T-REX Acquisition Corp 10-K for FY2024
T-REX Acquisition Corp. (TRXA)
About this 10-K
T-REX Acquisition Corp filed this 10-K on November 21, 2024, covering the fiscal year ended June 30, 2024 (FY2024).
Headline figures
Fiscal year ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $15.82K
- down 71.6% from $55.64K a year earlier
- Net loss
- $1.01M
- compared with a net loss of $1.84M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
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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(Address of principal executive offices) |
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(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 |
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Securities registered under Section 12(g) of the Act:
Title of each class registered:
Common stock
Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒
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 ☒
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 (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒
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 | ☐ |
☒ | 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).
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 June 30, 2024, approximately $
As of date of filing November 20, 2024, there were
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.
TABLE OF CONTENTS
CERTIFICATIONS
Exhibit 31 – | Management certification |
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Exhibit 32 – | Sarbanes-Oxley Act |
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PART I
Forward-Looking Information
This Annual Report of T-REX 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; 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 annual report on Form 10-K (the “10-K”) includes the Company’s audited financial statements for the fiscal years ending June 30, 2024, and 2023.
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T-REX Acquisition Corp is referred to herein as the “Company”, “us”, or “we”.
ITEM 1. BUSINESS
Description of Business
Cryptocurrency Mining and Virtual Asset Acquisition
For the fiscal year ending June 30, 2024, the Company has become an emerging technology company focused on the various verticals with the cryptocurrency industry and related intangible assets that are connected to distributed ledger technologies. Through our wholly owned operating subsidiary, Raptor Mining LLC, a Florida Limited Liability Company (“Raptor Mining”), we are engaged in cryptocurrency mining, which is the process of receiving cryptocurrency rewards for securing particular distributed ledger platforms. As of June 30, 2024, we had two cryptocurrency mining locations, however, since March 2024, our mining operations were paused; the contracts for these two locations were subsequently terminated and a new contract was entered in October, 2024 to resume mining at a single location.
The first distributed ledger platform that we are securing is Bitcoin. “Bitcoin” refers to the entire decentralized distributed ledger technology founded, upon information and belief, by a person using the pseudonym Satoshi Nakamoto, and maintained by thousands of volunteers globally since January 2009. Bitcoin was the first decentralized digital currency that could be exchanged without a central controlling authority. Bitcoin could be exchanged on peer-to-peer network that supports direct transactions between users independent of any intermediary. Lowercase “bitcoin” refers to the virtual asset (cryptocurrency) that is used to incentivize miners to maintain the protocol network named Bitcoin. The Company regularly researches other opportunities to secure additional distributed ledger systems and protocols.
On February 17, 2022, the Company began to receive bitcoin rewards (or some fraction thereof) from the Bitcoin network. The Company generates revenue when it converts the Bitcoin rewards that it receives for mining into United States Dollars (“USD”). The Company’s first Bitcoin mining operation was located in Tampa, Florida. The Company has since contracted with Simple Mining LLC, a Cedar-Falls, Iowa-based provider of co-location Bitcoin mining hosting services.
Investing in our securities involves a high degree of risk. Prior to making a decision about investing in our securities, you should carefully consider the risk factors discussed in Section 1A, “Risk Factors”.
Subsidiaries
The Company is a holding which wholly owns the following subsidiaries: a Raptor Mining LLC, a Florida limited liability company (“Raptor Mining”); Megalodon Mining and Electric, LLC a Florida limited liability company (“Megalodon”); and TRXA Merger Sub, Inc., an inactive Delaware corporation (“Merger Sub”).
Raptor Mining’s operations include the Company’s cryptocurrency mining operations and virtual asset acquisitions. The Company formed Megalodon to investigate and potentially pursue a cryptocurrency co-location business model. The cryptocurrency co-location business model is based on a company which has access to data centers and inexpensive cryptocurrency mining inputs, such as low-cost electricity supply, offering to host third-party owned cryptocurrency mining equipment in exchange for a fee, which may consist of a mix of cash and cryptocurrency consideration. As of the date of this Report, the Company has entered into a Non- Binding - Letter of Intent to acquire an established a co-location facility in Orofino, Idaho to consolidate its present mining operations and to expand into the co-location hosting market. There are no assurances that we will complete this purchase agreement or that we will be successful in our consolidated operations.
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Additional Information
The Company is subject to the information requirements of the Securities and Exchange Act of 1934, as amended (“Exchange Act”), and, in accordance therewith, files annual, quarterly, and special reports, proxy statements and other information with the Commission. The Commission maintains an internet website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission. The periodic reports, proxy statements and other information that the Company files with the Commission are available for inspection on the Commission’s website free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the Commission. The Company maintains a website at https://trex-acq.com/ where you may also access these materials free of charge. We have included our website address as an inactive textual reference only and the information contained in, and that can be accessed through, our website is not incorporated into and is not part of this report.
Employees & Employment Agreements
As of the date of this filing, T-REX has no employees, and two officers, Frank Horkey “Horkey”, the Company’s President and Michael Christiansen “Christiansen”, the Company’s Secretary and Treasurer. John Bennett, our prior Chief Financial Officer, passed away in August 2024 at which time Frank Horkey became our Chief Financial Officer.
Competition
The cryptocurrency mining industry is highly competitive and rapidly evolving. The Company faces competition from both established and emerging companies, including publicly traded and private companies that have substantial financial resources, more extensive operating histories, and greater access to capital than we do. Many of our competitors benefit from economies of scale and invest more in technology, infrastructure, and research and development, which enables them to operate more efficiently, secure mining equipment and energy at lower costs, and better withstand fluctuations in cryptocurrency prices. Additionally, some of our competitors have greater liquidity and access to capital markets, which allows them to expand their operations and respond more rapidly to market developments.
We define our principal competitors as other publicly traded bitcoin miners such as the following:
| · | Marathon Digital Holdings, Inc. |
| · | Riot Platforms, Inc. |
| · | CleanSpark, Inc. |
| · | Hut 8 Mining Corp. |
| · | Hive Blockchain Technologies, LTD. |
| · | Iris Energy Limited |
In this competitive landscape, we will experience challenges in maintaining or growing our market share and may be at a disadvantage in terms of pricing, energy costs, and access to high-performance mining hardware. Given the significant resources of our competitors, we may face heightened competition for mining equipment and access to low-cost energy sources, which could impact our profitability. Furthermore, as the industry continues to attract significant investment, competition may intensify, which could further impact our ability to remain competitive.
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The Company’s ability to successfully compete will depend on several factors, including but not limited to, its ability to obtain adequate financing, maintain access to mining hardware, secure favorable energy arrangements, and effectively manage operational risks. Failure to compete effectively with these larger, more established entities could have a material adverse effect on our business, financial condition, and results of operations.
In the cryptocurrency mining sector, participation itself drives competition, as miners worldwide contribute hash power to earn fractional rewards. Competing mining operations vary significantly in infrastructure, operational strategies, equipment, cooling, and most critically, power costs. Competitors, from established to new players, all leverage different economies of scale and unique strategies to maximize their efficiency and revenue.
The Company’s potential revenue streams extend beyond direct cryptocurrency mining. Additional revenue opportunities include co-location hosting, equipment sales, infrastructure development, software-as-a-service (SaaS), power curtailments, renewable energy credits and others. Strategic partnerships with technology and financial firms also offer potential income growth, as do our consulting services for emerging ventures, along with potential pivots within the blockchain infrastructure space.
The Company may face challenges in securing mining equipment, accessing affordable energy resources, and scaling operations to remain competitive. Furthermore, fluctuations in cryptocurrency values and potential regulatory changes could impact financial projections and overall market dynamics.
ITEM 1A. RISK FACTORS
General Risks
We have a history of operating losses, and we may be unable to achieve or sustain profitability.
We have a history of unprofitable operations and losses. We expect to continue to incur losses for the foreseeable future. Our losses could increase as we continue to work to develop our business. There is no assurance that we will ever become profitable or consistently sustain profitability
We have an unproven business model
We have recently shifted our focus to our blockchain and cryptocurrency mining business, and we may be unsuccessful in this business.
Prior to July 2021, we did not have any operations. In July 2021, we pursued a blockchain and cryptocurrency related business. Currently, our primary operations are focused on our cryptocurrency mining business. The Company has entered into a Letter of Intent to acquire an established a co-location facility in Orofino, Idaho for the purposes of consolidating its present mining operations and to expand into the co-location hosting market. Our current strategy is new and unproven, is in an industry that is itself new and evolving and is subject to the risks discussed herein.
Although bitcoin is presently the most prominent cryptocurrency, another cryptocurrency could supplant it as the most prominent cryptocurrency, which could have a materially negative effect on the demand for bitcoin and, therefore, on its conversion spot price.
Emerging cryptocurrencies with advanced technology, greater efficiency, or better scalability could surpass Bitcoin in prominence. For instance, Ethereum’s smart contract capabilities or Solana’s transaction speed challenge Bitcoin’s position. Regulatory shifts or institutional adoption of competitors could further reduce Bitcoin’s demand. Additionally, environmental concerns surrounding Bitcoin’s Proof-of-Work mechanism may push users toward greener alternatives like Cardano. A loss of dominance could erode Bitcoin’s market value and diminish its network effect. Thus, Bitcoin’s continued prominence depends on its ability to adapt to evolving market and technological trends
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The demand for bitcoin may fall for other reasons unknown to the Company.
The demand for Bitcoin could decline due to unforeseen factors beyond the Company’s awareness or control. These may include technological breakthroughs rendering Bitcoin obsolete, macroeconomic shift reducing interest in digital assets, or unexpected regulatory changes that limit its use. Social trends, such as charging preferences toward cryptocurrencies or innovations like Central Bank Digital Currencies (CBDCs), could also play a role. Additionally, security vulnerabilities may contribute to declining demand. The dynamic and unpredictable nature of the cryptocurrency market underscores the need to anticipate and adapt to such potential challenges.
