0001477932-20-000346.txt : 20200123 0001477932-20-000346.hdr.sgml : 20200123 20200123121747 ACCESSION NUMBER: 0001477932-20-000346 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 51 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20200123 DATE AS OF CHANGE: 20200123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APEX RESOURCES INC/NV CENTRAL INDEX KEY: 0001653710 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 352529753 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-207109 FILM NUMBER: 20541246 BUSINESS ADDRESS: STREET 1: 13191 CROSSROADS PKWY N STREET 2: SUITE 200 CITY: CITY OF INDUSTRY STATE: CA ZIP: 91746 BUSINESS PHONE: 626-910-5101 MAIL ADDRESS: STREET 1: 13191 CROSSROADS PKWY N STREET 2: SUITE 200 CITY: CITY OF INDUSTRY STATE: CA ZIP: 91746 10-K 1 apxr_10k.htm FORM 10-K apxr_10k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2019

 

or

 

¨

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to ________

 

Commission file number 333-207109

 

APEX RESOURCES INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

35-2529753

(State or other jurisdiction of

Incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

13191 Crossroads Pkwy N, Suite 200

City of Industry, CA

 

91746

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (626) 910-5101

 

Securities registered under Section 12(b) of the Exchange Act: None

 

Securities registered under Section 12(g) of the Exchange Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

    

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ¨ No x

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this From 10-K. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

x

Smaller reporting company

x

Emerging growth company

x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standard provided pursuant to Section 13(a) of the Exchanger Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes x No ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

N/A

 

As of December 31, 2018, the registrant had 5,080,000 shares of common stock issued and outstanding. No market value has been computed based upon the fact that no active trading market had been established as of June 30, 2019 and as of the date of this report.

 

 
 
 
 

 

APEX RESOURCES INC.

TABLE OF CONTENTS

 

 

Page No.

Part I

 

Item 1.

Business

5

 

Item 1A.

Risk Factors

6

 

Item 1B.

Unresolved Staff Comments

12

 

Item 2.

Properties

12

 

Item 3.

Legal Proceedings

12

 

Item 4.

Mine Safety Disclosures

12

 

Part II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

13

Item 6.

Selected Financial Data

14

 

Item 7.

Management’s Discussion and Analysis of Financial Condition and Plan of Operation

15

Item 8.

Consolidated financial statements

22

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

22

Item 9A.

Controls and Procedures

23

Item 9B.

Other Information

23

 

Part III

 

Item 10.

Directors and Executive Officers and Corporate Governance

24

 

Item 11.

Executive Compensation

26

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

27

 

Item 13.

Certain Relationships and Related Transactions

28

 

Item 14.

Principal Accounting Fees and Services

29

 

Part IV

 

Item 15.

Exhibits

30

Signatures

31

 

 
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DEFINED TERMS

 

Unless otherwise stated in this Annual Report on Form 10-K (this “annual report” or “Form 10-K”), references in this Report to:

 

“Blockchain” — a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly

 

“Exchange Act” — The Securities Exchange Act of 1934, as amended.

 

“FINRA” — The Financial Industry Regulatory Authority, Inc., which is the primary regulator in the United States for broker-dealers.

 

“SEC” — The U.S. Securities and Exchange Commission.

 

“Securities Act” — The Securities Act of 1933, as amended.

 

FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains certain forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). The statements herein which are not historical reflect our current expectations and projections about the Company’s future results, performance, liquidity, financial condition, prospects, and opportunities and are based upon information currently available to us and our management and our interpretation of what we believe to be significant factors affecting our business, including many assumptions about future events. Such forward-looking statements include statements regarding, among other things:

 

·

risks related to our ability to raise capital in order to pay our expenses and fund our operations;

·

our ability to develop a business in an industry about which we have little previous experience;

·

our new business model of e-commerce platforms;

·

consumer acceptance of our new business model;

·

rapid technological changes in e-commerce platforms and similar industries;

·

the impact of rigorous competition in e-commerce platforms and similar industries;

·

the overall success of our acquisition strategy and the ability to finance any such acquisitions;

·

our ability to implement effective internal controls to address a material weakness identified in this report;

·

industry-wide market factors and regulatory and other developments affecting our operations;

·

economic uncertainty;

·

risks related to changes in accounting interpretations; and

·

legal, political, and other risks associated with our operations located outside the United States.

 

Forward-looking statements, which involve assumptions and describe our plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “will,” “plan,” “could,” “target,” “contemplate,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these or similar words. Actual results, performance, liquidity, financial condition and results of operations, prospects, and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements because of various risks, uncertainties, and other factors, including the ability to raise sufficient capital to continue the Company’s operations. These statements may be found under Part I, Item 2-”Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as elsewhere in this Annual Report on Form 10-K generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, matters described in this Annual Report on Form 10-K.

 

In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report on Form 10-K will in fact occur.

 

 
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Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.

 

The forward-looking statements in this Annual Report on Form 10-K represent our views as of the date of this Annual Report on Form 10-K. Such statements are presented only as some guide about future possibilities and do not represent assured events, and we anticipate that subsequent events and developments will cause our views to change. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Annual Report on Form 10-K.

 

This Annual Report on Form 10-K also contains estimates and other statistical data prepared by independent parties and by us relating to market size and growth and other data about our industry. These estimates and data involve a number of assumptions and limitations, and potential investors are cautioned not to give undue weight to these estimates and data. We have not independently verified the statistical and other industry data generated by independent parties and contained in this Annual Report on Form 10-K. In addition, projections, assumptions, and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk.

 

Potential investors should not make an investment decision based solely on our projections, estimates, or expectations.

 

PART I

 

Item 1. Business

 

Corporate Background

 

Apex Resources Inc (“Apex”, the “Company”, “we”, “us,” or “our”) was incorporated on March 31, 2015, under the laws of the State of Nevada. On June 15, 2015, Tadas Dabasinskas, who at the time was our sole director and officer, purchased 4,000,000 shares of our common stock for $4,000 in cash. In November 2016, we sold 1,080,000 shares of our common stock to 31 individuals at $0.04 per share, for aggregate gross proceeds of $43,200, in a registered public offering pursuant to a Registration Statement on Form S-1 (file number: 333-207109) that had been declared effective by the Securities and Exchange Commission on October 4, 2016.

 

On March 23, 2018, Tadas Dabasinkas, the then majority shareholder, sole director and sole officer of the Company, entered into stock purchase agreements and sold an aggregate 4,000,000 shares of the common stock of the Company, or approximately 78.7% of the issued and outstanding shares of common stock of the Company as of such date, being all of the shares owned by Mr. Dabasinkas, for an aggregate $443,079 in cash. The purchasers of the shares were Sumunity Group, Inc. (“Sumunity”) and Harbor Torrance Family Trust (“Harbor”), which purchased 1,200,000 and 2,800,000 shares, respectively. Harbor also acted in part as agent for Bo Qian in purchasing 800,000 of the shares initially purchased by Harbor, which shares were resold by Harbor to Mr. Qian on or about March 31, 2018 for the same price at which they were purchased by Harbor from Mr. Dabasinkas (such transaction is sometimes referred as the “Change-of-Control Transaction” in this Form 10-K). The Company received no proceeds from the Change-of-Control Transaction. None of the purchasers is an affiliate of Mr. Dadasinkas.

 

The source of the funds used by Sumunity to purchase the shares was cash on hand from a capital contribution to Sumunity from certain of its shareholders. Those shareholders include entities whose own shareholders include Meijuan Fu As described below, Ms. Fu was appointed Chief Financial Officer of the Company in connection with the transaction described above. Additionally, Ms. Fu is the Chief Executive Officer and Chief Financial Officer of Sumunity. Harbor is also a principal shareholder of Sumunity. As also described below, effective June 30, 2018, Ms. Fu resigned as a director, Chief Financial Officer and Secretary of the Company.

 

The source of the funds used by Harbor to purchase the shares was a private loan, including funds from Xiaoya Deng, who, as described below, was appointed as a director of the Company in connection with the transaction described above. The loan is repayable in five years and bears interest at 5% per annum.

 

The source of the funds used by Mr. Qian to purchase the shares was personal funds. Effective June 30, 2018, Mr. Qian was appointed a director of the Company.

 

In connection with the Change-of-Control Transaction, and on the same date, (i) Mr. Dabasinkas resigned as director of the Company and from all officer positions with the Company, including Chief Executive Officer and President; (ii) Xiaoya Deng, Meijuan Fu and Yuen Wong Moon were appointed as directors of the Company; (iii) Jeff Bodnar was appointed as Chief Executive Officer and President of the Company; and (iv) Meijuan Fu was appointed as Chief Financial Officer and Secretary of the Company. Effective June 30, 2018, Ms. Fu resigned as a director, Chief Financial Officer and Secretary of the Company.

 

On March 23, 2018, in connection with the Change-of-Control transaction, all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. The loans were interest free, unsecured, and payable on demand.

 

On July 23, 2018, Sumunity entered into a securities purchase agreement with the Company and Harbor (the “SPA”). Pursuant to the SPA, Sumunity agreed to sell the 1,200,000 shares of the Company, representing Sumunity’s 100% equity interest in the Company to Harbor for a consideration of $100,000. As a result, Harbor holds 3,200,000 shares of the Company, representing 63% of the issued and outstanding shares of the Company.

 

 
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As of the date of this annual report, there is no active public trading market for our common stock and no assurance that an active trading market for our securities will ever develop. Our principal offices are located at 13191 Crossroads Pkwy N, Suite 200, City of Industry, CA 91746. Our telephone number is (626) 910-5101.

 

We are an “emerging growth company” within the meaning of the federal securities laws. For as long as we are an emerging growth company, we will not be required to comply with the requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company.

 

Going Concern

 

The accompanying consolidated financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the consolidated financial statements were issued.

 

For the period from inception (March 31, 2015) to June 30, 2019, the Company had an accumulated net loss of $753,214. The Company also had a negative net worth of $702,283 as of June 30, 2019. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

 

The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities.

 

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.

 

Our Business

 

Since our inception on March 31, 2015 until the Change-of-Control Transaction on March 23, 2018, we were in the steam room products distribution business. Following the Change-of-Control Transaction, our new management decided to pursue a different business from the steam room products distribution business. The Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.

 

We intended to pursue one or more business opportunities using Blockchain technology related products and services in various areas, such as e-commerce platforms offering online retail service involving Blockchain-as-a-service. However, we have not found partners or successfully engaged any partner at the costs and terms acceptable to us to design and maintain such platform for us. We are considering adjusting our business plan and conducting market research on certain adjustments.

 

We must raise a significant amount of capital, in the form of equity and/or debt, unless and until we have sufficient cash flow from operations. We do not anticipate any significant additional revenue until and unless we begin to execute our plan of operations. There is no assurance we will ever reach that stage. While there is an informal arrangement with one of our principal shareholders to provide loans to fund our working capital needs at present, there is no commitment from any person for any such capital and there can be no assurances that capital will be available to us on favorable terms, or at all.

 

After the Change-of-Control Transaction, we entered into an agreement dated April 26, 2018 (the “ADC Agreement”), with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which we would contribute $2 million to a new company, Apex Data Center Inc. (“ADC”), incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin would retain 20% of the equity of ADC. ADC would build a “mining pool,” or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee, with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. As of the date of this annual report, we provided $20,000 of the required working capital amount, the source of which were loans from one of our principal shareholders. Though we entered into the ADC Agreement with a good intention to commence to the mining business, we were not able to raise sufficient fund at terms and conditions acceptable to us to carry out our obligations within the timeframe given by the ADC Agreement and the parties terminated the ADC Agreement on April 1, 2019 by entering into a termination and release agreement (the “Termination Agreement”). The Termination Agreement is filed as Exhibit 10.2 to the Amendment to the Quarterly Report on Form 10-Q dated May 21, 2019.

 

Plan of Operations and Current Status

 

We originally planned to establish e-commerce platforms offering online retail service (the E-Commerce Platforms Project ) using Blockchain-as-a-service for all our customers who will join our e-commerce platforms as vendors and suppliers. However, during the past six months, we were not able to find partners or engage any partner at the costs and terms acceptable to us to design and develop the Blackchain-as-a-service platform for us and provide technical support at a reasonable cost that we can afford at this moment. We are currently considering adjusting our business plan and forming development strategy based on market research.

 

On June 28, 2019, we filed a registration statement on Form S-1 (No. 333-232453) (the Registration Statement ) under the Securities Act in connection with our self-underwritten public offering of up to 10,000,000 shares of Common Stock (the Offering ). The shares of Common Stock in our Offering were sold at an offering price of $1.00 per share (the Offering Price ).

 

We plan to use the proceeds of this Offering to fund E-Commerce Platforms Project which will be adjusted once we complete our market research. However, if we are not unable to overcome the difficulties of obtaining additional financing and capital from the market, it may be extremely difficult for us to start the establishment of e-commerce platform that could fuel the organic growth of our business.

 

 
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Research and Development

 

We have not incurred any research and development costs to date.

 

Employees

 

As of June 30, 2019, we had 3 full-time or part-time employees.

 

Intellectual Property

 

We currently have not obtained any copyrights, patents or trademarks. We do not anticipate filing any copyright or trademark applications related to any assets over the next 12 months.

 

Government Regulation

 

We are required to comply with all regulations, rules and directives of governmental authorities and agencies in any jurisdiction which we would conduct activities in the future. As of now there are no required governmental approvals present that we need approval from or any existing government regulation on our business.

 

REPORTS TO SHAREHOLDERS

 

We file reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. You may obtain copies of these reports from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10 A.M. to 3 P.M. or on the SEC’s website, at www.sec.gov. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

 

Item 1A. Risk Factors

 

You should carefully consider the following material risk factors and other information in this report. If any of the following risks actually occur, our business, financial condition, results of operations and prospects for growth could be seriously impacted. As a result, the trading price, if any, of our Common Stock could decline and you could lose part or all of your investment.

 

RISKS ASSOCIATED TO OUR BUSINESS

 

We have commenced limited operations in our business. We expect to incur significant operating losses for the foreseeable future.

 

We were incorporated on March 31, 2015 and underwent change-of-control on March 23, 2018. We have commenced limited business operations. Accordingly, we have no way to evaluate the likelihood that our business will be successful. Potential investors should be aware of the difficulties normally encountered by new distribution companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs and expenses that may exceed current estimates. We expect to incur losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful.

 

 
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If we are not able to implement our strategies to achieve our business objectives, our business operations and financial performance may be adversely affected.

 

Our business plan and growth strategy are based on currently prevailing circumstances and the assumption that certain circumstances will or will not occur, as well as the inherent risks and uncertainties involved in various stages of development. However, there is no assurance that we will be successful in implementing our strategies or that our strategies, even if implemented, will lead to the successful achievement of our objectives. If we are not able to successfully implement our strategies, our business operations and financial performance may be adversely affected.

 

We need to secure additional financing.

 

We require additional funds since we have very limited operating capital and negative working capital. As of June 30, 2019, we had no cash in bank but a bank overdraft in the amount of $8,697. As of the date of this annual report we did not have funds sufficient to pay most of our daily operating expenses, including compensation for our independent registered accounting firm for the review of this registration statement and must rely on the financial support of our major shareholders.

 

We anticipate that we will incur operating losses for the foreseeable future. Our officers have not been paid from the end of 2017 until February 1, 2019. Our cash burn rate is approximately $60,937 per month, which we are currently accruing, and which may increase as we continue to spend additional cash on legal and accounting expenses in connection with this registration statement.

 

If we continue to incur legal and accounting costs as we work towards getting this registration statement effective, we likely will be forced to engage in a toxic financing which would be extremely dilutive to existing shareholders and would depress the price of our common stock, among other things. If we are not successful in securing additional financing including toxic funding, we will likely be required to cease operations.

 

Any funding we raise through the sale of our common stock will result in dilution to existing shareholders and funding through bank loans will increase our liabilities.

