UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

(Mark One)

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

 

For the fiscal years ended May 31, 2016 and 2015

 

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

 

For the transition period from ______________ to ______________.

 

Commission File Number 0-22735

 

NXChain Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		45-3977747
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

11753 Willard Ave., Tustin, CA		92782
(Address of principal executive offices)		(Zip Code)

 

Registrants telephone number, including area code: (714) 832-3249

 

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

 

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

 

Common Stock, $.001 par value

(Title of Class)

 

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

 

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

 

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

 

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 ☐ No ☒

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

 

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

 

Large Accelerated Filer  ☐

Accelerated Filer  ☐

Non-Accelerated Filer  ☐

Smaller Reporting Company  ☒

 

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 August 29, 2016, the issuer had 10,041,469 shares of its common stock issued and outstanding.

 

As of August 29, 2016, the aggregate market value of the issuer’s common stock held by non-affiliates was $1,419,821 (based upon the closing price of the issuer’s common stock on The Over-the-Counter Bulletin Board on such date).

 

Documents incorporated by reference: None

 

 

 

NXChain Inc.

Form 10-K for the Fiscal Year Ended May 31, 2016 and 2015

Index to Contents

 

		Page No
Part I
Item 1	Business	1
Item 1A	Risk Factors	5
Item 1B	Unresolved Staff Comments	5
Item 2	Properties	5
Item 3	Legal Proceedings	5
Item 4	Mine Safety Disclosures	5
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6	Selected Financial Data	6
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	8
Item 8	Financial Statements and Supplementary Data	9
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	10
Item 9A	Controls and Procedures	10
Item 9B	Other Information	11
Part III
Item 10	Directors, Executive Officers and Corporate Governance	12
Item 11	Executive Compensation	14
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	15
Item 13	Certain Relationships and Related Transactions, and Director Independence	16
Item 14	Principal Accounting Fees and Services	17
Part IV
Item 15	Exhibits, Financial Statement Schedules	17
Signatures		18

 

 

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

 

The statements contained in this report with respect to our financial condition, results of operations and business that are not historical facts are “forward-looking statements”. Forward-looking statements can be identified by the use of forward-looking terminology, such as ”anticipate”, “believe”, “expect”, “plan”, “intend”, “seek”, “estimate”, “project”, “could”, “may” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in this report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employees, and general business factors affecting our operations, markets, growth, services, products and other factors, some of which are described in this report and some of which are discussed in our other filings with the Securities and Exchange Commission. These forward-looking statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.

 

Important factors to consider in evaluating any forward-looking statements include:

 

●

our ability to diversify our operations;

 

●

our ability to implement our business plan;

 

●

our ability to attract key personnel;

 

●

our ability to operate profitably;

 

●

our ability to efficiently and effectively finance our operations, and/or purchase orders;

 

●

inability to achieve future sales levels or other operating results;

 

●

inability to raise additional financing for working capital;

 

●

inability to efficiently manage our operations;

 

●

the inability of management to effectively implement our strategies and business plans;

 

●

the unavailability of funds for capital expenditures and/or general working capital;

 

●

the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

 

●

deterioration in general or regional economic conditions;

 

●

changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

 

●

adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

These risk factors should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral forward looking statements made in connection with this report that are attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by applicable law or regulation.

 

Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) expressly state that the safe harbor for forward-looking statements does not apply to companies that issue penny stock. If, as now, we are considered to be an issuer of penny stock, the safe harbor for forward-looking statements may not apply to us at certain times.

 

 

Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company” and “our company” refer to NXChain Inc., a Delaware corporation. All amounts are in U.S. Dollars, unless otherwise indicated.

 

 

Part I

 

Item 1. Description of Business.

 

Overview/Corporate History

 

Our company was incorporated under the laws of the State of New York in June 1982 under the name Robocom Systems International Inc. We were organized to develop, market and support advanced warehouse management software solutions that enable companies to realize significant cost savings by automating their warehouse operations and providing inventory visibility throughout the supply chain. On October 11, 2005, we sold substantially all of our assets to Avantce RSI, LLC, a Delaware limited liability company, for $2,970,000 in cash, plus a $200,000 promissory note payable over two years. In July 2006, we paid a dividend to our shareholders totaling approximately $2,760,000, which represented approximately 87% of our total assets at that time. On September 15, 2009, we paid a dividend to our shareholders totaling approximately $217,844, which represented approximately 82% of our total assets at that time.

 

On December 5, 2011, we entered into an Agreement and Plan of Merger dated as of December 5, 2011 (the “Merger Agreement’) with AgriVest Americas, Inc., a newly-formed Delaware corporation and a wholly-owned subsidiary in order to effect a reincorporation of our company in the State of Delaware. Pursuant to the Merger Agreement, we merged with and into AgriVest Americas, Inc., with AgriVest Americas, Inc. as the surviving corporation. The reincorporation merger resulted in the following:

 

●

The change of our domicile from New York to Delaware, as a result of which we are now governed by the laws of the State of Delaware;

 

●

The change of our corporate name from “Robocom Systems International Inc.” to “AgriVest Americas, Inc.”;

 

●

The conversion of every share of our common stock owned as of the effective date of the reincorporation merger into 0.5 of a share of common stock of AgriVest Americas, Inc.;

 

●

The reduction of the par value of our common stock from $0.01 per share to $0.001 per share; and

 

●

The increase in our authorized capital stock to 125,000,000 total shares, consisting of 100,000,000 shares of common stock, par value $0.001 per share, and 25,000,000 shares of “blank check” preferred stock, par value $0.001 per share.

 

On December 5, 2011, we entered into a securities purchase agreement with AgriVest Americas, Inc. and Michael Campbell. Pursuant to such purchase agreement, Mr. Campbell purchased following the reincorporation merger an aggregate of 19,000,000 shares of our common stock for an aggregate purchase price of $50,000. Immediately following the issuance of the Shares pursuant to the Purchase Agreement, an aggregate of 21,420,492 shares of our common stock was issued and outstanding and the shares of our common stock owned by Mr. Campbell represented approximately 88.7% of the issued and outstanding shares of capital stock of our company on a fully-diluted basis. The Shares were acquired with funds that Mr. Campbell borrowed from an entity controlled by a current director of our company.

 

On November 19, 2015, we entered into a common stock purchase agreement with Havanti AS, a Norwegian limited liability company (“Havanti”). Pursuant to such purchase agreement, Havanti purchased from our company an aggregate of 1,040,839 shares (the “Purchased Shares”) of our common stock of the Company for an aggregate purchase price of $200,000. Immediately following the issuance of the Purchased Shares pursuant such purchase agreement, an aggregate of 2,041,368 shares of common stock were issued and outstanding and the shares of common stock owned by Havanti represented approximately 51.0% of the issued and outstanding shares of capital stock of our company on a fully-diluted basis.

 

At or prior to the closing of the sale of the Purchased Shares, and as a condition to such closing, we entered into various agreements (the “Restructuring Agreements”) with an aggregate of 12 warrant holders, note holders or other creditors of our company pursuant to which we converted or exchanged all existing or outstanding debts, promissory notes or warrants of our company into an aggregate of 356,251 shares of common stock (the “Conversion Shares”) and $100,000 aggregate principal amount of promissory notes (the “Notes”) of our company. The Notes originally bore interest at the rate of 8% per annum if not paid in full on or prior to the six-month anniversary of the issue date of the Notes and at the rate of 18% if the maturity date of the Notes was automatically extended for an additional three months as permitted by the Notes, and now bear interest at a rate per annum equal to the lesser of 28% or the maximum rate permitted by law. As the outstanding principal and interest on the Notes was not paid in full at the end of such three month extension period, the Notes are payable on demand and the holders of the Notes may convert the unpaid principal of and interest on the Notes into shares of common stock at a price per share equal to 75% of the closing sale price of the common stock, or the last bid price if the closing sale price cannot be determined, on a material stock exchange or in the over-the-counter market on the trading day immediately prior to the conversion date.

 

 

After the consummation of the sale of the Purchased Shares to Havanti, our company remained a shell company with no operating business. As a result of the sale of the Purchased Shares, Havanti has acquired effective control of our company. In connection with such transactions, our board of directors has determined to establish our company as a provider of a digital currency, or cryptocurrency, to engage as a peer-to-peer lender utilizing such cryptocurrency and to engage in other cryptocurrency businesses. We intend to enter such markets by seeking and acquiring or merging with one or more established companies in such industry, including possibly, one or more companies controlled by Havanti or one of its affiliates or in which Havanti or one of its affiliates has an equity interest. Any such acquisition or merger may involve the issuance of additional shares of our common stock. In order to fund such proposed business plan, we intend to raise funds from investors by issuing our common stock, preferred stock and/or debt securities to fund future operations. Upon any such acquisition or merger, the Company will cease to be a shell company as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

 

On December 30, 2015, we filed a Certificate of Amendment to our Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to (i) change our corporate name from “AgriVest Americas, Inc.” to “NXChain Inc.” and (ii) effectuate a stock combination or reverse stock split, whereby every 33.7468 outstanding shares of our common stock were converted into one share of common stock. The Amendment became effective immediately upon filing on December 30, 2015. All share and per share amounts have been restated to give effect to such reverse stock split.

 

On March 10, 2016, we entered into a non-binding letter of intent (the “LOI”) to engage in a merger with LXCCoin Ltd. ("LXCC"), a privately-held UK company in the blockchain and digital currency market. The shareholders of LXCC are affiliated with Havanti. Under the terms of the LOI it was expected that LXCC would be merged with our company, which will remain the surviving entity, and that LXCC’s shareholders will own approximately 90% of the post-merged fully-diluted shares of our common stock. Completion of the merger is contingent upon certain closing conditions, including customary due diligence considerations, the negotiation, execution and delivery of a merger agreement by the parties, and board and stockholder approval. There can be no assurances that a merger agreement or a closing will occur based on satisfaction of these conditions. Due to the non-binding nature of the letter of intent, the terms of the proposed transaction remain subject to change. 

