UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the ninethree months ended March 31,September 30, 2023

or

For the transition period from _________ to _________

Commission File Number: 333-266766

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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    ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes    ☐ No

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

As of May 25, 2023,February 22, there were 18,223,95218,223,953 shares of the Registrant’s $0.0001 par value common stock issued and outstanding.

Securities registered under Section 12(g) of the Act:

Title of each class registered:

Common

(A Nevada Corporation)

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

T-REXTREX ACQUISITION CORP.

March 31,September 30, 2023

The accompanying footnotes are an integral part of these consolidated financial statements.

The accompanying footnotes are an integral part of these consolidated financial statements.

The accompanying footnotes are an integral part of these consolidated financial statements.

The accompanying footnotes are an integral part of these consolidated financial statements.

The accompanying footnotes are an integral part of these consolidated financial statements.

T-REXTREX ACQUISITION CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31,September 30, 2023

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 T-REXTREX Acquisition Corp. after the Companyits business operations under the Sync2 NetworksNetworks’ 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 Host,Hosting, a Tampa, Florida located data center. On August 5,June 30, 2022, the Company changed its name to “T-REX Acquisition Corp.”

As of March 31,June 30, 2023, 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”) and. On July 1, 2022, we incorporated Megalodon Mining and Electric, LLC, a Florida limited liability company (“Megalodon”), which is also a dormant entity.  .

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 and Merger Sub is an inactive subsidiary of the Company. 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 is based on a company which has access to data centers and inexpensive cryptocurrency mining inputs, such as low-cost electricity supply, 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. Prior toAs of the Company’s fiscal year end,date of this quarterly filing, the Company intendshas commenced researching the acquisition of land to acquire all of the assets of yetbegin offering co-location services to be disclosed competitor in the crypto mining and co-location industry. The asset purchase shall include all crypto mining equipment, established co-location customers / business, intellectual property, and its physical co-location facility. The Purchase price is agreed to be $885,000 closing in two tranches, the first on or before May 30, 2023, and the second within 180 days from the initial Closing.other cryptocurrency miner owners.

These unaudited interim consolidated financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end June 30, 2022, and June 30, 2021, respectively. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three and nine months ended March 31, 2023, are not necessarily indicative of results for the entire year ending June 30, 2023.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’saccompanying consolidated 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 if America of America requires management to make estimates("U.S. GAAP") as found in the Accounting Standards Codification ("ASC”), and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dateAccounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB") and are expressed in US Dollars. The consolidated financial statements should be read in conjunction with the notes contained herein as part of the Company's quarterly filing in its Form 10-Q filing under the Securities Exchange Commission.

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 reported amountsproper period in a timely manner to produce financial statements which present fairly the financial condition, results of revenuesoperations and expenses duringcash flows of the reporting period. Actual results could differ from those estimates.Company for the respective periods being presented. 

Reclassification

Certain reclassifications have been made to prior periods to conform with current reporting.

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 theWhen there is a potential of non-collections, an allowance has been determinedis booked as a contra account to accounts receivable with the offset is booked tofor the entry being bad debt expenseexpense. When collections are deemed more likely than not, the accounts receivable amount is directly written off and subsequently if the account is deemed to beincurred as a bad debt it is written off theexpense. When an allowance for doubtful accounts.potential non-collections is subsequently more likely than not non-collectible, the related allowance is reduced, and the accounts receivable balance is directly written off.

Principles of Consolidation

As of March 31,June 30, 2023, the accounts include those of the Company and its 100% owned subsidiaries, T-REX Merger Sub, Raptor Mining and Megalodon Mining and Electric. These entities are inactive and without balances. As a result, there were noAll intercompany transactions or balances to behave been eliminated.

As of January 5, 2023, the Company has commenced researching the acquisition of land to begin offering co-location services to other cryptocurrency miner owners.

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:

Digital currencies - Bitcoin

The Company applies accounting for digital assets in accordance with the AICPA Practice Aid "Accounting for and Auditing of Digital Assets", the guide is dated as of June 30, 2022, and the SEC issued Staff Accounting Bulletin No. 121, which is effective for periods after June 15, 2022, which are the current nonauthoritative guidance for accounting for digital assets under U.S. generally accepted accounting principles (GAAP). The AICPA Practice Aid is non-authoritative guidance that represents the views of the Digital Assets Working Group and AICPA staff. There is currently no official pronouncement or authoritative guidance on accounting for digital assets and digital asset transactions. Accordingly digital assets that lack physical substance meet the definition of intangible assets and are accounted for under FASB ASC 350, Intangibles-Goodwill and Other. Digital currency is recorded at cost, using the first-in-first-out (“FIFO”) valuation method, less impairment. On June 30, 2022, and September 30, 2023, no balance in bitcoin was held, therefore no impairment assessment was necessary An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the Company’s financialasset. Subsequent reversal of impairment losses is not permitted. The reward for a bitcoin miner changes roughly every four years, or after every 210,000 blocks are mined and gets reduced by half each time, this whole process is called bitcoin halving. The last halving occurred on May 11, 2020, and reduced the reward per block to 6.25 BTC.

