 | ) | |||
Total equity | 10,014 | |||||
Current liability | ||||||
Trade and other payables | 11 | 38,820 | ||||
Total current liability | 38,820 | |||||
Total liability | 38,820 | |||||
TOTAL EQUITY AND LIABILIY | 48,834 |
11 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
Share capital |
Accumulated losses |
Total |
||||||||
RM | RM | RM | ||||||||
Balance at 4 April 2018 (Date of Incorporation) |
50,000 |
- | 50,000 | |||||||
Non-owner changes in equity | ||||||||||
Loss for the financial period | - | (39,986 | ) | (39,986 | ) | |||||
Balance at 30 June 2019 | 50,000 | (39,986 | ) | 10,014 |
12 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
STATEMENT OF CASH FLOWS
FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
4.4.2018 | ||||||
to | ||||||
30.6.2019 | ||||||
Note |
RM | |||||
Cash flows from operating activities | ||||||
Loss before taxation | (39,986 | ) | ||||
Operating loss before working capital changes | (39,986 | ) | ||||
Change in trade and other receivables | (48,181 | ) | ||||
Change in trade and other payables | 38,820 | |||||
Net cash used in operating activities | (49,347 | ) | ||||
Cash flows from investing activity | - | |||||
(49,347 | ) | |||||
Cash flows from financing activity | ||||||
Proceeds from issuance of shares | 50,000 | |||||
Net cash generated from financing activity | 50,000 | |||||
Net increase in cash and cash equivalents | 653 | |||||
Cash and cash equivalents at 4 April 2018 (Date of Incorporation) |
- | |||||
Cash and cash equivalents at 30 June 2019 | 8 | 653 |
13 |
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
1. | General information |
The Company is a private limited liability company that is incorporated and domiciled in Malaysia. The Company was incorporated on 4 April 2018 and principally engaged in carrying out education business related to blockchain during the financial period. | |
The registered office of the Company is located at Unit 13A-07, Menara K1, Lorong 3/137C, Off Jalan Klang Lama, 58200, Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia. | |
These financial statements were authorised for issue by the Directors in accordance with a resolution of the Board of Directors dated 20 SEP 2019 |
2. | Basis of preparation |
The financial statements of the Company have been prepared under the historical cost convention, other than as disclosed in the notes to the financial statements, and in accordance with the Malaysian Private Entities Reporting Standard ("MPERS") issued by the Malaysian Accounting Standard Board ("MASB") and the provisions of the Malaysian Companies Act 2016. | |
Management has used estimates and assumptions in measuring the reported amounts of assets and liabilities at the end of the reporting period and the reported amount of revenues and expenses during the reporting period. Judgements and assumptions are applied in the measurement, and hence, the actual results may not coincide with the reported amounts. The areas involving significant judgements and estimation uncertainties are disclosed in Note 4. | |
These financial statements are presented in Ringgit Malaysia ("RM"), which is the Company's functional currency. |
3. | Significant accounting policies | |
(a) | Revenue recognition | |
Revenue represents invoiced value of service rendered. | ||
(b) | Tax assets and tax liabilities | |
A current tax for current and prior periods, to the extent unpaid, is recognised as a current tax liability. If the amount already paid in respect of current and prior periods exceed the amount due for those periods, the excess is recognised as a current tax asset. A current tax liability (asset) is measured at the amount the entity expects to pay (recover) using tax rates and laws that have been enacted or substantially enacted by the reporting date. |
14 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | |
(b) | Tax assets and tax liabilities (continued) | |
A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (or tax loss). The exceptions for initial recognition differences include items of property, plant and equipment that do not qualify for capital allowances and acquired intangible assets that are not deductible for tax purposes. | ||
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (or tax loss). The exceptions for the initial recognition differences include non-taxable government grants received and reinvestment allowances and investment tax allowances on qualifying property, plant and equipment. | ||
A deferred tax asset is recognised for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. Unused tax credits do not include unabsorbed reinvestment allowances and unabsorbed investment tax allowances because the Company treats these as part of initial recognition differences. | ||
Deferred taxes are measured using tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred taxes reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets or liabilities. | ||
At the end of each reporting period, the carrying amount of a deferred tax asset is reviewed, and is reduced to the extent that it is no longer probably that sufficient taxable profit will be available to allow the benefit of a part or all of that deferred tax asset to be utilised. Any such reduction will be reversed to the extent that it becomes probably that sufficient taxable profit will be available. | ||
A current or deferred tax is recognised as income and expense in profit or loss for the period, except to the extent that the tax arises from items recognised outside profit or loss. For an income or expense item recognised in other comprehensive income, the current or deferred tax expense or tax income is recognised in other comprehensive income. For items recognised directly in equity, the related tax effect is also recognised directly in equity. |
15 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | |
(c) | Impairment of non-financial assets | |
An impairment loss arises when the carrying amount of a Company's asset exceeds its recoverable amount. At the end of each reporting date, the Company assesses whether there is any indication that a stand-alone asset or a cash-generating unit may be impaired by using external and internal sources of information. If any such indication exists, the Company estimates the recoverable amount of the asset or cash-generating unit. | ||
If an individual asset generates independent cash inflows, it is tested for impairment as a stand-alone asset. If an asset does not generate independent cash inflows, it is tested for impairment together with other assets in a cash-generating unit, at the lowest level in which independent cash inflows are generated and monitored for internal management purposes. | ||
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and the value in use. The Company determines the fair value less cost to sell of an asset or a cash-generating unit in a hierarchy based on: (i) price in a binding sale agreement; (ii) market price traded in an active market; and (iii) estimate of market price using the best available information. The value in use is estimated by discounting the net cash inflows (by an appropriate discount rate) of the asset or unit, using reasonable and supportable management's budgets and forecasts of five years and extrapolation of cash inflows for period beyond the five-year forecast or budget. | ||
For an asset measured on a cost-based model, any impairment loss is recognised in profit or loss. For a plant and equipment measured on the revaluation model, any impairment loss is treated as a revaluation decrease. | ||
The Company reassesses the recoverable amount of an impaired asset or a cash-generating unit if there is any indication that an impairment loss recognised previously may have reversed. Any reversal of impairment loss for an asset carried at a cost-based model is recognised in profit or loss, subject to the limit that the revised carrying amount does not exceed the amount that would have been determined had no impairment loss been recognised previously. | ||
(d) | Equity instruments | |
The Company classifies and presents an issued financial instrument (or its component parts), on initial recognition as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instruments. |
(i) | Share capital | ||
Ordinary shares and non-redeemable preference shares issued that carry no put option and no mandatory contractual obligations: (i) to deliver cash or another financial asset; or (ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Company, are classified as equity instruments. |
•
16 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | ||
(d) | Equity instruments (continued) | ||
(i) | Share capital (continued) | ||
