KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints CEO its true and lawful attorney-in-fact, with full power of substitution and resubstitution for its and in its name, place and stead, in any and all capacities to sign any and all amendments including post-effective amendments to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or her substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.
19100 S. Susana Rd.
Notes to the Audited Consolidated Financial Statements
June 30, 2018
Note 1: Organization and Basis of Presentation
Apex Resources Inc (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.
Sales of Steam Room Products
Prior to April 7, 2018, the Company was engaged in the business of selling high quality stream room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company’s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.
On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the “SPA”). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: “Debt Discharge” and Note 8: “Change in Control”, for additional details.
After the end of the period, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.
Data Center Hosting Services
The Company entered into an agreement dated April 26, 2018 (the “ADC Agreement”), with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which the Company will contribute $2.0 million to a new company, Apex Data Center Inc. (“ADC”) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin will retain 20% of the equity of ADC. ADC will build a “mining pool”, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. While the Company does not currently own any rig machine, it is expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC’s facilities in the first phase. The Company will either host additional machines for other third parties or raise the capital to acquire additional machines. The target is to host a total of 10,000 rig machines in the facility in the next 12 months.
Under the ADC agreement, the Company has agreed to invest a total of $2 million for the construction and operation of the new ADC data center. Puxin will offer its expertise and assist the Company to design, budget, construct, and manage the day-to-day operations of the new ADC data center. Upon execution of the ADC Agreement, the Company is required to provide the first $280,000 of its total $2 million investment to ADC as working capital for development of the new ADC data center. To date, the Company has provided $20,000 of the required working capital.
If the Company fails to make its total capital contribution of $2 million, Puxin may increase its capital contribution for any unfulfilled amount, diluting the Company’s ownership interest in ADC proportionately. Alternatively, the parties may agree to admit a third party as a new investor, with the resulting dilution in ownership of ADC being borne completely by the Company.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
The Company’s consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in the U.S. dollars. The Company’s fiscal year-end is June 30.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the consolidated financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.
The accompanying consolidated financial statements include the consolidated accounts of Apex Resources Inc. and its 80%-owned subsidiary Apex Data Center Inc., which was incorporated on April 24, 2018. Significant intercompany transactions and balances have been eliminated. The consolidated financial statements and related disclosures as of June 30, 2018 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources, Inc. and its subsidiary.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
The preparation of consolidated 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 consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2018.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
Development Stage Entity
The Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:
|
a.
|
the customer has prepaid for the product;
|
|
b.
|
the product has been shipped from either Apex Resources or one of our suppliers; and
|
|
c.
|
the product has been delivered and signed for by the customer as evidenced by the shipping company.
|
The company is the primary obligor in the sales transaction. We are able to select suppliers based upon the customer’s needs, we do not have a key supplier, we have sales agreements with multiple suppliers and we are able to set the price of the product to the customer. Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. The company does not believe the 30 day exchange or refund will have a material impact on our revenue recognition as any product which has a defect in manufacturing will be returned to the supplier for replacement or refund for the customer based upon pursuant law and the Uniform Commercial Code.
Based on the above, the Company determined that the revenue recognition for the sales is in accordance with the FASB ASC 605-15-25-1.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. The Company has reviewed the recently issued pronouncements. During this review the Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.
On June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915):
Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation
,
which removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. The Company has adopted the amendment as of fiscal year ended June 30, 2015.
There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of June 30, 2018, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.
Note 3: Going Concern
The accompanying consolidated financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the consolidated financial statements were issued.
For the period from inception (March 31, 2015) to June 30, 2018, the Company had an accumulated net loss of $122,725. The Company also had a negative net worth of $75,565 as of June 30, 2018. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
Note 4: Concentrations
Our steam room product sales were concentrated with only one customer. Sales were made without collateral and the credit-related losses were insignificant or non-existent. Accordingly, there was no provision made to include an allowance for doubtful accounts.
Note 5: Legal Matters
The Company has no known legal issues pending.
Note 6: Debt
In June 2015, the Company’s former Director and President Tadas Dabasinkas made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.
As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, “Change in Control”, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of June 30, 2018, was $0.
Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and June 30, 2018, a principal shareholder Harbor Torrance Family Trust loaned a total $155,000 to the Company as working capital. The Company has not made any repayment to the $155,000 loan as of June 30, 2018. The loan is payable on demand and carries an interest rate of 0%.
Note 7: Capital Stock
The Company has 75,000,000 shares of common stock with a par value of $0.001 per share.
On June 15, 2015, the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000. As of June 30, 2018, there were no outstanding stock options or warrants.
In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its recent offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.
Note 8: Fixed Assets
On June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to March 23, 2018, the Company utilized the space as its primary office.
Fixed assets are stated at cost. The Company utilizes straight-line depreciation over the estimated useful life of the asset.
Land – 0 years
Buildings – 15 years
Office Equipment – 7 years
For the year ended June 30, 2018, the Company recorded depreciation expense of $289 for the building.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
Note 9: Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Apex Resources Inc. was registered in the State of Nevada and has been subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.
