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Form 10-Q Trex Acquisition Corp. For: Mar 31

May 23, 2022 4:39 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT DATED MARCH 31, 2022 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the three months ended March 31, 2022

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________ to _________

 

Commission File Number: 333-152551

 

TREX Acquisition Corp.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-1754034

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

7301 NW 4th Street Suite 102 Plantation FL

 

33317

(Address of principal executive offices)

 

(Zip Code)

 

(954) 742-3001

(Registrant’s Telephone Number, Including Area Code)

   

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes     ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging Growth Company

 

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☐

 

As of May 23, 2022 there were 16,169,106 shares of the Registrant’s $0.001 par value common stock issued and outstanding.

 

Securities registered under Section 12(g) of the Act:

 

Title of each class registered:

None

 

 

 

  

TABLE OF CONTENTS

 

 

 

 

Page

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

 

3

 

 

 

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

4

 

 

 

 

 

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

6

 

 

 

 

 

 

ITEM 4.

CONTROLS AND PROCEDURES

 

6

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

ITEM 1.

LEGAL PROCEEDINGS

 

8

 

 

 

 

 

 

ITEM 1A.

RISK FACTORS

 

8

 

 

 

 

 

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

8

 

 

 

 

 

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

8

 

 

 

 

 

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

8

 

 

 

 

 

 

ITEM 5.

OTHER INFORMATION

 

8

 

 

 

 

 

 

ITEM 6.

EXHIBITS

 

9

 

 

 

2

Table of Contents

  

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

TREX ACQUISITION CORP.

March 31, 2022

 

Consolidated Balance Sheets

 

 

F-1

 

Consolidated Statements of Operations

 

 

F-2

 

Consolidated Statements of Stockholders’ Equity

 

 

F-3

 

Consolidated Statements of Cash Flows

 

 

F-4

 

Notes to the Consolidated Financial Statements

 

 

F-5

 

 

 

3

Table of Contents

 

TREX ACQUISITION CORP.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

(Un-audited)

 

 

 

 

ASSETS

 

March 31,

2022

 

 

June 30,

2021

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash

 

$20,029

 

 

$-

 

Crypto Currency Held

 

 

26,305

 

 

 

-

 

TOTAL CURRENT ASSETS

 

 

46,334

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Plant and Equipment

 

 

437,544

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Facility Deposit

 

 

10,570

 

 

 

-

 

TOTAL ASSETS

 

$494,448

 

 

$-

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Accounts Payable and Accrued Expenses

 

$22,971

 

 

$1,124

 

Due to Related Party

 

 

30,000

 

 

 

45,000

 

TOTAL CURRENT LIABILITIES

 

 

52,971

 

 

 

46,124

 

TOTAL LIABILITIES

 

 

52,971

 

 

 

46,124

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Common Stock, 0.001 par value, authorized 150,000,000 shares and 16,169,106 and 14,669,106 issued and outstanding as of March 31, 2022, and June 30, 2021 respectively

 

 

16,169

 

 

 

14,669

 

Additional Paid In Capital

 

 

3,620,116

 

 

 

2,805,766

 

Shares to be issued

 

 

678,925

 

 

 

-

 

Accumulated deficit

 

 

(3,873,733)

 

 

(2,866,559)

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

441,477

 

 

 

(46,124)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

$494,448

 

 

$-

 

 

The accompanying footnotes are an integral part of these consolidated financial statements

 

 
F-1

Table of Contents

 

TREX ACQUISITION CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

for the three and nine months ended March 31,

(Un-audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

three months ended

 

 

nine months ended

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUE

 

$26,305

 

 

$-

 

 

$26,305

 

 

$-

 

Cost of goods sold

 

 

39,654

 

 

 

-

 

 

 

39,654

 

 

 

-

 

Gross Profit

 

 

(13,349)

 

 

-

 

 

 

(13,349)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer Agent and Filing Fees

 

 

637

 

 

 

2,150

 

 

 

4,433

 

 

 

8,167

 

Professional Fees

 

 

41,000

 

 

 

24,000

 

 

 

113,330

 

 

 

66,000

 

Share based expense

 

 

-

 

 

 

-

 

 

 

770,850

 

 

 

300,000

 

Management and Consulting Fees

 

 

30,000

 

 

 

15,000

 

 

 

90,000

 

 

 

45,000

 