 

On June 28, 2019, we filed a registration statement on Form S-1 (No. 333-232453) (the “Registration Statement”) under the Securities Act in connection with our self-underwritten public offering of up to 10,000,000 shares of Common Stock (the “Offering”). The shares of Common Stock in our Offering were sold at an offering price of $1.00 per share (the “Offering Price”). We expect the Offering to generate total gross proceeds of $10,000,000. On July 16, 2019, we received a comment letter from the SEC and plan to file an amendment to the Registration Statement along with a SEC response letter to address the open SEC comments by March 31, 2020.

 

We are raising capital in order for our business plan to succeed trough this Offering. Such stock issuances will cause stockholders’ interests in our company to be diluted. Such dilution will negatively affect the value of investors’ shares. Obtaining commercial loans, assuming those loans would be available, will increase the Company’s liabilities and future cash commitments.

 

We have earned limited revenue and our ability to sustain our operations is dependent on our ability to raise financing. As a result, there is substantial doubt about our ability to continue as a going concern.

 

Our cash and cash equivalents are our principal source of liquidity. As of June 30, 2019, our current assets were $960, compared to $72,644 in current assets as June 30, 2018. In November 2016, we received $43,200 from the sale of 1,080,000 shares of common stock and incurred $8,511 offering costs related to the transaction. As of June 30, 2019, we had accumulated net loss of $753,214. As of June 30, 2018, we had accumulated deficits of $122,725. Accordingly, there is substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. WWC, P.C. (“WWC”), our independent registered public accounting firm newly engaged on February 1, 2019, has expressed substantial doubt about our ability to continue as a going concern. This opinion could materially limit our ability to raise funds. If we fail to raise sufficient capital needed, we will not be able to complete our business plan. As a result, we may have to liquidate our business and you may lose your investment. You should consider our independent registered public accountant’s comments when determining if an investment is suitable.

 

 
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We will depend almost exclusively on outside capital to complete the development of a business plan. Such outside capital will include proceeds from the issuance of equity securities and may include commercial borrowing. There can be no assurance that capital will be available as necessary to meet these development costs or, if the capital is available, that it will be on terms acceptable to the Company.

 

If we are successful in raising the funds from the Offering, we plan to start our operations described in Plan of Operation section. We cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities.

 

We have identified multiple material weaknesses in our internal control over financial reporting which could, if not remediated, result in material misstatements in our financial statements.

 

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act. As disclosed elsewhere in this annual report, we identified material weaknesses in our internal control over financial reporting primarily as a result of lack of accounting staffing, insufficient policies and procedures to ensure the correct application of accounting and financing reporting with respect to the current requirements of GAAP and SEC disclosure requirements, lack of segregation of duties, no independent audit committee and no effective controlling procedures as to approval the use of the Company’s assets, and concluded that neither our disclosure controls and procedures nor our internal control over financial reporting were effective as of June 30, 2019. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission in Internal Control-An Integrated Framework (2013). We are actively engaged in developing a remediation plan designed to address these material weaknesses. If our remedial measures are insufficient to address the material weakness, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.

 

Any inability to attract and retain additional personnel could affect our ability to successfully grow our business.

 

Our future success depends on our ability to identify, attract, hire, train, retain and motivate other highly-skilled technical, managerial, editorial, merchandising, marketing and customer service personnel. Competition for such personnel is intense. Our failure to retain and attract the necessary technical, managerial, editorial, merchandising, marketing, and customer service personnel could harm our business.

 

If we fail to accurately forecast our expenses and revenues, our business, prospects, financial condition and results of operations may suffer and the price of our securities may decline.

 

The rapidly evolving nature of our industry and the constantly evolving nature of our business, make forecasting operating results difficult. We plan to upgrade and further expand the components of our infrastructure. We may experience difficulties with upgrades of our infrastructure, and may incur increased expenses as a result of these difficulties. As a result of these potential expenditures on our infrastructure, our ability to reduce spending may become limited. Therefore, any significant shortfall in the revenues for which we have built and are continuing to build our infrastructure would likely harm our business.

 

We may be accused of infringing intellectual property rights of third parties.

 

We may be subject to legal claims of alleged infringement of the intellectual property rights of third parties. The ready availability of damages, royalties and the potential for injunctive relief has increased the defense litigation costs of patent infringement claims, especially those asserted by third parties whose sole or primary business is to assert such claims. Such claims, even if not meritorious, may result in significant expenditure of financial and managerial resources, and the payment of damages or settlement amounts. Additionally, we may become subject to injunctions prohibiting us from using software or business processes we currently use or may need to use in the future, or requiring us to obtain licenses from third parties when such licenses may not be available on financially feasible terms or terms acceptable to us or at all. In addition, we may not be able to obtain on favorable terms, or at all, licenses or other rights with respect to intellectual property we do not own in providing ecommerce services to other businesses and individuals under commercial agreements.

 

 
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RISKS ASSOCIATED WITH OUR SECURITIES

 

Our Common Stock may be thinly traded and our stockholders may be unable to sell at or near ask prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate their shares.

 

Our Common Stock may be “thinly-traded”, meaning that the number of persons interested in purchasing our Common Stock at or near bid prices at any given time may be relatively small or non-existent. This situation may be attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. Broad or active public trading market for our Common Stock may not develop or be sustained.

 

The market price for our Common Stock may be volatile and subject to wide fluctuations due to factors such as:

 

 

actual or anticipated fluctuations in our quarterly operating results;

 

 

changes in financial estimates by securities research analysts;

 

 

negative publicity, studies or reports;

 

 

changes in the economic performance or market valuations of other companies conducting similar businesses as us;

 

 

announcements by us or our competitors of acquisitions, strategic partnerships, joint ventures or capital commitments; and

 

 

addition or departure of key personnel;

 

In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our Common Stock.

 

We do not intend to pay dividends for the foreseeable future.

 

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Common Stock if the market price of our Common Stock increases.

 

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

 

The SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management report on such company’s internal controls over financial reporting in its annual report, which contains management’s assessment of the effectiveness of internal controls over financial reporting.

 

 
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Our reporting obligations as a public company place a significant strain on our management and operational and financial resources and systems. Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting may result in the loss of investor confidence in the reliability of our financial statements, which in turn may harm our business and negatively impact the trading price of our stock. Furthermore, we anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act.

 

We historically were not in compliance with the SEC reporting requirements under the Securities Exchange Act, in any event if we become delinquent with our SEC reporting, we may not able to provide current disclosure to the public markets and our common shares may be considered highly risky.

 

We failed to timely file our annual report on Form 10-K for the year ended June 30, 2018 and subsequent quarterly reports for the periods ended September 30, 2018 and December 31, 2018. In addition, we failed to timely file this annual report for the year ended June 30, 2019 and the subsequently quarterly report for the period ended September 30, 2019. Though we have filed such reports with the SEC except the quarterly report for the period ended September 30, 2019, we cannot assure you that we will always be able to timely file our periodic reports with the SEC. If we fail to provide current disclosure to the public markets, investing in our common shares may be considered highly risky.

 

There is a limited market for our Common Stock, which may make it difficult for holders of our Common Stock to sell their stock.

 

Our stock is currently listed on the OTC Pink market under trading symbol APXX but there has been no active trading up to date. We plan to apply to be listed on OTCQB Market, but there is no assurance that we will be approved for the listing at this point. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our Common Stock, the ability of holders of our Common Stock to sell our Common Stock, or the prices at which holders may be able to sell our Common Stock. Further, many brokerage firms will not process transactions involving low price stocks, especially those that come within the definition of a “penny stock.” If we cease to be quoted, holders of our Common Stock may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our Common Stock, and the market value of our Common Stock would likely decline.

 

Our Common Stock is deemed a “penny stock,” which would make it more difficult for our investors to sell their shares.

 

Our Common Stock is subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose Common Stock is not listed on the Nasdaq Stock Market or other national securities exchange or trades at less than $5.00 per share. These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. Because our Common Stock is subject to the penny stock rules, investors will find it more difficult to dispose of our securities

 

The market for penny stocks has experienced numerous frauds and abuses which could adversely impact investors in our stock.

 

OTC securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC reporting requirements are less stringent than those of the stock exchanges or NASDAQ.

 

Patterns of fraud and abuse include:

 

 

·

Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

 

·

Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

 

·

“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

 

·

Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

 

·

Wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

 

Our management is aware of the abuses that have occurred historically in the penny stock market.

 

 
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If a more active trading market for our Common Stock develops, the market price of our Common Stock is likely to be highly volatile and subject to wide fluctuations, and holders of our Common Stock may be unable to sell their shares at or above the price at which they were acquired.

 

The market price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including:

 

 

quarterly variations in our revenues and operating expenses;

 

 

developments in the financial markets and worldwide economies;

 

 

announcements of innovations or services by us or our competitors;

 

 

announcements by the federal and state government relating to regulations that govern our industry;

 

 

significant sales of our Common Stock or other securities in the open market;

 

variations in interest rates;

 

 

changes in the market valuations of other comparable companies; and

 

 

changes in accounting principles.

 

The rights of the holders of our Common Stock may be impaired by the potential issuance of preferred stock.

 

Our board of directors has the right to create a new series of preferred stock. As a result, the Board of Directors may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights that may adversely affect the voting power and equity interest of the holders of our Common Stock. Although we have no present intention to issue any additional shares of preferred stock or to create any new series of preferred stock, we may issue such shares in the future.

 

RISKS RELATED TO REGULATION OF OUR BUSINESS

 

We do not have any clients and we cannot guarantee we will ever have any. Even if we obtain clients, there is no assurance that we will make a profit.

 

We do not have any clients. Even if we obtain clients, there is no guarantee that we will generate a profit. If we cannot generate a profit, we will have to suspend or cease operations.

 

We are solely dependent upon the funds to be raised in the future to start our business, the proceeds of which may be insufficient to achieve revenues. We may need to obtain additional financing which may not be available.

 

We have not started our E-commerce Platform Project. We need the proceeds from the Offering to initiate development on our e-commerce platforms and initiate the development of our marketing program. We may need additional funds to complete further development of our business plan to achieve a sustainable sales level where ongoing operations can be funded out of revenues. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us.

 

 
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Because we are small and have minimal capital, we must limit marketing of our new business to potential known clients. As a result, we may not be able to attract enough clients to operate profitably. If we do not make a profit, we may have to suspend or cease operations.

 

Because we are small and do not have much capital, we must limit marketing our products. The sale of our products via our e-commerce platform is how we will initially generate revenues. Because we will be limiting our marketing activities, we may not be able to attract enough clients to buy our products to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.

 

Because we have only 2 officers and 3 directors who are responsible for our managerial and organizational structure, in the future, there may not be effective disclosure and accounting controls to comply with applicable laws and regulations which could result in fines, penalties and assessments against us.

 

We have only 2 officers and 3 directors who are responsible for our managerial and organizational structure which will include assessment and preparation of our disclosure controls and procedures and internal controls over financial reporting under the Sarbanes Oxley Act of 2002. While most of them have no formal training in financial accounting matters, they have been reviewing the financial statements that are included in this annual report. When our disclosure controls and procedures and internal controls over financial reporting under the Sarbanes Oxley Act of 2002 referred to above are implemented, they will be responsible for the administration of them. If they do not have sufficient expertise, they may be incapable of creating and implementing the controls which may subject us to sanctions and fines by the SEC which ultimately could cause you to lose your investment.

 

A permanent loss of data or a permanent loss of service on the internet will have an adverse effect on our operations and will cause us to cease doing business.

 

Our future operations will depend entirely on the Internet. If we permanently lose data or permanently lose Internet service for any reason, be it technical failure or criminal acts, we will have to cease operations and you will lose your investment.

 

We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation.

 

We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us, which could cause us to cease operations. If that happens, you will lose your investment.

 

Item 1B. Unresolved Staff Comments.

 

Not applicable to smaller reporting companies.

 

Item 2. Properties

 

In October 2018, we moved our principal office from 150 S. Los Robles Avenue, Suite 650, Pasadena, CA 91101 to 19100 S. Susana Rd., Compton, CA 90221. We do not pay any rent for this space, which is provided by one of our principal shareholders for free. Our telephone number is (626) 910-5101. We do not own any real estate or other properties.

 

We have the property set forth in the table below.

 

Location

 

Size

 

Leased/Owned/Granted

 

Function

19100 S. Susana Rd., Compton, CA 90221

 

464.51 square meters (approximately 5,000 square feet)

 

Leased

 

Office

 

Item 3. Legal Proceedings

 

We are not currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.

 

Item 4. Mine Safety Disclosures

 

N/A

 

 
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PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Market for Securities

 

Our shares are quoted on the OTC Pink market but to date there has been no active trading. There can be no assurance that any market for our stock will develop.

 

Holders of our Common Stock

 

As of June 30, 2019, there were 39 registered stockholders, holding 5,080,000 shares of our issued and outstanding common stock.

 

Dividend Policy

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. However, the Nevada Revised Statutes prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

 

1.

We would not be able to pay our debts as they become due in the usual course of business; or

 

2.

Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

 

Recent Sales of Unregistered Securities

 

None.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

We did not purchase any of our shares of common stock or other securities during our fiscal year ended June 30, 2019.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

We do not have any equity compensation plans.

 

Penny Stock Rules

 

The Securities and Exchange Commission has also adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

 

 
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A purchaser is purchasing penny stock which limits the ability to sell the stock. Our shares constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

 

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document, which:

 

·

contains a description of the nature and level of risk in the market for penny stock in both public offerings and secondary trading;

·

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the Securities Act of 1934, as amended;

·

contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” price for the penny stock and the significance of the spread between the bid and ask price;

·

contains a toll-free telephone number for inquiries on disciplinary actions;

·

defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

·

contains such other information and is in such form (including language, type, size, and format) as the Securities and Exchange Commission shall require by rule or regulation;

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

 

·

the bid and offer quotations for the penny stock;

·

the compensation of the broker-dealer and its salesperson in the transaction;

·

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

·

monthly account statements showing the market value of each penny stock held in the customer’s account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulties selling their securities.

 

Section 16(a)

 

Because we do not have a class of equity securities registered under the Securities Exchange Act of 1934, as amended, our directors, officers, and certain of our principal shareholders are not required to file reports pursuant to Section 16(a) of the Securities Exchange Act of 1934.

 

Item 6. Selected Financial Data.

 

Not required of smaller reporting companies.

 

 
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

Apex was incorporated on March 31, 2015, under the laws of the State of Nevada. On June 15, 2015, Tadas Dabasinskas, who at the time was our sole director and officer, purchased 4,000,000 shares of our common stock for $4,000 in cash. In November 2016, we sold 1,080,000 shares of our common stock to 31 individuals at $0.04 per share, for aggregate gross proceeds of $43,200, in a registered public offering pursuant to a registration statement on Form S-1 (file number: 333-207109. The” Initial Registration Statement”) that had been declared effective by the Securities and Exchange Commission on October 4, 2016.

 

On March 23, 2018, Tadas Dabasinkas, the then majority shareholder, sole director and sole officer of the Company, entered into stock purchase agreements and sold an aggregate 4,000,000 shares of the common stock of the Company, or approximately 78.7% of the issued and outstanding shares of common stock of the Company as of such date, being all of the shares owned by Mr. Dabasinkas, for an aggregate $443,079 in cash. The purchasers of the shares were Sumunity Group, Inc. (“Sumunity”) and Harbor Torrance Family Trust (“Harbor”), which purchased 1,200,000 and 2,800,000 shares, respectively. Harbor also acted in part as agent for Bo Qian in purchasing 800,000 of the shares initially purchased by Harbor, which shares were resold by Harbor to Mr. Qian on or about March 31, 2018 for the same price at which they were purchased by Harbor from Mr. Dabasinkas (such transaction is sometimes referred as the “Change-of-Control Transaction” in this annual report). The Company received no proceeds from the Change-of-Control Transaction. None of the purchasers is an affiliate of Mr. Dadasinkas.

 

The source of the funds used by Sumunity to purchase the shares was cash on hand from a capital contribution to Sumunity from certain of its shareholders. Those shareholders include entities whose own shareholders include Meijuan Fu as described below, Ms. Fu was appointed Chief Financial Officer of the Company in connection with the transaction described above. Additionally, Ms. Fu is the Chief Executive Officer and Chief Financial Officer of Sumunity. Harbor is also a principal shareholder of Sumunity. As also described below, effective June 30, 2018, Ms. Fu resigned as a director, Chief Financial Officer and Secretary of the Company.