When ordinary shares and other equity instruments are issued in a private placement or in a rights issue to existing shareholders, they are recorded at the issue price. For ordinary shares and other equity instruments issued in exchange for non-monetary assets, they are measured by reference to the fair values of the assets received. | |||
When ordinary shares and other equity instruments are issued as consideration transferred in a business combination or as settlement of an existing financial liability, they are measured at their fair value at the date of the exchange transaction. | |||
Transaction cost of an equity transaction are accounted for as a deduction from equity, net of any related income tax effect. | |||
Preference shares that carry mandatory dividend payments and mandatory redemption are classified as a financial liability in their entirety. Preference shares that carry mandatory dividend payments only without a redemption feature or preference shares that carry mandatory redemption with discretionary dividend payments are accounted for a compound financial instruments. The liability component is initially measured at the present value of the future cash payments discounted at market rate of interest of a similar risk class debt instrument. The subsequent measurement of the liability component is at amortised cost using the effective interest rate method. | |||
(ii) | Compound financial instruments | ||
The Company evaluates the terms of an issued financial instrument to determine whether it contains both a liability component and an equity component. The proceeds of a convertible bond or other compound instruments are allocated to the liability component measured at fair value, using the discounted cash flow method, and the balance to the equity component. Transaction costs are allocated pro rata based on the relative carrying amounts. The Company treats any taxable temporary differences between the carrying amount of the liability component and its tax bases as an initial recognition difference for which no deferred tax liability is recognised. | |||
(iii) | Distributions | ||
The Company establishes a distribution policy whereby cash dividends can only be paid out of retained profits. Other distributions, such as stock dividends and distribution in specie, may be paid out of any reserve to the extent that the utilisation is permitted by company laws and regulations. | |||
Distributions to holders of an equity instruments are debited directly in equity, net of any related income tax effect. |
17 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | ||
(d) | Equity instruments (continued) | ||
(iii) | Distributions (continued) | ||
A dividend declared is recognised as a liability only after it has been appropriately authorised, which is the date when the Board of Directors declares an interim dividend, or in the case of a proposed final dividend, the date the shareholders of the Company approve the proposed final dividend in an annual general meeting of shareholders. | |||
(e) | Financial instruments | ||
(i) | Initial recognition and measurement | ||
The Company recognises a financial asset or a financial liability (including derivative instruments) in the statement of financial position when, and only when, the Company becomes a party to the contractual provisions of the instruments. | |||
On initial recognition, all financial assets and financial liabilities are measured at fair value, which is generally the transaction price, plus transaction costs if the financial asset or financial liability is not measured at fair value through profit or loss. For instruments measured at fair value through profit or loss, transaction costs are expensed to profit or loss when incurred. For contractual arrangements that constitute a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instruments. | |||
(ii) | Derecognition of financial instruments | ||
For derecognition purposes, the Company first determines whether a financial asset or a financial liability should be derecognised in its entirety as a single item or derecognised part-by-part of a single item or a group of similar items. | |||
A financial asset, whether as a single item or as a part, is derecognised when, and only when, the contractual rights to receive the cash flows from the financial asset expire, or when the Company transfers the contractual rights to receive cash flows of the financial asset, including circumstances when the Company acts only as a collecting agent of the transferee, and retains no significant risks and rewards of ownership of the financial asset or no continuing involvement in the control of the financial asset transferred. |
18 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | ||
(e) | Financial instruments (continued) | ||
(ii) | Derecognition of financial instruments (continued) | ||
A financial liability is derecognised when, and only when, it is legally extinguished, which is either when the obligation specified in the contract is discharged or cancelled or expires. A substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. For this purpose, the Company considers a modification as substantial if the present value of the revised cash flows of the modified terms discounted at the original effective interest rate differs by 10% or more when compared with the carrying amount of the original liability. | |||
(iii) | Subsequent measurement of financial assets | ||
For the purpose of subsequent measurement, the Company classifies financial assets into two categories, namely: (i) financial assets at fair value through profit or loss; and (ii) financial assets at amortised cost. | |||
After initial recognition, the Company measures investments in quoted preference shares, quoted ordinary shares and derivatives that are assets at their fair value by reference to their active market prices, if observable, or otherwise by a valuation technique, without any deduction for transaction costs it may incur on sale or other disposal. | |||
Investments in debt instruments, whether quoted or unquoted, are subsequently measured at amortised cost using the effective interest method. Investments in unquoted equity instruments and whose fair value cannot be reliably measured are measured at cost. | |||
Other than financial assets measured at fair value through profit or loss, all other financial assets are subject to review for impairment. | |||
(iv) | Subsequent measurement of financial liabilities | ||
After initial recognition, the Company measures all financial liabilities at amortised cost using the effective interest method, except for derivatives instruments that are liabilities, which are measured at fair value. | |||
(v) | Fair value measurement of financial instruments | ||
The fair value of a financial asset or a financial liability is determined by reference to the quoted market price in an active market, and in the absence of an observable market price, by a valuation technique. | |||
(vi) | Recognition of gains and losses | ||
Fair value changes of financial assets and financial liabilities classified as at fair value through profit or loss are recognised in profit or loss when they arise. |
19 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | ||
(e) | Financial instruments (continued) | ||
(vi) | Recognition of gains and losses (continued) | ||
For financial assets and financial liabilities carried at amortised cost, a gain or loss is recognised in profit or loss only when the financial asset or financial liability is derecognised or impaired, and through the amortisation process of the instrument. | |||
(vii) | Impairment of financial assets | ||
The Company applies the incurred loss model to recognise impairment losses of financial assets. At the end of each reporting period, the Company examines whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Evidences of trigger loss events include: (i) significant difficulty of the issue or obliger; (ii) a breach of contract, such as a default or delinquency in interest or principal payment; (iii) granting exceptional concession to a customer; (iv) it is probable that a customer will enter bankruptcy or other financial reorganisation; (v) the disappearance of an active market for that financial asset because of financial difficulties; or (vi) any observable market data indicating that there may be a measurable decrease in the estimated future cash flows from a group of financial assets. | |||
For a non-current loan and receivable carried at amortised cost, the revised estimated cash flows are discounted at the original effective interest rate. Any impairment loss is recognised in profit or loss and a corresponding amount is recorded in a loss allowance account. Any subsequent reversal of impairment loss of the financial asset is reversed in profit or loss with a corresponding adjustment to the allowance account, subject to the limit that the reversal should not result in the revised carrying amount of the financial asset exceeding the amount that would have been determined had no impairment loss been recognised previously. | |||
