TRXA 10-Q
T-REX Acquisition Corp. (TRXA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT DATED DECEMBER 31, 2021 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the three months ended
or
☐ | 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:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
( |
(Registrant’s Telephone Number, Including Area Code) |
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
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 | ☐ |
☒ | 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).
As of February 21, 2022 there were
Securities registered under Section 12(g) of the Act:
Title of each class registered:
None
TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
TREX ACQUISITION CORP.
December 31, 2021
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TREX ACQUISITION CORP. |
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CONSOLIDATED BALANCE SHEETS |
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| December 31, 2021 |
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| June 30, 2021 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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TOTAL CURRENT ASSETS |
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Property Plant and Equipment |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES: |
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Accounts Payable and Accrued Expenses |
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Due to Related Party |
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TOTAL CURRENT LIABILITIES |
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TOTAL LIABILITIES |
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Commitments and Contingencies |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Common Stock, |
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Additional Paid In Capital |
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Shares to be issued |
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Accumulated deficit |
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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The accompanying footnotes are an integral part of these consolidated financial statements
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| Table of Contents |
TREX ACQUISITION CORP. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
for the three and six months ended December 31, | ||||||||||||||||
(Un-audited) | ||||||||||||||||
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REVENUE |
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EXPENSES |
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Transfer Agent and Filing Fees |
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Professional Fees |
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Management and Consulting Fees |
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Administration Fees |
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Bad Debt |
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TOTAL EXPENSES |
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Loss from Operations |
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Interest Expense |
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LOSS BEFORE TAXES |
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Provision for Income Taxes |
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NET LOSS |
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NET LOSS PER COMMON SHARE - BASIC & DILUTED |
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED |
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The accompanying footnotes are an integral part of these consolidated financial statements
| F-2 |
| Table of Contents |
TREX ACQUISITION CORP. | ||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
as of December 31, 2021 | ||||||||||||||||||||||||
(Un-audited) | ||||||||||||||||||||||||
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| Additional |
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| Accumulated |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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| TOTAL |
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Balance June 30, 2019 |
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Net Loss |
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Balance September 30, 2019 |
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Net Loss |
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Balance December 31, 2019 |
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Net Loss |
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Balance March 31, 2020 |
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Net Loss |
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Balance June 30, 2020 |
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Shares issued from to be issued |
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Shares issued from private sale |
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Shares issued for services |
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Shares issued for related party debt conversion |
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Net Loss |
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Balance September 30, 2020 |
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Shares issued for related party debt conversion |
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Net Loss |
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Balance December 31, 2020 |
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Shares issued for related party debt conversion |
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Net Loss |
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Balance March 31, 2021 |
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Net Loss |
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Balance June 30, 2021 |
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Shares issued for related party debt conversion |
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Net Loss |
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Balance September 30, 2021 |
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Shares to be issued for subscriptions received |
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Share based expense for warrants issued |
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Shares to be issued for debt conversion |
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Net Loss |
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Balance December 31, 2021 |
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The accompanying footnotes are an integral part of these consolidated financial statements
| F-3 |
| Table of Contents |
TREX ACQUISITION CORP. |
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CONSOLIDATED STATEMENT OF CASH FLOWS |
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for the six months ended December 31, |
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(Un-audited) |
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OPERATING ACTIVITIES |
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Net Income (Loss) |
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Share based expense |
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Change in Related Party Advances |
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Change Accounts Payable and Accrued Expenses |
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Net Cash Used by Operating Activities |
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INVESTING ACTIVITIES: |
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Purchase of Equipment |
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Purchase of Land |
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Net cash used by investing activities |
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FINANCING ACTIVITIES: |
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Proceeds from subscriptions received |
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Net cash provided by financing activities |
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NET INCREASE (DECREASE) IN CASH |
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CASH AT BEGINNING OF PERIOD |
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CASH AT END OF PERIOD |
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Supplemental Cash flow Information |
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Interest Paid |
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Taxes Paid |
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Supplemental Non-Cash Information |
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Shares issued for services |
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Shares issued for debt conversion |
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shares to be issued for debt conversion |
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Conversion of Notes payable |
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Stock/warrants issued for payments made by others in which cash was never received |
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The accompanying footnotes are an integral part of these consolidated financial statements
| F-4 |
| Table of Contents |
TREX ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2021
(Unaudited)
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 December 31, 2021, the Company consists of itself, its
These unaudited interim consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end June 30, 2021 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six months ended December 31, 2021, are not necessarily indicative of results for the entire year ending June 30, 2022.