The Company has acquired and deployed miners that make use of application-specific integrated circuit (ASIC) chips, which are currently designed exclusively for bitcoin mining; if the demand for bitcoin experiences a sustained, substantial reduction, and the conversion spot price of bitcoin falls correspondingly, we may be unable to continue to mine bitcoin profitably and we may be forced to reconfigure our existing miners or acquire replacement miners capable of mining other, more profitable cryptocurrencies.
The Company’s reliance on ASIC miners, designed exclusively for Bitcoin, poses a significant risk if Bitcoin’s demand and spot price experience a prolonged decline. Under such circumstances, mining Bitcoin could become unprofitable, potentially forcing the Company to halt operations, reconfigure existing miners, or invest in new equipment capable of mining alternative cryptocurrencies. These adjustments could lead to substantial losses. To mitigate this risk, the Company will closely follow market trends and responsiveness to changes in the bitcoin industry, we may also explore diversification strategies, including adaptable mining technology or investing in multiple cryptocurrencies, ensuring resilience against market fluctuations and reducing dependency on Bitcoin’s performance.
We would expect to incur significant costs in connection with reconfiguration or to acquire replacement miners
We would likely be unable to continue to operate our miners during a reconfiguration or replacement process. These added costs and a potential interruption to our business operations could have a material adverse effect on our business, which may negatively impact stock price.
If our energy provider, Clearwater Electric, cannot supply sufficient economical electric power for us to operate our new miners, we may be required to relocate some or all of our miners to alternate co-location facilities, which may have a less advantageous cost structure, and negatively impact our results of operations.
We expect to make a significant capital investment in new next generation miners because we believe we will be able to operate them to mine bitcoin and other cryptocurrencies at prices advantageous to us and purchasing our own co-location facility will provide economic advantages over our previous co-location customer model, however, if this does not result in a new cost structure that is beneficial to us, our results of operations will be negatively impacted. . Further, during our consolidation period, relocating our present mining operations to the new facility, we will not operate our miners and thus we will not generate revenue that we would have otherwise received.
Failure to effectively manage our growth could place strains on our managerial, operational, and financial resources and could adversely affect our business and operating results.
Our growth has placed, and is expected to continue to place, a strain on our managerial, operational, and financial resources and systems Any further growth or increase in the number of our strategic relationships may place additional strain on our managerial, operational, and financial resources and systems. If we fail to manage our growth effectively or to develop and expand our managerial, operational, and financial resources and systems, our business and financial results may be materially harmed.
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Significant contributors to the Bitcoin network could propose amendments to its protocols and software which, if accepted and authorized, could negatively impact our business and operations.
A small group of individuals contribute to the Bitcoin Core Project on GitHub.com, which is a leading source of quasi-governance that works to ensure that the Bitcoin blockchain remains decentralized and governed by consensus. According to its website, “Bitcoin Core is an open-source project which maintains, and releases Bitcoin client software called ‘Bitcoin Core.’ It is a direct descendant of the original Bitcoin software client released by Satoshi Nakamoto after he published the famous Bitcoin whitepaper. Bitcoin Core is powered by an open-source development community, but it is maintained by a small group of maintainers and leading contributors.
These contributors may propose refinements or modifications to the Bitcoin network’s source code through software updates, which could change essential aspects of the Bitcoin network, such as transaction irreversibility and limits on new Bitcoin mining. Such proposals and discussions generally occur on online forums, making it challenging to anticipate or mitigate their impact in advance and could result in excessive costs and inefficiencies in operation. If these changes are accepted and implemented, they may adversely affect the value and functioning of our Bitcoin-related activities, can result in excessive costs for miners and inefficiencies in operations until more efficient systems are established.
The open-source structure of the Bitcoin network protocol may result in inconsistent or ineffective changes to the Bitcoin protocol; failed upgrades or maintenance to the protocol could damage the Bitcoin network, which could adversely affect our business and the results of our operations.
The Bitcoin network operates based on an open-source protocol maintained by contributors, largely on the Bitcoin Core project on GitHub. As an open-source project, Bitcoin is not governed by an official organization or authority. As the Bitcoin network protocol is not sold and its use does not generate revenues for contributors, contributors are generally not compensated for maintaining and updating the Bitcoin network protocol. Although the MIT Media Lab’s Digital Currency Initiative funds the current maintainer of the Bitcoin Core project on GitHub, this type of financial incentive is not typical. The lack of guaranteed financial incentive for contributors to maintain or develop the Bitcoin network and the lack of guaranteed resources to adequately address emerging issues with the Bitcoin network may reduce incentives to address the issues adequately or in a timely manner. Changes to a digital asset network which we are mining may adversely affect our results of operations.
Our ability to adopt technology in response to changing security needs or trends poses a challenge to the safekeeping of our digital assets.
The history of digital asset exchanges has shown that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets. We may move our digital assets to various exchanges to exchange them for fiat currency, which will require us to rely on the security protocols of these exchanges to safeguard our digital assets. While these exchanges purport to be secure malicious actors may be able to intercept our digital assets while we are in the process of selling them via such exchanges. Given the growth in their size and their relatively unregulated nature, we believe these exchanges will become a more appealing target for malicious actors. To the extent we are unable to identify and mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction, or other attacks, which could adversely affect our results of operations.
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The limited rights of legal recourse available to us and our lack of insurance protection for risk of loss of our digital assets exposes us and our shareholders to the risk of loss of our digital assets for which no person may ultimately be held liable and we may be unable to recover our losses.
The digital assets we hold are not insured. Further, banking institutions will not accept our digital assets, and they are therefore not insured by the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”). Therefore, we may suffer losses to our digital assets which are not covered by insurance, and we may be unable to recover any of our carried value in these digital assets if they are lost or stolen or suffer significant and sustained reduction in conversion spot price. If we are not otherwise able to recover damages from a malicious actor in connection with these losses, our business and results of operations may be negatively impacted.
If regulatory changes or interpretations of our activities require our registration as a money services business (“MSB”) under the regulations promulgated by “FinCEN” (Financial Crime Enforcement Network- a division of the U.S. Department of the Treasury) under the authority of the U.S. Bank Secrecy Act, or otherwise under other federal or state laws, we may incur significant compliance costs, which could be cost prohibitive; if f we become subject to these regulations, our costs in complying with them may have a material negative effect on our business and the results of our operations.
To the extent that the Company’s activities cause it to be deemed an MSB under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, we may be required to comply with FinCEN regulations, including those that would mandate us to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.
To the extent that the Company’s activities cause it to be deemed a “money transmitter” (“MT”) or equivalent designation, under state law in any state in which the Company operates, the Company may be required to seek a license or otherwise register with a state regulator and comply with state regulations that may include the implementation of anti-money laundering programs, maintenance of certain records and other operational requirements. The Company will continue to monitor developments in such legislation, guidance, or regulations.
Such additional federal or state regulatory obligations may cause the Company to incur extraordinary expenses, possibly affecting an investment in the Shares in a material and adverse manner. Furthermore, the Company and its service providers may be incapable of complying with certain federal or state regulatory obligations applicable to MSBs and MTs. If the Company is deemed to be subject to and determines not to comply with such additional regulatory and registration requirements, we may act to dissolve and liquidate the Company or any subsidiary subject to such regulatory requirements. Any such action may adversely affect an investment in us.
Current status of the regulation of the exchange of bitcoin under the CEA by the CFTC is unclear; to the extent we become subject to regulation under the CFTC in connection with our exchange of bitcoin, we may incur additional compliance costs, which may be significant.
Current legislation, including the Commodities Exchange Act of 1936, as amended (the “CEA”) is unclear with respect to the exchange of bitcoin. Changes in the CEA or the regulations promulgated there under, as well as interpretations thereof and official promulgations by the Commodities Futures Tradition Commission (“CFTC”), which oversees the CEA, much like the SEC oversees the Securities Act and the Exchange Act, may impact the classification of bitcoin, and therefore may subject them to additional regulatory oversight by the CFTC.
Presently, bitcoin derivatives are not excluded from the definition of a “commodity future” by the CFTC. We cannot be certain as to how future regulatory developments will impact the treatment of bitcoin under the law. Bitcoins have been deemed to fall within the definition of a commodity and, we may be required to register and comply with additional regulation under the CEA, including additional periodic report and disclosure standards and requirements. Moreover, we may be required to register as a commodity pool operator or as a commodity pool with the CFTC through the National Futures Association. Such additional registrations may result in extraordinary, non-recurring expenses, thereby materially and adversely impacting an investment in us. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations. Any such action may adversely affect an investment in us. As of the date of this prospectus, no CFTC orders or rulings are applicable to our business.
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Currently Bitcoin and other cryptocurrencies are not subject to regulation by in the United States by any federal banking or Federal Reserve regulatory agencies, but may do so in the future.
If the activity in cryptocurrency expands, it is possible that these regulatory agencies could attempt to or actually impose regulations which would substantially affect our operations. Regulation of the exchange of bitcoin under other federal regulatory agencies is possible; to the extent we become subject to other regulation in connection with our exchange of bitcoin, we may incur additional compliance costs, which may be significant.
Unfavorable global economic, business, or political conditions could adversely affect our business, financial condition, or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of our control, including the impact of health and safety concerns, such as those relating to any future COVID-19 outbreak or other similar pandemics. The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn could result in a variety of risks to our business, including weakened demand for bitcoin and our ability to raise additional capital when needed on acceptable terms, if at all. Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.
Our future success will depend in large part upon the value of bitcoin; if we are unable and if we are not able to mine Bitcoin and sell it at prices favorable to us, the results of our operations will suffer.
As previously disclosed, our operating results will depend in large part upon the value of bitcoin because it’s the primary cryptocurrency we currently mine. Specifically, revenues from our Bitcoin mining operations are based upon two factors: (1) the number of bitcoin rewards we successfully mine and (2) the value of bitcoin. In addition, our operating results are directly impacted by fluctuations in the value of bitcoin, because under ASU No. 2023-08 (effective December 15, 2024, early adoption permitted), the value of bitcoin is marked-to-market at each reporting period. The Company adopted this guidance in the quarter ended June 30, 2024.
Risks Related to an Investment in Our Securities
We expect to experience volatility in the price of our common stock, which could negatively affect stockholders’ investments.
