INTERNATIONAL LEADERS CAPITAL 10Q 2018 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205495

FORM 10-Q

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

For the quarterly period ended December 31, 2017

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

For the transition period from __________ to __________

Commission file number000-53780

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.)

1980 Festival Plaza Drive, Suite 530 Las Vegas, Nevada	89135
(Address of Principal executive offices)	(Zip Code)

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

(Former name and former address, if changed since last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yesx 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) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No¨

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¨ Nox

As of February 14, 2018, the registrant had 2,311,285 outstanding shares of Common Stock.

INTERNATIONAL LEADERS CAPITAL CORPORATION

INDEX

		Page Number
PART I.	FINANCIAL INFORMATION

Item 1	Financial Statements:
	Condensed Consolidated Balance Sheets as of December 31, 2017 (Unaudited) and June 30, 2016	5
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2017 and 2016 (Unaudited)	6
	Condensed Consolidated Statement of Stockholders’ Deficiency for the Six Months Ended December 31, 2017 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2017 and 2016 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements (Unaudited) - Six months Ended December 31, 2017 and 2016	9
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4T	Controls and Procedures	20

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	21
Item 1A	Risk Factors	21
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3	Defaults upon Senior Securities	21
Item 4	Mine Safety Disclosures	21
Item 5	Other Information	21
Item 6	Exhibits	22

SIGNATURES		23

EXHIBITS

Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “1933 Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q, including any projections of earnings, revenue or other financial items, any statements regarding the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, any statements regarding expected benefits from any transactions and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risk and uncertainties, including, but not limited to, the risk factors set forth in “Part II, Item 1A – Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. All forward looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law or applicable regulations. Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “International Leaders Capital Corporation,”, “the Company ”, “we,” “us” and “our” refer to International Leaders Capital Corporation, a Nevada corporation.

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERNATIONAL LEADERS CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

		December 31,			June 30,
		2017			2017
		(Unaudited)
Assets
Current assets:
Cash	$	29,519		$	92,004
Prepaid expenses		4,167			9,167
Total current assets	$	33,686		$	101,171

Liabilities and Stockholders’ Deficiency
Current Liabilities:
Accounts payable and accrued liabilities	$	120,547		$	117,966
Accrued compensation-related party		129,531			255,821
Advances (including $35,829 and $36,000 due to related parties at December 31, 2017 and June 30, 2017, respectively)		90,219			90,390
Convertible notes – related parties, net of discount of $0 and $1,781 at December 31, 2017 and June 30, 2017, respectively		72,229			214,957
Total current liabilities		412,526			679,134

Commitments and contingencies

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

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 December 31, 2017 and June 30, 2017		250			250
Common stock; par value $0.001; 250,000,000 shares authorized; 2,311,285 and 1,574,179 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively		2,311			1,574
Additional paid-in capital		121,032,100			120,830,251
Notes receivable		(5,000,000	)		(5,000,000	)
Accumulated deficiency		(116,456,681	)		(116,453,218	)
Total stockholders' deficiency		(422,020	)		(621,143	)
Total liabilities and stockholders’ deficiency	$	33,686		$	101,171
See accompanying notes

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		For the Three Months Ended December 31, 2017			For the Three Months Ended December 31, 2016			For the Six Months Ended December 31, 2017			For the Six Months Ended December 31, 2016

Revenue	$	—		$	—		$	—		$	—

Costs and expenses:
Compensation (reduction in compensation)		(90,791	)		199,627			(61,290	)		659,421
General and administrative		23,831			18,502			54,862			44,637
Total operating expenses		(66,960	)		218,129			(6,428	)		704,058

Other income (expenses):
Interest expense		(120,921	)		(13,179	)		(159,858	)		(38,959	)
Private placement costs		(67,055	)		—			(197,436	)		—
Change in fair value of derivative liability		59,057			—			94,346			—
Gain on extinguishment of derivative liability		253,090			—			253,090			—
Foreign exchange		(33	)		—			(33	)		—
Total other income (expense)		124,138			(13,179	)		(9,891			(38,959	)

Net income (loss)	$	191,098		$	(231,308	)		(3,463	)	$	(743,017	)

Net income (loss) per share - basic	$	0.10		$	(0.17	)	$	0.00		$	(0.54	)
Net loss per share - diluted	$	(0.01	)	$	(0.17	)	$	0.00		$	(0.54	)

Weighted average number of common shares outstanding - basic		1,918,494			1,374,178			1,746,337			1,374,178
Weighted average number of common shares outstanding - diluted		7,189,174			1,374,178			1,746,337			1,374,178