For short-term trade and other receivables, where the effect of discounting is immaterial, impairment loss is tested for each individually significant receivable whenever there is any indication of impairment. Individually significant receivables for which no impairment loss is recognised are grouped together with all other receivables by classes based on credit risk characteristics and aged according to their past due period. A collective allowance is estimated for a class group based on the Company's experiences of loss ratio in each class, taking into consideration current market conditions. | |||
For an unquoted equity investment measured at cost less impairment, the impairment is the difference between the asset's carrying amount and the best estimate (which will necessarily be an approximation) of the amount (which might be zero) that the Company expects to receive for the asset if it were sold at the reporting date. The Company may estimate the recoverable amount using an adjusted net asset value approach. |
20 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
3. | Significant accounting policies (continued) | |
(f) | Provisions | |
The Company recognises a liability as a provision if the outflows required to settle the liability are uncertain in timing or amount. A provision is recognised when the Company has a present legal or constructive obligation as a result of a past event, and of which the outflows of resources on settlement are probable and a reliable estimate of the amount can be made. No provision is recognised if these conditions are not met. | ||
Any reimbursement attributable to a recognised provision from a counter-party (such as an insurer) is not off-set against the provision but recognised separately as an asset when, and only when, the reimbursement is virtually certain. | ||
A provision is measured at the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. A provision is measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects the time value of money and the risk that the actual outcome might differ from the estimate made. The unwinding of the discount is recognised as an interest expense. | ||
(g) | Fair value measurement | |
For assets, liability and equity instruments (whether financial or non-financial items) that require fair value measurement or disclosure, the Company establishes a fair value measurement hierarchy that gives the highest priority to quoted prices (unadjusted) in active markets for identical assets, liabilities or equity instruments and the lowest priority to unobservable inputs. | ||
A fair value measurement of an item is estimated using a quoted price in an active market if that price is observable. The active market is the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability; and for which the Company can enter into a transaction for the asset or liability at the price in that market at the measurement date. | ||
In the absence of an active market, the fair value of an item is estimated by an established valuation technique using inputs from the marketplace that are observable for substantially the full term of the asset or liability. | ||
In the absence of both market price and observable inputs, a fair value measurement of an item is estimated by an established valuation techniques using unobservable inputs, including internally developed assumptions that are reasonable and supportable. |
21 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
4. | Critical judgements and estimation uncertainty Estimation uncertainties | |
The measurement of some assets and liabilities requires management to use estimates based on various observable inputs and other assumptions. The areas or items that are subject to significant estimation uncertainties are as follows: | ||
(i) | Measurement of income taxes | |
Significant judgements is required in determining the Company's provision for current and deferred tax because the ultimate tax liability is uncertain. When the final outcome of the taxes payable is determined with the tax authorities, the amounts might be different from the initial estimates of the taxes payable. Such differences may impact the current and deferred taxes in the period when such determination is made. The Company will adjust for the differences as over or under provision of current or deferred taxes in the current period in which those differences arise. | ||
(ii) | Loss allowances of financial assets | |
The Company recognises impairment losses for loans and receivables using the incurred loss model. Individually significant loans and receivables are tested for impairment separately by estimating the cash flows expected to be recoverable. All others are group into credit risk classes and tested for impairment collectively, using the Company's past experience of loss statistics, ageing of past due amounts and current economic trends. The actual eventual losses may be different from the allowances made and this may affect the Company's financial position and results. |
5. | Loss before taxation |
4.4.2018 | ||||
to | ||||
30.6.2019 | ||||
RM | ||||
Loss before taxation is arrived at after charging: | ||||
Auditors' remuneration | 1,000 | |||
Formation expense | 2,968 |
6. | Tax expense |
4.4.2018 | ||||
to | ||||
30.6.2019 | ||||
RM | ||||
Current income tax expense | - |
22 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
6. | Tax expense (continued) |
The significant differences between the tax expense and accounting loss multiplied by the statutory tax rate are due to the tax effects arising from the following items: |
No deferred tax asset has been recognised for the following items:
4.4.2018 | ||||
to | ||||
30.6.2019 | ||||
RM | ||||
Unutilised tax losses | (39,146 | ) | ||
Deferred tax assets at 18% not recognised in the financial statements | (7,046 | ) |
The unutilised tax losses disclosed above are available indefinitely for offsetting against future taxable profits of the Company whereas the unutilised losses is available to be carried forward up to the maximum of seven (7) years, subject to no substantial change in shareholdings under the Income Tax Act, 1967 and guidelines issued by the tax authority.
These deferred tax assets are not recognised due to uncertainty of its recoverability.
7. | Trade and other receivables |
30.6.2019 | ||||
RM | ||||
Trade receivable | ||||
Third party | 1,255 | |||
Amount due from holding company | 46,926 | |||
Total trade and other receivables | 48,181 |
Amount due from holding company is unsecured, interest free and repayable on demand.
23 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
8. | Cash and cash equivalents |
30.6.2019 | ||
RM | ||
Cash at bank/Cash and cash equivalents | 653 |
9. | Share capital |
No. of shares | 30.6.2019 | |||
30.6.2019 | RM | |||
Issued and fully paid | ||||
At 4 April 2018 (Date of incorporation) and at 30 June 2019 | 50,000 | 50,000 |
10. | Accumulated losses |
The Company's policy is to treat all gains and losses that pass through the statement of comprehensive income (i.e. non-owner transactions or events) as revenue reserves. Other than retained profits, all other revenue reserves are regarded as non-distributable in the form of cash dividends to shareholders. Accumulated losses are the opposite of retained profits and when an entity in the Company is in an accumulated loss position, it is prohibited from distributing cash dividends to shareholders.
11. | Trade and other payables |
30.6.2019 | ||
RM | ||
Other payables | ||
Related party | 8,000 | |
Third parties | 12,820 | |
Accrual | 1,000 | |
21,820 | ||
Amount due to a Director | 17,000 | |
Total trade and other payables | 38,820 |
Amounts due to related party and Director are unsecured, interest free and repayable on demand.
24 |
BELFRICS ACADEMY SDN. BHD
(Co. No. 1274981 - U)
(Incorporated in Malaysia)
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD FROM 4 APRIL 2018 (DATE OF INCORPORATION) TO 30 JUNE 2019
12. | Financial instruments |
30.6.2019 | ||
Categories of financial instruments |
RM
|
|
Financial assets | ||
Debt instruments measured at amortised cost | ||
Trade and other receivables | 48,181 | |
Cash at bank | 653 | |
Total financial assets | 48,834 | |
Financial liabilities | ||
Measured at amortised cost | ||
Trade and other payables | 38,820 | |
Total financial liabilities | 38,820 |
13. | Related party disclosures |
Control relationship
The Directors regard Belfries Malaysia Sdn. Bhd., a company incorporated in Malaysia, as the holding company of the Company.
14. | Comparative figures |
There were no comparative figures as this is the first set of financial statements• prepared.