The trading price of our common stock may be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with securities traded in those markets. Broad market and industry factors may seriously affect the market price of companies’ stock, including ours, regardless of actual operating performance. All of these factors could adversely affect your ability to sell your shares of common stock or, if you are able to sell your shares, to sell your shares at a price that you determine to be fair or favorable.
Our common stock may be categorized as “penny stock,” which may make it more difficult for investors to sell their shares of common stock due to suitability requirements.
Our common stock may be categorized as “penny stock.” The Commission has adopted Rule 15g-9 under the Exchange Act, which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our common stock is significantly less than $5.00 per share and, unless we qualify for an exception, may be considered “penny stock.” This designation imposes additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules, if applicable to us, would require a broker-dealer buying our securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities given the increased risks generally inherent in penny stocks. These rules may restrict the ability and/or willingness of brokers or dealers to buy or sell our common stock, either directly or on behalf of their clients, may discourage potential stockholders from purchasing our common stock, or may adversely affect the ability of stockholders to sell their shares.
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Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our common stock, which could depress the price of our common stock.
FINRA has adopted rules that require a broker-dealer to have reasonable grounds for believing that the investment is suitable for that customer before recommending an investment to a customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares of common stock, have an adverse effect on the market for our shares of common stock, and thereby depress our price per share of common stock.
The elimination of monetary liability against our directors, officers, and employees under Nevada law and the existence of indemnification rights for our obligations to our directors, officers, and employees may result in substantial expenditures by us and may discourage lawsuits against our directors, officers, and employees.
Our Articles of Incorporation contain a provision permitting us to eliminate the personal liability of our directors to us and our stockholders for damages for the breach of a fiduciary duty as a director or officer to the extent provided by Nevada law. We may also have contractual indemnification obligations under any future employment agreements with our officers or indemnification agreements we have entered into with our directors. The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and the resulting costs may also discourage us from bringing a lawsuit against directors and officers for breaches of their fiduciary duties; and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions, if successful, might otherwise benefit us and our stockholders.
We may issue additional shares of common stock in the future, which could cause significant dilution to all stockholders.
On June 1, 2022, the Board of Directors amended the Company’s Articles of Incorporation to authorize, among other things, the issuance of up to 350,000,000 shares of common stock, with a par value of $0.0001 per share and 20,000,000 shares of blank check preferred stock with a par value of $0.001. As of June 30, 2024, we had 18,223,953 shares of common stock outstanding; however, we may issue additional shares of common stock in the future in connection with a financing or an acquisition. Any issuance of additional shares of our common stock, or securities convertible into our common stock, including but not limited to, warrants, options, and convertible promissory notes, will dilute the percentage ownership interest of all stockholders, may dilute the book value per share of our common stock, and may negatively impact the market price of our common stock.
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Anti-takeover effects of certain provisions of Nevada state law may hinder a potential takeover of us.
Nevada has a business combination law that prohibits certain business combinations between Nevada corporations and “interested stockholders” for two years after an “interested stockholder” first becomes an “interested stockholder,” unless the corporation’s board of directors approves the combination in advance. For purposes of Nevada law, an “interested stockholder” is any person who is (i) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation or (ii) an affiliate or associate of the corporation and at any time within the two previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then outstanding shares of the corporation. The definition of the term “business combination” is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
The effect of Nevada’s business combination law is potentially to discourage parties interested in taking control of us from doing so if they cannot obtain the approval of our Board. Both of these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.
Because we do not intend to pay any cash dividends in the foreseeable future on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. Declaring and paying future dividends, if any, will be determined by our Board, based upon earnings, financial condition, capital resources, capital requirements, restrictions in our Articles of Incorporation, contractual restrictions, and such other factors as our Board deems relevant. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them. There is no assurance that stockholders will be able to sell shares when desired.
Failure to execute our strategies could result in impairment of goodwill or other intangible assets, which may negatively impact profitability.
Goodwill is evaluated for impairment on an annual basis or more frequently if impairment indicators are present. We assess the impairment of other intangible assets on an annual basis, or more frequently if impairment indicators are present, based upon the expected future cash flows of the respective assets. These valuations include management’s estimates of sales, profitability, cash flow generation, capital structure, cost of debt, interest rates, capital expenditures, and other assumptions. Significant negative industry or economic trends, disruptions to our business, inability to achieve sales projections or cost savings, inability to effectively integrate acquired businesses, unexpected significant changes, or planned changes in use of the assets or in entity structure, and divestitures may adversely impact the assumptions used in the valuations. If the estimated fair value of our reporting units changes in future periods, we may be required to record an impairment charge related to goodwill or other intangible assets, which would reduce earnings in such period. The Company held no goodwill or other intangible assets at June 30, 2024, or 2023.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
In the ordinary course of our business, the Company is subject to cybersecurity threats and risk which it manages as an important component of its overall enterprise risk management and mitigation strategy. We use, store and process data for our customers, employees, partners and suppliers. We have not yet implemented a formal cybersecurity risk management program designed to identify, assess and mitigate risks from cybersecurity threats to this data, our systems and business operations. We intend to implement a cybersecurity risk management program before the end of 2024.
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Cyber Risk Management and Strategy
Under the oversight of our Audit Committee, we intend to implement and maintain a risk management program that includes processes for the systematic identification, assessment, management, and treatment of cybersecurity risks. Our cybersecurity oversight and operational processes would be integrated into our overall risk management processes. We intend to implement a risk-based approach to the management of cyber threats, supported by cybersecurity technologies, including automated tools, designed to monitor, identify and address cybersecurity risks. In support of this approach, it is expected that we would have a third-party security consultant implement processes to assess, identify and manage security risks to our company, including in the pillar areas of security and compliance, application security, infrastructure security and data privacy. This process, once implemented, would include regular compliance and critical system access reviews. In addition, we intend to conduct application security assessments, vulnerability management, penetration testing, security audits and ongoing risk assessments as part of our risk management process.
We expect to utilize third parties and consultants to assist in the identification and assessment of risks, including to support tabletop exercises and to conduct security testing. We intend to utilize well-known cloud-based technologies and service providers, such as Amazon AWS, Microsoft Office, and Google enterprise to provide protection against cybersecurity threats.
Further, we intend to put processes in place that would evaluate potential risks from cybersecurity threats associated with our use of third-party service providers that would have access to our data, including a review process for such providers’ cybersecurity practices, risk assessments, contractual requirement and system monitoring.
Part of our intended program would be ongoing evaluation and enhancement of our systems, controls and processes where possible, including in response to actual or perceived threats specific to us or experienced by other companies.
Risks from cybersecurity threats have, to date, not materially affected us, our business strategy, results of operations or financial condition.
ITEM 2. DESCRIPTION OF PROPERTY
Real Property and Offices
Our executive, administrative and operating offices were previously provided at no cost on a month-to-month basis to the Company by our President, Frank Horkey, and are located at 151 N Nob Hill Road, Suite 402, Plantation, FL 33324. The Company leases office space from its President at a cost of $250 per month. The term of the lease is for 1 year, ended on June 30, 2024, and was renewed on July 1, 2024, for an additional 1 year. On June 30, 2024, $3,000 of rent expense was accrued and is included in Accounts Payable and Accrued Expenses.
ASIC Cryptocurrency Mining Equipment and Other Material Property
As of June 30, 2024, the Company owned fifty (50) Bitmain S19 ASIC miners. The Company is actively seeking to purchase additional ASIC miners to scale the Company’s cryptocurrency mining operations and virtual asset acquisitions. These miners were fully depreciated as of June 30, 2024.
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ITEM 3. LEGAL PROCEEDINGS
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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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(A) MARKET INFORMATION
During the fiscal year ended June 30, 2024, our common stock is listed for quotation on the OTC Markets, Inc. “Pink” Tier (“Pink Sheets Exchange”) under the symbol “TRXA.”. On June 13, 2024, FINRA accepted the Company’s SEC Rule 15c211 application permitting the Company’s stock to have any inter-dealer quotations and all orders, to the extent orders exist, are quotes from solicited and unsolicited customer orders. Investors may have difficulty selling this stock. An initial review by a broker-dealer under SEC Rule15c2-11 is required for brokers to publish competing quotes and provide continuous market making.
Quarter Ended |
| High Bid |
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| Low Bid |
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June 30, 2024 |
| $ | .16 |
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| $ | .16 |
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March 31, 2024 |
| $ | .16 |
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| $ | .16 |
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December 31, 2023 |
| $ | .16 |
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| $ | .16 |
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September, 30, 2023 |
| $ | .16 |
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| $ | .16 |
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June 30, 2023 |
| $ | .16 |
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| $ | .16 |
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(B) HOLDERS
As of June 30, 2024, we have 106 stockholders of record. 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.
(C) 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.
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(D) RECENT ISSUANCES OF UNREGISTERED SECURITIES
Related Party Transactions
On August 6, 2021, the Company issued 450,000 shares of its common stock in exchange for the conversion of $45,000 of unpaid advisory compensation due to related parties. In addition, as satisfaction of an external Settlement Agreement with a related party, the Company issued 1,050,000 Founder's shares.
Shares Issued for Services
On June 12, 2022, Frank Horkey received 350,000 shares for acting in the capacity of President and Director related to his previous contract that expired December 31, 2019 and 250,000 shares of the Company’s common stock on July 1, 2022 for his Board position which has the following vesting periods: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; twenty thousand eight hundred thirty- three (20,833) shares vest quarterly for the fiscal year ended June 30, 2024 twenty thousand eight hundred thirty three (20,833 shares vest quarterly for the fiscal year ended June 30, 2025.
On June 12, 2022, Michael Christiansen received 250,000 shares of the Company’s common stock; vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon his signing a board member services agreement as of July 1, 2022; twenty thousand eight hundred thirty- three (20,833) shares vest quarterly for the fiscal year ended June 30, 2024 twenty thousand eight hundred thirty three (20,833 shares vest quarterly for the fiscal year ended June 30, 2025.