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., 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 Subsidiary as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta. Sync2 Subsidiary does not and has not had any operations since 2015.
On March 13, 2020, the Company incorporated the TRXA Subsidiary 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 TRXA Subsidiary. 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.
Raptor Mining LLC
On July 9, 2021, the Company formed Raptor Mining Subsidiary in order to investigate a business model pivot towards operating a crypto-currency mining facility. As of the date of this filing, Raptor Mining Subsidiary has only engaged in the due diligence process regarding the risks and opportunities attendant to cryptocurrency mining, but the Company has begin testing and plans deployment of the initial group by February 28, 2022.
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.
| F-5 |
| Table of Contents |
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.
Principles of Consolidation
The accounts include those of the Company and its
Concerning the Raptor Mining Subsidiary, the Company serves as the sole member and managing member. The Company is assessing potential personnel and consultants needed to implement the crypto-currency mining operations.
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:
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Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
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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. |
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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, 2021.
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. On December 24, 2021, the company acquired cryptocurrency mining equipment during the period but it has yet to be put into service.
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.
The company accounts for its non-employee stock-based compensation in accordance with Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.
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, 2021 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company recognizes revenue under ASU No. 2014-09, ”Revenue from Contracts with Customers (Topic 606),” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:
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| · | Identify the contract with the customer |
| · | Identify the performance obligations in the contract |
| · | Determine the transaction price |
| · | Allocate the transaction price to the performance obligations in the contract |
| · | Recognize revenue when the company satisfies a performance obligation |
Income taxes
Federal Income taxes are not currently due since we have had losses since inception.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As of December 31, 2021, we had a net operating loss carry-forward of approximately $(
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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 outstanding warrants that could convert into
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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.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $
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 $
On June 24, 2014, the company entered into an unsecured promissory note with Squadron Marketing, Inc. in the amount of $
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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 was accounted for on the balance sheet as shares to be issued and was expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $
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 six months ended December 31, 2021, the Company incurred management fees to related parties of $
During the year ended June 30, 2021 the company converted $598,662 in related party debt, including amounts due for advances and accrued management fees, into 11, 380,198 shares of common stock.
On August 6, 2021 the company issued
On December 31, 2021 the company agreed to convert $
NOTE 5 – COMMON STOCK
On January 1, 2015, the Company entered into a management agreement for a period of
On January 1, 2015, the Company entered into a management agreement for a period of
On January 21, 2020, the Company formally resolved to issue (a)
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On March 12, 2020, the Company resolved to issue
On June 24, 2020, the Company resolved to issue
On September 9, 2020, the Company issued
In accordance with the terms and provisions of that certain Settlement Agreement dated October 9, 2020 (the "Settlement Agreement"), on November 20, 2020 TREX Acquisition Corp. issued to Squadron Marketing LLC, 400,000 of the Company’s common stock and to Lazarus Asset Management LLC, 400,000 of its common stock and 500,000 shares of its common stock were issued to the estate of a former shareholders. These shares were issued on November 23, 2020.
On March 24, 2021 the company issued
On August 6, 2021 the company issued
From November 17, 2021 through December 22, 2021 the company entered into subscription agreements for
NOTE 6 – WARRANTS
On May 3, 2014, it was resolved that the Company shall offer
On May 14, 2014, the company entered into a subscription agreement for
On May 14, 2014, the company entered into a subscription agreement for
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On July 14, 2014, the company entered into a subscription agreement for
As of the filing date of this quarterly report,
In addition, from November 17, 2021 through December 22, 2021 the company entered into subscription agreements for
The following is the outstanding warrant activity:
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NOTE 7 – 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.
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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation.
FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
In December 2019, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China and has spread throughout the United States and the rest of the world. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which has not been contained, and is disrupting supply chains and affecting production and sales across a range of industries in United States and other companies as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak, as well as the worldwide adverse effect to workforces, economies and financial markets, leading to a global economic downturn. Therefore, the Company expects this matter to negatively impact its operating results. However, the related financial impact and duration cannot be reasonably estimated at this time.
RESULTS OF OPERATION
Three and six months ended December 31, 2021 Compared to Three and six months ended December 31, 2020
Our net loss for the three months ended December 31, 2021 was ($840,805) compared to a net loss of ($41,479) during the three months end December 31, 2020.