See accompanying notes

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY

FOR THE SIX MONTHS ENDED DECEMBER 31, 2017

(Unaudited)

	Common Shares		Common Stock		Series B Preferred Shares		Series B Preferred Stock		Additional Paid-in Capital		Accumulated Deficiency			Note Receivable			Total Stockholders’ Deficiency
Balance July 1, 2017		1,574,179	$	1,574		25,000	$	250	$	120,830,251	$	(116,453,218	)	$	(5,000,000	)	$	(621,143	)
Common stock issued upon conversion of convertible notes payable and accrued interest		554,859		555						152,031								152,586
Common stock issued for cash		181,818		182						49,818								50,000
Rounding of shares on reverse stock-split		429		—		—		—		—		—			—			—
Net loss		—		—		—		—		—		(3,463	)		—			(3,463	)

Balance December 31, 2017 (Unaudited)		2,311,285	$	2,311		25,000	$	250	$	121,032,100	$	(116,456,681	)	$	(5,000,000	)	$	(422,020	)

See accompanying notes

INTERNATIONAL LEADERS CAPITAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31, 2017			Six Months Ended December 31, 2016
Cash Flows from Operating Activities:
Net loss	$	(3,463	)	$	(743,017	)
Adjustments to reconcile net loss to net cash used in operating activities and liabilities:
Amortization of debt discount		151,781			29,688
Private placement costs		197,436			—
Change in fair value of derivative liability		(94,346	)		—
Gain on extinguishment of derivative liability		(253,090	)
Foreign exchange		33			—
Changes in operating assets and liabilities:
Prepaid expenses		5,000			5,000
Accounts payable and accrued expenses		2,569			20,732
Accrued compensation-related parties		(126,290	)		659,421
Accrued interest		8,077			9,271
Net cash used in operating activities		(112,293	)		(18,905	)

Cash Flows from Financing Activities:
Proceeds from convertible notes - related party		150,000			22,173
Payment made on convertible notes - related party		(150,000	)		—
Advances – related parties		10,772			—
Payment made on advances – related party		(11,000	)		—
Proceeds from issuance of common stock – related party		50,000			—
Net cash provided by financing activities		49,772			22,173

Effect of exchange rate on cash		36			—

Net change in cash		(62,485	)		3,268
Cash beginning of period		92,004			920
Cash end of period	$	29,519		$	4,188

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest paid	$	—		$	—
Income tax paid	$	—		$	—
NON-CASH FINANCING ACTIVITIES
Beneficial conversion feature associated with issued convertible notes	$	—		$	5,000
Gain on settlement of accrued compensation – related party treated as a capital contribution	$	—		$	1,380,117
Shares issued for settlement of convertible notes	$	150,000		$	—

See accompanying notes

INTERNATIONAL LEADERS CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

Six months ended December 31, 2017 and 2016

(Unaudited)

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

International Leaders Capital Corporation (formerly Star Century Pandaho 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.

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 financial statements have been adjusted retroactively to reflect the reverse stock split.

On December 1, 2017, the Company completed the purchase of a 100% interest of International Leadership Center Holdings Limited, a British Virgin Islands company (“BVI ILC”). The Company purchased the 100% of the outstanding stock of BVI ILC from Michael Chi Chung Leung, a director of the Company, for a purchase price of $2,500 in cash.


Name of Company	Jurisdiction of Incorporation	Date of Incorporation	Percentage Ownership Interest	Principal Activity
International Leadership Center Holdings Limited (“BVI ILC”)	British Virgin Islands	December 19, 2016	100%	Investment holding
Hong Kong ILC Business Services Limited (“Hong Kong ILC”)	Hong Kong	February 3, 2017	100%	Investment holding
Shenzhen Qian Chuang Hui Technology Incubator Limited (“SZ QCH Incubator”)	People’s Republic of China	August 14, 2017	100%	Financial consulting services

On December 1, 2017, BVI ILC and its subsidiaries assets comprised of $5,903 in cash and liabilities comprised of $5,903 due to Michael Chi Chung Lueng with total net assets purchased of $0. Prior to December 1, 2017, BVI ILC did not have operations and the purchase price of $2,500 was expensed.

The Company operates of a financial services firm which provides consulting services for businesses and training programs for general investors. The Company anticipates earning revenue from business training and consulting, and jointly investing in projects and ventures for companies which we serve. The Company’s headquarters are based in Las Vegas, Nevada with planned primary operations in mainland China and Asia.

