T-REX Acquisition Corp 10-K for FY2016
T-REX Acquisition Corp. (TRXA)
About this 10-K
T-REX Acquisition Corp filed this 10-K on January 25, 2021, covering the fiscal year ended June 30, 2016 (FY2016).
Headline figures
Fiscal year ended June 30, 2016, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $0 a year earlier
- Net loss
- $141.07K
- compared with a net loss of $282.68K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2016
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number: 333-152551
| TREX Acquisition Corp. |
| (Exact name of registrant as specified in its charter) |
| Nevada |
| 26-1754034 |
| (State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
|
| ||
| 7301 NW 4th Street Suite 102 Plantation FL |
| 33317 |
| (Address of principal executive offices) |
| (Zip Code) |
| (954) 742-3001 |
| (Registrant’s Telephone Number, Including Area Code) |
Securities registered under Section 12(b) of the Act:
| Title of each class registered: |
| Name of each exchange on which registered: |
| None |
| None |
Securities registered under Section 12(g) of the Act:
Title of each class registered:
None
Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No
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. ☐ Yes ☒ 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 (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☐ Yes ☒ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
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 | ☒ |
|
| Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☒ Yes No ☐
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. As of December 31, 2016, approximately $2,812.60.
As of date of filing January 25, 2021 there were 13,589,581 shares of the issuer’s common stock issued and outstanding (par value $.001).
Documents incorporated by reference. There are no annual reports to security holders, proxy information statements, or any prospectus filed pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by reference.
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Forward-Looking Information
This Annual Report of TREX Acquisition Corp. on Form 10-K contains forward-looking statements, particularly those identified with the words, “anticipates,” “believes,” “expects,”, “may”, “will”, “plans,” “intends,” “objectives,” and similar expressions. These statements reflect management’s best judgment based on factors known at the time of such statements. The reader may find discussions containing such forward-looking statements in the material set forth under “Management’s Discussion and Analysis and Plan of Operations,” generally, and specifically therein under the captions “Liquidity and Capital Resources” as well as elsewhere in this Annual Report on Form 10-K. Actual events or results may differ materially from those discussed herein. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. New risks emerge from time to time; therefore, it is not possible to predict all risks. No representation, guaranty, or warranty is to be inferred from forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements, statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
This comprehensive annual report on Form 10-K (the “Super 10-K”) includes the Company’s financial statements for the fiscal year ending 2016. In order to bring the Company’s filings current in an expeditious manner, the Company shall file similar Super 10-K reports for the fiscal years ending, June 30, 2017, June 30, 2018, June 30, 2019 and June 30, 2020. The Company became delinquent in its filings primarily due to financial circumstances directly related to the failure of its core operating business. Since fiscal year ending June 30, 2014 until the date of this filing, the Company has not maintained an operating business from which it could draw the financial resources to retain and compensate the required professionals needed to maintain compliance. Each Super 10-K for a given fiscal year contains all required information and disclosures to shareholders that each quarterly and annual report would normally have provided had such quarterly and annual report had been filed timely. In the interest of complete disclosure, the Company has included current information in this annual report for all material events and developments that have taken place since June 30, 2014 through the filing date of this annual report.
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BACKGROUND
We were incorporated on January 16, 2008 under the laws of the state of Nevada as Plethora Resources Inc. to commence operations in the business of consulting to oil & gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia. We were unable to fund our intended business and, on May 28, 2009, but effective February 1, 2009, we acquired a wholly owned subsidiary, Sync2 International Ltd, for the assumption of the debts of Sync2 Agency Ltd, a wholly owned subsidiary of Sync2 International Ltd. Sync2 Agency Ltd is an internet marketing and website development company.
On May 14, 2009 we changed our name to Sync2 Networks Corp. On December 15, 2009, we shut down the operations of Sync2 Agency Ltd. after incurring substantial operating losses, and subsequently wrote-off the investment in Sync2 Agency Ltd.
At the end of 2009 Sync2 International Ltd, became inactive and Sync2 Agency Ltd. was liquidated.
Prior Business Operations
We were previously engaged in the business of acquiring and developing internet marketing and web site development entities and/or their individual software programs designed to enable third-party clients to better market their products through the use of the internet.
2013 Change in Control
On approximately August 14, 2013, there was a change in our control. In accordance with the terms and provisions of that certain escrow agreement dated March 31, 2012 (the “2012 Escrow Agreement”), Warren Gilbert, who was at the time the current President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and sole member of the Board of Directors, acquired in a private transaction an aggregate of 62,863,800 shares of our restricted common stock representing an equity interest of 61% of the total issued and outstanding shares. The amount of consideration paid was $325,000 and were outside funds from unrelated parties. The shares of common stock were acquired as follows: (i) 51,000,000 shares from Artur Etozov; and (ii) 11,863,800 shares from approximately ten separate shareholders each holding less than 5% of the total issued and outstanding.
Domestication of Subsidiary
On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”). Under Nevada statutory law, involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 International Ltd. as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta. As part of the process of domestication of Sync 2 International Ltd, we recognized $516,245 of income during the fiscal year ended June 30, 2013 from the write off of the remaining assets and liabilities of Sync 2 International Ltd,.
Sync2 International Ltd. entity status has been revoked by the Nevada Secretary of State as of the date of this filing.
FINRA Corporate Action/Information Statement on Form 14C
On October 9, 2013, our Board of Directors and majority shareholders approved a reverse stock split of one for one thousand (1:1000) of our total issued and outstanding shares of common stock (the “Reverse Stock Split”) and a change in our name from “Sync2 Networks Corp.” to “TREX Acquisition Corp.” (the “Name Change”). Pursuant to our Bylaws and the Nevada Revised Statutes, a vote by the holders of at least a majority of the Company’s outstanding votes was required to effectuate the Reverse Stock Split and the Name Change. Our articles of incorporation do not authorize cumulative voting. As of the record date of October 9, 2013, we had 103,046,175 voting shares of common stock issued and outstanding. The consenting stockholders of the shares of common stock were entitled to 62,863,800 votes, which represented approximately 61.0% of the voting rights associated with our shares of common stock at that time. The consenting stockholders voted in favor of the Reverse Stock Split and the Name Change described herein in a unanimous written consent dated October 9, 2013. An information statement on Form 14(c) was filed with the Securities and Exchange Commission on December 11, 2013.
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On December 11, 2013, we filed an Information Statement on Form 14(c) with the Securities and Exchange Commission, which was furnished to all holders of our common stock as of October 9, 2013, in connection with the action taken by written consent of holders of a majority of the outstanding voting power of the Company to authorize the following: (i) ratification of an amendment to the articles of incorporation (the “Name Change Amendment”) to effectuate the Name Change and (ii) ratification of the Reverse Stock Split.
Warren Gilbert was the shareholder of record who held in the aggregate a majority of our total issued and outstanding common stock and who signed the written consent of stockholders. Prior to the Reverse Stock Split, Warren Gilbert was the holder of record of 62,863,800 shares of common stock, which was 61% of the outstanding voting power of the Company at that time.
The Board of Directors had previously considered factors regarding their approval of the Reverse Stock Split including, but not limited to: (i) current trading price of our shares of common stock on the OTC QB Market and potential to increase the marketability and liquidity of our common stock; (ii) possible reluctance of brokerage firms and institutional investors to recommend lower-priced stocks to their clients or to hold in their own portfolios; (iii) desire to meet future requirements of per-share price and net tangible assets and shareholders’ equity relating to admission for trading on other markets; and (iv) posturing us and our structure in favorable position in order to effectively negotiate with potential acquisition candidates regarding assets. Our Board of Directors approved the Name Change and the Reverse Stock Split and recommended our majority shareholders review and approve the Name Change and the Reverse Stock Split.
The Reverse Stock Split was effectuated based upon the filing of appropriate documentation with FINRA. The Reverse Stock Split decreased our total issued and outstanding shares of common stock from approximately 103,046,175 shares to 103,046 shares of common stock. The common stock will continue to be $0.001 par value. Our trading symbol changed to “TRXA”. After the Reverse Stock Split and the Name Change, the CUSIP number for the Company became 89532J 108. All subsequent common stock references in this filing are post-Reverse Stock Split figures, unless otherwise identified.
The Name Change was effectuated to better reflect our future business goal to acquire an operating business via merger or acquisition.
2014 Change of Control
During fiscal year ended June 30, 2014 and to date, we did not issue any shares of common stock other than shares issued for debt conversion as discussed below.
During 2010, we had received monies from Boardwalk Business Developments Inc. (“Boardwalk”) pursuant to an operating loan and other advances made by Boardwalk to us. Therefore, we evidenced the monies loaned by that certain convertible debenture dated June 30, 2010 (the “Convertible Debenture”), which Convertible Debenture was and has been evidenced on our audited financial statements. Subsequently, Boardwalk and certain assignees (each an “Assignee” and collectively, the “Assignees”) entered into those certain assignments of convertible debenture dated July 15, 2012 (the “Assignments”) pursuant to which Boardwalk assigned and transferred to each of the Assignees a portion of its right, title and interest in and to the Debenture for payment of consideration from each of $8,000. The Assignees further assigned portions of their respective debt to others for consideration. We received those certain conversion notices dated September 21, 2014 from certain of the Assignees and others (collectively, the “Conversion Notices”) and desired to settle the debt evidenced by the Convertible Debenture in the aggregate amount of $691,926.00 by conversion into an aggregate post-Reverse Stock Split 1,835,835 shares of our restricted common stock at $0.3769 (which conversion price was changed based on the 1:1000 reverse stock split). Therefore, effective on September 21, 2014, our Board of Directors approved the issuance of an aggregate 1,835,835 shares of our restricted common stock to the Assignees and others in accordance with the terms and provisions of the respective Conversion Notices. The shares of common stock were issued at $0.3769 per share. The shares of common stock were issued to United States residents in reliance on Section 4(2) of the Securities Act. The securities have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The Assignees and others acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.
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The shares related to the Boardwalk Convertible Debenture were issued by the Company on January 21, 2020. No Assignee or other subsequent assignee holds in the aggregate shares exceeding 4.99% of the total issued and outstanding shares of common stock. As of September 21, 2014, Mr. Warren Gilbert is no longer the controlling shareholder of the Company.
CURRENT BUSINESS OPERATIONS
For the fiscal year ending June 30, 2016 , the Company did not have any material business operations. From the period covered in this filing until the date of this filing, the Company has not had any material business operations.
2014 Failed Prospective Kerr Utility Technologies Inc. Reverse Merger Transaction
On May 30, 2014, our Board of Directors approved the execution of a non-binding Letter of Intent in the form of a Term Sheet (the “2014 Term Sheet”) with Kerr Utility Technologies Inc. (“Kerr”) regarding a prospective tax-free reverse merger transaction with Kerr. In connection with this prospective reverse merger, we had intended to incorporate and establish two wholly owned subsidiaries of the Company to facilitate the Kerr acquisition (collectively, the “Merger Vehicles”). At that time, our Board of Directors also approved a private placement to raise, on an “all or none” basis, an aggregate sum of $500,000 for Kerr’s benefit prior to consummation of the Kerr acquisition.
In July 2014, in anticipation of the closing of the reverse merger transaction, a related party advanced, on behalf of the Company, $100,000 to Kerr (the “July 2014 Advance”). The July 2014 Advance is in addition to the $100,000 advanced by the same related party in May 2014 (the “May 2014 Advance”). The Kerr acquisition was ultimately not concluded, and the Company could not recover the $200,000 in funds reflected in the May 2014 Advance and the July 2014 Advance. As a result, the Company had written-off both advances totaling $200,000 ($100,000 in the year ending June 30, 2014 and $100,000 during the quarter ended September 30, 2014); specifically accounting for the May 2014 Advance during the Company’s fiscal year ending June 30, 2014 and the July 2014 Advance during the Company’s quarter ended September 30, 2014.
As of September 30, 2014, the 2014 Term Sheet with Kerr is no longer in effect, no Merger Vehicles had been established, and the Kerr acquisition was never consummated.
2018 Failed Reverse Merger Attempt
On April 19, 2018, the Company entered into a non-binding indication of interest (“LOI”) to acquire Kaneptec Enterprises, Inc., a company engaged in the hemp and cannabidiol business (“Kaneptec”) in a reverse merger (the “Kaneptec Transaction”). In reliance of the LOI, the Company sold 350,000 shares to a related party for $47,500, and this cash was transferred to Kaneptec in order to facilitate the Kaneptec Transaction. This potential merger candidate also advanced approximately $20,000 to the Company in anticipation of the Kaneptec Transaction. During the due diligence phase, the Company’s consultants determined that Kaneptec had made material misrepresentations; therefore, the Company ceased all further negotiations with Kaneptec. The Company has not recovered any sums advanced to Kaneptec in contemplation of the failed Kaneptec Transaction.
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2020 Stock Issuances
On January 21, 2020, the Company formally issued (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 350,500 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500.
On March 12. 2020, the Company issued 300,000 shares of its common stock in connection to professional service providers pursuant to their respective engagement agreements.
On June 24, 2020, the Company issued 8,900,000 shares of its common stock in connection with the conversion of $890,000 in debt owed to consultants pursuant to a July 1,2014 consulting agreement.
On November 20, 2020, the Company issued 1,300,000 shares of its common stock in connection with a prepayment of an $80,000 future expense advanced by two related parties.
2020 TRXA Merger Sub Inc.
March 13, 2020, the Company incorporated a wholly owned subsidiary, TRXA Merger Sub Inc., a Delaware corporation (“Merger Sub”) in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company. The Company’s Acquisition Consultants continue to provide vetted candidates for merger with the Company.
RESEARCH AND DEVELOPMENT
During the last two fiscal years no time was spent on specialized research and development activities and has no plans are contemplated in the future.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
As of the date of this Annual Report filing, we have no employees. Our officer Frank Horkey as President/Chief Executive Officer/Chief Financial Officer. On January 1, 2015, the Company entered into a five-year contract with Mr. Horkey to, in addition to his roles as sole Officer and Director, to provide consulting services related to vetting potential acquisition targets. Mr. Horkey shall receive 350,000 shares of the Company’s restricted common shares as of January 1, 2015 for the performance of his multiple roles. The Company also entered into a Consulting Agreement with Tonia Pfannestiel. Ms. Pfannenstiel will provide managerial oversight for a period not less than two year. Ms. Pfannenstiel shall receive 100,000 shares of the Company’s common shares. Mr. Horkey’s shares and Ms. Pfannenstiel shares were issued by the Company on January 21, 2020.