On June 12, 2022, Squadron Marketing LLC received 250,000 shares of the Company common stock for serving on the Company’s Advisory Board with vesting provisions as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; twenty thousand eight hundred thirty- three (20,833) shares vest quarterly for the fiscal year ended June 30, 2024 twenty thousand eight hundred thirty three (20,833 shares vest quarterly for the fiscal year ended June 30, 2025.
On June 12, 2022, Lazarus Asset Management LLC received 250,000 shares of the Company common stock for serving on the Company’s Advisory Board with vesting as provisions as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; twenty thousand eight hundred thirty three (20,833) shares vest quarterly the fiscal year ended June 30, 2024 twenty thousand eight hundred thirty three (20,833 shares vest quarterly for the fiscal year ended June 30, 2025.
During the year ended June 30, 2022, the Company issued 1,182,009 shares of the Company’s common stock for the conversion of $118,050 related to party payables.
On June 12, 2022, James Marshall III received 75,000 shares of the Company’s common stock for serving as the Company’s technical consultant for fiscal 2023. His shares are now fully vested, and the contract has not been renewed.
On June 15, 2022, John Bennet received 50,000 shares of the Company’s common stock for extending his consulting contract through fiscal year end 2023. On February 12, 2023, Mr. Bennet received an additional 100,000 shares of the Company’s common stock for assuming the role of the Company’s Chief Financial Officer through fiscal year ended June 30, 2024. As noted above, Mr. Bennet passed away subsequent to our fiscal year end.
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Private Placement Transactions
The Securities Purchase Agreements
On November 10, 2021, we entered into a Securities Purchase Agreement with certain of the selling stockholders referenced in our most recent registration statement pursuant to which we sold to such selling stockholders $560,875 in aggregate principal amount of our common stock (747,837 shares) and warrants to purchase shares of our common stock (which we refer to as the “PIPE Warrants”), exercisable at any time before the close of business on December 31, 2024. The PIPE Warrants are comprised of 747,837 warrants with an exercise price of $1.50 per share.
We closed the transactions contemplated by the Securities Purchase Agreement. We issued the securities contemplated under the Securities Purchase Agreement in reliance upon the exemption from registration pursuant to Section 4(a)(2) of the Securities Act.
The Registration Rights Agreements
On November 10, 2021, in connection with the closing of the transactions contemplated by the Securities Purchase Agreement, we entered into Registration Rights Agreements with the selling stockholders who are parties to the Securities Purchase Agreement. With respect to the selling stockholders who are party to the Securities Purchase Agreement, we are obligated to file a registration statement registering the resale of (i) their Warrant Shares, (ii) any Shares issuable under the terms of the Securities Purchase Agreement, and (iii) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization, or similar event with respect to the foregoing. The Company deemed the private placement officially closed in May 2022.
Pursuant to the Registration Rights Agreements, we agreed to file the registration statement(s) no later than the earlier of (a) 180-days after an initial public offering by the Company or (b) twelve (12) months after effective date of the Registration Rights Agreement. Furthermore, we agreed to grant the parties to the Securities Purchase Agreement a “piggy-back” registration right upon at least 10-day notice prior to the Company’s filing of a registration statement (or confidential submission in draft form) with the SEC. As contemplated by the terms of the Registration Rights Agreements, the Company filed a registration statement on Form S-1, as amended, that became effective on September 8, 2022.
Warrants Issued to Management and Consultants
On July 1, 2021, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a Class C warrant to purchase 250,000 and 200,000 shares respectively, of the Company’s common stock for consulting services, over a period of three years at an exercise price of $1.50, commencing on September 8, 2022, the effective date of the Company’s registration statement.
On May 26, 2022, the Company issued to Frank Horkey Class C warrant to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement as part of his executive compensation during the 2021 fiscal year. (G)
On May 26, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued Class C warrant to purchase 500,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement related to consulting services during fiscal 2022. (H)
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On June 25, 2022, Horkey and Christiansen were each issued a Class C warrants to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement for serving on the Company’s Board of Directors for the upcoming 2023 fiscal year. (I)
On June 25, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a class C warrant to purchase 250,000 shares of the company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement for serving on the Company’s Advisory Board for the upcoming 2023 fiscal year. (J)
All of the above offerings and sales were made in reliance upon the exemption from registration under Rule 506 of Regulation D promulgated under the Securities Act of 1933 and/or Section 4(a)(2) of the Securities Act of 1933, based on the following: (a) the investors confirmed to us that they were “accredited investors,” as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933 and had such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities; (b) there was no public offering or general solicitation with respect to the offering; (c) the investors were provided with certain disclosure materials and all other information as requested ; (d) where applicable, the investors acknowledged that all securities being purchased were “restricted securities” for purposes of the Securities Act of 1933, and agreed to transfer such securities only in a transaction registered under the Securities Act of 1933 or exempt from registration under the Securities Act; and (e) where applicable, a legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act of 1933 or transferred in a transaction exempt from registration under the Securities Act of 1933.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.
As of June 30, 2024, we have no formal equity compensation plans which authorize the issuance of our equity securities.
PENNY STOCK REGULATION
Shares of our common stock could be subject to rules adopted by the SEC that regulate broker-dealer practices 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. |
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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 Equiniti Trust Company 48 Wall Street, New York, New York 10005(“EQ”) and EQ can be reached via phone at +1 (303) 282-4800 or via the URL https://equiniti.com/us/.
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
Forward-Looking Statements
The following is management’s discussion and analysis (|MD&A”) of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expect,” “intend,” “estimate,” “continue,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents we file with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.
The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.
Our MD&A is comprised of significant accounting estimates made in the normal course of its operations, overview of our business conditions, results of operations, liquidity and capital resources and contractual obligations. We did not have any off-balance sheet arrangements as of June 30, 2024, or 2023.
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The discussion and analysis of our financial condition and results of operations is based upon its financial statements, which have been prepared in accordance with generally accepted accounting principles generally accepted in the United States (or “US GAAP”). The preparation of those financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities at the date of its financial statements. Actual results may differ from these estimates under different assumptions or conditions.
Background
The Company’s current operations are relatively new and involve an unproven business model. We have not generated any significant revenue to date and we have incurred recurring losses. . 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.
Trends and Uncertainties
Cryptocurrencies are highly volatile, which introduces risks in asset valuation and revenue predictability. Significant price drops can impact transaction volumes and lead to liquidity challenges, especially for firms holding substantial digital assets.
With reduced market liquidity on some centralized exchanges and the migration to decentralized exchanges, firms may face difficulty executing large transactions without significant price impacts. This liquidity risk can be especially impactful for companies that rely on large or frequent trades
Users increasingly favor DeFi protocols for financial services, reducing reliance on centralized exchanges and traditional custody providers. This shift could threaten companies that primarily operate as intermediaries.
The cryptocurrency industry is a prime target for cyberattacks, including exchange hacks, phishing schemes, and smart contract exploits. The rapidly evolving nature of blockchain technology can make systems vulnerable to new types of attacks.
The technology underpinning cryptocurrencies and DeFi protocols is still developing. Interoperability challenges across different blockchain networks, as well as the potential for bugs or failures in widely used protocols, can disrupt operations and erode user trust
Rising interest rates and inflation could impact investor demand for cryptocurrency as a speculative asset, while also influencing operational costs. Many investors view cryptocurrencies as alternative assets, so inflation or economic downturns may reduce interest in speculative investments.
Proof-of-Work cryptocurrencies (e.g., Bitcoin) face increasing scrutiny over their energy consumption. ESG concerns could lead to investor divestment or regulatory restrictions, particularly in regions aiming to meet strict carbon emissions targets.
Companies that do not adapt to environmentally friendly practices, such as moving to Proof-of-Stake models, may face reputation and compliance risks in the future as ESG considerations influence customer preferences and regulatory actions
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RESULTS OF OPERATION
For the Year Ended June 30, 2024, Compared to Year Ended June 30, 2023
Revenues for the year ended June 30, 2024, were approximately $15,824 compared to $55,637 for the year ended June 30, 2023, a decrease of $39,813 or 72%. The decrease in revenues is primarily attributable to a consolidation of our mining operations in a co-location facility that we would own. Accordingly, mining activity was halted while operational changes were made.
Cost of revenue for the year ended June 30, 2024, was $30,258 compared to $572,218 for the year ended June 30, 2023. The $541,960 decrease in the cost of revenue was due to a reduction in operational costs, as the Company combined its operations and equipment from two mining facilities to one mining facility and took the miners out of service for a period of 6 months during the fiscal year ended June 30, 2024. Additionally, the Company incurred significant depreciation expense in 2023 from its revision of the mining equipment’s estimated useful life from seven years to one year, resulting in minimal asset value remaining during the fiscal year ended June 30, 2024, and minimal depreciation expense to incur. This change in estimated life during fiscal year ended June 30, 2023, was prompted by a sustained decline in the fair value of bitcoin and the industry’s projection that the useful life of the equipment could potentially be 1 year.
Our net loss for the year ended June 30, 2024, was $1,007,654 compared to a net loss of $1,839,770 during the year ended June 30, 2023. The $832,116 decrease in the net loss is primarily attributable to a substantial decrease in stock-based compensation issued for services and a decline in depreciation expense from the fiscal year ended June 30, 2023, to June 30, 2024, due to its revision of the mining equipment’s estimated useful life from seven to one year.
During the year ended June 30, 2024, we incurred operating expenses of $966,179 compared to $1,321, 423 incurred during the year ended June 30, 2023. The $355,244 is primarily attributable to a decrease in stock-based compensation issued for services.
During the year ended June 30, 2024, we incurred interest expense of $27,041, out of which, interest expense of $2,131 was incurred on an unpaid vendor payable balance and $24,910 was incurred as interest expense on notes payable, compared to $1,766 during the year ended June 30, 2023.
LIQUIDITY AND CAPITAL RESOURCES
Year Ended June 30, 2024
As of June 30, 2024, our current assets are $152,249 and our current liabilities are $1,259,444, which resulted in a working capital deficit of $1,107,195. As of June 30, 2023, our current assets are $185,455 and our current liabilities are $629,038, which resulted in a working capital deficit of $443,583.