Basis of presentation

The unaudited condensed consolidated financial statements of the Company for the six months ended December 31, 2017 and 2016 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of June 30, 2017 was derived from the audited financial statements included in the Company's financial statements as of and for the fiscal year ended June 30, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on September 26, 2017. These financial statements should be read in conjunction with that report.

Going concern

The accompanying 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 six months ended December 31, 2017, the Company incurred a net loss of $3,463 and used cash in operating activities of $112,293, and at December 31, 2017, had a stockholders’ deficiency of $422,020. 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 financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s June 30, 2017 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. The Company’s 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 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.

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.

Foreign currency translation and transactions

The Company has determined that the functional currency of its wholly owned subsidiaries assets and liabilities are translated into U.S. dollars using the remeasurement method. Non-monetary assets are translated at historical exchange rates and monetary assets are translated at exchange rates existing at the respective balance sheet dates. Translation adjustments for wholly owned subsidiaries are included in determining net income (loss) for the period. The results of operations are translated into U.S. dollars at the average exchange rates during the period. The Company records these gains and losses in other income (expense).

Foreign currency transaction gains and losses are generated from the effects of exchange rate changes on transactions denominated in a currency other than the functional currency of the Company, which is the U.S. dollar.

Gains and losses on foreign currency transactions are generally required to be recognized in the determination of net income (loss) for the period. The Company records these gains and losses in other income (expense).

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. In transactions in which the Company brokers a sale and determines that it was not the primary obligor in the arrangement, the Company records as net the commission earned from the transaction.

Basic and Diluted 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 December 31, 2017 and 2016, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive:

	December 31, 2017		December 31, 2016
Common stock issuable upon conversion of convertible and non-redeemable convertible notes payable		4,046,338		4,193,150
Common stock issuable upon conversion of accrued compensation		235,510		394,738
Total		4,281,848		4,587,888

Share-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.

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 statements of operations. The Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments. 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.

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.

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 fair value of the derivative liability of $0 at December 31, 2017 was valued using Level 2 inputs.

The estimated fair value of certain financial instruments, including cash and cash equivalents 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.

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. ASU 2014-09 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 principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In addition, during 2016 the FASB has issued ASU 2016-08, ASU 2016-10 and ASU 2016-12, all of which clarify certain implementation guidance within ASU 2014-09, and ASU 2016-11, which rescinds certain SEC guidance effective upon an entity’s adoption of ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

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.

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. COMPENSATION AND ACCRUED COMPENSATION-RELATED PARTIES

Compensation-related party and accrued compensation-related party represent compensation due to one executive and due to a shareholder consultant. Pursuant to the terms of agreements, the executive and shareholder consultant have 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.

In April 2017, the consulting agreement with the shareholder consultant was terminated, and at December 31, 2017 and June 30, 2017, the accrued compensation due to the shareholder consultant under the terminated consulting agreement was $115,298 and $236,821, respectively, which if the shareholder consultant elected to be paid in shares of common stock, would result in the issuance of 209,632 and 236,821 shares, respectively, of the Company’s common stock. For the six months ended December 31, 2017, compensation expense (reduction) was recorded for a $(116,523) decrease for the fair value that could be paid in shares of common stock related to this employment agreement, and $5,000 of accrued compensation was paid.

Also effective in April 2017, a second consulting agreement was signed with the shareholder consultant and the Company agreed to pay $7,500 per month in cash for consulting services through December 31, 2017. At June 30, 2017, the accrued compensation under the new agreement was $15,000. During the six months ended December 31, 2017, compensation of $45,000 was accrued, and $60,000 of the accrued compensation was paid. At December 31, 2017, accrued compensation due to the shareholder consultant under the second agreement was $0.

Effective June 1, 2017, the Company entered in an employment agreement with an executive 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. At June 30, 2017, accrued compensation due to the executive was $4,000. For the six months ended December 31, 2017, compensation expense of $10,233 was recorded, including $12,000 accrual of cash compensation offset by a $1,767 reduction for the fair value that could be paid in shares of common stock related to this employment agreement. At December 31, 2017, the accrued compensation due to the executive was $14,233, which if the shareholder consultant elected to be paid in shares of common stock, would result in the issuance of 25,878 shares of the Company’s common stock.

