INTERNATIONAL LEADERS CAPITAL Corp - FORM 10-K

Attached files

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EX-32 - EXHIBIT 32.2 - INTERNATIONAL LEADERS CAPITAL Corp	ex322.htm
EX-32 - EXHIBIT 32.1 - INTERNATIONAL LEADERS CAPITAL Corp	ex321.htm
EX-31 - EXHIBIT 31.2 - INTERNATIONAL LEADERS CAPITAL Corp	ex312.htm
EX-31 - EXHIBIT 31.1 - INTERNATIONAL LEADERS CAPITAL Corp	ex311.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2018

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-53780

INTERNATIONAL LEADERS CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	27-0491634
(State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

9811 W. Charleston Blvd., Suite 2-518 Las Vegas, NV 89117	89135
(Address of Principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code.	(702) 628-8899

(Former name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act:	None

Securities registered under Section 12(g) of the Exchange Act:	Common stock, par value $0.001 per share
	(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

	Large accelerated filer ¨	Accelerated filer ¨
	Non-accelerated filer ¨	Smaller reporting company x
	Emerging Growth Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of December 31, 2017: $242,527

As of September 28, 2018 the registrant had 249,386,285 outstanding shares of Common Stock.

Documents incorporated by reference: None.

TABLE OF CONTENTS

PART I		Page
Item 1.	Business	4
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	8
Item 2.	Properties	8
Item 3.	Legal Proceedings	8
Item 4.	Mine Safety Disclosures	8
PART II
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	9
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 8.	Consolidated financial statements and Supplementary Data	13
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	13
Item 9A.	Controls and Procedures	13
Item 9B.	Other Information	14
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	14
Item 11.	Executive Compensation	15
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	18
Item 13.	Certain Relationships and Related Transactions and Director Independence	18
Item 14.	Principal Accountant Fees and Services	19
PART IV
Item 15.	Exhibits, Financial Statement Schedules	20
Item 16.	Form 10-K Summary	20
	Signatures	21

PART I.

Forward-Looking Information

Much of the discussion in this Item is “forward looking”. Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments. Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission.

There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to, general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders, and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-K to be accurate as of the date hereof. Changes may occur after that date. We will not update that information except as required by law in the normal course of its public disclosure practices.

ITEM 1.

BUSINESS.

Company Overview

International Leaders Capital Corporation (“ILCC” or "the Company") was organized under the laws of the State of Nevada on May 21, 2009.

On May 28, 2017, Star Century Entertainment Corporation agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC and the Company experienced a change in control. Cihan Huang, the Company’s CEO, is the managing member of ILC Holdings, LLC. On December 1, 2017, ILC Holdings, LLC sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang.

On December 1, 2017, the Company purchased International Leadership Center Holdings Limited (“ILC”) for $2,500. ILC has two subsidiaries, Hong Kong ILC Business Services and Shenzhen Qian Chuang Hui Technology Incubator Limited (“Shenzhen QCH Incubator”). Prior to December 1, 2017, ILC or its subsidiaries did not have any operations and the purchase price of $2,500 was expensed. In April 2018, ILC through its subsidiary Shenzhen QCH Incubator, leased an office space in Shenzhen, Peoples Republic of China (“ PRC”) and purchased some office equipment to be used in future planned operations. As of June 30, 2018, the Company and its subsidiaries, have not commenced their planned principal operations and are in the process of setting up a consultancy business.

In July 2018 and August 2018, the Company issued 247,000,000 shares of common stock for cash proceeds of $247,000 ($0.001 per share). 66,802,163 shares of common stock were issued to the Company’s CEO, 33,992,000 were issued to the Company’s COO, 72,500,000 shares of common stock were issued to 7 individuals other than the Company’s CEO that are members of ILC Holdings, LLC, and 73,705,837 shares of common stock were issued to 90 other individuals.

The Company plans to operate a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from (1) business training and consulting and (2) jointly investing in quality projects and ventures for companies which we serve. Our professional investment education program commences with a three day intensive program for general investors which is further reinforced with monthly training courses. In addition, we offer a roadshow platform for OTC listed companies which guides clients through the fund raising process. The Company’s administrative headquarters are based in Las Vegas, Nevada with planned operations in the People’s Republic of China (“PRC”) and Asia.

Employees

International Leaders Capital Corporation currently has two employees.

Office and Facilities

Our corporate headquarters are located at 9811 W. Charleston Blvd., Suite 2-518, Las Vegas, NV 89117. The Company also leases an office space located in Shenzhen, PRC.

ITEM 1A. RISK FACTORS.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occurs, our business, financial condition or results of operations could be seriously harmed.

RISK FACTORS CONCERNING OUR BUSINESS

Our business is subject to numerous risk factors, including the following:

The Company's independent registered public accounting firm have issued a report questioning the Company's ability to continue as a going concern.

Primarily as a result of our recurring losses and our lack of liquidity, the Company’s independent registered public accounting firm, in their report on our consolidated financial statements for the year ending June 30, 2018, expressed substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. We anticipate incurring losses in the foreseeable future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

We have had little operating history and no revenues or earnings from operations.

We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until we begin to generate revenue from new plan of operations. This may result in us incurring a net operating loss that will increase continuously until we can generate revenues or raise additional capital through other means. There is no assurance that we can identify such a business entity and consummate such an agreement or combination.

We do not have significant cash or other material assets and we are relying on advances from stockholders, officers and directors to meet our limited operating expenses. We may become insolvent if we are unable to pay our debts in the ordinary course of business as they become due.

Our proposed plan of operation is speculative.

Our proposed plan of operation strategy depends in large part on our ability to build a robust platform of official and professional fan clubs for the celebrities. We may not be able to enter into a substantial number of contracts that we anticipate would be necessary to support our business model.

There can be no assurance that the Company will be able to enhance its products or services, or develop other products or services.

If we are unable to achieve profitability in the future, recruit sufficient personnel or raise money in the future, our ability to develop our services would be adversely affected. Our inability to develop our services or develop new services, in view of rapidly changing technology, changing customer demands and competitive pressures, would have a material adverse effect upon our business, operating results and financial condition.

Our principal shareholder will be able to approve all corporate actions without shareholder consent and will control our Company.

On May 28, 2017, Star Century Entertainment Corporation sold an aggregate of 25,000 shares of Series B preferred shares of the Company’s Series B Preferred Stock to ILC Holdings. ILC Holding is an entity controlled by Cihan Huang, the Chief Executive Officer of the Company. Each share of Series B Preferred Stock has the voting power of 5,000 common shares. The 25,000 shares of Series B Preferred Stock has voting power of 125,000,000 common shares and the shares represent approximately 50% of the voting control of International Leaders Capital Corporation which is significant influence over all matters requiring approval by our shareholders. On December 1, 2017, ILC Holdings sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang, the Chief Executive Officer. On November 18, 2017, the Company issued 181,818 shares of common stock to ILC Holdings for cash proceeds of $50,000. Also on November 18, 2017, the Company issued 554,859 shares of common stock to ILC Holdings to settle convertible notes and accrued interest. In July 2018, the Company issued 100,000,000 shares of common stock to ILC Holdings for cash proceeds of $100,000.

The reporting requirements under federal securities law may delay or prevent us from making certain acquisitions.

Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended, (the "1934 Act"), require companies subject thereto to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the 1934 Act are applicable.

In addition to the audited financial statements, the time and additional costs that may be incurred by some target entities to prepare and disclose such information may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company.

An acquisition could create a situation wherein we would be required to register under The Investment Company Act of 1940 and thus be required to incur substantial additional costs and expenses.

Although we will be subject to regulation under the 1934 Act, management believes the Company will not be subject to regulation under the Investment Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage in a business combination that results in us holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to the status of our Company under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject us to material adverse consequences.

The requirement of audited financial statements may disqualify some business opportunities seeking a business combination with us.

Our management believes that any potential business combination opportunity must provide audited consolidated financial statements for review, for the protection of all parties to the business combination. One or more attractive business opportunities may choose to forego the possibility of a business combination with us, rather than incur the expenses associated with preparing audited consolidated financial statements.

If our Common Stock does not meet blue sky resale requirements, certain shareholders may be unable to resell our Common Stock.

The resale of Common Stock must meet the blue sky resale requirements in the states in which the proposed purchasers reside. If we are unable to qualify the Common Stock and there is no exemption from qualification in certain states, the holders of the Common Stock or the purchasers of the Common Stock may be unable to sell them.

Our shareholders may face significant restrictions on the resale of our Common Stock due to state "blue sky" laws or if we are determined to be a "blank check" company.

There are state regulations that may adversely affect the transferability of our Common Stock. We have not registered our Common Stock for resale under the securities or "blue sky" laws of any state. We may seek qualification or advise our shareholders of the availability of an exemption. We are under no obligation to register or qualify our Common Stock in any state or to advise the shareholders of any exemptions.

Current shareholders, and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that there might be significant state restrictions upon the ability of new investors to purchase the Common Stock.

Blue sky laws, regulations, orders, or interpretations place limitations on offerings or sales of securities by "blank check" companies or in "blind-pool" offerings, or if such securities represent "cheap stock" previously issued to promoters or others. Our former CEO, because he received stock at a price of $.001 for each share, may be deemed to hold "cheap stock." These limitations typically provide, in the form of one or more of the following limitations that such securities are:

(a) Not eligible for sale under exemption provisions permitting sales without registration to accredited investors or qualified purchasers;

(b) Not eligible for the transaction exemption from registration for non-issuer transactions by a registered broker-dealer;

(c) Not eligible for registration under the simplified small corporate offering registration (SCOR) form available in many states;

(d) Not eligible for the "solicitations of interest" exception to securities registration requirements available in many states;

(e) Not permitted to be registered or exempted from registration, and thus not permitted to be sold in the state under any circumstances.

Virtually all 50 states have adopted one or more of these limitations, or other limitations or restrictions affecting the sale or resale of stock of blank check companies or securities sold in "blind pool" offerings or "cheap stock" issued to promoters or others. Specific limitations on such offerings have been adopted in:

Alaska	Nevada	Tennessee
Arkansas	New Mexico	Texas
California	Ohio	Utah
Delaware	Oklahoma	Vermont
Florida	Oregon	Washington
Georgia	Pennsylvania
Idaho	Rhode Island
Indiana	South Carolina
Nebraska	South Dakota

Any secondary trading market which may develop may only be conducted in those jurisdictions where an applicable exemption is available or where the shares have been registered.

Current shareholders and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that we are under no obligation to register the shares on behalf of our shareholders under the Securities Act of 1933, as amended.

The Company's officers, directors and majority shareholders have expressed their intentions not to engage in any transactions with respect to the Company's Common Stock except in connection with or following a business combination resulting in us no longer being defined as a blank check issuer. Any transactions in our Common Stock by said shareholders will require compliance with the registration requirements under the Securities Act of 1933, as amended.

Our Common Stock may be subject to significant restriction on resale due to federal penny stock restrictions.

The Securities and Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the penny stock rules, and accordingly, shareholders of our Common Stock may find it difficult to sell their securities, if at all.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our fiscal year 2018 that remain unresolved.

ITEM 2. PROPERTIES.

The Company owns no real property.

ITEM 3. LEGAL PROCEEDINGS.

None.

ITEM 4. MINE SAFETY DISCLOSURES

N/A

PART II.

ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is quoted under the symbol “ILCC” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.

Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. On August 2, 2017, the directors and a majority of the stockholders of the Company approved a reverse stock split of all the Company’s outstanding common stock at a ratio of fifty to one (50 to 1). Prices for our common stock for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

Fiscal Year Ending June 30, 2018
Quarter Ended	High $	Low $
June 30, 2018	$1.87	$0.55
March 31, 2018	$0.55	$0.55
December 31, 2017	$87.78	$0.55
September 30, 2017	$1.00	$0.56

Fiscal Year Ending June 30, 2017
Quarter Ended	High $	Low $
June 30, 2017	$1.00	$0.50
March 31, 2017	$1.50	$0.50
December 31, 2016	$4.00	$0.50
September 30, 2016	$3.00	$2.50

On September 19, 2018, the last sales price per share of our common stock was $0.55.

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

ITEM 6.

SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

International Leaders Capital Corporation (“ILCC” or "the Company") was organized under the laws of the State of Nevada on May 21, 2009.

On May 28, 2017, Star Century Entertainment Corporation agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC and the Company experienced a change in control. Cihan Huang is the managing member of ILC Holdings, LLC. On December 1, 2017, ILC Holdings, LLC sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang.

As of June 30, 2018, the Company and its subsidiaries, have not commenced their planned principal operations and are in the process of setting up a consultancy business.

The Company plans to operate a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from (1) business training and consulting and (2) jointly investing in quality projects and ventures for companies which we serve. Our professional investment education program commences with a three day intensive program for general investors which is further reinforced with monthly training courses. In addition, we plan to offer a roadshow platform for OTC listed companies which guides clients through the fund raising process. The Company’s administrative headquarters are based in Las Vegas, Nevada with planned operations in the People’s Republic of China (“PRC”) and Asia.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties.

STOCK-BASED COMPENSATION

The Company may periodically issue shares of common stock, stock options, or warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the FASB whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

The fair value of the Company's common stock option grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of the financial statements for discussion of recent accounting pronouncements.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED JUNE 30, 2018 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 2017

REVENUE

For the fiscal years ended June 30, 2018 and 2017, we had no revenue.

OPERATING COSTS

Compensation includes salaries, stock-based compensation expenses and benefits paid and payable to three former executives and one current executive of the Company, and a consultant/shareholder of the Company. Compensation expense was $183,001 for the year ended June 30, 2018, compared to $717,873 for the year ended June 30, 2017.

For the year ended June 30, 2018, compensation expense included $114,000 for accrual of annual compensation due, $19,001 for the fair value that could be paid in shares of common stock and $50,000 of stock-based compensation. For the year ended June 30, 2017, the Company recorded $717,873 of compensation related to these agreements, which included $236,353 for accrual of year’s compensation, with the balance reflecting an expense for the value that could be paid in shares of common stock. The decrease in compensation expense is primarily due to the termination of the employment agreements with the three former executives.

General and administrative expenses were $148,707 for the year ended June 30, 2018, compared to $64,392 for the year ended June 30, 2017. Administration expense includes accounting, audit, legal and transfer agent costs related to SEC compliance and investor relation expenses. The increase in general and administrative expenses is primarily due to increase in rent and administrative expenses related to the Company’s leasing of an office space in Shenzhen, PRC.