As of June 30, 2018, the Company had net operating loss carry forwards of approximately $122,725 that may be available to reduce future years’ taxable income through 2035 and 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Provision (benefit) of income taxes for the years ended June 30, 2018 and 2017, were $1,298 and $0, respectively. The income tax benefit for the year ended June 30, 2018, results from a March 31, 2018 reversal of previously accrued income tax payable in the amount of $1,298.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a 100% valuation allowance.
Apex Resources Inc
Notes to the Audited Consolidated Financial Statements
June 30, 2018
|
|
Year Ended
June 30,
2018
|
|
|
Year Ended
June 30,
2017
|
|
|
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Net operating tax carryforward
|
|
$
|
122,725
|
|
|
$
|
50,394
|
|
Tax rate
|
|
|
21
|
%
|
|
|
34
|
%
|
Gross deferred tax assets
|
|
|
25,772
|
|
|
|
17,134
|
|
Valuation allowance
|
|
|
(25,772
|
)
|
|
|
(17,134
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Note 10: Related Party Transactions
The Company has related party loan transactions involving the Company’s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.
Note 11: Change in Control
On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.
Note 12: Subsequent Events
The Company has evaluated events subsequent through the date these consolidated financial statements have been issued, January 11, 2019, to assess the need for potential recognition or disclosure in this prospectus. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the consolidated financial statements.
|
|
September 30,
2018
|
|
|
June 30,
2018
|
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,964
|
|
|
$
|
71,499
|
|
Prepaid expense
|
|
|
1,145
|
|
|
|
1,145
|
|
Total Current Assets
|
|
|
16,109
|
|
|
|
72,644
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
Building
|
|
|
-
|
|
|
|
4,328
|
|
Accumulated Depreciation - Building
|
|
|
-
|
|
|
|
(865
|
)
|
Land
|
|
|
-
|
|
|
|
4,328
|
|
Total Fixed Assets
|
|
|
-
|
|
|
|
7,791
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
16,109
|
|
|
$
|
80,435
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
|
10,125
|
|
|
|
1,000
|
|
Loan from Shareholders
|
|
|
252,648
|
|
|
|
155,000
|
|
Total Current Liabilities
|
|
|
262,773
|
|
|
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
262,773
|
|
|
$
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 75,000,000 shares authorized; 5,080,000 shares issued and outstanding
|
|
|
5,080
|
|
|
|
5,080
|
|
Additional paid-in-capital
|
|
|
45,851
|
|
|
|
45,851
|
|
Deficit accumulated during the development stage
|
|
|
(293,824
|
)
|
|
|
(122,725
|
)
|
Total Stockholders’ Deficit - Apex Resources
|
|
|
(242,893
|
)
|
|
|
(71,794
|
)
|
Noncontrolling interests
|
|
|
(3,771
|
)
|
|
|
(3,771
|
)
|
Total Stockholders’ Deficit
|
|
|
(246,664
|
)
|
|
|
(75,565
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
$
|
16,109
|
|
|
$
|
80,435
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
|
|
For the
Three Months
Ended
|
|
|
For the
Three Months
Ended
|
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
30,108
|
|
Cost of Goods Sold
|
|
|
-
|
|
|
|
29,854
|
|
Gross Profit
|
|
|
-
|
|
|
|
254
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
171,050
|
|
|
|
1,521
|
|
Depreciation
|
|
|
-
|
|
|
|
72
|
|
Total Operating Expenses
|
|
|
171,050
|
|
|
|
1,593
|
|
Net Loss from Operations
|
|
|
(171,050
|
)
|
|
|
(1,339
|
)
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
(49
|
)
|
|
|
-
|
|
Loss Before Income Taxes
|
|
|
(171,099
|
)
|
|
|
(1,339
|
)
|
|
|
|
|
|
|
|
|
|
Provision for (Benefit of) Income Taxes
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) - Current
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Loss including noncontrolling interests
|
|
|
171,099
|
|
|
|
(1,339
|
)
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net Loss attributable to Apex Resources Inc.
|
|
$
|
(171,099
|
)
|
|
$
|
(1,339
|
)
|
|
|
|
|
|
|
|
|
|
Loss per Common Share:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
|
|
For the
Three Months
Ended
|
|
|
For the
Three Months
Ended
|
|
|
|
September 30,
2018
|
|
|
September 30,
2017
|
|
Operating Activities
|
|
|
|
|
|
|
Net Loss including noncontrolling interests
|
|
|
(171,099
|
)
|
|
|
(1,339
|
)
|
Add: Loss on asset held for sale
|
|
|
7,791
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
72
|
|
Accounts payable
|
|
|
9,125
|
|
|
|
(1,000
|
)
|
Net cash used in operating activities
|
|
|
(154,183
|
)
|
|
|
(2,267
|
)
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Loan from shareholder
|
|
|
97,648
|
|
|
|
1,500
|
|
Net cash provided by financing activities
|
|
|
97,648
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
$
|
(56,535
|
)
|
|
$
|
(767
|
)
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of the period
|
|
|
71,499
|
|
|
|
2,756
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of the period
|
|
$
|
14,964
|
|
|
$
|
1,989
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
49
|
|
|
$
|
-
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
Note 1: Organization and Basis of Presentation
Apex Resources, Inc. (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.