We anticipate that we will retain independent contractors as consultants to support our expansion and business development. We are not a party to any employment agreements.
As a “smaller reporting company”, the Company is not required to provide the information required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. DESCRIPTION OF PROPERTY
Our executive, administrative and operating offices are located at 7301 NW 4th Street Suite 102, Plantation FL 33317. We are not currently under lease with regards to the offices. We believe that our facilities are adequate for our needs and that additional suitable space will be available on acceptable terms as required.
As of the date of this Annual Report, management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Annual Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
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MARKET INFORMATION
Our common stock is listed for quotation on the Over-the-Counter Bulletin Board and OTCQB under the symbol “TRXA.” The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the NASDAQ OTC:BB stock market. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.
| Quarter Ended |
| High Bid |
|
| Low Bid |
| ||
| June 30, 2016 |
|
| .10 |
|
|
| .07 |
|
| March 31, 2016 |
|
| .10 |
|
|
| .07 |
|
| December 31, 2015 |
|
| 10 |
|
|
| .07 |
|
| September 30, 2015 |
|
| .10 |
|
|
| .07 |
|
| June 30, 2015 |
|
| .10 |
|
|
| .07 |
|
| March 31, 2015 |
|
| 1.00 |
|
|
| .60 |
|
| December 31, 2014 |
|
| 1.00 |
|
|
| .60 |
|
| September 30, 2014 |
|
| 1.00 |
|
|
| .60 |
|
HOLDERS
As of June 30, 2016, the number of stockholders of record is 35. The number of stockholders of record does not include beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.
DIVIDEND POLICY
We have never declared or paid a cash dividend on our capital stock. We do not expect to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain our earnings, if any, for use in our business. Any dividends declared in the future will be at the discretion of our Board of Directors.
RECENT SALES OF UNREGISTERED SECURITIES
During fiscal year ended June 30, 2016, the Company did not issue any shares of common stock related to the previously described private placement and Consulting Agreements or the debt conversion discussed below.
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During 2010, we had received monies from Boardwalk Business Developments Inc. (“Boardwalk”) pursuant to an operating loan and other advances made by Boardwalk to us. Therefore, we evidenced the monies loaned by that certain convertible debenture dated June 30, 2010 (the “Convertible Debenture”), which Convertible Debenture was and has been evidenced on our audited financial statements. Subsequently, Boardwalk and certain assignees (collectively, the “Assignees”) entered into those certain assignments of convertible debenture dated July 15, 2012 (the “Assignments”) pursuant to which Boardwalk assigned and transferred to each of the Assignees a portion of its right, title and interest in and to the Debenture for payment of consideration from each of $8,000. The Assignees further assigned portions of their respective debt to others for consideration. We received those certain conversion notices dated September 21, 2014 from certain of the Assignees and others (collectively, the “Conversion Notices”) and desired to settle the debt evidenced by the Convertible Debenture in the aggregate amount of $691,926.00 by conversion into an aggregate post-Reverse Stock Split 1,835,834 shares of our restricted common stock at $0.3769 (which conversion price was changed based on the 1:1000 reverse stock split). Therefore, effective on September 21, 2014, our Board of Directors approved the issuance of an aggregate 1,835,834 shares of our restricted common stock to the Assignees and others in accordance with the terms and provisions of the respective Notices of Conversion. The shares of common stock were issued at $0.3769 per share. The shares of common stock were issued to United States residents in reliance on Section 4(2) promulgated under the United States Securities Act of 1933, as amended (the “Securities Act”). The securities have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The Assignees and others acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of 1 share of common stock and one Series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance. These shares are unissued and accounted for in the shares to be issued on June 30, 2016.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of 1 share of common stock and one series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance. These shares are unissued and accounted for in the shares to be issued on June 30, 2016.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of 1 share of common stock, two series A warrants for each to purchase one share of common stock at $.65 per share and one series B warrant to purchase one share of common stock at $.80. Each series A warrant expires three years from the date of issuance and each series B warrant expires 5 years from the date of issuance. These shares are unissued and accounted for in the shares to be issued on June 30, 2016.
On September 21, 2015 Boardwalk assignees agreed to convert $691,927 in related party debt into 1,835,835 shares of the company’s common Stock
On January 1, 2015, the company entered into a management agreement for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60.
These shares were issued on January 21, 2020, but accounted for in the shares to be issued on June 30, 2016.
On January 1, 2015, the company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the stock price at that time was $.60. These shares are unissued and accounted for in the shares to be issued on June 30, 2016.
No new shares have been issued as of June 30, 2016. No Assignee or other subsequent assignee holds in the aggregate shares exceeding 4.99% of the total issued and outstanding shares of common stock.
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
As of June 30, 2016 , we had no equity compensation plans which authorized an issuance of our equity securities.
PENNY STOCK REGULATION
Shares of our common stock will probably be subject to rules adopted the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:
| · | a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
| · | a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws; |
| · | a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price; |
| · | a toll-free telephone number for inquiries on disciplinary actions; |
| · | definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| · | such other information and is in such form (including language, type, size and format), as the SEC shall require by rule or regulation. |
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
| · | the bid and offer quotations for the penny stock; |
| · | the compensation of the broker-dealer and its salesperson in the transaction; |
| · | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and |
| · | monthly account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.
TRANSFER AGENT
The stock transfer agent for our securities is Corporate Stock Transfer, 3200 Cherry Creek South Drive, Denver, Colorado 80209.
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ITEM 6. SELECTED FINANCIAL DATA
As a “smaller reporting company”, as defined by Rule 10(f)(1) of Regulation S-K, the Company is not required to provide this information.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements for the years ended June 30, 2016 and June 30, 2015 together with notes thereto as included in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in this Annual Report, particularly in the section entitled “Risk Factors.” Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
We are a development stage company since we have no current operations, are currently pursuing options to find suitable merger candidates and have not generated any significant revenue to date. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
RESULTS OF OPERATION
Year Ended June 30, 2016 Compared to Year Ended June 30, 2015
Our net loss for the year ended June 30, 2016 was ($141,067) compared to a net loss of ($282,683) during the year ended June 30, 2015. The decrease in net loss was mainly due to the decrease in management fees and the bad debt incurred in the Kerr Transaction. We had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at June 30, 2015, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the year ended June 30, 2015. During the years ended June 30, 2016 and June 30, 2015, we did not generate any revenue.
During the year ended June 30, 2016, we incurred operating expenses of $138,371 compared to $279,933 incurred during the year ended June 30, 2015. The decrease in operating expenses was mainly due to the decrease in management fees. In addition, we had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at June 30, 2014, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the year ended June 30, 2015.
During the year ended, we incurred interest expenses of $2,696, compared to $2,750 incurred during the year ended June 30, 2015.
On January 1, 2015, the company entered into a management agreement with Mr. Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. For the year ended June 30, 2015, we expensed $42,000 in consulting expense for Mr. Horkey They were valued on the date of the agreement and the stock price at that time was $.60.
Therefore, our net loss and loss per share during the year ended June 30, 2016 was ($141,067) to a net loss for year ended June 30, 2015 of ($282,683).
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LIQUIDITY AND CAPITAL RESOURCES
Year Ended June 30, 2016
As of June 30, 2016, our current assets were $0 and our current liabilities were $219,056, which resulted in a working capital deficit of $219,056. As of June 30, 2016, current assets were comprised of $0 in cash and cash equivalents. As of June 30, 2016, current liabilities were comprised of $152,546 due to related parties and $12,610 in accounts payable and accrued expenses and notes payable related party of $53,900. As of June 30, 2015, our current assets were $26 and our current liabilities were $150,015, which resulted in a working capital deficit of $149,989. As of June 30, 2015, current assets were comprised of $26 in cash and cash equivalents. As of June 30, 2015, current liabilities were comprised of $89,850 due to related parties, $6,265 in accounts payable and accrued expenses and notes payable related party of $53,900.
As of June 30, 2016, our total liabilities were $219,056 comprised entirely of current liabilities. The increase in liabilities during the year ended June 30, 2016 from the year ended June 30, 2015 was primarily due to increase in amounts due to other related parties and Management Fees.
Cash Flows from Operating Activities
For the year ended June 30, 2016, net cash flows used in operating activities was $(26) compared to net cash used in operating activity of $103,937 for the same period in 2015.
Cash Flows from Investing Activities
For the year ended June 30, 2016 and June 30, 2015, net cash flows used in investing activities was $0.
Cash Flows from Financing Activities
For the year ended June 30, 2016, net cash flows from financing activities was $0. For the year ended June 30, 2015, net cash flows provided by financing activities was $103,900.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our proceeds from the sales of stock and generation of revenues from acquisitions. Our working capital requirements are expected to increase in line with the growth of our business.
Our principal demands for liquidity are to increase business operations and for general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to future business operations, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.
MATERIAL COMMITMENTS
Convertible Debenture
As of June 30, 2014, we had a note payable dated June 30, 2010 in the principal amount of $1,253,095. As of March 31, 2015, this note has been either converted to stock or paid. The note payable accrues interest at the rate of 5% per annum, however that interest has been forgiven each year by the note holders. As of September 21, 2014, the note payable balance of $691,926 ($650,000 at June 30, 2013 plus additional advances of $41,926 for the year ended June 30, 2014) has been converted into shares of common stock. See “Item 5.
PURCHASE OF SIGNIFICANT
EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
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OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
RESULTS OF OPERATION
Quarter Ended September 30, 2015 Compared to Quarter Ended September 30, 2014
Our net loss for the quarter ended September 30, 2015 was ($34,075) compared to a net loss of ($130,959) during the quarter ended September 30, 2014. The decrease in net loss was mainly due to the fact we had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at September 30, 2014, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the Year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the quarter ended September 30, 2014. During the quarters ended September 30, 2015 and September 30, 2014, we did not generate any revenue.
During the quarter ended September 30, 2015, we incurred operating expenses of $33,401 compared to $130,959 incurred during the quarter ended September 30, 2014. The decrease in net loss was mainly due to the fact we had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at September 30, 2014, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the Year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the quarter ended September 30, 2014.
During the quarter ended September 30, 2015, we incurred interest expenses of $674 compared to $0 incurred during the quarter ended September 30, 2014.
LIQUIDITY AND CAPITAL RESOURCES
Quarter Ended September 30, 2015
As of September 30, 2015, our current assets were $0 and our current liabilities were $166,064, which resulted in a working capital deficit of $166,064. As of September 30, 2015, current assets were comprised of $0 in cash and cash equivalents. As of September 30, 2015, current liabilities were comprised of $105,524 due to related parties and $6,640 in accounts payable and accrued expenses and notes payable related party $53,900. As of September 30, 2014, our current assets were $26 and our current liabilities were $150,015, which resulted in a working capital deficit of $149,989. As of June 30, 2015, current assets were comprised of $26 in cash and cash equivalents. As of June 30, 2015, current liabilities were comprised of $89,850 due to related parties and $6,265 in accounts payable and accrued expenses and notes payable related party $53,900.
As of September 30, 2015, and 2014, our total liabilities were comprised entirely of current liabilities.
Cash Flows from Operating Activities
For the three months ended September 30, 2015, net cash flows used in operating activities was $(26) compared to net cash provided by operating activity of $39 for the same period in 2014.
Cash Flows from Investing Activities
For the three months ended September 30, 2015 and September 30, 2014, net cash flows used in investing activities was $0.
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Cash Flows from Financing Activities
For the three months ended September 30, 2015 and 2014, net cash flows from financing activities was $0.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our proceeds from the sales of stock and generation of revenues from acquisitions. Our working capital requirements are expected to increase in line with the growth of our business.
Our principal demands for liquidity are to increase business operations and for general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to future business operations, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.
MATERIAL COMMITMENTS
Convertible Debenture
As of March 31, 2014, we have a note payable dated June 30, 2010 in the principal amount of $1,253,095 of which As of September 30, 2015 this note has been either converted to stock or paid in full. The note payable accrued interest at the rate of 5% per annum, however that interest has been forgiven each year by the note holders. As of September 14, 2014, the amounts due to related parties on convertible notes was $0. The Board of Directors approved convert $691,926 of these related party notes payable, however as of September 30, 2015, the Shares have yet to be issued.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
RESULTS OF OPERATION
Quarter Ended December 31, 2015 Compared to Quarter Ended December 31, 2014
Our net loss for the quarter ended December 31, 2015 was ($35,630) compared to a net loss of ($70,447) during the quarter ended December 31, 2014. The decrease in net loss was mainly due to the decrease in management and consulting fees. During the quarters ended December 31, 2015 and December 31, 2014, we did not generate any revenue.
During the quarter ended December 31, 2015, we incurred operating expenses of $34,956 compared to $69,044 incurred during the quarter ended December 31, 2014. The decrease in net loss was mainly due to the decrease in management and consulting fees.
During the quarter ended December 31, 2015, we incurred interest expenses of $674 compared to $1,403 incurred during the quarter ended December 30, 2014.
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Six Months Ended December 31, 2015 Compared to Six Months Ended December 31, 2014
Our net loss for the six months ended December 31, 2015 was ($69,705) compared to a net loss of ($201,406) during the six months ended December 31, 2014. This decrease was mainly due to the Bad debt expense incurred and increase in Management and consulting expense in the six months ended December 31, 2014. During the six months ended December 31, 2015 and December 31, 2014, we did not generate any revenue.
During the six months ended December 31, 2015, we incurred operating expenses of $68,357 compared to $200,003 incurred during the six months ended December 31, 2014. The decrease in operating expenses was primarily attributable to the $100,000 of bad debts during the six months ended December 31, 2014. We had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at June 30, 2014, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the six months ended December 31, 2014.
During the six months ended December 31, 2015, we incurred interest expenses of $1,348 compared to $1,403 incurred during the six months ended December 31, 2014.