OTHER INCOME (EXPENSE)

Other income (expense) includes $197,436 expense for private placement costs associated with the initial recording of a derivative liability and $(2,938) for change in the fair value of the derivative liability.

Other income (expense) includes interest expense of $71,285 and $56,774 for the year ended June 30, 2018 and 2017, respectively. The increase in interest expense is due the amortization of debt discount on the convertible note-ILC Holdings LLC.

NET LOSS

Our net loss for the year ended June 30, 2018 was $601,364 compared to net loss of $839,039 for the year ended June 30, 2017. Our losses decreased in the current year primarily because of decrease in compensation expense due to the termination of the employment agreements with the three former executives.

LIQUIDITY

As of June 30, 2018, we had cash of $8,117 and total liabilities of $753,720. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations for the next 12 months.

The Company’s consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended June 30, 2018, the Company incurred a net loss of $601,364 and used cash in operating activities of $276,699, and at June 30, 2018, had a stockholders’ deficiency of $676,547. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s consolidated financial statements for the year ending June 30, 2018, expressed substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and to ultimately achieve profitable operations. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. Over the next 12 months, the Company expects to expend up to approximately $50,000 for legal, accounting and administrative costs. The Company’s officers or principal shareholders have committed to making advances or loans to pay for these legal, accounting, and administrative costs. The Company has not yet determined the amount of cash that will be necessary to fund its planned operations in China.

We hope to be able to attract suitable investors for our business plan. The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS

Our controlling shareholders expect to advance us additional funding for operating costs in order to implement our business plan. The funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the resources of our controlling shareholders. The loans from our controlling shareholders are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

PLAN OF OPERATION AND FUNDING

We do not currently engage in enough business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with amounts to be loaned to or invested in us by our stockholders, management or other investors.

During the next twelve months we anticipate incurring costs related to:

(i) filing of Exchange Act reports, and

(ii) costs relating to developing our business plan

We believe we will be able to meet these costs through amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements and related notes are included as part of this report as indexed in the appendix on page F-1 through F-17.

ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being June 30, 2018. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2018 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). As a result of this assessment, management concluded that, as of June 30, 2018 our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending June 30, 2019: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting identified in connection with the requisite evaluation that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION.

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The executive officers and directors of the Company as of September 19, 2018 are as follows:

Name	Age	Position
Cihan Huang	41	Chief Executive Officer, President and Director
Zhou Bing	41	Chief Operating Officer, Secretary, Treasurer
Yin Fook To	48	Director

Duties, Responsibilities and Experience

Biographical Information

Cihan Huang Mr. Huang is a full time Angel investor and a professional business speaker in China. He has spoken to more than 2 million people across the country, on different subjects, investing, Leadership, business model, marketing and selling etc. Mr. Huang has a strong interest in the language and culture of both Chinese and Western world, with superb English speaking skills and used to be the honorable president of Liyang Crazy English Education Group, which is the most famous training company in China. Mr. Huang has been long engaged in economics research and served as Vice Dean in Chinese Economy Institute, 2016-2017. Mr. Huang has served as Chairman of the Board of Directors of Guangzhou CIHAN Business Consulting Company Limited since 2008. He is Co-Founder of Shenzhen KAICI Fund Management Company Limited and served as a member of the Board of Directors from 2016 to present. From June 2015 to August 2015, he served as an executive director and Chief Executive Officer of Shenzhen CIHAN Internet Technology Company limited and from December 2015 to present he has served as Chairman of the Board of directors and chief executive officer. Since November 2015, Mr. Huang has served as General Manager and chairman of the Board of Directors of Shenzhen KAICI Financial Holding Group Co., Ltd. Since 2015, Mr. Huang has served as President and member of the Board of Directors of HONGKONG International Board Financial Investment Group Limited. From 2015 to 2016, he served as member of the Board of Directors of Shenzhen KAIMO VC Investment Corporation Limited and from 2016 to present he has served as General Manager and chairman of the Board of Directors.

Zhou Bing Zhou Bing (Simon) has more than 10 years of entrepreneurial experience in China which includes leading seven Chinese companies to become associated with prominent industry brands. Mr. Zhou is specialized in industry-finance business model design and strategy. He has spoken in front of nearly one million people who are entrepreneurs, investors, and managers of financial institutions. He has also guided a number of enterprises to become listed companies in China, launched the establishment of multiple funds and incubated multiple VC firms.

Mr. Bing is currently the President of SZ QCH Incubator Company and Executive Director of Kaici Financial Holding Group, and Co-founder of Kaici BlueOcean Company.

Yin Fook To Mr. To is experienced in management consulting, marketing, business development, operation and training, having worked in Greater China for 18 years (lived in Hong Kong, Beijing, Shanghai, Shenzhen, Chongqing) and lived in USA for 10 years. He has coached CEOs of American companies and worked with them on China market entry strategies and actual implementation. Recently Mr. To helped WOGC (World Organization of Governance & Competitiveness) run their entire Hong Kong office operation, and also worked with a team of six senior executives and junior staff to plan and execute the official launching conference at Asia-World Expo (venue) for the forming of Rongelap Atoll Digital Economic Special Administrative Region of the Republic of Marshall Islands. He has met and hosted Mr. Kessai Note, former president of the Marshall Islands, Mr Francisco Merino, Vice President of the Republic of El Salvador and several other country VPs from South America. Mr. To also worked on the past Beijing 2008 Olympics, got well-acquainted with major Chinese companies in China. Back in 2003, he was invited by a senior Olympic advisor to work as a consultant on the Beijing Olympic preparation team with the Beijing government, the owners of the Olympic stadium, and the worldwide and local Chinese Olympic sponsors. Through his work on the Beijing Olympics, he developed high level China contacts that help him navigate the complex China network of people and policies in order to provide China market-entry services to western companies. His clients and close friends regard him a man of hospitality, charisma, diligence, integrity and intelligence. He is a native of Nanjing China, grew up in Hong Kong and graduated from Brigham Young University-Hawaii. Mr. To served as Director/Head of Hong Kong Operation of World Organization of Governance and Competitiveness (WOGC) from 2017 to 2018, Vice President of Eastgate, Inc. from 2009 to 2017, and Project Manager of the Office of Senior Advisor of Beijing 2008 Olympics from 2003 to 2007.

ITEM 11.

EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation

The following table provides certain summary information concerning the compensation earned by the named executive officers for the fiscal years ended June 30, 2018 and 2017, for services rendered in all capacities to International Leaders Capital Corporation:

Name & Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Cihan Huang, Chief Executive Officer, President and Director		2018	$	24,000	$	—	$	74,000	$	—	$	—	$	—	$	—	$	98,000
		2017	$	2,000	$	—	$	—	$	—	$	—	$	—	$	—	$	2,000
Zhou Bing, Chief Operating Officer, Secretary, Treasurer		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Chang Wang, Former Chief Operating Officer, Secretary, Treasurer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Fen Xing, Former Chief Executive Officer, Secretary, Treasurer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	60,493	$	—	$	—	$	—	$	—	$	—	$	—	$	60,493
Jian Zhang, Former Chief Operating Officer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	60,493	$	—	$	—	$	—	$	—	$	—	$	—	$	60,493

Yan Zhang, Former Director of Public Relations and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	48,395	$	—	$	—	$	—	$	—	$	—	$	—	$	48,395

Director Compensation

The following table provides compensation summary concerning the compensation earned by the named directors for the years ended June 30, 2018 and 2017.

