10-K: T-REX Acquisition Corp. Reports Annual Results, Shifts Focus to Co-location Mining

T-REX Acquisition Corp. reports a net loss of $1,007,654 for the fiscal year ended June 30, 2024, while transitioning to a new co-location mining strategy.

Summary

• T-REX Acquisition Corp., a company focused on cryptocurrency mining, reported its annual results for the fiscal year ended June 30, 2024.
• The company experienced a decrease in revenue to $15,824, compared to $55,637 in the previous year, primarily due to a pause in mining operations for consolidation.
• Cost of revenue decreased significantly to $30,258 from $572,218 in the prior year, due to reduced operational costs and minimal depreciation expense.
• The net loss for the year was $1,007,654, an improvement from the $1,839,770 loss in the previous year, mainly due to decreased stock-based compensation and depreciation expenses.
• Operating expenses decreased to $966,179 from $1,321,423, primarily due to a reduction in stock-based compensation.
• The company's working capital deficit increased to $1,107,195 as of June 30, 2024, compared to $443,583 in the previous year.
• T-REX is shifting its strategy to include co-location hosting and has entered into a letter of intent to acquire a co-location facility in Orofino, Idaho.
• The company plans to fund its operations through sales of cryptocurrency and sales of its restricted common stock.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are some positive developments, such as reduced losses and a new strategic direction, the company faces significant challenges, including declining revenue, a large working capital deficit, and intense competition. The overall sentiment is cautiously negative.

Positives

• The net loss decreased by $832,116 year-over-year, indicating improved financial performance.
• Operating expenses decreased by $355,244, primarily due to a reduction in stock-based compensation.
• The company is actively pursuing a new co-location business model, which could provide additional revenue streams.
• The company has applied for lease financing to secure 275 latest generation ASIC miners.

Negatives

• Revenue decreased significantly by $39,813, or 72%, due to a pause in mining operations.
• The company has a working capital deficit of $1,107,195, indicating potential liquidity issues.
• The company has a history of operating losses and may be unable to achieve or sustain profitability.
• The company has no employees and relies on two officers.
• The company's mining equipment was fully depreciated as of June 30, 2024.

Risks

• The cryptocurrency market is highly volatile, which introduces risks in asset valuation and revenue predictability.
• The company faces significant competition from larger, more established cryptocurrency mining companies.
• The company's reliance on ASIC miners designed exclusively for Bitcoin poses a risk if Bitcoin demand declines.
• The company may face challenges in securing mining equipment, accessing affordable energy resources, and scaling operations.
• Regulatory changes or interpretations of the company's activities could require registration as a money services business, incurring significant compliance costs.
• The company's digital assets are not insured, exposing them to the risk of loss or theft.
• The company's common stock may be categorized as penny stock, making it difficult for investors to sell their shares.
• The company has a history of operating losses and may be unable to achieve or sustain profitability.

Future Outlook

The company expects to fund its operations through sales of cryptocurrency and sales of its restricted common stock and is pursuing a new co-location business model. The company has applied for lease financing to secure 275 latest generation ASIC miners.

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 cryptocurrency mining industry is highly competitive and rapidly evolving. The company faces competition from both established and emerging companies, including publicly traded and private companies that have substantial financial resources. The company is shifting its strategy to include co-location hosting, which is a growing trend in the industry.

Comparison to Industry Standards

• The company defines its principal competitors as other publicly traded bitcoin miners such as Marathon Digital Holdings, Inc., Riot Platforms, Inc., CleanSpark, Inc., Hut 8 Mining Corp., Hive Blockchain Technologies, LTD., and Iris Energy Limited.
• These competitors generally have greater financial resources, more extensive operating histories, and greater access to capital than T-REX.
• Many competitors benefit from economies of scale and invest more in technology, infrastructure, and research and development, which enables them to operate more efficiently and secure mining equipment and energy at lower costs.
• T-REX's revenue of $15,824 is significantly lower than the revenue of its larger competitors, indicating a smaller scale of operations.
• The company's net loss of $1,007,654 is also indicative of its smaller scale and challenges in achieving profitability compared to more established players in the industry.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of this Annual Report, management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties.

Related Party Transactions

• The company leases office space from its President at a cost of $250 per month.
• The company has issued shares and warrants to related parties for services and debt conversion.
• The company has outstanding notes payable to related parties.

Stakeholder Impact

• Shareholders face the risk of potential dilution from future stock issuances.
• Employees are limited to two officers, indicating a small workforce.
• Customers are not directly impacted as the company is primarily focused on mining and co-location services.
• Suppliers may be impacted by the company's financial performance and ability to pay.
• Creditors face the risk of non-payment due to the company's working capital deficit.

Next Steps

• The company intends to complete the acquisition of the co-location facility in Orofino, Idaho.
• The company plans to secure 275 latest generation ASIC miners.
• The company will continue to monitor developments in legislation, guidance, or regulations related to cryptocurrency.
• The company intends to implement a cybersecurity risk management program before the end of 2024.

Key Dates

Keywords

cryptocurrency mining, bitcoin, co-location, ASIC miners, digital assets, blockchain, financial results, revenue, net loss, operating expenses