SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2014
o TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________.
Commission File Number 000-54430
| APEX 2, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | | 80-0725943 |
| (State or other jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
| 90 SW 3rd Street Penthouse 4, Miami FL 33130 |
| (Address of principal executive offices) |
| |
| (772) 216-6460 |
| (Issuer's telephone number) |
NA
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the Company (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 o No o
Indicate by check mark whether the Company is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | o | Accelerated filed | o |
| Non-accelerated filer | o | Smaller reporting company | x |
Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
As of August 11, 2014, there were 10,000,000 shares of Common Stock of the issuer outstanding.
Table of Contents
| | | | Page | |
| Part I. | FINANCIAL INFORMATION | | | |
| | | | | |
| Item 1. | Financial Statements | | | |
| | | | | |
| | Condensed Balance Sheets as of June 30, 2014 (unaudited) and December 31, 2013 | | | 3 | |
| | | | | | |
| | Condensed Statements of Operations for the Three and Six Months Ended June 30, 2014 and 2013 and the period from May 17, 2011 ( Inception) to June 30, 2014 (Unaudited) | | | 4 | |
| | | | | | |
| | Condensed Statements of Cash Flows for the Six Months Ended June 30, 2014 and 2013 and the period from May 17, 2011 (Inception) to June 30, 2014 (Unaudited) | | | 5 | |
| | | | | | |
| | Notes to Condensed Financial Statements (Unaudited) | | | 6 | |
| | | | | | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | 8 | |
| | | | | | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | | | 9 | |
| | | | | | |
| Item 4. | Controls and Procedures | | | 9 | |
| | | | | | |
| Part II. | OTHER INFORMATION | | | | |
| | | | | | |
| Item 1. | Legal Proceedings | | | 10 | |
| | | | | | |
| Item 1. A | Risk Factors | | | 10 | |
| | | | | | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | | | 10 | |
| | | | | | |
| Item 3. | Defaults Upon Senior Securities | | | 10 | |
| | | | | | |
| Item 4. | Mine Safety Disclosures | | | 10 | |
| | | | | | |
| Item 5. | Other Information | | | 10 | |
| | | | | | |
| Item 6. | Exhibits | | | 11 | |
| | | | | | |
| Signatures | | | 12 | |
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
APEX 2, Inc.
(A Development Stage Company)
Condensed Balance Sheets
| | | June 30, | | | December 31, | |
| | | 2014 | | | 2013 | |
| | | (Unaudited) | | | | |
| ASSETS |
| |
| Total Assets | | $ | -- | | | $ | -- | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDER’S DEFICIT |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 1,500 | | | $ | -- | |
| Due to related party | | | 34,607 | | | | 26,760 | |
| | | | | | | | | |
| Total liabilities | | | 36,107 | | | | 26,760 | |
| | | | | | | | | |
| Stockholder’s Deficit | | | | | | | | |
| Preferred stock, ($.0001 par value, 5,000,000 shares authorized; none issued and outstanding) | | | - | | | | - | |
| Common stock ($.0001 par value, 100,000,000 shares authorized; 10,000,000 shares issued and outstanding as of June 30, 2014 and December 31, 2013 | | | 1,000 | | | | 1,000 | |
| Deficit accumulated during the development stage | | | (37,107 | ) | | | (27,760 | ) |
| Total stockholder’s deficit | | | (36,107 | ) | | | (26,760 | ) |
| Total Liabilities and Stockholder’s Deficit | | $ | -- | | | $ | -- | |
The accompanying notes are an integral part of the unaudited condensed financial statements
APEX 2, Inc.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | From May 17, 2011 (Inception) to June 30, | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| EXPENSES: | | | | | | | | | | | | | | | |
| General and administration expenses | | $ | 3,897 | | | $ | 2,369 | | | $ | 9,347 | | | $ | 7,816 | | | $ | 37,107 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total expenses | | | 3,897 | | | | 2,369 | | | | 9,347 | | | | 7,816 | | | | 37,107 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss | | $ | (3,897 | ) | | $ | (2,369 | ) | | $ | (9,347 | ) | | $ | (7,816 | ) | | $ | (37,107 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Loss per share (basic and diluted) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | | | |
| Weighted average common shares (basic and diluted) | | | 10,000,000 | | | | 10,000,000 | | | | 10,000,000 | | | | 10,000,000 | | | | | |
The accompanying notes are an integral part of the unaudited condensed financial statements
APEX 2, Inc
(A Development Stage Company)
Condensed Statements of Cash Flow
(Unaudited)
| | | Six Months Ended June 30, | | | From May 17, 2011 (Inception) to June 30, | |
| | | 2014 | | | 2013 | | | 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | |
| Net loss | | $ | (9,347 | ) | | | (7,816 | ) | | $ | (37,107 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | |
| Stock based compensation | | | -- | | | | -- | | | | 1,000 | |
| Change in operating assets and liabilities | | | | | | | | | | | | |
| Accounts payable | | | 1,500 | | | | 4,048 | | | | 1,500 | |
| Net cash used in operating activities | | | (7,847 | ) | | | (3,768 | ) | | | (34,607 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | |
| Advances from related party | | | 7,847 | | | | 3,768 | | | | 34,607 | |
| Net cash provided by financing activities | | | 7,847 | | | | 3,768 | | | | 34,607 | |
| | | | | | | | | | | | | |
| Net change in Cash | | | -- | | | | -- | | | | -- | |
| | | | | | | | | | | | | |
| Cash at Beginning of Period | | | -- | | | | -- | | | | -- | |
| | | | | | | | | | | | | |
| Cash at End of Period | | $ | -- | | | $ | -- | | | $ | -- | |
| | | | | | | | | | | | | |
| Supplemental Cash Flow Information | | | | | | | | | | | | |
| Interest paid | | $ | -- | | | | -- | | | $ | -- | |
| Taxes paid | | $ | -- | | | $ | -- | | | $ | -- | |
The accompanying notes are an integral part of the unaudited condensed financial statements
APEX 2, Inc
(A Development Stage Company)
Notes to Condensed Unaudited Financial Statements
NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS
APEX 2, Inc. (the “Company”) was incorporated under the laws of the State of Delaware on May 17, 2011 and has been inactive since inception. The Company intends to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock or other business combination with a domestic or foreign business.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed financial statements should be read in conjunction with a reading of the Company’s financial statements and notes thereto included in the Company’s Form 10-K annual report for year ended December 31, 2013 filed with the Securities and Exchange Commission (SEC) on March 5, 2014. Interim results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of future results for the full year.