NOTE 3. ADVANCES

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 December 31, 2017 and June 30, 2017, the Company was obligated for the following advances:

	December 31, 2017		June 30, 2017
Advances due to shareholders and director	$	35,829	$	36,000
Advances due to unrelated parties		54,390		54,390
	$	90,219	$	90,390

NOTE 4. CONVERTIBLE NOTES-RELATED PARTY

A summary of convertible notes payable-related party as of December 31, 2017 and June 30, 2017 is as follows:

	December 31, 2017		June 30, 2017
Convertible notes payable-related party (a)	$	72,229	$	216,738
Convertible note payable-ILC Holdings (b)		—		—
Unamortized note discounts		—		(1,781	)
	$	72,229	$	214,957

(a)

Convertible notes-related party are unsecured, accrue interest at 10% per annum, and are due from January 2018 through November 2018. 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 six months ended December 31, 2017, the Company paid $150,000 of principal and interest, and accrued interest of $5,491 was added to principal. At December 31, 2017, principal and accrued interest totaled $72,229. At December 31, 2017 and June 30, 2017, these convertible notes-related parties are convertible into 3,182,738 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 six months ended December 31, 2017, $1,781 of discount was amortized and included in interest expense. At December 31, 2017, the unamortized discount on these convertible notes-related parties is $0.

(b)

On August 16, 2017 and October 4, 2017, the Company issued two convertible notes to ILC Holdings LLC, the former controlling shareholder of the Company, for $100,000 and $50,000, respectively. The convertible notes were unsecured, accrued interest at 8% per annum, and were due on August 15, 2018 and October 3, 2018, respectively. During the six months ended December 31, 2017, accrued interest of $2,586 was added to principal. On November 18, 2017, the total of $150,000 convertible notes and $2,586 of accrued interest were converted into 554,759 shares of common stock. At December 31, 2017, principal and accrued interest totaled $0. During the six months ended December 31, 2017, $150,000 of discount was recorded on the issuance of the convertible notes, and $150,000 of discount was amortized and included in interest expense. At December 31, 2017, the unamortized discount on convertible notes is $0.

ILC Holdings LLC had the option, on or before December 31, 2017, to accept shares of the Company’s common stock in lieu of cash based by 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 past 10 trading days immediately preceding any such conversion. The variable conversion price of the convertible note to ILC Holdings LLC is not considered predominately based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. As a result, the Company determined that the conversion features of the convertible note to ILC Holdings LL was not considered indexed to the Company’s own stock and characterized the fair value of the conversion feature as a derivative liability upon issuance (See Note 6).

NOTE 5. NON-REDEEMABLE CONVERTIBLE NOTE-RELATED PARTY

Non-redeemable convertible note-related party is secured by all the assets of the Company, accrues interest at 20% per annum, and is due August 1, 2018. 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, 2017, principal and accrued interest totaled $43,180. During the six months ended December 31, 2017, interest of $0 was accrued and added to principal. At December 31, 2017, 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.

NOTE 6. CONVERTIBLE NOTE 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 variable conversion price of the convertible notes to ILC Holdings LLC (see Note 4) is not considered predominately based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock.

In accordance with the FASB authoritative guidance, the conversion feature of the financial instruments was separated from the host contract and recognized as a derivative instrument. The conversion feature of the financial instruments had been characterized as a derivative liability and is re-measured at the end of every reporting period with the change in value reported in the statement of operations.

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 expected life of the conversion feature of the notes was based on the remaining 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 7. STOCKHOLDERS’ DEFICIENCY

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). All common stock share and per-share amounts for all periods presented in these financial statements have been adjusted retroactively to reflect the reverse stock split.

During the six months ended December 31, 2017, the Company issued 554,859 shares of common stock to settle convertible notes and accrued interest of $152,586.

During the six months ended December 31, 2017, the Company issued 181,818 shares of common stock for cash proceeds of $50,000.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2017 AND 2016

Company Overview

International Leaders Capital Corporation (formerly Star Century Pandaho Corporation) (“SCPD” 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, 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. At May 28, 2017, ILC Holdings, LLC did not have any operations and had minimal assets and liabilities. In conjunction with the change in control, three individuals were elected to be the Company’s management, and the Company’s former Chief Executive Officer, former Chief Operating Officer, and former Director of Public Relations resigned. 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 financial statements have been adjusted retroactively to reflect the reverse stock split.

The Company’s previous majority shareholders had planned to build Pandaho, a cartoon styled character, into a competitive cartoon brand in China and surrounding areas with Pandaho-themed merchandise and multi-media exhibitions. Commensurate with the shareholder transactions on May 28, 2017, 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.

