10-Q: T-REX Acquisition Corp. Reports Continued Losses in Latest 10-Q Filing

T-REX Acquisition Corp.'s latest filing reveals ongoing losses and a working capital deficit, raising concerns about its ability to continue as a going concern.

Summary

• T-REX Acquisition Corp. reported a net loss of $729,242 for the six months ended December 31, 2024.
• The company has an accumulated deficit of $7,753,040 as of December 31, 2024.
• The working capital deficit stands at $1,351,786.
• Revenue for the quarter ended December 31, 2024, was $0, compared to $2,912 for the same period in 2023.
• The company's mining operations were paused due to a consolidation of mining operations at a co-location facility.
• Management intends to raise additional funds through private or public offerings.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is planning to lease 275 ASIC miners, but this is subject to its financial ability to do so.
• The company's disclosure controls and procedures were deemed not effective.
• There were deficiencies in segregation of duties and staffing of the financial accounting department.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to significant losses, a working capital deficit, and concerns about the company's ability to continue as a going concern. While management is taking steps to address these issues, the overall sentiment is pessimistic.

Positives

• The company is attempting to consolidate its mining operations to improve efficiency.
• Management is actively seeking additional funding through private or public offerings.
• The company adopted ASU No. 2023-08 early to enhance the transparency of its financial reporting.

Negatives

• The company reported a significant net loss of $729,242 for the six months ended December 31, 2024.
• The company has a substantial accumulated deficit of $7,753,040.
• The company's working capital deficit is $1,351,786.
• Revenue decreased significantly to $0 for the quarter ended December 31, 2024.
• The company's disclosure controls and procedures were deemed ineffective.
• There are deficiencies in segregation of duties and staffing in the financial accounting department.

Risks

• There is substantial doubt about the company's ability to continue as a going concern.
• The company's cash position may not be sufficient to support daily operations.
• The company's planned lease of ASIC miners is subject to its financial ability to do so.
• The company's disclosure controls and procedures were deemed ineffective.
• Deficiencies in segregation of duties and staffing of the financial accounting department could lead to misstatements in financial reporting.
• The company is exposed to risks associated with the volatile cryptocurrency market.

Future Outlook

The company expects working capital requirements to be funded through a combination of proceeds from the sales of stock and generation of revenues from acquisitions and plans to lease 275 ASIC miners, subject to financing.

Management Comments

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

Industry Context

The company operates in the cryptocurrency industry, which is known for its volatility and regulatory uncertainty. The company's performance is affected by factors such as the price of Bitcoin, the complexity of the transaction verification process, and technological obsolescence of mining equipment.

Comparison to Industry Standards

• It is difficult to compare T-REX Acquisition Corp. directly to industry standards due to its unique business model and small size.
• However, other cryptocurrency mining companies, such as Marathon Digital Holdings and Riot Platforms, are larger and have more established operations.
• These companies typically report higher revenues and lower losses than T-REX Acquisition Corp.

Related Party Transactions

• The company leases office space from its President at a cost of $250 per month.
• Substantially all assets of the Company are pledged as collateral for notes payable to related parties.
• The company issued Senior Secured Convertible Promissory Notes to related parties as compensation for management services.
• Various shareholders advanced funds for operating expenses.

Stakeholder Impact

• Shareholders face the risk of further dilution due to potential capital raises.
• Employees may be affected by the company's financial difficulties and potential restructuring.
• Creditors face the risk of non-payment due to the company's financial difficulties.

Next Steps

• The company plans to consolidate its mining operations to improve efficiency.
• The company intends to raise additional funds through private or public offerings.
• The company is planning to lease 275 ASIC miners, but this is subject to its financial ability to do so.

Key Dates