Administration Fees

 

 

8,326

 

 

 

2,751

 

 

 

15,212

 

 

 

2,750

 

TOTAL EXPENSES

 

 

79,963

 

 

 

43,901

 

 

 

993,825

 

 

 

421,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(93,312)

 

 

(43,901)

 

 

(1,007,174)

 

 

(421,917)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

LOSS BEFORE TAXES

 

 

(93,312)

 

 

(43,901)

 

 

(1,007,174)

 

 

(421,917)

Provision for Income Taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

NET LOSS

 

$(93,312)

 

$(43,901)

 

$(1,007,174)

 

$(421,917)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE - BASIC & DILUTED

 

$(0.01)

 

$(0.00)

 

$(0.06)

 

$(0.04)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED

 

 

16,169,106

 

 

 

13,776,217

 

 

 

15,851,171

 

 

 

9,752,330

 

 

The accompanying footnotes are an integral part of these consolidated financial statements

 

 
F-2

Table of Contents

 

TREX ACQUISITION CORP.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

for the nine months ended March 31, 2022

(Un-audited)

 

 

 

 

 

 

 

 

 Additional

 

 

 Shares

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid in

 

 

to be

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

issued

 

 

Deficit

 

 

TOTAL

 

Balance June 30, 2020

 

 

103,073

 

 

$103

 

 

$815,996

 

 

$1,105,674

 

 

$(2,398,616)

 

$(476,843)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued from to be issued

 

 

2,535,835

 

 

 

2,536

 

 

 

1,103,138

 

 

 

(1,105,674)

 

 

 

 

 

 

(0)

Shares issued from private sale

 

 

350,000

 

 

 

350

 

 

 

(350)

 

 

 

 

 

 

 

 

 

 

-

 

Shares issued for services

 

 

300,000

 

 

 

300

 

 

 

299,700

 

 

 

 

 

 

 

 

 

 

 

300,000

 

Shares issued for related party debt conversion

 

 

9,100,198

 

 

 

9,100

 

 

 

464,516

 

 

 

 

 

 

 

 

 

 

 

473,616

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(336,539)

 

 

(336,539)

Balance September 30, 2020

 

 

12,389,106

 

 

$12,389

 

 

$2,683,000

 

 

$-

 

 

$(2,735,155)

 

$(39,766)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for related party debt conversion

 

 

1,300,000

 

 

 

1,300

 

 

 

78,873

 

 

 

 

 

 

 

 

 

 

 

80,173

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,479)

 

 

(41,479)

Balance December 31, 2020

 

 

13,689,106

 

 

$13,689

 

 

 

2,761,873

 

 

$-

 

 

$(2,776,634)

 

$(1,072)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for related party debt conversion

 

 

980,000

 

 

 

980

 

 

 

43,893

 

 

 

 

 

 

 

 

 

 

 

44,873

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,901)

 

 

(43,901)

Balance March 31, 2021

 

 

14,669,106

 

 

$14,669

 

 

$2,805,766

 

 

$-

 

 

$(2,820,535)

 

$(100)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46,024)

 

 

(46,024)

Balance June 30, 2021

 

 

14,669,106

 

 

$14,669

 

 

$2,805,766

 

 

$-

 

 

$(2,866,559)

 

$(46,124)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for related party debt conversion

 

 

1,500,000

 

 

 

1,500

 

 

 

43,500

 

 

 

 

 

 

 

 

 

 

 

45,000

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(73,057)

 

 

(73,057)

Balance September 30, 2021

 

 

16,169,106

 

 

$16,169

 

 

$2,849,266

 

 

$-

 

 

$(2,939,616)

 

$(74,181)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares to be issued for subscriptions received

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360,875

 

 

 

 

 

 

 

360,875

 

Share based expense for warrants issued

 

 

 

 

 

 

 

 

 

 

770,850

 

 

 

 

 

 

 

 

 

 

 

770,850

 

Shares to be issued for debt conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

118,050

 

 

 

 

 

 

 

118,050

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(840,805)

 

 

(840,805)

Balance December 31, 2021

 

 

16,169,106

 

 

$16,169

 

 

$3,620,116

 

 

$478,925

 

 

$(3,780,421)

 

$334,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares to be issued for subscriptions received

 

 

-

 

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

 

 

 

 

200,000

 

Share based expense for warrants issued

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

Shares to be issued for debt conversion

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(93,312)

 

 

(93,312)

Balance March 31, 2022

 

 

16,169,106

 

 

$16,169

 

 

$3,620,116

 

 

$678,925

 

 

$(3,873,733)

 

$441,477

 

 

The accompanying footnotes are an integral part of these consolidated financial statements

 

 
F-3

Table of Contents

 

TREX ACQUISITION CORP.