As of June 30, 2024, and June 30, 2023, our total liabilities are $1,259,444 and $629,038, respectively and are comprised entirely of current liabilities, representing increased liabilities of $630,406.
Cash Flows from Operating Activities
For the year ended June 30, 2024, net cash flows used in operating activities was $626,479 compared to net cash flows used in operating activity of $188,196 for the same period in 2023, representing increased net cash flows used in operating activities of $438,283.
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Cash Flows used by Investing Activities
For the year ended June 30, 2024, net cash flows used by investing activities was $0 and June 30, 2023, net cash flows used by investing activities was $88,000.
Cash Flows from Financing Activities
For the year ended June 30, 2024, and June 30, 2023, our net cash flows provided by financing activities were $602,606 and $300,001, respectively, representing increased net cash flows by financing activities of $302,605.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded from (a) revenues through the sales of bitcoin and other cryptocurrency sales; and (b) sales of our restricted common stock. Our working capital requirements are expected to increase commensurate with our business growth.
Our principal demands for funding 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
The Company, through its wholly owned subsidiary Raptor Mining, previously had contracts with two co-location cryptocurrency mining facilities. These facilities provided the Company with electricity and maintenance of our Crypto miner hardware. Since the period ended June 30, 2023, the Company has consolidated its mining operations to one facility.
PURCHASE OF SIGNIFICANT EQUIPMENT
In anticipation of completing the acquisition of the Orofino ID facility, the Company has applied for lease financing for the purposes of securing 275 latest generation ASIC 270 terrahache miners over the next sixty days. Pricing for ASIC miners is generally directly related to the price of bitcoin; as of the date of this Annual Report, these particular ASIC miners cost between $8,500 and $9,000 per ASIC miner. Our planned lease of these miners is subject to our financial ability to do so and/or to obtain equity financing to pay for the ASIC miners.
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
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OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial conditions, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
GOING CONCERN
Our consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have not yet established a source of revenue sufficient to cover our operating expenses and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit on June 30, 2024, and 2023 of $7,008,181 and $6,000,527, respectively. Net losses for fiscal years ended June 30, 2024, and 2023 were $1,007,654 and $1,839,770, respectively. Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable. In its report on our financial statements for the years ended June 30, 2024, and 2023 our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt of our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
RECENTLY ISSUED ACCOUNTING STANDARDS
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Under ASU No. 2023-08, effective December 15, 2024, with early adoption permitted, companies are required to mark bitcoin and similar digital assets to market at each reporting period. This guidance ensures the bitcoin holdings are recorded at fair market value, reflecting any unrealized gains or losses at the end of each period. The Company adopted this new accounting standard early, as of the quarter ending June 30, 2024, to enhance the transparency of its financial reporting. This adoption aligns with evolving regulatory practices surrounding digital assets and provides stakeholders with timely and relevant information on asset valuation.
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.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by Item 8 are presented in the following order:
TABLE OF CONTENTS
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
T‐Rex Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of T‐Rex Acquisition Corp. and its subsidiaries (“the Company”, “T‐Rex”) as of June 30, 2024, and 2023, and the related consolidated statements of operations, changes in shareholders’ equity (deficit), and cash flows for the years ended June 30, 2024, and 2023, and the related notes and schedules (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, 2024, and 2023, and the results of its operations and its cash flows for the years ended June 30, 2024, and 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
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’s losses from operations and accumulated deficit raise substantial doubt about its 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 audits. 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
| F-2 |
| Table of Contents |
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition
Description of the matter:
As discussed in Note 2 to the consolidated financial statements, the Company’s revenue is recognized through the mining of digital assets. Digital assets, including revenue recognition, is an accounting and auditing area in which there lacks authoritative guidance, and as such the auditing digital assets and related activity requires significant auditor judgment.
How the Critical Audit Matter Was Addressed in the Audit:
Our principal audit procedures to evaluate management's revenue recognition consisted of the following, among others:
| 1. | Obtained and reviewed the Company's policies for recognizing revenue and the related application under generally accepted accounting principles. |
| 2. | Verified the reliability and accuracy of daily mining reports on which recognized revenue is derived. |
| 3. | Tested the accuracy of revenue recognized and recognized gain/loss on sale/exchange of cryptocurrency on FIFO cost basis. |
Complex Accounting Treatments ‐ Stock Warrants Valuation
Description of the Matter:
As discussed in Notes 2 and 12 the Company has stock warrants, which require fair value calculations that are complex and subject to critical judgment.
How the Critical Audit Matter Was Addressed in the Audit:
We examined stock warrants agreements that were issued as compensation, tested inputs used in the Black‐Scholes calculation by agreeing terms to the agreements, market information on third‐party sites, and recalculated the stock warrant’s fair value and stock‐based compensation expense based on the vesting of warrants.
Complex Accounting Treatments ‐ Stock based compensation
Description of the Matter:
As discussed in Notes 2 and 12 the Company has stock‐based compensation which is recognized as expensed ratably over the requisite service period/vesting period, which requires fair value calculations and subject to critical judgment.
How the Critical Audit Matter Was Addressed in the Audit:
We examined management agreements for issuance of stock, verified the grant date and vesting period and recalculated the stock’s fair value and stock‐based compensation expense.
/S/
We have served as the Company’s auditor since 2022.
November 18, 2024
| F-3 |
| Table of Contents |
TREX ACQUISITION CORP. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
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| June 30, 2024 |
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| June 30, 2023 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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Prepaid consulting - current |
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TOTAL CURRENT ASSETS |
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NON-CURRENT ASSETS: |
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Plant and equipment, net |
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Prepaid consulting - noncurrent |
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TOTAL NON-CURRENT ASSETS |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
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CURRENT LIABILITIES: |
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Accounts payable and accrued expenses |
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Due to related party- accrued compensation |
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Due to related party- advances |
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Notes payable - related parties |
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Note payable - unrelated parties |
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Interest payable, unrelated party |
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Deposit payable |
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TOTAL CURRENT LIABILITIES |
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TOTAL LIABILITIES |
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Commitments and contingencies (Note 9) |
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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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Accumulated deficit |
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) |
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| ( | ) |
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| ( | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| $ |
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| $ |
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The accompanying notes are an integral part of these financial statements.
| F-4 |
| Table of Contents |
TREX ACQUISITION CORP. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
for the years ended June 30, | ||||||||
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| 2024 |
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| 2023 |
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REVENUE |
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Mining Revenue |
| $ |
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| $ |
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Realized Gain (Loss) on sale/exchange of Bitcoin |
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Total revenues |
| $ |
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| $ |
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Cost of goods sold |
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Depreciation |
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Hosting |
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Contract Labor |
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Environmental expense |
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Total cost of goods sold |
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Gross Profit (Loss) |
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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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Share based compensation |
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Administration Fees |
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Total operating expenses |
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Loss from Operations |
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Other income (expenses): |
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Interest expense |
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| ( | ) |
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| ( | ) |
Total other income (expenses) |
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Loss Before Income Taxes |
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| ( | ) |
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| ( | ) |
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Net Loss |
| $ | ( | ) |
| $ | ( | ) |
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Basic and Dilutive Net Loss Per Share |
| $ | ( | ) |
| $ | ( | ) |
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Basic and Dilutive - Weighted average number of common shares outstanding |
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The accompanying notes are an integral part of these financial statements.
| F-5 |
| Table of Contents |
TREX ACQUISITION CORP. | ||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | ||||||||||||||||||||
For the years ended June 30, 2024, and 2023 | ||||||||||||||||||||
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| Common Stock at Par $0.0001 |
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| Additional |
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| Number of Shares |
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| Amount |
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| Paid in Capital |
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| Accumulated Deficit |
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| TOTAL |
| |||||
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Balance June 30, 2021 |
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| ( | ) |
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Shares issued for related party debt conversion |
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Share based expense for warrants issued |
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Shares issued for subscriptions |
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Shares issued for services |
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Shares issued for debt conversion |
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Net Loss |
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| - |
|
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| ( | ) |
|
| ( | ) | ||
Balance June 30, 2022 |
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| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||
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Shares Surrendered |
|
| ( | ) |
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| ( | ) |
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| ||
Shares Issued for Services |
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Shares issued for cash |
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Share based expense for warrants issued |
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Net Loss |
|
| - |
|
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|
| ( | ) |
|
| ( | ) | ||
Balance June 30, 2023 |
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| ( | ) |
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| ( | ) | |||
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Share based expense for warrants issued |
|
| - |
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| |||
|
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|
|
|
|
|
|
| - |
|
Net Loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||
Balance June 30, 2024 |
|
|
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|
| ( | ) |
|
| ( | ) | |||
| F-6 |
| Table of Contents |
TREX ACQUISITION CORP. |
| |||||||
CONSOLIDATED STATEMENT OF CASH FLOWS |
| |||||||
for the years ended June 30, |
| |||||||
|
|
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| ||
|
| 2024 |
|
| 2023 |
| ||
OPERATING ACTIVITIES |
| |||||||
Net Loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
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Share based expense for warrants issued |
|
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| ||
Cost of goods sold - depreciation expense |
|
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| ||
|
|
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Changes in assets and liabilities: |
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Crypto currency held |
|
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| ||
Other assets |
|
|
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|
| ||
Accounts payable and accrued expenses |
|
| ( | ) |
|
|
| |
Interest payable to third parties |
|
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| ||
Advances payable to related parties |
|
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Balances owed to related parties |
|
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| |
Deposit payable |
|
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| |
Net cash used in operating activities |
|
| ( | ) |
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| ( | ) |
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INVESTING ACTIVITIES: |
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Purchase of Equipment |
|
|
|
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| ( | ) | |
Net cash used in investing activities |
|
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| ( | ) | |
|
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FINANCING ACTIVITIES: |
|
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Shares issued for cash |
|
|
|
|
|
| ||
Net proceeds in related party debt |
|
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|
| |
Proceeds from issuance of note payable - related parties |
|
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| ||
Proceeds from issuance of note payable - unrelated parties |
|
|
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|
| ||
Net cash provided by financing activities |
|
|
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| ||
NET INCREASE (DECREASE) IN CASH |
|
| ( | ) |
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| |
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CASH AT BEGINNING OF PERIOD |
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| ||
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CASH AT END OF PERIOD |
| $ |
|
| $ |
| ||
|
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Supplemental Cashflow Information |
|
|
|
|
|
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|
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Interest Paid |
| $ |
|
| $ |
| ||
Taxes Paid |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Non-Cash Investing and Financing Activities |
| $ | - |
|
| $ | - |
|
Adjustment in par value from $0.001 to $0.0001 |
| $ |
|
| $ |
| ||
Surrender of shares |
| $ |
|
| $ |
| ||
Shares issued for related party debt conversion |
| $ |
|
| $ |
| ||
Shares issued and recorded as prepaid expense |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| F-7 |
| Table of Contents |
T-REX ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
T-REX 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, the Company changed its name to TREX Acquisition Corp. after the Company business operations under the Sync2 Networks branding had ceased. On June 21, 2021, the Company decided to pivot from seeking an acquisition candidate to operating a cryptocurrency mining business. On February 17, 2022, the Company began mining bitcoin at Ace Hosting, a Tampa, Florida located data center. On June 30, 2022, the Company changed its name to “T-REX Acquisition Corp.”