Name	Year		Fees Earned or Paid in Cash		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Non-Qualified Deferred Compensation Earnings		All Other Compensation		Total
Cihan Huang, Chief Executive Officer, President and Director		2018	$	24,000	$	74,000	$	—	$	—	$	—	$	—	$	98,000
		2017	$	2,000	$	—	$	—	$	—	$	—	$	—	$	2,000
Yin Fook To, Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Chang Wang, Former Chief Operating Officer, Secretary, Treasurer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Michael Chi Chung Leung, Former Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Fen Xing, Chief Former Executive Officer, Secretary, Treasurer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	60,493	$	—	$	—	$	—	$	—	$	—	$	60,493
Jian Zhang, Former Chief Operating Officer and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	60,493	$	—	$	—	$	—	$	—	$	—	$	60,493
Yan Zhang, Former Director of Public Relations and Director		2018	$	—	$	—	$	—	$	—	$	—	$	—	$	—
		2017	$	48,395	$	—	$	—	$	—	$	—	$	—	$	48,395

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of September 19, 2018, information about the beneficial ownership of our capital stock with respect to each person known by International Leaders Capital Corporation to own beneficially more than 5% of the outstanding capital stock, each director and officer, and all directors and officers as a group.

	Number of Shares Beneficially Owned		Percentage of Class ⁽⁵⁾
Name and Address	Number of Shares Beneficially Owned	Class	Percentage of Class ⁽⁵⁾
Cihan Huang, Chief Executive Officer, President and Director^{(1), (4)}	66,902,163	Common	26.83%
Zhou Bing, Chief Operating Officer, Secretary, Treasurer⁽¹⁾	33,992,000	Common	13.63%
Yin Fook To, Director⁽¹⁾	-	Common	*
All directors and executive officers (3 persons)	100,894,163	Common	40.46%
5% Holders
Huang Cijin⁽²⁾	30,000,000	Common	12.02%
Huang Cidong⁽³⁾	20,139,320	Common	8.08%
Huang Rong⁽³⁾	20,050,000	Common	8.04%
*Denotes less than 1%

9811 W. Charleston Blvd., Suite 2-518, Las Vegas, NV 89117.

	2)	Room 1110, Block C, Poly World Trade Center, Haizhu District, Guangdong Province, Guangzhou City, China
	3)	Room 403, Building 59, Gui Miao New Village, Nanshan District, Guangdong Province, Shenzhen City, China

	4)	Mr. Huang also owns 25,000 shares of Series B Preferred Stock. Each share of Series B Preferred Stock has the voting power of 5,000 shares of common stock. Series B Preferred stock is not convertible into common stock.
	5)	The above percentages are based on 249,386,285 shares of common stock outstanding as September 19, 2018.

“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security).

There are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of International Leaders Capital Corporation

There are no arrangements or understandings among members of both the former and the new control groups and their associates with respect to election of directors or other matters.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

At June 30, 2018, the Company had the following transactions with Cihan Huang, Chief Executive Officer, President and Director, Zhou Bing, Company’s Chief Operating Officer, and 7 members other than the Company’s CEO of ILC Holdings, LLC.

At June 30, 2018, convertible notes and accrued interest payable to ILC Holdings, LLC, an entity that Cihan Huang the Company’s CEO, is the managing member of, totaled $40,727. During the year ended June 30, 2018, ILC Holdings elected to convert the two notes aggregating $150,000 plus interest of $2,586 (total of $152,586) into 554,859 shares of the Company’s common stock.

At June 30, 2018 the accrued compensation due to Cihan Huang was $52,000. For the year need June 30, 2018, compensation expense totaled $48,000. In addition, the Company recorded compensation costs of $50,000 for Cihan Huang related to the issuance of 181,818 shares of common stock to ILC Holdings.

On December 1, 2017, ILC Holdings sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang. Each share of Series B Preferred Stock has the voting power of 5,000 common shares. The 25,000 shares of Series B Preferred Stock has voting power of 125,000,000 common shares and the shares represent approximately 34% of the voting control of International Leaders Capital Corporation which is significant influence over all matters requiring approval by our shareholders. On November 18, 2017, the Company issued 181,818 shares of common stock to ILC Holdings for cash proceeds of $50,000. Also on November 18, 2017, the Company issued 554,859 shares of common stock to ILC Holdings to settle convertible notes and accrued interest. .

In July 2018 and August 2018, 66,802,163 shares of common stock were issued to the Cihan Huang, the Company’s CEO for cash proceeds of $66,802, 33,992,000 shares of common stock were issued to the Zhou Bing, Company’s COO for cash proceeds of $33,992, and 72,500,000 shares of common stock were issued to 7 individuals other than the Company’s CEO that are members of ILC Holdings, LLC for cash proceeds of $72,500.

At June 30, 2018, the Company had the following transactions with Peter Chin, a shareholder/consultant of the Company:

	·	At June 30, 2018 the Company owed Peter Chin $392,883 made up of accrued consulting fees of $249,322, convertible notes and accrued interest payable of $75,381, non-redeemable note and accrued interest payable of $43,180, and advances due of $25,000. During the year ended June 30, 2018, consulting fees to Mr. Chin were $85,000.
	·	Subsequent to June 30, 2018, the Company issued 75,000 shares of common stock to Mr. Chin for services.

Subsequent to June 30, 2018, the Company settled total liabilities due to Chin of $392,883 for a cash payment of $126,322. The resulting gain on settlement of $266,561 will be recognized as a related party capital contribution.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed by the Company's auditors for the professional services rendered in connection with the audit of the Company's annual consolidated financial statements, review of our Form 10 and reviews of the consolidated financial statements included in the Company's Forms 10-Qs and Form 10-Ks for fiscal 2018 and 2017 were approximately $27,732 and $25,408, respectively.

Audit-Related Fees

None.

Tax Fees

None.

All Other Fees

None.

PART IV.

ITEM 15.

EXHIBITS.

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1	Articles of Incorporation		10/A#2		3.1	11/5/2009
3.2	Bylaws		10/A #2		3.2	11/5/2009
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Taxonomy Extension Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X

ITEM 16. FORM 10-K SUMMARY. None

SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTERNATIONAL LEADERS CAPITAL CORPORATION


Date: September 28, 2018	By:	/s/ Cihan Huang
		Cihan Huang, Chief Executive Officer, President and Director (Principal Executive Officer)

	By:	/s/ Zhou Bing
		Zhou Bing, Chief Operating Officer, Secretary, Treasurer (Principal Accounting and Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Date: September 28, 2018	By:	/s/ Cihan Huang
		Cihan Huang, Chief Executive Officer, President and Director (Principal Executive Officer)

	By:	/s/ Zhou Bing
		Zhou Bing, Chief Operating Officer, Secretary, Treasurer (Principal Accounting and Financial Officer)

INTERNATIONAL LEADERS CAPITAL CORPORATION

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets as of June 30, 2018 and 2017	F-3
Statements of Operations for the years ended June 30, 2018 and 2017	F-4
Statement of Stockholders’ Deficiency for the years ended June 30, 2018 and 2017	F-5
Statements of Cash Flows for the years ended June 30, 2018 and 2017	F-6
Notes to Financial Statements for the years ended June 30, 2018 and 2017	F-7

F-1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

International Leaders Capital Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of International Leaders Capital Corporation (the “Company”) as of June 30, 2018 and 2017, the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the years ended June 30, 2018 and 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2018 and 2017, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, during the year ended June 30, 2018 the Company incurred a net loss and utilized cash flows in operations, and at June 30, 2018 had a stockholders deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

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

/s/Weinberg & Company, P.A.