LIQUIDITY AND CAPITAL RESOURCES
Six Months Ended December 31, 2015
As of December 31, 2015, our current assets were $0 and our current liabilities were $183,694, which resulted in a working capital deficit of $183,694. As of December 31, 2015, current assets were comprised of $0 in cash and cash equivalents. As of December 31, 2015, current liabilities were comprised of $121,199 due to related parties and $8,595 in accounts payable and accrued expenses and $53,900 in notes payable related party. As of June 30, 2015, our current assets were $26 and our current liabilities were $150,015, which resulted in a working capital deficit of $149,989. As of June 30, 2015, current assets were comprised of $26 in cash and cash equivalents. As of June 30, 2015, current liabilities were comprised of $89,850 due to related parties and $6,265 in trade accounts payable and accrued expenses and $53,900 in notes payable related party.
As of December 31, 2015, and June 30, 2015 our total liabilities were entirely of current liabilities.
Cash Flows from Operating Activities
For the six months ended December 31, 2015, net cash flows used in operating activities was $(26) compared to net cash used in operating activity of $(103,837) for the same period in 2014.
Cash Flows from Investing Activities
For the six months ended December 31, 2015 and December 31, 2014, net cash flows used in investing activities was $0.
Cash Flows from Financing Activities
For the six months ended December 31, 2015 and 2014, net cash flows from financing activities was $0 and $103,905 respectively.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our proceeds from the sales of stock and generation of revenues from acquisitions. Our working capital requirements are expected to increase in line with the growth of our business.
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Our principal demands for liquidity are to increase business operations and for general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to future business operations, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.
MATERIAL COMMITMENTS
Convertible Debenture
As of March 31, 2014, we have a note payable dated June 30, 2010 in the principal amount of $1,253,095 of which As of December 31, 2014 this note has been either converted to stock or paid in full. The note payable accrued interest at the rate of 5% per annum, however that interest has been forgiven each year by the note holders. As of September 14, 2014, the amounts due to related parties on convertible notes was $0. The Board of Directors approved convert $691,926 of these related party notes payable, however as of December 31, 2015, the Shares have yet to be issued.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
RESULTS OF OPERATION
Quarter Ended March 31, 2016 Compared to Quarter Ended March 31, 2015
Our net loss for the quarter ended March 31, 2016 was ($35,592) compared to a net loss of ($35,553) during the quarter ended March 31, 2015. During the quarters ended March 31, 2016 and March 31, 2015, we did not generate any revenue.
During the quarter ended March 31, 2016, we incurred operating expenses of $34,918 compared to $34,879 incurred during the quarter ended March 31, 2015.
During the quarter ended March 31, 2016, we incurred interest expenses of $674 compared to $674 incurred during the quarter ended March 31, 2015.
Nine months Ended March 31, 2016 Compared to Nine months Ended March 31, 2015
Our net loss for the nine months ended March 31, 2016 was ($105,296) compared to a net loss of ($236,959) during the nine months ended March 31, 2015. This decrease was mainly due to the Bad debt expense incurred and increase in Management and consulting expense in the nine months ended March 31, 2015. During the quarters and nine months ended March 31, 2016 and March 31, 2015, we did not generate any revenue.
During the nine months ended March 31, 2016, we incurred operating expenses of $103,274 compared to $234,882 incurred during the nine months ended March 31, 2015. The decrease in operating expenses was primarily attributable to the $100,000 of bad debt expense incurred during the nine months ended March 31, 2015 and the decrease in management and consulting expense. We had advanced $100,000 to Kerr in May 2014 and a further $100,000 to Kerr in July 2014. Kerr subsequently ceased business operations. Therefore, at June 30, 2014, the original $100,000 was determined to be a bad debt and, therefore, was recorded as bad debt for the year ended June 30, 2014. The remaining $100,000 was reflected as a bad debt during the nine months ended March 31, 2015.
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On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of March 31, 2016, the shares were unissued and recorded as shares to be issued. We did incur management fees of $45,000 for the nine months ended March 31, 2016 compared to $95,900 to outside consultants during the nine months ended March 31, 2015 to locate and vet potential acquisition candidates.
LIQUIDITY AND CAPITAL RESOURCES
Nine months Ended March 31, 2016
As of March 31, 2016, our current assets were $0 and our current liabilities were $201,286, which resulted in a working capital deficit of $201,286. As of March 31, 2016, current assets were comprised of $0 in cash and cash equivalents. As of March 31, 2016, current liabilities were comprised of $136,873 due to related parties, Notes payable to related parties of $53,900 and $10,513 in accounts payable and accrued expenses. As of June 30, 2015, our current assets were $26 and our current liabilities were $150,015, which resulted in a working capital deficit of $149,989. As of June 30, 2015, current assets were comprised of $26 in cash and cash equivalents. As of June 30, 2015, current liabilities were comprised of $89,850 due to related parties $6,265 in trade accounts payable and accrued expenses and notes payable related party and notes payable related parties of $53,900.
As of March 31, 2016, our total liabilities were comprised entirely of current liabilities.
Cash Flows from Operating Activities
For the nine months ended March 31, 2016, net cash flows used in operating activities was $(26) compared to net cash used in operating activity of $(103,867) for the same period in 2015.
Cash Flows from Investing Activities
For the nine months ended March 31, 2016 and March 31, 2015, net cash flows used in investing activities was $0.
Cash Flows from Financing Activities
For the nine months ended March 31, 2016, net cash flows from financing activities was $0. For the nine months ended March 31, 2015 net cash flows used in financing activities was $103,900.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a combination of our proceeds from the sales of stock and generation of revenues from acquisitions. Our working capital requirements are expected to increase in line with the growth of our business.
Our principal demands for liquidity are to increase business operations and for general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to future business operations, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.
MATERIAL COMMITMENTS
Convertible Debenture
As of March 31, 2016, we have a note payable dated June 30, 2010 in the principal amount of $1,253,095. As of March 31, 2016, this note has been either converted to stock or paid. The note payable accrues interest at the rate of 5% per annum, however that interest has been forgiven each year by the note holders. As of September 14, 2014, the amounts due to related parties on convertible notes was $0. The Board of Directors approved convert $691,926 of these related party notes payable, however as of March 31, 2016, the Shares have yet to be issued.
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PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve months.
GOING CONCERN
The independent auditors’ report accompanying our June 30, 2016 and June 30, 2015 financial statements contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business. We have suffered recurring losses from operations and have a working capital deficit. These factors raise substantial doubt about our ability to continue as a going concern.
RECENTLY ISSUED ACCOUNTING STANDARDS
The following describes the recently issued accounting standards used in reporting our financial condition and results of operations. In some cases, accounting standards allow more than one alternative accounting method for reporting. Such is the case with accounting for oil and gas activities described below. In those cases, our reported results of operations would be different should we employ an alternative accounting method.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are presented in the following order:
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| F-2 |
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| F-3 |
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| Consolidated Statements of Operations and Comprehensive Loss |
| F-4 |
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| F-5 |
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| F-6 |
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| F-7 |
| F-1 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Trex Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Trex Acquisition Corp. (“the Company”) as of June 30, 2016 and 2015, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the two years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2016 and 2015, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has an accumulated deficit, history of net operating losses, and has not commenced operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
| Fruci & Associates II, PLLC We have served as the Company’s auditor since 2018. Spokane, Washington January 18, 2021 |
| F-2 |
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| TREX ACQUISITION CORP. | ||||||||
|
|
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|
| June 30, 2016 |
|
| June 30, 2015 |
| |||
| ASSETS | ||||||||
| CURRENT ASSETS: |
|
|
|
|
|
| ||
| Cash |
| $ | - |
|
| $ | 26 |
|
| TOTAL CURRENT ASSETS |
|
| - |
|
|
| 26 |
|
|
|
|
|
|
|
|
|
|
|
| Prepaid consulting |
|
| 162,000 |
|
|
| 234,000 |
|
| TOTAL ASSETS |
| $ | 162,000 |
|
| $ | 234,026 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
| Accounts Payable and Accrued Expenses |
| $ | 12,610 |
|
| $ | 6,265 |
|
| Due to Related Party |
|
| 152,546 |
|
|
| 89,850 |
|
| Notes Payable Related Party |
|
| 53,900 |
|
|
| 53,900 |
|
| TOTAL CURRENT LIABILITIES |
|
| 219,056 |
|
|
| 150,015 |
|
| TOTAL LIABILITIES |
|
| 219,056 |
|
|
| 150,015 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| Common Stock, 0.001 par value, authorized 150,000,000 shares and 103,046 issued and outstanding as of June 30, 2016 and June 30, 2015 respectively |
|
| 103 |
|
|
| 103 |
|
| Additional Paid In Capital |
|
| 815,996 |
|
|
| 815,996 |
|
| Shares to be issued |
|
| 1,058,174 |
|
|
| 1,058,174 |
|
| Accumulated deficit |
|
| (1,931,329 | ) |
|
| (1,790,262 | ) |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
|
| (57,056 | ) |
|
| 84,011 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | 162,000 |
|
| $ | 234,026 |
|
The accompanying notes are an integral part of these financial statements.
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| TREX ACQUISITION CORP. | ||||||||
| for the years ended June 30, | ||||||||
|
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| |||||
|
|
| 2016 |
|
| 2015 |
| ||
| REVENUE |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
| Transfer Agent and Filing Fees |
|
| 6,345 |
|
|
| 9,598 |
|
| Professional Fees |
|
| - |
|
|
| 20,203 |
|
| Shares to be issued for services |
|
| 72,000 |
|
|
| 36,000 |
|
| Management and Consulting Fees |
|
| 60,000 |
|
|
| 113,900 |
|
| Administration Fees |
|
| 26 |
|
|
| 232 |
|
| Bad Debt |
|
| - |
|
|
| 100,000 |
|
| TOTAL EXPENSES |
|
| 138,371 |
|
|
| 279,933 |
|
|
|
|
|
|
|
|
|
|
|
| Loss from Operations |
|
| (138,371 | ) |
|
| (279,933 | ) |
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
|
| (2,696 | ) |
|
| (2,750 | ) |
| LOSS BEFORE TAXES |
|
| (141,067 | ) |
|
| (282,683 | ) |
| Provision for Income Taxes |
|
| - |
|
|
| - |
|
| NET LOSS |
| $ | (141,067 | ) |
| $ | (282,683 | ) |
|
|
|
|
|
|
|
|
|
|
| NET LOSS PER COMMON SHARE - BASIC & DILUTED |
| $ | (1.37 | ) |
| $ | (2.74 | ) |
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
|
| 103,046 |
|
|
| 103,046 | |
The accompanying notes are an integral part of these financial statements.
| F-4 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||||||||||
| as of June 30, 2016 and 2015 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Common Stock |
|
| Additional Paid in |
|
| Shares to be |
|
| Accumulated |
|
|
|
| |||||||||
|
|
| Shares |
|
| Amount |
|
| Capital |
|
| issued |
|
| Deficit |
|
| TOTAL |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Balance, June 30, 2014 |
|
| 103,046 |
|
| $ | 103 |
|
| $ | 712,244 |
|
| $ | - |
|
| $ | (1,507,579 | ) |
| $ | (795,232 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued for debt conversion |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 691,926 |
|
|
|
|
|
|
| 691,926 |
|
| Shares to be issued for compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 270,000 |
|
|
|
|
|
|
| 270,000 |
|
| Shares and warrants issued for cash |
|
|
|
|
|
|
|
|
|
| 103,752 |
|
|
| 96,248 |
|
|
|
|
|
|
| 200,000 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (282,683 | ) |
|
| (282,683 | ) |
| Balance, June 30, 2015 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,790,262 | ) |
|
| 84,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (141,067 | ) |
|
| (141,067 | ) |
| Balance, June 30, 2016 |
|
| 103,046 |
|
| $ | 103 |
|
| $ | 815,996 |
|
| $ | 1,058,174 |
|
| $ | (1,931,329 | ) |
| $ | (57,056 | ) |
The accompanying notes are an integral part of these financial statements.
| F-5 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
| for the years ended June 30, | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| 2016 |
|
| 2015 |
| ||
| OPERATING ACTIVITIES |
| |||||||
| Net Income (Loss) |
| $ | (141,067 | ) |
| $ | (282,683 | ) |
| Bad debt write off |
|
| - |
|
|
| 100,000 |
|
| Shares to be issued for services |
|
| 72,000 |
|
|
| 36,000 |
|
| Change in Related Party Advances |
|
| 62,696 |
|
|
| 39,853 |
|
| Change Accounts Payable and Accrued Expenses |
|
| 6,345 |
|
|
| 2,893 |
|
| Net Cash Used by Operating Activities |
|
| (26 | ) |
|
| (103,937 | ) |
|
|
|
|
|
|
|
|
|
|
| FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from common stock subscriptions |
|
|
|
|
|
| 50,000 |
|
| Proceeds from notes payable related party |
|
| - |
|
|
| 53,900 |
|
| Net cash provided by financing activities |
|
| - |
|
|
| 103,900 |
|
| NET INCREASE (DECREASE) IN CASH |
|
| (26 | ) |
|
| (37 | ) |
|
|
|
|
|
|
|
|
|
|
| CASH AT BEGINNING OF PERIOD |
|
| 26 |
|
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT END OF PERIOD |
| $ | - |
|
| $ | 26 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Cashflow Information |
|
|
|
|
|
|
|
|
| Interest Paid |
| $ | - |
|
| $ | - |
|
| Taxes Paid |
| $ | - |
|
| $ | - |
|
| Supplemental Non-Cash Information |
|
|
|
|
|
|
|
|
| Note issued in exchange for amount advanced to potential merger Candidate |
| $ | - |
|
| $ | 100,000 |
|
| Conversion of Notes payable |
| $ | - |
|
| $ | 691,926 |
|
| Stock/warrants issued for payments made by others in which cash was never received |
| $ | - |
|
| $ | 150,000 |
|
| Shares to be issued for services |
| $ | - |
|
| $ | 270,000 |
|
The accompanying notes are an integral part of these financial statements.
| F-6 |
| Table of Contents |
TREX ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2016
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
TREX Acquisition Corp. (The “Company”) was formed on January 16, 2008 in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia. The Company later changed its name to Sync2 Networks Corp when the Company began to engage in software-related services. On March 20, 2014 to TREX Acquisition Corp. after the Company business operations had ceased.