LODGED BY : | BBS BUSINESS MANAGEMENT SDN. BHD. (1101469-T) | |
ADDRESS: | UNIT 13A-07, MENARA Kl, LORONG 3/137C, OFF JALAN KLANG LAMA 58200 KUALA LUMPUR. | |
TEL: | 603-7772 6333 | |
FAX: | 603-7772 6555 |
25 |
Exhibit 99.2
LIFE CLIPS, INC.
INDEX TO FINANCIAL INFORMATION
Unaudited Consolidated Financial Statements of Belfrics for the year ended June 30, 2021 and the period ending September 30, 2021
-1- |
Unaudited Consolidated Financial Statements of Belfrics for the year ended June 30, 2021
Summarized Balance Sheet as on June 30, 2021
Assets and Liabilities | Belfrics Global PTE Ltd | Belfrics BT Pvt Ltd | Belfrics Cryptex Pvt Ltd | Belfrics Tanzania Ltd | Belfrics Malaysia SDN BHD | Belfrics Nigeria Pvt Ltd | Belfrics BT SDN BHD | Belfrics Holding Ltd | Belfrics Academy SDN BHD | Belfrics International Ltd | Incrypts SDN BHD | Belfrics Kenya Ltd | Belfrics Europe SLU | Total Group Companies | ||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity and Reserves | (196,835 | ) | (8,477 | ) | 23,902 | (92,338 | ) | (68,933 | ) | (59,539 | ) | (142,878 | ) | (186,498 | ) | (10,644 | ) | 56,423 | (8,378 | ) | (140,646 | ) | 3,665 | (831,176 | ) | |||||||||||||||||||||||||||||||
Total Current & Non-Current Liabilities | 1,607,832 | 170,477 | 124,329 | 104,342 | 102,256 | 72,729 | 293,662 | 3,581,553 | 11,016 | 28,035 | 8,434 | 438,529 | - | 6,543,194 | ||||||||||||||||||||||||||||||||||||||||||
Total Equity and Liabilities | 1,410,997 | 162,000 | 148,231 | 12,004 | 33,323 | 13,190 | 150,784 | 3,395,055 | 372 | 84,458 | 56 | 297,883 | 3,665 | 5,712,018 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: US GAAP | (294,508 | ) | - | - | - | - | (3,571 | ) | (2,476 | ) | - | - | (63,110 | ) | - | - | - | (363,665 | ) | |||||||||||||||||||||||||||||||||||||
Stockholders’ Equity and Liabilities (US GAAP) | 1,116,489 | 162,000 | 148,231 | 12,004 | 33,323 | 9,619 | 148,308 | 3,395,055 | 372 | 21,348 | 56 | 297,883 | 3,665 | 5,348,353 | ||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPE & Non-Current Assets | 368,136 | - | 68,130 | 10,884 | 20,828 | 12,714 | 148,973 | 3,392,532 | - | 84,110 | - | 15,392 | - | 4,121,699 | ||||||||||||||||||||||||||||||||||||||||||
Current Assets | 1,042,861 | 162,000 | 80,101 | 1,120 | 12,495 | 476 | 1,811 | 2,523 | 372 | 348 | 56 | 282,491 | 3,665 | 1,590,319 | ||||||||||||||||||||||||||||||||||||||||||
Total Assets | 1,410,997 | 162,000 | 148,231 | 12,004 | 33,323 | 13,190 | 150,784 | 3,395,055 | 372 | 84,458 | 56 | 297,883 | 3,665 | 5,712,018 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: US GAAP | (294,508 | ) | - | - | - | - | (3,571 | ) | (2,476 | ) | - | - | (63,110 | ) | - | - | - | (363,665 | ) | |||||||||||||||||||||||||||||||||||||
Total Assets (US GAAP) | 1,116,489 | 162,000 | 148,231 | 12,004 | 33,323 | 9,619 | 148,308 | 3,395,055 | 372 | 21,348 | 56 | 297,883 | 3,665 | 5,348,353 |
-2- |
Unaudited Consolidated Financial Statements of Belfrics for the year ended June 30, 2021
Accumulated Profit and Loss Accounts for the year ended June 30, 2021 in accordance with USGAAP
The significant adjustments required to convert earnings available for shareholders in accordance with respective GAAP to accumulated profit and loss in accordance with US GAAP are:
-3- |
Unaudited Consolidated Financial Statements of Belfrics for the year ended June 30, 2021
Shareholders’ equity in accordance with USGAAP
The significant adjustments required to convert shareholders’ funds in respective GAAP to shareholders’ equity in accordance with US GAAP are:
Adjustments | Shareholders’ equity (US GAAP) | |||||||||||||||||||||||
Sr.No. | Company | GAAP | Shareholders’ equity | Depreciation/Amortization | Receivable w/off | Reclass to Current Liabilities | ||||||||||||||||||
1 | Belfrics Global PTE Ltd | SFRS | (196,835 | ) | (294,508 | ) | - | - | (491,344 | ) | ||||||||||||||
2 | Belfrics BT Pvt Ltd | IGAAP | (8,477 | ) | - | - | - | (8,477 | ) | |||||||||||||||
3 | Belfrics Cryptex Pvt Ltd | IGAAP | 23,902 | - | - | - | 23,902 | |||||||||||||||||
4 | Belfrics Tanzania Ltd | IFRS | (92,338 | ) | - | - | - | (92,338 | ) | |||||||||||||||
5 | Belfrics Malaysia SDN BHD | MPERS | (68,933 | ) | - | - | - | (68,933 | ) | |||||||||||||||
6 | Belfrics Nigeria Pvt Ltd | IFRS | 13,190 | (3,571 | ) | - | (72,729 | ) | (63,110 | ) | ||||||||||||||
7 | Belfrics BT SDN BHD | MPERS | (142,878 | ) | (2,476 | ) | - | - | (145,354 | ) | ||||||||||||||
8 | Belfrics Holding Ltd | MFRS | (186,498 | ) | - | - | - | (186,498 | ) | |||||||||||||||
9 | Belfrics Academy SDN BHD | MPERS | (10,644 | ) | - | - | - | (10,644 | ) | |||||||||||||||
10 | Belfrics International Ltd | MPERS | 56,423 | - | (63,110 | ) | - | (6,687 | ) | |||||||||||||||
11 | Incrypts SDN BHD | MPERS | (8,379 | ) | - | - | - | (8,379 | ) | |||||||||||||||
12 | Belfrics Kenya Ltd | IFRS | (140,646 | ) | - | - | - | (140,646 | ) | |||||||||||||||
13 | Belfrics Europe SLU | IFRS | 3,665 | - | - | - | 3,665 | |||||||||||||||||
TOTAL | (758,448 | ) | (300,555 | ) | (63,110 | ) | (72,729 | ) | (1,194,842 | ) |
-4- |
Unaudited Consolidated Financial Statements of Belfrics
Accumulated Profit and Loss Accounts in accordance with USGAAP, for the periods ending following the last date of audited financials, as listed on the table below.
