The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022, and 2021
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
T-REX Acquisition Corp. (The “Company”) was formed on January 16, 2008, in the state of Nevada under the name Plethora Resources, Inc. as a development stage enterprise. The Company was originally organized to engage in the business of consulting to oil and gas exploration companies interested in obtaining exploration and production licenses at auction for oil and gas properties in Russia. The Company later changed its name to Sync2 Networks Corp when the Company began to engage in software-related services. On March 20, 2014, the Company changed its name to TREX Acquisition Corp. after the Company business operations under the Sync2 Networks branding had ceased. On June 21, 2021, the Company decided to pivot from seeking an acquisition candidate to operating a cryptocurrency mining business. On February 17, 2022, the Company began mining bitcoin at Ace Hosting, a Tampa, Florida located data center. On June 30, 2022, the Company changed its name to “T-REX Acquisition Corp.”
As of June 30, 2022, the Company is a holding company with the following subsidiaries: Raptor Mining LLC, a Florida limited liability company (“Raptor Mining”); and TRXA Merger Sub, Inc., an inactive Delaware corporation (“Merger Sub”). On July 1, 2022, we incorporated Megalodon Mining and Electric, LLC, a Florida limited liability company (“Megalodon”);
2020 TRXA Merger Sub Inc.
On March 13, 2020, the Company incorporated the Merger Sub in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company.
2021 Raptor Mining LLC and 2022 Megalodon Mining and Electric LLC
On July 9, 2021, the Company formed Raptor Mining in order to pursue the Company’s new business operating strategy to engage in cryptocurrency mining, which is used to secure decentralized network protocols and decentralized distributed ledgers. On July 1, 2022, the Company formed Megalodon to investigate and potentially pursue a cryptocurrency co-location business model. The cryptocurrency co-location business model includes offering to host third-party owned cryptocurrency mining equipment in exchange for a fee, which may consist of a mix of cash and cryptocurrency consideration. Co-location service businesses typically have access to large data centers and inexpensive cryptocurrency mining inputs, such as low-cost electricity supply. As of the date of this Annual Report, the Company has commenced researching the acquisition of land to begin offering co-location services to other cryptocurrency miner owners
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented
Determination of Bad Debts
The Company’s policy is to analyze the collectability of Accounts and Notes Receivable on a monthly basis to determine whether any allowance for doubtful accounts is necessary. Once the allowance has been determined the offset is booked to bad debt expense and subsequently if the account is deemed to be a bad debt, it is written off the e allowance for doubtful accounts.
Principles of Consolidation
As of June 30, 2022, the accounts include those of the Company and its 100% owned subsidiaries, Merger Sub, Raptor Mining Megalodon Mining and Electric. All intercompany transactions have been eliminated.
On March 13, 2020, the Company incorporated Merger Sub in order to facilitate the acquisition of a pre-revenue Software-as-a-Service internet platform business. The Company’s sole Officer and Director currently serves as the sole officer and director of the Merger Sub. As of the date of this filing, neither the Company nor the Merger Sub have entered into a definitive agreement or non-binding letter of intent to acquire a company. On July 9, 2021, the Company organized Raptor Mining, which currently generates revenues via its operating business.
Use of estimates
The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S.) GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| |
Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Fair value of crypto currency held – June 30, 2022 | | $ | 9,211 | | | $ | - | | | $ | - | | | $ | 9,211 | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Fair value of crypto currency held – June 30, 2021 | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
The carrying amount of the Company’s financial assets and liabilities, such as cash, and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements as of June 30, 2022.
The assets and liabilities recorded on the balance sheet approximate their fair value.
Equipment
Equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation of equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of three (3) or seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations. Equipment consists solely of bitcoin miners used in the operation. The equipment value is based on the cost and the potential impairment is reviewed periodically and as of June 30, 2022 there was no impairment of any of the mining equipment.The depreciation expense for the year ended June 30, 2022, was $23,867.
Stock based compensation
The Company accounts for stock-based compensation in accordance with ASC Section 718 Compensation – Stock Compensation. Under the fair value recognition provisions of ASC 718 stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expensed ratably over the requisite service period/vesting period.