As of June 30, 2024, the Company is a holding company with the following subsidiaries: Raptor Mining LLC, a Florida limited liability company (“Raptor Mining”); and TRXA Merger Sub, Inc., an inactive Delaware corporation (“Merger Sub”). On July 1, 2022, we incorporated Megalodon Mining and Electric, LLC, a Florida limited liability company (“Megalodon”).
2020 TRXA Merger Sub Inc.
On March 13, 2020, the Company incorporated the Merger Sub in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s President currently serves as the sole officer and director of the Merger Sub.
2021 Raptor Mining LLC and 2022 Megalodon Mining and Electric LLC
On July 9, 2021, the Company formed Raptor Mining to pursue the Company’s new business operating strategy to engage in cryptocurrency mining, which is used to secure decentralized network protocols and decentralized distributed ledgers. On July 1, 2022, the Company formed Megalodon to investigate and potentially pursue a cryptocurrency co-location business model. The cryptocurrency co-location business model is based on a company which has access to data centers and inexpensive cryptocurrency mining inputs, such as low-cost electricity supply, offering to host third-party owned cryptocurrency mining equipment in exchange for a fee, which may consist of a mix of cash and cryptocurrency consideration.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States if America of ("U.S. GAAP") as found in the Accounting Standards Codification ("ASC”), and the Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB") and are expressed in US Dollars. The consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company's Annual Report in its Form 10-K filing under the Securities Exchange Commission.
| F-8 |
| 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.
Reclassification
Certain reclassifications have been made to prior periods to conform with current reporting.
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. The Company currently has no accounts receivable.
Principles of Consolidation
As of June 30, 2024, the accounts include those of the Company and its
On March 13, 2020, the Company incorporated Merger Sub in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s President 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 July 9, 2021, the Company organized Raptor Mining, which currently generates revenues via its operating business. On July 1, 2022, the Company formed Megalodon to investigate and potentially pursue a cryptocurrency co-location business model. The cryptocurrency co-location business model is based on a company, which has access to data centers and inexpensive cryptocurrency mining inputs, such as low-cost electricity supply, offering to host third-party owned cryptocurrency mining equipment in exchange for a fee, which may consist of a mix of cash and cryptocurrency consideration.
As of the date of this filing, the Company has entered into a Letter of Intent to acquire an established co-location facility in Orofino, Idaho for the purposes of consolidating its present mining operations and to expand into the co-location hosting market.
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.
| F-9 |
| Table of Contents |
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. |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Note Payable (unrelated parties) – June 30, 2023 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Note Payable (related parties) – June 30, 2024 |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
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| F-10 |
| Table of Contents |
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 as of June 30, 2024.
The assets and liabilities recorded on the balance sheet approximate their fair value.
Derivative Financial Instruments
The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features (such as conversion features) that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. The Company had convertible notes with derivative values determined as $0, on June 30, 2024, and 2023, principally due to its stock price and volatility.
Digital currencies - Bitcoin
The Company applies accounting for digital assets in accordance with the AICPA Practice Aid "Accounting for and Auditing of Digital Assets", the guide is dated as of June 30, 2022, and the SEC issued Staff Accounting Bulletin No. 121, which is effective for periods after June 15, 2022, which are the current nonauthoritative guidance for accounting for digital assets under U.S. generally accepted accounting principles (GAAP). The AICPA Practice Aid is non-authoritative guidance that represents the views of the Digital Assets Working Group and AICPA staff. There is currently no official pronouncement or authoritative guidance on accounting for digital assets and digital asset transactions. The Company held no digital assets on June 30, 2024, or 2023. On June 30, 2022, bitcoin balance held was valued at $
Plant and equipment - Crypto-currency machines
The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following:
| · | the complexity of the transaction verification process which is driven by the algorithms contained within the bitcoin open-source software. |
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| · | the general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as the blockchain’s total hash rate) |
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| · | technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs i.e., the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and a lower cost of purchase. |
The Company operates in an emerging industry for which limited data is available to make estimates on the useful economic lives of specialized mining equipment. The equipment could become obsolete within less time than other equipment due to it being specialized, as new technology still being developed and improved. Plant and equipment, which represent mining equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Prior to the fiscal year June 30, 2023, management determined the expected useful life of mining machines as
| F-11 |
| Table of Contents |
Management’s assessment takes into consideration the availability of historical data and management's expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data becomes available.
Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying value to determine if an adjustment for impairment is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and it’s carrying value.
Revenue recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new 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 following five steps are applied to achieve that core principle:
| · | Step 1: Identify the contract with the customer |
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| · | Step 2: Identify the performance obligations in the contract |
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| · | Step 3: Determine the transaction price |
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| · | Step 4: Allocate the transaction price to the performance obligations in the contract |
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| · | Step 5: Recognize revenue when the Company satisfies a performance obligation |
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.
When determining the transaction price, an entity must consider the effects of all of the following:
| · | Variable consideration |
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| · | Constraining estimates of variable consideration |
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| · | The existence of a significant financing component in the contract |
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| · | Noncash consideration |
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| · | Consideration payable to a customer |
Crypto asset transaction verification is the output generated from the Company's ordinary activities under its mining pool contract. The consideration the Company receives is a bitcoin reward, which the Company measures at fair value on the date awarded. Rewards are earned when the Company successfully places a block (by being the first to solve an algorithm). As a result, the Company receives confirmation from the mining pool of the block placed and rewards earned. The Company uses the quoted price of the bitcoin at closing, on the date the coin is mined to value its reward/s. There is no significant financing component in these transactions. Expenses associated with running the digital currency mining business, such as rent, mining equipment depreciation, and electricity costs are also recorded as cost of revenue.
| F-12 |
| Table of Contents |
Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the related digital currency on the grant date of the reward.
Additionally in its regular courses of business the Company earns a gain or incurs a loss on the trade of bitcoin awarded.
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. Through June 30, 2024, and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Related Party Disclosures
Under ASC 850 “Related Party Transactions” an entity or person is considered to be a “related party” if it has control, significant influence or is a key member of management personnel. A transaction is considered to be a related party transaction when there is a transfer of resources of obligations between related parties. The Company, in accordance with the standard ASC 850, presents disclosures about related party transactions and outstanding balances with related parties, see Note 8.
Earnings per Share
The Company computes earnings (loss) per share ("EPS") in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted EPS on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of warrants or stock options and the conversion of instruments convertible to common stock. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
| F-13 |
| Table of Contents |
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 June 30, 2024, we had a net operating loss carry-forward of approximately $(
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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. The IRS requires all domestic corporations in existence for any part of the tax year to file an income tax return whether or not they have taxable income. The Company incurred a loss for the fiscal years ended June 30, 2024, and 2023 and has not filed tax returns for either year. The Company has not received any notifications from the IRS. Reported tax benefits and valuation allowances are the Company’s best estimate of its tax positions and have not been reviewed by the taxing authority.
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
| F-14 |
| Table of Contents |
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, raise additional capital 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. PRE-PAID CONSULTING
The Company issued shares to its directors and advisors for services to be performed at a future date. The common shares are recorded as issued and outstanding at the time they are granted, and the related share-based compensation expense is incurred as services performed. Compensation expense not incurred is accounted for as prepaid consulting expense. On June 12, 2022, the Company issued
| F-15 |
| Table of Contents |
NOTE 5. CRYPTOCURRENCIES
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NOTE 6. PROPERTY PLANT & EQUIPMENT – MINING MACHINES
On August 24, 2022, the Company entered into a contract to purchase 20 Bitmain XJ S19 Pro 110 th and installation at Simple Mining in Iowa. During the 2024 fiscal year, the Company wrote off $
Depreciation expenses amounted to $
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| F-16 |
| Table of Contents |
NOTE 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
During the year the Company accrued amounts owed to vendors and certain other accrued expenses, which were comprised of the following:
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The Company’s trade payables are generally short term, due on demand or with an obligation to pay within less than 365 days. Approximately 80% of trade payables is outstanding for more than 90 days.
NOTE 8. RELATED PARTY TRANSACTIONS
Office space
Our executive, administrative and operating offices were previously provided at no cost on a month-to-month basis to the Company by our President, Frank Horkey, and are located at 151 N Nob Hill Road, Suite 402, Plantation FL 33324. The Company leases office space from its President at a cost of $
Due to Related Parties
On August 6, 2021, the Company issued
| F-17 |
| Table of Contents |
As of June 30, 2024, and June 30, 2023, the Company owed $
As of June 30, 2024, and June 30, 2023, the Company owed Management Compensation payable of $
As of June 30,2024, and June 30, 2023, the Company owed Board of Director fees of $
On January 30, 2023, entities affiliated with Timothy B. Ruggiero and Peter Chung each cancelled
On July 1, 2023, the Company issued Frank Horkey a $
On July 1, 2023, the Company issued Lazarus Asset Management LLC (“Lazarus”) a $
On February 9, 2024, the Company issued Sparta Road Ltd. C/o Timothy B Ruggiero a $
On April 1, 2024, the Company issued Frank Horkey a $
On April 1, 2024, the Company issued Lazarus a $
| F-18 |
| Table of Contents |
In addition, certain shareholders have advanced a total of $
NOTE 9. COMMITMENTS AND CONTINGENCIES
Legal contingencies
From time to time, the Company may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. Management is not aware of any pending, threatened or asserted claims. Through June 30, 2024, and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
See other commitments and contingencies under “NOTE 8. RELATED PARTY TRANSACTIONS”, “NOTE 10. NOTES PAYABLE” and “NOTE 13. SUBSEQUENT EVENTS”.
