SEC Comment Letter 0000000000-23-002634 to TOKEN COMMUNITIES LTD. (TKCM) (CIK 0001683252)
TOKEN COMMUNITIES LTD. (TKCM) (CIK 0001683252)
Date: March 16, 2023 · CIK: 0001683252 · Accession: 0000000000-23-002634
AI Filing Summary & Sentiment
File numbers found in text: 000-55688
Letter
United States securities and exchange commission logo March 16, 2023 David Chen Chief Executive Officer Token Communities Ltd. 4802 Lena Road, Unit 105 Bradenton, Florida, 34211 Re:Token Communities Ltd. Form 10-K for the Year Ended June 30, 2022 Filed October 13, 2022 Form 8-K filed January 12, 2023 Form 10-Q for the Quarter Ended December 31, 2022 Filed February 21, 2023 File No. 000-55688 Dear David Chen: We have reviewed your February 21, 2023 response to our comment letter and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Unless we note otherwise, our references to prior comments are to comments in our February 15, 2023 letter. Form 10-Q for the Quarter Ended December 31, 2022 Notes to Consolidated Financial Statements Note 1 - Organization and Basis of Presentation Organization and Line of Business, page 5 1.During fiscal 2022, you sold the Lukki Exchange, a non-operating crypto exchange with zero cost basis, and received consideration of $50,000 which you recorded as a "Deposit." Please disclose the terms and nature of the deposit and when it will be cash settled, if at all. Also, tell us if the counterparty/buyer is a related party or an affiliate and disclose, if applicable.
FirstName LastNameDavid Chen Comapany NameToken Communities Ltd. March 16, 2023 Page 2 FirstName LastNameDavid Chen Token Communities Ltd. March 16, 2023 Page 2 Note 2 - Summary of Significant Accounting Policies Revenue Recognition, page 9 2.On page 10, you summarized your "only revenue category" as "Advisory fees and related services ... for a suite of one to two dozen services that include advising on where to establish a corporation, establishing the corporation (often Gibraltar or Malta), writing white paper, setting up website, making videos or animations describing the company and its business, engaging in public relations, and introducing potential investors." However, on page 6, under Note 1, you stated that "the Company has remained in the advisory and consulting or companies regarding block chain technology, and has maintained a remote staff in China to conduct research and development on naturopathic medicine." Please revise to reconcile or remove the inconsistent disclosures characterizing the nature of your operations and services from which you expect to derive any revenues.
Form 8-K filed January 12, 2023 Item 2.01 Completion of Acquisition or Disposition of Assets , page 2 3.The statements in your response to prior comment 1 appear to be inconsistent with your Form 10-K and Form 10-Q disclosures and the accompanying financial statements. In particular, although you stated that in the last year or so, you had about "30 people working for the Company in China conducting research and development in naturopathic medicine," your financial statements do not present nor disclose R&D costs and payments for related services. For the years ended June 30, 2021 and 2022 and through the quarterly period ended December 31, 2022, you reported static balances for cash, accounts payable and accrued expenses in the amounts of $312, $472,488 and $354,542 for those balance sheet accounts respectively. Additionally, in the statements of stockholders' equity for the year ended June 30, 2022 through the quarterly period ended December 31, 2022, you did not report the issuance of any shares as compensation for services rendered (i.e., stock- based compensation), absent cash payments. As such, your financial statements taken as a whole appear to indicate that you may have been a shell company, absent meaningful year-over-year changes in the accounts that would have been typical of a business with more than nominal operations. Please amend your Form 8-K per our prior comment and/or the Forms 10-K and 10-Q and the accompanying financial statements as applicable, or provide us a detailed analysis as to why these revisions are not required.
FirstName LastNameDavid Chen Comapany NameToken Communities Ltd. March 16, 2023 Page 3 FirstName LastName David Chen Token Communities Ltd. March 16, 2023 Page 3 You may contact Kathryn Jacobson, Senior Staff Accountant at (202) 551-3365 or Robert Littlepage, Accountant Branch Chief at (202) 551-3361 if you have questions regarding comments on the financial statements and related matters. Sincerely, Division of Corporation Finance Office of Technology
Show Raw Text
United States securities and exchange commission logo
March 16, 2023
David Chen
Chief Executive Officer
Token Communities Ltd.