Plant and equipment - Crypto-currency machines

The rate at which the Company generates digital assets and, liabilities, such as cash,therefore, consumes the economic benefits of its transaction verification servers are influenced by a number of factors including the following:

The Company operates in an emerging industry for which limited data is available to make estimates on the useful economic lives of specialized mining equipment. The equipment could become obsolete within less time than other equipment due to it being specialized, new technology still being developed and accrued expenses approximate their fair value becauseimproved. Plant and equipment, which represent mining equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the short maturityassets. Prior to the fiscal year June 30, 2023, management determined the expected useful life of those instruments.mining machines as 7 years. During the fiscal year ended June 30, 2023, management has reassessed that the mining machines’ useful life to 1-year rather than 7 years, consistent with current industry research and publications on bitcoin machines. The Company’s notes payable approximatechange in the estimated useful life was accounted for prospectively by updating the accumulated depreciation and incurring the related depreciation expense in the fiscal year ended June 30, 2023. Management’s assessment takes into consideration the availability of historical data and management's expectations regarding the direction of the industry including potential changes in technology. Management will review this estimate annually and will revise such estimates as and when data becomes available.

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying value to determine if an adjustment for impairment is necessary. The effect of any impairment would be to expense the difference between 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 March 31, 2023.

The assetsasset and liabilities recorded on the balance sheet approximate their fairit’s carrying value.

EquipmentRevenue recognition

 EquipmentThe Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new 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 following five steps are applied to achieve that core principle:

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, an entity must consider the effects of all of the following:

Crypto asset transaction verification is the output generated from the Company's ordinary activities under its mining pool contract. The consideration the Company receives is a bitcoin reward, which the Company measures at fair value on the date awarded. Rewards are earned when the Company successfully places a block (by being the first to solve an algorithm). As a result, the Company receives confirmation from the mining pool of the block placed and rewards earned. The Company uses the quoted price of the bitcoin at closing, on the date the coin is mined to value its reward/s. There is no significant financing component in these transactions. Expenses associated with running the digital currency mining business, such as rent, and electricity costs are also recorded as cost of revenue. Depreciation on digital currency mining equipment is recorded at cost. Expenditures for major additionsas a component of the cost of revenue.

Fair value of the digital asset award received is determined using the average U.S. dollar spot rate of the related digital currency on the grant date of the reward.

Expenses associated with running the digital currency mining business, such as rent, and bettermentselectricity cost are capitalized. Maintenance and repairs are charged to operationsalso recorded as incurred.cost of revenues. Depreciation ofon digital currency mining equipment is computed byrecorded as a component of cost of revenues.

Additionally in its regular courses of business the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of seven (7) years. Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and anyCompany earns a gain or incurs a loss is reflected in statements of operations. Equipment consists solelyon the trade 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 three and nine months ended March 31. 2023, was $19,307 and $55,498 respectively. Depreciation expense for the three and nine months ended March 31, 2022, was $7,956 and $7,956 respectively.awarded.

Stock based compensationcompensation.

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 companyCompany 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. From time to time, the Company may be a defendant in pending or threatened legal proceedings arising in the normal course of its business. Management is not aware of any pending, threatened or asserted litigation, petition, or claim.

Revenue recognition

The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new 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 following five steps are applied to achieve that core principle:

The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

When determining the transaction price, an entity must consider the effects of all of the following:

Crypto asset transaction verification is the output generated from the Company's ordinary activities. The consideration the Company receives is a bitcoin reward, which the Company measures fair value onThrough fiscal period ended June 30, 2023, quarter ended September 30, 2023, and through the date received. Rewards are earned when the Company successfully places a block (by being the first to solve an algorithm). As a result, the Company receives confirmation from the mining pool of the block placed and reward/s earned. The Company uses the quoted price of the bitcoin at closing on the date the coin is mined to value its reward/s.  There isfiling, there have been no significant financing component in these transactions. 

Expenses associated with running the digital currency mining business, such as rent, and electricity cost are also recorded as cost of revenue. Depreciation on digital currency mining equipment is recorded as a component of cost of revenue.

Digital currencies - Bitcoin

Bitcoin is included as a non-current, intangible asset in the balance sheets. It is recorded at cost less impairment. If it is determined that more likely than not an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.  The Bitcoin’s cost is accounted for using FIFO cost basis.  Rewards in bitcoin are earned for mining activity.  The reward a bitcoin miner earns changes roughly every four years,intervening lawsuits, claims or after every 210,000 blocks are mined and gets reduced by half each time; this whole process is called bitcoin halving. The last halving occurred on May 11, 2020, and reduced the reward per block to 6.25 BTC. judgments filed.

Related Party Disclosures

Under ASC 850 “Related Party Transactions” an entity or person is considered to be a “related party” if it has control, significant influence or is a key member of management personnel. A transaction is considered to be a related party transaction when there is a transfer of resources of obligations between related parties. The Company, in accordance with the standard ASC 850, presents disclosures about related party transactions and outstanding balances with related parties, see Note 8.

Earnings per Share