As of June 30, 2016, the Company consists of itself and its 100% owned subsidiary Sync2 Networks International Ltd.
On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”), which under Nevada statutory law involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 Networks International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 International Ltd. as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta.
The Company’s business plan is to find a merger candidate and become an operating company or to be a corporate governance and management company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
Determination of Bad Debts
The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the e allowance for doubtful accounts.
Principles of Consolidation
The accounts include those of the Company and its 100% owned subsidiary. All intercompany transactions have been eliminated. At this time, SYNC2 International LTD has no operations, assets or liabilities.
| F-7 |
| Table of Contents |
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
| |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
| |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2016.
The assets and liabilities recorded on the balance sheet approximate their fair value.
Equipment
Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Stock based compensation
The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.
| F-8 |
| Table of Contents |
The company accounts for its non-employee stock-based compensation in accordance with ASC Section 505 Equity Based Payments to Non-Employees. Under the fair value recognition provisions of ASC 505, stock based compensation cost is measured at the earlier of the purchase commitment or performance completions, based on the fair value of the award, and is recognized as expense as purchase commitment is settled.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Since June 30, 2016 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Income taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Net deferred tax assets consist of the following components as of June 30, 2016 and 2015:
|
|
| June 30, 2016 |
|
| June 30, 2015 |
| ||
| Deferred Tax Assets – Non-current: |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
| Net Operating Loss Carryover |
| $ | 405,579 |
|
| $ | 375,955 |
|
| Pay Payroll Accrual |
|
| - |
|
|
| - |
|
| Less: valuation allowance |
|
| (405,579 | ) |
|
| (375,955 | ) |
|
|
|
|
|
|
|
|
|
|
| Deferred tax assets, net of valuation allowance |
| $ | - |
|
| $ | - |
|
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended June 30, 2016 and 2015 due to the following:
|
|
| 2016 |
|
| 2015 |
| ||
|
|
|
|
|
|
|
| ||
| Book Income |
| $ | (141,067 | ) |
| $ | (282,683 | ) |
| Meals and Entertainment |
|
| - |
|
|
| - |
|
| Stock for Services |
|
| - |
|
|
| - |
|
| Accrued Payroll |
|
| - |
|
|
| - |
|
| Valuation allowance |
|
| 141,067 |
|
|
| (282,683 | ) |
|
|
| $ | - |
|
| $ | - |
|
| F-9 |
| Table of Contents |
At June 30, 2016, the Company had net operating losses of $405,579 that may be offset against future taxable income from the year 2016 to 2036. No tax benefit has been reported in the June 30, 2016 and 2015 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the changes the Tax Reform Act of 1986 and the Tax Cut and Jobs Act of 2017, net operating loss carryforwards for Federal Income tax reporting purposes are subject to additional limitations. Should certain changes in ownership occur, our net operating loss carryforwards may be limited to use in future years. In addition, tax rates on corporations were reduced and certain other deductions limited. These changes may affect the income tax benefit calculation and related allowance during subsequent fiscal years
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were 1,835,835 potentially dilutive shares outstanding as of June 30, 2016 resulting from shares to be issued per the conversion of related party debt (see Note 4). We also had 450,000 in shares to be issued for services that were unissued at June 30, 2016. We also had outstanding warrants that could convert into 377,000 shares of common stock as of June 30, 2016. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total Advertising costs were zero for all periods.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
| F-10 |
| Table of Contents |
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $1,931,329 and a working capital deficit of $219,056 as of June 30, 2016.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
On June 24, 2014 the company entered into an unsecured promissory note with Lazarus asset management, LLC. in the amount of $34,550 with an interest rate of 5% per annum and a due date of June 24, 2015. This note is currently in default. As of June 30, 2016, the accrued interest on this note was $3,491.
On June 24, 2014, the company entered into an unsecured promissory note with Squadron Marketing, Inc. in the amount of $19,350 with an interest rate of 5% per annum and a due date of June 24, 2015. This note is currently in default. As of June 30, 2016, the accrued interest on this note was $1,954.
On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. The agreements resulted in Management Fee expense of $60,000 for the years ended June 30, 2015 and June 30, 2016. These amounts were unpaid at June 30, 2016.
On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of June 30, 2016, the shares were unissued and recorded as shares to be issued. For the years ended June 30, 2016 and 2015 the company amortized and expensed $72,000 and $36,000 respectively.
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Due to Related Parties
During the year ended June 30, 2016, the Company incurred management fees to related parties of $60,000.
| F-11 |
| Table of Contents |
NOTE 5 – FAILED PROSPECTIVE MERGER WITH KERR TECHNOLOGIES, INC.
On May 30, 2014, our Board of Directors approved the execution of a non-binding Letter of Intent in the form of a Term Sheet (the “2014 Term Sheet”) with Kerr Utility Technologies Inc. (“Kerr”) regarding a prospective tax-free reverse merger transaction with Kerr. In connection with this prospective reverse merger, we had intended to incorporate and establish two wholly owned subsidiaries of the Company to facilitate the Kerr acquisition (collectively, the “Merger Vehicles”). At that time, our Board of Directors also approved a private placement to raise, on an “all or none” basis, an aggregate sum of $500,000 for Kerr’s benefit prior to consummation of the Kerr acquisition.
In July 2014, in anticipation of the closing of the reverse merger transaction, a related party advanced, on behalf of the Company, $100,000 to Kerr (the “July 2014 Advance”). The July 2014 Advance is in addition to the $100,000 advanced by the same related party in May 2014 (the “May 2014 Advance”). The Kerr acquisition was ultimately not concluded, and the Company could not recover the $200,000 in funds reflected in the May 2014 Advance and the July 2014 Advance. As a result, the Company had written-off both advances totaling $200,000 ($100,000 for the year ended June 30, 2014 and $100,000 for the three months ended September 30, 2014); specifically accounting for the May 2014 Advance during the Company’s fiscal year ending June 30, 2014 and the July 2014 Advance during the Company’s fiscal year ending June 30, 2015.
As of September 30, 2014, the 2014 Term Sheet with Kerr is no longer in effect, no Merger Vehicles had been established, and the Kerr acquisition was never consummated.
NOTE 6 – COMMON STOCK
On September 21, 2015 Boardwalk assignees agreed to convert $691,927 in related party debt into 1,835,835 shares of the Company’s common Stock
On January 1, 2015, the Company entered into a management agreement for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60.
On January 1, 2015, the Company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the Company’s stock price at that time was $.60.
For the years ended June 30, 2016 and 2015 the company amortized and expensed $72,000 and $36,000 respectively.
NOTE 7 – WARRANTS
On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $.80 per unit. Each Unit shall consist of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000 Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.
| F-12 |
| Table of Contents |
The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to redeem the Warrants by returning the Warrant to the Company accompanied by payment of $.80 per share. The warrants were valued using a Black Scholes calculation.
The inputs for series A used a price $.59, a strike price range of .65 – 1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232.
As of the filing date of this annual report, 189,500 A warrants have expired leaving only 125,000 A Warrants and 62,500 B Warrants remaining effective since the Company has yet to consummate a merger.
The following is the outstanding warrant activity:
|
|
| Warrants - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Warrants exercisable - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Weighted average life in years |
| |||||
| Outstanding June 30, 2014 |
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 3.00 |
|
| Additions | Granted |
| 187,500 |
|
| $ | 0.80 |
|
|
| 187,500 |
|
| $ | 0.80 |
|
|
| 3.67 |
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding June 30, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.66 |
|
| Additions | Granted |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding March 31, 2016 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 1.66 |
|
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following subsequent events needed to be disclosed.
2018 Failed Reverse Merger Attempt
On April 19, 2018, the Company entered into a non-binding indication of interest (“LOI”) to acquire Kaneptec Enterprises, Inc., a company engaged in the hemp and cannabidiol business (“Kaneptec”) in a reverse merger (the “Kaneptec Transaction”). In reliance of the LOI, the Company sold 350,000 shares to a related party for $47,500, and this cash was transferred to Kaneptec in order to facilitate the Kaneptec Transaction. This potential merger candidate also advanced approximately $20,000 to the Company in anticipation of the Kaneptec Transaction. During the due diligence phase, the Company’s consultants discovered that Kaneptec’s management had made material misrepresentations regarding its business and management; therefore, the Company ceased all further negotiations with Kaneptec. The Company has not recovered any sums advanced to Kaneptec in contemplation of the failed Kaneptec Transaction.
| F-13 |
| Table of Contents |
2020 Stock Issuances
On January 21, 2020, the Company formally issued (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 250,000 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500.
On March 12. 2020, the Company issued 300,000 shares of its common stock in connection to professional service providers pursuant to their respective engagement agreements.
On June 24, 2020, the Company issued 8,900,000 shares of its common stock in connection with the conversion of $890,000 in debt owed to consultants pursuant to a July 1, 2014, consulting agreement.
2020 TRXA Merger Sub Inc.
March 13, 2020, the Company incorporated a wholly owned subsidiary, TRXA Merger Sub Inc., a Delaware corporation (“Merger Sub”) in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company.
On November 20, 2020, the Company issued 1,300,000 shares of its common stock in connection with a prepayment of an $80,000 future expense advanced by two related parties.
| F-14 |
| Table of Contents |
|
| F-16 |
| ||
| Consolidated Statements of Operations and Comprehensive Loss |
| F-17 |
| |
|
| F-18 |
| ||
|
| F-19 |
| ||
|
| F-20 |
| F-15 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| (Un-audited) |
|
|
|
| ||
|
| September 30, 2015 |
|
| June 30, 2015 |
| |||
| ASSETS | ||||||||
| CURRENT ASSETS: |
|
|
|
|
|
| ||
| Cash |
| $ | - |
|
| $ | 26 |
|
| TOTAL CURRENT ASSETS |
|
| - |
|
|
| 26 |
|
|
|
|
|
|
|
|
|
|
|
| Prepaid consulting |
|
| 216,000 |
|
|
| 234,000 |
|
| TOTAL ASSETS |
| $ | 216,000 |
|
| $ | 234,026 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
| Accounts Payable and Accrued Expenses |
| $ | 6,640 |
|
| $ | 6,265 |
|
| Due to Related Party |
|
| 105,524 |
|
|
| 89,850 |
|
| Notes payable related party |
|
| 53,900 |
|
|
| 53,900 |
|
| TOTAL CURRENT LIABILITIES |
|
| 166,064 |
|
|
| 150,015 |
|
| TOTAL LIABILITIES |
|
| 166,064 |
|
|
| 150,015 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| Common Stock, 0.001 par value, authorized 150,000,000 shares and 103,046 issued and outstanding as of September 30, 2015 and June 30, 2015 respectively |
|
| 103 |
|
|
| 103 |
|
| Additional Paid In Capital |
|
| 815,996 |
|
|
| 815,996 |
|
| Shares to be issued |
|
| 1,058,174 |
|
|
| 1,058,174 |
|
| Accumulated deficit |
|
| (1,824,337 | ) |
|
| (1,790,262 | ) |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
|
| 49,936 |
|
|
| 84,011 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | 216,000 |
|
| $ | 234,026 |
|
The accompanying notes are an integral part of these financial statements.
| F-16 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
| for the three months ended September 30, | ||||||||
| (Un-audited) | ||||||||
|
|
|
|
| |||||
|
|
| 2015 |
|
| 2014 |
| ||
| REVENUE |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
| Transfer Agent and Filing Fees |
|
| 375 |
|
|
| 4,370 |
|
| Professional Fees |
|
| 26 |
|
|
| 11,500 |
|
| Shares to be issued for services |
|
| 18,000 |
|
|
| - |
|
| Management and Consulting Fees |
|
| 15,000 |
|
|
| 15,000 |
|
| Administration Fees |
|
| - |
|
|
| 89 |
|
| Bad Debt |
|
| - |
|
|
| 100,000 |
|
| TOTAL EXPENSES |
|
| 33,401 |
|
|
| 130,959 |
|
|
|
|
|
|
|
|
|
|
|
| Loss from Operations |
|
| (33,401 | ) |
|
| (130,959 | ) |
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
|
| (674 | ) |
|
| - |
|
| LOSS BEFORE TAXES |
|
| (34,075 | ) |
|
| (130,959 | ) |
| Provision for Income Taxes |
|
| - |
|
|
| - |
|
| NET LOSS |
| $ | (34,075 | ) |
| $ | (130,959 | ) |
|
|
|
|
|
|
|
|
|
|
| NET LOSS PER COMMON SHARE - BASIC & DILUTED |
| $ | (0.33 | ) |
| $ | (1.27 | ) |
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
|
| 103,073 |
|
|
| 103,073 |
|
The accompanying notes are an integral part of these financial statements.
| F-17 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||||||||||
| as of September 30, 2015 | ||||||||||||||||||||||||
| (Un-audited) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Common Stock |
|
| Additional Paid |
|
| Shares to be |
|
| Accumulated |
|
|
|
| |||||||||
|
|
| Shares |
|
| Amount |
|
| in Capital |
|
| issued |
|
| Deficit |
|
| TOTAL |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Balance, June 30, 2014 |
|
| 103,073 |
|
| $ | 103 |
|
| $ | 712,244 |
|
| $ | - |
|
| $ | (1,507,579 | ) |
| $ | (795,232 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 691,926 |
|
|
|
|
|
| $ | 691,926 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (130,959 | ) |
|
| (130,959 | ) |
| Balance, September 30, 2014 |
|
| 103,073 |
|
|
| 103 |
|
|
| 712,244 |
|
|
| 691,926 |
|
|
| (1,638,538 | ) |
|
| (234,265 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 96,248 |
|
|
|
|
|
|
| 96,248 |
|
| Allocation of warrants |
|
|
|
|
|
|
|
|
|
| 103,752 |
|
|
|
|
|
|
|
|
|
|
| 103,752 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (70,447 | ) |
|
| (70,447 | ) |
| Balance, December 31, 2014 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 788,174 |
|
|
| (1,708,985 | ) |
|
| (104,712 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 270,000 |
|
|
|
|
|
|
| 270,000 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36,300 | ) |
|
| (36,300 | ) |
| Balance, March 31, 2015 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,745,285 | ) |
|
| 128,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (44,977 | ) |
|
| (44,977 | ) |
| Balance, June 30, 2015 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,790,262 | ) |
|
| 84,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (34,075 | ) |
|
| (34,075 | ) |
| Balance, September 30, 2015 |
|
| 103,073 |
|
| $ | 103 |
|
| $ | 815,996 |
|
| $ | 1,058,174 |
|
| $ | (1,824,337 | ) |
| $ | 49,936 |
|
The accompanying notes are an integral part of these financial statements.
