10-K: T-REX Acquisition Corp. Reports Annual Results, Focuses on Cryptocurrency Mining

T-REX Acquisition Corp.'s annual report highlights its shift to cryptocurrency mining, with operations in Iowa and Idaho, while also noting ongoing losses and a need for additional capital.

Summary

• T-REX Acquisition Corp. has transitioned into an emerging technology company focused on cryptocurrency mining and related virtual assets.
• The company operates two cryptocurrency mining facilities in Cedar Falls, Iowa, and Orofino, Idaho, primarily mining Bitcoin.
• As of the report date, the company's mining operations contribute over 5,000 tera-hashes per second to the Bitcoin network, generating approximately 0.55 bitcoin per month.
• The company's net loss for the year ended June 30, 2023, was $1,839,770, compared to a net loss of $1,294,198 in the previous year.
• The increase in net loss was primarily due to a substantial increase in shares and warrants issued for services.
• The company's current assets were $185,455, and current liabilities were $629,038, resulting in a working capital deficit of $443,583.
• The company expects to fund its working capital requirements through a combination of cryptocurrency sales and stock sales.
• The company intends to acquire 150 to 300 ASIC miners per quarter to scale its cryptocurrency mining operations.
• The company has contracts with two co-location cryptocurrency mining facilities on a month-to-month basis.
• The company's financial statements have been prepared assuming it will continue as a going concern, but there is substantial doubt about its ability to do so.

Sentiment

Score: 3

Explanation: The document highlights significant financial challenges, including substantial losses, a working capital deficit, and a going concern warning from the auditor. While the company is actively pursuing growth in the cryptocurrency mining sector, the risks and uncertainties outweigh the positives, resulting in a negative sentiment.

Positives

• The company has successfully transitioned to cryptocurrency mining and has established two mining operations.
• The company is generating revenue from Bitcoin mining.
• The company is actively seeking to expand its mining operations by acquiring additional ASIC miners.
• The company has secured co-location agreements for its mining equipment.

Negatives

• The company has incurred significant operating losses and has an accumulated deficit.
• The company has a substantial working capital deficit.
• The company's independent auditor has raised substantial doubt about its ability to continue as a going concern.
• The company's financial results are heavily dependent on the price of Bitcoin.
• The company has limited operating history in the cryptocurrency mining sector.
• The company's internal controls over financial reporting are not effective.

Risks

• The company's profitability is highly dependent on the price of Bitcoin, which is volatile.
• The company may not be able to sustain profitability in the future.
• The company may be required to relocate its miners to alternate facilities, which could be costly and disruptive.
• Changes to the Bitcoin network protocol could negatively impact the company's operations.
• The company's digital assets are not insured, exposing it to the risk of loss.
• The company may be subject to additional regulations as a money services business or commodity pool operator.
• The company's stock price may be volatile and categorized as penny stock.
• The company may issue additional shares of common stock in the future, which could cause significant dilution to all stockholders.
• The company's internal control over financial reporting is not effective.

Future Outlook

The company expects to fund its working capital requirements through a combination of cryptocurrency sales and stock sales and intends to acquire 150 to 300 ASIC miners per quarter to scale its cryptocurrency mining operations.

Management Comments

• Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
• Management intends to raise additional funds by way of a public or private offering.

Industry Context

The company's shift to cryptocurrency mining reflects a broader trend of companies exploring opportunities in the digital asset space. The company's reliance on Bitcoin mining exposes it to the volatility and risks associated with the cryptocurrency market.

Comparison to Industry Standards

• The company's financial performance is weak compared to established cryptocurrency mining companies, many of which have achieved profitability.
• The company's reliance on month-to-month co-location contracts is less secure than companies with long-term agreements or their own facilities.
• The company's small scale of operations and limited resources put it at a disadvantage compared to larger competitors.
• The company's lack of effective internal controls is a significant concern compared to industry best practices.

Management Changes

Related Party Transactions

• The company leases office space from its Chief Executive Officer at a cost of $250 per month.
• As of June 30, 2023, the company owed $495,800 due to related parties for management fees for the year ended June 30, 2023.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and dependence on the volatile cryptocurrency market.
• Employees may be impacted by the company's financial challenges and potential restructuring.
• Customers may be affected by the company's ability to provide reliable cryptocurrency mining services.
• Suppliers and creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company intends to acquire 150 to 300 ASIC miners per quarter.
• The company will continue to seek additional co-location facilities.
• The company plans to raise additional capital through a public or private offering.

Key Dates

Keywords

cryptocurrency mining, bitcoin, ASIC miners, digital assets, blockchain, co-location, financial results, risk factors, operating losses, capital resources