 

 CONSOLIDATED STATEMENT OF CASH FLOWS

 

for the nine months ended March 31,

 

(Un-audited)

 

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

OPERATING ACTIVITIES

 

Net Income (Loss)

 

$(1,007,174)

 

$(421,917)

Share based expense

 

 

770,850

 

 

 

300,000

 

Change in Crypto Currency Held

 

 

(26,305)

 

 

 

 

Change in Deposits

 

 

(10,570)

 

 

 

 

Change in Related Party Advances

 

 

148,049

 

 

 

125,043

 

Change Accounts Payable and Accrued Expenses

 

 

21,848

 

 

 

(3,126)

Net Cash Used by Operating Activities

 

 

(103,302)

 

 

-

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of Equipment

 

 

(437,544)

 

 

-

 

Net cash used by investing activities

 

 

(437,544)

 

 

-

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from subscriptions received

 

 

560,875

 

 

 

-

 

Net cash provided by financing activities

 

 

560,875

 

 

 

-

 

NET INCREASE (DECREASE) IN CASH

 

 

20,029

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH AT END OF PERIOD

 

$20,029

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental Cash flow Information

 

 

 

 

 

 

 

 

Interest Paid

 

$-

 

 

$-

 

Taxes Paid

 

$-

 

 

$-

 

Supplemental Non-Cash Information

 

 

 

 

 

 

 

 

Shares issued for debt conversion

 

$-

 

 

$598,662

 

Shares to be issued for debt conversion

 

$163,050

 

 

$-

 

 

The accompanying footnotes are an integral part of these consolidated financial statements

 

 
F-4

Table of Contents

 

TREX ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

TREX Acquisition Corp. (The “Company”) was formed on January 16, 2008 in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia. The Company later changed its name to Sync2 Networks Corp when the Company began to engage in software-related services. On March 20, 2014, after the Company’s business operations had ceased, the Company changed its name to TREX Acquisition Corp.

 

As of March 31, 2022, the Company consists of itself, its 100% owned subsidiary Sync2 Networks International Ltd, a Nevada corporation (“Sync2 Subsidiary”), its 100% owned subsidiary TRXA Merger Sub, Inc., a Delaware corporation (“TRXA Subsidiary”), and its 100% owned subsidiary, Raptor Mining LLC, a Florida limited liability company (“Raptor Mining Subsidiary”).

 

These unaudited interim consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end June 30, 2021 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the Nine months ended March 31, 2022, are not necessarily indicative of results for the entire year ending June 30, 2022.

 

On April 7, 2014, our Board of Directors deemed it in the best interests of the Company and its shareholders to domesticate our subsidiary, Sync2 International Ltd., as a corporation formed under the laws of Malta to a corporation formed under the laws of the State of Nevada (the “Domestication”), which under Nevada statutory law involves the transfer of an existing corporation from one jurisdiction to another whereby Sync2 Networks International Ltd. shall cease all operations in Malta. On May 1, 2014, we filed Articles of Domestication with the Nevada Secretary of State effecting the domestication of Sync2 International Ltd. as a corporate entity formed under the laws of the State of Nevada, which domestication provides that Sync2 Subsidiary as domesticated in the State of Nevada shall be the same entity as Sync2 International Ltd. organized under the laws of Malta. Sync2 Subsidiary does not and has not had any operations since 2015.

 

On March 13, 2020, the Company incorporated the TRXA Subsidiary in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s sole Officer and Director currently serves as the sole officer and director of the TRXA Subsidiary. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company. The Company’s acquisition consultants continue to provide vetted candidates for merger with the Company.

 

Raptor Mining LLC

 

On July 9, 2021, the Company formed Raptor Mining Subsidiary in order to investigate a business model pivot towards operating a cryptocurrency mining facility. As of February 17, 2022, our Raptor Mining Subsidiary  had commenced cryptocurrency mining.