| F-18 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
| for the three months ended September 30, | ||||||||
| (Un-audited) | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| 2015 |
|
| 2014 |
| ||
| OPERATING ACTIVITIES |
| |||||||
| Net Income (Loss) |
| $ | (34,075 | ) |
| $ | (130,959 | ) |
| Bad debt writeoff |
|
| - |
|
|
| 100,000 |
|
| Shares to be issued for services |
|
| 18,000 |
|
|
| - |
|
| Change in Related Party Advances |
|
| 15,674 |
|
|
| 28,500 |
|
| Change Accounts Payable and Accrued Expenses |
|
| 375 |
|
|
| 2,498 |
|
| Net Cash Used by Operating Activities |
|
| (26 | ) |
|
| 39 |
|
|
|
|
|
|
|
|
|
|
|
| FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from notes payable related party |
|
| - |
|
|
| - |
|
| Net cash provided by financing activities |
|
| - |
|
|
| - |
|
| NET INCREASE (DECREASE) IN CASH |
|
| (26 | ) |
|
| 39 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT BEGINNING OF PERIOD |
|
| 26 |
|
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT END OF PERIOD |
| $ | - |
|
| $ | 102 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Cashflow Information |
|
|
|
|
|
|
|
|
| Interest Paid |
| $ | - |
|
| $ | - |
|
| Taxes Paid |
| $ | - |
|
| $ | - |
|
| Supplemental Non-Cash Information |
|
|
|
|
|
|
|
|
| Note issued in exchange for amount advanced to potential merger Candidate |
| $ | - |
|
| $ | 100,000 |
|
| Conversion of Notes payable |
| $ | - |
|
| $ | 691,926 |
|
The accompanying notes are an integral part of these financial statements.
| F-19 |
| Table of Contents |
TREX ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2015
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
TREX Acquisition Corp. (The “Company”) was formed on January 16, 2008 in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company later changed its name to Sync2 Networks Corp. then on March 20, 2014 to T-REX Acquisition Corp. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia.
The Company consists of itself and its 100% owned subsidiary Sync2 Networks International Ltd.
On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”), which under Nevada statutory law involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 Networks International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 International Ltd. as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta.
The Company’s business plan is to find a merger candidate and become an operating company or to be a corporate governance and management company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted account principles have been condensed or omitted. These consolidated financial statement should be read in conjunction with a reading of the financial statements and notes there included in our annual report on form 10k for the fiscal year end June 30, 2015, as filed with the US Securities and Exchange Commission.”
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
Determination of Bad Debts
The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the allowance for doubtful accounts.
| F-20 |
| Table of Contents |
Principles of Consolidation
The accounts include those of the Company and its 100% owned subsidiary. All intercompany transactions have been eliminated. At this time, SYNC2 International LTD has no operations, assets or liabilities.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
| |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
| |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at September 30, 2015.
The assets and liabilities recorded on the balance sheet approximate their fair value.
| F-21 |
| Table of Contents |
Equipment
Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Impairment of long-lived assets
The Company follows paragraph 360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which includes computer equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company determined that there were no impairments of long-lived assets as of September 30, 2015 or June 30, 2015.
Stock based compensations
The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.
The company accounts for its no-employee stock-based compensation in accordance with ASC Section 505 Equity Based Payments to Non-Employees. Under the fair value recognition provisions of ASC 505, stock based compensation cost is measured at the earlier of the purchase commitment or performance completions, based on the fair value of the award, and is recognized as expense as purchase commitment is settled.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Since September 30, 2015 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
| F-22 |
| Table of Contents |
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were 1,835,835 potentially dilutive shares outstanding as of September 30, 2015 resulting from shares to be issued per the conversion of related party debt (see Note 4). We also had shares to be issued for consulting that were unissued as of September 30, 2015. We also had outstanding warrants that could convert into 377,000 shares of common stock as of September 30, 2015. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total Advertising costs were zero for all periods.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
| F-23 |
| Table of Contents |
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $1,824,337 and a working capital deficit of $166,064 as of September 30, 2015.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
On June 24, 2014, the company entered into an unsecured promissory note with Lazarus asset management, LLC. in the amount of $34,550 with an interest rate of 5% per annum and a due date of June 24, 2015. As of September 30, 2015, the outstanding accrued interest was $2,196.
On June 24, 2014, the company entered into an unsecured promissory note with Squardron Marketing, Inc. in the amount of $19,350 with an interest rate of 5% per annum and a due date of June 24, 2015. As of September 30, 2015, the outstanding accrued interest was $1,229.
On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. The agreements resulted in Management Fee expense of $15,000 for the quarter ended September 30, 2015. These amounts were unpaid as of September 30, 2015.
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Due to Related Parties
During the quarter ended September 30, 2015, the Company was advanced $0 in cash to pay for operations by certain related parties and incurred management fees to these same related parties $15,000. In addition, a related party advanced $100,000 directly to Kerr as part of the potential merger agreement (See Note 5). During the year ended June 30, 2014, the Company was advanced $37,700 to pay for operations by certain related parties. Certain of these advances were converted into stock to be issued on September 14, 2014 as part of the Boardwalk note conversion.
On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of December 31, 2014, the shares were unissued and recorded as shares to be issued
As of the date of filing, all of these Related Party Transactions have since been converted into shares of the Company’s Common Stock.
| F-24 |
| Table of Contents |
NOTE 5 – PROPOSED MERGER WITH KERR TECHNOLOGIES, INC.
On May 30, 2014, our Board of Directors approved the execution of a non-binding indication of interest in the form of a Term Sheet (the “Term Sheet”) with Kerr Utility Technologies Inc. (“Kerr”) regarding a tax-free stock-for-stock exchange reverse merger transaction with Kerr (the “Merger”). In connection with the Merger, we intended to incorporate and establish T-REX Acquisitions, Inc. as a Nevada corporation and our wholly owned subsidiary (the “Merger Sub”) and T-REX Merger, Inc., a Nevada corporation (“Newco”) to accommodate the Kerr acquisition. Our Board of Directors has also approved a private placement offering to raise on an “all or none” basis an aggregate of $500,000 for Kerr’s benefit prior to consummation of the Merger.
In July 2014 and in anticipation of the closing of the transaction, a related party advanced, on behalf of the Company, $100,000 to Kerr This $100,000 amount was subsequently deemed uncollectible and written off during the quarter ended September 30, 2014. This amount is in addition to the $100,000 advanced by the same related party in May 2014 and written off during the year ended June 30, 2014.
The Kerr Merger was ultimately not concluded, and the Company will not recover any of the funds advanced to Kerr.
NOTE 6 – COMMON STOCK
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of 1 share of common stock and one Series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of 1 share of common stock and one series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of 1 share of common stock, two series A warrants for each to purchase one share of common stock at $.65 per share and one series B warrant to purchase one share of common stock at $.80. Each series A warrant expires three years from the date of issuance and each series B warrant expires 5 years from the date of issuance.
On January 1, 2015, the Company entered into a management agreement for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. For the three months ended September 30, 2016 and 2015 we expensed $10,500 and $0 respectively.
On January 1, 2015, the Company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the Company’s stock price at that time was $.60. For the three months ended September 30, 2016 and 2015 we expensed $7,500 and $0 respectively.
NOTE 7 – WARRANTS
On May 3, 2014, it was resolved that TREX Acquisition Corp. shall offer 125,000 Units of its securities at a price of $.80 per Unit. Each Unit shall consists of One (1) share of common stock, and a combination of Series A Warrants ( which may be exercised within three (3) years) and Series B Warrants exercised within five (5) years.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of 1 share of common stock and one Series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
| F-25 |
| Table of Contents |
On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $.80 per unit. Each Unit shall consist of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000 Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.
The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to remit payment of $.80 per share. The warrants were valued using a Black Scholes calculation.
The inputs for series A used a price $.59, a strike price range of .65 – 1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232.
As of the filing date of this annual report, 189,500 A warrants have expired; only 125,000 A Warrants and 62,500 B Warrants remain effective since the Company has yet to consummate a merger.
The following is the outstanding warrant activity:
|
|
| Warrants - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Warrants exercisable - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Weighted average life in years |
| |||||
| Outstanding June 30, 2014 |
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 3.00 |
|
| Additions | Granted |
| 187,500 |
|
| $ | 0.80 |
|
|
| 187,500 |
|
| $ | 0.80 |
|
|
| 3.67 |
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding June 30, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.66 |
|
| Additions | Granted |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding September 30, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.41 |
|
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following subsequent events needed to be disclosed.
| F-26 |
| Table of Contents |
2018 Failed Reverse Merger Attempt
On April 19, 2018, the Company entered into a non-binding indication of interest (“LOI”) to acquire Kaneptec Enterprises, Inc., a company engaged in the hemp and cannabidiol business (“Kaneptec”) in a reverse merger (the “Kaneptec Transaction”). In reliance of the LOI, the Company sold 350,000 shares to a related party for $47,500, and this cash was transferred to Kaneptec in order to facilitate the Kaneptec Transaction. This potential merger candidate also advanced approximately $20,000 to the Company in anticipation of the Kaneptec Transaction. During the due diligence phase, the Company’s consultants discovered that Kaneptec’s management had made material misrepresentations;; therefore, the Company ceased all further negotiations with Kaneptec. The Company has not recovered any sums advanced to Kaneptec in contemplation of the failed Kaneptec Transaction.
2020 Stock Issuances
On January 21, 2020, the Company formally issued (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 350,700 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500.
On March 12. 2020, the Company issued 300,000 shares of its common stock in connection to professional service providers pursuant to their respective engagement agreements.
On June 24, 2020, the Company issued 8,900,000 shares of its common stock in connection with the conversion of $890,000 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement.
On November 20, 2020, the Company issued 1,300,000 shares of its common stock in connection with a prepayment of an $80,000 future expense advanced by two related parties.
2020 TRXA Merger Sub Inc.
March 13, 2020, the Company incorporated a wholly owned subsidiary, TRXA Merger Sub Inc., a Delaware corporation (“Merger Sub”) in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s Sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company.
| F-27 |
| Table of Contents |
|
| F-29 |
| ||
| Consolidated Statements of Operations and Comprehensive Loss |
| F-30 |
| |
|
| F-31 |
| ||
|
| F-32 |
| ||
|
| F-33 |
| F-28 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| (Un-audited) |
|
|
|
| ||
|
| December 31, 2015 |
|
| June 30, 2015 |
| |||
| ASSETS | ||||||||
| CURRENT ASSETS: |
|
|
|
|
|
| ||
| Cash |
| $ | - |
|
| $ | 26 |
|
| TOTAL CURRENT ASSETS |
|
| - |
|
|
| 26 |
|
|
|
|
|
|
|
|
|
|
|
| Prepaid consulting |
|
| 198,000 |
|
|
| 234,000 |
|
| TOTAL ASSETS |
| $ | 198,000 |
|
| $ | 234,026 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
| Accounts Payable and Accrued Expenses |
| $ | 8,595 |
|
| $ | 6,265 |
|
| Due to Related Party |
|
| 121,199 |
|
|
| 89,850 |
|
| Notes payable related party |
|
| 53,900 |
|
|
| 53,900 |
|
| TOTAL CURRENT LIABILITIES |
|
| 183,694 |
|
|
| 150,015 |
|
| TOTAL LIABILITIES |
|
| 183,694 |
|
|
| 150,015 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| Common Stock, 0.001 par value, authorized 150,000,000 shares and 103,073 issued and outstanding as of December 31, 2015 and June 30, 2015 respectively |
|
| 103 |
|
|
| 103 |
|
| Additional Paid in Capital |
|
| 815,996 |
|
|
| 815,996 |
|
| Shares to be issued |
|
| 1,058,174 |
|
|
| 1,058,174 |
|
| Accumulated deficit |
|
| (1,859,967 | ) |
|
| (1,790,262 | ) |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
|
| 14,306 |
|
|
| 84,011 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | 198,000 |
|
| $ | 234,026 |
|
The accompanying notes are an integral part of these financial statements.
| F-29 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||
| for the three and six months ended December 31, | ||||||||||||||||
| (Un-audited) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
| Three months ended |
|
| Six months ended |
| ||||||||||
|
|
| 2015 |
|
| 2014 |
|
| 2015 |
|
| 2014 |
| ||||
| REVENUE |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transfer Agent and Filing Fees |
|
| 1,956 |
|
|
| 1,609 |
|
|
| 2,331 |
|
|
| 5,979 |
|
| Professional Fees |
|
| - |
|
|
| (1,500 | ) |
|
| 26 |
|
|
| 10,000 |
|
| Shares to be issued for services |
|
| 18,000 |
|
|
| - |
|
|
| 36,000 |
|
|
| - |
|
| Management and Consulting Fees |
|
| 15,000 |
|
|
| 68,900 |
|
|
| 30,000 |
|
|
| 83,900 |
|
| Administration Fees |
|
| - |
|
|
| 35 |
|
|
| - |
|
|
| 124 |
|
| Bad Debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 100,000 |
|
| TOTAL EXPENSES |
|
| 34,956 |
|
|
| 69,044 |
|
|
| 68,357 |
|
|
| 200,003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from Operations |
|
| (34,956 | ) |
|
| (69,044 | ) |
|
| (68,357 | ) |
|
| (200,003 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
|
| (674 | ) |
|
| (1,403 | ) |
|
| (1,348 | ) |
|
| (1,403 | ) |
| LOSS BEFORE TAXES |
|
| (35,630 | ) |
|
| (70,447 | ) |
|
| (69,705 | ) |
|
| (201,406 | ) |
| Provision for Income Taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| NET LOSS |
| $ | (35,630 | ) |
| $ | (70,447 | ) |
| $ | (69,705 | ) |
| $ | (201,406 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS PER COMMON SHARE - BASIC & DILUTED |
| $ | (0.35 | ) |
| $ | (0.68 | ) |
| $ | (0.68 | ) |
| $ | (1.95 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
|
| 103,073 |
|
|
| 103,073 |
|
|
| 103,073 |
|
|
| 103,073 |
|
The accompanying notes are an integral part of these financial statements.