Basis of Presentation - Development Stage Company
The Company has not earned any revenue from operations. Accordingly, the Company’s activities have been accounted for as those of a “Development Stage Company” as set forth in Financial Accounting Standards Board Statement Accounting Standards Codification (“ASC”) Topic 915. Among the disclosures required by ASC Topic 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statement of operations, stockholders’ deficit and cash flows disclose activity since the date of the Company’s inception.
Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.
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. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.
Income Taxes
Income taxes are provided in accordance with ASC Topic 740 Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Basic Earnings (Loss) per Share
ASC Topic 260, “Earnings per Share”, specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC Topic 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share.
Basic net loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. There were no such common stock equivalents outstanding during the period from May 17, 2011 (inception) through June 30, 2014.
Impact of New Accounting Standards
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.
NOTE 3: GOING CONCERN
As shown in the accompanying balance sheet, the Company has no assets and an accumulated deficit of $37,107 at June 30, 2014. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on ability to identify a target acquisition. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty. The Company will engage in very limited activities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholder.
NOTE 4: RELATED PARTY TRANSACTIONS
The Company’s officer and director performed services related to the organization of the Company in May 2011 for 10,000,000 founder’s shares which was valued at par value of $1,000. Since inception, the Company’s officer and director has advanced a total $34,607 which remains unpaid as of June 30, 2014. These amounts are non-interest bearing and due on demand.
NOTE 5: STOCKHOLDER’S DEFICIT
On May 17, 2011 the Company issued 10,000,000 shares of common stock (founder’s shares) valued at $1,000 with a par value of $0.0001 per share.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are forward-looking statements. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Among the factors that could cause actual results to differ materially from the forward-looking statements are the following: the Company’s ability to obtain necessary capital, the Company’s ability to meet anticipated development timelines, the Company’s ability to protect its proprietary technology and knowhow;, the Company’s ability to successfully consummate future acquisitions and such other risk factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those filed with this Form 10-Q quarterly report. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
The Company will attempt to locate and negotiate with a business entity for the combination of that target company with the Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. No assurances can be given that the Company will be successful in locating or negotiating with any target business.
The Company has not restricted its search for any specific kind of businesses, and it may acquire a business which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.
In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.
It is anticipated that any securities issued in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after the Company has entered into an agreement for a business combination or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market which may develop in the Company's securities may depress the market value of the Company's securities in the future if such a market develops, of which there is no assurance.
The Company will participate in a business combination only after the negotiation and execution of appropriate agreements. Negotiations with a target company will likely focus on the percentage of the Company which the target company shareholders would acquire in exchange for their shareholdings. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing and will include miscellaneous other terms. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's shareholders at such time.
Results of Operations
The Company has not generated any revenue. Expenses for the three and six months ended in June 30, 2014 were $3,897 and $9,347, respectively while the expenses for the same periods in 2013 were $2,369 and $7,816, respectively. The three and six month expenses in 2014 compared to the same period in 2013 were insignificant in the differences between periods. The expenses related to the costs for accounting, auditing and filing of financial reports.
Net loss for the three and six months ended June 30, 2014, was $3,897 and $9,347, respectively, compared to $2,369 and $7,816, respectively for the same periods ended June 30, 2013.
Liquidity
The Company has negative working capital of $36,107 as of June 30, 2014. Funds used in operating activities during the six months ended June 30, 2014 were $7,847 while funds provided from financing activities were $7,847. This compares to funds used in operating activities of $3,768 and funds provided of $3,768 for the same period ended June 30, 2014. All funds in financing activities were advances from the officer and director.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
An investment in the Company is highly speculative in nature and involves an extremely high degree of risk.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures were not effective as of June 30, 2014.
Changes in internal controls
Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the six months ended June 30, 2014. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no changes occurred in the Company's internal controls over financial reporting during the three months ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits.
| Exhibit No. | | Description |
| | | |
| 31 | | Chief Executive Officer Certification |
| | | |
| 32 | | Section 1350 Certification |
| 101.INS ** | | XBRL Instance Document |
| | | |
| 101.SCH ** | | XBRL Taxonomy Extension Schema Document |
| | | |
| 101.CAL ** | | XBRL Taxonomy Extension Calculation Linkbase Document |
| | | |
| 101.DEF ** | | XBRL Taxonomy Extension Definition Linkbase Document |
| | | |
| 101.LAB ** | | XBRL Taxonomy Extension Label Linkbase Document |
| | | |
| 101.PRE ** | | XBRL Taxonomy Extension Presentation Linkbase Document |
__________
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | APEX 2, INC. | |
| | | | |
| Dated: August 12, 2014 | By: | /s/ Martin Mobarak | |
| | | Martin Mobarak | |
| | | Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors | |
