UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 4.01. | Changes in Registrant’s Certifying Accountant. |
(b) Engagement of New Independent Registered Accounting Firm
Effective as of January 5, 2023, the Board of Directors of Credex Corporation (the “Company”) approved the appointment of Michael Gillespie & Associates, PLLC (“Gillespie”) as the Company’s new independent registered accounting firm for the periods ended December 31, 2021 and 2022. During the Company’s two most recent fiscal years ended December 31, 2020 and 2019 and from January 1, 2021 to December 31, 2022, neither the Company nor anyone acting on the Company’s behalf consulted Gillespie with respect to any of the matters or reportable events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K, except that Gillespie audited the Company’s financial statements for the periods ended December 31, 2020 and 2019 and reviewed the unaudited financial statements of the Company for the periods ended March 31, 2021, June 30, 2021 and September 30, 2021. In approving the selection of Gillespie as the Company’s independent registered public accounting firm, the Company’s Board of Directors considered these services previously provided by Gillespie and concluded that such services would not adversely affect the independence of Gillespie.
| Item 4.02 | Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Audit Review. |
On December 14, 2022, the Board of Directors of the Company determined that the Company’s financial statements for the periods ended June 30, 2021 and September 30, 2021 (the “Financial Statements”) included in its Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 16, 2021 and November 10, 2021, respectively, could not be relied upon (the “Form 10-Q’s”).
The Financial Statements included in the Form 10-Q’s, erroneously did not reflect the accounting perspective of the Cannabis Depot Transactions as discussed below in accordance with ASC 805-40 and SEC Financial Reporting Manual TOPIC 12 - Reverse Acquisitions and Reverse Recapitalizations. The Cannabis Depot Transactions should have been treated as a recapitalization and reverse acquisition for financial reporting purposes, and Cannabis Depot is considered the acquirer for accounting purposes. As a result, the Company plans to restate the Financial Statements and any other related periods.
As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on December 30, 2022, Cannabis Depot Holding Corp. (“Cannabis Depot”) acquired 58,492,500 shares (the “Control Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”) on June 17, 2021, representing a controlling interest in the Company (the “Change in Control Transaction”). Cannabis Depot then distributed the Control Shares to its shareholders (the “Share Distribution,” together with the Change in Control Transaction, the “Cannabis Depot Transactions”). Consequently, the Cannabis Depot Transactions resulted in a change in the accounting treatment for that transaction that was incorrectly reflected in the Form 10-Q’s.
The matters set forth in this Form 8-K have been discussed with the Company’s independent registered public accounting firm, Gillespie.
The effect of correcting this error on the Company’s Financial Statements is shown in the tables below.
| 2 |
The following table presents the effect of the restatement on the balance sheet included in the previously issued Financial Statements for the period ended June 30, 2021:
| As of June 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Assets | ||||||||||||
| Total Current Assets | $ | 4,377 | $ | 1,352,076 | $ | 1,356,453 | ||||||
| Total Other Assets | $ | - | $ | 535,460 | $ | 535,460 | ||||||
| Total Assets | $ | 4,377 | $ | 1,891,913 | ||||||||
| Liabilities and Equity | ||||||||||||
| Total Current Liabilities | $ | 8,345 | $ | 37,800 | $ | 46,145 | ||||||
| Stockholders Equity | ||||||||||||
| Common Stock | $ | 58,993 | $ | - | $ | 58,993 | ||||||
| Additional Paid In Capital | $ | 326,885 | $ | 1,643,129 | $ | 1,970,014 | ||||||
| Accumulated Deficit | $ | (389,846 | ) | $ | 206,607 | $ | (183,239 | ) | ||||
| Total Stockholders’ Equity | $ | (3,968 | ) | $ | 1,845,768 | |||||||
| Total Liabilities and Equity | $ | 4,377 | $ | 1,891,913 | ||||||||
The following table presents the effect of the restatement on the statement of operations included in the previously issuedFinancial Statements for the six month period ended June 30, 2021:
| For the six month period ended June 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Operating Expenses | ||||||||||||
| Total Operating Expenses | $ | 3,968 | $ | 82,472 | $ | 86,440 | ||||||
| Other Income | $ | - | $ | - | $ | - | ||||||
| Net Income (Loss) | $ | 3,968 | $ | 86,440 | ||||||||
| Net Loss Per Share Basic and Diluted | $ | - | $ | - | ||||||||
| 3 |
The following table presents the effect of the restatement on the statement of shareholder deficit included in the previously issued Financial Statements for the period ended June 30, 2021:
| For the period ended June 30, 2021 | ||||||||||||||||||||
| Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||
| Balances- December 31, 2020, as previously reported | 59,992,500 | $ | 58,993 | $ | 242,449 | $ | (382,629 | ) | $ | (81,187 | ) | |||||||||
| Credex activity for the six months ended June 30, 2021 | - | $ | 84,437 | $ | (7,218 | ) | $ | 77,219 | ||||||||||||
| Balances- June 30, 2021, as previously reported | 59,992,500 | $ | 58,993 | $ | 326,886 | $ | (389,847 | ) | $ | (3,968 | ) | |||||||||
| Credex adjustments to reflect the Cannabis Depot transaction | - | $ | - | $ | (326,886 | ) | $ | 389,847 | $ | 62,961 | ||||||||||
| Adjusted Balances- June 30, 2021 | 59,992,500 | $ | 58,993 | - | $ | - | $ | 58,993 | ||||||||||||
| Cannabis Depot Holding Corp activity through June 30, 2021 | - | $ | - | $ | 2,422,976 | $ | (183,239 | ) | $ | 2,239,737 | ||||||||||
| Cannabis Depot Holding Corp adjustments to reflect the Credex transaction | - | $ | - | $ | (452,962 | ) | $ | - | $ | (452,962 | ) | |||||||||
| Balances- June 30, 2021, as restated | 59,992,500 | $ | 58,993 | $ | 1,970,014 | $ | (183,239 | ) | $ | 1,845,768 | ||||||||||
The following table presents the effect of the restatement on the statement of cash flows included in the previously issued Financial Statements for the period ended June 30, 2021:
| As of June 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net Income (Loss) | $ | (7,218 | ) | $ | (79,222 | ) | $ | (86,440 | ) | |||
| Changes in Operating Assets and Liabilities: | ||||||||||||
| Changes in Due From Related Parties | $ | 8,345 | $ | (93,828 | ) | $ | (85,483 | ) | ||||
| Changes in Net Accounts Receivable | $ | (1,250 | ) | $ | (1,250 | ) | ||||||
| Changes in Prepaid Expenses and Other Assets | $ | (4,377 | ) | $ | (81,000 | ) | $ | (85,377 | ) | |||
| Changes to Accounts Payable | $ | (81,187 | ) | $ | 81,187 | $ | - | |||||
| Changes to Accrued Liabilities and Other Liabilities | $ | - | $ | 5,845 | $ | 5,845 | ||||||
| Changes to Affiliate Receivables | $ | - | $ | (282,115 | ) | $ | (282,115 | ) | ||||
| Net cash used in operating Activities | $ | (84,437 | ) | $ | (534,820 | ) | ||||||
| Cash Flows from Financing Activities | ||||||||||||
| Changes in Shareholders Loans- Credex | $ | 84,437 | $ | (84,437 | ) | |||||||
| Changes in Shareholders Capital- CDHC | $ | 881,737 | $ | 881,737 | ||||||||
| Net cash provided by financing activities | $ | 84,437 | $ | 881,737 | ||||||||
| Net increase (decrease) in cash | $ | - | $ | 346,917 | $ | 346,917 | ||||||
| Cash - Beginning of Period | $ | - | $ | - | ||||||||
| Cash - End of Period | $ | - | $ | 346,917 | ||||||||
| 4 |
The following table presents the effect of the restatement on the balance sheet included in the previously issued Financial Statements for the period ended September 30, 2021:
| As of September 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Assets | ||||||||||||
| Total Current Assets | $ | 3,128 | $ | 1,519,496 | $ | 1,522,624 | ||||||
| Total Other Assets | $ | - | $ | 704,034 | $ | 704,034 | ||||||
| Total Assets | $ | 3,128 | $ | 2,223,530 | $ | 2,226,658 | ||||||
| Liabilities and Equity | ||||||||||||
| Total Current Liabilities | $ | 9,675 | $ | 43,287 | $ | 52,962 | ||||||
| Stockholders Equity | ||||||||||||
| Common Stock | $ | 58,993 | $ | - | $ | 58,993 | ||||||
| Additional Paid In Capital | $ | 326,885 | $ | 2,200,768 | $ | 2,527,653 | ||||||
| Accumulated Deficit | $ | (392,425 | ) | $ | (20,525 | ) | $ | (412,950 | ) | |||
| Total Stockholders Equity | $ | (6,547 | ) | $ | 2,180,243 | $ | 2,173,696 | |||||
| Total Liabilities and Equity | $ | 3,128.00 | $ | 2,223,530 | $ | 2,226,658 | ||||||
The following table presents the effect of the restatement on the statement of operations included in the previously issued Financial Statements for the nine month period ended September 30, 2021:
| For the nine month period ended September 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Operating Expenses | ||||||||||||
| Total Operating Expenses | $ | 2,579 | $ | 313,675 | $ | 316,254 | ||||||
| Other Income | $ | - | $ | (103 | ) | $ | (103 | ) | ||||
| Net Income (Loss) | $ | 2,579 | $ | 313,572 | $ | 316,151 | ||||||
| Net Loss Per Share Basic and Diluted | $ | - | $ | - | ||||||||
| 5 |
The following table presents the effect of the restatement on the statement of shareholder deficit included in the previously issued Financial Statements for the period ended September 30, 2021:
| For the period ended September 30, 2021 | ||||||||||||||||||||
| Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Deficit | ||||||||||||||||
| Balances- December 31, 2020, as previously reported | 59,992,500 | $ | 58,993 | $ | 242,449 | $ | (382,629 | ) | $ | (81,187 | ) | |||||||||
| Credex activity for the nine months ended September 30, 2021 | - | $ | - | $ | 84,437 | $ | (9,796 | ) | $ | 74,641 | ||||||||||
| Balances- September 30, 2021, as previously reported | 59,992,500 | $ | 58,993 | $ | 326,886 | $ | (392,425 | ) | $ | (6,546 | ) | |||||||||
| Credex adjustments to reflect the Cannabis Depot transaction | - | $ | - | $ | (326,886 | ) | $ | 392,425 | $ | 65,539 | ||||||||||
| Adjusted Balances- September 30, 2021 | 59,992,500 | $ | 58,993 | $ | 0 | $ | 0 | $ | 53,993 | |||||||||||
| Cannabis Depot Holding Corp activity through September 30, 2021 | - | $ | - | $ | 2,973,396 | $ | 412,950 | $ | 2,560,446 | |||||||||||
| Cannabis Depot Holding Corp adjustments to reflect the Credex transaction | - | $ | - | $ | (445,743 | ) | $ | - | $ | (445,743 | ) | |||||||||
| Balances- September 30, 2021, as restated | 59,992,500 | $ | 58,993 | $ | 2,527,653 | $ | (412,950 | ) | $ | 2,173,696 | ||||||||||
The following table presents the effect of the restatement on the statement of cash flows included in the previously issued Financial Statements for the period ended September 30, 2021:
| As of September 30, 2021 | ||||||||||||
| As Reported | Adjustments | As Restated | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net Income (Loss) | $ | (9,796 | ) | $ | (306,355 | ) | $ | (316,151 | ) | |||
| Changes in Operating Assets and Liabilities: | ||||||||||||
| Changes in Due From Related Parties | $ | 9,675.00 | $ | (40,180 | ) | $ | (30,505 | ) | ||||
| Changes in Net Accounts Receivable | $ | (1,270 | ) | $ | (1,270 | ) | ||||||
| Changes in Prepaid Expenses and Other Assets | $ | (3,129 | ) | $ | (249,573 | ) | $ | (252,702 | ) | |||
| Changes to Accounts Payable | $ | (81,187 | ) | $ | 86,655 | $ | 5,468 | |||||
| Changes to Accrued Liabilities and Other Liabilities | $ | - | $ | 7,195 | $ | 7,195 | ||||||
| Changes to Affiliate Receivables | $ | - | $ | (752,580 | ) | $ | (752,580 | ) | ||||
| Net cash used in operating Activities | $ | (84,437 | ) | $ | (1,256,108 | ) | $ | (1,340,545 | ) | |||
| Cash Flows from Financing Activities | ||||||||||||
| Changes in Shareholders Capital- Credex | $ | 84,437 | $ | (84,437 | ) | $ | - | |||||
| Changes in Shareholders Capital- CDHC | $ | 1,439,375 | $ | 1,439,375 | ||||||||
| Net cash provided by financing activities | $ | 84,437 | $ | 1,354,938 | $ | 1,439,375 | ||||||
| Net increase (decrease) in cash | $ | - | $ | 98,830 | $ | 98,830 | ||||||
| Cash - Beginning of Period | $ | - | $ | - | ||||||||
| Cash - End of Period | $ | - | $ | 98,830 | ||||||||
| 6 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Credex Corporation | ||
| Date: January 31, 2023 | By: | /s/ Robin McVey |
| Robin McVey | ||
| Chief Executive Officer | ||
| 7 |