Since our inception on March 31, 2015 until the Change-of-Control Transaction on
March 23, 2018, we were was in the steam room products distribution business.
Following the Change-of-Control Transaction on March 23, 2018, our new
management decided to pursue a different business from the steam room products
distribution business, which was discontinued on April 7, 2018. We intend to
pursue one or more business opportunities using blockchain technology related
products and services in various areas, which may include financing, gaming,
education, and data storage. We are in the early stages of developing our new
business model and pursuing business opportunities.
We must raise significant amounts of capital, in the form of equity and/or debt,
unless and until we have sufficient cash flow from operations. We do not
anticipate any significant additional revenue until and unless we begin to
execute on our new plan of operations, described herein, involving blockchain
technology related products and services. There is no assurance we will ever
reach that stage. While there is an informal arrangement with one of our
principal shareholders to provide loans to fund our working capital needs at
present, there is no commitment from any person for any such capital and there
can be no assurances that capital will be available to us on favorable terms, or
In furtherance of our new business, we entered into the ADC Agreement with
Puxin, a cryptocurrency mining company in China, pursuant to which we will
contribute $2 million to 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 we do not
currently own any rig machine, it is expected that we will 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.
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Under the ADC agreement, we have 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, we are required to provide the first $280,000 of the 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-K we have provided $20,000 of the
required working capital amount, the source of which was loans from one of our
If we fail to make our total capital contribution of $2 million, Puxin may
increase its capital contribution for any unfulfilled amount, diluting our
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 us.
We do not have sufficient funds to meet our financial obligations under the ADC
Agreement. Because we are not generating operating revenue at this time, we must
raise capital, in the form of equity and/or debt, to meet our financial
obligations under the ADC Agreement. There are no agreements for any such
funding at this time. There can be no assurance that any such funding will be
available to us on favorable terms, or at all. Our failure to raise the
necessary capital to meet our financial obligations under the ADC Agreement
could result in significant dilution of our ownership interest in ADC or even
the abandonment of the ADC project altogether. In addition, our independent
registered public accountant has issued a going concern opinion. This means that
there is substantial doubt that we can continue as an ongoing business for the
next 12 months unless we obtain additional capital to pay our expenses.
Subject to having adequate financing, we intend to pursue other business
opportunities in our industry as such opportunities present themselves.
Results of Operations
Twelve Months Ended June 30, 2018 Compared to the Twelve Months Ended June 30,
Revenue, Cost of Goods Sold and Gross Profit
For the year ended June 30, 2018, we generated $94,264 in steam room products
revenues, resulting in a decrease of $31,123 from the $125,386 revenue
recognized in the previous year ended June 30, 2017. We incurred $83,679 in cost
of goods sold for the year ended June 30, 2018, resulting in a decrease of
$30,201 from the $113,880 cost of goods sold for the year ended June 30, 2017.
The gross profit for the year ended June 30, 2018 was $10,584, compared to the
$11,507 gross profit for the previous year, representing a net decrease of in
gross profit of $923.
For the year ended June 30, 2018, we incurred operating expenses of $87,984,
consisting primarily of advertising, general expense and depreciation expense.
The fiscal year 2018 operating expenses represent an increase of $23,375 over
the total operating expenses of $64,609 for the same period ended June 30, 2017.
Income Taxes Provision (Benefit)
For the year ended June 30, 2018, we have a income taxes provision (benefit) of
$1,298, compared to $0 for the previous year. 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.
Net Loss attributable to Apex for the year ended June 30, 2018, was $72,331, an
increase of $19,230 over the $53,102 net loss for the year ended June 30, 2017.
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Liquidity and Capital Resources
At June 30, 2018, we had $71,499 in cash in bank, which increased by $68,743
from $2,756 at June 30, 2017. The cash in bank and a prepaid expense of $1,146
were our only current assets as of June 30, 2018.
We had $156,000 in total current liabilities as of June 30, 2018, including a
$155,000 of loan from a principal shareholder the Harbor Torrance Family Trust
and $1,000 of accounts payable, as compared to $14,028 in total current
liabilities at June 30, 2017.
We had a working capital deficit of $83,356 as of June 30, 2018, compared to a
working capital deficit at $11,272 as of June 30, 2017. For the period from
inception (March 31, 2015) to June 30, 2018, we had an accumulated net loss of
$122,725. We have a negative net worth attributable to Apex in the amount of
$75,565 as of June 30, 2018. This raises substantial doubt about our ability to
continue as a going concern within one year after the date that the consolidated
financial statements are issued.
Our independent registered public accountant has issued a going concern opinion.
This means that there is substantial doubt that we can continue as an ongoing
business for the next 12 months unless we obtain additional capital to pay our
expenses. We have generated an aggregate $377,095 in revenues but we do not
anticipate any significant additional revenue until and unless we begin to
execute on our new plan of operations involving blockchain technology related
products and services. There is no assurance we will ever reach that stage.
Our ability to continue as a going concern is dependent upon our ability to
successfully execute our new business plan and generate profitable operations in
the future, and/or to obtain the necessary financing to meet our obligations and
repay our liabilities arising from normal business operation as and when they
become due. Management intends to finance operating costs for the foreseeable
future with loans from related parties and the issuance of equity and/or debt.
There is no commitment from any person for any such capital and there can be no
assurances that capital will be available to us on favorable terms, or at all.
At June 30, 2018, there were outstanding liabilities of $156,000. We received
loans in the aggregate principal amount of $155,000 from one of our new
principal shareholders from the date of the change-of-control transaction
through June 30, 2018. The shareholder loan is payable on demand and carries an
interest rate of 0%.
This shareholder has informally agreed to continue to lend us some of the funds
needed for some of our operating expenses, but he has no legal obligation to do
so and may discontinue making any such loans at any time. Our failure to achieve
the necessary levels of profitability or obtain the additional significant
funding required to meet our expenses and other financial obligations, including
our obligations under the ADC Agreement, would be detrimental to us and result
in the inability to execute our plan of operations, being unable to meet our
financial obligations under the ADC Agreement or even having to cease operations
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
The failure to achieve the necessary levels of profitability or obtain the
additional funding would be detrimental to the Company.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures, or capital resources that is material to investors.
Critical Accounting Policies
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
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.
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.
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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
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.
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.
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
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