10-Q: T-REX Acquisition Corp. Reports Q3 2024 Results with Ongoing Losses and Working Capital Deficit

T-REX Acquisition Corp. reported a net loss of $245,713 for the three months ended March 31, 2024, and a working capital deficit of $974,501, highlighting ongoing financial challenges.

Summary

• T-REX Acquisition Corp. reported a net loss of $245,713 for the three months ended March 31, 2024, compared to a net loss of $258,622 for the same period in 2023.
• The company's revenue for the quarter was $0, a decrease from $19,944 in the prior year's quarter.
• For the nine months ended March 31, 2024, the net loss was $813,771, compared to a net loss of $1,265,385 for the same period in 2023.
• Operating expenses for the three months ended March 31, 2024, were $245,713, slightly up from $243,668 in the same period of 2023.
• The company's working capital deficit was $974,501 as of March 31, 2024.
• The company's cash balance was $13 as of March 31, 2024, down from $23,909 as of June 30, 2023.
• The company has an accumulated deficit of $6,814,297 as of March 31, 2024.
• The company intends to acquire 150 to 200 ASIC miners per quarter, with costs ranging from $1,500 to $4,000 per miner.

Sentiment

Score: 2

Explanation: The document indicates a very weak financial position with no revenue, a large working capital deficit, and a critically low cash balance. The company's ability to continue as a going concern is in doubt, and there are significant risks associated with its operations.

Positives

• The net loss for the three months ended March 31, 2024, was lower than the same period in 2023, indicating a slight improvement in financial performance.
• Operating expenses for the nine months ended March 31, 2024, were lower than the same period in 2023, indicating some cost control.

Negatives

• The company's revenue decreased to $0 for the three months ended March 31, 2024, compared to $19,944 in the same period of 2023.
• The company has a significant working capital deficit of $974,501 as of March 31, 2024.
• The company's cash balance is critically low at $13 as of March 31, 2024.
• The company has an accumulated deficit of $6,814,297 as of March 31, 2024.
• The company's internal controls over financial reporting were deemed ineffective as of March 31, 2024.

Risks

• The company's ability to continue as a going concern is in substantial doubt due to its significant losses and working capital deficit.
• The company's low cash balance may not be sufficient to support daily operations.
• The company's internal control over financial reporting is not effective, which could lead to misstatements in financial reporting.
• The company is dependent on raising additional funds through public or private offerings to continue operations.
• The company's plan to acquire ASIC miners is subject to price fluctuations in the bitcoin market.

Future Outlook

The company expects to fund its working capital requirements through a combination of stock sales and revenue generation from acquisitions and intends to acquire 150 to 200 ASIC miners per quarter.

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 volatile cryptocurrency mining industry, which is subject to fluctuations in the price of bitcoin and technological advancements in mining equipment. The company's performance is directly tied to the price of bitcoin and the efficiency of its mining operations.

Comparison to Industry Standards

• The company's revenue of $0 for the quarter is significantly below industry standards for companies engaged in cryptocurrency mining.
• The company's negative working capital and low cash balance are concerning compared to other companies in the sector.
• The company's reliance on convertible debt and equity raises is not uncommon in the industry, but the level of debt and the lack of revenue is a concern.
• The company's plan to acquire 150-200 ASIC miners per quarter is a common strategy in the industry, but the company's ability to fund these purchases is questionable given its current financial position.
• Companies like Marathon Digital Holdings and Riot Platforms, which are larger players in the bitcoin mining space, have significantly higher revenues and stronger balance sheets.

Related Party Transactions

• The company leases office space from its Chief Executive Officer at a cost of $250 per month.
• The company owes $435,000 to related parties for management advisory fees as of March 31, 2024.
• The company owes $171,559 to related parties for compensation payable as of March 31, 2024.
• The company owes $84,000 to related parties for Board of Director fees as of March 31, 2024.
• The company issued convertible promissory notes to Frank Horkey and Lazarus Asset Management LLC to settle amounts owed as compensation.
• Certain shareholders have advanced a total of $6,000 to the Company to cover operating expenses.

Stakeholder Impact

• Shareholders face significant risk due to the company's poor financial performance and going concern issues.
• Employees may be impacted by the company's financial instability and potential restructuring.
• Creditors face increased risk of non-payment due to the company's low cash balance and working capital deficit.
• Suppliers may be impacted by the company's financial instability and potential inability to pay for goods and services.

Next Steps

• The company intends to raise additional funds through public or private offerings.
• The company plans to acquire 150 to 200 ASIC miners per quarter.
• The company will continue to implement its business plan and generate revenues.

Key Dates

Keywords

cryptocurrency mining, bitcoin, financial results, net loss, working capital, ASIC miners, going concern, internal controls, convertible notes, share based compensation