Sales of Steam Room Products
Prior to April 7, 2018, the Company was engaged in the business of selling high quality steam room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company’s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.
On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the “SPA”). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: “Debt Discharge” and Note 11: “Change in Control”, for additional details.
After the end of the period ending September 30, 2018, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.
Data Center Hosting Services
The Company entered into an agreement dated April 26, 2018 (the “ADC Agreement”) with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which the Company is obligated to contribute $2.0 million to a new company, Apex Data Center Inc. (“ADC”) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin retains 20% of the equity of ADC. ADC will build a “mining pool”, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in facilities to be built in one or more locations that are currently being evaluated by the Company. While the Company does not currently own any rig machine, it is expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC’s facilities in the first phase. We will either host additional machines for other third parties or raise the capital to acquire additional machines. The target is to host a total of 10,000 rig machines in the facility in the next 12 months. As of September 30, 2018, the Company is still evaluating various options and has not finalized on the selection of the location of the facilities.
Under the ADC agreement, the Company has agreed to invest a total of $2 million for the construction and operation of the new ADC data center. Puxin will offer its expertise and assist the Company to design, budget, construct, and manage the day-to-day operations of the new ADC data center. Upon execution of the ADC Agreement, the Company is required to provide the first $280,000 of its total $2 million investment to ADC as working capital for development of the new ADC data center. To date, the Company has provided $20,000 of the required working capital amount. The Company intends to make the total capital contribution of $2 million in the next 12 months.
If the Company fails to make its total capital contribution of $2 million, Puxin may increase its capital contribution for any unfulfilled amount, diluting the Company’s ownership interest in ADC proportionately. Alternatively, the parties may agree to admit a third party as a new investor, with the resulting dilution in ownership of ADC being borne completely by the Company.
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
The Company’s financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in the U.S. dollars. The Company’s fiscal year-end is June 30.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.
The Financial Statements and related disclosures as of September 30, 2018 are reviewed pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources, Inc.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
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 period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Bank overdraft, if any, is presented as a current liability in the balance sheet.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2018.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal as of September 30, 2018.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:
|
(1)
|
persuasive evidence of an arrangement exists;
|
|
|
|
|
(2)
|
delivery has occurred;
|
|
|
|
|
(3)
|
the selling price is fixed and determinable;
|
|
|
|
|
(4)
|
collectability is reasonably assured; and
|
|
|
|
|
(5)
|
the amount of future return can be reasonably estimated.
|
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
Recent Accounting Pronouncements
Management has reviewed all the recently issued, but not yet effective, accounting pronouncements, and does not believe any of these pronouncements will have a material impact on the Company.
Unaudited Financial Statements
The balance sheet as of September 30, 2018, the statements of operations and cash flows for the three-month period ended September 30, 2018, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three months ended September 30, 2018 are not necessarily indicative of results expected for the full year ending June 30, 2019. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at September 30, 2018 have been made.
It is suggested that these statements be read in conjunction with the June 30, 2018 audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K and related amendments filed with the Securities and Exchange Commission.
Note 3: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the financial statements were issued.
For the period from its inception on March 31, 2015 to September 30, 2018, the Company had an accumulated net loss of $286,033. The Company also has a negative net worth of $235,102 as of September 30, 2018. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next twelve months with loans from related parties or the issuance of equity and debt securities.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
Note 4: Concentrations
Our steam room product sales were concentrated with only one customer. Although sales were made without collateral, management believes the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.
Note 5: Legal Matters
The Company has no known legal proceedings pending.
Note 6: Debt
In June 2015, the Company’s former Director and President Tadas Dabasinkas made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.
As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, “Change in Control”, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of September 30, 2018, was $0.
Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and September 30, 2018, a principal shareholder Harbor Torrance Family Trust made advances and loans (net of repayments) in the total amount of $252,648 to the Company as working capital. The loan from Harbor Torrance Family Trust is payable on demand and carries an interest rate of 0%.
Note 7: Capital Stock
As of September 30, 2018 the Company has 75,000,000 shares of common stock, par value of $0.001 per share, authorized.
On June 15, 2015 the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its then-sole Director. The Company received aggregate gross proceeds of $4,000. As of September 30, 2018 there were no outstanding stock options or warrants.
In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its recent offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.
Note 8: Fixed Assets
In June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to April 7, 2018 the Company utilized the space as its principal office to conduct the Company’s former steam room products sales activities. As the Company discontinued the steam room products sales activities on April 7, 2018, the office in Lithuania is treated as an asset held for sale under ASC 250-45 and ASC 360-10 post-April 6, 2018. Based on the analysis of the management, the sale of the land and the building is not likely to occur. Thus, management decided to write off the fixed assets, i.e. $7,791 for the period ended September 30, 2018.
Apex Resources, Inc.
Notes to the Condensed Financial Statements
September 30, 2018
Note 9: Income Taxes
Apex Resources Inc. is registered in the State of Nevada and is subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.