 

 
F-5

Table of Contents

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

 

Determination of Bad Debts

 

The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the allowance for doubtful accounts.

 

Principles of Consolidation

 

The accounts include those of the Company and its 100% owned subsidiaries All intercompany transactions have been eliminated. At this time, Sync2 Subsidiary has no operations, assets or liabilities.

 

Concerning the TRXA Subsidiary, the Company’s sole Officer and Director currently serves as the sole officer and director of the TRXA Subsidiary. As of the date of this filing, neither the Company nor the TRXA Subsidiary have entered into a definitive agreement or non-binding letter of intent to acquire a company. The Company’s acquisition consultants continue to provide vetted candidates for merger with the Company.

 

Concerning the Raptor Mining Subsidiary, the Company serves as the sole member and managing member. The Company is assessing potential personnel, locations and consultants needed to expand the current cryptocurrency mining operations.

 

Use of estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.

 

Cash equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

Crypto currency held

 

The Company considers its Crypto currency held to be highly liquid investments with a maturity of three months or less when mined to be cash equivalents. In order to value the Bitcoin that we mined and maintain in our slush pool wallet, we mark to market using the last quote at 11:59 on the last day of the period. We then multiply the quote against the (in this case fractional) number of bitcoin we own. That gives the dollar value of our position.

 

 
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Fair value of financial instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

Level 3

Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31, 2022.

 

The assets and liabilities recorded on the balance sheet approximate their fair value.

 

Equipment

 

Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. On December 24, 2021, the company acquired cryptocurrency mining equipment, which was put into service during the three months ended March 31, 2022.

 

Stock based compensation

 

The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.

 

The company accounts for its non-employee stock-based compensation in accordance with Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.

 

Commitments and contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Since March 31, 2022 and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.

 

 
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Table of Contents

 

Revenue recognition

 

The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.

 

We recognize the revenue when the coins are mined. In order to value the Bitcoin that we mined and maintain in our slush pool wallet, we mark to market using the last quote at 11:59 on the last day of the period. and the change in the price from the time it was mined and the value on the last day and record the change to gain / (loss) in the other income / expense section of the statement of operations. We then multiply the quote against the (in this case fractional) number of bitcoin we own. That gives the dollar value of our position.

 

During the three months ended March 31, 2022, the company recognized $26,305 in revenue from its cryptocurrency mining operations.  

 

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 March 31, 2022, we had a net operating loss carry-forward of approximately $(3,873,733) and a deferred tax asset of $813,484 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(813,484). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At March 31, 2022, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.

 

 

 

March 31,

2022

 

 

June 30,

2021

 

Deferred Tax Asset

 

$813,484

 

 

$503,709

 

Valuation Allowance

 

 

(813,484 )

 

 

(503,709 )

Deferred Tax Asset (Net)

 

$-

 

 

$-

 

 

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 1,435,333 shares of common stock as of March 31, 2022. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.

 

 
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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 $3,873,733 and a working capital deficit of $6,637 as of March 31, 2022.

 

While the Company has recently commenced operations and is generating revenue, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

 

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

On June 24, 2014 the company entered into an unsecured promissory note with Lazarus Asset Management, LLC. in the amount of $34,550 with an interest rate of 5% per annum and a due date of June 24, 2015. This note was  in default until June 30, 2021, when all outstanding principal and interest balances were converted into common stock. Therefore, the balance on this note at March 31, 2022 was $0.

 

On June 24, 2014, the company entered into an unsecured promissory note with Squadron Marketing, Inc. in the amount of $19,350 with an interest rate of 5% per annum and a due date of June 24, 2015. This note was  in default until June 30, 2021, when all outstanding principal and interest balances were converted into common stock. Therefore, the balance on this note at March 31, 2022 was $0

 

 
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Table of Contents

 

On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. On July 1, 2021 the agreements were amended to be $60,000 each per year. In additions 500,000 warrants were issued and 500,000 will be issued on the year anniversary over the five year term. The agreements resulted in Management Fee expense of $90,000 for the Nine months ended March 31, 2022. As of March 31, 2022, the balance due for management services was $30,000.

 

On January 1, 2015, the company entered into a management agreement with Frank Horkey for a period of 5 years and will issue 350,000 shares of its common stock as consideration and was accounted for on the balance sheet as shares to be issued and was expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $0.60. As of March 31, 2022, all the shares have been issued and the cost has been fully amortized.

 

Free office space

 

The Company has been provided office space by its Chief Executive Officer at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.

 

Due to Related Parties

 

During the six months ended December 31, 2022, the Company incurred management fees to related parties of $60,000 and had been advanced $43,050 for operational expenses by related parties. During the six months ended December 31, 2021 $118,050 was converted to shares to be issued and As of March 31, 2022 the shares remained unissued. As of March 31, 2022 the outstanding balance due for the management fees was $30,000 for the management fees incurred in the three months ended March 31, 2022.

 

During the year ended June 30, 2021 the company converted $598,662 in related party debt, including amounts due for advances and accrued management fees, into 11,380,198 shares of common stock.

 

On August 6, 2021, the Company issued 450,000 shares of its common stock in exchange for $45,000 of payables due to related parties. In addition, as satisfaction of an external Settlement Agreement between Peter Simone/Corporate Capital Group International, LTD and related Parties, the Company issued 1,050,000 Founder's shares originally due to Simone/CCGI to in exchange for $80,000, paid by those related Parties.

 

NOTE 5 – COMMON STOCK

 

On January 1, 2015, the Company entered into a management agreement for a period of 5 years and will issue 350,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (5 years), which resulted in a prepaid consulting expense of $210,000. They were valued on the date of the agreement and the stock price at that time was $.60. For the three months ended March 31, 2022 and 2021 we expensed $0 and $0 respectively. These shares were issued as part of the January resolution referenced below.

 

On January 1, 2015, the Company entered into a management agreement for a period of 2 years and will issue 100,000 shares of its common stock as consideration and is accounted for on the balance sheet as shares to be issued and will be expensed over the life of the contract (2 years), which resulted in a prepaid consulting expense of $60,000. They were valued on the date of the agreement and the Company’s stock price at that time was $.60. For the three months ended March 31, 2022 and 2021 we expensed $0 and $0 respectively. These shares were issued as part of the January resolution referenced below.

 

On January 21, 2020, the Company formally resolved to issue (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 250,000 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500. These shares were issued on September 9, 2020.

 

 
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Table of Contents

 

On March 12, 2020, the Company resolved to issue 300,000 shares of its common stock in connection to professional service providers. These shares were issued on September 9, 2020.

 

On June 24, 2020, the Company resolved to issue 8,900,000 shares of its common stock in connection with the conversion of $473,616 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement, this includes all notes payable, accrued interest and other advances. These shares were issued on September 9, 2020.

 

On September 9, 2020, the Company issued 200,198 shares of its common stock in connection to expenses paid by related parties.

 

In accordance with the terms and provisions of that certain Settlement Agreement dated October 9, 2020 (the “Settlement Agreement”), on November 20, 2020 TREX Acquisition Corp. issued to Squadron Marketing LLC, 400,000 of the Company’s common stock and to Lazarus Asset Management LLC, 400,000 of its common stock and 500,000 shares of its common stock were issued to the estate of a former shareholder. These shares were issued on November 23, 2020.

 

On March 24, 2021 the company issued 980,000 shares of its common stock for advances and payments made on behalf of the company and management services rendered by related parties.

 

On August 6, 2021, the Company issued 450,000 shares of its common stock in exchange for $45,000 of payables due to related parties. In addition, as satisfaction of an external Settlement Agreement between Peter Simone/Corporate Capital Group International, LTD  and related Parties, the Company issued 1,050,000 Founder's shares originally due to Simone/CCGI to in exchange for $80,000, paid by those related Parties.

 

From November 17, 2021 through December 22, 2021 the company entered into subscription agreements for 481,167 shares of its common stock at $.75 per share for a total of $360,875 and also issued 481,167 in common stock warrants at $1.50. As of March 31, 2022 these were accounted for in the shares to be issued.

 

From January 1, 2022 through March 31, 2022 the company entered into subscription agreements for 266,666 shares of its common stock at $.75 per share for a total of $200,000 and also issued 266,666 in common stock warrants at $1.50. As of March 31, 2022 these were accounted for in the shares to be issued.

 

NOTE 6 – WARRANTS

 

On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $.80 per unit. Each Unit shall consist of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.

 

On May 14, 2014, the company entered into a subscription agreement for 157,500 units at $.80 per share for a total of $125,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.