Accumulated Profit/(Loss) after Tax | For the Six (6) Months Ended September 30, 2021 | For the Nine (9) Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Belfrics BT Pvt Ltd | Belfrics Criptex Pvt Ltd | Belfrics Global PTE Ltd | Belfrics Tanzania Ltd | Belfrics Malaysia SDN BHD | Belfrics Nigeria Pvt Ltd | Belfrics BT SDN BHD | Belfrics Holding Ltd | Belfrics Academy SDN BHD | Belfrics International Ltd | Incrypts SDN BHD | Belfrics Kenya Ltd | Belfrics Europe SLU | ||||||||||||||||||||||||||||||||||||||||
2 | 3 | 1 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | ||||||||||||||||||||||||||||||||||||||||
USD | USD | USD | USD | USD | USD | USD | USD | USD | USD | USD | USD | USD | ||||||||||||||||||||||||||||||||||||||||
Revenue | - | - | - | - | - | - | 1,803 | - | - | - | - | 3,428 | - | |||||||||||||||||||||||||||||||||||||||
Less: Cost of Services | - | - | - | - | - | - | 19,619 | 5,535 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Gross Profit | - | - | - | - | - | - | (17,816 | ) | (5,535 | ) | - | - | - | 3,428 | - | |||||||||||||||||||||||||||||||||||||
Less: Office & Administrative Exp. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rent including lease rentals | - | - | - | 16,263 | - | - | - | - | - | - | - | 9,997 | - | |||||||||||||||||||||||||||||||||||||||
Depreciation & Amortisation Cost | - | 5,117 | 55,927 | - | - | 1,648 | 3,594 | - | - | - | - | 1,636 | - | |||||||||||||||||||||||||||||||||||||||
Bank Charges & Commission | - | - | - | - | - | - | 120 | - | - | 448 | - | 171 | - | |||||||||||||||||||||||||||||||||||||||
Communication | - | - | - | 937 | - | - | - | - | - | - | - | 437 | - | |||||||||||||||||||||||||||||||||||||||
Legal & Professional Fees | - | - | - | 283 | - | - | 11,394 | - | - | 2,175 | - | 827 | - | |||||||||||||||||||||||||||||||||||||||
Travelling Expense | - | - | - | - | - | - | 3,352 | - | - | - | - | 722 | - | |||||||||||||||||||||||||||||||||||||||
Employee Benefit Expenses | - | - | - | - | - | - | - | - | - | - | - | 671 | - | |||||||||||||||||||||||||||||||||||||||
Auditors & Secretarial Fees | - | - | - | - | - | - | - | - | - | 630 | 172 | - | - | |||||||||||||||||||||||||||||||||||||||
Other Office & Administrative Expenses | - | - | - | 1,824 | - | - | - | 74 | - | 1,511 | - | 595 | - | |||||||||||||||||||||||||||||||||||||||
Total Operating Costs | - | 5,117 | 55,927 | 19,308 | - | 1,648 | 18,460 | 74 | - | 4,764 | 172 | 15,056 | - | |||||||||||||||||||||||||||||||||||||||
Accumulated Profit & Loss | - | (5,117 | ) | (55,927 | ) | (19,308 | ) | - | (1,648 | ) | (36,276 | ) | (5,609 | ) | - | (4,764 | ) | (172 | ) | (11,628 | ) | - | ||||||||||||||||||||||||||||||
Other Comprehensive Income | - | - | - | - | - | - | 128,245 | 41,918,737 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | - | (5,117 | ) | (55,927 | ) | (19,308 | ) | - | (1,648 | ) | 91,968 | 41,913,128 | - | (4,764 | ) | (172 | ) | (11,628 | ) | - |
-5- |
Unaudited Consolidated Financial Statements of Belfrics for the period ended September 30, 2021
BELFRICS
CONSOLIDATED BALANCE SHEET
(Unaudited)
As of September 30, 2021
(inclusive of the preliminary purchase accounting adjustments)
-6- |
Unaudited Consolidated Financial Statements of Belfrics for the period ended September 30, 2021
BELFRICS
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
As of September 30, 2021
(inclusive of the preliminary purchase accounting adjustments)
For the three month | ||||
period ended | ||||
September 30, 2021 | ||||
Revenues | ||||
License Income | $ | - | ||
Other Revenues | 574 | |||
Total Revenues | 574 | |||
Cost of Goods Sold | - | |||
Gross Profit | 574 | |||
Operating Costs: | ||||
Professional Fees | 600 | |||
Other General and Administrative Expenses | 12,113 | |||
Total Operating Costs | 12,713 | |||
Loss from Operations | (12,139 | ) | ||
Other Income/(Expense): | ||||
Loss on Impairment of Intangibles | (1,522,597 | ) | ||
Total Other Income (Expense) | (1,522,597 | ) | ||
Income/(Loss) Before Income Taxes | (1,534,736 | ) | ||
Net Income/(Loss) | $ | (1,534,736 | ) |
-7- |
Unaudited Consolidated Financial Statements of Belfrics for the year ended September 30, 2021
Accumulated Profit and Loss Accounts for the year ended September 30, 2021 in accordance with USGAAP
The significant adjustments required to convert earnings available for shareholders in accordance with respective GAAP to accumulated profit and loss in accordance with US GAAP are:
All amounts are in USD | ||||||||||||||||||||||
Sr. No. | Company | GAAP | Accumulated Profit/(Loss) after Tax (GAAP) | Depreciation/Amortization | Receivable w/off |
Accumulated Profit/(Loss) after Tax (US GAAP) |
||||||||||||||||
14. | Belfrics Global PTE Ltd | SFRS | - | - | - | - | ||||||||||||||||
15. | Belfrics BT Pvt Ltd | IGAAP | - | - | - | - | ||||||||||||||||
16. | Belfrics Cryptex Pvt Ltd | IGAAP | 2,319 | - | - | 2,319 | ||||||||||||||||
17. | Belfrics Tanzania Ltd | IFRS | (8,586 | ) | - | - | (8,586 | ) | ||||||||||||||
18. | Belfrics Malaysia SDN BHD | MPERS | - | - | - | - | ||||||||||||||||
19. | Belfrics Nigeria Pvt Ltd | IFRS | - | - | - | - | ||||||||||||||||
20. | Belfrics BT SDN BHD | MPERS | - | - | - | - | ||||||||||||||||
21. | Belfrics Holding Ltd | MFRS | (18 | ) | - | - | (18 | ) | ||||||||||||||
22. | Belfrics Academy SDN BHD | MPERS | (878 | ) | - | - | (878 | ) | ||||||||||||||
23. | Belfrics International Ltd | MPERS | - | - | - | - | ||||||||||||||||
24. | Incrypts SDN BHD | MPERS | - | - | - | - | ||||||||||||||||
25. | Belfrics Kenya Ltd | IFRS | (4,976 | ) | - | - | (4,976 | ) | ||||||||||||||
26. | Belfrics Europe SLU | IFRS | - | - | - | - | ||||||||||||||||
TOTAL | (12,139 | ) | - | - | (12,139 | ) |
-8- |
Exhibit 99.3
LIFE CLIPS, INC.