 

The source of the funds used by Harbor to purchase the shares was a private loan, including funds from Xiaoya Deng, who, as described below, was appointed as a director of the Company in connection with the transaction described above. The loan is repayable in five years and bears interest at 5% per annum.

 

The source of the funds used by Mr. Qian to purchase the shares was personal funds. Effective June 30, 2018, Mr. Qian was appointed a director of the Company.

 

In connection with the Change-of-Control Transaction, and on the same date, (i) Mr. Dabasinkas resigned as director of the Company and from all officer positions with the Company, including Chief Executive Officer and President; (ii) Xiaoya Deng, Meijuan Fu and Yuen Wong Moon were appointed as directors of the Company; (iii) Jeff Bodnar was appointed as Chief Executive Officer and President of the Company; and (iv) Meijuan Fu was appointed as Chief Financial Officer and Secretary of the Company. Effective June 30, 2018, Ms. Fu resigned as a director, Chief Financial Officer and Secretary of the Company.

 

On March 23, 2018, in connection with the Change-of-Control transaction, all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. The loans were interest free, unsecured, and payable on demand.

 

Recent Development

 

Since our inception on March 31, 2015 until the Change-of-Control Transaction on March 23, 2018, we were was in the steam room products distribution business. Following the Change-of-Control Transaction on March 23, 2018, our new management decided to pursue a different business from the steam room products distribution business. The Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.

 

We intended to pursue one or more business opportunities using Blockchain technology related products and services in various areas, such as e-commerce platforms offering online retail service involving Blockchain-as-a-service. However, we have not found partners or successfully engaged any partner at the costs and terms acceptable to us to design and maintain such platform for us. We are considering adjusting our business plan and conducting market research on certain adjustments. 

 

 
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We must raise significant amount of capital, in the form of equity and/or debt, unless and until we have sufficient cash flow from operations. We do not anticipate any significant additional revenue until and unless we begin to execute on our plan of operations. There is no assurance we will ever reach that stage. While there is an informal arrangement with one of our principal shareholders to provide loans to fund our working capital needs at present, there is no commitment from any person for any such capital and there can be no assurances that capital will be available to us on favorable terms, or at all.

 

After the Change-of-Control Transaction, we entered into an agreement dated April 26, 2018 (the “ADC Agreement”), with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which we would contribute $2 million to a new company, Apex Data Center Inc. (“ADC”), incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin would retain 20% of the equity of ADC. ADC would build a “mining pool,” or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee, with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. As of the date of this annual report, we provided $20,000 of the required working capital amount, the source of which were loans from one of our principal shareholders. Though we entered into the ADC Agreement with a good intention to commence to the mining business, we were not able to raise sufficient fund at terms and conditions acceptable to us to carry out our obligations within the timeframe given by the ADC Agreement and the parties terminated the ADC Agreement on April 1, 2019 by entering into a termination and release agreement (the “Termination Agreement”). The Termination Agreement is filed as Exhibit 10.2 to the Amendment to the Quarterly Report on Form 10-Q dated May 21, 2019. The certificate of dissolution of ADC was filed with the State of Washington on May 13, 2019. No liquidating distribution was made to either Puxin or us. We deconsolidated ADC from our balance sheet as of June 30, 2019 and recorded a loss from investment in subsidiary for $4,000.

 

On July 23, 2018, Sumunity entered into a securities purchase agreement with the Company and Harbor (the “SPA”). Pursuant to the SPA, Sumunity agreed to sell the 1,200,000 shares of the Company, representing Sumunity’s 100% equity interest in the Company to Harbor for a consideration of $100,000. As a result, Harbor holds 3,200,000 shares of the Company, representing 63% of the issued and outstanding shares of the Company.

 

Plan of Operations and Current Status

 

We planned to establish e-commerce platforms offering online retail service (the “E-Commerce Platforms Project”) with Blockchain-as-a-service that is intended for all our customers who will join our e-commerce platforms as vendors and suppliers. However, during the past six months, we were not able to find partners or engage any partner at the costs and terms acceptable to us to design and develop the Blackchain-as-a-service platform for us and provide technical support at a reasonable cost that we can afford at this moment. We are currently considering adjusting our business plan and forming development strategy based on market research.  

 

On June 28, 2019, we filed a registration statement on Form S-1 (No. 333-232453) (the “Registration Statement”) under the Securities Act in connection with our self-underwritten public offering of up to 10,000,000 shares of Common Stock (the “Offering”). The shares of Common Stock in our Offering were sold at an offering price of $1.00 per share (the “Offering Price”). We plan to use the proceeds of this Offering to fund E-Commerce Platforms Project which will be adjusted once we complete our market research. However, if we are not unable to overcome the difficulties of obtaining additional financing and capital from the market, it may be extremely difficult for us to start the establishment of e-commerce platform that could fuel the organic growth of our business.

 

 
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Results of Operations

 

We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

 

We expect we will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities, although there can be no guarantee that we will be able to raise such capital or, if we are able to, that the terms of such financing will be favorable to our current shareholders.

 

Twelve Months Ended June 30, 2019 Compared to the Twelve Months Ended June 30, 2018

  

For the year ended June 30, 2019, we generated $0 in steam room products revenues, resulting in a decrease of $94,264 from the $94,264 revenue recognized in the previous year ended June 30, 2018. We incurred $0 in cost of goods sold for the year ended June 30, 2019, resulting in a decrease of $83,679 from the $83,679 cost of goods sold for the year ended June 30, 2018. The gross profit for the year ended June 30, 2019 was $0, compared to the $10,584 gross profit for the previous year, representing a net decrease of in gross profit of $10,584.

  

Operating Expenses

 

For the year ended June 30, 2019, we incurred operating expenses of $626,067, consisting primarily of legal and professional fee, salaries and wages, rent and consulting fee. The fiscal year 2019 operating expenses represent an increase of $538,083 over the total operating expenses of $87,984 for the same period ended June 30, 2018.

  

Income Taxes Provision (Benefit)

 

For the year ended June 30, 2019, we do not have income taxes provision (benefit), compared to $1,298 for the previous year. The income tax benefit for the year ended June 30, 2018 results from a March 31, 2018 reversal of previously accrued income tax payable in the amount of $1,298.

 

Net Loss

 

Net Loss attributable to Apex for the year ended June 30, 2019, was $630,489, an increase of $558,157 over the $72,332 net loss for the year ended June 30, 2018.

 

 
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Liquidity and Capital Resources

 

At June 30, 2019, we had bank overdraft of $8,697, which decreased by $80,196 from cash ending balance $71,499 at June 30, 2018. Our current asset was other receivable of $960 as of June 30, 2019.

 

We had $758,994 in total current liabilities as of June 30, 2019, including a loan from related parties of $655,545, accrued expense of $62,555, other payable of $26,987, bank overdraft $8,697, and payroll tax payable of $5,209 as compared to $156,000 in total current liabilities at June 30, 2018.

 

We had a working capital deficit of $758,034 as of June 30, 2019, compared to a working capital deficit at $83,356 as of June 30, 2018. For the period from inception (March 31, 2015) to June 30, 2019, we had an accumulated net loss of $753,214. We have a negative net worth attributable to Apex in the amount of $702,283 as of June 30, 2019. This raises substantial doubt about our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

 

Our independent registered public accountant has issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our expenses. We have generated an aggregate $377,095 in revenues since inception but we do not anticipate any significant additional revenue until and unless we begin to execute on our plan of operations. There is no assurance we will ever reach that stage.

 

Our ability to continue as a going concern is dependent upon our ability to successfully execute our new business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operation as and when they become due. Management intends to finance operating costs for the foreseeable future with loans from related parties and the issuance of equity and/or debt. There is no commitment from any person for any such capital and there can be no assurances that capital will be available to us on favorable terms, or at all.

 

At June 30, 2019, there were outstanding liabilities of $758,994. We received loans in the aggregate principal amount of $655,545 from our new principal shareholders from the date of the change-of-control transaction through June 30, 2019. The shareholder loan is payable on demand and carries an interest rate of 0%.

 

This shareholder has informally agreed to continue to lend us some of the funds needed for some of our operating expenses, but he has no legal obligation to do so and may discontinue making any such loans at any time. Our failure to achieve the necessary levels of profitability or obtain the additional significant funding required to meet our expenses and other financial obligations, would be detrimental to us and result in the inability to execute our plan of operations, even having to cease operations completely.

 

Going Concern

 

The accompanying consolidated financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the consolidated financial statements were issued.

 

For the period from inception (March 31, 2015) to June 30, 2019, the Company had an accumulated net loss of $753,214. The Company also had a negative net worth of $702,283 as of June 30, 2019. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

 

The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities.

 

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.

 

 
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Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Critical Accounting Policies

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fair Value of Financial Instruments

      

The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

 

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

 

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

 

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

 

The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, inventories, advances to suppliers, prepaid expenses, short-term loans, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments.

  

ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

 

 
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Development Stage Entity

 

The Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.

 

Leases

 

In February 2016, the FAS issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”) and ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company’s non-cancellable leases consist of an office leases for 63 months for 6,543 square feet expiring in March 2024. The new standard, including subsequent amendments is effective for our interim and annual periods beginning July 1, 2019. The Company will adopt the new guidance in the first quarter of fiscal year 2020 using the alternative modified transition basis, thereby recognizing the cumulative effect of initially applying Topic 842 as an adjustment to opening balance sheet on the adoption date, without revising the balances in comparative periods. The Company plans to elect the package of transitional practical expedients allowing, among other provisions, the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct cost, for any existing leases on the adoption date.

 

The Company has substantially completed its evaluation of the new lease guidance implementation and assessed the effect of the adoption on its financial statements. In connection with the adoption of the new guidance, the Company expects to recognize ROU asset for approximately $879,000 and lease liability of approximately $947,000 in its balance sheet as of July 1, 2019, with no impact to its results of operations and cash flows. The difference between the leased assets and lease liabilities represents the net position of existing prepaid rent and deferred rent liabilities balance, resulting from historical straight-lining of operating leases, which will be effectively reclassified upon adoption to reduce the measurement of the leased assets.

 

Basic and Diluted Loss Per Share

 

The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.

 

Revenue Recognition

 

The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:

 

 

a.

the customer has prepaid for the product;

 

b.

the product has been shipped from either Apex Resources or one of our suppliers; and

 

c.

the product has been delivered and signed for by the customer as evidenced by the shipping company.

 

 
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The company is the primary obligor in the sales transaction. We are able to select suppliers based upon the customer’s needs, we do not have a key supplier, we have sales agreements with multiple suppliers and we are able to set the price of the product to the customer. Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. The company does not believe the 30-day exchange or refund will have a material impact on our revenue recognition as any product which has a defect in manufacturing will be returned to the supplier for replacement or refund for the customer based upon pursuant law and the Uniform Commercial Code.

 

Based on the above, the Company determined that the revenue recognition for the sales is in accordance with the FASB ASC 605-15-25-1.

 

Income Taxes

 

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.

 

Recent Accounting Pronouncements

 

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by the US GAAP. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We do not believe the adoption of this ASU would have a material effect on our financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its financial statements.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations, except for the new Topic 842 lease standard as discussed above.

 

 
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Item 8. Consolidated Financial Statements and Supplementary Data

 

See Pages F-1 through F-12.

 

Item 9. Changes in and Disagreements with Accountants on Financial Disclosure

 

(a) Resignation of Previous Independent Registered Public Accounting Firm

 

In mid-January, 2019, our independent auditor, Kirtane & Pandit LLP (“K&P”) notified the Board of Directors of the Company of its intended resignation as the Company’s independent registered public accounting firm. On February 1, 2019, K&P submitted its resignation letter and the Board of Directors accepted such resignation. The auditor’s report of K&P on the Company’s consolidated financial statements as of and for either of the past two fiscal years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles.

 

During the two most recent fiscal years and through the subsequent interim period preceding K&P’s resignation, there were no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K) between the Company and K&P on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of K&P would have caused K&P to make reference to the subject matter thereof in its reports for such fiscal years and interim period, or (ii) “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

 

We furnished a copy of this disclosure to K&P and have requested that K&P furnish us with a letter addressed to the SEC stating whether such firm agrees with the above statements or, if not, stating the respects in which it does not agree and a copy of the letter was filed with the Current Report on Form 8-K as Exhibit 16.1 dated February 4, 2019.

 

(b) Engagement of New Independent Registered Public Accounting Firm

 

On February 1, 2019, the Board of Directors ratified and approved the engagement of WWC, P.C. (“WWC”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements as of and for fiscal year ending June 30, 2019 and the entry of an engagement letter dated January 25, 2019 with WWC.

 

During the two most recent fiscal years and through the subsequent interim period preceding WWC’s engagement, the Company has not consulted with WWC regarding (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to the Company nor oral advice was provided that WWC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

 

 
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Item 9A. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of June 30, 2019, because of the material weaknesses in our internal control over financial reporting as discussed below.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.

 

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

 

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to consolidated financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected.

 

Management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of June 30, 2019, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the evaluation date due to the factors stated below.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of evaluation date and identified the following material weaknesses:

 

Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.

 

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

 

Lack of Audit Committee and Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee or outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

 

Management is committed to improving its internal controls and, subject to having adequate financial resources, will (1) continue to use third-party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel, and (3) consider appointing outside directors and audit committee members in the future.

 

Management has discussed the material weaknesses noted above with our independent registered public accounting firm. Due to the nature of these material weaknesses, there is a more than remote likelihood that misstatements which could be material to the annual or interim consolidated financial statements could occur that would not be prevented or detected.

  

Changes in Internal Controls Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter for our fiscal year ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

None.

 

 
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PART III

 

Item 10. Directors, Executive Officers and Corporate Governance

 

As of the date of this Form 10-K, our directors and executive officers are as follows:

 

Name

 

Age

 

Positions

 

Jeff Bodnar

 

56

 

President, Chief Executive Officer, and Director

Linda Bao

 

61

 

Chief Financial Officer and Secretary

Xiaoya Deng

 

46

 

Chairperson of the Board and director

Bo Qian

 

49

 

Director

 

Jeff Bodnar has been our President and Chief Executive Officer since the change-of-control transaction on March 23, 2018. He was appointed as a director effective June 30, 2018. Mr. Bodnar has been a manager at Harbor Green Grains, LP and Harbor Metal Management Inc. of Compton, California since 2013. He is also the lead instructor at the Fast Lane Racing School since 2002. Mr. Bodnar holds a BFA degree from the California State University Fullerton and has served in the US Air Force Reserves as crew chief/inspection mechanic, Secret Security Clearance between 1988 and 1991.

 

Linda Bao has been our Chief Financial Officer and Secretary since June 30, 2018. Ms. Bao has been the accountant for River Star Recycling Inc. since January 2013. Ms. Bao obtained a Bachelor’s degree in chemistry from Shanghai Tech University in China.

 

Xiaoya Deng has been a director and Chairperson of the Board of our Company since the change-of-control transaction on March 23, 2018. Ms. Deng is the founder and General Manager of Hong Kong Lisu Plastic Co. Ltd., Lisu Recycling Resources Co. Ltd. and Nanhai Lishui Lisu Plastic Co. Ltd. of Foshan, Guangdong, China. Ms. Deng has been an entrepreneur in the plastic recycling business in China and Hong Kong since the founding of these companies.

 

Bo Qian has been a director of our Company since June 30, 2018. Mr. Qian has been the Marketing Director of Shen Yang Sunny Shang Ye Lian Suo Qi Ye Guan Li Corporation, based in the Peoples Republic of China, since 2013. Mr. Qian holds a Bachelor’s degree in economics from Shenyang University of Finance and Economics in China.

 

 
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Term of Office

 

Directors hold office until the next annual meeting of our shareholders and until their successors have been duly elected and qualified. Our Bylaws provide that our Board of Directors will consist of no less than one member. Our officers are appointed by, and serve at the discretion of, the Board of Directors.