 

On May 14, 2014, the company entered into a subscription agreement for 32,000 units at $.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.

  

On July 14, 2014, the company entered into a subscription agreement for 62,500 units at $.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.

 

 
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Table of Contents

 

The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to redeem the Warrants by returning the Warrant to the Company accompanied by payment of $.80 per share. The warrants were valued using a Black Scholes calculation.

 

The inputs for series A used a price $.59, a strike price range of $.65 – $1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232. 

As of the filing date of this quarterly report, 189,500 A warrants have expired leaving only 125,000 A Warrants and 62,500 B Warrants remaining effective since the Company has yet to consummate a merger.

 

In addition, from November 17, 2021 through December 22, 2021 the company entered into subscription agreements for 481,167 shares of its common stock at $.75 per share for a total of $360,875 and also issued 481,167 in common stock warrants to purchase one (1) share of common stock at $1.50 per warrant.

 

From January 1, 2022 through March 31, 2022 the company entered into subscription agreements for 266,666 shares of its common stock at $.75 per share for a total of $2,000 and also issued 266,666 in common stock warrants at $1.50.

 

On July 1, 2014, the Company entered into management agreements with Squadron Marketing, Inc. and Lazarus Asset Management, LLC for $30,000 each annually to assist the Company in obtaining potential merger candidates, negotiating the merger agreements, drafting, along with the Company’s attorney, offering documents, and assisting with closing the transactions. On July 1, 2021 the agreements were amended to be $60,000 per year. In additions 500,000 warrants were issued and 500,000 will be issued on the year anniversary over the five year term.

 

The following is the outstanding warrant activity:

 

 

 

 Warrants - Common

Share

Equivalents

 

 

Weighted

Average

Exercise

price

 

 

 Warrants exercisable - Common

Share

Equivalents

 

 

Weighted

Average

Exercise

price

 

 

Weighted

average

life in

years

 

Outstanding June 30, 2020

 

 

187,500

 

 

$0.75

 

 

 

187,500

 

 

$0.75

 

 

 

3.67

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

Expired

 

 

-

 

 

$-

 

 

 

-

 

 

 

-

 

 

 

 

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

Outstanding June 30, 2021

 

 

187,500

 

 

$0.75

 

 

 

187,500

 

 

$0.75

 

 

 

3.67

 

Granted

 

 

1,247,833

 

 

 

1.50

 

 

 

1,247,833

 

 

 

1.50

 

 

 

2.92

 

Expired

 

 

-

 

 

$-

 

 

 

-

 

 

 

-

 

 

 

 

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

Outstanding March 31, 2022

 

 

1,435,333

 

 

$1.38

 

 

 

1,435,333

 

 

$1.38

 

 

 

3.04

 

 

NOTE 7 – SUBSEQUENT EVENTS

 

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were no additional subsequent events needed to be disclosed.

 

 
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Table of Contents

 

Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation.

 

FORWARD-LOOKING STATEMENTS

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

  

In December 2019, a novel strain of corona virus (COVID-19) was reported in Wuhan, China and has spread throughout the United States and the rest of the world. The World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.” This contagious disease outbreak, which has not been contained, and is disrupting supply chains and affecting production and sales across a range of industries in United States and other companies as a result of quarantines, facility closures, and travel and logistics restrictions in connection with the outbreak, as well as the worldwide adverse effect to workforces, economies and financial markets, leading to a global economic downturn. Therefore, the Company expects this matter to negatively impact its operating results. However, the related financial impact and duration cannot be reasonably estimated at this time.

 

RESULTS OF OPERATION

 

Three and Nine months ended March 31, 2022 Compared to Three and Nine months ended March 31, 2021

 

During the three months ended March 31, 2022, we had revenue of $26,305 compared to $0 incurred during the three months ended December 31, This change was due to the start up of our crypto mining operation in February 2022.

 

During the three months ended March 31, 2022, we had cost of good sold of$39,654 compared to $0 incurred during the three months ended March 31, 2021, This change was due to the start up of our crypto mining operation in February 2022.

 

Our net loss for the three months ended March 31, 2022 was ($103,882) compared to a net loss of ($43,901) during the December 31, 2021. This was due to the increase in Professional and management fees.

 

During the three months ended March 31, 2022, we incurred operating expenses of $79,963 compared to $43,901 incurred during the three months ended March 31, 2021. This was due to the increase in Professional and management fees.