 

Plan of Operations

 

We are a shell company with no operating business. As a result of the sale of the Purchased Shares, Havanti has acquired effective control of our company. In connection with such transactions, our board of directors has determined to establish our company as a provider of a digital currency, or cryptocurrency, to engage as a peer-to-peer lender utilizing such cryptocurrency and to engage in other digital currency businesses. As discussed above, we intend to enter such markets by seeking and acquiring or merging with one or more established companies in such industry, including possibly, one or more companies controlled by Havanti or one of its affiliates or in which Havanti or one of its affiliates has an equity interest. Any such acquisition or merger may involve the issuance of additional shares of our common stock. In order to fund such proposed business plan, we intend to raise funds from investors by issuing our common stock, preferred stock and/or debt securities to fund future operations. Upon any such acquisition or merger, the Company will cease to be a shell company as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

 

Since the sale of the Purchased Shares to Havanti in November 2015, we were able to raise only limited funds to engage in our proposed business. Since October 11, 2005, we have not engaged in any operations and our business has been dormant. As such, we may presently be defined as a “shell” company, whose sole purpose, at this time, is to locate and consummate a merger with or an acquisition of a private entity.

 

The proposed business activities described herein classify us as a “blank check” company. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions.

 

We intend to engage in digital currency businesses, and at this time, our purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities in such industry presented to us by persons or firms who or which desire to seek the perceived advantages of a corporation whose securities are registered pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will not restrict our search to any specific business or geographical location.

 

This discussion of our proposed business is purposefully general and is not meant to be restrictive of our virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that we may be able to participate in only one potential business venture because we have nominal assets and limited financial resources. This lack of diversification should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture against gains from another.

 

We may seek a business opportunity with entities that have recently commenced operations, or that wish to utilize the public marketplace in order to raise additional capital in order to expand into new products or markets, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

 

 

We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes there are numerous firms seeking the perceived benefits of a publicly-registered corporation. Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, and providing liquidity (subject to restrictions of applicable statutes) for all shareholders, among other factors. Available business opportunities may occur in many different digital currency industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

 

We have had, and anticipate that we will continue to have, little or no capital with which to provide the owners of business opportunities with any significant cash or other assets. However, our management believes we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in a publicly-registered company without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunities will, however, incur significant legal and accounting costs in connection with acquisition of a business opportunity, including the costs of preparing Current Reports on Form 8-K, Annual Reports on Form 10-K and other reports required to be filed under applicable Federal and state securities law, agreements and related reports and documents. The Exchange Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the numerous filings relevant to complying with the Exchange Act. Our officers and directors have not conducted market research and are not aware of statistical data that would support the perceived benefits of a merger or acquisition transaction for the owners of a business opportunity.

 

Our officers have no experience in managing a shell company similar to ours and will rely upon their own efforts in accomplishing our business purposes. Nevertheless, we anticipate we will locate and make contact with possible target businesses primarily through the efforts of our officers and directors, who will meet personally with existing management and key personnel, visit and inspect material facilities, assets, products and services belonging to such prospects, and undertake such further reasonable investigation as they deem appropriate. Management has a network of business contacts, including our outside lawyers and accountants, and believes that prospective target businesses will be referred to us through this network.

 

We also anticipate that prospective target businesses will be brought to our attention from various other non-affiliated sources, including securities broker-dealers, investment bankers, venture capitalists, bankers, and other members of the financial community. We have neither the present intention, nor does the present potential exist for us, to consummate a business combination with a target business in which our management or their affiliates or associates directly or indirectly have a pecuniary interest, although no existing corporate policies would prevent this from occurring. We may engage the services of professional firms that specialize in finding business acquisitions and pay a finder’s fee or other compensation.

 

The analysis of new business opportunities will be undertaken by, or under the supervision of, our officers and directors. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations, if any; prospects for the future; nature of present and expected competition; the quality and experience of management services that may be available and the depth of that management; the potential for further research, development or exploration; specific risk factors not now foreseeable but that then may be anticipated to impact the proposed activities of our company; the potential for growth or expansion; the potential for profit; the perceived public recognition of, or acceptance of, products, services or trades; name identification; and other relevant factors. Our officers and directors expect to meet personally with management and key personnel of the business opportunity as part of their investigation. To the extent possible, we intend to utilize written reports and investigation to evaluate the above factors. We will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction. Our limited funds and the lack of full-time management, however, will likely make it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we commit our capital or other resources thereto. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market surveys and the like which would be desirable if we had more funds available. We will be particularly dependent in making decisions upon information provided by the promoter, owner, sponsor or others associated with the business opportunity seeking our participation.

 

We will not restrict our search to any specific kind of firm within the digital currency industry, but we may acquire a venture that is in its preliminary or development stage, which is already in operation, or in essentially any stage of its corporate life. It is impossible to predict at this time the status of any business in which we 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 we may offer. However, we do not intend to obtain funds in one or more private placements to finance the operation of any acquired business opportunity until such time as we have successfully consummated such a merger or acquisition.

 

It is anticipated that we will incur nominal expenses in the implementation of the business plan described herein. We have limited capital with which to pay these anticipated expenses.

 

 

The time and costs required to select and evaluate a target business (including conducting a due diligence review) and to structure and consummate the business combination (including negotiating relevant agreements and preparing requisite documents for filing pursuant to applicable securities laws and state “blue sky” and corporation laws) cannot presently be ascertained with any degree of certainty. Our officers and directors only devote a small portion of their time to the operations of our company, and, accordingly, consummation of a business combination may require a greater period of time than if they devoted their full time to our company’s affairs. However, our officers and directors will devote such time as they deem reasonably needed.

 

In implementing a structure for a particular business acquisition, we may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also acquire the stock or assets of an existing business. Upon the consummation of a transaction, it is probable that our present management and shareholders will no longer be in control of our company. In addition, our directors may, as part of the terms of the acquisition transaction, resign and be replaced by new directors without a vote of our current shareholders or may sell their stock in our company. Any and all such sales will only be made in compliance with the securities laws of the United States and any applicable state.

 

It is anticipated that any securities issued in any such reorganization will 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, we 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, of which there can be no assurance, it will be undertaken by the surviving entity after we have successfully consummated a merger or acquisition and we are no longer considered a “shell” company. Until such time as this occurs, we do not intend to register any additional securities. The issuance of substantial additional securities and their potential sale into any trading market that may develop in our securities may have a depressive effect on the value of our securities in the future, if such a market develops, of which there is no assurance.

 

As a general rule, federal and state tax laws and regulations have a significant impact upon the structuring of business combinations. We will evaluate the possible tax consequences of any prospective business combination and will endeavor to structure a business combination so as to achieve the most favorable tax treatment for us, the target company and their respective stockholders. However, there can be no assurance that the Internal Revenue Service (“IRS”) or relevant state tax authorities will ultimately assent to our tax treatment of a particular consummated business combination.

 

To the extent the IRS or any relevant state tax authorities ultimately prevail in recharacterizing the tax treatment of a business combination, there may be adverse tax consequences to us, the target business and their respective stockholders. Tax considerations as well as other relevant factors will be evaluated in determining the precise structure of a particular business combination, which could be effected through various forms of a merger, consolidation or stock or asset acquisition.

 

While the actual terms of a transaction to which we may be a party cannot be predicted, it may be expected that the parties to the business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so-called “tax-free” reorganization under Sections 368(a) (1) or 351 of the Internal Revenue Code of 1986, as amended (the “Code”). In order to obtain tax-free treatment under the Code, it may be necessary for the owners of the target business to own 80% or more of the voting stock of the surviving entity. In such event, our shareholders would retain less than 20% of the issued and outstanding shares of the surviving entity, which would result in significant dilution in the equity of such shareholders. Nonetheless, there can be no assurance that the IRS or relevant state tax authorities will ultimately assent to our tax treatment of a particular consummated business combination.

 

With respect to any merger or acquisition, negotiations with the target company’s management is expected to focus on the percentage of our company that the target company shareholders would acquire in exchange for all of their shareholdings in the target company. Depending upon, among other things, the target company's assets and liabilities, our shareholders will in all likelihood hold a substantially lesser percentage ownership interest in our company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event we acquire a target company with substantial assets. Any merger or acquisition effected by us can be expected to have a significant dilutive effect on the percentage of shares held by our then shareholders.

 

We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with our attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.

 

As stated hereinabove, we will not acquire or merge with any entity that cannot provide independent audited financial statements within a reasonable period of time after closing of the proposed transaction. We are subject to all of the reporting requirements included in the Exchange Act. Included in these requirements is the affirmative duty to file independent audited financial statements as part of our Current Report on Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the audited financial statements included in our annual report on Form 10-K. If such audited financial statements are not available at closing, or within time parameters necessary to insure our compliance with the requirements of the Exchange Act, or if the audited financial statements provided do not conform to the representations made by the candidate to be acquired in the closing documents, the closing documents will provide that the proposed transaction will be voidable, at the discretion of our present management.

 

 

We do not intend to provide our security holders with any complete disclosure documents, including audited financial statements, concerning an acquisition or merger candidate and its business prior to the consummation of any acquisition or merger transaction.

 

Our company will remain an insignificant participant among the firms that engage in the acquisition of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. In view of our combined extremely limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.

