| Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES A summary of the principal accounting policies is
set out below: Cash The Company maintains its cash balances in interest
and noninterest bearing accounts which do not exceed Federal Deposit Insurance Corporation limits. Principles of Consolidation The accompanying consolidated financial statements
include the accounts of Kibush Capital and Aqua Mining. All intercompany accounts and transactions have been eliminated. Other Comprehensive Income and Foreign Currency
Translation FASB ASC 220-10-05, Comprehensive Income The accompanying consolidated financial statements
are presented in United States dollars. Reclassifications Reclassifications have been made to prior year consolidated
financial statements in order to conform the presentation to the statements as of and for the period ended September 30, 2014. On June 10, 2014, the FASB issued Accounting Standards
Update (ASU) No. 2014-10, Development Stage Entities (Topic 915) – Elimination of Certain Financial Reporting Requirements, Including
an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation Use of Estimates The preparation of financial statements in conformity
with Generally Accepted Accounting Principles in the United States of America (“GAAP”) requires management to make certain
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates
made by management are, recoverability of long-lived assets, valuation and useful lives of intangible assets, valuation of derivative
liabilities, and valuation of common stock, options, warrants and deferred tax assets. Actual results could differ from those estimates. Non-Controlling Interests Investments in associated companies over which the
Company has the ability to exercise significant influence are accounted for under the consolidation method, after appropriate adjustments
for intercompany profits and dividends. In December 2007, the FASB issued SFAS No. 141(R),
“Business Combinations.” It requires an acquirer to recognize, at the acquisition date, the assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree at their full fair values as of that date. In a business combination achieved
in stages (step acquisitions), the acquirer will be required to re-measure its previously held equity interest in the acquiree at its
acquisition-date fair value and recognize the resulting gain or loss in earnings. The acquisition-related transaction and restructuring
costs will no longer be included as part of the capitalized cost of the acquired entity but will be required to be accounted for separately
in accordance with applicable generally accepted accounting principles. U.S. SFAS No. 141(R) applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. A non-controlling interest in a subsidiary is an ownership
interest in a consolidated entity that is reported as equity in the consolidated financial statements and separate from the Company’s
equity. In addition, net income/(loss) attributable to non-controlling interests is reported separately from net income attributable to
the Company in the consolidated financial statements. The Company’s consolidated statements present the full amount of assets, liabilities,
income, and expenses of all of our consolidated subsidiaries, with a partially offsetting amount shown in non-controlling interests for
the portion of these assets and liabilities that are not controlled by us. For our investments in affiliated entities that are
included in the consolidation, the excess cost over underlying fair value of net assets is referred to as goodwill and reported separately
as “Goodwill” in our accompanying consolidated balance sheets. Goodwill may only arise where consideration has been paid. Property and Equipment Property and equipment is stated at cost. Depreciation
is computed using the straight-line method over estimated useful lives as follows:
Plant equipment 2 to 15 years
Motor Vehicle 4 to 15 years Maintenance and repairs are charged to expense as
incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or other disposition of property and
equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are reflected in the
consolidated statement of operations. Impairment of Long-Lived Assets In accordance with FASB ASC 360-10-5, Accounting
for the Impairment or Disposal of Long-Lived Assets
● Significant under performance relative to expected historical or projected future operating results;
● Significant changes in its strategic business objectives and utilization of the assets;
● Significant negative industry or economic trends, including legal factors; If the Company determines that the carrying values
of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company’s
management performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the
impairment based on the difference between the asset’s carrying amount and its fair value, and the impairment is charged to operations
in the period in which the long-lived asset impairment is determined by management. During the year ended September 30, 2020, the Aqua
Mining business continued to generate material operating losses. Consequently, management has re-assessed the carrying value of the existing
plant and equipment and its ability to generate positive cash flows over the remaining useful life of the group of assets used within
the Timber milling business. Managements current assessment, which takes into consideration the ongoing uncertain impacts of COVID-19
on market supply chains and the access to equipment required for timber processing facility enhancements, indicates that the current group
of assets are impaired and need to be written down to a carrying value indicative representative of fair value. Managements current assessment
of the carrying value is nil as there is no reliable secondary market at present for these assets in the Port Moresby region combined
with other market constraints relating to COVID-19 impacts on supply chains. Management will continue to explore opportunities to expand
the supply and processing capacity of the timber milling process with a view to re-assessing the carrying value of the asset group should
positive operating cash flows start to be generated in future periods. The carrying value of the Company’s investment
in Joint Venture contract with leaseholders of certain Mining Leases in Papua New Guinea represents its ownership, accounted for under
the equity method. The ownership interest is not adjusted to fair value on a recurring basis. Each reporting period the Company assesses
the fair value of the Company’s ownership interest in Joint Venture in accordance with FASB ASC 325-20-35. Each year the Company
conducts an impairment analysis in accordance with the provisions within FASB ASC 320-10-35 paragraphs 25 through 32. Fair Value of Financial Instruments The carrying amounts of the Company’s cash,
accounts payable and accrued expenses approximate their estimated fair values due to the short-term maturities of those financial instruments.