As of September 30, 2018, the Company had net operating loss carry forwards of approximately $293,824that may be available to reduce future years’ taxable income through 2035 and 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Benefit of income taxes for the three-month periods ended September 30, 2018 and 2017 were $0 and $0, respectively.
Note 10: Related Party Transactions
The Company has related party loan transactions involving the Company’s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.
Note 11: Change in Control
On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.
Note 12: Subsequent Events
The Company has evaluated events subsequent through the date these consolidated financial statements have been issued, February 20, 2019, to assess the need for potential recognition or disclosure in this prospectus. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the consolidated financial statements.
APEX RESOURCES INC
Condensed Consolidated Balance Sheets
(Stated in U.S. Dollars)
|
|
December 31,
2018
|
|
|
June 30,
2018
|
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
-
|
|
|
$
|
71,499
|
|
Prepaid expense
|
|
|
1,145
|
|
|
|
1,145
|
|
Security Deposit
|
|
|
51,781
|
|
|
|
-
|
|
Total Current Assets
|
|
|
52,926
|
|
|
|
72,644
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
Building
|
|
|
-
|
|
|
|
4,328
|
|
Accumulated Depreciation - Building
|
|
|
-
|
|
|
|
(865
|
)
|
Land
|
|
|
-
|
|
|
|
4,328
|
|
Total Fixed Assets
|
|
|
-
|
|
|
|
7,791
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
52,926
|
|
|
$
|
80,435
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Bank Overdraft
|
|
|
12,115
|
|
|
|
-
|
|
Accounts Payable
|
|
|
13,552
|
|
|
|
1,000
|
|
Loan from Related Party
|
|
|
345,648
|
|
|
|
155,000
|
|
Total Current Liabilities
|
|
|
371,315
|
|
|
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
371,315
|
|
|
$
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 75,000,000 shares authorized; 5,080,000 shares issued and outstanding
|
|
|
5,080
|
|
|
|
5,080
|
|
Additional paid-in-capital
|
|
|
45,851
|
|
|
|
45,851
|
|
Deficit accumulated during the development stage
|
|
|
(365,549
|
)
|
|
|
(122,725
|
)
|
Total Stockholders’ Deficit - Apex Resources
|
|
|
(314,618
|
)
|
|
|
(71,794
|
)
|
Noncontrolling interests
|
|
|
(3,771
|
)
|
|
|
(3,771
|
)
|
Total Stockholders’ Deficit
|
|
|
(318,389
|
)
|
|
|
(75,565
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT
|
|
$
|
52,926
|
|
|
$
|
80,435
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
$
|
30,366
|
|
|
$
|
-
|
|
|
$
|
60,474
|
|
Cost of Goods Sold
|
|
|
-
|
|
|
|
20,989
|
|
|
|
-
|
|
|
|
50,843
|
|
Gross Profit
|
|
$
|
-
|
|
|
|
9,377
|
|
|
|
-
|
|
|
|
9,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
71,724
|
|
|
|
1,627
|
|
|
|
242,774
|
|
|
|
3,148
|
|
Depreciation
|
|
|
-
|
|
|
|
72
|
|
|
|
-
|
|
|
|
144
|
|
Total Operating Expenses
|
|
|
71,724
|
|
|
|
1,699
|
|
|
|
242,774
|
|
|
|
3,292
|
|
Net Income (Loss) from Operations
|
|
|
(71,724
|
)
|
|
|
7,678
|
|
|
|
(242,774
|
)
|
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
49
|
|
|
|
-
|
|
Income (Loss) Before Income Taxes
|
|
|
(71,724
|
)
|
|
|
7,678
|
|
|
|
(242,823
|
)
|
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (Benefit of) Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) - Current
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) including noncontrolling interests
|
|
|
(71,724
|
)
|
|
|
7,678
|
|
|
|
(242,823
|
)
|
|
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to Apex Resources Inc.
|
|
$
|
(71,724
|
)
|
|
$
|
7,678
|
|
|
$
|
(242,823
|
)
|
|
$
|
6,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
Operating Activities
|
|
|
|
|
|
|
Net Income (Loss) including noncontrolling interests
|
|
|
(242,823
|
)
|
|
|
6,339
|
|
Add: Loss on asset held for sale
|
|
|
7,790
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
144
|
|
Accounts payable
|
|
|
12,552
|
|
|
|
(10,000
|
)
|
Accrued expense
|
|
|
|
|
|
|
(1,000
|
)
|
Security deposit
|
|
|
(51,781
|
)
|
|
|
|
|
Net cash used in operating activities
|
|
|
(274,262
|
)
|
|
|
(4,517
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Loan from related party
|
|
|
190,648
|
|
|
|
2,000
|
|
Net cash provided by financing activities
|
|
|
190,648
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(83,614
|
)
|
|
$
|
(2,517
|
)
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of the period
|
|
|
71,499
|
|
|
|
2,756
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of the period
|
|
$
|
(12,115
|
)
|
|
$
|
239
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
49
|
|
|
$
|
-
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash transactions:
|
|
|
|
|
|
|
|
|
Discharged loan from Director converted to additional paid-in capital
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
Note 1: Organization and Basis of Presentation
Apex Resources, Inc. (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.