Los Angeles, California

September 28, 2018

We have served as the Company’s auditor since 2014.

F-2

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONSOLIDATED BALANCE SHEETS

		June 30,			June 30,
		2018			2017
Assets
Current assets:
Cash and cash equivalents	$	8,117		$	92,004
Prepaid expenses		11,000			9,167
Lease deposit		45,802			—
Total current assets		64,919			101,171

Office equipment		12,254			—
Total assets	$	77,173		$	101,171

Liabilities and Stockholders’ Deficiency
Current Liabilities:
Accounts payable and accrued liabilities	$	123,106		$	117,966
Accrued compensation-related party		301,322			255,821
Advances payable (including $151,066 and $36,000 due to related parties at June 30, 2018 and 2017, respectively)		205,456			90,390
Convertible notes – related party, net of discount of $35,452 and $1,781 at June 30, 2018 and 2017, respectively		80,656			214,957
Total current liabilities		710,540			679,134

Non-redeemable convertible note – related party		43,180			43,180

Commitments and contingencies

Stockholders' Deficiency:
Preferred stock; par value $0.01; 48,900,000 shares authorized; no shares issued and outstanding		—			—
Series A Convertible Preferred Stock; par value $0.01; 1,000,000 shares authorized; no shares issued and outstanding		—			—
Series B Preferred Stock; par value $0.01; 100,000 shares authorized; 25,000 shares issued and outstanding at June 30, 2018 and 2017		250			250
Common stock; par value $0.001; 750,000,000 shares authorized; 2,311,285 and 1,574,179 shares issued and outstanding at June 30, 2018 and 2017, respectively		2,311			1,574
Additional paid-in capital		121,375,474			120,830,251
Notes receivable		(5,000,000	)		(5,000,000	)
Accumulated deficiency		(117,054,582	)		(116,453,218	)
Total stockholders' deficiency		(676,547	)		(621,143	)
Total liabilities and stockholders’ deficiency	$	77,173		$	101,171
See accompanying notes

F-3

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended June 30, 2018			Year ended June 30, 2017


Revenue	$	—		$	—

Operating costs:
Compensation		183,001			717,873
General and administrative		148,707			64,392
Total operating expenses		331,708			782,265

Loss from operations		(331,708	)		(782,265	)

Other income (expense):
Interest expense		(71,285	)		(56,774	)
Private placement costs		(197,436	)		—
Change in fair value of derivative liabilities		(2,938	)		—
Other income		2,003			—
Total other income (expense)		(269,656	)		(56,774	)

Net loss	$	(601,364	)	$	(839,039	)

Net loss per share – basic and diluted	$	(0.30	)	$	(0.61	)

Weighted average number of common shares outstanding – basic and diluted		2,026,275			1,380,205

See accompanying notes

F-4

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

	Common Shares		Common Stock		Series B Preferred Shares		Series B Preferred Stock		Additional Paid-in Capital		Accumulated Deficit			Note Receivable			Total Stockholders’ Deficiency
Balance June 30, 2016		1,374,179	$	1,374		25,000	$	250	$	119,345,334	$	(115,614,179	)	$	(5,000,000	)	$	(1,267,221	)
Beneficial conversion feature on issuance of convertible note payable-related party		—		—		—		—		5,000		—			—			5,000
Gain on settlement of accrued compensation–related party treated as a capital contribution		—		—		—		—		1,380,117		—			—			1,380,117
Shares issued for cash-related party		200,000		200		—		—		99,800		—			—			100,000
Net loss		—		—		—		—		—		(839,039	)		—			(839,039	)
Balance June 30, 2017		1,574,179		1,574		25,000		250		120,830,251		(116,453,218	)		(5,000,000	)		(621,143	)
Shares issued for cash		181,818		182		—		—		49,818		—			—			50,000
Fair value of shares issued for compensation		—		—		—		—		50,000		—			—			50,000
Fair value of shares issued for settlement of convertible notes and accrued interest - related party		554,859		555		—		—		304,617		—			—			305,172
Gain on settlement of convertible notes and accrued interest - related party treated as a capital contribution		—		—		—		—		100,788		—			—			100,788
Beneficial conversion feature on issuance of convertible notes - related party		—		—		—		—		40,000		—			—			40,000
Rounding to effect reverse stock split		429		—		—		—		—		—			—			—
Net loss		—		—		—				—		(601,364	)		—			(601,364	)
Balance June 30, 2018		2,311,285	$	2,311		25,000	$	250	$	121,375,474	$	(117,054,582	)	$	(5,000,000	)	$	(676,547	)

See accompanying notes

F-5

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year Ended June 30, 2018			Year Ended June 30, 2017
Cash Flows from Operating Activities:
Net loss	$	(601,364	)	$	(839,039	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		59,329			38,161
Fair value of shares issued for compensation		50,000			—
Private placement costs		197,436			—
Change in fair value of derivative liability		2,938			—
Accrued interest		11,956			18,613
Changes in operating assets and liabilities:
Prepaid expenses		(1,833	)		—
Lease deposit		(45,802	)		—
Accounts payable and accrued expenses		5,140			12,303
Accrued compensation-related parties		45,501			717,873
Net cash used in operating activities		(276,699	)		(52,089	)

Cash Flows from Investing Activities:
Purchase of office equipment		(12,254	)		—
Net cash used in investing activities		(12,254	)		—

Cash Flows from Financing Activities:
Proceeds from convertible notes-related parties		190,000			32,173
Payment made on convertible notes-related parties		(150,000	)		—
Advances from related parties		126,066			11,000
Repayment of advances-related parties		(11,000	)		100,000
Proceeds from the issuance of common stock-related party		50,000			—
Net cash provided by financing activities		205,066			143,173

Net change in cash and cash equivalents		(83,887	)		91,084
Cash and cash equivalents, beginning of year		92,004			920
Cash and cash equivalents, end of year	$	8,117		$	92,004

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest paid	$	26,799		$	—
Income tax paid	$	—		$	—
NON-CASH FINANCING ACTIVITIES
Fair value of shares issued for settlement of convertible notes and accrued interest-related party	$	305,172		$	—
Gain on settlement of convertible notes and accrued interest - related party treated as a capital contribution	$	100,788		$	—
Carrying value of derivative extinguished upon settlement of convertible notes and accrued interest-related party	$	350,374		$	—
Derivative recorded as discount upon issuance of convertible notes-related party	$	150,000		$	—
Beneficial conversion feature recorded as discount upon issuance of convertible notes-related party	$	40,000		$	5,000
Gain on settlement of accrued compensation–related party	$	—		$	1,380,117

See accompanying notes

F-6

INTERNATIONAL LEADERS CAPITAL CORPORATION

Notes to Consolidated financial statements

For the years ended June 30, 2018 and 2017

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

International Leaders Capital Corporation ("the Company") was organized under the laws of the State of Nevada on May 21, 2009. The Company was established as part of the Chapter 11 reorganization of AP Corporate Services, Inc.