 

We have had in the past, and continue to have, discussions with potential merger or acquisition partners and while we do not have a definitive agreement in place with any potential partner to do so, we anticipate issuing shares of our common stock, and possibly preferred stock, as part of any merger or acquisition with a merger or acquisition partner.

 

Employees

 

We do not have any employees who provide services to our company. Our Chief Executive Officer serves in such capacity as an independent contractor.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Act of 1934, and are not required to provide the information under this item.

 

Item 1B. Unresolved Staff Comments.

 

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Act of 1934, and are not required to provide the information under this item.

 

Item 2. Properties.

 

We do not own any real property. Our executive office is located at 11753 Willard Avenue, Tustin, CA. 92782, in the office of Michael Campbell, our Chief Executive Officer. We are not charged rent for the use of this space. We believe that our existing facilities are sufficient for our current operations.

 

Item 3. Legal Proceedings.

 

We are not a party to any material legal proceeding.

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

 

Part II

 

Item 5. Market for Registrants Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities.

 

Market Information

 

Our common stock trades on the Over-the-Counter Bulletin Board under the symbol NXCN. The following table represents the high and low price information for our common stock for each quarterly period in fiscal 2016 and 2015.

 

		Fiscal 2016								Fiscal 2015
		High				Low				High				Low
First Quarter		$	.95			$	.37			$	.02			$	.02
Second Quarter			1.15				.37				.02				.01
Third Quarter			2.01				.68				.01				.01
Fourth Quarter			5.55				2.01				.01				.01

 

Quotations listed above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. On August 29, 2016, the closing price of our common stock as reported on the Over-the-Counter Bulletin Board was $4.10.

 

Holders

 

As of August 29, 2016, there were 10,041,469 shares of our common stock outstanding held by approximately 48 shareholders of record.

 

Dividends

 

We did not declare any cash dividends on any class of common equity during the fiscal years ended May 31, 2015 and 2016. We presently intend to retain all earnings, if any, and accordingly our board of directors does not anticipate declaring any dividends in the foreseeable future.

 

Securities Authorized for Issuance under Equity Compensation Plan

 

Information regarding securities authorized for issuance under our equity compensation plans is disclosed in this report under the section captioned “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

 

Item 6. Selected Financial Data

 

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Act of 1934, and are not required to provide the information under this item.

 

 

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

 

Certain statements in this Report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of our company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions, intense competition for the acquisition of businesses, and domestic and foreign government regulations. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made.

 

Overview

 

On October 11, 2005, we sold substantially all of our assets to Avantce RSI, LLC, a Delaware limited liability company, for $2,970,000 in cash, plus a $200,000 promissory note payable over two years. On July 28, 2006, we paid a dividend to our shareholders totaling approximately $2,760,000, which represented approximately 87% of the total assets at that time. On September 15, 2009, we paid a dividend to our shareholders totaling approximately $217,844, which represented approximately 82% of the total assets at that time.

 

On December 5, 2011, we entered into an Agreement and Plan of Merger dated as of December 5, 2011 in order to effect a reincorporation in the State of Delaware and to, among other things, change our corporate name from “Robocom Systems International Inc.” to “AgriVest Americas, Inc.”

 

On November 19, 2015, we entered into a stock purchase agreement with Havanti AS, a Norwegian limited liability company, pursuant to which Havanti purchased an aggregate of 1,040,839 shares of common stock for an aggregate purchase price of $200,000.

 

On December 30, 2015, we changed our corporate name from “AgriVest Americas, Inc.” to “NXChain Inc.” and effectuated a stock combination or reverse stock split, whereby every 33.7468 outstanding shares of common stock were converted into one share of common stock.

 

On March 10, 2016, we entered into a non-binding letter of intent to engage in a merger with LXCCoin Ltd. Under the terms of the LOI it was expected that LXCC would be merged with our company, which will remain the surviving entity, and that LXCC’s shareholders will own approximately 90% of the post-merged fully-diluted shares of our common stock. Completion of the merger is contingent upon certain closing conditions, including customary due diligence considerations, the negotiation, execution and delivery of a merger agreement by the parties, and board and stockholder approval. There can be no assurances that a merger agreement or a closing will occur based on satisfaction of these conditions. Due to the non-binding nature of the letter of intent, the terms of the proposed transaction remain subject to change.

 

We have not conducted any meaningful business operations since October 11, 2005 and since such date, except for certain fund-raising activities, our business has been dormant.

 

Results of Operations

 

Comparison of Fiscal Years Ended May 31, 2016 and May 31, 2015

 

Revenues. We did not record any revenues related to our operations during the fiscal years ended May 31, 2016 and 2015.

 

Selling, General and Administrative Expenses. Selling, general and administrative expenses consisted of consulting fees, financial personnel and professional fees, as well as other miscellaneous administrative expenses. For the fiscal year ended May 31, 2016, selling general and administrative expenses increased by $259,676 to $307,518, as compared to $47,842 during the fiscal year ended May 31, 2015. This increase was primarily related to an increase in consulting fees, professional fees, and SEC filing requirements related to the sale of common stock to Havanti and the proposed merger transaction contemplated by the LOI.

 

Other Income (Expense).

 

During the fiscal year ended May 31, 2016, we realized gains on extinguishment of debt in the amount of $87,146, as debt was extinguished for less than the amounts owed. Also for the year ended May 31, 2016, we incurred expenses on settlements for previously disputed amounts owed in the amount of $218,751. During the fiscal year ended May 31, 2015, we realized a gain of $4,204 related to the extinguishment of debt upon the issuance of stock and warrants.  

 

 

During the fiscal year ended May 31, 2016, interest expense decreased by $315 to $13,711, as compared to $14,026, during the fiscal year ended May 31, 2015. This decrease was primarily related to extinguishment of debt.

 

Income Taxes. No provision for or benefit from income taxes was reflected in the 2016 or 2015 periods, as the benefits of operating loss carryforwards have been reserved.

 

Liquidity and Capital Resources

 

Our company’s cash expenditures during the years ended May 31, 2016 and 2015 were limited primarily to amounts required for the payment of professional fees in connection with our company meeting its requirements under the securities laws and in completing the transactions contemplated by the Purchase Agreement.

 

During the years ended May 31, 2016 and 2015, we funded our operations with the proceeds of loans from our shareholders, the notes payable, the sale of common stock and warrants to purchase common stock, and the cash on hand derived from the Purchase Agreement. As of May 31, 2016, we had $62,075 in cash and cash equivalents. As of May 31, 2015, we did not have any cash and cash equivalents. As of May 31, 2015, we had $11,835 in receivables due from a related party.

 

Net cash used in operating activities was $264,595 and $77,743 for the fiscal years ended May 31, 2016 and 2015, respectively. During the fiscal years ended May 31, 2016 and 2015, our company was not engaged in any revenue-generating operations. Cash used in operations was higher in the 2016 period primarily as a result of increased costs related to professional, consulting fees and SEC filing requirement expenses.

 

Net cash used in investing activities was $10,500 during the fiscal year ended May 31, 2016. We did not have any investing activities during the fiscal year ended May 31, 2015. During the fiscal year ended May 31, 2016, we loaned $10,500 to Legend Merchant Group, an unaffiliated New York based company.

 

Net cash provided by financing activities was $337,170 and $75,987 for the fiscal year ended May 31, 2016 and 2015, respectively. During the fiscal year ended May 31, 2016, we refunded a cash advance in the amount of $60,000, received $277,170 from the sale of common stock and had proceeds from a note payable of $120,000. During the fiscal year ended May 31, 2015, we borrowed $3,905 from related parties and repaid $3,418 to related parties. In addition, during such period, we sold promissory notes totaling $10,000, we converted notes payable of $5,000 and sold common stock and warrants totaling $6,685. In addition, we entered into a purchase agreement and received a deposit on this agreement of $60,000, which amount has since been refunded.

 

The accompanying financial statements have been prepared assuming that our company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. Our continued existence is dependent upon our ability to effect our business plan and generate sufficient cash flows from operations to support its daily operations, as well as to provide sufficient resources to retire existing liabilities and obligations on a timely basis. We anticipate effecting future sales of debt or equity securities to execute our plans to fund our operations. However, there is no assurance that it will be able to obtain additional funding through the sales of additional debt or equity securities or that such funding, if available, will be obtained on terms favorable to or affordable by our company.

 

Further, we face considerable risk in our business plan and a potential shortfall of funding due to our inability to raise capital in the debt and equity securities markets. If no additional capital is raised, our company will be forced to rely on existing cash in the bank and or scale back operations until such time that it generates revenues or raises additional capital, which raises substantial doubt about its ability to continue as a going concern.

 

In such a restricted cash flow scenario, our company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, our company may have to scale back operations and expansion plans during the next twelve months, or until such time as necessary funds can be raised in the debt or equity securities markets.

 

Off-Balance Sheet Arrangements

 

As of May 31, 2016 and 2015, we had no off-balance sheet arrangements.

 

Inflation and Seasonality

 

We do not believe our operations are materially affected by inflation or seasonality.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Act of 1934, and are not required to provide the information under this item.

 

 

Item 8. Financial Statements and Supplementary Data.

 

INDEX TO FINANCIAL STATEMENTS

 

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets as of May 31, 2016 and 2015	F-2
Statements of Operations for the years ended May 31, 2016 and 2015	F-3
Statements of Shareholders’ Equity (Deficit) for the years ended May 31, 2016 and 2015	F-4
Statements of Cash Flows for the years ended May 31, 2016 and 2015	F-5
Notes to Financial Statements	F-6

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders

NxChain Inc.

