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EX-32.2 - CERTIFICATION - APEX RESOURCES INC/NVapxr_ex322.htm
EX-32.1 - CERTIFICATION - APEX RESOURCES INC/NVapxr_ex321.htm
EX-31.2 - CERTIFICATION - APEX RESOURCES INC/NVapxr_ex312.htm
EX-31.1 - CERTIFICATION - APEX RESOURCES INC/NVapxr_ex311.htm
EX-23.1 - CONSENT - APEX RESOURCES INC/NVapxr_ex231.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2017

 

Commission file number 333-207109

 

APEX RESOURCES INC

(Exact name of registrant as specified in its charter)

 

Nevada

(State or other jurisdiction of incorporation or organization)

 

Alytaus g. 100, Varėna, Lithuania

(Address of principal executive offices, including zip code.)

 

(775)253-3921

(Telephone number, including area code)

 

Check whether the issuer (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 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 x NO o

 

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," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

 

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 5,080,000 shares as of January 19, 2018

 

 
 
 
 

 

ITEM 1. FINANCIAL STATEMENTS

 

KIRTANE & PANDIT LLP CHARTERED ACCOUNTATS

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

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

 

Report of Independent Registered Public Accounting Firm

 

We have reviewed the accompanying balance sheet, and related statement of operation, stockholders' equity and cash flows of Apex Resources Inc. (the "Company") as of December 31, 2017, and the three-month periods then ended. These interim financial statements are the responsibility of the company's management.

 

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As indicated in Note 3 to the financial statements, the company has experienced limited operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also not described in the notes to the financial statements. The 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.

 

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America (US GAAP).

 

For Kirtane & Pandit LLP

Chartered Accountants

FRN: 105215W/W100057

PCAOB FIRM ID NO 5686

 

/s/ Milind Bhave                    

Partner

Membership No. 047973

 

Place: Mumbai, India

Date: January 15, 2018

 

 
2
 
 

 

APEX RESOURCES INC

 

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

December 31,

2017

 

 

June 30,

2017

 

 

 

(Unaudited)

 

 

(Audited)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$ 239

 

 

$ 2,756

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

239

 

 

 

2,756

 

 

 

 

 

 

 

 

 

 

FIXED ASSETS

 

 

 

 

 

 

 

 

Building

 

$ 4,328

 

 

$ 4,328

 

Accumulated Depreciation - Building

 

 

(721 )

 

 

(577 )

Land

 

 

4,328

 

 

 

4,328

 

 

 

 

 

 

 

 

 

 

TOTAL FIXED ASSETS

 

 

7,934

 

 

 

8,078

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 8,172

 

 

$ 10,834

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts Payable

 

$ 0

 

 

$ 10,000

 

Accrued Expenses

 

 

500

 

 

 

1,500

 

Loan Payable - Due to Director

 

 

3,231

 

 

 

1,231

 

Income Tax Payable

 

 

1,297

 

 

 

1,297

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

$ 5,028

 

 

$ 14,028

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock: authorized 75,000,000; $0.001 par value; 5,080,000 shares issued and outstanding at December 31, 2017 and June 30, 2017

 

$ 5,080

 

 

$ 5,080

 

Additional Paid In Capital

 

 

42,120

 

 

 

42,120

 

Profit (loss) accumulated during the development stage

 

 

(44,055 )

 

 

(50,394 )

 

 

 

 

 

 

 

 

 

Total Stockholders' Equity

 

$ 3,145

 

 

$ (3,194 )

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$ 8,172

 

 

$ 10,834

 

 

The accompanying notes are an integral part of these financial statements

 

 
3
 
 

 

APEX RESOURCES INC

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

Three Months

 

 

Six Months

 

 

Six Months

 

 

 

Ended

 

 

Ended

 

 

Ended

 

 

Ended

 

 

 

December 31,

2017

 

 

December 31,

2016

 

 

December 31,

2017

 

 

December 31,

2016

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise Sales

 

$ 30,366

 

 

$ 30,606

 

 

$ 60,474

 

 

$ 62,444

 

Total Income

 

 

30,366

 

 

 

30,606

 

 

 

60,474

 

 

 

62,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases - Resale Items

 

$ 20,989

 

 

$ 23,922

 

 

$ 50,843

 

 

$ 54,995

 

Total Cost of Goods Sold

 

 

20,989

 

 

 

23,922

 

 

 

50,843

 

 

 

54,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

9,377

 

 

 

6,684

 

 

 

9,631

 

 

 

7,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$ 1,627

 

 

$ 16,110

 

 

$ 3,148

 

 

$ 16,879

 

Advertising & Promotion

 

 

-

 

 

 

43,100

 

 

 

-

 