On May 28, 2017, Star Century Entertainment Corporation, a shareholder of the Company, agreed to sell 25,000 shares of the Company’s Series B preferred shares, representing approximately 99% of the voting control of the Company, to ILC Holdings, LLC and the Company experienced a change in control. Cihan Huang is the managing member of ILC Holdings, LLC. On December 1, 2017, ILC Holdings, LLC sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang.

Effective August 2, 2017, the Company’s Board of Directors and a majority of the shareholders of the Company amended the Company’s Articles of Incorporation to (i) change the name of the Company to International Leaders Capital Corporation and (ii) effect a 1-for-50 reverse common stock split. All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.

On December 1, 2017, the Company purchased International Leadership Center Holdings Limited (“ILC”) for $2,500. ILC has two subsidiaries, Hong Kong ILC Business Services and Shenzhen Qian Chuang Hui Technology Incubator Limited (“Shenzhen QCH Incubator”). Prior to December 1, 2017, ILC or its subsidiaries did not have any operations and the purchase price of $2,500 was expensed. In April 2018, ILC through its subsidiary Shenzhen QCH Incubator, leased an office space in Shenzhen, Peoples Republic of China (“ PRC”) and purchased some office equipment to be used in future planned operations. As of June 30, 2018, the Company, and ILC and its subsidiaries, have not commenced their planned principal operations and are in the process of setting up a consultancy business.

The Company plans to operate as a financial services firm which will provide consulting services for businesses and training programs for general investors. The Company anticipates earning revenues from business training and consulting, and jointly investing in projects and ventures for companies which it consults with. The Company’s administrative headquarters are in Las Vegas, Nevada with planned operations in the PRC.

GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended June 30, 2018, the Company incurred a net loss of $601,364 and used cash in operating activities of $276,699, and at June 30, 2018, had a stockholders’ deficiency of $676,547. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.

The Company hopes to be able to attract suitable investors for our business plan, which will not require us to use our cash. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing.

F-7

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, International Leadership Center Holdings Limited, Hong Kong ILC Business Services Limited and Shenzhen Qian Chuang Hui Technology Incubator Limited. All intercompany transactions and balances have been eliminated in consolidation.

ESTIMATES

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The more significant estimates and assumptions by management include, among others, impairment analysis of long-term assets, the valuation allowance for deferred tax assets. the assumptions used in the valuation of derivative liabilities, the assumptions used in valuing share-based instruments issued for services, and the accrual of potential liabilities. Actual results may differ from those estimates.

CASH AND CASH EQUIVALENTS

Investments with original maturities of three months or less are considered to be cash equivalents.

At June 30, 2018, cash and cash equivalents was denominated in the following currencies: $1,878 was denominated in United States Dollars, $1,363 was denominated in Hong Kong dollars, and $4,876 was denominated in Chinese Renminbi $4,876. At June 30, 2017, $92,004 was denominated in United States Dollars.

REVENUE

Revenue is recognized when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been delivered, and collectability is reasonably assured. For the years ended June 30, 2018 and 2017, the Company did not have any revenue.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Betterments, renewals, and extraordinary repairs that extend the life of the assets are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation applicable to retired assets are removed from the Company’s accounts, and the gain or loss on dispositions, if any, is recognized in the consolidated statements of operations.

Property and equipment are recorded at cost and depreciated using the straight-line method over the following estimated useful lives:

Office furniture and equipment 5 Years

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the year ended June 30, 2018, the Company determined there were no indicators of impairment of its property and equipment.

F-8

DERIVATIVE FINANCIAL INSTRUMENTS

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.

INCOME TAXES

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.

The Company plans to conduct businesses in Hong Kong and China and plans to file separate tax returns in these jurisdictions that will be subject to examination by foreign tax authorities.

LOSS PER SHARE

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive.

At June 30, 2018 and 2017, we excluded the outstanding common stock equivalents summarized below as their effect would have been anti-dilutive:

	June 30, 2018		June 30, 2017
Common stock issuable upon conversion of convertible and non-redeemable convertible notes payable		8,262,196		5,378,010
Common stock issuable upon conversion of accrued compensation		149,103		240,821
Total		8,411,299		5,618,831

FOREIGN CURRENCY TRANSLATION

The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company’s operating subsidiaries maintain their books and records in their respective local currency, which consists of the Chinese Renminbi (“RMB”), and Hong Kong Dollars (“HK$”), which is also the respective functional currency of the subsidiaries.

In general, for consolidation purposes, assets and liabilities of the Company’s subsidiaries whose functional currency is not the US$ are translated into US$ using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of a foreign subsidiary are recorded as a separate component of accumulated other comprehensive loss within stockholders’ equity.

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

F-9

	As of and for the six months ended June 30,
	2018		2017
Period-end RMB : US$1 exchange rate		6.62		6.78
Period-average RMB : US$1 exchange rate		6.38		6.85
Period-end / average HK$ : US$1 exchange rate		7.75		7.75

COMPREHENSIVE INCOME

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company’s accumulated other comprehensive income will consist of cumulative foreign currency translation adjustments.

STOCK-BASED COMPENSATION

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

F-10

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The estimated fair value of certain financial instruments, including cash and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded values of the convertible notes-related parties and non-redeemable convertible note approximates their fair values based upon their effective interest rates.

SEGMENTS

The Company operates in one segment for its planned consultancy business. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements

CONCENTRATIONS

At June 30, 2018, the Company’s assets include $62,932 of assets that are located in the PRC. At June 30, 2017, there were no assets located in the PRC.

ECONOMIC AND POLITICAL RISKS

The Company’s planned operations in the PRC will be subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09, as amended, is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principles based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Under ASU 2014-09, revenue will be recognized when performance obligations under the terms of a contract are satisfied, which generally occurs upon shipment or delivery to customers based on written sales terms, which is also when control is transferred. Revenue will be measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer. The Company will adopt the guidance of ASU 2014-09 on July 1, 2018. As the Company does not currently have revenue, the adoption of the new guidance is not expected to impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

F-11

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

NOTE 2. ACCRUED COMPENSATION-RELATED PARTIES

A summary of accrued compensation-related parties as of June 30, 2018 and 2017 is as follows:

	June 30, 2018		June 30, 2017
Accrued compensation, CEO (a)	$	52,000	$	4,000
Accrued compensation, shareholder/consultant (b)		249,322		251,821
	$	301,322	$	255,821

(a)

Effective June 1, 2017, the Company entered in an employment agreement with its Chief Executive Officer for annual compensation of $24,000. The executive has the option to accept shares of the Company’s common stock in lieu of cash based on a 50% discount to the average stock price, as defined. The option to accept shares of common stock in lieu of cash is accounted for at the fair value of the potentially issuable common shares and is subject to adjustment at each reporting date based on the change in market value of the shares. At June 30, 2017, accrued compensation due to the executive was $4,000. For the year ended June 30, 2018, compensation expense of $48,000 was recorded, including $24,000 accrual of annual compensation and $24,000 accrual for the fair value that could be paid in shares of common stock related to this employment agreement. At June 30, 2018 the accrued compensation due to the executive was $52,000, which if the executive elected to be paid in shares of common stock, would result in the issuance of 27,808 of the Company’s common stock.

(b)

In April 2017, a consulting agreement was signed between a shareholder/consultant and the Company. Pursuant to this agreement, the Company agreed to pay $7,500 per month in cash for consulting services through December 31, 2017, and month to month thereafter. At June 30, 2017, the accrued compensation under this agreement was $15,000. During the year ended June 30, 2018, compensation of $90,000 was accrued, and $82,500 of the accrued compensation was paid. At June 30, 2018, accrued compensation due to the shareholder/consultant under this agreement was $22,500.

At June 30, 2018 and 2017, the Company also owed the shareholder/consultant $226,822 and $236,821, respectively, related to a consulting contract that had terminated in April 2017. Pursuant to the terms of that agreement, the shareholder/consultant has the option to accept shares of the Company’s common stock in lieu of cash based on a 50% discount to the average stock price, as defined. At June 30, 2018, if the shareholder/consultant elected to be paid in shares of common stock, it would result in the issuance of 121,295 shares of the Company’s common stock. Subsequent to June 30, 2018, the shareholder/consultant agreed to settle the amounts owed to him under the both consulting agreements aggregating $249,322 (See Note 10).

NOTE 3. ADVANCES PAYABLE

The Company from time to time borrows from its principal shareholders, or others, to pay expenses such as filing fees, accounting fees and legal fees. These advances are non-interest bearing, unsecured, and generally due upon demand. At June 30, 2018 and 2017, the Company was obligated for the following advances:

F-12

	June 30, 2018		June 30, 2017
Advances due to CEO	$	119,865	$	—
Advances due to director		6,201		—
Advances due to shareholder/consultant		25,000		36,000
Advances due to unrelated parties		54,390		54,390
	$	205,456	$	90,390

Subsequent to June 30, 2018, the advances due to shareholder of $25,000 and advances due to unrelated parties of $54,390 were settled (See Note 10).

NOTE 4. CONVERTIBLE NOTES-RELATED PARTIES

A summary of convertible notes payable-related party as of June 30, 2018 and 2017 is as follows:

	June 30, 2018			June 30, 2017
Convertible notes payable-related party (a)	$	75,381		$	216,738
Convertible notes payable-ILC Holdings (b)		40,727			—
Unamortized note discounts		(35,452	)		(1,781	)
	$	80,656		$	214,957

(a)

Convertible notes-related party are unsecured, accrue interest at 10% per annum, and are due from January 2019 through November 2019. These notes are convertible into shares of the Company’s common stock at a conversion price ranging from of $0.01 per share to $0.10 per share. At June 30, 2017, principal and accrued interest totaled $216,738. During the year ended June 30, 2018, the Company paid $150,000 of principal and interest, and accrued interest of $8,643 was added to principal. At June 30, 2018, principal and accrued interest totaled $75,381. At June 30, 2018 and 2017, these convertible notes-related parties are convertible into 3,325,829 and 4,514,410 shares of common stock, respectively. At June 30, 2017, the unamortized discount on these convertible notes-related parties was $1,781. During the year ended June 30, 2018, $1,781 of discount was amortized and included in interest expense. At June 30, 2018, the unamortized discount on these convertible notes-related parties is $0.

Subsequent to June 30, 2018, the convertible notes payable-related party of $75,381 were settled (See Note 10).

(b)

In April 2018, the Company issued two convertible notes to ILC Holdings, an entity controlled by the Company’s CEO, for $30,000 and $10,000, respectively. The convertible notes were unsecured, accrued interest at 8% per annum, and are due on April 1, 2020 and April 26, 2020, respectively. At June 30, 2018, $727 of accrued interest was added to principal and the total outstanding balance of these notes amounted to $40,727, and is convertible into 4,072,767 shares of common stock.

The Company determined that the notes contained a beneficial conversion feature of $40,000 since the market price of the Company’s common stock were higher than the conversion price of the notes when they were issued. The beneficial conversion feature of $40,000 was recorded as debt discount to be amortized over the term of the notes or in full upon the conversion of the corresponding notes. During the year ended June 30, 2018, $4,548 of discount was amortized, and at June 30, 2018, and the unamortized note discount was $35,452.

NOTE 5. GAIN ON SETTLEMENT OF CONVERTIBLE NOTES-RELATED PARTY

On August 16, 2017 and October 4, 2017, the Company issued two convertible notes to ILC Holdings for $100,000 and $50,000, respectively. Cihan Huang, the CEO and controlling shareholder of the Company, is the managing and controlling member of ILC Holdings. The convertible notes were unsecured, accrued interest at 8% per annum, and were due on August 15, 2018 and October 3, 2018, respectively.

F-13

Per the terms of each convertible note, ILC Holdings has the option, on or before December 31, 2017, to accept shares of the Company’s common stock in lieu of cash based on dividing (i) the principal balance plus accrued interest by (ii) 50% of the average of the lowest 5 trading days closing bid prices in the 10 trading days immediately preceding any such conversion. The conversion feature results in there being no explicit limit on the number of shares that may be required to be issued and accordingly the Company cannot assert it will have sufficient shares to settle the arrangement. Hence the conversion features were bifurcated and accounted for as derivative liabilities (See Note 7).

The Company determined that upon issuance of the convertible note, the initial fair value of the embedded conversion features was $347,436, of which $150,000 was recorded as debt discount offsetting the face amount of the convertible notes, and the balance of $197,436 was recorded as private placement costs.

On November 18, 2017, ILC Holdings elected to convert the two notes aggregating $150,000 plus interest of $2,586 (total of $152,586) into 554,859 shares of the Company’s common stock at a conversion price of $0.275 per share. On the date of conversion, the closing price of the Company’s common stock was $0.55 per share, or total fair value of shares of $305,172. The Company followed the general extinguishment model to record the settlement of the debt. The debt and accrued interest of $152,587, an unamortized discount of $97,000, and the bifurcated conversion option derivatives after a final mark-up to $350,373, were removed at their carrying amounts and the shares issued were measured at their fair value of $305,172. The difference of $100,788 was recorded as gain on settlement of debt:

	For the year ended June 30, 2018
Carrying amount of debt that was settled		152,587
Carrying amount of unamortized discount on debt that was settled		(97,000	)
Carrying amount of embedded derivative extinguished on settlement of debt		350,373
Subtotal		405,959
Fair value of shares issued for settlement of debt		(305,172	)
Gain on settlement of debt		100,788

As the convertible notes were issued to ILC Holdings, which is controlled by the CEO and controlling shareholder of the Company, the gain on settlement was recorded as related party capital contribution on the accompanying statement of stockholders’ deficiency for the year ended June 30, 2018.