The Company believes the carrying amount of its notes payable approximates its fair value based on rates and other terms currently available
to the Company for similar debt instruments Beneficial Conversion Features of Debentures In accordance with FASB ASC 470-20, Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, we recognize the advantageous
value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock
at a price per share that is less than the trading price to the public on the day the loan is made to us. The beneficial value is calculated
as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion
feature of debentures and related accruing interest is recorded as a discount to the related debt and an addition to additional paid in
capital. The discount is amortized over the remaining outstanding period of related debt using the interest method. Derivative Financial Instruments We apply the provisions of FASB ASC 815-10, Derivatives
and Hedging In applying the Black-Scholes valuation model, the
Company used the following assumptions during the year ended September 30, 2020:
For the year ended
September 30, 2020
Annual dividend yield -
Expected life (years) 0.50 – 1.00
Risk-free interest rate 2.050 %
Expected volatility 41 % The inputs used to measure fair value fall in different
levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant
to the fair value measurement. The Company determines the fair value of its derivative
instruments using a three-level hierarchy for fair value measurements which these assets and liabilities must be grouped, based on significant
levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable
inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These
two types of inputs have created the following fair-value hierarchy: Level 1 Level 2 Level 3 The following table presents the Company’s embedded
conversion features of its convertible debt measured at fair value on a recurring basis as of September 30, 2019, and as of September
30, 2020:
Carry Value at Carry Value at
September 30, 2020 September 30, 2019
Derivative liabilities:
Embedded conversion features - notes $ - $ 728,080
Total derivative liability $ - $ 728,080
For the year ended For the year ended
September 30, 2020 September 30, 2019
Change in fair value included in other income (expense), net - -1,209
The following table provides a reconciliation of the
beginning and ending balances for the Company’s derivative liabilities measured at fair value using Level 3 inputs:
For the year ended For the year ended
September 30, 2019 September 30, 2019
Embedded Conversion
Features - Notes:
Balance at beginning of year $ 728,080 $ 726,871
Change in derivative liabilities $ -728,080 $ 2,418
Net change in fair value included in net loss - -1,209
Ending balance $ 0 $ 728,080 The Company re-measures the fair values of all its
derivative liabilities as of each period end and records the net aggregate gain/loss due to the change in the fair value of the derivative
liabilities as a component of other expense, net in the accompanying consolidated statement of operations. During the years ended September
30, 2020, and 2019, the Company recorded a net increase (decrease) to the fair value of derivative liabilities balance $0 and -$ 1,209,
respectively. Debt Consolidation On January 14, 2020, the Company entered into a Promissory
Note Consolidation Agreement ( the “Consolidation Agreement”) (“Mr. Sheppard”) (the “Outstanding Debt”) As a consequence of the debt consolidation, the derivative
Liabilities associated with option component has been extinguished, therefore, derivative liabilities amounted to $728,080 as of the debt
consolidation date are subsequently reversed and charged into profit and losses in January 2020.