NOTE 10. NOTES PAYABLE
On March 24, 2023, the Company issued to a private investor a $
On May 15, 2023, the Company issued to a private investor a $
On September 25, 2023, the Company issued to a private investor a 180-day Senior Secured Convertible Promissory Note bearing an interest rate of
On October 2, 2023, the Company issued to a private investor a 180-day Senior Secured Convertible Promissory Note bearing an interest rate of
| F-19 |
| Table of Contents |
On March 12, 2024, the Company issued to a private investor a 180-day Secured Convertible Promissory Note bearing an interest rate of
On May 23, 2024, the Company issued to a private investor a 90-day Secured Convertible Promissory Note bearing an interest rate of
See due to Related Parties section in Note 8 for additional information on senior secured convertible promissory notes issued on July 1, 2023, and April 1, 2024, to Horkey and Lazarus Asset Management, LLC. and on February 9, 2024, to Sparta Road Ltd.
NOTE 11. COMMON STOCK
Frank. Horkey received
On July 1, 2022, Michael Christiansen received
On July 1, 2022 Squadron Marketing LLC received
On July 1, 2022 Lazarus Asset Management LLC - received
| F-20 |
| Table of Contents |
John Bennet received
James Marshall III received
Shawn Perez Esq. was awarded
NOTE 12. WARRANTS
Warrants Issued for Investment
On May 5, 2022, the Company issued shares and warrants related to that certain Securities Purchase Agreement dated November 10, 2021with certain of the selling stockholders referenced in our most recent registration statement pursuant to which we sold to such selling stockholders $
On July 28, 2022, August 1, 2022, and November 28, 2022, an investor purchased 400,001 Units consisting of one shares of the Company’s restricted common stock and one Class C warrant to purchase one shares of the Company’s restricted common stock at an exercise price of $
On October 2, 2023, the Company issued to a private investor a 180-day Senior Secured Convertible Promissory Note bearing an interest rate of
On December 6, 2023, the Company agreed to sell to a private investor
On February 8, 2024, entities belonging to Peter S. Chung and Timothy B. Ruggiero, collectively, accepted a Pre-Funded Common Stock Purchase Warrant to purchase three million shares of the Company’s restricted common stock at $
See due to related parties and notes payable section in Note 8 for additional information on convertible promissory notes issued with warrants on March 24, 2023, May 15, 2023, July 1, 2023, September 2023, October 2, 2023, and April 1, 2024.
| F-21 |
| Table of Contents |
Warrants Issued for Management and Consulting Services
On July 1, 2021, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a Class C warrant to purchase
On May 26, 2022, the Company issued to Frank Horkey Class a C warrant to purchase
On May 26, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued Class C warrant to purchase
On June 12, 2022, Frank Horkey and Michael Christiansen were each issued
On June 12, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a class C warrant to purchase
On July 1, 2023, Squadron Marketing LLC, Lazarus Asset Management LLC, and Horkey were each issued a class C warrant to purchase
Certain of the shares and warrants noted above were issued to Board Members, Advisory Board Members and Consultants for services to be rendered for periods subsequent to June 30, 2024. Amounts related to shares issued as compensation for services not yet performed are treated as prepaid consulting (current and non-current). The amounts will be recognized in subsequent periods as they are earned according to the Agreements.
The following is the outstanding warrant activity:
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These warrants were valued using a Black Scholes calculation using a stock price of $
| F-22 |
| Table of Contents |
Private Placement Transactions
The Securities Purchase Agreements
On July 22, 2022, we entered into a Securities Purchase Agreement with one private investor who is not a Selling Stockholder (defined above) to whom we sold $
No shares were issued in the year ended June 30, 2024.
The Registration Rights Agreements
On November 10, 2021, in connection with the closing of the transactions contemplated by the Securities Purchase Agreement, we entered into Registration Rights Agreements with the selling stockholders who are parties to the Securities Purchase Agreement. With respect to the selling stockholders who are party to the Securities Purchase Agreement, we are obligated to file a registration statement registering the resale of (i) their Warrant Shares, (ii) any Shares issuable under the terms of the Securities Purchase Agreement, and (iii) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization, or similar event with respect to the foregoing.
Pursuant to the Registration Rights Agreements, we agreed to file the registration statement(s) no later than the earlier of (a) 180-days after an initial public offering by the Company or (b) twelve (12) months after effective date of the Registration Rights Agreement. Furthermore, we agreed to grant the parties to the Securities Purchase Agreement a “piggy-back” registration right upon at least 10-day notice prior to the Company’s filing of a registration statement (or confidential submission in draft form) with the SEC. As contemplated by the terms of the Registration Rights Agreements, the Company filed a registration statement on Form S-1, as amended, that became effective on September 8, 2022.
| F-23 |
| Table of Contents |
NOTE 13. 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.
On July 1, 2023, the Company issued Lazarus Asset Management, LLC a $
| i. | On July 1, 2024, the Company issued a shareholder a $ |
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On October 20, 2024, the Company entered into an agreement with Clearwater Power Company (“Clearwater”) for the provision of electric power and facilities to support its cryptocurrency mining operations. As part of this contract, the Company deposited approximately $
On July 1, 2024, the Company entered into a Non-Binding Letter of Intent to acquire an established co-location facility in Orofino, Idaho for the purposes of consolidating its present mining operations and to expand into the co-location hosting market. There are no assurances that the Company will complete this purchase agreement or that we will be successful in consolidated operations. In anticipation of completing the acquisition of the Orofino, ID facility, the Company has applied for lease financing on September 10, 2024, for the purpose of securing 275 latest generation ASIC 270 terrahache miners over the next sixty days.
| F-24 |
| 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
(a) Disclosure Controls and Procedures
We are required to 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.
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company’s management, including the Company’s Chief Executive Officer (“CEO”)and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation the Company’s CEO / CFO concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2024 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, 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 the Company’s management, including the Company’s CEO/CFO, as appropriate, to allow timely decisions regarding required disclosure. The principal basis for this conclusion is the lack of segregation of duties within our financial function due to an insufficient number of management and accounting personnel and the lack of an operating Audit Committee.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s 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 accounting principles generally accepted in the United States of America 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 the assets of the company; |
|
|
● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and |
|
|
● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. |
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
We carried out an assessment, under the supervision and with the participation of our management, including our CEO/CFO, of the effectiveness of the design and operation of our internal controls over financial reporting, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of September 30, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (2013). Based on that assessment and on those criteria, our CEO/ CFO concluded that our internal control over financial reporting was not effective as of June 30, 2024. The principal basis for this conclusion is the lack of segregation of duties within our financial function, due to (i) an insufficient number of management and accounting personnel; (ii) failure to fully document our internal control policies and procedures; and (iii) the lack of an operating Audit Committee.
This annual 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 temporary rules of the SEC that permit us to provide only management report in this annual report.
(c) Changes in Internal Controls
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
The Company’s management, including the Company’s CEO/CFO, does not expect that the Company’s internal control over financial reporting will prevent all errors and all fraud. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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 or compliance with the policies or procedures may deteriorate.
Subsequent to our year end, our Board of Directors has established an Audit, Compensation and Governance Committees. While our Board is not yet large enough to have a full complement of independent directors, we believe we are substantially in compliance regulatory requirements,
ITEM 9B. OTHER INFORMATION
None.
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PART III
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 |
| 68 |
| President/ Director/ Chief Financial Officer |
Michael Christiansen |
| 66 |
| Secretary/Treasurer/Director |
Frank Horkey, our President, and Board Member.
Frank Horkey has been our President/Director since January 2014 and our Chief Financial Officer since August 2024. During the past forty years, Frank Horkey has been engaged as an auditor and a certified public accountant. Frank 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. Frank Horkey’s clients have included large corporations, small businesses, professionals, not-for-profit organizations, municipalities, and other governmental entities. Frank 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.
Frank Horkey received a Bachelor of Science in Accounting from Florida Atlantic University. He 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.
Frank 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 and again for 2021-2022.
Frank 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, a member of the Broward Education Planning Initiative, which was the first countywide effort to address school overcrowding. Frank 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 was Board Chair of the Foundation for 2018-2020
Michael Christiansen
Michael Christiansen has been our Secretary/Treasurer and Board Member since July 2022. He has more than twenty years of investment banking experience and is currently Senior Managing Director at Weild & Co., an independent network investment bank. He has previously served as Chief Financial Officer of Weild & Co. from 2016 to 2020 and served as Managing Director at West Park Capital and previously with Prudential Securities. His investment banking experience includes public and private equity transactions, mergers and acquisitions, and strategic advisory engagements with clients in enterprise technology, life sciences, consumer, and retailing and natural resources industries. As a senior investment banker, he has advised clients on over $2 billion in aggregate closed financing transactions.
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| Table of Contents |
Matthew Cohen
Matthew Cohen has been our director since July 2024. He co-founded Stem Holdings, Inc. in 2016 and has served as Chief Executive Officer and Chief Financial Officer. Matthew. Cohen has over 38 years of experience serving in corporate leadership roles, investing capital, structuring, and funding public/private partnerships, and providing strategic advisory services to companies throughout the U.S., Europe, Asia and Latin America and previously worked in the Investment Banking Division at Oppenheimer as an Analyst. Mr. Cohen has a B.B.A. degree in Accounting from New Paltz State University, New York.