 

Director Independence

 

Our Board of Directors is currently composed of three (3) members, none of whom qualifies as an independent director in accordance with the published listing requirements of the Nasdaq Stock Market. The Nasdaq independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his or her family members has engaged in various types of business dealings with us. In addition, our Board of Directors has not made a subjective determination as to any of our directors that no relationships exist which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, although such subjective determination is required by Nasdaq requirements. Had our Board of Directors made these determinations, our Board of Directors would have reviewed and discussed information provided by our directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.

 

Involvement in Certain Legal Proceedings

 

No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses), (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.

 

Committee Structure and Conflicts of Interest

 

Since our Board of Directors does not have Audit, Compensation, or Nominating/Corporate Governance Committees, or any other committees, the functions that would have been performed by such committees are performed by our Board of Directors as a whole. We do not currently have a director who would satisfy the requirements of being an audit committee financial expert. The Board of Directors has determined that such committees are not necessary at this time, since the Company is in the early stages of its new business model, and a small number of shareholders and no active trading of our stock. It should be noted that because none of our directors are independent, there is a risk of conflicts of interest arising from time to time. During the next fiscal year, our Board of Directors will monitor whether and when it would be appropriate to diversify the Board of Directors to include independent directors and/or establish Audit, Compensation, and/or Nominating/Corporate Governance Committees.

 

Shareholder Communications with the Board of Directors

 

We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, our directors welcome the views of our shareholders. During the next fiscal year, our Board of Directors will continue to monitor whether and when it would be appropriate to adopt such a process.

 

 
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Item 11. Executive Compensation

 

Summary Compensation Table

 

The following table sets forth information regarding each element of compensation that we paid or awarded to our named executive officers for fiscal years June 30, 2019 and 2018:

 

Name and

Principal Position

 

Year

 

Salary

($)

 

 

Bonus

($)

 

 

Stock

Awards

($) *

 

 

Option

Awards

($) *

 

 

Non-Equity

Incentive Plan

Compensation

($)

 

 

Nonqualified

Deferred

Compensation

($)

 

 

All Other

Compensation

($)

 

 

Total

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tadas Dabasinskas (1)

 

2019

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

2018

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

-0-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeff Bodnar (2)

 

2019

 

 

32,000

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2018

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meijuan Fu (3)

 

2019

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2018

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Linda Bao (4)

 

2019

 

 

29,500

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2018

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

____________

 

(1)

Mr. Dabasinkas resigned as President, Secretary, and Treasurer on March 23, 2018.

 

(2)

Mr. Bodnar was appointed President and Chief Executive Officer on March 23, 2018. Mr. Bodnar was entitled to an annual base salary of $60,000 pursuant to the employment agreement he had with the Company

 

(3)

Ms. Fu served as Chief Financial Officer and Secretary from March 23, 2018, through June 30, 2018.

 

 

 

 

(4)

Ms. Linda Bao was appointed Chief Financial Officer on June 30, 2018. Ms. Bao was entitled to an annual base salary of $70,800 pursuant to the employment agreement she had with the Company.

 

We currently do not pay any compensation to any of our director.

 

Stock Option Grants and Other Equity Awards

 

We had no outstanding equity awards as of the end of the fiscal period ended June 30, 2019. There are no agreements, arrangements or understanding currently in effect pursuant to which any of our officer or directors will be granted stock options or other equity awards.

 

Employment Agreements

 

As of April 1, Apex entered into an employment agreement (the “Bodnar’s Agreement”) with Mr. Jeff Bodnar pursuant to which he shall be employed as the CEO of Apex and receive an annual base salary of $60,000 (the “Annual Base Salary”). Under this Bodnar’s Agreement, Mr. Bodnar is employed as our CEO for a term of 24 months, which automatically renews for additional one-year term unless previously terminated. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or grossly negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. In such case, the executive officer will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the executive officer’s right to all other benefits will terminate, except as required by any applicable law. We may also terminate an executive officer’s employment without cause upon one-month advance written notice. In such case of termination by us, we are required to provide compensation to the executive officer in the amount of Annual Base Salary earned and not paid prior to termination. The executive officer may terminate the employment at any time with a two-month advance written notice if there is any significant change in the executive officer’s duties and responsibilities or a material reduction in the executive officer’s annual salary. In such case, the executive officer may resign prior to the expiration of Bodnar’s Agreement if such resignation is approved by the Board of Directors of the Company or an alternative arrangement with respect to the Employment is agreed to by the Board of Directors.

 

 
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As of April 1, Apex entered into an employment agreement (the “Bao’s Agreement”) with Ms. Linda Bao pursuant to which he shall be employed as the CFO of Apex and receive an annual base salary of $70,800 (the “Annual Base Salary”). Under this Bao’s Agreement, Ms. Bao is employed as our CFO for a term of 24 months, which automatically renews for additional one-year term unless previously terminated. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or grossly negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. In such case, the executive officer will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the executive officer’s right to all other benefits will terminate, except as required by any applicable law. We may also terminate an executive officer’s employment without cause upon one-month advance written notice. In such case of termination by us, we are required to provide compensation to the executive officer in the amount of Annual Base Salary earned and not paid prior to termination. The executive officer may terminate the employment at any time with a two-month advance written notice if there is any significant change in the executive officer’s duties and responsibilities or a material reduction in the executive officer’s annual salary. In such case, the executive officer may resign prior to the expiration of the Bao’s Agreement if such resignation is approved by the Board of Directors of the Company or an alternative arrangement with respect to the Employment is agreed to by the Board of Directors.

 

Each executive officer has agreed to hold, both during and after the termination of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment, any of our confidential information or proprietary information of any third party received by us and for which we have confidential obligations.

 

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his employment and for two years following termination of the employment.

 

Director Compensation

 

None of our directors serving as such during fiscal 2018 and 2019 received any compensation from us. There are no agreements, arrangements, or understanding currently in effect pursuant to which any of our directors will be compensated in the future for any services provided as a director.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth information, as of January 22, 2020, concerning, except as indicated by the footnotes below:

 

·

each person whom we know beneficially owns more than 5% of our outstanding common stock;

·

each of our directors and nominees for the board of directors;

·

our Chief Executive Officer, Chief Financial Officer, and each of our other executive officers serving as such as of June 30, 2019 (such individuals are hereafter referred to as our “Named Executive Officers”); and

·

all of our directors and executive officers as a group.

 

Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Apex Resources, Inc., 13191 Crossroads Pkwy N, Suite 200, City of Industry, CA 91746.

 

We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

 

Applicable percentage ownership is based on 5,080,000 shares of common stock outstanding at June 30, 2019. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options, warrants, restricted stock units, or other convertible securities held by that person or entity that are currently exercisable or releasable or that will become exercisable or releasable within sixty days following June 30, 2019. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

 

 
27
 
Table of Contents

 

The information provided in the table is based on our records, information filed with the SEC, and/or information provided to us, except where otherwise noted.

 

Name and Address of Beneficial Owner

 

Amount and

Nature

of Beneficial

Ownership

 

 

Percent of

Common

Stock(1)

 

 

 

 

 

 

 

 

5% Holders:

 

 

 

 

 

 

 

 

 

 

 

 

 

Harbor Torrance Family Trust (2)

 

 

3,200,000

 

 

 

63.0%

 

 

 

 

 

 

 

 

 

Bo Qian

 

 

800,000

 

 

 

15.7%

 

 

 

 

 

 

 

 

 

Directors and Executive Officers:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Xiaoya Deng

 

 

0

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Jeff Bodnar

 

 

0

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Bo Qian

 

 

800,000

 

 

 

15.7%

 

 

 

 

 

 

 

 

 

Linda Bao

 

 

0

 

 

 

-

 

 

 

 

 

 

 

 

 

 

All directors and executive officers as a group (6 persons)

 

 

800,000

 

 

 

15.7%

_____________

(1)

Based on 5,080,000 shares of Common Stock outstanding as of the date hereof.

 

(2)

Harbor Torrance Family Trust is a California trust with its principal business address at 19100 S Susanna Road, Compton CA 90221. Mr. Jacky Lor, the general manager of our Company responsible for the office administration, and his spouse, Mrs. Manhong Zhang are the trustees. 1,200,000 shares out of 3,200,000 shares was transferred from Sumunity Group Inc. (“Sumunity”) pursuant to certain Securities Purchase Agreement entered into by and among the Company, Sumunity as the seller, and Harbor Torrance Family Trust as the buyer on July 23, 2018 for a consideration of $100,000.

 

Item 13. Certain Relationships and Related Transactions, and Director Independence

 

Through the change-of-control transaction on March 23, 2018, we received a total of $1,231 in loans from Tadas Dabasinskas, who, at the time the loans were made, was our sole director and officer, and our principal shareholder. The loans were interest free, unsecured, and payable on demand. Proceeds from the loans were used to open the company bank accounts and pay certain expenses. On March 23, 2018, in connection with the change-of-control transaction, the loans from Mr. Dabasinkas were forgiven by him.

 

Following the change-of-control transaction on March 23, 2018, and through June 30, 2019, a principal shareholder loaned us a total of $655,545 for working capital purposes. The working capital loan is payable on demand and carries an interest rate of 0%.

 

On July 23, 2018, Sumunity entered into a securities purchase agreement with the Company and Harbor (the “SPA”). Pursuant to the SPA, Sumunity agreed to sell the 1,200,000 shares of the Company, representing Sumunity’s 100% equity interest in the Company to Harbor for a consideration of $100,000. As a result, Harbor holds 3,200,000 shares of the Company, representing 63% of the issued and outstanding shares of the Company.

 

 
28
 
Table of Contents

 

The ADC Agreement was signed by one of our principal shareholders on our behalf. It is our intention and the intention of this shareholder that the ADC Agreement is for the benefit of the company and not for this individual. As of the date of this annual report, we provided $20,000 of the required working capital amount, the source of which were loans from one of our principal shareholders. Though we entered into the ADC Agreement with a good intention to commence to the mining business, we were not able to raise sufficient fund at terms and conditions acceptable to us to carry out our obligations within the timeframe given by the ADC Agreement and the parties terminated the ADC Agreement on April 1, 2019 by entering into a termination and release agreement (the “Termination Agreement”). The Termination Agreement is filed as Exhibit 10.2 to the Amendment to the Quarterly Report on Form 10-Q dated May 21, 2019.

 

Item 14. Principal Accounting Fees and Services

          

The following table summarizes the fees charged by Kirtane & Pandit LLP (“K&P”) and WWC, P.C. (“WWC”) for the services rendered to the company and its subsidiaries in fiscal years 2018 and 2019:

 

 

 

Amount Billed and Paid

 

Type of Fee

 

Fiscal Year

2018

 

 

Fiscal Year

2019

 

Audit (1), (2)

 

$3,750

 

 

$14,000

 

Audit Related (2)

 

 

-

 

 

 

-

 

Total

 

$3,750

 

 

$14,000

 

________________

(1)

Represents aggregate fees charged by K&P of $3,750 and $750 for annual audits and quarterly reviews for fiscal years 2018 and 2019, as well as fees of $14,000 charged by WWC for fiscal year 2019.

(2)

Represents aggregate fees charged by K&P for audit or review and related services that are reasonably related to the performance of the audit and are not reported as audit fees.

 

 

29

 
Table of Contents

 

PART IV

 

Item 15. Exhibits, Consolidated Financial Statement Schedules

 

 

Incorporated by Reference

Exhibit

 

Exhibit Description

 

Filed

Herewith

 

Form

 

Period

Ending

 

Exhibit

 

Filing Date

3.1

 

Articles of Incorporation, as amended

 

_

 

S-1

 

_

 

3.1

 

09/24/2015

3.2

 

By-Laws

 

_

 

S-1

 

_

 

3.2

 

09/24/2015

10.1

 

Cooperation Agreement Of Apex Data Center Inc. Dated April 26, 2018

 

_

 

8-K

 

_

 

10.1

 

06/22/2018

10.2

 

Termination and Release Agreement by and between Apex Resources Inc. and Chongqing Puxin Blockchain Technology Co., Ltd. dated as of May April 1, 2019

 

_

 

Form 10-Q/A

 

March 31, 2019

 

10.2

 

May 21, 2019

10.3

 

Employment Agreement dated April 1, 2019, by and between Apex Resources Inc. and Jeff Bodnar.

 

x

 

10.4

 

Employment Agreement dated April 1, 2019, by and between Apex Resources Inc. and Linda Bao.

 

x

 

31.1

 

Certifications by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

x

 

_

 

_

 

_

 

_

31.2

 

Certifications by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

x

 

_

 

_

 

_

 

_

32.1

 

Certifications by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

x

 

_

 

_

 

_

 

_

32.2

 

Certifications by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

x

 

_

 

_

 

_

 

_

101.INS

 

XBRL Instance Document

 

x

 

_

 

_

 

_

 

_

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

x

 

_

 

_

 

_

 

_

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

x

 

_

 

_

 

_

 

_

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

x

 

_

 

_

 

_

 

_

101.LAB

 

XBRL Taxonomy Extension Labels Linkbase Document

 

x

 

_

 

_

 

_

 

_

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

x

 

_

 

_

 

_

 

_

_______

** Furnished, not filed

 

 
30
 
Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

APEX RESOURCES, INC.

 

 

Date: January 23, 2020

By:

/s/ Jeff Bodnar

 

Jeff Bodnar

 

President and Chief Executive Officer

 

 
31
 
Table of Contents

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints, jointly and severally, Jeff Bodnar and Linda Bao, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature

 

Title

 

Date

 
/s/ Jeff Bodnar

 

President, Chief Executive Officer (principal executive officer), and Director

 

January 23, 2020

Jeff Bodnar

 
/s/ Linda Bao

 

Secretary, Treasurer, and Chief Financial Officer

 

January 23, 2020

Linda Bao

 

(principal financial officer and principal accounting officer)

 
/s/ Xiaoya Deng

 

Chairperson of the Board (director)

 

January 23, 2020

Xiaoya Deng

 
/s/ Bo Qian

 

Director

 

January 23, 2020

Bo Qian

 

 
32
    

 

 

 

To:

The Board of Directors and Stockholders of

 

Apex Resources Inc.

 

Report of Independent Registered Public Accounting Firm

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Apex Resources Inc.(the “Company”) as of June 30, 2019, and the related statements of operations, stockholders’ equity, and cash flows for the year ended June 30, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2019, and the results of its operations and its cash flows for the year ended June 30, 2019, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had a working capital deficit, an accumulated net loss and a negative net worth, which raise substantial doubt about its ability to continue as a going concern. Management’s plan in regards to these matters are described in Note 3. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ WWC, P.C.

Certified Public Accountants

 

San Mateo, California

January 10, 2020

 

We have served as the Company’s auditor since 2019.

 

 

 
F-1
 
 

 

KIRTANE & PANDIT LLP CHARTERED ACCOUNTANTS

H-16, Saraswat Colony, Sitladevi Temple Road, Mahim (W), Mumbai 400016

T: 91-22-24444119 Email:kpcamumbai@kirtanepandit.com

 

To the Board of Directors and Stockholders' Apex Resources Inc.

 

Report of Independent Registered Public Accounting Firm

 

Opinion on the Consolidated Financial Statements

 

We have audited the accompanying balance sheet of Apex Resources Inc. (the “Company”) as of June 30, 2018, the related statements of operations, changes in shareholders' equity(deficit), and cash flows for each of the year in the period ended June 30, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financials position of the Company as of June 30, 2018, and the results of its operations and its cash flows for the year ended June 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

 

Basis of Opinion

 

The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We served as the Company’s auditor from 2017 to 2018.

 

We are public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error of fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosers in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provide a reasonable basis for our opinion.

 

Critical Audit Matters

 

The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the company has incurred a net loss of $122,725 since inception and has a negative net worth of $75,565 as of June 30, 2018. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

 

The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities. Management has also given its plan in regard to these matters which are described in Note 3 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to the matter.