INDEX TO PRO FORMA FINANCIAL INFORMATION
Unaudited
Pro Forma Combined Financial Information
of Belfrics Holdings Limited and its related entities (collectively “Belfrics”)
1 |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined balance sheet presents the historical balance sheets of Life Clips, Inc. (“Life Clips”) and Belfrics Holdings Limited and its related entities (collectively “Belfrics*”) as of June 30, 2021 and accounts for the merger of Life Clips and Belfrics with Life Clips as the accounting acquirer giving effect to the transaction as if it had occurred as of June 30, 2020. On August 25, 2021, Life Clips purchased 100% of the outstanding shares of Belfrics in exchange for $26,014,226 in Series C Convertible Preferred Stock and $15,788,699 in Contingent Series C Convertible Preferred Stock consideration. As a result of the Exchange Agreement, Belfrics became a wholly owned subsidiary of the Life Clips, Inc.
The Life Clips and Belfrics balance sheet information was derived from its audited balance sheets as of June 30, 2021. The unaudited pro forma condensed combined statements of operations are based on the historical statements of Life Clips and Belfrics and combine the results of operations giving effect to the transaction as if it occurred on July 1, 2020, and reflecting the pro forma adjustments expected to have a continuing impact on the combined results.
The unaudited pro forma condensed combined financial statements are for informational purposes only. They do not purport to indicate the results that would have actually been obtained had the acquisitions been completed on the assumed dates or for the periods presented, or that may be realized in the future. Furthermore, while the pro forma financial information reflects transaction costs incurred with the merger on June 30, 2021, the pro forma financial information does not reflect the impact of any reorganization or restructuring expenses or operating efficiencies resulting from the transaction. The unaudited pro forma condensed combined financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical financial statements referred to above.
*
Belfrics Global PTE Ltd., a Singapore corporation
Belfrics BT Pvt Ltd, an India corporation
Belfrics Cryptex Pvt Ltd, an India corporation
Belfrics Tanzania Ltd, a Tanzania corporation
Belfrics Nigeria Pvt Ltd, a Nigeria corporation
Belfrics BT SDN BHD, a Malaysia corporation
Belfrics Holding Limited, a Malaysia corporation
Belfrics Academy SDN BHD, a Malaysia corporation
Belfrics International Ltd, a Malaysia corporation
Belfrics Europe SL, a Spain corporation
Belfrics Kenya Pvt. Ltd, a Kenya corporation
Incrypts SDN BHD, a Malaysia corporation
Belfrics Malaysia SDN BHD
2 |
LIFE CLIPS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF JUNE 30, 2021
See notes to the unaudited pro forma condensed combined financial statements
3 |
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED JUNE 30, 2021
Life Clips, Inc. | Belfrics Companies | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
Revenues | ||||||||||||||||
License Income | $ | 50,000 | $ | - | $ | - | $ | 50,000 | ||||||||
Revenue | 120,897 | - | 120,897 | |||||||||||||
Cost of Goods Sold | - | 95,921 | - | 95,921 | ||||||||||||
Gross Profit | 50,000 | 24,976 | - | 74,976 | ||||||||||||
Operating Costs | ||||||||||||||||
Professional Fees | 527,604 | 68,443 | - | 596,047 | ||||||||||||
Payroll Expense | 68,588 | - | - | 68,588 | ||||||||||||
Other General and Administrative Expenses | 3,398 | 254,670 | - | 258,068 | ||||||||||||
Total Operating Costs | 599,590 | 323,113 | - | 922,703 | ||||||||||||
Loss from Operations | (549,590 | ) | (298,137 | ) | - | (847,727 | ) | |||||||||
- | - | |||||||||||||||
Other Income/(Expense) | - | |||||||||||||||
Gain on Batterfly Settlement | 468,505 | - | $ | - | $ | 468,504.50 | ||||||||||
Loss on Extinguishment of Debt | (67,814 | ) | - | - | (67,814.21 | ) | ||||||||||
Loss on Impairment of Intangibles | (10,036,200 | ) | - | - | (10,036,200 | ) | ||||||||||
Interest Expense | (568,168 | ) | (25 | ) | - | (568,631 | ) | |||||||||
Change in Fair Value of Derivative | 7,274,230 | - | $ | - | $ | 7,274,230 | ||||||||||
Total Other Income (Expense) | (2,929,447 | ) | (25 | ) | - | (2,929,910 | ) | |||||||||
Income/(Loss) Before Income Taxes | (3,479,037 | ) | (298,162 | ) | - | (3,777,179 | ) | |||||||||
Provision for Income Taxes | - | (879 | ) | - | (879 | ) | ||||||||||
Net Income/(Loss) | $ | (3,479,037 | ) | $ | (299,041 | ) | $ | - | (3,778,078 | ) | ||||||
- | - | - | ||||||||||||||
Other Comprehensive Loss: | - | - | - | |||||||||||||
Foreign currency translation adjustment | (6,387 | ) | - | - | (6,387 | ) | ||||||||||
Change in Value of Investment | (61,578 | ) | - | - | (61,578 | ) | ||||||||||
Comprehensive Loss | $ | (3,547,002 | ) | $ | - | $ | - | (3,846,043 | ) | |||||||
Earnings/(Loss) Per Share: Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||||
Weighted Average Number of Common Shares Outstanding: | ||||||||||||||||
Basic and Diluted | 1,262,254,090 | 1,262,254,090 |
See notes to the unaudited pro forma condensed combined financial statements
4 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On August 25, 2021, Life Clips purchased 100% of the outstanding shares of Belfrics in exchange for $26,014,226 in Series C Convertible Preferred Stock and $15,788,699 in Contingent Series C Convertible Preferred Stock consideration. As a result of the Exchange Agreement, Belfrics became a wholly owned subsidiary of the Life Clips, Inc.
The following is the calculation of goodwill (gain on bargain purchase)
Belfrics | ||||
Purchase price | $ | 41,802,925 | ||
Less: net book value of assets | (1,194,843 | ) | ||
Excess purchase price | 42,997,768 | |||
Fair value adjustments | 25,259,146 | |||
Excess purchase price after adjustments | 17,738,622 | |||
Goodwill | $ | 17,738,622 |
The goodwill calculated was $17,738,622.