 

We have audited the accompanying balance sheets of NxChain Inc. as of May 31, 2016 and 2015, and the related statements of operations, shareholders’ equity (deficit), and cash flows for each of the years in the two-year period ended May 31, 2016. NxChain Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor where we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NxChain Inc. as of May 31, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended May 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had recurring net losses and recurring net cash used in operations for each of the two years ended May 31, 2016 and 2015, respectively and has an accumulated deficit totaling $13,162,985 at May 31, 2016. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Rosenberg Rich Baker Berman & Company

 

Somerset, NJ

 

August 29, 2016.

 

 

NXChain Inc.

 

BALANCE SHEETS

 

		May 31, 2016				May 31, 2015
Assets
Current assets:
Cash		$	62,075			$	---
Loan receivable			10,500
Due from related party			---				11,835
Total assets		$	72,575			$	11,835
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses		$	54,453			$	220,222
Loans payable shareholders			---				65,073
Note payable related party			120,000				---
Notes payable			---				85,000
Due to related party			---				60,000
Convertible note payable related party			25,000				---
Convertible note payable			75,000				---
Total liabilities			274,453				430,295
Shareholders’ deficit:
Common stock, $.001 par value; 100,000,000 shares authorized; 10,041,469 and 644,278 shares issued and outstanding, respectively			10,041				644
Common stock subscribed, 1,482 shares, respectively			1				1
Common stock subscription receivable			(2,830	)			---
Additional paid-in capital			12,953,895				12,291,046
Accumulated deficit			(13,162,985	)			(12,710,151	)
Total shareholders’ deficit			(201,878	)			(418,460	)
Total liabilities and shareholders’ deficit		$	72,575			$	11,835

 

See accompanying notes to the financial statements.

 

 

NXChain Inc.

 

STATEMENTS OF OPERATIONS

 

		For the year ended
		May 31, 2016				May 31, 2015
Selling, general and administrative expenses		$	(307,518	)		$	(47,842	)
Other income (expense):
Extinguishment of debt			87,146				4,204
Settlement expense			(218,751	)			---
Interest expense			(13,711	)			(14,026	)
Total other income (expense)			(145,316	)			(9,822	)
Net loss		$	(452,834	)		$	(57,664	)
Basic and diluted net loss per share:
Net loss per basic and diluted share		$	(0.20	)		$	(0.09	)
Weighted average shares outstanding:
Basic and diluted			2,249,483				642,796

 

See accompanying notes to the financial statements.

 

 

NXChain Inc.

 

STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

 

		Common Stock Subscribed								Common Stock								Common Stock Subscription				Additional Paid-In				Accumulated				Shareholders’ Equity
		Shares				Par Value				Shares				Par Value				Receivable				Capital				Deficit				(Deficit)
Balance, May 31, 2014			---			$	---				640,787			$	641			$	---			$	12,284,364			($	12,652,487	)		$	(367,481	)
Common stock issued for subscription			1,482				1				---				---				---				4,999				---			$	5,000
Settlement of note and accrued interest			---				---				3,195				3				---				1,182				---			$	1,185
Settlement of note and Exercise of warrants			---				---				296				0				---				500				---			$	500
Net loss			---				---				---				---				---				---				(57,664	)		$	(57,664	)
Balance, May 31, 2015			1,482			$	1				644,278			$	644			$	---			$	12,291,046			$	(12,710,151	)		$	(418,459	)
Forgiveness of debt			---				---				---				---				---				7,573				---				7,573
Cashless conversion of warrants			---				---				2,697				3				---				(3	)			---			$	---
Conversion of notes payable			---				---				85,000				85				---				84,915				---			$	85,000
Conversion of loan payable			---				---				32,500				33				---				32,467				---			$	32,500
Conversion of accrued interest			---				---				25,421				25				---				25,396				---			$	25,421
Common stock issued for settlements			---				---				190,633				191				---				218,560				---			$	218,751
Conversion of payables into stock			---				---				20,000				20				---				22,980				---			$	23,000
Common stock issued for cash			---				---				9,040,839				9,041				(2,830	)			270,959				---			$	277,170
Common stock credits issued in connection with stock split			---				---				101				0				---				0							$	0
Net loss			---				---				---				---								---				(452,834	)		$	(452,834	)
Balance, May 31, 2016			1,482			$	1				10,041,469			$	10,041			$	(2,830	)		$	12,953,894			$	(13,162,985	)		$	(201,878	)

 

 

See accompanying notes to the financial statements.

 

 

NXChain Inc.

 

STATEMENTS OF CASH FLOWS

 

		For the year ended
		May 31, 2016				May 31, 2015
Net cash provided by operating activities
Net loss		$	(452,834	)		$	(57,664	)
Adjustments to reconcile net loss to net cash used in operating activities:
Extinguishment of debt			(87,146	)			(4,204	)
Shares issued for settlement expense			218,751				---
Changes in operating assets and liabilities:
Due from related party			11,835				(11,835	)
Accounts payable and accrued expenses			44,799				(4,040	)
Net cash used in operating activities			(264,595	)			(77,743	)
Net cash provided by investing activities
Issuance of loan receivable			(10,500	)			---
Net cash used in investing activities			(10,500	)			---
Net cash from financing activities
Repayment of shareholder loans			---				(3,418	)
Proceeds from refundable deposit			---				60,000
Proceeds from issuance of notes payable			---				10,000
Proceeds from issuance of common stock subscriptions			---				5,000
Proceeds from exercise of warrants			---				500
Repayment to related parties			(60,000	)			---
Proceeds from note payable related party			120,000
Proceeds from issuance of common stock			277,170				---
Proceeds from loans from shareholders			---				3,905
Net cash provided by financing activities			337,170				75,987
Change in cash and cash equivalents			62,075				(1,756	)
Cash and cash equivalents at beginning of period			---				1,756
Cash and cash equivalents at end of period		$	62,075			$	---
Cash paid for interest		$	---			$	---
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Accounts payable and accrued expenses converted to stock		$	48,421			$	86
Accounts payable and accrued expenses converted to convertible note		$	75,000			$	---
Loan payable converted to note payable		$	25,000			$	---
Loan payable converted to stock		$	32,500			$	---
Note payable converted to stock		$	85,000			$	1,100

 

See accompanying notes to the financial statements.

 

 

Notes to the Financial Statements

 

Note 1. Organization and Significant Accounting Policies

 

Organization

 

NXChain Inc. (formerly AgriVest Americas, Inc., formerly Robocom Systems International Inc.) (sometimes referred to herein, after the effective date of the Reincorporation Merger (defined below) as, the “Company”) was incorporated under the laws of the State of New York in June 1982 and reincorporated in the State of Delaware on December 5, 2011. Since October 2005, the Company has been a “shell” company, as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, whose sole purpose was to locate and consummate a merger with or an acquisition of a private entity (see “Plan of Operations” below).

 

Reincorporation Merger Agreement

 

On December 5, 2011, Robocom Systems International Inc., a New York corporation (“Robocom”), entered into an Agreement and Plan of Merger dated as of December 5, 2011 (the “Merger Agreement’) with the AgriVest Americas, Inc. (referred to herein prior to the Reincorporation Merger, as “AgriVest”) in order to effect a reincorporation of Robocom through the merger of Robocom with and into AgriVest (the “Reincorporation Merger”). At the time of the Reincorporation Merger, AgriVest was a newly-formed Delaware corporation and a wholly-owned subsidiary of Robocom formed specifically for the purpose of effecting a reincorporation of Robocom in the State of Delaware. Pursuant to the Merger Agreement, on December 5, 2011, Robocom merged with and into AgriVest, making AgriVest the surviving corporation. The Reincorporation Merger resulted in the following:

 

●

The change of domicile of the registrant from New York to Delaware, as a result of which the registrant is now governed by the laws of the State of Delaware and by a new certificate of incorporation and new by-laws governed by Delaware law;

 

●

The change of the corporate name of the registrant from “Robocom Systems International Inc.” to “AgriVest Americas, Inc.”;

 

●

The conversion of every share of the registrant’s common stock owned as of the effective date of the Reincorporation Merger into 0.5 of a share of common stock of the Company;

 

●

The reduction of the par value of the registrant’s common stock from $0.01 per share to $0.001 per share; and

 

●

The increase in the authorized capital stock of the registrant to 125,000,000 total shares, consisting of 100,000,000 shares of common stock, par value $0.001 per share, and 25,000,000 shares of “blank check” preferred stock, par value $0.001 per share.

 

The Merger Agreement was approved by the Board of Directors of Robocom on November 8, 2011 and by the Board of Directors and sole stockholder of AgriVest on December 2, 2011. At the annual meeting of stockholders of Robocom held on May 27, 2008, the holders of a majority of the outstanding shares of common stock of Robocom approved the reincorporation of Robocom in the State of Delaware through a merger with and into a wholly-owned, newly-formed Delaware subsidiary formed specifically for that purpose, subject to certain parameters that were satisfied by the terms of the Merger Agreement.

 

At the effective time of the Reincorporation Merger, the number of Company’s authorized shares of common stock and preferred stock was increased, the number of outstanding shares of common stock was reduced by approximately 50% and the par value of the Company’s common stock and preferred stock was reduced from $0.01 per share to $0.001 per share. All impacted amounts included in the financial statements and notes thereto have been retroactively adjusted for such increases and reductions. Impacted amounts include shares of common stock and preferred stock authorized, outstanding shares of common stock, par value per share and loss per share.

 

Securities Purchase Agreement and Change of Control

 

On December 5, 2011, Robocom and the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Michael Campbell. Pursuant to the Purchase Agreement, Mr. Campbell purchased from the Company following the Reincorporation Merger an aggregate of 19,000,000 shares (the “Shares”) of common stock, par value $0.001 per share (“Common Stock”), for an aggregate purchase price of $50,000.

 

Immediately following the issuance of the Shares pursuant to the Purchase Agreement, an aggregate of 21,420,492 shares of common stock was issued and outstanding and the shares of Common Stock owned by Mr. Campbell represented approximately 88.7% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis. The Shares were acquired with funds that Mr. Campbell borrowed from an entity controlled by a current director of the Company. Given the change of control, the amount and availability of any net operating loss carryforwards will be subject to the limitations set forth in the Internal Revenue Code. The following factors all enter into the annual computation of allowable annual utilization of any net operating loss carryforward(s):

 

●

the number of shares ultimately issued within a three-year look-back period;

 

●

whether there is a deemed more than 50 percent change in control;

 

●

the applicable long-term tax exempt bond rate;

 

●

continuity of historical business; and

 

●

subsequent income of the Company.

 

 

NxChain Inc.
Notes to the Financial Statements (continued)

 

On November 19, 2015, the Company entered into a Common Stock Purchase Agreement with Havanti AS, a Norwegian limited liability company (“Havanti”). Pursuant to such purchase agreement, Havanti purchased from the Company an aggregate of 1,040,839 shares (the “Purchased Shares”) of Common Stock for an aggregate purchase price of $200,000. Immediately following the issuance of the Purchased Shares pursuant such purchase agreement, an aggregate of 2,041,368 shares of Common Stock were issued and outstanding and the shares of Common Stock owned by Havanti represented approximately 51.0% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.

 

At or prior to the closing of the sale of the Purchased Shares, and as a condition to such closing, the Company entered into various agreements (the “Restructuring Agreements”) with an aggregate of 12 warrant holders, note holders or other creditors of the Company pursuant to which the Company converted or exchanged all existing or outstanding debts, promissory notes or warrants of the Company into an aggregate of 356,251 shares of Common Stock (the “Conversion Shares”) and $100,000 aggregate principal amount of promissory notes (the “Notes”) of the Company. The Notes originally bore interest at the rate of 8% per annum if not paid in full on or prior to the six-month anniversary of the issue date of the Notes and at the rate of 18% if the maturity date of the Notes was automatically extended for an additional three months as permitted by the Notes, and now bear interest at a rate per annum equal to the lesser of 28% or the maximum rate permitted by law. As the outstanding principal and interest on the Notes was not paid in full at the end of such three month extension period, the Notes are now payable on demand and the holders of the Notes may convert the unpaid principal of and interest on the Notes into shares of Common Stock at a price per share equal to 75% of the closing sale price of the Common Stock, or the last bid price if the closing sale price cannot be determined, on a material stock exchange or in the over-the-counter market on the trading day immediately prior to the conversion date.

 

On March 10, 2016, the Company entered into a non-binding Letter of Intent (“LOI”) to engage in a merger with LXCCoin Ltd. ("LXCC"), a privately-held UK company in the blockchain and digital currency market. Under the terms of the LOI it is expected that LXCC will be merged with NXCN, which will remain the surviving entity, and that LXCC’s shareholders will own approximately 90% of the post-merged fully-diluted shares of NXCN. Completion of the merger is contingent upon certain closing conditions, including customary due diligence considerations, the negotiation, execution and delivery of a merger agreement by the parties, and board and stockholder approval. There can be no assurances that a merger agreement or a closing will occur based on satisfaction of these conditions. Due to the non-binding nature of the letter of intent, the terms of the proposed transaction remain subject to change.

 

Basis of Presentation

 

On December 30, 2015, the Company filed a Certificate of Amendment to its Certificate of Incorporation (the “Amendment”) with the Secretary of State of the State of Delaware to (i) change the Company’s name from “AgriVest Americas, Inc.” to “NXChain Inc.” and (ii) effectuate a stock combination or reverse stock split, whereby every 33.7468 outstanding shares of Common Stock of the Company were converted into one share of Common Stock. The Amendment became effective immediately upon filing on December 30, 2015. All share and per share amounts have been restated to give effect to such reverse stock split.

 

Plan of Operations

 

The Company is a shell company with no operating business. As a result of the sale of the Purchased Shares, Havanti has acquired effective control of the Company. In connection with such transactions, the board of directors of the Company has determined to establish the Company as a provider of a digital currency, to engage as a peer-to-peer lender utilizing such digital currency and to engage in other digital currency businesses. The Company intends to enter such markets by seeking and acquiring or merging with one or more established companies in such industry, including possibly, one or more companies controlled by Havanti or one of its affiliates or in which Havanti or one of its affiliates has an equity interest. Any such acquisition or merger may involve the issuance of additional shares of Common Stock. In order to fund such proposed business plan, the Company intends to raise funds from investors by issuing Common Stock, preferred stock and/or debt securities to fund future operations. Upon any such acquisition or merger, the Company will cease to be a shell company as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended.

 

Liquidity and Capital Resources

 

The Company’s accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. The Company’s continued existence is dependent upon its ability to effect its business plan and generate sufficient cash flows from operations to support its daily operations, as well as to provide sufficient resources to retire existing liabilities and obligations on a timely basis. The Company anticipates effecting future sales of debt or equity securities to execute its plans to fund its operations. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional debt or equity securities or that such funding, if available, will be obtained on terms favorable to or affordable by the Company.

 

 

NxChain Inc.
Notes to the Financial Statements (continued)

 

Further, the Company faces considerable risk in its business plan and a potential shortfall of funding due to the Company’s inability to raise capital in the debt and equity securities markets. If no additional capital is raised, the Company will be forced to rely on existing cash in the bank or to scale back operations until such time that it generates revenues or raises additional capital, which raises substantial doubt about the Company’s ability to continue as a going concern.

 

In such a restricted cash flow scenario, the Company would be unable to complete its business plan steps, and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may have to scale back operations and expansion plans during the next twelve months, or until such time as necessary funds can be raised in the debt or equity securities markets.

 

Significant Accounting Policies

 

Use of Estimates

 

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three-months or less at the time of purchase to be cash equivalents.

 

Basic and Diluted Net Income (Loss) Per Share

 

Basic and diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the periods presented.

 

The Company calculates income (loss) per common share in accordance with ASC Topic 260, "Earnings Per Share". Basic and diluted income (loss) per common share is computed based on the weighted average number of common shares outstanding. Common share equivalents consist of warrants and are excluded from the computation of diluted income (loss) per share, since the effect would be anti-dilutive. Common share equivalents, which could potentially dilute basic earnings (loss) per share in the future, and which were excluded from the computation of diluted income (loss) per share. There were no Common share equivalents for the period ending May 31, 2016. Common share equivalents totaled approximately 91,000 at May 31, 2015.

 

Income Taxes

 

The Company employs an asset and liability approach in accounting for income taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and as measured by the provisions of enacted laws.

 

Deferred tax assets or liabilities are recognized for temporary differences that will result in deductible amounts or taxable income in future years and for net operating loss carry forwards. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

 

The Company's 2016, 2015 and 2014 federal and state tax returns remain subject to examination by the respective taxing authorities. In addition, net operating losses arising from prior years are also subject to examination at the time that they are utilized in future years. Neither the Company's federal or state tax returns are currently under examination.

 

 

NxChain Inc.
Notes to the Financial Statements (continued)

 

Note 2. Related Party Transactions

 

Loans Payable Shareholder and Convertible Note Payable Shareholder

 

The Company from time to time borrows money from a Director of the Company and the Company’s CEO. At May 31, 2015, there was $25,000 and $40,073 outstanding in loans respectively to the Director and CEO.  On November 11, 2015, the Company converted all amounts owed to these individuals into a convertible note and into shares of common stock, respectively. At the time of conversion of the loan payable to the Director, there was $25,000 outstanding. This amount was converted to a $25,000 convertible note that bears interest at 8% per annum with a maturity date of August 15, 2016. The note is convertible after August 15, 2016 at a price per share equal to 75% of the closing sale price of the Common Stock, or the last bid price if the closing sale price cannot be determined, on a material stock exchange or in the over-the-counter market on the trading day immediately prior to the conversion date. If the note is not paid in full on or prior to the six-month anniversary of the issue date of the note and at the rate of 18% if the maturity date of the notes was automatically extended for an additional three months as permitted by the note, and now bears interest at a rate per annum equal to the lesser of 28% or the maximum rate permitted by law. As the outstanding principal and interest on the note was not paid in full at the end of such three-month extension period, the note is currently payable on demand and the holder of the note may convert the unpaid principal of and interest on the note into shares of Common Stock as described above. As of May 31, 2016, there was $25,000 of principal and accrued interest of $1,083 outstanding on this note. At the time of conversion of the loan payable to the CEO, there was $40,073 outstanding. This amount was converted into 32,500 shares of stock with $7,573 of debt being forgiven, which is included in additional paid-in capital on the balance sheet.

 

Due From Related Party

 

Until February 2016, all of the Company’s cash was held by a related party at which point the monies were deposited into the Company’s bank account. The amount of cash held by this related party at May 31, 2015 was $11,835.

 

Due To Related Party

 

As part of a potential reverse merger with an unaffiliated party, the Company received $60,000 from the unaffiliated party, which were being held in the Due from Related Party account, in the year ended May 31, 2014 to help fund expenses until the proposed merger could be completed. In the event the proposed merger was not completed, the Company would be obligated to return the $60,000. During the quarter ended November 30, 2015, the potential reverse merger was terminated and the $60,000 advance was returned in full.