Sales of Steam Room Products
Prior to April 7, 2018, the Company was engaged in the business of selling high quality steam room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company’s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.
On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the “SPA”). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: “Debt Discharge” and Note 11: “Change in Control”, for additional details.
After the end of the period ending June 30, 2018, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.
Data Center Hosting Services
The Company entered into an agreement dated April 26, 2018 (the “ADC Agreement”) with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which the Company is obligated to contribute $2.0 million to a new company, Apex Data Center Inc. (“ADC”) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin retains 20% of the equity of ADC. ADC will build a “mining pool”, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in facilities to be built in one or more locations that are currently being evaluated by the Company. While the Company does not currently own any rig machine, it is expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC’s facilities in the first phase. We will either host additional machines for other third parties or raise the capital to acquire additional machines. The target is to host a total of 10,000 rig machines in the facility in the next 12 months. As of December 31, 2018, the Company was still evaluating various options and had not finalized on the selection of the location of the facilities.
Under the ADC agreement, the Company has agreed to invest a total of $2 million for the construction and operation of the new ADC data center. Puxin will offer its expertise and assist the Company to design, budget, construct, and manage the day-to-day operations of the new ADC data center. Upon execution of the ADC Agreement, the Company is required to provide the first $280,000 of its total $2 million investment to ADC as working capital for development of the new ADC data center. As of the date of the filing of this Form 10-Q, the Company has provided $20,000 of the required working capital amount. The Company intends to make the total capital contribution of $2 million in the next 12 months.
If the Company fails to make its total capital contribution of $2 million, Puxin may increase its capital contribution for any unfulfilled amount, diluting the Company’s ownership interest in ADC proportionately. Alternatively, the parties may agree to admit a third party as a new investor, with the resulting dilution in ownership of ADC being borne completely by the Company.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
The Company’s financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in the U.S. dollars. The Company’s fiscal year-end is June 30.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.
The Financial Statements and related disclosures as of December 31, 2018 are reviewed pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources, Inc.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
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 period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Bank overdraft, if any, is presented as a current liability in the balance sheet.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2018.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal as of December 31, 2018.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:
|
(1)
|
persuasive evidence of an arrangement exists;
|
|
|
|
|
(2)
|
delivery has occurred;
|
|
|
|
|
(3)
|
the selling price is fixed and determinable;
|
|
|
|
|
(4)
|
collectability is reasonably assured; and
|
|
|
|
|
(5)
|
the amount of future return can be reasonably estimated.
|
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
Recent Accounting Pronouncements
Management has reviewed all the recently issued, but not yet effective, accounting pronouncements, and does not believe any of these pronouncements will have a material impact on the Company.
Unaudited Financial Statements
The balance sheet as of December 31, 2018, the statements of operations and cash flows for the six-month period ended December 31, 2018, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the six months ended December 31, 2018 are not necessarily indicative of results expected for the full year ending June 30, 2019. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at December 31, 2018 have been made.
It is suggested that these statements be read in conjunction with the June 30, 2018 audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K and related amendments filed with the Securities and Exchange Commission.
Note 3: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the financial statements were issued.
For the period from its inception on March 31, 2015 to December 31, 2018, the Company had an accumulated net loss of $365,549. The Company also has a negative net worth of $314,618 as of December 31, 2018. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next twelve months with loans from related parties or the issuance of equity and debt securities.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
Note 4: Concentrations
Our steam room product sales were concentrated with only one customer. Although sales were made without collateral, management believes the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.
Note 5: Legal Matters
The Company has no known legal proceedings pending.
Note 6: Debt
In June 2015, the Company’s former Director and President Tadas Dabasinkas made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.
As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, “Change in Control”, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of December 31, 2018, was $0.
Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and December 31, 2018, a principal shareholder Harbor Torrance Family Trust made advances and loans (net of repayments) in the total amount of $345,648 to the Company as working capital. The loan from Harbor Torrance Family Trust is payable on demand and carries an interest rate of 0%.
Note 7: Capital Stock
As of December 31, 2018, the Company had 75,000,000 shares of common stock, par value of $0.001 per share, authorized.
On June 15, 2015, the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its then-sole Director. The Company received aggregate gross proceeds of $4,000. As of December 31, 2018, there were no outstanding stock options or warrants.
In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its recent offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.
Note 8: Fixed Assets
In June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to April 7, 2018, the Company utilized the space as its principal office to conduct the Company’s former steam room products sales activities. As the Company discontinued the steam room products sales activities on April 7, 2018, the office in Lithuania is treated as an asset held for sale under ASC 250-45 and ASC 360-10 post-April 6, 2018. Based on the analysis of the management, the sale of the land and the building is not likely to occur. Thus, management wrote off the fixed assets, i.e. $7,790 for the period ended September 30, 2018.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
December 31, 2018
Note 9: Income Taxes
Apex Resources Inc. is registered in the State of Nevada and is subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.
As of December 31, 2018, the Company had net operating loss carry forwards of approximately $365,549 that may be available to reduce future years’ taxable income through 2035 and 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Benefit of income taxes for the six-month periods ended December 31, 2018 and 2017 were $0 and $0, respectively.
Note 10: Related Party Transactions
The Company has related party loan transactions involving the Company’s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.
Note 11: Change in Control
On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.
Note 12: Subsequent Events
The Company has evaluated events subsequent through the date these consolidated financial statements have been issued, April 9, 2019, to assess the need for potential recognition or disclosure in this prospectus. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the consolidated financial statements.
|
|
March 31,
2019
|
|
|
June 30,
2018
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13,351
|
|
|
$
|
71,499
|
|
Prepaid expense
|
|
|
1,145
|
|
|
|
1,145
|
|
Total Current Assets
|
|
|
14,496
|
|
|
|
72,644
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
Building
|
|
|
-
|
|
|
|
4,328
|
|
Accumulated depreciation - Building
|
|
|
-
|
|
|
|
(865
|
)
|
Land
|
|
|
-
|
|
|
|
4,328
|
|
Security deposit
|
|
|
55,751
|
|
|
|
-
|
|
Total Fixed Assets
|
|
|
55,751
|
|
|
|
7,791
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
70,247
|
|
|
$
|
80,435
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
57,574
|
|
|
|
1,000
|
|
Payroll Tax Payable
|
|
|
5,332
|
|
|
|
-
|
|
Loan from related party
|
|
|
508,913
|
|
|
|
155,000
|
|
Total Current Liabilities
|
|
|
571,819
|
|
|
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
571,819
|
|
|
$
|
156,000
|
|
|
|
|
|
|
|
|
|
|
Stockholders Deficit
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 75,000,000 shares authorized; 5,080,000 shares issued and outstanding
|
|
|
5,080
|
|
|
|
5,080
|
|
Additional paid-in-capital
|
|
|
45,851
|
|
|
|
45,851
|
|
Deficit accumulated during the development stage
|
|
|
(548,732
|
)
|
|
|
(122,725
|
)
|
Total Stockholders Equity (Deficit) - Apex Resources
|
|
|
(497,801
|
)
|
|
|
(71,794
|
)
|
Noncontrolling interests
|
|
|
(3,771
|
)
|
|
|
(3,771
|
)
|
Total Stockholders Deficit
|
|
|
(501,572
|
)
|
|
|
(75,565
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
|
|
$
|
70,247
|
|
|
$
|
80,435
|
|
The accompanying notes are an integral part of these consolidated financial statements
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
|
|
|
|
|
|
|
$
|
60,474
|
|
Cost of Revenue
|
|
|
-
|
|
|
|
|
|
|
|
|
|
50,843
|
|
Gross Profit
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
182,811
|
|
|
|
1,458
|
|
|
|
425,585
|
|
|
|
4,606
|
|
Depreciation
|
|
|
-
|
|
|
|
72
|
|
|
|
-
|
|
|
|
216
|
|
Total Operating Expenses
|
|
|
182,811
|
|
|
|
1,530
|
|
|
|
425,585
|
|
|
|
4,822
|
|
Net Income (Loss) from Operations
|
|
|
(182,811
|
)
|
|
|
(1,530
|
)
|
|
|
(425,585
|
)
|
|
|
4,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
373
|
|
|
|
-
|
|
|
|
422
|
|
|
|
-
|
|
Income (Loss) Before Income Taxes
|
|
|
(183,184
|
)
|
|
|
(1,530
|
)
|
|
|
(426,007
|
)
|
|
|
4,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for (Benefit of) Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) - Current
|
|
|
-
|
|
|
|
(1,298
|
)
|
|
|
-
|
|
|
|
(1,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) including noncontrolling interests
|
|
|
(183,184
|
)
|
|
|
(232
|
)
|
|
|
(426,007
|
)
|
|
|
6,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to noncontrolling interests
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) attributable to Apex Resources Inc.