Promissory Note Outstanding Principal Outstanding Interest
David Loren Corporation. 2% Secured Promissory Note issued May 1, 2011 to Hoboken Street Associates, and as assigned to Warren Sheppard on July 3, 2013 22,166 3,780
David Loren Corporation. 2% Secured Promissory Note issued January 2, 2012 to Hoboken Street Associates, and as assigned to Warren Sheppard on July 3, 2013 48,000 7,438
David Loren Corporation. 2% Secured Promissory Note issued January 3, 2013 to Hoboken Street Associates, and as assigned to Warren Sheppard on July 3, 2013 12,000 1,618
Kibush Capital Corp. 12.5% Secured Promissory Note issued March 31, 2014 to Warren Sheppard. 157,500 104,815
Kibush Capital Corp. 12.5% Secured Promissory Note issued June 30, 2014 to Warren Sheppard. 110,741 70,384
Kibush Capital Corp. 12.5% Secured Promissory Note issued September 30, 2014 to Warren Sheppard. 98,575 59,670
Kibush Capital Corp. 12.5% Secured Promissory Note issued September 30, 2015 to Warren Sheppard. 316,046 153,387
Kibush Capital Corp. 12.5% Secured Promissory Note issued October 10, 2016 to Warren Sheppard. 155,300 37,272
Total: 920,328 438,364 Upon the assumption by the Company of the Outstanding
Debt, the Company and Mr. Sheppard entered into an unsecured promissory note (the “ Consolidated Note On January 9th, 2020, the Company issued Mr Sheppard
14,999,899 Class B Preference Shares and 101 Class C Preference Shares in full satisfaction of his unpaid 2015 and 2016 Salary of $250,000. Loss per Share The Company applies FASB ASC 260, “Earnings
per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average
number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that
the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury
stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive. Income Taxes Income taxes are accounted for in accordance with
ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities are recognized for
the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income
in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established
when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Mineral Property, Mineral Rights (Claims) Payments
and Exploration Costs Pursuant to EITF 04-02, “Whether Mineral Rights
are Tangible or Intangible Assets and Related Issues”, the Company has an accounting policy to capitalize the direct costs to acquire
or lease mineral properties and mineral rights as tangible assets. The direct costs include the costs of signature (lease) bonuses, options
to purchase or lease properties, and brokers’ and legal fees. If the acquired mineral rights relate to unproven properties, the
Company does not amortize the capitalized mineral costs, but evaluates the capitalized mineral costs periodically for impairment. The
Company expenses all costs related to the exploration of mineral claims in which it had secured exploration rights prior to establishment
of proven and probable reserves. Accounting Treatment of Mining Interests At this time, the Company does not directly own or
directly lease mining properties. However, the Company does have contractual rights and governmental permits which allow the Company to
conduct mining exploration on the properties referenced in this report. These contractual relationships, coupled with the government permits
issued to the Company (or a subsidiary), are substantially similar in nature to a mining lease. Therefore, we have treated these contracts
as lease agreements from an accounting perspective . Research and Development Research and development costs are recognized as an
expense in the period in which they are incurred. The Company incurred no research and development costs for the years ended September
30, 2020, and 2019, respectively. Recent Accounting Pronouncements In November 2019, the ASB issued Accounting Standards
Update 2019-08-Compensation-Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements-Share-Based
Consideration Payable to a Customer. This ASU will affect companies that issue share-based payments (e.g., options or warrants) to their
customers. Similar to issuing a cash rebate to a customer, issuing a share-based payment to a customer can incentivize additional purchases.
The share-based payments can also serve a strategic purpose by aligning the interests of a supplier and its customer, because the customer’s
additional purchases increase its investment in the supplier. For entities that have not yet adopted the amendments in Update 2018-07,
the amendments in this update are effective in fiscal years beginning after December 15, 2019. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements. In November 2019, the FASB issued Accounting Standards
Update 2019-09-Financial Services-Insurance (Topic 944). This ASU will affect companies that issue share-based payments (e.g., options
or warrants) to their customers. Similar to issuing a cash rebate to a customer, issuing a share-based payment to a customer can incentivize
additional purchases. The share-based payments can also serve a strategic purpose by aligning the interests of a supplier and its customer,
because the customer’s additional purchases increase its investment in the supplier. The amendments in this Update are effective
in fiscal years beginning after December 15, 2021. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements. In November 2019, the FASB issued Accounting Standards
Update 2019-10-Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective
Dates. This ASU discusses the FASB’s proposed ASU Codification Improvements to Hedge Accounting, which would clarify certain amendments
made by ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, to the guidance in ASC 815 on hedging activities. The
FASB issued the proposal in response to feedback and questions received from stakeholders related to their implementation of ASU 2017-12.