 

During the three months ended March 31, 2022, we incurred interest expenses of $0 compared to $0 incurred during the three months ended March 31, 2021.

  

Our net loss for the nine months ended March 31, 2022 was ($1,007,174) compared to a net loss of ($421,917) during the March 31, 2021. The increase in net loss was mainly due to an increase in warrants issued for services in 2022.

 

During the nine months ended March 31, 2022, we had revenue of $26,305 compared to $0 incurred during the three months ended March 31, 2021. This change was due to the start up of our crypto mining operation in February 2022

 

 
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Table of Contents

 

During the nine months ended March 31, 2022, we had cost of good sold of$39,654 compared to $0 incurred during the three months ended March 31, 2021, This change was due to the start up of our crypto mining operation in February 2022.

 

During the Nine months ended March 31, 2022, we incurred operating expenses of $1,007,174 compared to $421,917 incurred during the Nine months ended March 31, 2021. The increase in expenses was mainly due to an increase in shares based expense for the warrant issued in the second quarter of 2022. This was due to the increase in Professional fees, share based expense and management fees.

 

During the Nine months ended March 31, 2022, we incurred interest expenses of $0 compared to $0 incurred during the Nine months ended March 31, 2021.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of March 31, 2022, our current assets were $46,334 and our current liabilities were $52,971, which resulted in a working capital deficit of $6,637.

 

As of March 31, 2022, and December 31, 2021, our total liabilities were comprised entirely of current liabilities.

 

Cash Flows from Operating Activities

 

For the Nine months ended March 31, 2022, net cash flows used in operating activities was $103,302 compared to net cash used in operating activity of $0 for the same period in 2021.

 

Cash Flows from Investing Activities

  

For the Nine months ended March 31, 2022, net cash flows used in investing activities was $437,544 compared to $0 for the same period in 2021.

 

Cash Flows from Financing Activities

  

For the Nine months ended March 31, 2022, net cash flows from financing activities was $560,875 compared to $0 for the same period in 2021.

 

PLAN OF OPERATION AND FUNDING

 

We expect that working capital requirements will continue to be funded through a combination of our proceeds from the sales of stock and generation of revenues from acquisitions. Our working capital requirements are expected to increase in line with the growth of our business.

 

Our principal demands for liquidity are to increase business operations and for general corporate purposes. We intend to meet our liquidity requirements, including capital expenditures related to future business operations, and the expansion of our business, through cash flow provided by funds raised through proceeds from the issuance of debt or equity.

 

 
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Table of Contents

 

MATERIAL COMMITMENTS

 

Convertible Debenture

  

As of June 30, 2014, we had a note payable dated June 30, 2010 in the principal amount of $1,253,095. As of March 31, 2016, this note has been either converted to stock or paid. The note payable accrues interest at the rate of 5% per annum; however that interest has been forgiven each year by the note holders. As of September 21, 2014, the note payable balance of $691,926 ($650,000 at June 30, 2013 plus additional advances of $41,926 for the year ended June 30, 2021) has been converted into shares of common stock.

 

PURCHASE OF SIGNIFICANT EQUIPMENT

 

In nine months ended March 31, 2022 we purchased capital equipment valued at $447,544. On December 24, 2021, the company acquired cryptocurrency mining equipment, which was put into service during the three months ended March 31, 2022.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Recently Issued Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position or results of operations upon adoption.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4. Controls and Procedures.

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

We maintain controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon their evaluation of those controls and procedures performed as of the end of the periods covered by this report, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective.

 

 
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Table of Contents

 

MANAGEMENT’S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Our Chief Executive Officer and our Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and

·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our Chief Executive Officer and our Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, management used the criteria set forth by the 1992 Committee of Sponsoring Organizations of the Treadway Commission (“2013 COSO”) in Internal Control — Integrated Framework.

 

Based on our assessment, our Chief Executive Officer and our Chief Financial Officer believe that, as of March 31, 2022, our internal control over financial reporting is not effective based on those criteria, due to the following:

 

·

Deficiencies in Segregation of Duties. Lack of proper segregation of functions, duties and responsibilities with respect to our cash and control over the disbursements related thereto due to our very limited staff, including our accounting personnel. Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.