Debit | Credit | ||||||||
Journal Entry 1 | |||||||||
Investment in Belfrics | $ | 41,802,925 | 1 | ||||||
Series C Preferred Stock | $ | 2,000 | 1 | ||||||
Additional paid in capital | 26,012,226 | 1 | |||||||
Contingent Liability | 15,788,699 | 1 | |||||||
To record investment in Belfrics | |||||||||
Journal Entry 2 | |||||||||
Investment in Belfrics | 41,802,925 | 2 | |||||||
Common Stock | 532,148 | 2 | |||||||
Accumulated Deficit | 1,726,989 | 2 | |||||||
Intangible Assets | 24,332,773 | 2 | |||||||
Property and Equipment, Net | 926,373 | 2 | |||||||
Goodwill | 17,738,622 | 2 | |||||||
To eliminate investment in Belfrics and equity of Belfrics and Record Fair Value Adjustments |
5 |
FAIR VALUE ADJUSTMENTS
3. The following table illustrates the fair value adjustments of the crypto-currency.
Belfrics Holding Ltd |
Belfrics
BT SDN BHD |
|||||||
Crypto-currency value prior to write up for fair value | 3,332,030 | 102,331 | ||||||
Fair value | 27,556,263 | 210,871 | ||||||
Change in fair value | 24,224,233 | 108,540 |
4. The following table illustrates the fair value adjustments of the crypo-currency software.
Belfrics Global PTE Ltd | ||||
Software value prior to write up for fair value | 73,627 | |||
Fair value | 1,000,000 | |||
Change in fair value | 926,373 |
6 |
BELFRICS GROUP OF COMPANIES RECONCILIATION TO US GAAP
The following are the key difference in accounting under as reported accounting standards versus USGAAP:
1. | Depreciation/Amortization |
Property & Equipment & Intangible assets are subject to depreciation and amortization under USGAAP and accordingly necessary depreciation/amortization is provided.
2. | Receivable write off |
Belfrics International Ltd has prepared accounts under Malaysian Private Entities Reporting Standard and auditor have qualified the audit report for December 31, 2020 with respect to long outstanding receivables for which no allowance for doubtful debts have been made by the company.
Under USGAAP, company has provided for allowance for uncollectible receivable
3. | Reclassification to Current Liabilities |
Under IFRS, Belfrics Nigeria has disclosed deposit for share from the existing shareholder has injected more capital beyond the existing authorized share capital. Increase is authorised share capital is yet not approved by the Corporate Affairs Commission of Nigeria CAC to accommodate the excess above the current share capital.
Under USGAAP, pending regulatory approval as per local law amount invested by existing shareholders have been reclassified to due to related party.
Annexure:
1. | Accumulated Profit and Loss Accounts for the year ended June 30, 2021 | |
2. | Summarised Balance Sheet in accordance with USGAAP as on June 30, 2021 | |
3. | Shareholders’ equity in accordance with USGAAP as on June 30, 2021 | |
4. | Total assets in accordance with USGAAP as on June 30, 2021 | |
5. | Short term borrowings in accordance with USGAAP as on June 30, 2021 |
7 |
Annexures
1. | Accumulated Profit and Loss Accounts for the year ended June 30, 2021 in accordance with USGAAP |
The significant adjustments required to convert earnings available for shareholders in accordance with respective GAAP to accumulated profit and loss in accordance with US GAAP are:
All amounts are in USD | ||||||||||||||||||||||
Sr. No. | Company | GAAP | Accumulated Profit/(Loss) after Tax (GAAP) | Depreciation/Amortization | Receivable w/off |
Accumulated Profit/(Loss) after Tax (US GAAP) |
||||||||||||||||
1. | Belfrics Global PTE Ltd | SFRS | (197,568 | ) | (294,508 | ) | - | (492,076 | ) | |||||||||||||
2. | Belfrics BT Pvt Ltd | IGAAP | (10,277 | ) | - | - | (10,277 | ) | ||||||||||||||
3. | Belfrics Cryptex Pvt Ltd | IGAAP | 22,502 | - | - | 22,502 | ||||||||||||||||
4. | Belfrics Tanzania Ltd | IFRS | (132,338 | ) | - | - | (132,338 | ) | ||||||||||||||
5. | Belfrics Malaysia SDN BHD | MPERS | (279,393 | ) | - | - | (279,393 | ) | ||||||||||||||
6. | Belfrics Nigeria Pvt Ltd | IFRS | (111,539 | ) | (3,571 | ) | - | (115,110 | ) | |||||||||||||
7. | Belfrics BT SDN BHD | MPERS | (155,258 | ) | (2,476 | ) | - | (157,734 | ) | |||||||||||||
8. | Belfrics Holding Ltd | MFRS | (196,498 | ) | - | - | (196,498 | ) | ||||||||||||||
9. | Belfrics Academy SDN BHD | MPERS | (23,024 | ) | - | - | (23,024 | ) | ||||||||||||||
10. | Belfrics International Ltd | MPERS | (127,577 | ) | - | (63,110 | ) | (190,687 | ) | |||||||||||||
11. | Incrypts SDN BHD | MPERS | (10,779 | ) | - | - | (10,779 | ) | ||||||||||||||
12. | Belfrics Kenya Ltd | IFRS | (141,575 | ) | - | - | (141,575 | ) | ||||||||||||||
13. | Belfrics Europe SLU | IFRS | - | - | - | - | ||||||||||||||||
TOTAL | (1,363,324 | ) | (300,555 | ) | (63,110 | ) | 1,726,989 |
8 |
2. | Summarized Balance Sheet as on June 30, 2021 |
Assets and Liabilities | Belfrics Global PTE Ltd | Belfrics BT Pvt Ltd | Belfrics Cryptex Pvt Ltd | Belfrics Tanzania Ltd | Belfrics Malaysia SDN BHD | Belfrics Nigeria Pvt Ltd | Belfrics BT SDN BHD | Belfrics Holding Ltd | Belfrics Academy SDN BHD | Belfrics International Ltd | Incrypts SDN BHD | Belfrics Kenya Ltd | Belfrics Europe SLU | Total Group Companies | ||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity and Reserves | (196,835 | ) | (8,477 | ) | 23,902 | (92,338 | ) | (68,933 | ) | (59,539 | ) | (142,878 | ) | (186,498 | ) | (10,644 | ) | 56,423 | (8,378 | ) | (140,646 | ) | 3,665 | (831,176 | ) | |||||||||||||||||||||||||||||||