			Percentage Ownership Interest
Name of Company	Jurisdiction of Incorporation	Date of Incorporation	Direct	Indirect	Principal Activity
International Leadership Center Holdings Limited (“BVI ILC”)	British Virgin Islands	December 19, 2016	100%	-	Investment holding
Hong Kong ILC Business Services Limited (“Hong Kong ILC”)	Hong Kong	February 3, 2017	-	100%	Investment holding
Shenzhen Qian Chuang Hui Technology Incubator Limited (“SZ QCH Incubator”)	People’s Republic of China	August 14, 2017	-	100%	Financial consulting services

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2017 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2016

REVENUE

For the three months ended December 31, 2017 and 2016, we had $0 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 (net reduction) was $(90,791) for the three months ended December 31, compared to $199,627 for the three months ended December 31, 2016. For the three months ended December 31, 2017, compensation expense included $22,500 for accrual of annual compensation due, and reduction of $113,291 for the fair value that could be paid in shares of common stock. For the three months ended December 31, 2016, the Company recorded $199,627 of compensation related to these agreements, which included $99,814 for accrual of three months 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 to the termination of the employment agreements with the three former executives.

General and administrative expenses were $23,831 for the three months ended December 31, 2017, compared to $18,502 for the three months ended December 31, 2016. Administration comprise accounting, audit, legal and transfer agent costs related to SEC compliance and investor relation expenses. The decrease in general and administrative expenses is primarily due to decrease in professional fees.

OTHER INCOME (EXPENSE)

Other income (expense) includes $67,055 expense for private placement costs associated with the initial recording of a derivative liability and 59,057 of income from the change in the fair value of the derivative liability and $253,090 of income from gain on extinguishment of derivative liability.

Other income (expense) includes interest expense of $120,921 and $13,179 for the three months ended December 31, 2017 and 2016, respectively. The increase in interest expense is due the debt discount on the convertible note-ILC Holdings LLC.

NET INCOME (LOSS)

Our net income for the three months ended December 31, 2017 was $191,098 compared to net loss of $231,308 for the three months ended December 31, 2016. Our losses decreased in the current year primarily because of decrease in compensation expense due to reduction for the fair value that could be paid in shares of common stock.

SIX MONTHS ENDED DECEMBER 31, 2017 COMPARED TO THE SIX MONTHS ENDED DECEMBER 31, 2016

REVENUE

For the six months ended December 31, 2017 and 2016, we had $0 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 (net reduction) of $(61,290) for the six months ended December 31, 2017, compared to $659,421 for the six months ended December 31, 2016. For the six months ended December 31, 2017, compensation expense included $57,000 for accrual of annual compensation due, and reduction of $118,290 for the fair value that could be paid in shares of common stock. For the six months ended December 31, 2016, the Company recorded $659,421 of compensation related to these agreements, which included $199,627 for accrual of six months 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 to the termination of the employment agreements with the three former executives.

General and administrative expenses were $54,862 for the six months ended December 31, 2017, compared to $44,637 for the six months ended December 31, 2016. Administration comprise 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 professional fees.

OTHER INCOME (EXPENSE)

Other income (expense) includes $197,436 expense for private placement costs associated with the initial recording of a derivative liability and 94,346 of income from the change in the fair value of the derivative liability and $253,090 of income from gain on extinguishment of derivative liability.

Other income (expense) includes interest expense of $159,858 and $38,959 for the six months ended December 31, 2017 and 2016, respectively. The increase in interest expense is due the debt discount on the convertible note-ILC Holdings LLC.

NET INCOME (LOSS)

Our net loss for the six months ended December 31, 2017 was $3,463 compared to net loss of $743,017 for the six months ended December 31, 2016. Our losses decreased in the current year primarily because of decrease in compensation expense due to reduction for the fair value that could be paid in shares of common stock.

LIQUIDITY

As of December 31, 2017, we had cash of $29,519 and total liabilities of $455,706. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations.

The Company’s 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 six months ended December 31, 2017, the Company incurred a net loss of $3,463 and used cash in operating activities of $112,293, and at December 31, 2017, had a stockholders’ deficiency of $422,020. 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 financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending June 30, 2017, expressed substantial doubt about the Company’s ability to continue as a going concern. The Company’s 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.

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.

Critical Accounting Policies

Revenue

Share-Based Compensation:

The Company may periodically issue stock options and 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.

Recent Accounting Pronouncements

See Footnote 1 of condensed financial statements for a discussion of recently issued accounting standards.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2018, subject to obtaining additional financing: (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 above 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 were no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.

Except as so indicated in Exhibits 32.1 and 32.2, the following exhibits are filed as part of, or incorporated by reference, to this Quarterly Report on Form 10-Q.

			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	Interactive Data Files for the International Leaders Capital Corporation Form 10Q for the period ended December 31, 2017	X

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: February 14, 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 and Treasurer (Principal Accounting and Financial Officer)

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INTERNATIONAL LEADERS CAPITAL 10-Q2018 Q2 Quarterly report

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