 

In light of this conclusion and as part of the preparation of this report, we have applied compensating procedures and processes as necessary to ensure the reliability of our financial reporting. Accordingly, management believes, based on its knowledge, that (1) this report does not contain any untrue statement of a material fact or omit to state a material face necessary to make the statements made not misleading with respect to the periods covered by this report, and (2) the financial statements, and other financial information included in this report, fairly present in all material respects our financial condition, results of operations and cash flows for the years and periods then ended.

 

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this report.

 

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

 

There were no significant changes in our internal control over financial reporting during the three months ended March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
7

Table of Contents

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

From time to time, the Company is involved in litigation incidental to the conduct of its business. The Company is presently not involved in any legal proceedings which in the opinion of management are likely to have a material adverse effect on the Company’s consolidated financial position or results of operations.

 

Item 1A. Risk Factors.

 

There have been no material changes in the Company’s risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2021.

 

Item 2. Unregistered Sales of Equity Securities.

 

On January 21, 2020, the Company formally resolved to issue (a) 1,835,835 shares of its common stock in connection with prior Boardwalk convertible debt conversions, (b) 450,000 shares of its common stock in connection with management compensation, (c) 250,000 shares of its common stock to unit subscribers in connection with the failed Kerr transaction, and (d) 350,000 shares of its common stock in connection with a 2018 private sale of 350,000 shares to a related party for $47,500. These shares were issued on September 9, 2020.

 

On March 12. 2020, the Company resolved to issue 300,000 shares of its common stock in connection to professional service providers. These shares were issued on September 9, 2020.

 

On June 24, 2020, the Company resolved to issue 8,900,000 shares of its common stock in connection with the conversion of $473,616 in debt owed to consultants pursuant to a July 1, 2014 consulting agreement, this includes all notes payable, accrued interest and other advances. These shares were issued on September 9, 2020.

 

On September 9, 2020, the Company issued 200,198 shares of its common stock in connection to expenses paid by related parties.

 

In accordance with the terms and provisions of that certain Settlement Agreement dated October 9, 2020 (the “Settlement Agreement”), on November 20, 2020 TREX Acquisition Corp. issued to Squadron Marketing LLC, 400,000 of the Company’s common stock and to Lazarus Asset Management LLC, 400,000 of its common stock and 500,000 shares of its common stock were issued to the estate of a former shareholders. These shares were issued on November 23, 2020.

 

On March 24, 2021 the company issued 980,000 shares of its common stock for advances and payments made on behalf of the company and management services rendered by related parties.

 

On August 6, 2021 the company issued 1,500,000 shares of its common stock for the conversion of $45,000 in related party payables.

 

From November 17, 2021 through December 22, 2021 the company entered into subscription agreements for 481,167 shares of its common stock at $.75 per share for a total of $360,875 and also issued 481,167 in common stock warrants at $1.50. As of March 31, 2022 theses were accounted for in the shares to be issued.

 

From January 1, 2022 through March 31, 2022 the company entered into subscription agreements for 266,666 shares of its common stock at $.75 per share for a total of $200,000 and also issued 266,666 in common stock warrants at $1.50. As of March 31, 2022 theses were accounted for in the shares to be issued.

 

Item 3. Defaults upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

Item 5. Other Information.

 

None.

 

 
8

Table of Contents

 

Item 6. Exhibits.

 

The exhibit listed on the Exhibit Index (following the signatures section of this quarterly report dated March 31, 2022 on Form 10-Q are included, or incorporated by reference, in this three months ended March 31, 2022 Report on Form 10-Q.

 

Exhibit No.

 

Description

 

3.1

 

Articles of Incorporation incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on July 25, 2008

3.3

 

Bylaws, incorporated by reference to Exhibit 3.1 of our Registration Statement on Form S-1 filed on April 18, 2011

31.1

 

Certification of Principal Executive Officer and Principal Financial Officer Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002*

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

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.

 

 
9

Table of Contents

 

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

 

May 23, 2022

By:

/s/ Frank Horkey

 

Frank Horkey

 

Its:

President, Director

 

(Principal Executive Officer)

 

May 23, 2022

By:

/s/ Frank Horkey

 

Frank Horkey

 

Its:

Chief Financial Officer, Secretary, Treasurer, Director

 

(Principal Financial and Accounting Officer)

 

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

May 23, 2022

By:

/s/ Frank Horkey

 

Frank Horkey

 

Its:

Director

 

 
10

 



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