Total Current & Non-Current Liabilities | 1,607,832 | 170,477 | 124,329 | 104,342 | 102,256 | 72,729 | 293,662 | 3,581,553 | 11,016 | 28,035 | 8,434 | 438,529 | - | 6,543,194 | ||||||||||||||||||||||||||||||||||||||||||
Total Equity and Liabilities | 1,410,997 | 162,000 | 148,231 | 12,004 | 33,323 | 13,190 | 150,784 | 3,395,055 | 372 | 84,458 | 56 | 297,883 | 3,665 | 5,712,018 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: US GAAP | (294,508 | ) | - | - | - | - | (3,571 | ) | (2,476 | ) | - | - | (63,110 | ) | - | - | - | (363,665 | ) | |||||||||||||||||||||||||||||||||||||
Stockholders’ Equity and Liabilities (US GAAP) | 1,116,489 | 162,000 | 148,231 | 12,004 | 33,323 | 9,619 | 148,308 | 3,395,055 | 372 | 21,348 | 56 | 297,883 | 3,665 | 5,348,353 | ||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PPE & Non-Current Assets | 368,136 | - | 68,130 | 10,884 | 20,828 | 12,714 | 148,973 | 3,392,532 | - | 84,110 | - | 15,392 | - | 4,121,699 | ||||||||||||||||||||||||||||||||||||||||||
Current Assets | 1,042,861 | 162,000 | 80,101 | 1,120 | 12,495 | 476 | 1,811 | 2,523 | 372 | 348 | 56 | 282,491 | 3,665 | 1,590,319 | ||||||||||||||||||||||||||||||||||||||||||
Total Assets | 1,410,997 | 162,000 | 148,231 | 12,004 | 33,323 | 13,190 | 150,784 | 3,395,055 | 372 | 84,458 | 56 | 297,883 | 3,665 | 5,712,018 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: US GAAP | (294,508 | ) | - | - | - | - | (3,571 | ) | (2,476 | ) | - | - | (63,110 | ) | - | - | - | (363,665 | ) | |||||||||||||||||||||||||||||||||||||
Total Assets (US GAAP) | 1,116,489 | 162,000 | 148,231 | 12,004 | 33,323 | 9,619 | 148,308 | 3,395,055 | 372 | 21,348 | 56 | 297,883 | 3,665 | 5,348,353 |
9 |
3. | Shareholders’ equity in accordance with USGAAP |
The significant adjustments required to convert shareholders’ funds in respective GAAP to shareholders’ equity in accordance with US GAAP are:
Adjustments | Share-holders’ equity (US GAAP) | |||||||||||||||||||||||||||
Sr.No. | Company | GAAP | Shareholders’ equity | Depreciation/Amortization | Receivable w/off | Reclass to Current Liabilities | ||||||||||||||||||||||
1 | Belfrics Global PTE Ltd | SFRS | (196,835 | ) | (294,508 | ) | - | - | (491,344 | ) | ||||||||||||||||||
2 | Belfrics BT Pvt Ltd | IGAAP | (8,477 | ) | - | - | - | (8,477 | ) | |||||||||||||||||||
3 | Belfrics Cryptex Pvt Ltd | IGAAP | 23,902 | - | - | - | 23,902 | |||||||||||||||||||||
4 | Belfrics Tanzania Ltd | IFRS | (92,338 | ) | - | - | - | (92,338 | ) | |||||||||||||||||||
5 | Belfrics Malaysia SDN BHD | MPERS | (68,933 | ) | - | - | - | (68,933 | ) | |||||||||||||||||||
6 | Belfrics Nigeria Pvt Ltd | IFRS | 13,190 | (3,571 | ) | - | (72,729 | ) | (63,110 | ) | ||||||||||||||||||
7 | Belfrics BT SDN BHD | MPERS | (142,878 | ) | (2,476 | ) | - | - | (145,354 | ) | ||||||||||||||||||
8 | Belfrics Holding Ltd | MFRS | (186,498 | ) | - | - | - | (186,498 | ) | |||||||||||||||||||
9 | Belfrics Academy SDN BHD | MPERS | (10,644 | ) | - | - | - | (10,644 | ) | |||||||||||||||||||
10 | Belfrics International Ltd | MPERS | 56,423 | - | (63,110 | ) | - | (6,687 | ) | |||||||||||||||||||
11 | Incrypts SDN BHD | MPERS | (8,379 | ) | - | - | - | (8,379 | ) | |||||||||||||||||||
12 | Belfrics Kenya Ltd | IFRS | (140,646 | ) | - | - | - | (140,646 | ) | |||||||||||||||||||
13 | Belfrics Europe SLU | IFRS | 3,665 | - | - | - | 3,665 | |||||||||||||||||||||
TOTAL | (758,448 | ) | (300,556 | ) | (63,110 | ) | (72,729 | ) | (1,194,843 | ) |
10 |
4. | Total assets in accordance with USGAAP |
The significant adjustments required to convert Total assets in respective GAAP to shareholders’ equity in accordance with US GAAP are:
Adjustments | ||||||||||||||||||||||||
Sr.No. | Company | GAAP | Total Assets | Depreciation/Amortization | Receivable w/off | Total Assets (USGAAP) | ||||||||||||||||||
1 | Belfrics Global PTE Ltd | SFRS | 1,410,997 | (294,508 | ) | - | 1,116,489 | |||||||||||||||||
2 | Belfrics BT Pvt Ltd | IGAAP | 162,000 | - | - | 162,000 | ||||||||||||||||||
3 | Belfrics Cryptex Pvt Ltd | IGAAP | 148,231 | - | - | 148,231 | ||||||||||||||||||
4 | Belfrics Tanzania Ltd | IFRS | 12,004 | - | - | 12,004 | ||||||||||||||||||
5 | Belfrics Malaysia SDN BHD | MPERS | 33,323 | - | - | 33,323 | ||||||||||||||||||
6 | Belfrics Nigeria Pvt Ltd | IFRS | 13,190 | (3,571 | ) | - | 9,619 | |||||||||||||||||
7 | Belfrics BT SDN BHD | MPERS | 150,784 | (2,476 | ) | - | 148,308 | |||||||||||||||||
8 | Belfrics Holding Ltd | MFRS | 3,395,055 | - | - | 3,395,055 | ||||||||||||||||||
9 | Belfrics Academy SDN BHD | MPERS | 372 | - | - | 372 | ||||||||||||||||||
10 | Belfrics International Ltd | MPERS | 84,458 | - | (63,110 | ) | 21,348 | |||||||||||||||||
11 | Incrypts SDN BHD | MPERS | 56 | - | - | 56 | ||||||||||||||||||
12 | Belfrics Kenya Ltd | IFRS | 297,883 | - | - | 297,883 | ||||||||||||||||||
13 | Belfrics Europe SLU | IFRS | 3,665 | - | - | 3,665 | ||||||||||||||||||
TOTAL | 5,712,018 | (300,556 | ) | (63,110 | ) | 5,348,353 |
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