|
|
$
|
(183,184
|
)
|
|
$
|
(232
|
)
|
|
$
|
(426,007
|
)
|
|
$
|
6,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) per Common Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
|
|
5,080,000
|
|
The accompanying notes are an integral part of these consolidated financial statements
APEX RESOURCES INC
Condensed Consolidated Statements of Changes in Stockholders Equity (Deficit)
(Unaudited)
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Non
|
|
|
Total
|
|
|
|
No. of
|
|
|
Common
|
|
|
Paid In
|
|
|
Accumulated
|
|
|
Controlling
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Stock
|
|
|
capital
|
|
|
Deficit
|
|
|
Interest
|
|
|
Equity (Deficit)
|
|
Balance as of July 1, 2017
|
|
|
5,080,000
|
|
|
$
|
5,080
|
|
|
$
|
42,120
|
|
|
$
|
(50,394
|
)
|
|
$
|
-
|
|
|
$
|
(3,194
|
)
|
Stockholder contribution (change in control)
|
|
|
-
|
|
|
|
-
|
|
|
|
3,731
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,731
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,107
|
|
|
|
-
|
|
|
|
6,107
|
|
Balance as of March 31, 2018
|
|
|
5,080,000
|
|
|
|
5,080
|
|
|
|
45,851
|
|
|
|
(44,287
|
)
|
|
|
-
|
|
|
|
6,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of July 1, 2018
|
|
|
5,080,000
|
|
|
|
5,080
|
|
|
|
45,851
|
|
|
|
(122,725
|
)
|
|
|
(3,771
|
)
|
|
|
(75,565
|
)
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(426,007
|
)
|
|
|
-
|
|
|
|
(426,007
|
)
|
Balance as of March 31, 2019
|
|
|
5,080,000
|
|
|
$
|
5,080
|
|
|
$
|
45,851
|
|
|
$
|
(548,732
|
)
|
|
$
|
(3,771
|
)
|
|
$
|
(501,572
|
)
|
The accompanying notes are an integral part of these consolidated financial statements
APEX RESOURCES INC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Stated in U.S. Dollars)
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Operating Activities
|
|
|
|
|
|
|
Net Income (Loss) including noncontrolling interests
|
|
|
(426,007
|
)
|
|
|
6,107
|
|
Add: Loss on asset held for sale
|
|
|
7,791
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
-
|
|
|
|
216
|
|
Bank overdraft
|
|
|
-
|
|
|
|
14
|
|
Prepaid purchase
|
|
|
-
|
|
|
|
(32,836
|
)
|
Accounts payable
|
|
|
56,574
|
|
|
|
(9,503
|
)
|
Accrued expense
|
|
|
-
|
|
|
|
(1,238
|
)
|
Payroll tax payable
|
|
|
5,332
|
|
|
|
|
|
Unearned revenue
|
|
|
-
|
|
|
|
33,790
|
|
Security deposit
|
|
|
(55,751
|
)
|
|
|
-
|
|
Income tax payable
|
|
|
-
|
|
|
|
(1,298
|
)
|
Net cash used in operating activities
|
|
|
(412,060
|
)
|
|
|
(4,748
|
)
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds from loan from director
|
|
|
-
|
|
|
|
2,500
|
|
Loan from related parties
|
|
|
353,913
|
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
353,913
|
|
|
|
2,500
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(58,148
|
)
|
|
$
|
(2,248
|
)
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at beginning of the period
|
|
|
71,499
|
|
|
|
2,756
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of the period
|
|
$
|
13,351
|
|
|
$
|
507
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
373
|
|
|
$
|
-
|
|
Taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash transactions:
|
|
|
|
|
|
|
|
|
Discharged loan from Director converted to additional paid-in capital
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these consolidated financial statements
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
Note 1: Organization and Basis of Presentation
Apex Resources, Inc. (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.
Sales of Steam Room Products
Prior to April 7, 2018, the Company was engaged in the business of selling high quality steam room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company’s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.
On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the “SPA”). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: “Debt Discharge” and Note 11: “Change in Control”, for additional details.
After the end of the period ending June 30, 2018, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.
Data Center Hosting Services
The Company entered into an agreement dated April 26, 2018 (the “ADC Agreement”) with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which the Company is obligated to contribute $2.0 million to a new company, Apex Data Center Inc. (“ADC”) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin retains 20% of the equity of ADC. ADC will build a “mining pool”, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in facilities to be built in one or more locations that are currently being evaluated by the Company. While the Company does not currently own any rig machine, it is expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC’s facilities in the first phase. We will either host additional machines for other third parties or raise the capital to acquire additional machines. The target is to host a total of 10,000 rig machines in the facility in the next 12 months. As of March 31, 2019, the Company was still evaluating various options and had not finalized on the selection of the location of the facilities.
Under the ADC agreement, the Company has agreed to invest a total of $2 million for the construction and operation of the new ADC data center. Puxin will offer its expertise and assist the Company to design, budget, construct, and manage the day-to-day operations of the new ADC data center. Upon execution of the ADC Agreement, the Company is required to provide the first $280,000 of its total $2 million investment to ADC as working capital for development of the new ADC data center. As of the date of the filing of this Form 10-Q, the Company has provided $20,000 of the required working capital amount. The Company intends to make the total capital contribution of $2 million in the next 12 months.
Due to the lack of progress in the implementation of the business plan contemplated in the ADC Agreement, the Company and Puxin agreed to terminate the ADC Agreement on April 1, 2019. See Note 12: Subsequent Events for details of the terms of termination.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
The Company’s financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in the U.S. dollars. The Company’s fiscal year-end is June 30.
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.
The Financial Statements and related disclosures as of March 31, 2019 are reviewed pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources, Inc.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
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 period. Actual results could differ from those estimates.
Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Bank overdraft, if any, is presented as a current liability in the balance sheet.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2019.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
Leases
In February 2016, the FAS issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, ”Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”) and ASU 2018-10, ”Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company’s non-cancellable leases consist of an office leases of 6,543 square feet expiring in March 2024. The Company is currently assessing and implementing the new standard, including classification of leases, identifying lease and non-lease components, discount rates, and the practical expedients that are available under the guidance. The Company expects to complete the assessment of the impacts of adopting the new standard by the end of the June 30, 2019 fiscal year.