During the three months ended December 31, 2021, we incurred operating expenses of $840,805 compared to $41,479 incurred during the three months ended December 31, 2020.
During the three months ended December 31, 2021, we incurred interest expenses of $0 compared to $0 incurred during the three months ended December 31, 2020.
Our net loss for the six months ended December 31, 2021 was ($913,862) compared to a net loss of ($378,018) during the six months ended December 31, 2020. The increase in net loss was mainly due to an increase in shares issued for services in 2020.
During the six months ended December 31, 2021, we incurred operating expenses of $913,862 compared to $378,018 incurred during the six months ended December 31, 2020. The increase in expenses was mainly due to an increase in shares issued for services in 2020.
During the six months ended December 31, 2021, we incurred interest expenses of $0 compared to $0 incurred during the six months ended December 31, 2020.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2021, our current assets were $1,360 and our current liabilities were $22,971, which resulted in a working capital deficit of $21,611.
As of December 31, 2021, and 2020, our total liabilities were comprised entirely of current liabilities.
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Cash Flows from Operating Activities
For the six months ended December 31, 2021, net cash flows used in operating activities was $3,115 compared to net cash used in operating activity of $0 for the same period in 2020.
Cash Flows from Investing Activities
For the six months ended December 31, 2021, net cash flows used in investing activities was $356,400. Compared to $0 for the same period in 2020.
Cash Flows from Financing Activities
For the six months ended December 31, 2021, net cash flows from in financing activities was $360,875. Compared to $0 for the same period in 2020.
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, 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 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, 2021) has been converted into shares of common stock.
PURCHASE OF SIGNIFICANT EQUIPMENT
In December of 2021 we purchased capital equipment valued at $356,400.
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.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position or results of operations upon adoption.
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Item 3. Quantitative and Qualitative Disclosure about Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4. 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 QUARTERLY 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 December 31, 2021. 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.
Based on our assessment, our Chief Executive Officer and our Chief Financial Officer believe that, as of December 31, 2021, 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 three months ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company’s consolidated financial position or results of operations.
Item 1A. Risk Factors.
There have been no material changes in the Company’s risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2021.
Item 2. Unregistered Sales of Equity Securities.
On January 21, 2020, the Company formally resolved to issue (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. These shares were issued on September 9, 2020.
On March 12. 2020, the Company resolved to issue 300,000 shares of its common stock in connection to professional service providers. These shares were issued on September 9, 2020.
On June 24, 2020, the Company resolved to issue 8,900,000 shares of its common stock in connection with the conversion of $473,616 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement, this includes all notes payable, accrued interest and other advances. These shares were issued on September 9, 2020.
On September 9, 2020, the Company issued 200,198 shares of its common stock in connection to expenses paid by related parties.
In accordance with the terms and provisions of that certain Settlement Agreement dated October 9, 2020 (the "Settlement Agreement"), on November 20, 2020 TREX Acquisition Corp. issued to Squadron Marketing LLC, 400,000 of the Company’s common stock and to Lazarus Asset Management LLC, 400,000 of its common stock and 500,000 shares of its common stock were issued to the estate of a former shareholders. These shares were issued on November 23, 2020.
On March 24, 2021 the company issued 980,000 shares of its common stock for advances and payments made on behalf of the company and management services rendered by related parties.
On August 6, 2021 the company issued 1,500,000 shares of its common stock for the conversion of $45,000 in related party payables.
Item 3. Defaults upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
The exhibit listed on the Exhibit Index (following the signatures section of this quarterly report dated December 31, 2021 on Form 10-Q are included, or incorporated by reference, in this three months ended December 31, 2021 Report on Form 10-Q.
Exhibit No. |
| Description |
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).** |
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document.** |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document.** |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document.** |
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document.** |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document.** |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
_____________
* 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.
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SIGNATURES
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.
| TREX Acquisition Corp. a Nevada corporation | ||
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February 21, 2022 | By: | /s/ Frank Horkey | |
| Frank Horkey | ||
| Its: | President, Director | |
| (Principal Executive Officer) | ||
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February 21, 2022 | By: | /s/ Frank Horkey | |
| Frank Horkey | ||
| Its: | Chief Financial Officer, Secretary, Treasurer, Director | |
| (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.
February 21, 2022 | By: | /s/ Frank Horkey | |
| Frank Horkey | ||
| Its: | Director |
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