| F-30 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||||||||||
| as of December 31, 2015 | ||||||||||||||||||||||||
| (Un-audited) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Common Stock |
|
| Additional Paid |
|
| Shares to be |
|
| Accumulated |
|
|
|
| |||||||||
|
|
| Shares |
|
| Amount |
|
| in Capital |
|
| issued |
|
| Deficit |
|
| TOTAL |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Balance, June 30, 2014 |
|
| 103,073 |
|
| $ | 103 |
|
| $ | 712,244 |
|
| $ | - |
|
| $ | (1,507,579 | ) |
| $ | (795,232 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 691,926 |
|
|
|
|
|
| $ | 691,926 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (130,959 | ) |
|
| (130,959 | ) |
| Balance, September 30, 2014 |
|
| 103,073 |
|
|
| 103 |
|
|
| 712,244 |
|
|
| 691,926 |
|
|
| (1,638,538 | ) |
|
| (234,265 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 96,248 |
|
|
|
|
|
|
| 96,248 |
|
| Allocation of warrants |
|
|
|
|
|
|
|
|
|
| 103,752 |
|
|
|
|
|
|
|
|
|
|
| 103,752 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (70,447 | ) |
|
| (70,447 | ) |
| Balance, December 31, 2014 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 788,174 |
|
|
| (1,708,985 | ) |
|
| (104,712 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 270,000 |
|
|
|
|
|
|
| 270,000 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (36,300 | ) |
|
| (36,300 | ) |
| Balance, March 31, 2015 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,745,285 | ) |
|
| 128,988 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (44,977 | ) |
|
| (44,977 | ) |
| Balance, June 30, 2015 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,790,262 | ) |
|
| 84,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (34,075 | ) |
|
| (34,075 | ) |
| Balance, September 30, 2015 |
|
| 103,073 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,824,337 | ) |
|
| 49,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (35,630 | ) |
|
| (35,630 | ) |
| Balance, December 31, 2015 |
|
| 103,073 |
|
| $ | 103 |
|
| $ | 815,996 |
|
| $ | 1,058,174 |
|
| $ | (1,859,967 | ) |
| $ | 14,306 |
|
The accompanying notes are an integral part of these financial statements.
| F-31 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
| for the six months ended December 31, | ||||||||
| (Un-audited) | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| 2015 |
|
| 2014 |
| ||
| OPERATING ACTIVITIES |
| |||||||
| Net Income (Loss) |
| $ | (69,705 | ) |
| $ | (201,406 | ) |
| Bad debt writeoff |
|
| - |
|
|
| 100,000 |
|
| Shares to be issued for services |
|
| 36,000 |
|
|
| - |
|
| Change in Related Party Advances |
|
| 31,349 |
|
|
| (4,905 | ) |
| Change Accounts Payable and Accrued Expenses |
|
| 2,330 |
|
|
| 2,474 |
|
| Net Cash Used by Operating Activities |
|
| (26 | ) |
|
| (103,837 | ) |
|
|
|
|
|
|
|
|
|
|
| FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from common stock subscriptions |
|
|
|
|
|
| 50,000 |
|
| Proceeds from notes payable related party |
|
| - |
|
|
| 53,905 |
|
| Net cash provided by financing activities |
|
| - |
|
|
| 103,905 |
|
| NET INCREASE (DECREASE) IN CASH |
|
| (26 | ) |
|
| 68 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT BEGINNING OF PERIOD |
|
| 26 |
|
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT END OF PERIOD |
| $ | - |
|
| $ | 131 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Cashflow Information |
|
|
|
|
|
|
|
|
| Interest Paid |
| $ | - |
|
| $ | - |
|
| Taxes Paid |
| $ | - |
|
| $ | - |
|
| Supplemental Non-Cash Information |
|
|
|
|
|
|
|
|
| Note issued in exchange for amount advanced to potential merger Candidate |
| $ | - |
|
| $ | 100,000 |
|
| Conversion of Notes payable |
| $ | - |
|
| $ | 691,926 |
|
The accompanying notes are an integral part of these financial statements.
| F-32 |
| Table of Contents |
TREX ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 2015
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
TREX Acquisition Corp. (The “Company”) was formed on January 16, 2008 in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company later changed its name to Sync2 Networks Corp. then on March 20, 2014 to T-REX Acquisition Corp. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia.
The Company consists of itself and its 100% owned subsidiary Sync2 Networks International Ltd.
On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”), which under Nevada statutory law involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 Networks International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 International Ltd. as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta.
The Company’s business plan is to find a merger candidate and become an operating company or to be a corporate governance and management company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted account principles have been condensed or omitted. These consolidated financial statement should be read in conjunction with a reading of the financial statements and notes there included in our annual report on form 10k for the fiscal year end June 30, 2016, as filed with this form 10K.”
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
Determination of Bad Debts
The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the allowance for doubtful accounts.
| F-33 |
| Table of Contents |
Principles of Consolidation
The accounts include those of the Company and its 100% owned subsidiary. All intercompany transactions have been eliminated. At this time, SYNC2 International LTD has no operations, assets or liabilities.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
| |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
| |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2015.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis.
| F-34 |
| Table of Contents |
Equipment
Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
Stock based compensations
The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.
The company accounts for its no-employee stock-based compensation in accordance with ASC Section 505 Equity Based Payments to Non-Employees. Under the fair value recognition provisions of ASC 505, stock based compensation cost is measured at the earlier of the purchase commitment or performance completions, based on the fair value of the award, and is recognized as expense as purchase commitment is settled.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Since December 31, 2015 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were 1,835,835 potentially dilutive shares outstanding as of December 31, 2015 resulting from shares to be issued per the conversion of related party debt (see Note 4). We also had shares to be issued for consulting that were unissued as of December 31, 2015. We also had outstanding warrants that could convert into 377,000 shares of common stock as of December 31, 2015. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
| F-35 |
| Table of Contents |
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total Advertising costs were zero for all periods.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $1,859,967 and a working capital deficit of $183,694 at December 31, 2015.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| F-36 |
| Table of Contents |
NOTE 4 – RELATED PARTY TRANSACTIONS
On June 24, 2014 the company entered into an unsecured promissory note with Lazarus asset management, LLC. in the amount of $34,550 with an interest rate of 5% per annum and a due date of June 24, 2015. As of December 31, 2015, the outstanding accrued interest was $2,628.
On June 24, 2014 the company entered into an unsecured promissory note with Squardron Marketing, Inc. in the amount of $19,350 with an interest rate of 5% per annum and a due date of June 24, 2015. As of December 31, 2015, the outstanding accrued interest was $1,229.
On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. The agreements resulted in Management Fee expense of $15,000 for the quarter ended December 31, 2015 and $30,000 for the six months ended December 31, 2015. These amounts were unpaid at the end of the quarter and six months ended December 31, 2015.
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Due to Related Parties
During the quarter ended December 31, 2015, the Company was advanced $0 in cash to pay for operations by certain related parties and incurred management fees to these same related parties $15,000. During the six months ended December 31, 2015, the Company was advanced $0 in cash to pay for operations by certain related parties and incurred management fees to these same related parties $30,000. In addition, a related party advanced $100,000 directly to Kerr as part of the potential merger agreement (See Note 5). During the year ended June 30, 2014, the Company was advanced $37,700 to pay for operations by certain related parties. Certain of these advances were converted into stock to be issued on September 14, 2014 as part of the Boardwalk note conversion.
On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of December 31, 2014, the shares were unissued and recorded as shares to be issued
As of the date of filing, all of these Related Party Transactions have since been converted into shares of the Company’s Common Stock.
NOTE 5 – PROPOSED MERGER WITH KERR TECHNOLOGIES, INC.
On May 30, 2014, our Board of Directors approved the execution of a non-binding indication of interest in the form of a Term Sheet (the “Term Sheet”) with Kerr Utility Technologies Inc. (“Kerr”) regarding a tax-free stock-for-stock exchange reverse merger transaction with Kerr (the “Merger”). In connection with the Merger, we intended to incorporate and establish T-REX Acquisitions, Inc. as a Nevada corporation and our wholly owned subsidiary (the “Merger Sub”) and T-REX Merger, Inc., a Nevada corporation (“Newco”) to accommodate the Kerr acquisition. Our Board of Directors has also approved a private placement offering to raise on an “all or none” basis an aggregate of $500,000 for Kerr’s benefit prior to consummation of the Merger.
| F-37 |
| Table of Contents |
In July 2014 and in anticipation of the closing of the transaction, a related party advanced, on behalf of the Company, $100,000 to Kerr This $100,000 amount was subsequently deemed uncollectible and written off during the quarter ended September 30, 2014. This amount is in addition to the $100,000 advanced by the same related party in May 2014 and written off during the year ended June 30, 2014.
The Kerr Merger was ultimately not concluded, and the Company will not recover any of the funds advanced to Kerr.
NOTE 6 – COMMON STOCK
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of 1 share of common stock and one Series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of 1 share of common stock and one series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of 1 share of common stock, two series A warrants for each to purchase one share of common stock at $.65 per share and one series B warrant to purchase one share of common stock at $.80. Each series A warrant expires three years from the date of issuance and each series B warrant expires 5 years from the date of issuance.
On January 1, 2015, the Company entered into a management agreement for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. For the six months ended December 30, 2016 and 2015 we expensed $21,000 and $0 respectively.
On January 1, 2015, the Company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the Company’s stock price at that time was $.60. For the six months ended December 30, 2016 and 2015 we expensed $15,000 and $0 respectively.
NOTE 7 – WARRANTS
On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $.80 per unit. Each Unit shall consist of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000 Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.
| F-38 |
| Table of Contents |
The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to remit payment of $.80 per share. The warrants were valued using a Black Scholes calculation.
The inputs for series A used a price $.59, a strike price range of .65 – 1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232.
As of the filing date of this annual report, 189,500 A warrants have expired; only 125,000 A Warrants and 62,500 B Warrants remain effective since the Company has yet to consummate a merger.
The following is the outstanding warrant activity:
|
|
| Warrants - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Warrants exercisable - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Weighted average life in years |
| |||||
| Outstanding June 30, 2014 |
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 3.00 |
|
| Additions | Granted |
| 187,500 |
|
| $ | 0.80 |
|
|
| 187,500 |
|
| $ | 0.80 |
|
|
| 3.67 |
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding June 30, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.66 |
|
| Additions | Granted |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding December 31, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.16 |
|
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following subsequent events needed to be disclosed.
2018 Failed Reverse Merger Attempt
On April 19, 2018, the Company entered into a non-binding indication of interest (“LOI”) to acquire Kaneptec Enterprises, Inc., a company engaged in the hemp and cannabidiol business (“Kaneptec”) in a reverse merger (the “Kaneptec Transaction”). In reliance of the LOI, the Company sold 350,000 shares to a related party for $47,500, and this cash was transferred to Kaneptec in order to facilitate the Kaneptec Transaction. This potential merger candidate also advanced approximately $20,000 to the Company in anticipation of the Kaneptec Transaction. During the due diligence phase, the Company’s consultants discovered that Kaneptec’s management had made material misrepresentations;; therefore, the Company ceased all further negotiations with Kaneptec. The Company has not recovered any sums advanced to Kaneptec in contemplation of the failed Kaneptec Transaction.
| F-39 |
| Table of Contents |
2020 Stock Issuances
On January 21, 2020, the Company formally issued (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 350,700 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500.
On March 12. 2020, the Company issued 300,000 shares of its common stock in connection to professional service providers pursuant to their respective engagement agreements.
On June 24, 2020, the Company issued 8,900,000 shares of its common stock in connection with the conversion of $890,000 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement.
On November 20, 2020, the Company issued 1,300,000 shares of its common stock in connection with a prepayment of an $80,000 future expense advanced by two related parties.
2020 TRXA Merger Sub Inc.
March 13, 2020, the Company incorporated a wholly owned subsidiary, TRXA Merger Sub Inc., a Delaware corporation (“Merger Sub”) in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s Sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company.
| F-40 |
| Table of Contents |
|
| F-42 |
| ||
| Consolidated Statements of Operations and Comprehensive Loss |
| F-43 |
| |
|
| F-44 |
| ||
|
| F-45 |
| ||
|
| F-46 |
| F-41 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
|
|
|
|
|
|
|
| ||
|
| March 31, 2016 |
|
| June 30, 2015 |
| |||
| ASSETS | ||||||||
| CURRENT ASSETS: |
| (Un-audited) |
|
|
|
| ||
| Cash |
| $ | - |
|
| $ | 26 |
|
| TOTAL CURRENT ASSETS |
|
| - |
|
|
| 26 |
|
|
|
|
|
|
|
|
|
|
|
| Prepaid consulting |
|
| 180,000 |
|
|
| 234,000 |
|
| TOTAL ASSETS |
| $ | 180,000 |
|
| $ | 234,026 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
| Accounts Payable and Accrued Expenses |
| $ | 10,513 |
|
| $ | 6,265 |
|
| Due to Related Party |
|
| 136,873 |
|
|
| 89,850 |
|
|
|
|
| 53,900 |
|
|
| 53,900 |
|
| TOTAL CURRENT LIABILITIES |
|
| 201,286 |
|
|
| 150,015 |
|
| TOTAL LIABILITIES |
|
| 201,286 |
|
|
| 150,015 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and Contingencies |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| Common Stock, 0.001 par value, authorized 150,000,000 shares and 103,073 issued and outstanding as of March 31, 2016 and June 30, 2015 respectively |
|
| 103 |
|
|
| 103 |
|
| Additional Paid In Capital |
|
| 815,996 |
|
|
| 815,996 |
|
| Shares to be issued |
|
| 1,058,174 |
|
|
| 1,058,174 |
|
| Accumulated deficit |
|
| (1,895,559 | ) |
|
| (1,790,262 | ) |
| TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
|
| (21,286 | ) |
|
| 84,011 |
|
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ | 180,000 |
|
| $ | 234,026 |
|
The accompanying notes are an integral part of these financial statements.