4802 Lena Road, Unit 105
Bradenton, Florida, 34211
Re:Token Communities Ltd.
Form 10-K for the Year Ended June 30, 2022
Filed October 13, 2022
Form 8-K filed January 12, 2023
Form 10-Q for the Quarter Ended December 31, 2022
Filed February 21, 2023
File No. 000-55688
Dear David Chen:
We have reviewed your February 21, 2023 response to our comment letter and have the
following comments. In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional
comments. Unless we note otherwise, our references to prior comments are to comments in our
February 15, 2023 letter.
Form 10-Q for the Quarter Ended December 31, 2022
Notes to Consolidated Financial Statements
Note 1 - Organization and Basis of Presentation
Organization and Line of Business, page 5
1.During fiscal 2022, you sold the Lukki Exchange, a non-operating crypto exchange with
zero cost basis, and received consideration of $50,000 which you recorded as a "Deposit."
Please disclose the terms and nature of the deposit and when it will be cash settled, if at
all. Also, tell us if the counterparty/buyer is a related party or an affiliate and disclose, if
applicable.
FirstName LastNameDavid Chen
Comapany NameToken Communities Ltd.
March 16, 2023 Page 2
FirstName LastNameDavid Chen
Token Communities Ltd.
March 16, 2023
Page 2
Note 2 - Summary of Significant Accounting Policies
Revenue Recognition, page 9
2.On page 10, you summarized your "only revenue category" as "Advisory fees and related
services ... for a suite of one to two dozen services that include advising on where to
establish a corporation, establishing the corporation (often Gibraltar or Malta), writing
white paper, setting up website, making videos or animations describing the company and
its business, engaging in public relations, and introducing potential investors." However,
on page 6, under Note 1, you stated that "the Company has remained in the advisory and
consulting or companies regarding block chain technology, and has maintained a remote
staff in China to conduct research and development on naturopathic medicine." Please
revise to reconcile or remove the inconsistent disclosures characterizing the nature of your
operations and services from which you expect to derive any revenues.
Form 8-K filed January 12, 2023
Item 2.01 Completion of Acquisition or Disposition of Assets , page 2
3.The statements in your response to prior comment 1 appear to be inconsistent with your
Form 10-K and Form 10-Q disclosures and the accompanying financial statements. In
particular, although you stated that in the last year or so, you had about "30 people
working for the Company in China conducting research and development in naturopathic
medicine," your financial statements do not present nor disclose R&D costs and payments
for related services. For the years ended June 30, 2021 and 2022 and through the quarterly
period ended December 31, 2022, you reported static balances for cash, accounts payable
and accrued expenses in the amounts of $312, $472,488 and $354,542 for those balance
sheet accounts respectively. Additionally, in the statements of stockholders' equity for the
year ended June 30, 2022 through the quarterly period ended December 31, 2022, you did
not report the issuance of any shares as compensation for services rendered (i.e., stock-
based compensation), absent cash payments. As such, your financial statements taken as a
whole appear to indicate that you may have been a shell company, absent meaningful
year-over-year changes in the accounts that would have been typical of a business with
more than nominal operations. Please amend your Form 8-K per our prior comment
and/or the Forms 10-K and 10-Q and the accompanying financial statements as applicable,
or provide us a detailed analysis as to why these revisions are not required.
FirstName LastNameDavid Chen
Comapany NameToken Communities Ltd.
March 16, 2023 Page 3
FirstName LastName
David Chen
Token Communities Ltd.
March 16, 2023
Page 3
You may contact Kathryn Jacobson, Senior Staff Accountant at (202) 551-3365 or
Robert Littlepage, Accountant Branch Chief at (202) 551-3361 if you have questions regarding
comments on the financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Technology