Forward-Looking Statements

The following discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products and services for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using us for certain applications; delays our introduction of new products or services; and our failure to keep pace with our competitors.

When used in this discussion, words such as "believes", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

General Information about Our Company

Life Clips, Inc. (the "Company") was incorporated in Wyoming on March 20, 2013.

On April 5, 2021, the Company closed its acquisition of Cognitive Apps Software Solutions, Inc. ("Cognitive Apps"), a developer of artificial intelligence (AI) applications for the healthcare industry and psychedelic research. Cognitive Apps was incorporated in British Columbia, Canada on November 25, 2020. Its principal business is developing, financing, producing and distributing AI based technological solutions to the mental health and healthcare sector. Cognitive Apps sold all of its issued and outstanding capital stock to the Company, becoming a 100% wholly owned subsidiary.

On August 25, 2021, the Company closed its acquisition of Belfrics Holdings Limited and its related entities (collectively "Belfrics"). The new business of operating cryptocurrency exchanges and blockchain development services in Asia and Africa. Belfrics sold all of its issued and outstanding capital stock to the Company, becoming a 100% wholly owned subsidiary.

The Belfrics entities acquired are:

Belfrics Global PTE Ltd., a Singapore corporation
Belfrics BT Pvt Ltd, an India corporation
Belfrics Cryptex Pvt Ltd, an India corporation
Belfrics Tanzania Ltd, a Tanzania corporation
Belfrics Nigeria Pvt Ltd, a Nigeria corporation
Belfrics BT SDN BHD, a Malaysia corporation
Belfrics Holding Limited, a Malaysia corporation
Belfrics Academy SDN BHD, a Malaysia corporation
Belfrics International Ltd, a Malaysia corporation
Belfrics Europe SL, a Spain corporation
Belfrics Kenya Pvt. Ltd, a Kenya corporation
Incrypts SDN BHD, a Malaysia corporation
Belfrics Malaysia SDN BHD, a Malaysia corporation

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In exchange for the acquisition, Belfrics received the following consideration:



  (a) Preferred Shares. Exchange each issued and outstanding share of The Belfrics
      Entities common stock for 2,000,000 shares of Series C Preferred Shares,
      pursuant to the Designation set forth as Exhibit B.

  (c) Earn Out. Upon obtaining the milestones set forth on Schedule 2.1(c) the
      Sellers shall be entitled to up to an additional 1,500,000 of Series C
      Preferred Stock on a pro rata basis.

Founded in 2014, the Belfrics digital exchange platform, which was fully developed in-house, is one of the most compliant platforms in the cryptocurrency industry. Supported by the proprietary technology of Belrium Blockchain KYC solution, the KYC ("Know Your Customer") and AML ("Anti-Money Laundering") process of Belfrics Exchange is a well-accepted compliance solution. With 10 operational offices in 8 countries, Belfrics provides localized and personalized support to digital currency traders. Through its Blockchain Academy, Belfrics provides continuous training to traders, developers and Blockchain enthusiasts in more than 20 countries. Belfrics is licensed and regulated by the Labuan Financial Services Authority (LFSA) in Malaysia.

Results of Operations for the Three Months Ended March 31, 2022 and 2021

For the three months ended March 31, 2022 and 2021, the Company had revenues of 2,964,111 and $0 respectively. This is as a direct result of the acquisition of Belfrics and is primarily generated by Belfrics.

For the three months ended March 31, 2022 and 2021, the Company had gross profit of $674,173 and $0, respectively. This is as a direct result of the acquisition of Belfrics and is primarily generated by Belfrics.

Total operating costs were $1,709,204 compared with $91,239 for the three months ended March 31, 2022 and 2021, respectively. The increase is directly related to higher professional fees, marketing expenses, payroll expenses, travel and meal expenditures, as well as other general and administrative expenses, primarily due to the acquisition of Belfrics.

Other Income (Expense) was $4,389,106 when compared with $4,898,351 for the three months ended March 31, 2022 and 2021, respectively. The difference of $509,245 is primarily due to a change in fair value of derivatives in 2021, and a change in fair value of contingent liability in 2022. There were no derivative calculations required in 2022, which caused in an increase of $5,003,769. In 2022, management's assessment of the stock milestones attainable by Belfrics resulted in an increase of $4,464,254.

Net income for the three months ended March 31, 2022 was $3,354,075 as compared to net income of $4,807,112 for the three months ended March 31, 2021.

Results of Operations for the Nine Months Ended March 31, 2022 and 2021

For the nine months ended March 31, 2022 and 2021, the Company had revenues of $5,244,952 and $0, respectively. This is as a direct result of the acquisition of Belfrics and is primarily generated by Belfrics.

For the nine months ended March 31, 2022 and 2021, we had gross profit of $2,276,014 and $0, respectively. This is as a direct result of the acquisition of Belfrics and is primarily generated by Belfrics.

Total operating costs were $3,868,479 when compared with $286,629 for the nine months ended March 31, 2022 and 2021, respectively. The increase is directly related to higher professional fees, marketing expenses, payroll expenses, travel and meal expenditures, as well as other general and administrative expenses, primarily due to the acquisition of Belfrics.

Other Income (Expense) was $990,203 when compared with $8,829,754 for the nine months ended March 31, 2022 and 2021, respectively. This change is primarily due to a change in fair value of derivatives of that decreased from $9,127,156 in 2021 to $1,577,001 in 2022. This is further offset by a change in fair value of contingent liability not present in 2021, as well as a loss on impairment of intangibles. The contingent liability and the impairment is due to the acquisition of Belfrics.

Net Loss for the nine months ended March 31, 2022 was $602,262 as compared to Net Income of $8,543,125 for the nine months ended March 31, 2021.

Liquidity and Capital Resources

Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. As of March 31, 2022 the Company had cash on hand of $855,759, total assets of $50,624,450, total liabilities of $26,119,132 and total stockholder's equity of $24,505,318. As all variable convertible notes payable were converted to a fixed value, the derivative liability of $1,577,001 was final and ended on June 30, 2021. A loss on impairment of intangibles in the amount of $1,522,597 was recorded to impair cryptocurrency assets.

The Company's cash was generated from a Regulation A fundraising. The Company plans to raise additional working capital via additional notes or equity sales to ensure that it will have enough cash to fund its primary operation for the next twelve (12) months.

The Company has no agreements in place with its shareholders, officer and director or with any third parties to fund operations beyond the end of the Company's March 31, 2022 period ended. The Company has not negotiated nor has available to it any other third party sources of liquidity.



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Cash flows from operating activities for the nine-month periods ended March 31, 2022 and 2021 were $(1,211,776) and $(57,857), respectively. The change was primarily due to net loss and increased accounts payable being offset by changes in fair value of derivative liabilities, due to related parties, loss on impairment of intangibles and accrued expenses converted to stock, which are directly related to the acquisition of Belfrics.

Cash flows from investing activities totaled $(2,821,266) and $0 for the nine-month periods ended March 31, 2022 and 2021, respectively. The change was directly related to Belfrics' purchase of intangible assets of $2,650,006, purchases of property and equipment of $279,908, offset by net cash acquired on acquisitions of $74,377 and due from related parties of 34,271.

Cash flows from financing activities totaled $4,651,000 and $85,000 for the nine-month periods ended March 31, 2022 and 2021, respectively. This is primarily due to the new proceeds from the Regulation A financing.

Off-Balance Sheet Arrangements

The Company has no current off-balance sheet arrangements and does not anticipate entering into any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition.

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