 

Note Payable Related Party

 

During the fiscal year ended May 31, 2016, the Company issued a promissory note to a company, which is affiliated with LXCC, in the aggregate principal amount of $120,000 with interest at 8% per annum and a maturity date of March 31, 2017.  At May 31, 2016, $120,000 of principal and $2,400 of accrued interest were outstanding.

 

Expenses

 

The Company uses a consulting firm owned by the CEO for consulting services.  During the fiscal years ending May 31, 2016 and 2015, we incurred consulting fees to this related party of $138,854 and $18,200, respectively.   There were no payables outstanding to this company as of May 31, 2016 or 2015.

 

Other

 

During the fiscal year ended May 31, 2016, we entered into the LOI to engage in a merger with LXCC, a privately-held UK company in the blockchain and digital currency market, that is owned by the stockholders of our majority stockholder. Under the terms of the LOI it is expected that LXCC will be merged with NXCN, which will remain the surviving entity, and that LXCC’s shareholders will own approximately 90% of the post-merged fully-diluted shares of NXCN. The letter of intent provides that, subject to certain exceptions, for a sixty-day period, neither party may engage in negotiations or solicit proposals with another company with respect to an acquisition or a debt or equity investment transaction, disposal of assets outside of the ordinary course, or, with respect to LXCCoin, sell any equity or debt interest, subject to certain exceptions.

 

During the fiscal year ended May 31, 2016, the Company entered into a Common Stock Purchase Agreement with Havanti AS. Pursuant to the Purchase Agreement, Havanti purchased from the Company an aggregate of 1,040,839 shares of Common Stock for an aggregate purchase price of $200,000. Immediately following the issuance of the Purchased Shares pursuant to the Purchase Agreement, an aggregate of 2,041,368 shares of Common Stock were issued and outstanding and the shares of Common Stock owned by Havanti represented approximately 51.0% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.

 

During the fiscal year ended May 31, 2016, a consulting firm owned by our CEO acquired 283,042 shares of Common Stock for an aggregate purchase price of $2,830. This amount was not received as of May 31, 2016 and is shown as a common stock subscription receivable on the balance sheet. 

 

On April 20, 2016, Havanti AS acquired 7,716,958 shares of Common Stock for an aggregate purchase price of $77,170.

 

 

NxChain Inc.
Notes to the Financial Statements (continued)

 

Note 3. Loan Receivable

 

During the fiscal year ended May 31, 2016, the Company issued a promissory note to Legend Merchant Group, Inc., an unaffiliated New York-based company, in the aggregate principal amount of $10,500. This note bears interest at 8% per annum with a maturity date of September 30, 2016.

 

Note 4. Notes Payable

 

As of May 31, 2014, the Company had $80,000 in outstanding principal on various notes originated between December 2011 and May 2014.  The interest rates on the notes ranged from 10% to 15% and the maturity dates ranged between October 2012 and March 2015.

 

During fiscal 2015, one note holder converted $5,000 in principal and $390 of accrued interest to 107,813 shares of common stock, which resulted in a gain of $4,204. As of May 31, 2015, $75,000 of principal was outstanding on these notes.

 

During fiscal 2015, the Company entered in a new note on June 12, 2014 for $10,000 with an interest rate of 15% and a maturity date of March 31, 2015. No payments were made on the note in fiscal 2015; therefore, as of May 31, 2015, $10,000 was outstanding on this note.

 

On November 11, 2015, the Company converted the above $85,000 of principal of the notes and $25,421 of accrued interest thereon into 85,000 and 25,421 shares of common stock, respectively. 

 

Convertible Note Payable

 

On November 15, 2015, the Company had $144,038 in outstanding payables from a vendor that it converted into a $75,000 convertible note with the remaining $69,038 of debt being forgiven. The convertible note has interest rate of 8% with a maturity date of August 15, 2016. As of this filing, the Company is in arrears on this note as $75,000 is still outstanding. The Notes originally bore interest at the rate of 8% per annum if not paid in full on or prior to the six-month anniversary of the issue date of the Notes and at the rate of 18% if the maturity date of the Notes was automatically extended for an additional three months as permitted by the Notes, and now bear interest at a rate per annum equal to the lesser of 28% or the maximum rate permitted by law. As the outstanding principal and interest on the Notes was not paid in full at the end of such three month extension period, the Notes are payable on demand and the holders of the Notes may convert the unpaid principal of and interest on the Notes into shares of common stock at a price per share equal to 75% of the closing sale price of the common stock, or the last bid price if the closing sale price cannot be determined, on a material stock exchange or in the over-the-counter market on the trading day immediately prior to the conversion date. As of May 31, 2016, there was $75,000 of principal and $3,250 of accrued interest outstanding on this note.

 

Note 5. Shareholders Equity (Deficit)

 

Preferred Stock

 

The Company has 25,000,000 of “Blank Check” preferred stock, $.001 par value, authorized. As of May 31, 2016 and 2015, the Company had no shares of preferred stock is issued or outstanding.

 

Common Stock

 

During the fiscal year ended May 31, 2015, one investor converted promissory notes in the aggregate principal amount of $5,000 and related interest of $390 to 3,195 shares of Common Stock. This transaction resulted in a gain of $4,204.

 

During fiscal year ended May 31, 2015, one note holder converted $5,000 in principal and $390 of accrued interest to 107,813 shares of common stock, which resulted in a gain of $4,204.

 

During the fiscal year ended May 31, 2015, one investor exercised warrants to purchase 296 shares of Common Stock for $500.

 

During the fiscal year ended May 31, 2015, the Company sold 1,481 shares at $0.10 per share for total proceeds of $5,000. As of May 31, 2015 the shares have yet to be issued; therefore, the par value of the shares is recorded as common stock subscribed.

 

During the fiscal year ended May 31, 2016, the Company converted $40,073 of loans payable to the CEO, into 32,500 shares of stock with $7,573 of debt being forgiven, which is included in additional paid-in capital on the balance sheet.

 

During the fiscal year ended May 31, 2016, the Company converted $23,000 in outstanding payables into 20,000 shares of Common Stock.

 

During the fiscal year ended May 31, 2016, the Company converted 2,697 outstanding warrants into 2,697 shares of Common Stock.

 

During the fiscal year ended May 31, 2016, the Company issued 190,633 shares of Common Stock with a value of $218,751 to settle disputes over amounts claimed to be owed to unaffiliated third parties.

 

As discussed in Note 4, during the fiscal year ended May 31, 2016, the Company converted $85,000 of notes payable and $25,421 of accrued interest into 85,000 and 25,421 shares of common stock, respectively.

 

 

NxChain Inc.
Notes to the Financial Statements (continued)

 

During the fiscal year ended May 31, 2016, the Company entered into a Common Stock Purchase Agreement with Havanti AS. Pursuant to the Purchase Agreement, Havanti purchased from the Company an aggregate of 1,040,839 shares of Common Stock for an aggregate purchase price of $200,000. Immediately following the issuance of the Purchased Shares pursuant to the Purchase Agreement, an aggregate of 2,041,368 shares of Common Stock were issued and outstanding and the shares of Common Stock owned by Havanti represented approximately 51.0% of the issued and outstanding shares of capital stock of the Company on a fully-diluted basis.

 

During the fiscal year ended May 31, 2016, a consulting firm owned by our CEO acquired 283,042 shares of Common Stock for an aggregate purchase price of $2,830. This amount was not received as of May 31, 2016 and is shown as a common stock subscription receivable on the balance sheet.

 

On April 20, 2016, Havanti acquired 7,716,958 shares of Common Stock for an aggregate purchase price of $77,170.

 

During the fiscal year ending May 31, 2016, the Company filed a Certificate of Amendment to its Certificate of Incorporation with the Secretary of State of the State of Delaware to (i) change the Company’s name from “AgriVest Americas, Inc.” to “NXChain Inc.” and (ii) effectuate a stock combination or reverse stock split, whereby every 33.7468 outstanding shares of Common Stock of the Company were converted into one share of Common Stock. The Amendment became effective immediately upon filing on December 30, 2015. All share and per share amounts have been restated to give effect to such reverse stock split.

 

Note 6. Income Taxes

 

Deferred tax assets as of May 31, 2016 and 2015 were substantially comprised of net operating loss carryforwards, net of valuation allowances.

 

The Company did not record any provision for or benefit of income taxes in the years ended May 31, 2016 or 2015. The valuation allowance at May 31, 2016 and 2015 was provided because of uncertainty, based on its historical results, with respect to realization of deferred tax assets.

 

At May 31, 2016 and 2015, the Company had net operating loss carryforwards of approximately $5.37 million for income tax purposes, which may be able to reduce taxable income in future years. The utilization of these losses to reduce future income taxes will depend on the Company generating sufficient taxable income prior to the expiration of the net operating loss carryforwards. Net operating loss carryforwards will expire in various years through May 31, 2036.

 

 

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

 

None.

 

Item 9A. Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

The management of our company, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of May 31, 2016 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of May 31, 2016, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weakness described below.

 

In light of the material weakness described below, we performed additional analysis to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present, in all material respects, our company’s financial condition, results of operations and cash flows for the periods presented.

 

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5) or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

In performing its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, management identified a material weakness relating to the relatively small number of professionals employed by our company in bookkeeping and accounting functions, which prevents us from appropriately segregating duties within our internal control systems. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

 

The material weakness described above caused management to conclude that, as of May 31, 2016, our disclosure controls and procedures were not effective at the reasonable assurance level. Management will continue to evaluate our existing accounting personnel needs and intends to increase the Company’s accounting and financing personnel resources by hiring additional accounting staff. However, the Company will be unable to remedy this material weakness in its disclosure controls until it has the financial resources that will allow it to hire additional qualified employees.