Basic and Diluted Loss Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal as of March 31, 2019.
Revenue Recognition
The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:
|
(1)
|
persuasive evidence of an arrangement exists;
|
|
|
|
|
(2)
|
delivery has occurred;
|
|
|
|
|
(3)
|
the selling price is fixed and determinable;
|
|
|
|
|
(4)
|
collectability is reasonably assured; and
|
|
|
|
|
(5)
|
the amount of future return can be reasonably estimated.
|
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
Unaudited Financial Statements
The balance sheet as of March 31, 2019, the statements of operations and cash flows for the nine-month period ended March 31, 2019, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the nine months ended March 31, 2019 are not necessarily indicative of results expected for the full year ending June 30, 2019. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at March 31, 2019 have been made.
It is suggested that these statements be read in conjunction with the June 30, 2018 audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K and related amendments filed with the Securities and Exchange Commission.
Note 3: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the financial statements were issued.
For the period from its inception on March 31, 2015 to March 31, 2019, the Company had an accumulated net loss of $548,732. The Company also has a negative net worth of $497,801 as of March 31, 2019. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next twelve months with loans from related parties or the issuance of equity and debt securities.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
Note 4: Lease Commitment
The Company entered into a 63-month operating lease for its office space in the City of Industry on January 1, 2019. California. The payment obligations of the lease are guaranteed by Harbor Green Grains, LP, an entity controlled by one of the Company’s majority shareholders. Future minimum lease payment under the lease are as follows:
For the 12-month period ending
|
|
March 31
|
|
2020
|
|
$
|
177,296
|
|
2021
|
|
|
182,615
|
|
2022
|
|
|
205,610
|
|
2023
|
|
|
211,778
|
|
2024
|
|
|
218,131
|
|
Total Future Minimum Lease Payment
|
|
$
|
995,430
|
|
Rent expense for the three and nine months ended March 31, 2019 was $32,061 and $32,061, respectively. No rent expense was incurred in the comparable periods in 2018.
Note 5: Legal Matters
The Company has no known legal proceedings pending.
Note 6: Debt
In June 2015, the Company’s former Director and President Tadas Dabasinkas made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.
As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, “Change in Control”, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of March 31, 2019, was $0.
Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and March 31, 2019, a principal shareholder Harbor Torrance Family Trust made advances and loans (net of repayments) in the total amount of $508,913 to the Company as working capital. The loan from Harbor Torrance Family Trust is payable on demand and carries an interest rate of 0%.
Note 7: Capital Stock
As of March 31, 2019, the Company had 75,000,000 shares of common stock, par value of $0.001 per share, authorized.
On June 15, 2015, the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its then-sole Director. The Company received aggregate gross proceeds of $4,000. As of March 31, 2019, there were no outstanding stock options or warrants.
In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.
Note 8: Fixed Assets
In June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to April 7, 2018, the Company utilized the space as its principal office to conduct the Company’s former steam room products sales activities. As the Company discontinued the steam room products sales activities on April 7, 2018, the office in Lithuania is treated as an asset held for sale under ASC 250-45 and ASC 360-10 post-April 6, 2018. Based on the analysis of the management, the sale of the land and the building is not likely to occur. Thus, management wrote off the fixed assets, i.e. $7,791 for the period ended September 30, 2018.
Apex Resources, Inc.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
March 31, 2019
Note 9: Income Taxes
Apex Resources Inc. is registered in the State of Nevada and is subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.
As of March 31, 2019, the Company had net operating loss carry forwards of approximately $548,731 that may be available to reduce future years’ taxable income through 2036 and 2039. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
Benefit of income taxes for the nine-month periods ended March 31, 2019 and 2018 were $0 and $0, respectively.
Note 10: Related Party Transactions
The Company has related party loan transactions involving the Company’s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.
Note 11: Change in Control
On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.
Note 12: Subsequent Events
The Company has evaluated events subsequent through the date these consolidated financial statements have been issued, May 15, 2019, to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, the company has no subsequent event occurred that require recognition or disclosure in the consolidated financial statements, except for the followings:
Termination of the ADC Agreement
On April 1, 2019, the Company signed a termination and release agreement (the “ADC Termination Agreement”) with Chongqing Puxin Blockchain Technology Co., Ltd., a company organized under the laws of the People’s Republic of China (“Puxin”) to terminate the agreement previously entered into by the two companies on April 26, 2018 (the “ADC Agreement”). Under the ADC Agreement, (1) a joint venture entity Apex Data Center Inc. was incorporated to pursue the data mining operations in the state of Washington, (2) the Company was obligated to contribute the sum of $2.0 million cash in exchange for 80% of ADC’s shares of common stock to be issued, and (3) Puxin was obligated to contribute properties and services in kind (equipment, labor, professional services, etc.) for its 20% ownership in ADC. Upon signing of the ADC Termination Agreement, the Company and Puxin agreed to terminate the ADC Agreement immediately. The Companmy and Puxin also agreed to irrevocably and unconditionally release each other from any claims, charges, causes of action or any other liabilities arising out of the ADC Agreement.