| F-42 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||
| for the three and nine months ended March 31, | ||||||||||||||||
| (Un-audited) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
| Three months ended |
|
| nine months ended |
| ||||||||||
|
|
| 2016 |
|
| 2015 |
|
| 2016 |
|
| 2015 |
| ||||
| REVENUE |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transfer Agent and Filing Fees |
|
| 1,918 |
|
|
| 1,844 |
|
|
| 4,248 |
|
|
| 7,820 |
|
| Professional Fees |
|
| - |
|
|
| - |
|
|
| 26 |
|
|
| 13,000 |
|
| Shares to be issued for services |
|
| 18,000 |
|
|
| 18,000 |
|
|
| 54,000 |
|
|
| 18,000 |
|
| Management and Consulting Fees |
|
| 15,000 |
|
|
| 15,000 |
|
|
| 45,000 |
|
|
| 95,900 |
|
| Administration Fees |
|
| - |
|
|
| 35 |
|
|
| - |
|
|
| 162 |
|
| Bad Debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 100,000 |
|
| TOTAL EXPENSES |
|
| 34,918 |
|
|
| 34,879 |
|
|
| 103,274 |
|
|
| 234,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from Operations |
|
| (34,918 | ) |
|
| (34,879 | ) |
|
| (103,274 | ) |
|
| (234,882 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Expense |
|
| (674 | ) |
|
| (674 | ) |
|
| (2,022 | ) |
|
| (2,077 | ) |
| LOSS BEFORE TAXES |
|
| (35,592 | ) |
|
| (35,553 | ) |
|
| (105,296 | ) |
|
| (236,959 | ) |
| Provision for Income Taxes |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| NET LOSS |
| $ | (35,592 | ) |
| $ | (35,553 | ) |
| $ | (105,296 | ) |
| $ | (236,959 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS PER COMMON SHARE - BASIC & DILUTED |
| $ | (0.35 | ) |
| $ | (0.35 | ) |
| $ | (1.02 | ) |
| $ | (2.30 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
|
| 103,046 |
|
|
| 103,046 |
|
|
| 103,046 |
|
|
| 103,046 |
|
The accompanying notes are an integral part of these financial statements.
| F-43 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||||||||||||||||||
| as of March 31, 2016 | ||||||||||||||||||||||||
| (Un-audited) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
|
| Common Stock |
|
| Additional Paid |
|
| Shares to be |
|
| Accumulated |
|
|
|
| |||||||||
|
|
| Shares |
|
| Amount |
|
| in Capital |
|
| issued |
|
| Deficit |
|
| TOTAL |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
| Balance, June 30, 2014 |
|
| 103,046 |
|
| $ | 103 |
|
| $ | 712,244 |
|
| $ | - |
|
| $ | (1,507,579 | ) |
| $ | (795,232 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 691,926 |
|
|
|
|
|
| $ | 691,926 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (130,959 | ) |
|
| (130,959 | ) |
| Balance, September 30, 2014 |
|
| 103,046 |
|
|
| 103 |
|
|
| 712,244 |
|
|
| 691,926 |
|
|
| (1,638,538 | ) |
|
| (234,265 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 96,248 |
|
|
|
|
|
|
| 96,248 |
|
| Allocation of warrants |
|
|
|
|
|
|
|
|
|
| 103,752 |
|
|
|
|
|
|
|
|
|
|
| 103,752 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (70,447 | ) |
|
| (70,447 | ) |
| Balance, December 31, 2014 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 788,174 |
|
|
| (1,708,985 | ) |
|
| (104,712 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shares to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 270,000 |
|
|
|
|
|
|
| 270,000 |
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (35,553 | ) |
|
| (35,553 | ) |
| Balance, March 31, 2015 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,744,538 | ) |
|
| 129,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (45,725 | ) |
|
| (45,725 | ) |
| Balance, June 30, 2015 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,790,263 | ) |
|
| 84,010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (34,075 | ) |
|
| (34,075 | ) |
| Balance, September 30, 2015 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,824,338 | ) |
|
| 49,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (35,630 | ) |
|
| (35,630 | ) |
| Balance, Decmber 31, 2015 |
|
| 103,046 |
|
|
| 103 |
|
|
| 815,996 |
|
|
| 1,058,174 |
|
|
| (1,859,968 | ) |
|
| 14,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (35,592 | ) |
|
| (35,592 | ) |
| Balance, March 31, 2016 |
|
| 103,046 |
|
| $ | 103 |
|
| $ | 815,996 |
|
| $ | 1,058,174 |
|
| $ | (1,895,560 | ) |
| $ | (21,287 | ) |
The accompanying notes are an integral part of these financial statements.
| F-44 |
| Table of Contents |
| TREX ACQUISITION CORP. | ||||||||
| for the nine months ended March 31, | ||||||||
| (Un-audited) | ||||||||
|
|
|
|
|
|
|
| ||
|
|
| 2016 |
|
| 2015 |
| ||
| OPERATING ACTIVITIES |
| |||||||
| Net Income (Loss) |
| $ | (105,296 | ) |
| $ | (236,959 | ) |
| Bad debt writeoff |
|
| - |
|
|
| 100,000 |
|
| Shares to be issued for services |
|
| 54,000 |
|
|
| 18,000 |
|
| Change in Related Party Advances |
|
| 47,023 |
|
|
| 14,677 |
|
| Change Accounts Payable and Accrued Expenses |
|
| 4,247 |
|
|
| 415 |
|
| Net Cash Used by Operating Activities |
|
| (26 | ) |
|
| (103,867 | ) |
|
|
|
|
|
|
|
|
|
|
| FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds from common stock subscriptions |
|
|
|
|
|
| 50,000 |
|
| Proceeds from notes payable related party |
|
| - |
|
|
| 53,900 |
|
| Net cash provided by financing activities |
|
| - |
|
|
| 103,900 |
|
| NET INCREASE (DECREASE) IN CASH |
|
| (26 | ) |
|
| 33 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT BEGINNING OF PERIOD |
|
| 26 |
|
|
| 63 |
|
|
|
|
|
|
|
|
|
|
|
| CASH AT END OF PERIOD |
| $ | - |
|
| $ | 96 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental Cashflow Information |
|
|
|
|
|
|
|
|
| Interest Paid |
| $ | - |
|
| $ | - |
|
| Taxes Paid |
| $ | - |
|
| $ | - |
|
| Supplemental Non-Cash Information |
|
|
|
|
|
|
|
|
| Note issued in exchange for amount advanced to potential merger Candidate |
| $ | - |
|
| $ | 100,000 |
|
| Conversion of Notes payable |
| $ | - |
|
| $ | 691,926 |
|
| Stock/warrants issued for payments made by others in which cash was never received |
| $ | - |
|
| $ | 150,000 |
|
| Shares to be issued for services |
| $ | - |
|
| $ | 270,000 |
|
The accompanying notes are an integral part of these financial statements.
| F-45 |
| Table of Contents |
TREX ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2016
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
TREX Acquisition Corp. (The “Company”) was formed on January 16, 2008 in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company later changed its name to Sync2 Networks Corp. then on March 20, 2014 to T-REX Acquisition Corp. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia.
The Company consists of itself and its 100% owned subsidiary Sync2 Networks International Ltd.
On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”), which under Nevada statutory law involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 Networks International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 International Ltd. as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta.
The Company’s business plan is to find a merger candidate and become an operating company or to be a corporate governance and management company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Certain information and note disclosures normally included in our annual financial statements prepared in accordance with generally accepted account principles have been condensed or omitted. These consolidated financial statement should be read in conjunction with a reading of the financial statements and notes there included in our annual report on form 10k for the fiscal year end June 30, 2014, as filed with the US Securities and Exchange Commission.”
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
| F-46 |
| Table of Contents |
Determination of Bad Debts
The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. . Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the allowance for doubtful accounts.
Principles of Consolidation
The accounts include those of the Company and its 100% owned subsidiary. All intercompany transactions have been eliminated. At this time, SYNC2 International LTD has no operations, assets or liabilities.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
|
| |
| Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
|
| |
| Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2016.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis.
Equipment
Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.
| F-47 |
| Table of Contents |
Stock based compensations
The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.
The company accounts for its no-employee stock-based compensation in accordance with ASC Section 505 Equity Based Payments to Non-Employees. Under the fair value recognition provisions of ASC 505, stock based compensation cost is measured at the earlier of the purchase commitment or performance completions, based on the fair value of the award, and is recognized as expense as purchase commitment is settled.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Since March 31, 2016 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were 1,835,835 potentially dilutive shares outstanding as of March 31, 2016 resulting from shares to be issued per the conversion of related party debt (see Note 4). We also had 450,000 of shares to be issued for compensation that were unissued as of March 31, 2016. We also had outstanding warrants that could convert into 377,000 shares of common stock as of March 31, 2016. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
| F-48 |
| Table of Contents |
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total Advertising costs were zero for all periods.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $1,895,559 and a working capital deficit of $201,286 as of March 31, 2016.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
On June 24, 2014 the company entered into an unsecured promissory note with Lazarus asset management, LLC. in the amount of $34,550 with an interest rate of 5% per annum and a due date of June 24, 2015. As of March 31, 2016, the accrued interest on this note was $3,059.
| F-49 |
| Table of Contents |
On June 24, 2014 the company entered into an unsecured promissory note with Squardron Marketing, Inc. in the amount of $19,350 with an interest rate of 5% per annum and a due date of June 24, 2015. . As of March 31, 2016, the accrued interest on this note was $1,471.
On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. The agreements resulted in Management Fee expense of $15,000 for the quarter ended March 31, 2016 and $45,000 for the nine months ended March 31, 2016. These amounts were unpaid at the end of the quarter and nine months ended March 31, 2016.
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Due to Related Parties
During the quarter ended March 31, 2016, the Company was advanced $0 in cash to pay for operations by certain related parties and incurred management fees to these same related parties $15,000. During the nine months ended March 31, 2016, the Company was advanced $0 in cash to pay for operations by certain related parties and incurred management fees to these same related parties $30,000. In addition, a related party advanced $100,000 directly to Kerr as part of the potential merger agreement (See Note 5). During the year ended June 30, 2014, the Company was advanced $37,700 to pay for operations by certain related parties. Certain of these advances were converted into stock to be issued on September 14, 2014 as part of the Boardwalk note conversion.
On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of March 31, 2015 the shares were unissued and recorded as shares to be issued.
All of these Related Party Transactions have since been converted into shares of the Company’s Common Stock, as of the date of this filing, with the exception of the $100,000 advance to Kerr which was written off in Fiscal year end 2014.
NOTE 5 – PROPOSED MERGER WITH KERR TECHNOLOGIES, INC.
On May 30, 2014, our Board of Directors approved the execution of a non-binding indication of interest in the form of a Term Sheet (the “Term Sheet”) with Kerr Utility Technologies Inc. (“Kerr”) regarding a tax-free stock-for-stock exchange reverse merger transaction with Kerr (the “Merger”). In connection with the Merger, we intended to incorporate and establish T-REX Acquisitions, Inc. as a Nevada corporation and our wholly owned subsidiary (the “Merger Sub”) and T-REX Merger, Inc., a Nevada corporation (“Newco”) to accommodate the Kerr acquisition. Our Board of Directors has also approved a private placement offering to raise on an “all or none” basis an aggregate of $500,000 for Kerr’s benefit prior to consummation of the Merger.
In July 2014 and in anticipation of the closing of the transaction, a related party advanced, on behalf of the Company, $100,000 to Kerr This $100,000 amount was subsequently deemed uncollectible and written off during the quarter ended September 30, 2014. This amount is in addition to the $100,000 advanced by the same related party in May 2014 and written off during the year ended June 30, 2014.
The Kerr Merger was ultimately not concluded, and the Company will not recover any of the funds advanced to Kerr.
| F-50 |
| Table of Contents |
NOTE 6 – COMMON STOCK
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of 1 share of common stock and one Series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of 1 share of common stock and one series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of 1 share of common stock, two series A warrants for each to purchase one share of common stock at $.65 per share and one series B warrant to purchase one share of common stock at $.80. Each series A warrant expires three years from the date of issuance and each series B warrant expires 5 years from the date of issuance.
On January 1, 2015, the company entered into a management agreement for a period of 2 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60.
On January 1, 2015, the company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the stock price at that time was $.60.
NOTE 7 – WARRANTS
On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $.80 per unit. Each Unit shall consists of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.
On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000 Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share Each A warrant expires three years from the date of issuance.
On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.
The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to remit payment of $.80 per share. The warrants were valued using a Black Scholes calculation.
The inputs for series A used a price $.59, a strike price range of .65 – 1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232.
As of the filing date of this annual report, 189,500 A Warrants have expired; only 125,000 A Warrants and the 62,500 B Warrants remain effective since the Company has yet to consummate a merger.
| F-51 |
| Table of Contents |
The following is the outstanding warrant activity:
|
|
| Warrants - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Warrants exercisable - Common Share Equivalents |
|
| Weighted Average Exercise price |
|
| Weighted average life in years |
| |||||
| Outstanding June 30, 2014 |
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 189,500 |
|
| $ | 0.80 |
|
|
| 3.00 |
|
| Additions | Granted |
| 187,500 |
|
| $ | 0.80 |
|
|
| 187,500 |
|
| $ | 0.80 |
|
|
| 3.67 |
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding June 30, 2015 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 2.66 |
|
| Additions | Granted |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Expired | Expired |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| Exercised |
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
| |
| Outstanding March 31, 2016 |
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 377,000 |
|
| $ | 0.75 |
|
|
| 1.91 |
|
NOTE 8 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following subsequent events needed to be disclosed.
2018 Failed Reverse Merger Attempt
On April 19, 2018, the Company entered into a non-binding indication of interest (“LOI”) to acquire Kaneptec Enterprises, Inc., a company engaged in the hemp and cannabidiol business (“Kaneptec”) in a reverse merger (the “Kaneptec Transaction”). In reliance of the LOI, the Company sold 350,000 shares to a related party for $47,500, and this cash was transferred to Kaneptec in order to facilitate the Kaneptec Transaction. This potential merger candidate also advanced approximately $20,000 to the Company in anticipation of the Kaneptec Transaction. During the due diligence phase, the Company’s consultants discovered that Kaneptec management had made material misrepresentations regarding its business and management; therefore, the Company ceased all further negotiations with Kaneptec. The Company has not recovered any sums advanced to Kaneptec in contemplation of the failed Kaneptec Transaction.