 

Management’s annual report on internal control over financial reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

 

●

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets

of us;

 

 

●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and

 

●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Management assessed our internal control over financial reporting as of May 31, 2016, the end of our last fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

 

Based on its assessment, management has concluded that our internal control over financial reporting was not effective as of the end of our last fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Management determined that there existed a material weakness relating to the relatively small number of professionals employed in bookkeeping and accounting functions, which prevents us from appropriately segregating duties within our internal control systems.

 

As a smaller reporting company, management’s report is not subject to attestation by our independent registered public accounting firm.

 

Changes in Internal Controls

 

There were no changes in our internal controls over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information

 

Not applicable.

 

 

Part III

 

Item 10. Directors, Executive Officers, and Corporate Governance.

 

Directors and Executive Officers

 

The following table sets forth the names and ages of our directors and executive officers as of August 29, 2016:

 

Name		Age		Position
Michael B. Campbell		60		Chief Executive Officer and Director
Eric M. Hellige		61		Director

 

The biographies of each of the directors and executive officer below contains information regarding the person’s service, business experience, positions held currently or at any time during the last five years, and for each director or any nominee for director the particular experiences, qualifications, attributes or skills that caused our Board of Directors to determine that such person should serve as a director for us in 2016, and the names of any other publicly-held companies of which such person served as a director in the past five years.

 

Michael B. Campbell, President, Chief Executive Officer and Director:

 

Michael B. Campbell, has served as a Director and as President, Chief Executive Officer and Treasurer of our company since December 5, 2011.

 

Mr. Campbell has served as the managing director of both M1 Advisors LLC and M1 Capital Group Ltd., since founding those companies in 2002 and 2004, respectively. M1 Advisors LLC and M1 Capital Group Ltd. are business advisory and merchant banking firms that provide growth capital and financial advisory services to high-growth companies in emerging markets. Since November 2009, Mr. Campbell also has served as Chairman of the Board of Directors and as President, Chief Executive Officer and Secretary of Resource Holdings, Inc., a publicly-traded, development-stage company that makes loans and leases equipment to operating gold mines located in Brazil. Mr. Campbell also served as a director of Ensurge, Inc., a public “shell” company, from December 2009 until June 29, 2010. Mr. Campbell has over 30 years of experience in founding, financing, building and operating high- growth companies worldwide.

 

We believe Mr. Campbell’s qualifications to sit on its board of directors include his over 30 years of experience in founding, financing, building and operating high-growth companies worldwide.

 

Eric M. Hellige, Director

 

Eric M. Hellige has been a director of our company since December 2010. For more than the last five years, Mr. Hellige has been a member of the law firm of Pryor Cashman LLP, New York, New York.

 

Mr. Hellige brings to the Board of Directors over 30 years of experience counseling business entities in a wide range of general corporate, financing and mergers and acquisitions activities. During the past five years, Mr. Hellige has not served as a director of another company with a class of securities registered pursuant to Section 12 of the Exchange Act.

 

Term

 

All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors during the period covered by this report.

 

 

Executive officers are elected by, and serve at the discretion of, our Board of Directors.

 

Family Relationships

 

There are no family relationships between or among any of our directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, none of our directors and executive officers was involved in any legal proceeding during the last 10 years as described in Item 401 (f) of Registration S-K.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of our outstanding common stock to file with the SEC initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

 

Based solely upon a review by us of Forms 3 and 4 relating to fiscal years 2016 and 2015 as furnished to us under Rule 16a-3(d) under the Act, and Forms 5 and amendments thereto furnished to us with respect to fiscal year 2016, we believe that during the fiscal years ended May 31, 2016 and 2015, there was no failure to comply with Section 16(a) filing requirements applicable to our officers, directors and 10% stockholders.

 

Code of Ethics

 

On September 13, 2004, our Board of Directors adopted a Code of Ethics and Business Conduct applicable to all members of the Board of Directors, the executive officers and employees of our company and a Code of Ethics that applies to all financial executives and employees of our company. The Code of Ethics and Business Conduct and the Code of Ethics for Financial Executives and Employees were filed as Exhibits 14.1 and 14.2, respectively, to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on September 29, 2004 and are incorporated herein by reference.

 

Committees of the Board of Directors Audit Committee

 

Our Board of Directors established an audit committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. There are currently no members of the audit committee. The members of our Board of Directors perform the functions of the audit committee. All future members of the audit committee will be independent within the meaning of Rule 4200(a)(15) of the Nasdaq Stock Market Corporate Governance Standards, as amended. Due to our status as a shell company and our limited resources, we do not have access to additional eligible candidates. The audit committee is directly responsible for the appointment, compensation and oversight of our independent auditors. The audit committee oversees the financial reporting process on behalf of our Board of Directors by reviewing with the independent auditors the scope and results of the audit engagement, monitoring our financial policies and internal control procedures, and reviewing and monitoring the provisions of non-audit services performed by our independent auditors. Management is responsible for our internal controls and establishing and reviewing the financial reporting process. The audit committee acts under a written charter adopted and approved in September 1997. The audit committee did not meet during the fiscal year ended May 31, 2016 or 2015.

 

Nominating Committee

 

Our Board of Directors does not have a standing nominating committee. Our entire Board of Directors is responsible for this function. Due to the relatively small size of our company and the resulting efficiency of a Board of Directors that is also limited in size, our Board of Directors has determined that it is not necessary or appropriate at this time to establish a separate nominating committee. Our Board of Directors intends to review periodically whether such a nominating committee should be established.

 

 

Our Board of Directors uses a variety of methods for identifying and evaluating nominees for director. It regularly assesses the appropriate size of the Board of Directors, and whether any vacancies exist or are expected due to retirement or otherwise. If vacancies exist, are anticipated or otherwise arise, our Board of Directors considers various potential candidates for director. Candidates may come to their attention through current members of our Board of Directors, shareholders or other persons. These candidates are evaluated at regular or special meetings of our Board of Directors, and may be considered at any point during the year. Our Board of Directors will consider candidates for director that are nominated by shareholders in accordance with the procedures regarding the inclusion of shareholder proposals in proxy materials set forth in the section entitled “Shareholder Proposals” in this proxy statement. In evaluating such recommendations, our Board of Directors uses the qualifications and standards discussed below and seeks to achieve a balance of knowledge, experience and capability on our Board of Directors.

 

Qualifications for consideration as a director nominee may vary according to the particular areas of expertise that may be desired in order to complement the qualifications that already exist among our Board of Directors. Among the factors that our directors consider when evaluating proposed nominees are their independence, financial literacy, business experience, character, judgment and strategic vision. Other considerations would be their knowledge of issues affecting our business, their leadership experience and their time available for meetings and consultation on company matters. Our directors seek a diverse group of candidates who possess the background skills and expertise to make a significant contribution to our Board of Directors, our company and our shareholders.

 

Compensation Committee

 

Our Board of Directors established a compensation committee; however, there are currently no members of the compensation committee. Our entire Board of Directors performs the functions of the compensation committee. All future members of the compensation committee will be independent within the meaning of Rule 4200(a)(15) of the Nasdaq Stock Market Corporate Governance Standards, as amended. Due to our status as a shell company and our limited resources, we do not have access to additional eligible candidates. The compensation committee is responsible for reviewing and recommending salaries, bonuses and other compensation for our officers. The compensation committee is also responsible for administering our stock option plan and for establishing terms and conditions of all stock options granted under the plan. The compensation committee did not meet during the fiscal year ended May 31, 2016 or 2015.

 

Item 11. Executive Compensation.

 

The following table sets forth all compensation awarded to, earned by or paid to the chief executive officer (“CEO”) of our company. We did not employ any other executive officers in fiscal 2016 or 2015.

 

SUMMARY COMPENSATION TABLE

 

																										Nonqualified
																						Non-Equity				Deferred
														Stock				Option				Incentive Plan				Compensation				All Other
Name and		Fiscal				Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
Principal Position		Year				($)				($)				($)				($)				($)				($)				($) (1)				($)
Michael Campbell			2016				---				---				---				---				---				---			$	138,854			$	138,854
Chief Executive Officer			2015				---				---				---				---				---				---			$	33,950			$	33,950

 

(1)	Represents amounts paid to Mr. Campbell under his consulting agreement.

 

 

Outstanding Equity Awards at Fiscal Year End

 

There were no equity awards for our named executive officer, including unexercised options, stock that has not vested and equity incentive plan awards, outstanding at fiscal year ended May 31, 2016 or 2015.

Benefit Plans

 

Our company does not have any retirement, pension, profit sharing, stock options, insurance program or similar programs for the benefit of its employees.

 

Employment Contracts and Termination of Employment and Change in Control Arrangement

 

There are no compensatory plans or arrangements with respect to any officer, director, manager or other executive which would in any way result in payments to any such person because of his resignation, retirement, or other termination of employment with our company, or any change in control of our company, or change in the person’s responsibilities following a change of control of our company.

 

Directors’ Compensation

 

The members of our Board of Directors are not compensated for their service on the Board of Directors, and no member of the Board of Directors received any cash, stock or other compensation during the years ended May 31, 2016 or 2015.

 

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

 

The following table sets forth, as of August 29, 2016, the names, addresses and number of shares of common stock beneficially owned by (i) all persons known to our management to be beneficial owners of more than 5% of the outstanding shares of our common stock, (ii) each director of our company, (iii) each named Executive Officer and (iv) all executive officers and directors of our company as a group (except as indicated, each beneficial owner listed exercises sole voting power and sole dispositive power over the shares beneficially owned):

 

 

		Amount and
		Nature of
Name and Address of		Beneficial				Percent
Beneficial Owner		Ownership				of Class(1)
Michael B. Campbell(2)			863,742				8.6	%
Eric M. Hellige(2)			73,633	(3)			—	%*
Havanti AS			8,757,796	(4)			87.2	%
All executive officers and directors as a group (2 persons)			937,375				45.9	%

 

*Less than 1%.