The Company accounts for its non-employee stock-based compensation in accordance with Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Through June 30, 2022, and through the date of filing, there have been no intervening lawsuits, claims or judgments filed.
Revenue recognition
The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.
We recognize the revenue when the coins are mined. In order to value the bitcoin that we mined and maintain in our Slush Pool wallet, we mark to market using the last quote at 11:59 on the day the coin is mined. and is then evaluated for impairment on a daily basis with any adjustments recorded in the other income / expense section of the statement of operations. We then multiply the quote against the (in this case fractional) number of bitcoin we own. That gives the dollar value of our position.
During the years ended June 30, 2022 and June 30, 2021, the company recognized $61,906 and $0 respectively, in revenue from its cryptocurrency mining operations.
Income taxes
Federal Income taxes are not currently due since we have had losses since inception.
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.
Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.
As of June 30, 2022, we had a net operating loss carry-forward of approximately $(4,160,757) and a deferred tax asset of $873,759 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(873,759). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. On June 30, 2022, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.
| | June 30, 2022 | | | June 30, 2021 | |
Deferred Tax Asset | | $ | 873,759 | | | $ | 601,977 | |
Valuation Allowance | | | (873,759 | ) | | | (601,977 | ) |
Deferred Tax Asset (Net) | | $ | - | | | $ | - | |
Due to the changes the Tax Reform Act of 1986 and the Tax Cut and Jobs Act of 2017, net operating loss carryforwards for Federal Income tax reporting purposes are subject to additional limitations. Should certain changes in ownership occur, our net operating loss carryforwards may be limited to use in future years. In addition, tax rates on corporations were reduced and certain other deductions limited. These changes may affect the income tax benefit calculation and related allowance during subsequent fiscal years
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
There were outstanding warrants that could convert into 3,685,333 shares of common stock as of June 30, 2022. At the end of both periods the potentially dilutive shares were excluded because the effect would have been anti-dilutive.
Cash flows reporting
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.
Advertising Costs
The Company expenses the cost of advertising and promotional materials when incurred. Total Advertising costs were zero for all periods.
Subsequent events
The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer, considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.
NOTE 3 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had an accumulated deficit of $4,160,757 and a working capital deficit of $81,805 as of June 30, 2022.
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect and there is substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.
The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
Free office space
The Company has been provided office space by its Chief Executive Officer at no cost. Management determined that such cost is nominal and did not recognize the rent expense in its financial statements.
Due to Related Parties
On August 6, 2021, the Company issued 450,000 shares of its common stock in exchange for the conversion of $45,000 of unpaid advisory compensation due to related Parties. In addition, as satisfaction of an external Settlement Agreement between Peter Simone/Corporate Capital Group International, LTD and the related Parties, the Company issued 1,050,000 Founder's shares.
For the year ended June 30, 2022, the company issued 1,182,009 for the conversion of $118,050 in related party payables.
As of June 30, 2022, the company owed $120,000 due to related parties for management fees for the year ended June 30, 2022.
NOTE 5 – COMMON STOCK
On August 6, 2021, the Company issued 450,000 shares of its common stock in exchange for the conversion of $45,000 of unpaid advisory compensation due to related Parties. In addition, as satisfaction of an external Settlement Agreement between Peter Simone/Corporate Capital Group International, LTD and the related Parties, the Company issued 1,050,000 Founder’s shares.
Frank Horkey received 350,000 shares for acting in the capacity of President and sole Director since his previous contract expired December 31, 2019 and 250,000 shares for his board position vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty-three thousand three hundred thirty-three (83,333) shares at the end of the first year, June 30, 2023; and eighty-three thousand three hundred thirty-four (83,334) shares at June 30, 2024.
Michael Christiansen received 250,000 shares of the Company’s common stock vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty-three thousand three hundred thirty-three (83,333) shares at the end of the first year, June 30, 2023; and eighty-three thousand three hundred thirty-four (83,334) shares on June 30, 2024.
Squadron Marketing LLC received 250,000 shares of the Company common stock for acting on the Company’s Advisory Board for fiscal 2023 vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty-three thousand three hundred thirty-three (83,333) shares at the end of the first year, June 30, 2023; and eighty-three thousand three hundred thirty-four (83,334) shares on June 30, 2024.