2020 Stock Issuances
On January 21, 2020, the Company resolved to issue and issued (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 350,700 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500.
On March 12. 2020, the Company resolved to issue and issued 300,000 shares of its common stock in connection to professional service providers pursuant to their respective engagement agreements.
On June 24, 2020, the Company resolved to issue and issued 8,900,000 shares of its common stock in connection with the conversion of $890,000 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement.
2020 TRXA Merger Sub Inc.
March 13, 2020, the Company incorporated a wholly-owned subsidiary, TRXA Merger Sub Inc., a Delaware corporation (“Merger Sub”) in order to facilitate the acquisition of a Software-as-a-Service internet platform business. The Sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company.
On November 20, 2020, the Company issued 1,300,000 shares of its common stock in connection with a prepayment of an $80,000 future expense advanced by two related parties.
| F-52 |
| Table of Contents |
ITEM 9. CHANGES AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
As of the date of this filing, there are no disagreements between us and our accountants on any matter of accounting principles, practices or financial statement disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the periods covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our Chief Executive Officer and our Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| · | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| · | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and |
| · | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our Chief Executive Officer and our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of June 30, 2015. In making this assessment, management used the criteria set forth by the 1992 Committee of Sponsoring Organizations of the Treadway Commission (“2013 COSO”) in Internal Control — Integrated Framework.
| 19 |
| Table of Contents |
Based on our assessment, our Chief Executive Officer and our Chief Financial Officer believe that, as of June 30, 2016, our internal control over financial reporting is not effective based on those criteria, due to the following:
| · | Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel. Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources. |
In light of this conclusion and as part of the preparation of this report, we have applied compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the periods covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the years and periods then ended.
This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes in our internal control over financial reporting during the fourth quarter of the year ended June 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
| 20 |
| Table of Contents |
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
EXECUTIVE OFFICERS AND DIRECTORS
Our directors and principal executive officers are as specified on the following table:
| Name |
| Age |
| Position |
|
| ||||
| Frank Horkey |
| 66 |
| President/Chief Executive Officer, Secretary and Chief Financial Officer Director |
Frank J. Horkey
Mr. Horkey has been our President/Secretary and Chief Financial Officer and a director since January 14, 2014. During the past forty years, Mr. Horkey has been engaged as an auditor and a certified public accountant. Mr. Horkey currently is the founder and manager of Horkey & Associates, which is a public accounting firm located in West Broward, Florida. In 1978, Mr. Horkey commenced his career with Touche Ross (which is now called Deloitte Touche), an international public accounting firm, in Miami, Florida. After three years, he started his own public accounting firm and through subsequent mergers was a partner through 1991 in one of the largest accounting firms in western Broward County. Mr. Horkey has taught courses on accounting, auditing and taxation issues, and has written a variety of articles on diverse tax topics, such as home office deductions, and accounting and auditing topics such as audits of small businesses. Mr. Horkey’s clients have included large corporations, small businesses, professionals, not-for-profit organizations, municipalities and other governmental entities. Mr. Horkey was the audit partner on one of the pilot single audits performed on a large governmental unit in 1981, and was involved in the development and application of the single audit process with the Office of Management and Budget and the General Accounting Office.
Mr. Horkey earned a Bachelor of Science in Accounting from Florida Atlantic University and has been certified by the State of Florida as a Certified Public Accountant since April 1979. He is a member of the American Institute of Certified Public Accountants as well as the Florida Institute of Certified Public Accountants. He also holds the designation as Certified in Florida Sales Tax, a specialty designation awarded jointly by the Florida Board of Accountancy and the Florida Institute of Certified Public Accountants.
Mr. Horkey is also a 1993 graduate of Leadership Broward and 1987 President of the Sunrise Chamber of Commerce. He has been a member of the Broward Workforce Development Board since 1993 and Chair of its Audit Committee and was Board Chair for 2015-2016. Mr. Horkey is the 1995 recipient of the “Small Business Person of the Year” award from the Sunrise Chamber of Commerce, and a two-time finalist for the South Florida “Up and Comers” Award in accounting. He was also Chair of the Sole Practitioners Committee of the Florida Institute of Certified Public Accountants for two years.
| 21 |
| Table of Contents |
Mr. Horkey’s community involvement also extends into the education environment. He was a member of the School Board of Broward County Audit Committee for ten years, Chair of the Sunrise Chamber of Commerce Education Committee for three years, and co-founder of the Sunrise Chamber “One for the Kids” Program (which matches business people who have specific skills with schools and/or students with matching needs). He also worked on the Broward Education Planning Initiative, which was the first countywide effort to address school overcrowding. Mr. Horkey was Treasurer of Broward Education Foundation for four years including the period during which the Foundation administered the Marjory Stoneman Douglas Victims fund of over $10,700,000. He is currently Board Chair of Broward Education Foundation.
All directors hold office until the completion of their term of office, which is not longer than one year, or until their successors have been elected. All officers are appointed annually by the board of directors and, subject to employment agreements (which do not currently exist), serve at the discretion of the board. Currently, our directors receive no compensation.
There is no family relationship between any of our officers or directors. For the past ten years, there have been no orders, judgments, or decrees of any governmental agency or administrator, or of any court of competent jurisdiction, revoking or suspending for cause any license, permit or other authority to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining any of our officers or directors from engaging in or continuing any conduct, practice or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security, or any aspect of the securities business or of theft or of any felony.
CORPORATE GOVERNANCE
Committees
Our Board of Directors does not currently have a compensation committee or nominating and corporate governance committee because, due to the Board of Director’s composition and our relatively limited operations, the Board of Directors believes it is able to effectively manage the issues normally considered by such committees. Our Board of Directors may undertake a review of the need for these committees in the future.
Audit Committee and Financial Expert
Our Board of Directors has not established an audit committee. The respective role of an audit committee has been conducted by our Board of Directors. We intend to establish an audit committee as soon as it is practical to do so.. When established, the audit committee’s primary function will be to provide advice with respect to our financial matters and to assist our Board of Directors in fulfilling its oversight responsibilities regarding finance, accounting, and legal compliance. The audit committee’s primary duties and responsibilities will be to: (i) serve as an independent and objective party to monitor our financial reporting process and internal control system; (ii) review and appraise the audit efforts of our independent accountants; (iii) evaluate our quarterly financial performance as well as its compliance with laws and regulations; (iv) oversee management’s establishment and enforcement of financial policies and business practices; and (v) provide an open avenue of communication among the independent accountants, management and our Board of Directors.
| 22 |
| Table of Contents |
Code of Ethics
We do not currently have a Code of Ethics that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We plan to adopt a Code of Ethics.
Director Independence
Our director is not deemed independent. Our director also holds positions as an officer.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our principal executive officers during the fiscal years ended June 30, 2015 and June 30, 2014.
Summary Compensation Table
| Name and Principal Position |
| Fiscal Years |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
| Warren Gilbert, |
| 2013 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
| President/Secretary/Treasurer/CFO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Frank Horkey, Note 1) |
| 2015-2016 |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
| President/Secretary/Treasurer/CFO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
|
Note 1) On January 1, 2015, the company entered into a management agreement for a period of 2 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of June 30, 2016, these shares remained unissued.
| 23 |
| Table of Contents |
OUTSTANDING EQUITY AWARDS
We do not have any effective stock option or other equity award plans. Therefore, as of June 30, 2016, the following named executive officers had the following unexercised options, stock that has not vested, and equity incentive plan awards:
|
|
| Option Awards |
|
|
|
|
| Stock Awards |
| |||||||||||||||||||||||||||
| Name |
| Number of Securities Underlying Unexercised Options # Exercisable |
|
| # Un-exercisable |
|
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options |
|
| Option Exercise Price |
|
| Option Expiration Date |
|
| Number of Shares or Units of Stock Not Vested |
|
| Market Value of Shares or Units Not Vested |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights Not Vested |
|
| Value of Unearned Shares, Units or Other Rights Not Vested |
| |||||||||
| Warren Gilbert, President/Secretary/Treasurer/CFO |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
| Frank Horkey Pres/CEO Secretary CFO |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
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There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.
DIRECTOR COMPENSATION
Our directors received the following compensation for their service as directors during the fiscal years ended June 30, 2016 and June 30, 2015:
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| Fees Earned or Paid in Cash $ |
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| Stock Awards $ |
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| Option Awards $ |
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| Non-Equity Incentive Plan Compensation $ |
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| Non-Qualified Deferred Compensation Earnings $ |
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| All Other Compensation $ |
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| Warren Gilbert, President/Secretary/Treasurer/CFO 2013 |
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| Frank Horkey 2014-2019 |
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| 24 |
| Table of Contents |
On approximately August 14, 2013, there was a change in our control. In accordance with the terms and provisions of that certain escrow agreement dated March 31, 2012 (the “Escrow Agreement”), Warren Gilbert, became our President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and sole member of the Board of Directors, when he acquired, acquired in a private transaction an aggregate of 62,863,800 shares of our pre-Reverse Stock Split restricted common stock representing an equity interest of then 61% of the total issued and outstanding shares. The amount of consideration paid was $325,000 and were outside funds from unrelated parties. The shares of common stock were acquired as follows: (i) 51,000,000 pre-Reverse Stock Split shares from Artur Etozov; and (ii) 11,863,800 pre-Reverse Stock Split shares from approximately ten separate shareholders each holding less than 5% of the total issued and outstanding.
On January 21,2020, Frank Horkey Pres/CEO, Secretary CFO and sole director was issued 350,000 shares of the Company’s common stock pursuant to a certain Management Agreement dated January 1, 2015. Mr. Horkey has no options to purchase any stock.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 30, 2015 by each person or entity known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, each of our directors and named executive officers, and all of our directors and executive officers as a group.
| Title of Class |
| Name and Address of Beneficial Owner |
| Amount and Nature of Beneficial Owner |
| Percent of Class (1) |
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| Officers and Directors |
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| Common Stock |
| Warren Gilbert 9540 NW 10th Street Plantation, Florida 33322 |
| 62,864 shares |
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| 61 | % |
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| Common Stock |
| All directors and named executive officers as a group (1 person) |
| 62,864 shares |
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| 61 | % |
| Beneficial Owners 5% or Greater |
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| None |
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________
| (1) | Percentage of beneficial ownership of our common stock is based on 103,046 shares of common stock outstanding as of the date of this Annual Report, which total issued and outstanding were reduced in accordance with the Reverse Stock Split. |
Changes in Control
Other than as described above, our management is not aware of any arrangements which may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.
| 25 |
| Table of Contents |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related party transactions.
None of the following parties has, since our date of incorporation, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
| 1. | Any of our directors or officers; |
| 2. | Any person proposed as a nominee for election as a director; Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting |
| 3. | rights attached to our outstanding shares of common stock; |
| 4. | Any member of the immediate family of any of the foregoing persons. |
There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.
On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. As of June 30, 2016 the shares were unissued and recorded as shares to be issued
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed for the fiscal years ended June 30, 2016 and June 30, 2015 for professional services rendered by the principal accountant for the audit of our annual financial statements and quarterly review of the financial statements included in our Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were $10,000 and $10,000, respectively.
Other Audit Fees
For the fiscal years ended June 30, 2016 and June 30, 2015, there were no fees billed for other audit fees.
Tax Fees
For the fiscal years ended June 30, 2016 and June 30, 2015, there were no fees billed for services for tax compliance, tax advice, and tax planning work by our principal accountants.
All Other Fees
None.
Pre-Approval Policies and Procedures
Prior to engaging our accountants to perform a particular service, our Board of Directors obtains an estimate for the service to be performed. All of the services described above were approved by the Board of Directors in accordance with its procedures.
| 26 |
| Table of Contents |
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements.
Included in Item 8
(b) Exhibits required by Item 601.
| Exhibit No. |
| Description |
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| 101.INS |
| XBRL Instance Document** |
| 101.SCH |
| XBRL Taxonomy Schema** |
| 101.CAL |
| XBRL Taxonomy Calculation Linkbase** |
| 101.DEF |
| XBRL Taxonomy Definition Linkbase** |
| 101.LAB |
| XBRL Taxonomy Label Linkbase** |
| 101.PRE |
| XBRL Taxonomy Presentation Linkbase** |
_____________
* Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
| 27 |
| Table of Contents |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| TREX Acquisition Corp. a Nevada corporation | ||
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| January 25, 2021 | By: | /s/ Frank Horkey | |
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| Frank Horkey | ||
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| Its: | President, Director | |
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| (Principal Executive Officer) | ||
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| January 25, 2021 | By: | /s/ Frank Horkey | |
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| Frank Horkey | ||
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| Its: | Chief Financial Officer, Secretary, Treasurer, Director | |
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| (Principal Financial and Accounting Officer) | ||
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| January 25, 2021 | By: | /s/ Frank Horkey | |
|
| Frank Horkey | ||
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| Its: | Director |
| 28 |
EXHIBIT 31.1
I, Frank Horkey, certify that
| 1. | I have reviewed this annual report on Form 10-K of TREX Acquisition Corp; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
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| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to affect the registrant's internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
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| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: January 25, 2021 | By: | /s/ Frank Horkey | |
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| Name: | Frank Horkey | |
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| Title: | Chief Executive Officer Chief Financial Officer President/Treasurer/Secretary & Principal Financial Officer |
EXHIBIT 32.1
CERTIFICATIONS PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of TREX Acquisition Corp, a Nevada corporation (the “Company”), on Form 10-K for the year ended June 30, 2016, as filed with the Securities and Exchange Commission (the “Report”), Frank Horkey, President and Chief Executive Officer of the Company does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to his knowledge:
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| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: January 25, 2021 | By: | /s/ Frank Horkey | |
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| Name: | Frank Horkey | |
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| Title: | Chief Executive Officer/President/Secretary/Treasurer/Chief Financial Officer/Director |
[A signed original of this written statement required by Section 906 has been provided to TREX Acquisition Corp and will be retained by TREX Acquisition Corp and furnished to the Securities and Exchange Commission or its staff upon request.]