 

(1)	Except as indicated in the footnotes to this table, we believe that all persons named in the table have sole voting and investment power with respect to all common stock shown as beneficially owned by them. In accordance with the rules of the Securities and Exchange Commission (the “Commission”), a person or entity is deemed to be the beneficial owner of common stock that can be acquired by such person or entity within sixty (60) days upon the exercise of options or warrants or other rights to acquire common stock. Each beneficial owner's percentage ownership is determined by assuming that options and warrants that are held by such person (but not those held by any other person) and which are exercisable within sixty (60) days have been exercised. The inclusion herein of such shares listed as beneficially owned does not constitute an admission of beneficial ownership.
(2)	The address of Michael B. Campbell is 11756 Willard Ave., Tustin, CA 92782. The address of Eudora Partners, LLC is 475 Hempstead Avenue, Rockville Centre, NY 11570.
(3)	Includes 40,001 shares owned by Mr. Hellige and 33,632 shares owned by Eudora Partners, LLC (“Eudora”). Eric M. Hellige, a director of our company, serves as the managing member of Eudora, which is a family limited partnership, and has investment and voting control over the shares owned by Eudora. Mr. Hellige disclaims beneficial ownership of the shares owned by Eudora, except to the extent of his pecuniary interest therein.
(4)	Pursuant to the Schedule 13D filed by Havanti SA with the Securities and Exchange Commission on April 20, 2016, Harald Ellefsen is the sole officer and director of Havanti SA.  The address of Havanti SA is Postboks 84 Slemdal, 0710, Oslo, Norway.

 

 

Securities Authorized for Issuance under Equity Compensation Plans

 

Our 1997 Stock Option and Long-term Incentive Compensation Plan expired on May 15, 2007, and as of May 31, 2016 and 2015, we had no outstanding options or warrants and no compensation plan under which shares of common stock may be issued. We have no equity compensation plans or arrangements that have not been approved by shareholders.

 

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

 

The Company from time to time borrows money from each of Michael Campbell and Eric M. Hellige, each of whom is a member of our board of directors and is a person who has a beneficial ownership of our outstanding common stock. During the fiscal year ended May 31, 2016, the Company converted all amounts owed to these individuals into a convertible note and into shares of common stock, respectively. At the time of conversion of the loan payable to the Director, there was $25,000 outstanding. This amount was converted to a $25,000 convertible note that originally bore interest at the rate of 8% per annum if not paid in full on or prior to the six-month anniversary of the issue date of the note and at the rate of 18% if the maturity date of the notes was automatically extended for an additional three months as permitted by the note, and now bears interest at a rate per annum equal to the lesser of 28% or the maximum rate permitted by law. As the outstanding principal and interest on the note was not paid in full at the end of such three month extension period, the note is currently payable on demand and the holder of the note may convert the unpaid principal of and interest on the note into shares of Common Stock at a price per share equal to 75% of the closing sale price of the Common Stock, or the last bid price if the closing sale price cannot be determined, on a material stock exchange or in the over-the-counter market on the trading day immediately prior to the conversion date. As of May 31, 2016, there was $25,000 of principal and accrued interest of $1,083 outstanding on this note. At the time of conversion of the loan payable to the CEO, there was $40,073 outstanding. This amount was converted into 32,500 shares of stock with $7,573 of debt being forgiven, which is included in additional paid-in capital on the balance sheet. As of May 31, 2015, we had net borrowings of $25,693 from Mr. Campbell and $25,350 from Mr. Hellige. During the period ended May 31, 2015, certain miscellaneous expenses were offset against amounts owed to Mr. Campbell.

 

As of May 31, 2015, we had net borrowings of $14,030 from a company owned by our CEO. This debt was converted to Common Stock in November 2015.

 

During the fiscal year ended May 31, 2016, we entered into the LOI to engage in a merger with LXCC, a privately-held UK company in the blockchain and digital currency market that is an affiliate of Havanti. Under the terms of the LOI, it is expected that LXCC will be merged with our company, which will remain the surviving entity, and that LXCC’s shareholders will own approximately 90% of the post-merged fully-diluted shares of our common stock. Completion of the merger is contingent upon certain closing conditions, including customary due diligence considerations, the negotiation, execution and delivery of a merger agreement by the parties, and board and stockholder approval. There can be no assurances that a merger agreement or a closing will occur based on satisfaction of these conditions. Due to the non-binding nature of the letter of intent, the terms of the proposed transaction remain subject to change.

 

During the fiscal years ending May 31, 2016, we paid consulting fees to a firm owned by our CEO in the amount of $138,854.

 

 

Item 14. Principal Accountant Fees and Services.

 

The following table lists aggregate fees paid for professional services rendered by Rosenberg Rich Baker Berman & Company, our current auditors, for the fiscal years ended May 31, 2016 and 2015.

 

		2016				2015
Audit Fees(1)		$	31,000			$	15,000
Audit Related Fees			—				—
Tax Fees			—				—
All Other Fees			—				—

 

(1)	These fees were for professional services rendered for the audit of our annual financial statements and review of financial statements. There were no other audit related fees for 2016 and 2015. Rosenberg Rich Baker Berman & Company did not perform any other services for us.

 

To our knowledge our principal accountant, Rosenberg Rich Baker Berman & Company, did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.

 

Board of Directors Pre-Approval Policy

 

There are currently no members on our audit committee. However, our entire Board of Directors performs the function of an audit committee. All audit and permissible non-audit services provided by our independent auditors, as well as the fees for such services, must be pre-approved by our Board of Directors. The Board of Directors may delegate to one or more designated members of the Board of Directors the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decisions are reported to the full Board of Directors at its next scheduled meeting. Any pre-approval is generally for the current fiscal year, and any pre-approval is detailed as to the particular service or category of services. All audit and non- audit services provided by our independent auditors during fiscal 2016 and fiscal 2015 were approved by or on behalf of our company by our Board of Directors.

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

The exhibits required by this item are listed on the Exhibit Index attached hereto and are filed herewith.

 

 

SIGNATURES

 

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

 

	NXCHAIN INC.
August 29, 2016	By:	/s/ Michael B. Campbell
		Michael B. Campbell,
		Chief Executive Officer
		(Principal Executive Officer)

 

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

 

Signature		Title		Date
/s/ Michael B. Campbell		Chief Executive Officer and Chairman of the		August 29, 2016
Michael B. Campbell		Board of Directors (Principal Executive Officer and
		Principal Financial Officer)
/s/ Eric M. Hellige		Director		August 29, 2016
Eric M. Hellige

  

 

Exhibit Index

 

Exhibit Number		Description
2.1		Asset Purchase Agreement dated August 17, 2005, between our company and Avantcé RSI, LLC (incorporated by reference to Exhibit 10.1 to our company’s Current Report on Form 8-K as filed with the Commission on August 17, 2005.
2.2		Agreement and Plan of Merger, dated as of December 5, 2011, by and between our company and Robocom Systems International Inc. (incorporated herein by reference to Exhibit 2.1 to our company’s Current Report on Form 8-K as filed with the Commission on December 8, 2011).
3.1		Certificate of Incorporation of our company (incorporated herein by reference to Exhibit 3.1 to our company’s Current Report on Form 8-K as filed with the Commission on as filed with the Commission on December 8, 2011).
3.2		By-laws of our company (incorporated herein by reference to Exhibit 3.2 to our company’s Current Report on Form 8-K as filed with the Commission on December 8, 2011).
3.3		Certificate of Amendment to the Certificate of Incorporation of our company (incorporated herein by reference to Exhibit 3.1 to our company’s Current Report on Form 8-K as filed with the Commission on as filed with the Commission on January 1, 2016.).
10.1		Securities Purchase Agreement, dated as of December 5, 2011, by and among our company, Robocom Systems International Inc. and Michael Campbell (incorporated herein by reference to Exhibit 2.1 to our company’s Current Report on Form 8-K as filed with the Commission on December 8, 2011).
10.2		Securities Purchase Agreement, dated as of November 9, 2015, by and among our company, AgriVest Americas, Inc. and Havanti AS (incorporated herein by reference to Exhibit 99.1 to our company’s Current Report on Form 8-K as filed with the Commission on November 23, 2015).
10.3		Securities Subscription Agreement, dated as of April 20, 2016, by and among our company, NxChain Inc. and Havanti AS (incorporated herein by reference to Exhibit 10.1 to our company’s Current Report on Form 8-K as filed with the Commission on April 20, 2016).
10.4		Securities Subscription Agreement, dated as of April 20, 2016, by and among our company, NxChain Inc. and Michael Campbell (incorporated herein by reference to Exhibit 10.2 to our company’s Current Report on Form 8-K as filed with the Commission on April 20, 2016).
14.1		Robocom Systems International Inc. Code of Ethics and Business Conduct (incorporated herein by reference to Exhibit 14.1 to our company’s Current Report filed on Form 8-K as filed with the Commission on September 24, 2004.
14.2		Robocom Systems International Inc. Code of Ethics for Financial Executives and Employees (incorporated herein by reference to Exhibit 14.2 to our company’s Current Report filed on Form 8-K as filed with the Commission on September 24, 2004.
31.1		Certification of our company’s Chief Executive Officer and Chief Financial Officer, Michael B. Campbell, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of our company’s Chief Executive Officer and Chief Financial Officer, Michael B. Campbell, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

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