(the “Parent”).

These financial statements should be read in conjunction with the company’s latest annual financial statements.

F-6

at a point in time, typically upon delivery.

charges.

operations.

The Company has been behind in filing its payroll tax returns and sales tax returns. The Company has recorded $882 as penalties and $6,835 as interest for the late payment of taxes in the accompanying financials.

F-7

Allowance for Doubtful Accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. The allowances for doubtful accounts as of September 30, 2017 and June 30, 2017 are $135,956 and $135,956 respectively.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or net realizable value. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of September 30, 2017 and June 30, 2017, the Company had outstanding balances of Finished Goods Inventory of $0 and $18,443 respectively.

As of September 30, 2017 and June 30, 2017, a reserve for Estimated Inventory Charges in the amount of $230 and $230 was established.

F-8

As Property and equipment is categorized under assets of September 30, 2017 and June 30, 2017, Plant and Equipment consisteddiscontinued operations in the balance sheet. Additionally, depreciation expense would be included under loss from operations of discontinued operations in the following:

Depreciation was $554 and $976 for the three months ended September 30, 2017 and 2016, respectively.

statement of operations.

As of September 30, 2017 and June 30, 2017, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

F-9

Intangible Assets

The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.

Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from one to ten years.

2017:

In January 2016, The FASB issued ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities(Topic 825). ASU No. 2016-01 revises the classification and measurement of investments in certain equity investments and the presentation of certain fair value changes for certain financial liabilities measured at fair value. ASU No. 2016-01 requires the change in fair value of many equity investments to be recognized in net income. For non-public companies, ASU 2016-01 is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. We are currently evaluating the impact of the adoption of ASU 2016-01 on our consolidated financial statements.

F-10

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815),” which addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 with early adoption permitted. statements.

In August 2017, the FASB issued guidance that eases certain documentation and assessment requirements of hedge effectiveness and modifies the accounting for components excluded from the assessment. Some of the modifications include the ineffectiveness of derivative gain/loss in highly effective cash flow hedge to be recorded in OCI, the change in fair value of derivative to be recorded in the same income statement line as hedged item, and additional disclosures required on the cumulative basis adjustment in fair value hedgesstatements unless otherwise disclosed, and the effect of hedging on financial statement lines for components excluded from the assessment. The amendment also simplifies the application of hedgeCompany does not believe that there are any other new accounting in certain situations to permit new hedging strategies to be eligible for hedge accounting. The guidance is effective for annual reporting periods and interim periods within those annual reporting periods beginning after December 15, 2018, our fiscal 2020. Early adoption is permitted and the modified retrospective transition method should be applied. We do not expect the adoption of this guidance topronouncements that have been issued that might have a material impact on our consolidatedits financial statements.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Instituteposition or results 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. 

operations.

Note

Collectabilityvalue exchanged according to settlement agreements with certain investors and debtors of the Company. An additional $39,179 of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducingpayables was converted and accrued during the carrying amount directly. A provision for impairmentyear ended June 30, 2018. $620,225 of trade receivables is raised when there is objective evidence that the consolidated entity or parent entitypayables will not be ableconverted to collect all amounts due according25,095 series A preferred shares, $569,991 of accrued interest will be converted to the original terms29,314 series A preferred shares, $691,828 of the receivables. Significant financial difficultiesloans payable will be converted to 59,869 series A preferred shares, $123,141 of the debtor, probability that the debtorloans from related parties will enter bankruptcy or financial reorganizationbe converted to 11,917 series A preferred shares, $320,730 of convertible loans from related parties will be converted to 18,682 series A preferred shares and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may$70,883 of other convertible debt will be impaired.converted to 14,296 series A preferred shares. The amount of the impairment allowance is the difference between the asset’s carrying amount and the presentshares will be converted at a par value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

$0.00001.

The allowances for doubtful accounts assummarized below:

Note 4

The Company Effective with the AAT merger closing described in Note 3, the note holder has a trade financing agreement with a financial institution in Australia with a maximum limitagreed to convert all outstanding principal and interest into 3,418,889 shares of AUD $150,000 at ancommon stock effected for the post-reverse split. As of June 30, 2018 the principal and interest rate of 20.95% per annum. Upon defaultrelated to this note was written down by $126 and $349, respectively, to accurately reflect the value of the loan, the Company reached a settlement with its obligation with the entity in the amount of AUD $165,523. The amount is to be paid through application of its Export Market Development Grant and up to 25% of the Company’s store sales in Australia. All of the amounts referenced are in Australian dollars. conversion.

From May 2014 to June 2017, the Company entered into several convertible loan agreements with a lender aggregating in the amount of $162,500. The notes bear$15,106 and $15,272, respectively. Effective with the AAT merger closing described in Note 3, the note holder has agreed to convert all outstanding principal and interest at 6% per yearinto 200,358 shares of effected for the post-reverse split. As of June 30, 2018, the principal and are dueinterest related to this note was written down by $20,152 and payable six months from$42,749, respectively, to accurately reflect the date of each note. The loans may be converted into common stock at any time by the electionvalue of the lender after a period of six months at a predetermined conversion price. The outstanding balance as of September 30, 2017 andconversion.

written down by $1,118 to accurately reflect the value of the conversion.

Related Party As of June 30, 2018 the principal and interest related to this loan was written down by $9,630 and $1,940, respectively, to accurately reflect the value of the conversion.

This note and any associated discount and accrued interest will be converted to preferred stock, see Note 10 for additional detail on the equity conversion. As of June 30, 2018 the principal and interest related to this loan was written down by $66,599 and $35,887, respectively, to accurately reflect the value of the conversion.

Scheduled As of June 30, 2018 the principal payments on loans are as follows;

Year ending June 30,		Loan 1				Loan 2				Loan 3				Loan 4				Loan 5				Loan 6				Total
2018		$	100,000			$	36,500			$	500,000			$	60,125			$	387,328			$	170,626			$	1,254,579
		$	100,000			$	36,500			$	500,000			$	60,125			$	387,328			$	170,626			$	1,254,579

F-14

Note 7and interest related to this loan was written down by $47,485 and $21,594, respectively, to accurately reflect the value of the conversion.

The Company also leases space on an as needed basis in Santa Monica, California that serves as its corporate headquarters. We utilize approximately 500 square feet of space pursuant to a month-to-month basis.

For$52,000 and the total lease expense for three months ended September 30, 2018 and 2017 was $0 and 2016 the aggregate rental expense$6,348, respectively. This lease was $6,348 and $14,597, respectively.

Note 8 – INCOME TAXES

Based on the available information and other factors, management believes it is more likely than not that the net deferred tax assets at, June 30, 2017 and June 30, 2016 will not be fully realizable. Accordingly, management has recorded a full valuation allowance against its net deferred tax assets atterminated in September 30, 2017 and June 30, 2017. At September 30, 2017 and June 30, 2017, the Company had federal net operating loss carry-forwards of approximately $4,979,000 and $4,755,000, respectively, expiring beginning in 2032.

Deferred tax assets consist of the following components:

Effective with the Spin Out Agreement (See Note 13), the 1,000,000 shares of preferred stock were returned to the Company.