EX-99.2 3 flit_ex9902.htm FINANCIALS JUNE 30, 2019

Exhibit 99.2

Flitways Technology Inc.

Statement of Financial Position

As at June 30, 2019 (Unaudited)

	Notes	As at June 30, 2019 (Unaudited)
		($)
ASSETS
Current Assets
Cash and cash equivalents	4	$	5,287
Trade debts			101,941
Undeposited funds			23
			107,251
Non Current Assets
Property, plant and equipment	5		17,116
Other assets			47,481

Total Assets		$	171,849

EQUITY & LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities	6	$	1,223,949
Deferred compensation			141,991
Line of Credit - related party			23,801
			1,389,742
Non Current Liabilities
Notes and other payable	7		136,046
Convertible promissory notes - net of discount	8		1,155,058
Derivative Liabilities	9		5,750,222
			7,041,326

Total Liabilities			8,431,068

Shareholders’ Equity
Preferred stock: 10,000,0000 shares authorized $0.001 par value; 1,000,000 and zero shares issued and outstanding			1,000
Common stock: 700,000,000 shares authorized $0.001 par value;			2,000,000
Additional paid in capital			63,169,258
Accumulated profit / (losses)			(73,429,477	)
			(8,259,219	)

Total Liabilities and Shareholders’ Equity		$	171,849

The annexed notes 1- 17 form an integral part of these financial statements.

Flitways Technology Inc.

Statement of Profit and loss

For the six months ended June 30, 2019

	Notes		For the six months ended June 30, 2019

			(Amount in $)

Sales revenue		10	$	27,966
Service revenue				26,340
Revenue				54,306

Less: Cost of sales		11		(44,077	)
Gross Profit				10,229

Less:
General and administration expenses		12		133,441
Advertisement and marketing expenses				13,120
Total operating expenses				146,561

Profit / (loss) from operations				(136,332	)

Interest expense		13		(280,673	)
Change in fair value of derivatives		14		(4,100,466	)
Total nonoperating expenses				(4,381,139	)

Profit / (loss) before tax				(4,517,471	)

Provision for income tax				–

Net Profit / (loss)			$	(4,517,471	)

The annexed notes 1- 17 form an integral part of these financial statements.

Flitways Technology Inc.

Statement of Shareholders' Equity

As at June 30, 2019 (Unaudited)

	Common Stock				Preferred Stock				Additional Paid		Accumulated Profit /
	Shares		Amount		Shares		Amount		in capital		(Deficit)			Total

As at January 1, 2019		1,200,000,000	$	1,200,000		1,000,000	$	1,000	$	59,005,600	$	(68,912,006	)	$	(8,705,406	)

Shares issued during the period		800,000,000		800,000		–		–		2,074,477		–			2,874,477

Profit / (loss) for the period										2,089,181		(4,517,471	)		(2,428,290	)

As at June 30, 2019 (Unaudited)		2,000,000,000	$	2,000,000		1,000,000	$	1,000	$	63,169,258	$	(73,429,477	)	$	(8,259,219	)

The annexed notes 1- 17 form an integral part of these financial statements.

Flitways Technology Inc.

Statement of Cash Flows

For the six months ended June 30, 2019

	For the Six Months Ended June 30, 2019
Cash flow from operating activities
(Loss) / profit before income tax	$	(4,517,471	)
Adjustment for non cash charges and other items:		–
Depreciation / amortization		252
Change in fair value of derivatives		4,051,353
Interest accrued during the period		280,673
Changes in working capital
Decrease / (increase) in Trade debts		(5,498	)
Decrease / (increase) in other assets		23
(Decrease) / increase in accounts payable and accrued liabilities		176,123
(Decrease) / increase in deferred compensation		(35,498	)
Cash flow from operating activities		(50,043	)

Cash flow from investing activities		–

Cash flow from financing activities
Proceeds from notes payable		269
Proceeds from convertible promissory notes		49,253
Cash flow from financing activities		49,522

Increase/(decrease) in cash and cash equivalents		(521	)

Cash and cash equivalents at beginning of the year		5,808

Cash and cash equivalents at end of the year	$	25,374

The annexed notes 1- 17 form an integral part of these financial statements.

Flitways Technology Inc.

Notes to the Financial Statements

For the quarter ended June 30, 2019

1.	LEGAL STATUS AND OPERATIONS

	Flitways Technology Inc. (the “Company”), was incorporated in the State of Nevada on December 11, 2012 and established a fiscal year end of December 31. The Company is involved in the “on demand” transportation business providing businesses and private traveler’s access to book and schedule ground transportation online or by mobile device. The Company gives travelers access to customizable travel rides through a network of ground travel providers. It incorporates ride booking into the travel industry by making travel ride booking available at various travel points of sale to allow travelers to book rides that fit their lifestyle online and on its mobile application.

2.	BASIS OF PREPARATION

2.1	Statement of compliance

	The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") on a going concern basis.

2.2	Accounting convention

	These financial statements have been prepared on the basis of 'historical cost convention using accrual basis of accounting except as otherwise stated in the respective accounting policies notes.

2.3	Management's assessment of going concern

	In assessing the going concern status of the Company, management has carefully assessed a number of factors covering the operational performance of the business, the ability to increase the revenue sources of the Company and the appetite of majority shareholder to continue financial support. Based on the analysis of these, management is comfortable that the Company will be able to continue as a going concern in the foreseeable future.

2.4	Critical accounting estimates and judgments

	The preparation of financial statements in conformity with the approved accounting standards require management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

	The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of the revision and future periods.

	The areas involving higher degree of judgment and complexity, or areas where assumptions and estimates made by the management are significant to the financial statements are as follows:

	i) Operating assets - estimated useful life of property, plant and equipment
	ii) Impairment of assets
	iii) Provision for doubtful advances and other receivables (note - 3.4)
	iv) Provision for income tax (note - 3.1)

3	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1	Income tax

	The tax expense for the year comprises of income tax, and is recognized in the statement of earnings. The income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

	Deferred income tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred income tax liabilities are recognised for all taxable temporary differences and deferred income tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilized. Deferred income tax is calculated at the rates that are expected to apply to the period when the differences are expected to be reversed.

3.2	Trade and other payables

	Liabilities for trade and other amounts payable are carried at cost, which is the fair value of the consideration to be paid in future for goods and services received, whether or not billed to the Company.

3.3	Provisions

	A provision is recognized in the financial statements when the Company has a legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.

3.4	Trade debts, advances and other receivables

	These are non-interest bearing obligations due under normal course of business. The management reviews accounts receivable on a monthly basis to determine if any receivables will be potentially uncollectible. Historical bad debts and current economic trends are used in evaluating the allowance for doubtful accounts. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available, the Company believes its allowance for doubtful accounts as of period ended is adequate.

3.5	Contingent liabilities

	A contingent liability is disclosed when the Company has a possible obligation as a result of past events, the existence of which will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events, not wholly within the control of the Company; or when the Company has a present legal or constructive obligation, that arises from past events, but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability.

3.6	Financial liabilities

	Financial liabilities are recognized when the Company becomes party to the contractual provision of the instruments and the Company loses control of the contractual right that comprise the financial liability when the obligation specified in the contract is discharged, cancelled or expired. The Company classifies its financial liabilities in two categories: at fair value through profit or loss and financial liabilities measured at amortized cost. The classification depends on the purpose for which the financial liabilities were incurred. Management determines the classification of its financial liabilities at initial recognition.

	(a)	Financial liabilities at fair value through profit or loss

		Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this category if incurred principally for the purpose of trading or payment in the short-term. Derivatives (if any) are also categorized as held for trading unless they are designated as hedges.

	(b)	Financial liabilities measured at amortized cost

		These are non-derivative financial liabilities with fixed or determinable payments that are not quoted in an active market. These are recognized initially at fair value, net of transaction costs incurred and are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the profit and loss account.

3.7	Property, plant and equipment

	All equipments are stated at cost less accumulated depreciation and impairment loss. The cost of fixed assets includes its purchase price, import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

	Depreciation on additions to property, plant and equipment is charged, using straight line method, on pro rata basis from the month in which the relevant asset is acquired or capitalized, up to the month in which the asset is disposed off. Impairment loss, if any, or its reversal, is also charged to income for the year. Where an impairment loss is recognized, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less its residual value, over its estimated useful life.

	Maintenance and normal repair costs are expensed out as and when incurred. Major renewals and improvements are capitalized and assets so replaced, if any are retired.

	Useful lives of property, plant and equipment are reviewed by the management on preiodic basis and change if any, in the estimates is accounted for on prospective basis.

	Gains and losses on disposal of fixed assets, if any, are recognized in statement of profit and loss.

3.8	Cash and cash equivalents

	Cash and cash equivalents include cash in hand and deposits held at call with banks. For the purpose of the statement of cash flows, cash and cash equivalents bank balances and short term highly liquid investments subject to an insignificant risk of changes in value and with maturities of less than three months.

3.9	Revenue recognition

	Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable for goods sold or services rendered, net of discounts and sales tax and is recognised when significant risks and rewards are transferred.

3.10	Functional and presentation currency

	Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates. The financial statements are presented in US (Dollars) which is the Company's presentation currency. All financial information presented in US Dollars has been rounded to the nearest dollar unless otherwise stated.

3.11	Foreign currency transactions

	Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the exchange rate prevailing at the statement of financial position date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates are recognized in the profit and loss account.

3.12	Contingencies

	The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome of the future events cannot be predicted with certainty. The Company, based on the availability of the latest information, estimates the value of contingent assets and liabilities, which may differ on the occurrence / non-occurrence of the uncertain future event(s).

4.	Cash and bank balances

	2019
	Amount in $
Cash in hand		–
Balance with banks
Current account		13,467
Overdraft facility		(8,179	)
		5,287

5.	Property, plant and equipment

	2019
	Furniture and Fixtures			Equipment			Product Web Engine			Total


Cost as at January 1, 2019	$	18,141		$	3,259		$	9,450		$	30,850
Accumulated Depreciation as at June 30, 2019		(9,952	)		(1,162	)		(2,620	)		(13,734	)

Net Book Value as at June 30, 2019	$	8,189		$	2,098		$	6,830		$	17,116

6.	Accounts payable and accrued liabilities

		2019
		Amount in $
Opening balance			1,047,826
Movement during the period			176,123
Closing balance	6.1		1,223,949

6.1

Balance as at June 30, 2019 comprises of:

Accounts payable		674,022
Accrued liabilities		15,600
Taxes and government levies		45,217
Chargeback reserve		1,554
Markup accrued	6.2	487,014
Others		542
		1,223,949

6.2

This includes interest accrued on line of credit from related party amounting to $17,565.

7.	Notes and other payable

		Amount in $
Opening balance			135,777
Movement during the period			269
Closing balance	7.1		136,046

7.1

Balance as at June 30, 2019 comprises of:

Loan Builder			90,197
Pearl Loan			3,163
Kabbage Loan			18,126
Business Funding Advance Loan			17,044
Kings Cash Loan			7,513
			136,046

8.	Convertible promissory notes - net of discount

Opening balance		1,105,805
Movement during the period		49,253
Closing balance	8.1	1,155,058

8.1

As of June 30, 2019, convertible promissory notes payable consisted of the following

Principal	561,994
Additional note	–
Principal Converted	(3,738	)
Net balance	558,256
Default principal	482,901
Discounts	113,901
Notes payable, net	1,155,058

9.	Derivative Liabilities

Opening balance		6,370,348
Movement during the period		(620,126	)
Closing balance	9.1	5,750,222

9.1

Balance as at June 30, 2019 comprises of:

Derivative Warrants - L2			3,183,673
Derivative Warrants - EMA and Auctus			55,891
Derivative Liability - L2			296,978
Derivative Liability - EMA and Auctus			2,213,681
Derivative Liability - Power Up			–
			5,750,222

10.

Revenue

Sales revenue of the Company is earned from the following sources:

	2019
	Net Revenue ($)
Stripe revenue		23,124
Paypal sales		4,842
Service sales		26,340

		54,306

11.

Cost of Sales

	2019
	Amount in $
Cost of revenue sold		8,124
Cost of revenue fee		13,158
Invoice wire fees		9,571
Uber - COS		8,077
Uber - COS Service Fee		5,146
		44,077

12.

General and administration expenses

	2019
	Amount in $
Marketing Expense		13,120
Bank Charges		663
Insurance Expense		2,545
Licenses		2,717
Office Expense		13,736
Office Maintenance		37,166
Payroll Tax Expense		2,569
Rent or Lease Expense		25,004
Travel		3,967
Salaries, wages and benefits		20,689
Utilities		8,629
Legal Expenses		15,756
		146,561

13.

Interest Cost

Interest Expense			165,351
Finance Cost			115,322

			280,673

14.

Derivative Expense

Change in Fair Value Derivative			4,100,466
Derivative Expense			–
Stock Option			–
			4,100,466

15.

Contingencies and Commitments

The company has no contingency and commitment as at the end of reporting period.

16.

Other Information

	i)	Evaluation of Disclosure Controls and Procedures

		Management of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company had concluded that the Company's disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q were effective.

	ii)	Changes in internal control over financial reporting.

		Management of the Company has also evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q and determined that there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.