All directors hold office until the completion of their term of office, which is three years, or until their successors have been elected. All officers are appointed by the board of directors and, subject to employment agreements (which did not exist prior to June 30, 2022), serve at the discretion of the board. On July 1, 2022, the Company established a framework for Board Service Agreements with stock compensation subject to a vesting schedule. In connection with their respective appointments and using the above noted Board Service Agreement model we entered into agreements with Frank Horkey and Mr. Christiansen pursuant to which, among other things, the Company issued in a private placement 250,000 restricted shares of the Company’s common stock to each director, subject to a vesting schedule.
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
As noted above, subsequent to our year end, our Board of Directors has formed Compensation, Audit, and Corporate Governance committees. While we have added an additional Board member, our Board is still limited to three Board Members. Given the establishment of these committees and our relatively limited operations, the Board believes we are able to effectively manage the issues effectively.
Audit Committee and Financial Expert
In September 2024 our Board of Directors established an Audit committee. While our Board is not yet large enough to have a full complement of independent directors, we believe we are substantially in compliance with Audit Committee guidance.
Until the establishment of our Audit Committee, the role of an audit committee has been conducted by our Board of Directors. Our President/Director/Chief Financial Officer, Frank Horkey is a certified public accountant with substantial audit experience. Our 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.
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| Table of Contents |
Code of Ethics
Subsequent to our year end, we have adopted a comprehensive Code of Ethics and related Insider Trading Policy and Prohibitions that applied to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Director Independence
Our President and Chief Financial Officer, Frank Horkey, is not deemed independent director as he also holds positions as an officer. As of the date of this Annual Report, Michael Christiansen serves on the Company’s board of directors and Mr. Christiansen is deemed an independent member of the board of directors.
ITEM 11. EXECUTIVE COMPENSATION
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, 2024, and June 30, 2023.
Name and Principal Position |
| Fiscal Years |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Warrants ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||
Frank Horkey, President (Note 1) |
| 2023 |
|
| 177,000 |
|
|
| - |
|
|
| 38,053 |
|
|
| 101,723 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 316,776 |
|
|
| 2024 |
|
| 162,000 |
|
|
| - |
|
|
| 38,053 |
|
|
| 50,470 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 250,523 |
|
Michael Christiansen, Secretary/Treasurer (Note 2) |
| 2023 |
|
| 12,000 |
|
|
| - |
|
|
| 38,053 |
|
|
| 25,470 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 75,523 |
|
|
| 2024 |
|
| 12,000 |
|
|
| - |
|
|
| 38,053 |
|
|
| 25,470 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 75,523 |
|
John Bennet, Chief Financial Officer (Note 3) |
| 2023 |
|
| 18,000 |
|
|
| - |
|
|
| 4,667 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 22,667 |
|
|
| 2024 |
|
| 18,000 |
|
|
| - |
|
|
| 9,333 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 27,333 |
|
| 28 |
| Table of Contents |
OUTSTANDING EQUITY AWARDS
|
|
|
| Stock Awards |
| |||||||||||
Name |
| Number of Shares or Units of Stock |
|
| Market Value of Shares or Units |
|
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights |
|
| Value of Unearned Shares, Units or Other Rights |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Frank Horkey |
|
| 250,000 |
|
| $ | 114,160 |
|
|
| 83,333 |
|
| $ | 38,053 |
|
President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Christiansen |
|
| 250,000 |
|
|
| 114,160 |
|
|
| 83,333 |
|
|
| 38,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Bennet |
|
| 100,000 |
|
|
| 14,000 |
|
|
| - |
|
|
| - |
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All stock awards are valued at market on the day of the award.
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 formal bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.
Note 1. On June 12, 2022, Frank Horkey received 350,000 shares for acting in the capacity of President and Director since his previous contract expired December 31, 2029. On June 12, 2022, the Company entered into a three-year contract for fiscal 2023 through 2025 with Frank Horkey, for his role as Officer and Director, and for consulting services to vet potential acquisition targets. Under this agreement, Frank Horkey is to receive $60,000 per year and 250,000 shares of restricted common stock and a warrant to purchase 250,000 shares of the Company’s restricted common stock at any time during the three-year period beginning on July 1, 2022, at a strike price of $1.50. Both the shares and warrants vest over three years for his services as Director and Officer. Frank Horkey also receives $3,000 per quarter as additional compensation for his service as a Director and Officer.
Note 2. On July 1, 2022, the Company entered into an agreement with Michael Christiansen, Secretary /Treasurer and Director. . Christiansen received 250,000 shares of restricted common stock and a warrant to purchase 250,000 shares of the Company’s restricted common stock at any time during the three-year period beginning July 1, 2022, at a strike price of $1.50. Both the shares and warrants vest over three years for his services as Director and Officer. vest over three years. Michael Christiansen also receives $3,000 per quarter as additional compensation for his service as Director and Officer.
Note 3. On January 1, 2023, the Company entered into a two-year agreement with our accounting consultant, John Bennett to act as our Chief Financial officer (“CFO”). Mr. Bennett was tasked with providing financial oversight for a period of eighteen months. John Bennett’s compensation was 100,000 shares of the Company’s restricted common stock vesting over eighteen months. John Bennett also received $4,500 as compensation per quarter for his service as a CFO. His services conclude in August 2024, due to his passing.
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| Table of Contents |
Horkey and Christiansen’s shares were issued on July 1, 2022, and Bennett’s shares were issued on February 12, 2023. The cost of these shares was recorded as a prepaid expense and amortized over the life of the contracts.
To support our expansion and business development, we anticipate that we will continue to issue stock and warrants as compensation to retain our current and future directors, officers and independent contractors as consultants.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and president and (iv) all executive officers and directors as a group as of June 30, 2024
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Owner | Percent of Class (1) | ||||
Officers and Directors | Frank Horkey 7301 NW4th St Suite 102 Plantation FL 33317 | 950,000 shares | 5.2% | |||
Michael Christensen 2089 High Mesa Dr. Henderson, NV 8901 | 250,000 shares | 1.4% | ||||
John Bennet 2114 N 1 St. Grand Junction, CO 43215 | 200,000 shares | 1.1% | ||||
| ||||||
All directors and named executive officers as a group (3 persons) | 1,400,000 shares | 7.7% | ||||
Beneficial Owners 5% or Greater | Lazarus Asset Management LLC et al. | |||||
9540 NW 10th St Plantation, FL 33322 | 1,377,972 shares | 7.6% |
On September 9, 2020, Frank Horkey, who was President/CEO, Secretary/Treasurer/ CFO, and our director was issued 350,000 restricted common stock shares pursuant to that certain five-year Management Agreement, which commenced and was dated January 1, 2015, and expired December 30, 2019. =On July 1, 2022, Frank Horkey received 250,000 restricted common stock shares for his three year board position from fiscal 2023 to 2025, vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty three thousand three hundred thirty three (83,333) shares for year two to vest quarterly at the rate twenty thousand eight hundred thirty three (20,833) shares per quarter; and eighty three thousand three hundred thirty three (83,333) shares for year three to vest quarterly at the rate twenty thousand eight hundred thirty three (20,833) shares per quarter.
On July 1, 2022, as compensation for serving on the Company’s Board of Directors, Michael Christiansen received 250,000 shares of the Company’s common stock for his three year board position, from fiscal 2023 to 2025, vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty three thousand three hundred thirty three (83,333) shares for year two to vest quarterly at the rate twenty thousand eight hundred thirty three (20,833) shares per quarter; and eighty three thousand three hundred thirty three (83,333) shares for year three to vest quarterly at the rate twenty thousand eight hundred thirty three (20,833) shares per quarter.
John Bennet received 50,000 shares for extending his consulting contract through fiscal year end 2023. On February 10, 2023, as incentive to accept the position of the Company’s Chief Financial Officer for the period of January 1, 2023- through the end of fiscal year 2024, John Bennet was awarded an additional 100,000 of the Company’s restricted common stock that vest at 16,666 shares per quarter.
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| Table of Contents |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
Please refer to Financial Statements and Notes, which are incorporated in their entirety by this reference.
Director Independence
As of June 30, 2024, our one (1) director, Michael Christiansen is considered “independent” in accordance with Rule 4200(a)(15) of the NASDAQ Marketplace Rules. The remaining director is not considered “independent”.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate fees billed for the fiscal years ended June 30, 2024, and June 30, 2023, 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 $53,225 and $53,500, respectively.
Other Audit Fees
For the fiscal years ended June 30, 2024, and June 30, 2023, there were no fees billed for other audit fees.
Tax Fees
For the fiscal years ended June 30, 2024, and June 30, 2023, 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.
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| 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 |
| ||
| ||
| ||
| ||
| ||
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 Schema** |
101.CAL |
| Inline XBRL Taxonomy Calculation Linkbase** |
101.DEF |
| Inline XBRL Taxonomy Definition Linkbase** |
101.LAB |
| Inline XBRL Taxonomy Label Linkbase** |
101.PRE |
| Inline XBRL Taxonomy Presentation Linkbase** |
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 | ||
| |||
November 20, 2024 | By: | /s/ Frank Horkey | |
| Frank Horkey | ||
| Its: | Chief Financial 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.
November 20, 2024 | By: | /s/ Frank Horkey |
|
| Frank Horkey |
| |
| Its: | President |
|
| 33 |
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 presents 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: |
|
| 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; |
|
|
|
|
|
| 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; |
|
|
|
|
|
| c) | evaluated the effectiveness of the registrant’s 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 |
|
|
|
|
|
| d) | disclosed in this report any change in the registrant’s 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): |
|
| 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 |
|
|
|
|
|
| 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: November 20, 2024 | By: | /s/ Frank Horkey | |
| Frank Horkey | |||
| Its: | President and CFO | ||
| Date: November 20, 2024 | By: | /s/ Matthew Cohen | |
| Its: | Board Member and Audit Committee Char |
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, 2024 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:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 20, 2024 | By: | /s/ Frank Horkey | |
|
| Name: | Frank Horkey | |
|
| Title: | President and CFO |
[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.]