 

For Kirtane & Pandit LLP

Chartered Accountants

FRN: 105215W/W100057

PCAOB FIRM ID NO 5686

 

Milind Bhave

Partner

Membership No. 047973

 

Place: Mumbai, India

Date: January 11, 2019

  

 

F-2

 
 

  

APEX RESOURCES INC

Consolidated Balance Sheets

(Audited, Stated in U.S. Dollars)

 

 

June 30,

2019

 

 

June 30,

2018

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$-

 

 

$71,499

 

Prepaid expense

 

 

-

 

 

 

1,145

 

Other receivable

 

 

960

 

 

 

-

 

Total Current Assets

 

 

960

 

 

 

72,644

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

 

 

 

 

 

 

Building

 

 

-

 

 

 

4,328

 

Accumulated depreciation - building

 

 

-

 

 

 

(865)

Land

 

 

-

 

 

 

4,328

 

Total Fixed Assets

 

 

-

 

 

 

7,791

 

 

 

 

 

 

 

 

 

 

Security deposit

 

 

55,751

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$56,711

 

 

$80,434

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Bank overdraft

 

$8,697

 

 

$-

 

Accounts payable

 

 

-

 

 

 

1,000

 

Payroll Tax Payable

 

 

5,209

 

 

 

-

 

Accrued expense

 

 

62,555

 

 

 

-

 

Other payable

 

 

26,987

 

 

 

-

 

Loan from related parties

 

 

655,545

 

 

 

155,000

 

Total Current Liabilities

 

 

758,994

 

 

 

156,000

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

$758,994

 

 

$156,000

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 75,000,000 shares

 

 

 

 

 

 

 

 

authorized; 5,080,000 shares issued and outstanding

 

 

5,080

 

 

 

5,080

 

Additional paid-in-capital

 

 

45,851

 

 

 

45,851

 

Deficit accumulated during the development stage

 

 

(753,214)

 

 

(122,725)

Total Stockholders' Deficit - Apex Resources

 

 

(702,283)

 

 

(71,794)

Noncontrolling interests

 

 

-

 

 

 

(3,771)

Total Stockholders’ Deficit

 

 

(702,283)

 

 

(75,565)

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficit

 

$56,711

 

 

$80,435

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
F-3
 
 

  

APEX RESOURCES INC

Consolidated Statements of Operations

(Audited, Stated in U.S. Dollars)

 

 

 

 

 

 

 

 

 

Year ended

 

 

Year ended

 

 

 

June 30,

2019

 

 

June 30,

2018

 

 

 

 

 

 

 

 

Revenue

 

$-

 

 

$94,264

 

Cost of Revenue

 

 

-

 

 

 

83,679

 

Gross Profit

 

$-

 

 

 

10,584

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

626,067

 

 

 

83,403

 

Advertising and promotion

 

 

-

 

 

 

4,293

 

Depreciation

 

 

-

 

 

 

289

 

Total Operating Expenses

 

 

626,067

 

 

 

87,984

 

Net Loss from Operations

 

 

(626,067)

 

 

(77,401)

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Interest expenses

 

 

(422)

 

 

-

 

Loss on liquidation of subsidiary

 

 

(4,000)

 

 

-

 

Total Other Income (Expense)

 

 

(4,422)

 

 

-

 

Loss Before Income Taxes

 

 

(630,489)

 

 

(77,401)

 

 

 

 

 

 

 

 

 

Provision for (Benefit of) Income Taxes

 

 

 

 

 

 

 

 

Income tax expense (benefit) - Current

 

 

-

 

 

 

(1,298)

 

 

 

 

 

 

 

 

 

Net Loss including noncontrolling interests

 

 

(630,489)

 

 

(76,103)

 

 

 

 

 

 

 

 

 

Less: Net loss attributable to noncontrolling interests

 

 

-

 

 

 

3,771

 

 

 

 

 

 

 

 

 

 

Net Loss attributable to Apex Resources Inc.

 

$(630,489)

 

$(72,332)

 

 

 

 

 

 

 

 

 

Loss per Common Share:

 

 

 

 

 

 

 

 

Basic and Diluted

 

$(0.12)

 

$(0.01)

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic and Diluted

 

 

5,080,000

 

 

 

5,080,000

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
F-4
 
 

  

APEX RESOURCES INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

 

(Audited, Stated in U.S. Dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

Income (Deficit)

accumulated

during

 

 

Total

 

 

 

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Paid in

Capital

 

 

the development

stage

 

 

Stockholders’

Deficit

 

 

Noncontrolling

Interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 1, 2017

 

 

5,080,000

 

 

 

5,080

 

 

 

42,120

 

 

 

(50,394)

 

 

(3,194)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholder contribution (change in control)

 

 

 

 

 

 

 

 

 

 

3,731

 

 

 

 

 

 

 

3,731

 

 

 

-

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(72,332)

 

 

(72,332)

 

 

(3,771)

Balance, June 30, 2018

 

 

5,080,000

 

 

 

5,080

 

 

 

45,851

 

 

 

(122,726)

 

 

(71,795)

 

 

(3,771)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 1, 2018

 

 

 5,080,000

 

 

 

 5,080

 

 

 

 45,851

 

 

 

 (122,726

 

 

 (71,795

 

 

 (3,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(630,489)

 

 

(630,489)

 

 

 

 

Elimination of noncontrolling interest at the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dissolution of Apex Data Center Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

3,771

 

Balance, June 30, 2019

 

 

5,080,000

 

 

 

5,080

 

 

 

45,851

 

 

 

(753,214)

 

 

(702,283)

 

 

-

 

 

 

The accompanying notes are an integral part of these consolidated financial statements

 

 
F-5
 
 

 

APEX RESOURCES INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Audited, Stated in U.S. Dollars)

 

 

 

 

 

 

 

 

 

Year ended

 

 

Year ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

Operating Activities

 

 

 

 

 

 

Net Loss including noncontrolling interests

 

$(630,489)

 

$(76,102)

Add: Impairment loss on asset held for sale

 

 

7,791

 

 

 

-

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Depreciation

 

 

-

 

 

 

289

 

Other receivable

 

 

 (960

 

 

 

 

Prepaid purchase

 

 

1,145

 

 

 

(1,146)

Accounts payable

 

 

(1,000

 

 

(9,000)

Accrued expense

 

 

62,555

 

 

 

(1,500)

Payroll tax payable

 

 

5,209

 

 

 

-

 

Other payable

 

 

26,987

 

 

 

 

 

Security deposit

 

 

(55,751)

 

 

-

 

Income tax payable

 

 

-

 

 

 

(1,298)

Net cash used in operating activities

 

 

(584,512

)

 

 

(88,757)

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Bank overdraft balance

 

 

8,697

 

 

 

-

 

Proceeds from loan from director

 

 

-

 

 

 

2,500

 

Loan from related parties

 

 

500,545

 

 

 

155,000

 

Net cash provided by financing activities

 

 

509,242

 

 

 

157,500

 

 

 

 

 

 

 

 

 

 

Elimination of noncontrolling interest of Apex Data Center Inc.

 

 

3,771

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

(71,499

)

 

 

68,743

 

 

 

 

 

 

 

 

 

 

Cash and equivalents at beginning of the period

 

 

71,499

 

 

 

2,756

 

 

 

 

 

 

 

 

 

 

Cash and equivalents at end of the period

 

$-

 

 

$71,499

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

 

422

 

 

$-

 

Taxes

 

 

-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Significant non-cash transactions:

 

 

 

 

 

 

 

 

Discharged loan from Director converted to additional paid-in capital

 

 

-

 

 

$3,731

 

  

The accompanying notes are an integral part of these consolidated financial statements

 

 
F-6
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

Note 1: Organization and Basis of Presentation

 

Apex Resources Inc (the “Company”) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.

 

Sales of Steam Room Products

 

Prior to April 7, 2018, the Company was engaged in the business of selling high quality stream room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company’s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.

 

On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the “SPA”). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: “Debt Discharge” and Note 8: “Change in Control”, for additional details.

 

After the end of the period, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.

 

Data Center Hosting Services

 

The Company entered into an agreement dated April 26, 2018 (the “ADC Agreement”), with Chongqing Puxin Blockchain Technology Co., Ltd. (“Puxin”), a cryptocurrency mining company in China, pursuant to which the Company would contribute $2.0 million to a new company, Apex Data Center Inc. (“ADC”) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin would retain 20% of the equity of ADC. ADC would build a “mining pool”, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. While the Company did not own any rig machine, under the ADC Agreement it was expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC’s facilities in the first phase. The Company would either host additional machines for other third parties or raise the capital to acquire additional machines. The target was to host a total of 10,000 rig machines in the facility in the fiscal years 2019 and 2020.

 

Though we entered into the ADC Agreement with a good intention to commence to the mining business, we were not able to raise sufficient fund at terms and conditions acceptable to us to carry out our obligations within the timeframe given by the ADC Agreement and the parties terminated the ADC Agreement on April 1, 2019. The dissolution of ADC was filed with the State of Washington on May 13, 2019. No liquidating distribution was made to either Puxin or us. We deconsolidated ADC from our balance sheet as of June 30, 2019 and recorded a loss from investment in subsidiary for $4,000.

 

 
F-7
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

The Company’s consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and are expressed in the U.S. dollars. The Company’s fiscal year-end is June 30.

 

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (“ASC”), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the consolidated financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.

 

The accompanying consolidated financial statements include the consolidated accounts of Apex Resources Inc. and its 80%-owned subsidiary Apex Data Center Inc., which was incorporated on April 24, 2018. Significant intercompany transactions and balances have been eliminated. The consolidated financial statements and related disclosures as of June 30, 2019 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources, Inc. and its subsidiary.

 

Note 2: Significant Accounting Policies and Recent Accounting Pronouncements

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

 

Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fair Value of Financial Instruments

 

The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

 

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

 

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

 

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

 

The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, inventories, advances to suppliers, prepaid expenses, short-term loans, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments.

 

ASC Topic 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

 

 
F-8
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

Development Stage Entity

 

The Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.

 

Leases

 

In February 2016, the FAS issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”) and ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company’s non-cancellable leases consist of an office leases for 63 months for 6,543 square feet expiring in March 2024. The new standard, including subsequent amendments is effective for our interim and annual periods beginning July 1, 2019. The Company will adopt the new guidance in the first quarter of fiscal year 2020 using the alternative modified transition basis, thereby recognizing the cumulative effect of initially applying Topic 842 as an adjustment to opening balance sheet on the adoption date, without revising the balances in comparative periods. The Company plans to elect the package of transitional practical expedients allowing, among other provisions, the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct cost, for any existing leases on the adoption date.

 

The Company has substantially completed its evaluation of the new lease guidance implementation and assessed the effect of the adoption on its financial statements. In connection with the adoption of the new guidance, the Company expects to recognize ROU asset for approximately $879,000 and lease liability of approximately $947,000 in its balance sheet as of July 1, 2019, with no impact to its results of operations and cash flows. The difference between the leased assets and lease liabilities represents the net position of existing prepaid rent and deferred rent liabilities balance, resulting from historical straight-lining of operating leases, which will be effectively reclassified upon adoption to reduce the measurement of the leased assets.

 

Basic and Diluted Loss Per Share

 

The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.

 

Revenue Recognition

 

The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:

 

 

a.

the customer has prepaid for the product;

 

b.

the product has been shipped from either Apex Resources or one of our suppliers; and

 

c.

the product has been delivered and signed for by the customer as evidenced by the shipping company.

 

The company is the primary obligor in the sales transaction. We are able to select suppliers based upon the customer’s needs, we do not have a key supplier, we have sales agreements with multiple suppliers and we are able to set the price of the product to the customer. Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. The company does not believe the 30-day exchange or refund will have a material impact on our revenue recognition as any product which has a defect in manufacturing will be returned to the supplier for replacement or refund for the customer based upon pursuant law and the Uniform Commercial Code.

 

Based on the above, the Company determined that the revenue recognition for the sales is in accordance with the FASB ASC 605-15-25-1.

 

Income Taxes

 

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

 

 
F-9
 
 

  

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.

 

Recent Accounting Pronouncements

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by the US GAAP. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We do not believe the adoption of this ASU would have a material effect on our financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its financial statements.

 

The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations, except for the new Topic 842 lease accounting guidance as discussed above.

 

Note 3: Going Concern

 

The accompanying consolidated financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the consolidated financial statements were issued.

 

For the period from inception (March 31, 2015) to June 30, 2019, the Company had an accumulated net loss of $753,214. The Company also had a negative net worth of $702,283 as of June 30, 2019. This raises substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

 

The ability to continue as a going concern is dependent upon the Company’s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities.

 

The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.

 

 
F-10
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

Note 4: Lease Commitment

 

The Company entered into a 63-month operating lease for its office space in the City of Industry on January 1, 2019. California. The payment obligations of the lease are guaranteed by Harbor Green Grains, LP, an entity controlled by one of the Company’s majority shareholders. Future minimum lease payment under the lease are as follows:

 

For the 12-month period ending June 30, 2019

 

 

 

2020

 

$178,738.40

 

2021

 

 

184,100.56

 

2022

 

 

207,140.40

 

2023

 

 

213,354.60

 

2024

 

 

164,004.51

 

Total Future Minimum Lease Payment

 

$947,338.47

 

 

See Note 2: Significant Accounting Policies and Recent Accounting Pronouncements for a discussion of the Company’s assessment of the impact on its balance sheets and statements of operations and cash flows beginning July 1, 2019 with respect to the new Topic 842 lease accounting guidance.

 

Note 5: Legal Matters

 

The Company has no known legal issues pending.

 

Note 6: Debt

 

In June 2015, the Company’s former Director and President Tadas Dabasinkas made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.

 

As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, “Change in Control”, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of June 30, 2019, was $0.

 

Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and June 30, 2019, a principal shareholder Harbor Torrance Family Trust loaned a total $655,545 to the Company as working capital. The Company has not made any repayment to the $655,545 loan as of June 30, 2019. The loan is payable on demand and carries an interest rate of 0%.

 

Note 7: Capital Stock

 

The Company has 75,000,000 shares of common stock with a par value of $0.001 per share.

 

On June 15, 2015, the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000. As of June 30, 2019, there were no outstanding stock options or warrants.

 

In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its recent offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.

 

Note 8: Fixed Assets

 

In June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to April 7, 2018, the Company utilized the space as its principal office to conduct the Company’s former steam room products sales activities. As the Company discontinued the steam room products sales activities on April 7, 2018, the office in Lithuania is treated as an asset held for sale under ASC 250-45 and ASC 360-10 post-April 6, 2018. Because the location of the property, which does not suit our business development plan, and the logistics involved in a sale of asset, the Company abandoned the property and wrote off the undepreciated cost of $7,791 in the quarter ended September 30, 2018.

 

 
F-11
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

Note 9: Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

Apex Resources Inc. was registered in the State of Nevada and has been subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.

 

As of June 30, 2019, the Company had net operating loss carry forwards of approximately $753,214 that may be available to reduce future years’ taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

 

Provision (benefit) of income taxes for the years ended June 30, 2019 and 2018, were $0 and ($1,298), respectively.

 

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

 

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a 100% valuation allowance.

 

 
F-12
 
 

 

Apex Resources Inc

Notes to the Audited Consolidated Financial Statements

June 30, 2019

 

 

 

Year Ended

June 30,

2019

 

 

Year Ended

June 30,

2018

 

 

 

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

 

Net operating tax carryforward

 

$753,214

 

 

$122,725

 

Tax rate

 

 

21%

 

 

21%

Gross deferred tax assets

 

 

158,175

 

 

 

25,772

 

Valuation allowance

 

 

(158,175)

 

 

(25,772)

 

 

 

 

 

 

 

 

 

Net deferred tax assets

 

$-

 

 

$-

 

 

Note 10: Related Party Transactions

 

The Company has related party loan transactions involving the Company’s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.

 

Note 11: Change in Control

 

On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company’s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company’s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.

 

Note 12: Subsequent Events

 

The Company has evaluated events subsequent through the date these consolidated financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the consolidated financial statements.

 

 
F-13

 

EX-10.3 2 apxr_ex103.htm EMPLOYMENT AGREEMENT apxr_ex103.htm

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April 1, 2019 (the “Effective Date”), by and between APEX RESOURCES, INC., a Nevada company (the “Company”), and Jeff Bodnar, an individual (the “Executive”). Except with respect to the direct employment of the Executive by the Company, the term “Company” as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its subsidiaries and affiliated entities (collectively, the “Group”).

 

RECITALS

 

A. The Company desires to employ the Executive as its President and Chief Executive Officer and to assure itself of the services of the Executive during the term of Employment (as defined below).

 

B. The Executive desires to be employed by the Company as its President and Chief Executive Officer during the term of Employment and upon the terms and conditions of this Agreement.

 

AGREEMENT

 

The parties hereto agree as follows:

 

I. POSITION

 

The Executive hereby accepts a position of President and Chief Executive Officer (the “Employment”) of the Company.

 

II. TERM

 

Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be 24 months commencing on the Effective Date, unless terminated earlier pursuant to the terms of this Agreement. The Employment will be renewed automatically for additional one-year terms if neither the Company nor the Executive provides a notice of termination of the Employment to the other party or otherwise proposes to re-negotiate the terms of the Employment with the other party within three months prior to the expiration of the applicable term.

 

III. DUTIES AND RESPONSIBILITIES

 

a. The Executive’s duties at the Company will include all jobs assigned by the Company’s Board of the Directors (the “Board”).

 

b. The Executive shall devote all of his working time, attention and skills to the performance of his duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement, the Certificate of Incorporation and Bylaws of the Company, as amended and restated from time to time (the “Charter Documents”), and the guidelines, policies and procedures of the Company approved from time to time by the Board.

 

c. The Executive shall use his best efforts to perform his duties hereunder. The Executive shall not, without the prior written consent of the Board, become an employee of any entity other than the Company and any subsidiary or affiliate of the Company, and shall not be concerned or interested in any business or entity that engages in the same business in which the Company engages (any such business or entity, a “Competitor”), provided that nothing in this clause shall preclude the Executive from holding any shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere if such shares or securities represent less than 5% of the competitors outstanding shares and securities. The Executive shall notify the Company in writing of his interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require.

 

IV. NO BREACH OF CONTRACT

 

The Executive hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Executive and the performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the Executive is a party or otherwise bound, except for agreements entered into by and between the Executive and any member of the Group pursuant to applicable law, if any; (ii) that the Executive has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, the Executive entering into this Agreement or carrying out his duties hereunder; (iii) that the Executive is not bound by any confidentiality, trade secret or similar agreement (other than this) with any other person or entity except for other member(s) of the Group, as the case may be.

 

V. COMPENSATION AND BENEFITS

 

a. Base Salary. Executive shall receive a base salary at the rate of $60,000 per annum (the “Annual Base Salary”), subject to withholdings and deductions and which shall be paid to Executive in accordance with the customary payroll practices and procedures of the Company. Such Annual Base Salary shall be reviewed by the Company not less often than annually, and may be adjusted from time to time.

 

 
1
 
 

 

b. Bonus. The Executive shall be eligible for bonuses as determined by the Board in its sole discretion.

 

c. Equity Incentives. To the extent the Company adopts and maintains a share incentive plan, the Executive will be eligible to participate in such plan pursuant to the terms thereof as determined by the Board in its sole discretion.

 

d. Benefits. Executive shall participate in such full-time employee and executive benefit plans and programs as the Company may from time to time offer to senior executives of the Company, subject to the terms and conditions of such plans,

 

e. Vacation. Executive shall be entitled to vacation, sick leave, holidays and other paid time-off benefits provided by the Company from time to time which are applicable to the Company’s executive officers in accordance with Company policy. The opportunity to take paid time off is contingent upon Executive’s workload and ability to manage his schedule.

 

f. Business Expenses. The Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures as in effect from time to time

 

VI. TERMINATION OF THE AGREEMENT

 

a. By the Company.

 

(i) For Cause. The Company may terminate the Employment for cause, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), and the termination shall be effective immediately, if:

 

(1) the Executive is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement;

 

(2) the Executive has been grossly negligent or acted dishonestly to the detriment of the Company;

 

(3 the Executive has engaged in actions amounting to willful misconduct or failed to perform his duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure; or

 

(4) the Executive violates Section VI or VIII of this Agreement.

 

Upon termination for cause, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

 

(ii) For death and disability. The Company may also terminate the Employment, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:

 

(1) the Executive has died; or

 

(2) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his employment with the Company, with or without reasonable accommodation, for more than 120 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.

 

Upon termination for death or disability, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

 

(iii) Without Cause. The Company may terminate the Employment without cause, at any time, upon one-month prior written notice.

 

Upon termination without cause, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination.

 

(iv) Change of Control Transaction. If the Company or its successor terminates the Employment upon a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity (the “Change of Control Transaction”), the Executive shall be entitled to a lump sum cash payment equal to one (1) month of the Executive’s Annual Base Salary at a rate equal to the greater of his/her annual salary in effect immediate1y prior to the termination, or his/her then current Annua1 Base Salary as of the date of such termination.

 

 
2
 
 

 

b. By the Executive. The Executive may terminate the Employment at any time with a two-month prior written notice to the Company, if (1) there is a material reduction in the Executive’s authority, duties and responsibilities, or (2) there is a material reduction in the Executive’s annual Base Salary. The Executive may resign prior to the expiration of the Agreement if such resignation is approved by the Board or an alternative arrangement with respect to the Employment is agreed to by the Board.

 

c. Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.

 

d. Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, and then held with the Company or any of its affiliates, and, at the Company’s request, Executive shall execute such documents as are necessary or desirable to effectuate such resignations.

 

e. Return of Company Property. Executive hereby acknowledges and agrees that all Company Property and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “ Company Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, cellular and portable telephone equipment, personal digital assistant (PDA) devices, and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.

 

VII. CONFLICTING EMPLOYMENT.

 

The Executive hereby agrees that, during the term of his employment with the Company, he or she will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during the term of the Executive’s employment, nor will the Executive engage in any other activities that conflict with his obligations to the Company without the prior written consent of the Company.

 

VIII. NON-COMPETITION AND NON-SOLICITATION

 

In consideration of the compensation and benefits granted to the Executive by the Company and subject to applicable law, the Executive agrees that during the term of the Employment and for a period of two (2) year following the termination of the Employment for whatever reason:

 

a. The Executive will not approach clients, customers or contacts of the Company or other persons or entities introduced to the Executive in the Executive’s capacity as a representative of the Company for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities;

 

b. The Executive will not assume employment with or provide services as a director or otherwise for any Competitor, or engage, whether as principal, partner, licensor or otherwise, in any Competitor; and

 

c. The Executive will not seek, directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination.

 

The provisions contained in this Section VIII are considered reasonable by the Executive and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.

 

This Section VIII shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section VIII, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). In any event, the Company shall have right to seek all remedies permissible under applicable law.

 

 
3
 
 

 

IX. MISCELLANEOUS

 

a. Work Eligibility. As a condition of Executive’s employment with the Company, Executive will be required to provide evidence of Executive’s identity and eligibility for employment in the United States. It is required that Executive bring the appropriate documentation with Executive at the time of employment. As a further condition of Executive’s employment with the Company, Executive shall enter into and abide by the Company’s standard Confidential Information and Intellectual Property Assignment Agreement (the “Confidential Information Agreement”).

 

b. Withholding Taxes. Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

c. Section 409A. The intent of the parties hereto is that the payments and benefits under this Agreement be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (collectively with the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, “ Section 409A” ), and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt therefrom. If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.

 

d. Assignment. This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and (ii) in the event of a Change of Control Transaction, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

 

e. Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

 

f. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter, including any prior agreements between the Executive and a member of the Group. The Executive acknowledges that he or she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.

 

g. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York and each of the parties irrevocably consents to the jurisdiction and venue of the federal and state courts located in New York, New York.

 

h. Amendment. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.

 

i. Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

j. Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.

 

k. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

 
4
 
 

 

l. No Interpretation Against Drafter. Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, he or she has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and year first above written.

 

 

APEX RESOURCES, INC.

 

By:

/s/ Jeff Bodnar

Name:

Jeff Bodnar

Title:

Chief Executive Officer

 

 

EXECUTIVE

 

 

By:

/s/ Jeff Bodnar

Name:

Jeff Bodnar

Title:

Chief Executive Officer

 

Address:

 

 

 

 

5

 

 

EX-10.4 3 apxr_ex104.htm EMPLOYMENT AGREEMENT apxr_ex104.htm

EXHIBIT 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April 1, 2019 (the “Effective Date”), by and between APEX RESOURCES, INC., a Nevada company (the “Company”), and Linda Bao, an individual (the “Executive”). Except with respect to the direct employment of the Executive by the Company, the term “Company” as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its subsidiaries and affiliated entities (collectively, the “Group”).

 

RECITALS

 

A. The Company desires to employ the Executive as its Chief Financial Officer and to assure itself of the services of the Executive during the term of Employment (as defined below).

 

B. The Executive desires to be employed by the Company as its Chief Financial Officer during the term of Employment and upon the terms and conditions of this Agreement.

 

AGREEMENT

 

The parties hereto agree as follows:

 

I. POSITION

 

The Executive hereby accepts a position of Chief Financial Officer (the “Employment”) of the Company.

 

II. TERM

 

Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be 24 months commencing on the Effective Date, unless terminated earlier pursuant to the terms of this Agreement. The Employment will be renewed automatically for additional one-year terms if neither the Company nor the Executive provides a notice of termination of the Employment to the other party or otherwise proposes to re-negotiate the terms of the Employment with the other party within three months prior to the expiration of the applicable term.

 

III. DUTIES AND RESPONSIBILITIES

 

a. The Executive’s duties at the Company will include all jobs assigned by the Company’s Board of the Directors (the “Board”).

 

b. The Executive shall devote all of her working time, attention and skills to the performance of her duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement, the [Certificate of Incorporation and Bylaws] of the Company, as amended and restated from time to time (the “Charter Documents”), and the guidelines, policies and procedures of the Company approved from time to time by the Board.

 

c. The Executive shall use her best efforts to perform her duties hereunder. The Executive shall not, without the prior written consent of the Board, become an employee of any entity other than the Company and any subsidiary or affiliate of the Company, and shall not be concerned or interested in any business or entity that engages in the same business in which the Company engages (any such business or entity, a “Competitor”), provided that nothing in this clause shall preclude the Executive from holding any shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere if such shares or securities represent less than 5% of the competitors outstanding shares and securities. The Executive shall notify the Company in writing of her interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require.

 

IV. NO BREACH OF CONTRACT

 

The Executive hereby represents to the Company that: (i) the execution and delivery of this Agreement by the Executive and the performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any other agreement or policy to which the Executive is a party or otherwise bound, except for agreements entered into by and between the Executive and any member of the Group pursuant to applicable law, if any; (ii) that the Executive has no information (including, without limitation, confidential information and trade secrets) relating to any other person or entity which would prevent, or be violated by, the Executive entering into this Agreement or carrying out her duties hereunder; (iii) that the Executive is not bound by any confidentiality, trade secret or similar agreement (other than this) with any other person or entity except for other member(s) of the Group, as the case may be.

 

 
1
 
 

 

V. COMPENSATION AND BENEFITS

 

a. Base Salary. Executive shall receive a base salary at the rate of $70,800.00 per annum (the “Annual Base Salary”), subject to withholdings and deductions and which shall be paid to Executive in accordance with the customary payroll practices and procedures of the Company. Such Annual Base Salary shall be reviewed by the Company not less often than annually, and may be adjusted from time to time.

 

b. Bonus. The Executive shall be eligible for bonuses as determined by the Board in its sole discretion.

 

c. Equity Incentives. To the extent the Company adopts and maintains a share incentive plan, the Executive will be eligible to participate in such plan pursuant to the terms thereof as determined by the Board in its sole discretion.

 

d. Benefits. Executive shall participate in such full-time employee and executive benefit plans and programs as the Company may from time to time offer to senior executives of the Company, subject to the terms and conditions of such plans,

 

e. Vacation. Executive shall be entitled to vacation, sick leave, holidays and other paid time-off benefits provided by the Company from time to time which are applicable to the Company’s executive officers in accordance with Company policy. The opportunity to take paid time off is contingent upon Executive’s workload and ability to manage her schedule.

 

f. Business Expenses. The Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures as in effect from time to time

 

VI. TERMINATION OF THE AGREEMENT

 

a. By the Company.

 

(i) For Cause. The Company may terminate the Employment for cause, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), and the termination shall be effective immediately, if:

 

(1) the Executive is convicted or pleads guilty to a felony or to an act of fraud, misappropriation or embezzlement;

 

(2) the Executive has been grossly negligent or acted dishonestly to the detriment of the Company;

 

(3 the Executive has engaged in actions amounting to willful misconduct or failed to perform her duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure; or

 

(4) the Executive violates Section VI or VIII of this Agreement.

 

Upon termination for cause, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

 

(ii) For death and disability. The Company may also terminate the Employment, at any time, without notice or remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided in accordance with applicable law), if:

 

(1) the Executive has died; or

 

(2) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of her employment with the Company, with or without reasonable accommodation, for more than 120 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply.

 

Upon termination for death or disability, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination. However, the Executive will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and the Executive’s right to all other benefits will terminate, except as required by any applicable law.

 

(iii) Without Cause. The Company may terminate the Employment without cause, at any time, upon one-month prior written notice.

 

Upon termination without cause, the Executive shall be entitled to the amount of Annual Base Salary earned and not paid prior to termination.

 

(iv) Change of Control Transaction. If the Company or its successor terminates the Employment upon a merger, consolidation, or transfer or sale of all or substantially all of the assets of the Company with or to any other individual(s) or entity (the “Change of Control Transaction”), the Executive shall be entitled to a lump sum cash payment equal to one (1) month of the Executive’s Annual Base Salary at a rate equal to the greater of his/her annual salary in effect immediate1y prior to the termination, or his/her then current Annua1 Base Salary as of the date of such termination.

 

 
2
 
 

 

b. By the Executive. The Executive may terminate the Employment at any time with a two-month prior written notice to the Company, if (1) there is a material reduction in the Executive’s authority, duties and responsibilities, or (2) there is a material reduction in the Executive’s annual Base Salary. The Executive may resign prior to the expiration of the Agreement if such resignation is approved by the Board or an alternative arrangement with respect to the Employment is agreed to by the Board.

 

c. Notice of Termination. Any termination of the Executive’s employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.

 

d. Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, and then held with the Company or any of its affiliates, and, at the Company’s request, Executive shall execute such documents as are necessary or desirable to effectuate such resignations.

 

e. Return of Company Property. Executive hereby acknowledges and agrees that all Company Property and equipment furnished to, or prepared by, Executive in the course of, or incident to, Executive’s employment, belongs to the Company and shall be promptly returned to the Company upon termination of Executive’s employment (and will not be kept in Executive’s possession or delivered to anyone else). For purposes of this Agreement, “ Company Property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), keys, building card keys, company credit cards, telephone calling cards, computer hardware and software, cellular and portable telephone equipment, personal digital assistant (PDA) devices, and all other proprietary information relating to the business of the Company or its subsidiaries or affiliates. Following termination, Executive shall not retain any written or other tangible material containing any proprietary information of the Company or its subsidiaries or affiliates.

 

VII. CONFLICTING EMPLOYMENT.

 

The Executive hereby agrees that, during the term of [his/her] employment with the Company, he or she will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Company is now involved or becomes involved during the term of the Executive’s employment, nor will the Executive engage in any other activities that conflict with her obligations to the Company without the prior written consent of the Company.