 

 

43,100

 

Depreciation

 

 

72

 

 

 

72

 

 

 

144

 

 

 

144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Expenses

 

 

1,699

 

 

 

59,282

 

 

 

3,292

 

 

 

60,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Tax

 

$ 7,678

 

 

$ (52,598 )

 

$ 6,339

 

 

$ (52,674 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Income Tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income for Period

 

 

7,678

 

 

 

(52,598 )

 

 

6,339

 

 

 

(52,674 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain (loss) per share: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$ 0.0015

 

 

$ (0.0104 )

 

$ 0.0012

 

 

$ (0.0104 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

5,080,000

 

 

 

5,080,000

 

 

 

5,080,000

 

 

 

5,080,000

 

 

The accompanying notes are an integral part of these financial statements

 

 
4
 
 

 

APEX RESOURCES INC

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months

 

 

Six Months

 

 

 

 Ended 

 

 

 Ended 

 

 

 

December 31,

2017

 

 

December 31,

2016

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$ 6,339

 

 

$ (52,674 )

 

 

 

 

 

 

 

 

 

Adjustment to reconcile net loss to net cash provided by operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accumulated Depreciation

 

 

144

 

 

 

144

 

Accounts Payable

 

 

(10,000 )

 

 

10,000

 

Accrued Expenses

 

 

(1,000 )

 

 

 

 

Provision for Income Tax

 

 

-

 

 

 

-

 

Net cash provided by operating activities

 

 

(4,517 )

 

 

(42,529 )

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

-

 

 

 

43,200

 

Due to related party

 

 

2,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

2,000

 

 

 

43,200

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchase of Building

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net cash provided by investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

(2,517 )

 

 

671

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

2,756

 

 

 

70

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$ 239

 

 

$ 740

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes

 

$ -

 

 

$ -

 

Interest

 

$ -

 

 

$ -

 

 

The accompanying notes are an integral part of these financial statements

 

 
5
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

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.

 

The primary focus of Apex Resources Inc is providing very high quality stream room products at competitive prices. The Company is a newly created company and is subject to all risks inherent to the establishment of a start-up business enterprise. The Company’s operations are based in Lithuania, but use the U.S. dollar as its functional currency.

 

Our financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in U.S. dollars. The Company’s fiscal year-end is June 30.

 

The Financial Statements and related disclosures as of December 31, 2017 are reviewed pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Unless the context otherwise requires, all references to “Apex”, “Apex Resources”, “we”, “us”, “our” or the “company” are to Apex Resources Inc.

 

Note 2: Significant Accounting Policies and Recent Accounting Pronouncements

 

Use of Estimates and Assumptions

 

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 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

 

ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2017.

 

The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.

 

 
6
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

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.

 

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 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.

 

 
7
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the 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.

 

Our effective tax rate for fiscal year 2018 is 17%, which we expect to be fairly consistent in the near term. Our tax rate is also affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

Income taxes are calculated and accrued for U.S. taxes only. The company does not currently accrue any Lithuanian taxes under Lithuanian corporate rules. As we become profitable, and have sustained revenue within Lithuania, we may become subject to Lithuanian taxes.

 

Recent Accounting Pronouncements

 

The Financial Accounting Standards Board (“FASB”) periodically issues new accounting standards in a continuing effort to improve standards of financial accounting and reporting. The Company has reviewed the recently issued pronouncements. During this review 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.

 

On June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation, which removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. The Company has adopted the amendment as of fiscal year ended June 30, 2015.

 

There are several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. As of December 31, 2017, none of these pronouncements is expected to have a material effect on the financial position, results of operations or cash flows of the Company.

 

 
8
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

Unaudited Financial Statements

 

The balance sheet as of December 31, 2017, the statements of operations and cash flows for the three and six-month periods ended December 31, 2017, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three and six months ended December 31, 2017 are not necessarily indicative of results expected for the full year ending June 30, 2018. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at December 31, 2017 have been made.

 

It is suggested that these statements be read in conjunction with the June 30, 2017 audited financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

 

Note 3: Going Concern

 

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

 

For the period from inception (March 31, 2015) to December 31, 2017, the Company had a net profit (loss) of $(44,055). The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock.

 

Management plans to fund operations of the Company through the proceeds from its recent offering pursuant to a Registration Statement on Form S-1 or private placements of restricted securities or the issuance of stock in lieu of cash for payment of services until such a time as profitable operations are achieved. There are no written agreements in place for such funding or issuance of securities and there can be no assurance that such will be available in the future. Management believes that this plan provides an opportunity for the Company to continue as a going concern.

 

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

 

Note 4: Concentrations

 

Initial sales are concentrated with one client. Sales are made without collateral and the credit-related losses are insignificant or non-existent. Accordingly, there is no provision made to include an allowance for doubtful accounts.

 

Note 5: Legal Matters

 

The Company has no known legal issues pending.

 

 
9
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

Note 6: Debt

 

In June 2015 the Director and President of the Company made the initial deposits to the Company’s bank accounts (checking and savings) in the amount $105 which is being carried as a loan payable. The Director loaned the company additional funds from time to time, paying expenses on behalf of the Company. The balance of the loan at December 31, 2017 is $3,231. The loan is non-interest bearing, unsecured and due upon demand.

 

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 December 31, 2017 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. The Company utilizes the space as a primary office.

 

Fixed assets are stated at cost. The Company utilizes straight-line depreciation over the estimated useful life of the asset.

 

Land

0 years

Buildings

15 years

Office Equipment

7 years

  

For the three months ended December 31, 2017 the Company recorded depreciation expense of $72 for the building.

 

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 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.

 

 
10
 
 

 

Apex Resources Inc

Notes to the Condensed Financial Statements

December 31, 2017

 

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 financial statements and prescribes a recognition threshold and measurement attribute for the 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.

 

Our effective tax rate for fiscal year 2017 was 17%, which we expect to be fairly consistent in the near term. Our tax rate is also affected by discrete items that may occur in any given year, but are not consistent from year to year.

 

The components of income (loss) before income taxes were comprised of the following:

 

 

 

 

Year ended

June 30, 2017

 

Tax jurisdictions from:

 

 

 

– U.S.

 

 

$ (53,102 )

Income (loss) before income taxes

 

 

$ (53,102 )

 

Provision for income taxes (at 17%) consisted of the following:

 

 

 

Year ended

June 30, 2017

 

Current:

 

 

 

 

 

 

(9,027 )

Income tax expense

 

$ (9,027 )

 

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 valuation allowance. For the six months ended December 31, 2017 the Company recorded a net gain of $6,339.

 

Apex Resources Inc is registered in the State of Nevada and is subject to United States of America tax law.

 

Note 10: Related Party Transactions

 

The Company's sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available. The Company has a related party transaction involving the Company’s director. The nature and details of the transaction are described in Note 6.

 

Note 11: Subsequent Events

 

The Company has evaluated events subsequent through the date these 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 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 financial statements.

 

 
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors,” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Results of Operations

 

We have had $343,306 in operating revenues and $306,122 in cost of goods sold since our inception on March 31, 2015 through December 31, 2017. Our activities have been financed from $37,184 in gross profits, a loan of $105 from our sole officer and director to open the company bank accounts, $4,000 from the sale of 4,000,000 shares of common stock to our director and $43,200 in proceeds from the sale of 1,080,000 shares at $0.04 per share to 31 independent shareholders pursuant to the company’s Registration Statement on Form S-1.

 

For the period from inception through December 31, 2017, we incurred operating expenses of $81,239, consisting primarily of advertising expenses, professional fees and office expenses and recorded a provision for income tax of $1,297 for a net loss of $44,055.

 

For the three months ended December 31, 2017 we generated $30,366 in revenues and $20,989 in cost of goods sold for a gross profit of $9,377. We incurred operating expenses of $1,699, consisting primarily of general expense and depreciation expense for a net gain (loss) of $7,678.

 

For the three months ended December 31, 2016 we generated $30,606 in revenues and $23,922 in cost of goods sold for a gross profit of $6,684. We incurred operating expenses of $59,282, consisting of $43,100 in advertising and promotional expense and the balance in general expense and depreciation expense for a net gain (loss) of $(52,598).

 

 
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For the six months ended December 31, 2017 we generated $60,474 in revenues and $50,843 in cost of goods sold for a gross profit of $9,631. We incurred operating expenses of $3,292, consisting primarily of general expense and depreciation expense for a net gain (loss) of $6,339.

 

For the six months ended December 31, 2016 we generated $62,444 in revenues and $54,995 in cost of goods sold for a gross profit of $7,449. We incurred operating expenses of $60,123, consisting of $43,100 in advertising and promotional expense and the balance in general expense and depreciation expense for a net gain (loss) of $(52,674).

 

Plan of Operation for the next 12 months

 

Our cash balance is $239 as of December 31, 2017. Our cash balance is not sufficient to fund our limited levels of operations.

 

Even under a limited operations scenario to maintain our corporate existence, we believe we will require a minimum of $10,000 in additional cash over the next 12 months to maintain our regulatory reporting and filings. Management believes the company will require a minimum of approximately $40,000 over the next twelve months to remain in business, either from revenues or funding. We currently have no arrangement in place to cover this shortfall.

 

If we do not generate revenues these funds will have to be raised through equity financing, debt financing, or other sources, which may result in the dilution in the equity ownership of our shares. We will also require additional financing to sustain our business operations if we are ultimately not successful in earning revenues. We currently do not have any arrangements regarding the offering or following the offering for further financing and we may not be able to obtain financing when required. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

 

There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.

 

Our independent registered public accountant has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have generated $343,306 in revenues but no significant increase in revenues are anticipated until we complete our initial business development. There is no assurance we will ever reach that stage. To meet our need for cash we have raised money from an offering pursuant to a Registration Statement filed on Form S-1, however we were only able to raise half the amount we anticipated. If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely. 

 

 
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We have commenced our steam room products distribution business. In the next twelve months, we plan to engage in the following activities to expand our business operations:

 

During the first stages of our growth, our director will provide all of the labor required to execute our business plan at no charge. Funds will come from cash on hand from revenues or loans from our director.

 

Our president will devote approximately 10 to 20 hours of his time to our operations. Once we are able to attract more and more customers to buy our product he has agreed to commit more time as required. Because he will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.

 

Our specific goal is to profitably sell our product. Our plan of operations is as follows:

 

Negotiation With Potential Customers (Distributors And Brokers)

 

Months 1-6:  We will continue to negotiate agreements with national medium-sized wholesale and wholesale Steam Room Distribution companies. To date, several medium-sized wholesale Steam Room Distribution companies have expressed interest in our products.  We have contacted buyers from these companies and have engaged in discussion regarding supplying Steam Room Distribution products; we sold to one of the Steam Room Distribution firms, who continues to make repeat orders. We have no written agreements with any of them at the current time but we will be providing samples to several buyers in an attempt to secure contracts with these companies. We have purchased samples which will be provided to our main prospects; the cost of $43,100 was split between our offering proceeds and revenues.

 

 
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Marketing

 

Months 1-12:  We plan to advertise through home improvement trade shows and a road show campaign at the stores of our future customers, distributors and brokers. We continue to develop and maintain a database of potential customers who may want to purchase Steam Room products from us. We follow up with these clients periodically, send them our new catalogues and offer them presentations and special discounts from time to time. We plan to print catalogues and flyers and mail them to potential customers as part of our marketing campaign if we have the funds from revenues to do so. We intend to use marketing strategies, such as web advertisements, direct mailing, samples for main prospects and phone calls to acquire additional customers. We intend to spend $3,000 - $5,000 on marketing efforts during this year. Marketing is an ongoing matter that will continue during the life of our operations.

 

Development of Our Website

 

Months 7-12:  During this period, we intend to further develop our website, if revenues will support the expense. We may hire a web designer to help us with the design and basic development of our website if our director is unable to accomplish it. We do not have any written agreements with any web designers at current time. The basic website development cost is expected to be $1,700. Updating and improving our website will continue throughout the lifetime of our operations.

 

It is our plan that when we have enough money we want to start making and selling our own brand of steam room products (steam rooms).

 

For the current time, our company is focused on getting our second and third customer and selling them more of the steam rooms. I hope we can add second and third customer in the next 12-18 months.

 

Liquidity and Capital Resources

 

At December 31, 2017 the Company had $239 in cash and there were outstanding liabilities of $5,028. Our director has verbally agreed to continue to loan the company funds for operating expenses in a limited scenario, but he has no legal obligation to do so.

 

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.

 

 
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ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Management maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2017.

 

Based on that evaluation, management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

 

Changes in Internal Controls over Financial Reporting

 

As of the end of the period covered by this report, there have been no changes in the internal controls over financial reporting during the quarter ended December 31, 2017, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting subsequent to the date of management’s last evaluation.

 

 
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PART II. OTHER INFORMATION

 

ITEM 6. EXHIBITS.

 

The following exhibits are included with this quarterly filing. Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our Registration Statement on Form S-1, filed under SEC File Number 333-207109, at the SEC website at www.sec.gov:

 

Exhibit No.

Description

3.1

Articles of Incorporation*

3.2

Bylaws*

23.1

 

Auditor Consent

31.1

Sec. 302 Certification of Principal Executive Officer

31.2

Sec. 302 Certification of Principal Financial Officer

32.1

Sec. 906 Certification of Principal Executive Officer

32.2

Sec. 906 Certification of Principal Financial Officer

101

Interactive data files pursuant to Rule 405 of Regulation S-T

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  

 

  Apex Resources Inc

Registrant

       
Date: January 26, 2018 By: /s/ Tadas Dabasinkas

 

 

Tadas Dabasinkas  
   

(Principal Executive Officer, Principal Financial Officer,

Principal Accounting Officer & Sole Director)

 

 

 

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