Lazarus Asset Management LLC - received 250,000 shares of the Company common stock for acting on the Company’s Advisory Board for fiscal 2023 vesting as follows: eighty-three thousand three hundred thirty-three (83,333) shares upon signing as of July 1, 2022; eighty-three thousand three hundred thirty-three (83,333) shares at the end of the first year, June 30, 2023; and eighty-three thousand three hundred thirty-four (83,334) shares on June 30, 2024.
John Bennet received 50,000 shares for extending his consulting contract through fiscal year end 2023.
James Marshall III received 75,000 shares of the Company’s common stock for acting as the Company’s technical consultant for fiscal 2023.
NOTE 6 – WARRANTS
On May 3, 2014, it was resolved that the Company shall offer 250,000 Units at a price of $0.80 per unit. Each Unit shall consist of (a) one (1) share of common stock and (b) a combination of series A warrants (which may be exercised within three (3) years) and series B warrants exercised within five (5) years of the consummation of a merger.
On May 14, 2014, the Company entered into a subscription agreement for 157,500 units at $0.80 per share for a total of $125,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On May 14, 2014, the Company entered into a subscription agreement for 32,000 units at $0.80 per share for a total of $25,000. Each unit consists of one (1) share of common stock and one (1) series A warrant to purchase one share of common stock at $1.25 per share. Each A warrant expires three years from the date of issuance.
On July 14, 2014, the Company entered into a subscription agreement for 62,500 units at $0.80 per share for a total of $50,000. Each unit consists of one (1) share of common stock, and two (2) Series A warrants to purchase one (1) share of common stock at $.65 per share and one (1) series B warrant to purchase one (1) share of common stock at $.80. Each series A warrant expires three years from the consummation of a merger and each series B warrant expires 5 years from the consummation a merger.
The Company may call the B Warrants at such point the quoted market closing price is at least $2.50 for 20 consecutive trading days. In the event the Company calls the Warrants, it shall immediately notify holders of the Warrants of the call. Warrants holders will be granted a period of 45 calendar days to redeem the Warrants by returning the Warrant to the Company accompanied by payment of $.80 per share. The warrants were valued using a Black Scholes calculation.
The inputs for series A used a price $.59, a strike price range of .65 – 1.25, maturity 3 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.202. The inputs for series B used a price $.59, a strike price of .80, maturity 5 years, a risk-free interest rate of 3.9% and a beta of 50% estimated and were valued at $.232.
As of the filing date of this annual report, 187,500 A warrants have expired leaving only 125,000 A Warrants and 62,500 B Warrants remaining effective since the Company has yet to consummate a merger.
On May 5, 2022 issued shares and warrants related to that certain Securities Purchase Agreement dated November 10, 2021with certain of the selling stockholders referenced in our most recent registration statement pursuant to which we sold to such selling stockholders $560,875 in aggregate principal amount of our common stock (747,837 shares) and warrants to purchase shares of our common stock (which we refer to as the “PIPE Warrants”), exercisable at any time before the close of business on December 31, 2024. The PIPE Warrants are comprised of 747,837 warrants with an exercise price of $1.50 per share.
On July 1, 2021, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a Class C warrant to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50.
On May 26, 2022, the Company issued to Frank Horkey Class C warrant to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement as part of his executive compensation during the 2022 fiscal year.
On May 26, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued Class C warrant to purchase 500,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement related to consulting services during fiscal 2022.
On June 25, 2022, Frank Horkey and Michael Christiansen were each issued 250,000 class C warrants to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement for serving on the Company’s Board of Directors for the upcoming 2022 fiscal year.
On June 25, 2022, Squadron Marketing LLC and Lazarus Asset Management LLC were each issued a class C warrant to purchase 250,000 shares of the Company’s common stock for a period of three years at an exercise price of $1.50 commencing upon the effective date of the Company’s registration statement for serving on the Company’s Advisory Board for the upcoming 2022 fiscal year.
Certain of the shares and warrants noted above were issued to Board Members, Advisory Board Members and, Consultants for services to be rendered for periods subsequent to June 30, 2022. The amounts related to shares and warrants are treated as prepaid consulting, both current and non-current in these financial statements. These amounts will be recognized in subsequent periods as they are earned according to the Agreements.