 

VIII. NON-COMPETITION AND NON-SOLICITATION

 

In consideration of the compensation and benefits granted to the Executive by the Company and subject to applicable law, the Executive agrees that during the term of the Employment and for a period of two (2) year following the termination of the Employment for whatever reason:

 

a. The Executive will not approach clients, customers or contacts of the Company or other persons or entities introduced to the Executive in the Executive’s capacity as a representative of the Company for the purposes of doing business with such persons or entities which will harm the business relationship between the Company and such persons and/or entities;

 

b. The Executive will not assume employment with or provide services as a director or otherwise for any Competitor, or engage, whether as principal, partner, licensor or otherwise, in any Competitor; and

 

c. The Executive will not seek, directly or indirectly, by the offer of alternative employment or other inducement whatsoever, to solicit the services of any employee of the Company employed as at or after the date of such termination, or in the year preceding such termination.

 

The provisions contained in this Section VIII are considered reasonable by the Executive and the Company. In the event that any such provisions should be found to be void under applicable laws but would be valid if some part thereof was deleted or the period or area of application reduced, such provisions shall apply with such modification as may be necessary to make them valid and effective.

 

This Section VIII shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section VIII, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). In any event, the Company shall have right to seek all remedies permissible under applicable law.

 

 
3
 
 

 

IX. MISCELLANEOUS

 

a. Work Eligibility. As a condition of Executive’s employment with the Company, Executive will be required to provide evidence of Executive’s identity and eligibility for employment in the United States. It is required that Executive bring the appropriate documentation with Executive at the time of employment. As a further condition of Executive’s employment with the Company, Executive shall enter into and abide by the Company’s standard Confidential Information and Intellectual Property Assignment Agreement (the “Confidential Information Agreement”).

 

b. Withholding Taxes. Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

c. Section 409A. The intent of the parties hereto is that the payments and benefits under this Agreement be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (collectively with the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, “ Section 409A” ), and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt therefrom. If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.

 

d. Assignment. This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and (ii) in the event of a Change of Control Transaction, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.

 

e. Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

 

f. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter, including any prior agreements between the Executive and a member of the Group. The Executive acknowledges that he or she has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.

 

g. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York and each of the parties irrevocably consents to the jurisdiction and venue of the federal and state courts located in New York, New York.

 

h. Amendment. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.

 

i. Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

j. Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.

 

k. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

l. No Interpretation Against Drafter. Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, he or she has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms.

 

 
4
 
 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and year first above written.

 

APEX RESOURCES, INC.

   
By:/s/ Jeff Bodnar

Name:

Jeff Bodnar 
Title:Chief Executive Officer 
   

EXECUTIVE

 

 

 

 

By:

/s/ Linda Bao

 

Name:

Linda Bao

 

Title:

Chief Financial Officer

 

 

Address:

 

 

 

 

 

 

 

5

 

EX-31.1 4 apxr_ex311.htm CERTIFICATION apxr_ex311.htm

EXHIBIT 31.1

 

 

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Jeff Bodnar, certify that:

 

1.

I have reviewed this Annual Report on Form 10-K for fiscal year ended June 30, 2019 of Apex Resources. Inc.

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: January 23, 2020

By:

/s/ Jeff Bodnar

 

Jeff Bodnar

 

Chief Executive Officer

 

EX-31.2 5 apxr_ex312.htm CERTIFICATION apxr_ex312.htm

EXHIBIT 31.2

 

CERTIFICATION OF

CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Linda Bao, certify that:

 

1.

I have reviewed this Annual Report on Form 10-K for fiscal year ended June 30, 2019 of Apex Resources. Inc.

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

a)

Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

 

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: January 23, 2020

By:

/s/ Linda Bao

 

Linda Bao

 

Chief Financial Officer

 

EX-32.1 6 apxr_ex321.htm CERTIFICATION apxr_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Apex Resources Inc. (the “Company”) on Form 10-K for the fiscal year ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeff Bodnar, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

Such Annual Report on Form 10-K for the fiscal year ended June 30, 2019, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)

The information contained in such Annual Report on Form 10-K for the fiscal year ended June 30, 2019, fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 23rd day of January, 2020.

 

 

By:

/s/ Jeff Bodnar

 

Jeff Bodnar

 

 

Chief Executive Officer

 

 

EX-32.2 7 apxr_ex322.htm CERTIFICATION apxr_ex322.htm

EXHIBIT 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Annual Report of Apex Resources Inc. (the “Company”) on Form 10-K for the fiscal year ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Linda Bao, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

Such Annual Report on Form 10-K for the fiscal year ended June 30, 2019, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)

The information contained in such Annual Report on Form 10-K for the fiscal year ended June 30, 2019, fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

IN WITNESS WHEREOF, the undersigned has executed this certification as of the 23rd day of January, 2020.

 

 

By:

/s/ Linda Bao

 

Linda Bao

 

Chief Financial Officer

 