NOTE 6. NON-REDEEMABLE CONVERTIBLE NOTE-RELATED PARTY

Non-redeemable convertible note-related party is secured by all the assets of the Company, accrued interest at 20% per annum through June 30, 2016, and is non-interest bearing thereafter, and is due August 1, 2019. The Company may prepay the note in readily available funds at any time prior to the maturity date. The Company has the right to convert the note into shares of the Company’s common stock at any time prior to the maturity date at a fixed price of $0.05 per share of common stock. At June 30, 2018, principal and accrued interest totaled $43,180, and are convertible into 863,600 shares of common stock. As it is the Company’s choice to convert the note into shares of the Company’s common stock or to pay the note in cash, the note is presented below current liabilities on the accompanying balance sheets. Subsequent to June 30, 2018, the Non-redeemable convertible note and accrued interest were settled (See Note 10).

NOTE 7. DERIVATIVE LIABILITY

Under authoritative guidance issued by the FASB debt instruments, which do not have fixed settlement provisions, are deemed to be derivative instruments. The conversion feature of the convertible notes to ILC Holdings (see Note 5) results in there being no explicit limit on the number of shares that may be required to be issued and accordingly the company cannot assert it will have sufficient shares to settle the arrangement. Hence the conversion features were bifurcated and accounted for as derivative liabilities

F-14

The Company determined that upon issuance of the convertible notes, the initial fair value of the embedded conversion features was $347,436, of which $150,000 was recorded as debt discount and the remainder of $197,436 was recorded as private placement costs. On November 18, 2017, ILC Holdings elected to convert the two notes aggregating $150,000 plus interest of $2,586 into 554,859 shares of the Company’s common stock. Upon conversion, the derivative was re-measured and the resulting fair value of $350,373 was recorded as part of the gain on settlement of debt (See Note 5).

The derivative liability was valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions:

	November 18, 2017 (settlement)			October 4, 2017 (issuance)			August 16, 2017 (issuance)
Risk free interest rate		1.08	%		1.08	%		1.08	%
Expected volatility		520	%		223	%		282	%
Dividend yield		0	%		0	%		0	%
Expected life		0.12 years			0.24 years			0.38 years

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company used its own historical stock volatility as the estimated volatility. The expected life of the conversion feature of the notes was based on the remaining contractual terms of the financial instruments. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.

NOTE 8. STOCKHOLDERS' DEFICIENCY

Increase in Authorized Shares

Effective June 29, 2018, the Company increased authorized shares from 300,000,000 shares to 800,000,000 shares. The capital stock of the Company is divided into two classes: (1) Common Stock in the amount of 750,000,000 shares, having par value of $0.001 each, and (2) Preferred Stock in the amount of 50,000,000 shares, having par value of $0.01 each.

Series B Preferred stock

The holders of Series B Preferred stock are entitled to vote together with the holders of common stock, as a single class, upon all matters submitted to holders of common stock for a vote. Each share of Series B Preferred Stock has the voting power of 5,000 shares of common stock. The Series B Preferred stock is not convertible into common stock. In the event of any liquidation, dissolution or winding up of the Company, Series B Preferred stock shall have a liquidation preference to the common stock in the amount of par value per share.

During the year ended June 30, 2017, Star Century Entertainment Corporation agreed to sell 25,000 shares of the Company’s Series B preferred shares to ILC Holding, an unrelated third party (see Note 1). On December 1, 2017, ILC Holdings sold the 25,000 shares of the Company’s Series B Preferred Stock to Cihan Huang, the Chief Executive Officer of the Company, and controlling member of ILC Holdings.

Common stock

On November 18, 2017, the Company issued 181,818 shares of common stock to ILC Holdings for cash proceeds of $50,000 ($0.275 per share). Cihan Huang, the CEO of the Company, is the managing member of ILC Holdings. The closing price of the Company shares of common stock on November 18, 2017 was $0.55 per share. Pursuant to generally accepted accounting principles related to share-based payment arrangements with employees, the Company recorded compensation costs of $50,000 to account for the difference between the purchase price $0.275 per share and the closing price of $0.55 per share on the issuance of the 181,818 shares.

On November 18, 2017, the Company issued 554,859 shares of common stock to ILC Holdings to settle convertible notes and accrued interest (See Note 5).

F-15

During the year ended June 30, 2017, the Company issued 200,000 shares of common stock for cash proceeds of $100,000.

Additional paid-in capital

At December 31, 2016, accrued compensation due to the three former executives totaled $1,380,117. Effective December 31, 2016, the three former executives agreed to forgive the $1,380,117, and to also terminate their employment agreements. Accordingly, at June 30, 2017, the total due to the three former executives for accrued compensation was zero. The Company determined that based on the related party nature of the settlement, the gain on settlement of accrued compensation of $1,380,117 was treated as a capital contribution and recorded as a credit to additional paid-in capital.

NOTE 9. INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

The Company had no income tax expense due to operating loss incurred for the years ended June 30, 2018 and 2017.

The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at June 30, 2018 and 2017 are comprised of the following:

	Year Ended June 30, 2018			Year Ended June 30, 2017
Deferred tax assets:
Share-based compensation		73,775			86,979
Net-operating loss carryforward	$	539,114		$	773,688
Total deferred tax assets		612,889			860,667
Valuation allowance		(612,889	)		(860,667	)
Deferred tax assets, net of allowance	$	—		$	—

	Year Ended June 30, 2018			Year Ended June 30, 2017
Federal
Current	$	—		$	—
Deferred		61,249			272,299
State
Current		—			—
Deferred		—			—
Change in valuation allowance		(61,249	)		(272,299	)
Income tax provision	$	—		$	—

F-16

During the ended June 30, 2018, the deferred tax asset was decreased by approximately $296,000 for the reduction in the enacted U.S Federal corporate tax rate to 21% in 2018.

At June 30, 2018, the Company had net operating loss carry forwards for federal tax purposes of approximately $2.5 million which expires in years 2030 through 2038. It appears that the Company had generated net operating losses, since 2010, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382. Management of the Company has recorded a full valuation reserve; since it is more likely than not that no benefit will be realized for the deferred tax assets.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. The Company has provided a valuation allowance for the full amount of the deferred tax assets at June 30, 2018.

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

	Year Ended June 30, 2018			Year Ended June 30, 2017
Statutory Federal Income Tax Rate		28	%		35	%
Nontaxable permanent differences		31	%		27	%
Change in valuation allowance		(59	%)		(62	%)
Income tax provision	$	—		$	—

The Company has not identified any uncertain tax positions requiring a reserve as of June 30, 2018

NOTE 10. SUBSEQUENT EVENTS

On August 15, 2018, the Company issued 75,000 shares of common stock for services.

At June 30, 2018 the Company owed $137,790 to various unrelated parties, made up of accounts payable of $83,400, and advances payable to unrelated parties of $54,390. Subsequent to June 30, 2018, the Company settled the total liabilities of $137,790 for cash payments of $106,000. The resulting gain of $31,790 will be recorded as a gain on settlement of debt.

At June 30, 2018 the Company owed $392,883 to a related party stockholder/consultant, made up of accrued consulting fees of $249,322, convertible notes and accrued interest payable of $75,381, non-redeemable note and accrued interest payable of $43,180, and advances due of $25,000. Subsequent to June 30, 2018, the Company settled the total liabilities of $392,883 for a cash payment of $126,322. The resulting gain on settlement of debt-related party of $266,561 will be recorded as a capital contribution.

F-17

INTERNATIONAL LEADERS CAPITAL Corp - FORM 10-K - September 28, 2018

Attached files

INTERNATIONAL LEADERS CAPITAL Corp Reports