The ASU also discusses the recent issuance of FASB ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives
and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The ASU provides a framework to stagger effective dates for future major
accounting standards and amends the effective dates for certain major new accounting standards to give implementation relief to certain
types of entities. Specifically, ASU 2019-10 changes some effective dates for ASU 2017-12 on hedging, ASU 2016-02 on leasing, ASU 2016-13
on current expected credit losses, and ASU 2017-04 on simplifying the goodwill impairment test. The amendments in this Update amend the
mandatory effective dates Credit Losses for all entities as follows or fiscal years beginning after December 15, 2019. The effective dates
for Hedging after applying this update are as follows: for fiscal years beginning after December 15, 2018. The effective dates for Leases
after applying this Update are as follows for fiscal years beginning after December 15, 2018. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements. In December 2019, the FASB issued Accounting Standards
Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU summarizes the FASB’s recently issued
Accounting Standards Update (ASU) No. 2019-12, simplifying the Accounting for Income Taxes. The ASU enhances and simplifies various aspects
of the income tax accounting guidance in ASC 740. The amendments in this update are effective for fiscal years, and interim periods within
those fiscal years, beginning after December 15, 2020. We do not expect the adoption of this ASU to have a material effect on our consolidated
financial statements. In January 2020, the FASB issued Accounting Standards
Update 2020-01-Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and
Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. This ASU clarifies the interaction between
accounting standards related to equity securities (ASC 321), equity method investments (ASC 323), and certain derivatives (ASC815). The
amendments in this Update are effective for fiscal years beginning after December 15, 2020. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements. In March 2020, the FASB issued Accounting Standards
Update 2020-03-Codification Improvements to Financial Instruments. The Standard is part of FASB’s ongoing project to improve and
clarify its Accounting Standards Codification and avoid unintended application. The items addressed are not expected to significantly
affect current practice or create a significant administrative cost for most entities. The amendment is divided into issues 1 to 7 with
different effective dates as follows: The amendments related to Issue 1, Issue 2, Issue 4, and Issue 5 are conforming amendments. For
public business entities, the amendments are effective upon issuance of this update. For all other entities, the amendments are effective
for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. The
amendment related to Issue 3 is a conforming amendment that affects the guidance related to the amendments in 2016-01, Financial Instruments-Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The effective date of this update for the
amendments to Update 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
For entities that have not yet adopted the amendments related to Update 2016-13, the effective dates and the transition requirements for
these amendments are the same as the effective date and transition requirements in Update 2016-13. For entities that have adopted the
guidance in Update 2016-13, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods
within those fiscal years. For those entities, the amendments should be applied on a modified-retrospective basis by means of a cumulative-effect
adjustment to opening retained earnings in the statement of financial position as of the date that an entity adopted the amendments in
Update 2016-13. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements. In June 2020, the FASB issued Accounting Standards
Update 2020-05—Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities. The
amendments in this Update are effective upon issuance. In August 2020, the FASB issued Accounting Standards
Update 2020-06—Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The
amendments in this Update are effective for public business entities that meet the definition of a Securities and Exchange Commission
(SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December
15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal
years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should
adopt the guidance as of the beginning of its annual fiscal year. An entity that has not yet adopted the amendments in Accounting Standards
Update No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic
815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, and (Part II) Replacement of the Indefinite Deferral
for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests
with a Scope Exception, can early adopt the amendments in this Update for convertible instruments that include a down round feature. This
early adoption is permitted for fiscal years beginning after December 15, 2019. In October 2020, the FASB issued Accounting Standards
Update 2020-08—Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs. For public business
entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2020. Early application is not permitted. All entities should apply the amendments in this Update on a prospective basis
as of the beginning of the period of adoption for existing or newly purchased callable debt securities. These amendments do not change
the effective dates for Update 2017-08. We do not expect the adoption of this ASU to have a material effect on our consolidated financial
statements. In October 2020, the FASB issued Accounting Standards
Update 2020-10—Codification Improvements. The amendments in Sections B and C of this Update are effective for annual periods beginning
after December 15, 2020, for public business entities. For all other entities, the amendments are effective for annual periods beginning
after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. We do not expect the adoption of
this ASU to have a material effect on our consolidated financial statements. In January 2021, the FASB issued Accounting Standards
Update 2021-01—Reference Rate Reform (Topic 848): Scope. The amendments in this Update are effective immediately for all entities.
We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements. In March 2021, the FASB issued Accounting Standards
Update 2021-03—Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events. The amendments
in this Update are effective on a prospective basis for fiscal years beginning after December 15, 2019. Early adoption is permitted for
both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity
should not retroactively adopt the amendments in this Update for interim financial statements already issued in the year of adoption.
The amendments in this Update also include an unconditional one-time option for entities to adopt the alternative prospectively after
its effective date without assessing preferability under Topic 250, Accounting Changes and Error Corrections. We do not expect the adoption
of this ASU to have a material effect on our consolidated financial statements. Other accounting standards that have been issued or
proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material
impact on our consolidated financial statements upon adoption. GST Receivable The company was subject to a Goods and Services Tax
Audit in Papua New Guinea during the financial year, the amounts claimed were confirmed and we are awaiting refunds to the amount as shown
in the Balance Sheet as Other Assets in due course. In the meantime we are offsetting Goods and Services Tax charged on sales against
this amount. |