EX-101.INS 8 apxr-20190630.xml XBRL INSTANCE DOCUMENT 0001653710 2018-07-01 2019-06-30 0001653710 2018-12-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure apxr:integer 0001653710 2019-06-30 0001653710 2017-07-01 2018-06-30 0001653710 us-gaap:CommonStockMember 2017-06-30 0001653710 2015-03-31 2019-06-30 0001653710 apxr:HarborTorranceFamilyTrustMember 2019-06-30 0001653710 2018-07-01 2018-09-30 0001653710 us-gaap:AdditionalPaidInCapitalMember 2017-06-30 0001653710 apxr:HarborTorranceFamilyTrustMember 2018-03-24 2018-06-30 0001653710 2018-06-30 0001653710 apxr:SecuritiesPurchaseAgreementMember 2018-03-23 0001653710 us-gaap:RetainedEarningsMember 2017-06-30 0001653710 apxr:SecuritiesPurchaseAgreementMember 2018-03-01 2018-03-23 0001653710 us-gaap:NoncontrollingInterestMember 2017-06-30 0001653710 apxr:MrDabasinkasMember 2017-06-30 0001653710 apxr:SecuritiesPurchaseAgreementMember apxr:MrDabasinkasMember 2018-03-01 2018-03-23 0001653710 2017-06-30 0001653710 2016-11-01 2016-11-30 0001653710 us-gaap:BuildingMember 2018-07-01 2019-06-30 0001653710 apxr:DataCenterHostingServicesMember apxr:ADCAgreementMember apxr:PuxinMember 2017-07-01 2018-06-30 0001653710 apxr:MrDabasinkasMember 2019-06-30 0001653710 us-gaap:LandMember 2018-07-01 2019-06-30 0001653710 apxr:DataCenterHostingServicesMember apxr:ADCAgreementMember apxr:PuxinMember 2018-07-01 2019-06-30 0001653710 2016-11-30 0001653710 apxr:MrDabasinkasMember apxr:AdditionalLoanMember 2016-01-31 0001653710 apxr:DirectorsAndPresidentMember 2015-06-30 0001653710 apxr:DirectorsMember 2015-06-15 0001653710 apxr:DataCenterHostingServicesMember apxr:ADCAgreementMember 2018-04-26 0001653710 us-gaap:CommonStockMember 2017-07-01 2018-06-30 0001653710 apxr:DirectorsMember 2015-06-01 2015-06-15 0001653710 us-gaap:AdditionalPaidInCapitalMember 2017-07-01 2018-06-30 0001653710 apxr:DataCenterHostingServicesMember apxr:ADCAgreementMember 2018-04-01 2018-04-26 0001653710 us-gaap:NoncontrollingInterestMember 2017-07-01 2018-06-30 0001653710 us-gaap:RetainedEarningsMember 2017-07-01 2018-06-30 0001653710 us-gaap:CommonStockMember 2018-06-30 0001653710 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001653710 us-gaap:RetainedEarningsMember 2018-06-30 0001653710 us-gaap:NoncontrollingInterestMember 2018-06-30 0001653710 us-gaap:NoncontrollingInterestMember 2018-07-01 2019-06-30 0001653710 us-gaap:CommonStockMember 2018-07-01 2019-06-30 0001653710 us-gaap:RetainedEarningsMember 2018-07-01 2019-06-30 0001653710 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2019-06-30 0001653710 us-gaap:CommonStockMember 2019-06-30 0001653710 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001653710 us-gaap:RetainedEarningsMember 2019-06-30 0001653710 us-gaap:NoncontrollingInterestMember 2019-06-30 APEX RESOURCES INC/NV 0001653710 10-K false No --06-30 No true false true No 2019-06-30 Non-accelerated Filer FY 2019 false 5080000 0 333-207109 13191 Crossroads Pkwy N Suite 200 91746 352529753 Industry 626-910-5101 CALIFORNIA 94264 5080000 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Apex Resources Inc (the &#8220;Company&#8221;) is a for profit corporation established under the Corporation Laws of the State of Nevada on March 31, 2015.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px"><u>Sales of Steam Room Products</u></p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Prior to April 7, 2018, the Company was engaged in the business of selling high quality stream room products at competitive prices. The Company conducted the steam room sales operation from its principal office in Lithuania. The Company&#8217;s purchases and sales prices were both quoted in the U.S. Dollars and, therefore, used the U.S. Dollar as its functional currency to account for the financial position and results of operations of the steam room products sales activities.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">On March 23, 2018, a change in control of the Company occurred, pursuant to which three parties acquired an aggregate 4,000,000 shares of the Company&#8217;s common stock (or approximately 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas, pursuant to that certain Securities Purchase Agreement (the &#8220;SPA&#8221;). Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions; and all of the Company&#8217;s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas. As a result, the Company recorded additional paid-in capital as of March 23, 2018 for the $3,731 debt discharged by Mr. Dabasinkas. See Note 6: &#8220;Debt Discharge&#8221; and Note 8: &#8220;Change in Control&#8221;, for additional details.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">After the end of the period, the Company completed the last sale of steam room products by making delivery on April 6, 2018 of inventory ordered by a customer in February 2018. The steam room sales activities were discontinued after April 6, 2018.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px"><u>Data Center Hosting Services</u></p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company entered into an agreement dated April 26, 2018 (the &#8220;ADC Agreement&#8221;), with Chongqing Puxin Blockchain Technology Co., Ltd. (&#8220;Puxin&#8221;), a cryptocurrency mining company in China, pursuant to which the Company would contribute $2.0 million to a new company, Apex Data Center Inc. (&#8220;ADC&#8221;) incorporated by Puxin, in exchange for an 80% equity in ADC. Puxin would retain 20% of the equity of ADC. ADC would build a &#8220;mining pool&#8221;, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. While the Company did not own any rig machine, under the ADC Agreement it was expected to receive and host 2,000 to 3,000 rig machines owned by Puxin in China into ADC&#8217;s facilities in the first phase. The Company would either host additional machines for other third parties or raise the capital to acquire additional machines. The target was to host a total of 10,000 rig machines in the facility in the fiscal years 2019 and 2020.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Though we entered into the ADC Agreement with a good intention to commence to the mining business, we were not able to raise sufficient fund at terms and conditions acceptable to us to carry out our obligations within the timeframe given by the ADC Agreement and the parties terminated the ADC Agreement on April 1, 2019. The dissolution of ADC was filed with the State of Washington on May 13, 2019. No liquidating distribution was made to either Puxin or us. We deconsolidated ADC from our balance sheet as of June 30, 2019 and recorded a loss from investment in subsidiary for $4,000.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company&#8217;s consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;), and are expressed in the U.S. dollars. The Company&#8217;s fiscal year-end is June 30.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In June 2014, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued Accounting Standards Update (&#8220;ASU&#8221;) 2014-10, &#8220;Development Stage Entities&#8221;. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification (&#8220;ASC&#8221;), thereby removing the financial reporting distinction between development stage entities and other reporting entities from the U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the consolidated financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The adoption of ASU 2014-10 removed the development stage entity financial reporting requirements for the Company.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The accompanying consolidated financial statements include the consolidated accounts of Apex Resources Inc. and its 80%-owned subsidiary Apex Data Center Inc., which was incorporated on April 24, 2018. Significant intercompany transactions and balances have been eliminated. The consolidated financial statements and related disclosures as of June 30, 2019 are audited pursuant to the rules and regulations of the United States Securities and Exchange Commission (the &#8220;SEC&#8221;). Unless the context otherwise requires, all references to &#8220;Apex&#8221;, &#8220;Apex Resources&#8221;, &#8220;we&#8221;, &#8220;us&#8221;, &#8220;our&#8221; or the &#8220;company&#8221; are to Apex Resources, Inc. and its subsidiary.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Use of Estimates and Assumptions</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Cash and Cash Equivalents</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Fair Value of Financial Instruments</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Level 3-Inputs are unobservable inputs which reflect the reporting entity&#8217;s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. </p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, inventories, advances to suppliers, prepaid expenses, short-term loans, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">ASC Topic 825-10 &#8220;<i>Financial Instruments</i>&#8221; allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;<u>Development Stage Entity</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Leases</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">In February 2016, the FAS issued ASU 2016-02, &#8220;Leases (Topic 842)&#8221; (&#8220;ASU 2016-02&#8221;). The new standard establishes a right-of-use (&#8220;ROU&#8221;) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, &#8220;Leases (Topic 842): Targeted Improvements&#8221; (&#8220;ASU 2018-11&#8221;) and ASU 2018-10, &#8220;Codification Improvements to Topic 842, Leases&#8221; (&#8220;ASU 2018-10&#8221;). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company&#8217;s non-cancellable leases consist of an office leases for 63 months for 6,543 square feet expiring in March 2024. The new standard, including subsequent amendments is effective for our interim and annual periods beginning July 1, 2019. The Company will adopt the new guidance in the first quarter of fiscal year 2020 using the alternative modified transition basis, thereby recognizing the cumulative effect of initially applying Topic 842 as an adjustment to opening balance sheet on the adoption date, without revising the balances in comparative periods. The Company plans to elect the package of transitional practical expedients allowing, among other provisions, the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct cost, for any existing leases on the adoption date. </p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company has substantially completed its evaluation of the new lease guidance implementation and assessed the effect of the adoption on its financial statements. In connection with the adoption of the new guidance, the Company expects to recognize ROU asset for approximately $879,000 and lease liability of approximately $947,000 in its balance sheet as of July 1, 2019, with no impact to its results of operations and cash flows. The difference between the leased assets and lease liabilities represents the net position of existing prepaid rent and deferred rent liabilities balance, resulting from historical straight-lining of operating leases, which will be effectively reclassified upon adoption to reduce the measurement of the leased assets.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Basic and Diluted Loss Per Share</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company computes earnings (loss) per share in accordance with ASC 260-10-45 &#8220;Earnings per Share&#8221;, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Revenue Recognition</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">a.</p></td><td style="WIDTH: 91%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">the customer has prepaid for the product;</p></td></tr><tr><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">b.</p></td><td style="WIDTH: 91%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">the product has been shipped from either Apex Resources or one of our suppliers; and</p></td></tr><tr><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 4%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">c.</p></td><td style="WIDTH: 91%" valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">the product has been delivered and signed for by the customer as evidenced by the shipping company.</p></td></tr></table><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The company is the primary obligor in the sales transaction. We are able to select suppliers based upon the customer&#8217;s needs, we do not have a key supplier, we have sales agreements with multiple suppliers and we are able to set the price of the product to the customer. Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. The company does not believe the 30-day exchange or refund will have a material impact on our revenue recognition as any product which has a defect in manufacturing will be returned to the supplier for replacement or refund for the customer based upon pursuant law and the Uniform Commercial Code.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Based on the above, the Company determined that the revenue recognition for the sales is in accordance with the FASB ASC 605-15-25-1.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Income Taxes</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes.&#8221; Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity&#8217;s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. </p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#8217;s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><u>Recent Accounting Pronouncements</u></p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update affect any entity that is required to apply the provisions of Topic 220, Income Statement &#8211; Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by the US GAAP. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We do not believe the adoption of this ASU would have a material effect on our financial statements.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">In August 2018, the FASB issued ASU 2018-13, &#8220;<i>Fair Value Measurement (Topic 820), &#8211; Disclosure Framework &#8211; Changes to the Disclosure Requirements for Fair Value Measurement</i>,&#8221; which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting&#8212;Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its financial statements.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations, except for the new Topic 842 lease accounting guidance as discussed above.</p></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The accompanying consolidated financial statements and notes have been prepared assuming that the Company will continue as a going concern for one year after the date the consolidated financial statements were issued.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">For the period from inception (March 31, 2015) to June 30, 2019, the Company had an accumulated net loss of $753,214. The Company also had a negative net worth of $702,283 as of June 30, 2019. This raises substantial doubt about the Company&#8217;s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The ability to continue as a going concern is dependent upon the Company&#8217;s ability to successfully execute its business plan and generate profitable operations in the future, and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operation when they become due. Management intends to finance operating costs over the next 12 months with loans from related parties or the issuance of equity and debt securities.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company entered into a 63-month operating lease for its office space in the City of Industry on January 1, 2019. California. The payment obligations of the lease are guaranteed by Harbor Green Grains, LP, an entity controlled by one of the Company&#8217;s majority shareholders. Future minimum lease payment under the lease are as follows:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><b>For the 12-month period ending June 30, 2019</b></p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2020</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">178,738.40</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2021</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">184,100.56</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2022</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">207,140.40</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2023</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">213,354.60</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2024</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">164,004.51</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><b>Total Future Minimum Lease Payment </b></p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px"><b>$</b></p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px"><b>947,338.47</b></p></td><td style="WIDTH: 1%" valign="bottom"></td></tr></table><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">See Note 2: Significant Accounting Policies and Recent Accounting Pronouncements for a discussion of the Company&#8217;s assessment of the impact on its balance sheets and statements of operations and cash flows beginning July 1, 2019 with respect to the new Topic 842 lease accounting guidance.</p></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company has no known legal issues pending.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In June 2015, the Company&#8217;s former Director and President Tadas Dabasinkas made the initial deposits to the Company&#8217;s bank accounts (checking and savings) in the amount $105 which was carried as a loan payable. On January 31, 2016, Mr. Dabasinkas loaned the company an additional $326. During the year ended June 30, 2017, Mr. Dabasinkas paid an invoice for $800 on behalf of the Company. The balance of the loans at June 30, 2017, was $1,231. The loan is non-interest bearing, unsecured and due upon demand.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">As of March 23, 2018, the outstanding principal balance of such loans from and advances by Mr. Dabasinkas was in the amount of $3,731. As a result of the change in control on March 23, 2018, and as more fully described in Note 11, &#8220;Change in Control&#8221;, the entire unpaid principal balance of these loans was discharged by Mr. Dabasinkas. The balance of the loans payable to Mr. Dabasinkas as of June 30, 2019, was $0.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Between March 23, 2018 (the date of the Change in Control as explained in Note 11), and June 30, 2019, a principal shareholder Harbor Torrance Family Trust loaned a total $655,545 to the Company as working capital. The Company has not made any repayment to the $655,545 loan as of June 30, 2019. The loan is payable on demand and carries an interest rate of 0%.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company has 75,000,000 shares of common stock with a par value of $0.001 per share.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">On June 15, 2015, the Company issued 4,000,000 shares of common stock for a purchase price of $0.001 per share to its sole director. The Company received aggregate gross proceeds of $4,000. As of June 30, 2019, there were no outstanding stock options or warrants.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In November 2016, the Company sold and issued 1,080,000 shares at $0.04 per share pursuant to its recent offering on a Registration Statement on Form S-1. The shares were issued to 31 independent shareholders for proceeds of $43,200.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In June 30, 2015, the Company purchased land and a small office located at Aytaus g. 100, Varena, Lithuania. The purchase price of $8,655 was allocated as $4,327.50 for the building and $4,327.50 for the land. Prior to April 7, 2018, the Company utilized the space as its principal office to conduct the Company&#8217;s former steam room products sales activities. As the Company discontinued the steam room products sales activities on April 7, 2018, the office in Lithuania is treated as an asset held for sale under ASC 250-45 and ASC 360-10 post-April 6, 2018. Because the location of the property, which does not suit our business development plan, and the logistics involved in a sale of asset, the Company abandoned the property and wrote off the undepreciated cost of $7,791 in the quarter ended September 30, 2018.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes.&#8221; Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity&#8217;s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Apex Resources Inc. was registered in the State of Nevada and has been subject to the tax law of the United States of America and a federal corporate statutory tax rate of 21% starting January 1, 2018.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">As of June 30, 2019, the Company had net operating loss carry forwards of approximately $753,214 that may be available to reduce future years&#8217; taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Provision (benefit) of income taxes for the years ended June 30, 2019 and 2018, were $0 and ($1,298), respectively.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#8217;s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a 100% valuation allowance.</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2"><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>Year Ended</b></p><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>June 30,</b></p><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2"><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>Year Ended</b></p><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>June 30,</b></p><p style="text-align:center;margin:0px;Font:10pt Times New Roman;padding:0px"><b>2018</b></p></td><td valign="bottom"></td></tr><tr><td></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Deferred tax assets:</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Net operating tax carryforward</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">753,214</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">122,725</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Tax rate</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">21</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">%</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">21</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">%</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Gross deferred tax assets</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">158,175</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">25,772</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Valuation allowance</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">(158,175</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">)</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">(25,772</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">)</p></td></tr><tr bgcolor="#cceeff"><td></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">Net deferred tax assets</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%; BORDER-BOTTOM: 3px double" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 3px double" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">-</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%; BORDER-BOTTOM: 3px double" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 3px double" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">-</p></td><td style="WIDTH: 1%" valign="bottom"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company has related party loan transactions involving the Company&#8217;s former director and a principal shareholder. The nature and details of these transactions are described in Note 6: Debt.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">On March 23, 2018, three parties acquired an aggregate 4,000,000 shares of the Company&#8217;s common stock (or 78.74% of the total issued and outstanding shares of the Company as of the date of acquisition) from Tadas Dabasinkas pursuant to the SPA. Mr. Dabasinkas received an aggregate $443,079 for the 4,000,000 shares; the Company received no proceeds from this transaction. Pursuant to the SPA and other related agreements, Mr. Dabasinkas resigned from all management and Board positions, and all of the Company&#8217;s outstanding loan balance owed to Mr. Dabasinkas, in the amount of $3,731, was fully forgiven by Mr. Dabasinkas.</p></div> <p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company has evaluated events subsequent through the date these consolidated financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these consolidated financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or disclosure in the consolidated financial statements.</p> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">Due to the limited level of operations, the Company has not had to make material assumptions or estimates other than the assumption that the Company is a going concern.</p></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><b>For the 12-month period ending June 30, 2019</b></p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 9%" valign="bottom" colspan="2"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2020</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">$</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">178,738.40</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2021</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">184,100.56</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2022</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">207,140.40</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2023</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">213,354.60</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">2024</p></td><td style="WIDTH: 1%" valign="bottom"></td><td style="WIDTH: 1%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 9%; BORDER-BOTTOM: 1px solid" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px">164,004.51</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px"><b>Total Future Minimum Lease Payment </b></p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="WIDTH: 1%" valign="bottom"><p style="text-align:justify;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px"><b>$</b></p></td><td style="WIDTH: 9%" valign="bottom"><p style="text-align:right;margin:0px 0px 0px 0in;Font:10pt Times New Roman;padding:0px"><b>947,338.47</b></p></td><td style="WIDTH: 1%" valign="bottom"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div></div></div> <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom" colspan="2"><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>Year Ended</b></p><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>June 30,</b></p><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>2019</b></p></td><td valign="bottom"></td><td valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom" colspan="2"><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>Year Ended</b></p><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>June 30,</b></p><p style="margin:0px;text-align:center;Font:10pt Times New Roman;padding:0px"><b>2018</b></p></td><td valign="bottom"></td></tr><tr><td></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" colspan="2" style="width:9%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" colspan="2" style="width:9%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Deferred tax assets:</p></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" colspan="2" style="width:9%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" colspan="2" style="width:9%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Net operating tax carryforward</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">$</p></td><td valign="bottom" style="width:9%;"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">753,214</p></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">$</p></td><td valign="bottom" style="width:9%;"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">122,725</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Tax rate</p></td><td valign="bottom" style="width:1%;"></td><td style="BORDER-BOTTOM: 1px solid;width:1%;" valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">21</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">%</p></td><td valign="bottom" style="width:1%;"></td><td style="BORDER-BOTTOM: 1px solid;width:1%;" valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">21</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">%</p></td></tr><tr bgcolor="#cceeff"><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Gross deferred tax assets</p></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="bottom" style="width:9%;"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">158,175</p></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="bottom" style="width:9%;"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">25,772</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Valuation allowance</p></td><td valign="bottom" style="width:1%;"></td><td style="BORDER-BOTTOM: 1px solid;width:1%;" valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">(158,175</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">)</p></td><td valign="bottom" style="width:1%;"></td><td style="BORDER-BOTTOM: 1px solid;width:1%;" valign="bottom"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 1px solid;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">(25,772</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">)</p></td></tr><tr bgcolor="#cceeff"><td></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:9%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:9%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td></tr><tr bgcolor="#ffffff"><td valign="top"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Net deferred tax assets</p></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double;width:1%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">$</p></td><td style="BORDER-BOTTOM: 3px double;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">-</p></td><td valign="bottom" style="width:1%;"></td><td valign="bottom" style="width:1%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td style="BORDER-BOTTOM: 3px double;width:1%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:justify;Font:10pt Times New Roman;padding:0px">$</p></td><td style="BORDER-BOTTOM: 3px double;width:9%;" valign="bottom"><p style="margin:0px 0px 0px 0in;text-align:right;Font:10pt Times New Roman;padding:0px">-</p></td><td valign="bottom" style="width:1%;"></td></tr></table><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p></div> 2015-03-31 The Company&#8217;s non-cancellable leases consist of an office leases for 63 months for 6,543 square feet expiring in March 2024. -753214 178738 655545 0.001 753214 3731 -630489 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.</p></div> Nevada 879000 -702283 184101 655545 75000000 8655 122725 0.7874 0.001 83679 -76103 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company adopted the guidance of ASC Topic 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Level 3-Inputs are unobservable inputs which reflect the reporting entity&#8217;s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. </p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The carrying amounts reported in the balance sheets for cash and cash equivalents, accounts receivable, inventories, advances to suppliers, prepaid expenses, short-term loans, accounts payable, accrued expenses, advances from customers, VAT and service taxes payable and income taxes payable approximate their fair market value based on the short-term maturity of these instruments.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">ASC Topic 825-10 &#8220;<i>Financial Instruments</i>&#8221; allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.</p></div> 207140 0.00 5080000 7791 -1298 4000000 71499 7791 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company decided to early adopt ASU 2014-10 which eliminates the definition of a development stage entity, eliminates the development stage presentation and disclosure requirements under ASC 915, and amends provisions of existing variable interest entity guidance under ASC 810.</p></div> 213355 1231 5080000 0.21 0.21 443079 75000000 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In February 2016, the FAS issued ASU 2016-02, &#8220;Leases (Topic 842)&#8221; (&#8220;ASU 2016-02&#8221;). The new standard establishes a right-of-use (&#8220;ROU&#8221;) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In July 2018, the FASB issued ASU 2018-11, &#8220;Leases (Topic 842): Targeted Improvements&#8221; (&#8220;ASU 2018-11&#8221;) and ASU 2018-10, &#8220;Codification Improvements to Topic 842, Leases&#8221; (&#8220;ASU 2018-10&#8221;). ASU 2018-11 provides for an additional optional adoption method of ASU 2016-02, allowing for the application of the new standard as of the adoption date and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-10 provides corrections and updates to the previously issued codification regarding Topic 842. Various areas of the codification were impacted from the update. The two standards follow the effective dates of ASU 2016-02. The Company&#8217;s non-cancellable leases consist of an office leases for 63 months for 6,543 square feet expiring in March 2024. The new standard, including subsequent amendments is effective for our interim and annual periods beginning July 1, 2019. The Company will adopt the new guidance in the first quarter of fiscal year 2020 using the alternative modified transition basis, thereby recognizing the cumulative effect of initially applying Topic 842 as an adjustment to opening balance sheet on the adoption date, without revising the balances in comparative periods. The Company plans to elect the package of transitional practical expedients allowing, among other provisions, the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct cost, for any existing leases on the adoption date. </p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company has substantially completed its evaluation of the new lease guidance implementation and assessed the effect of the adoption on its financial statements. In connection with the adoption of the new guidance, the Company expects to recognize ROU asset for approximately $879,000 and lease liability of approximately $947,000 in its balance sheet as of July 1, 2019, with no impact to its results of operations and cash flows. The difference between the leased assets and lease liabilities represents the net position of existing prepaid rent and deferred rent liabilities balance, resulting from historical straight-lining of operating leases, which will be effectively reclassified upon adoption to reduce the measurement of the leased assets.</p></div> The accompanying consolidated financial statements include the consolidated accounts of Apex Resources Inc. and its 80%-owned subsidiary Apex Data Center Inc., which was incorporated on April 24, 2018. Significant intercompany transactions and balances have been eliminated. 947000 164005 43200 4328 0.21 1.00 3731 1145 10584 5080 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><div style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN"><p style="text-align:justify;margin:0px;Font:10pt Times New Roman;padding:0px">The Company computes earnings (loss) per share in accordance with ASC 260-10-45 &#8220;Earnings per Share&#8221;, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.</p></div></div> 947338 0 1080000 4328 25772 960 5080000 42120 289 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The company follows the guidelines of ASC 605-15 for revenue recognition. Revenue is recognized when all the following conditions have been met:</p><p style="margin:0px;Font:10pt Times New Roman;padding:0px">&nbsp;</p><table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0"><tr><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">a.</p></td><td valign="top" style="width:91%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">the customer has prepaid for the product;</p></td></tr><tr><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">b.</p></td><td valign="top" style="width:91%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">the product has been shipped from either Apex Resources or one of our suppliers; and</p></td></tr><tr><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p></td><td valign="top" style="width:4%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">c.</p></td><td valign="top" style="width:91%;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">the product has been delivered and signed for by the customer as evidenced by the shipping company.</p></td></tr></table><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The company is the primary obligor in the sales transaction. We are able to select suppliers based upon the customer&#8217;s needs, we do not have a key supplier, we have sales agreements with multiple suppliers and we are able to set the price of the product to the customer. Customers are allowed to return the products within 30 days for exchange or refund if defects in manufacturing are identified. The company does not believe the 30-day exchange or refund will have a material impact on our revenue recognition as any product which has a defect in manufacturing will be returned to the supplier for replacement or refund for the customer based upon pursuant law and the Uniform Commercial Code.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Based on the above, the Company determined that the revenue recognition for the sales is in accordance with the FASB ASC 605-15-25-1.</p></div> -4000 800 0.04 158175 626067 -50394 -960 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes.&#8221; Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity&#8217;s consolidated financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. </p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise&#8217;s consolidated financial statements and prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">Income taxes are calculated and accrued for U.S. taxes only. The company did not accrue any Lithuanian taxes under Lithuanian corporate rules, as we believe our business activities prior to the April 7, 2018 discontinuance of steam room products sales generated no taxable income under the local tax rules.</p></div> 326 31 25772 960 5080000 83403 1145 <div style="font: 10pt TIMES NEW ROMAN; text-align: justify;"><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this update affect any entity that is required to apply the provisions of Topic 220, Income Statement &#8211; Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by the US GAAP. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. We do not believe the adoption of this ASU would have a material effect on our financial statements.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">In August 2018, the FASB issued ASU 2018-13, &#8220;<i>Fair Value Measurement (Topic 820), &#8211; Disclosure Framework &#8211; Changes to the Disclosure Requirements for Fair Value Measurement</i>,&#8221; which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting&#8212;Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its financial statements.</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">&nbsp;</p><p style="margin:0px;text-align:justify;Font:10pt Times New Roman;padding:0px">The Company believes that there were no other accounting standards recently issued that had or are expected to have a material impact on our financial position or results of operations, except for the new Topic 842 lease accounting guidance as discussed above.</p></div> 105 4000000 158175 72644 -3194 -1146 0.80 0.001 4293 -1000 2000000 4000 3731 -9000 ADC would build a &#8220;mining pool&#8221;, or a facility with rig machines that mine cryptocurrencies, for a hosting or management fee with the capability of accommodating up to 100,000 dedicated servers in a facility to be built in Washington State. 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