The following is the outstanding warrant activity:
| | | | Warrants - Common Share Equivalents | | | Weighted Average Exercise price | | | Warrants exercisable - Common Share Equivalents | | | Weighted Average Exercise price | |
Outstanding June 30, 2020 | | | | | 187,500 | | | $ | 0.75 | | | | 187,500 | | | $ | 0.75 | |
Additions | | Granted | | | - | | | | - | | | | - | | | | - | |
Expired | | Expired | | | - | | | $ | - | | | | - | | | | - | |
| | Exercised | | | - | | | | - | | | | - | | | | - | |
Outstanding June 30, 2021 | | | | | 187,500 | | | $ | 0.75 | | | | 187,500 | | | $ | 0.75 | |
Additions | | Granted | | | 3,497,833 | | | | 1.50 | | | | 1,247,833 | | | | 1.50 | |
Expired | | Expired | | | - | | | $ | - | | | | - | | | | - | |
| | Exercised | | | - | | | | - | | | | - | | | | - | |
Outstanding June 30, 2022 | | | | | 3,685,333 | | | $ | 1.47 | | | | 1,435,333 | | | $ | 1.47 | |
These warrants were valued using a Black Scholes calculation using a stock price of $1,00, and exercise price of $1.50 a voltility range of 30% to 40% and a risk-free interest rate of 1%.
As of June 30, 2022, none of the warrants were exercisable because the Company had yet to file a Registration Statement including these warrants. The Registration Statement was filed subsequent to year end and was declared on October 9, 2022.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that the following subsequent events needed to be disclosed.
Name Change
On August 5, 2022, the Company changed its name to “T-REX Acquisition Corp.”
Private Sales of Unregistered Securities
On July 22, 2022, we entered into a Securities Purchase Agreement with one private investor who is not a Selling Stockholder (defined above) to whom we sold $100,000 in aggregate principal amount for 133,333 shares of our common stock and warrants to purchase 133,333 shares of our common stock, with an exercise price of $1.50 per share and exercisable at any time before the close of business on December 31, 2025. On August 8, 2022, the same private investor has committed to purchasing another $100,000 in aggregate principal amount for an additional 133,333 shares of our common stock and warrants to purchase 133,333 shares of our common stock, with an exercise price of $1.50 per share and exercisable at any time before the close of business on December 31, 2025. We closed the transactions contemplated by the Securities Purchase Agreement. We issued the securities contemplated under the Securities Purchase Agreement in reliance upon the exemption from registration pursuant to Section 4(a)(2) of the Securities Act.
Company’s Registration Statement on Form S-1, as amended
At 4pm eastern time on September 8, 2022, the Company’s registration statement on Form S-1, as amended, concerning the registration of 6,505,267 shares of its common stock, had been declared effective by the Securities and Exchange Commission. The registration statement relates to the possible resale, from time to time, by the selling stockholders of up to an aggregate of 6,530,267 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), including (i) an aggregate of 747,837 shares acquired by those selling stockholders who purchased the Company’s common stock and warrants pursuant to a Securities Purchase Agreement (the “PIPE Investors”), (ii) an aggregate of 747,837 shares issuable upon the exercise in full of warrants (the “PIPE Warrant Shares”), (iii) an aggregate of 2,437,500 shares of the Company’s common stock issuable upon the exercise of warrants held by the remaining Selling Stockholders (the “Non-PIPE Warrant Shares”) (assuming the Warrants are exercised in full without regard to any exercise limitations therein), and (iii) 2,597,093 shares of common stock, including common stock owned by the Company’s long term investors and beneficially owned by certain directors and current executive officers of the Company.
The Shares will be offered and sold by the selling stockholders at a fixed price of $1.50 per share until our common stock is quoted on OTC Market Group, Inc.’s “OTCQB” or “OTCQX” tiers, and thereafter the Shares may be sold at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. Although we intend to pursue an application for listing on the OTCQB tier, we cannot assure you that our common stock will, in fact, be quoted on the OTCQB tier. The Company will not receive any proceeds from the sale of the Shares by the selling stockholders, although the Company will receive the proceeds from any cash exercise of the Warrants.
Significant purchase of assets
The Company purchased approximately $90,000 of mining equipment from Simple Mining, LLC in September 2022.