UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended August 31, 2016

 

☐  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 and zip code)

 

(714) 832-3249

(Registrants telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ☐	Accelerated filer   ☐
Non-accelerated filer   ☐	Smaller reporting company   ☒

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 10,041,469 shares of common stock as of October 14, 2016.

 

 

 

NX Chain Inc.

 

FORM 10-Q

 

INDEX

 

		Page No.
PART I.	Financial Information	1
Item 1.	Financial Statements:	1
	Balance Sheets – August 31, 2016 (unaudited) and May 31, 2016	1
	Statements of Operations – Three months ended August 31, 2016 (unaudited) and August 31, 2015 (unaudited)	2
	Statements of Cash Flows – Three months ended August 31, 2016 (unaudited) and August 31, 2015 (unaudited)	3
	Notes to Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
PART II.	Other Information:	14
Item 6.	Exhibits	14
Signatures		15

 

 

PART I.    FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

NX Chain Inc.

 

BALANCE SHEETS

 

		August 31, 2016				May 31, 2016
		(unaudited)
Assets
Current assets:
Cash		$	430			$	62,075
Loan receivable			10,500				10,500
Total assets		$	10,930			$	72,575
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable and accrued expenses		$	57,925			$	54,453
Notes payable related party			120,000				120,000
Convertible note payable related party			25,000				25,000
Convertible note payable			75,000				75,000
Total liabilities			277,925				274,453
Shareholders’ Deficit:
Common stock, $.001 par value; 100,000,000 shares authorized; 10,041,469 shares issued and outstanding			10,041				10,041
Common stock subscribed, 1,482 shares			1				1
Common stock subscription receivable			(2,830	)			(2,830	)
Additional paid-in capital			12,953,895				12,953,895
Accumulated deficit			(13,228,102	)			(13,162,985	)
Total shareholders’ deficit			(266,995	)			(201,878	)
Total liabilities and shareholders’ deficit		$	10,930			$	72,575

 

See accompanying notes.

 

 

NX Chain Inc.

 

STATEMENTS OF OPERATIONS

(unaudited)

 

		Three months ended,
		August 31, 2016				August 31, 2015
Selling, general and administrative expenses		$	58,138			$	62,798
Loss from operations			(58,138	)			(62,798	)
Other Income (expense):			-				-
Interest expense			(6,979	)			(3,489	)
Net loss		$	(65,117	)		$	(66,287	)
Basic and diluted net loss per share:
Net loss per basic and diluted share		$	(0.01	)		$	(0.10	)
Weighted average shares outstanding:
Basic and diluted			10,041,469				644,278

 

See accompanying notes.

  

 

NX Chain Inc.

 

STATEMENTS OF CASH FLOWS

(unaudited)

 

		Three months ended,
		August 31, 2016				August 31, 2015
Cash flows from operating activities
Net loss		$	(65,117	)		$	(66,287	)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Decrease in other current assets			-				12,317
Accounts payable and accrued expenses			3,472				18,970
Net cash used in operating activities			(61,645	)			(35,000	)
Cash flows from financing activities
Proceeds from refundable deposit			-				35,000
Proceeds from note payable related party			20,000				-
Repayment to note payable related party			(20,000	)			-
Net cash provided by financing activities			-				35,000
Change in cash and cash equivalents			(61,645	)			-
Cash and cash equivalents at beginning of period			62,075				-
Cash and cash equivalents at end of period		$	430			$	-

 

See accompanying notes.

 

 

NX Chain Inc.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

 

Note 1 - Description of Business and Summary of Significant Accounting Policies

 

Organization

 

NX Chain Inc. (formerly AgriVest Americas, Inc. and Robocom Systems International Inc.) (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).

 

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 common 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 September 26, 2016, we purchased certain assets of LXCCoin Ltd. (“LXCC) pursuant to an Asset Purchase Agreement dated as of September 26, 2016 (the “Purchase Agreement”) with LXCC. In exchange for the assets acquired, we issued to LXCC 14,243,000 shares of our common stock. Following consummation of the asset purchase transaction, LXCC owned approximately 57.97% of our issued and outstanding shares of the common stock, which shares gave LXCC effective control of our company.

 

We plan to use the assets acquired as part of our planned digital-currency payment processing platform that will enable other companies to provide an assortment of online and mobile payment services for products and services that they sell. We plan to both white-label and private-label its payment processing platform for other companies. In addition, we plan to further develop our payment processing platform to support micro-payments, online paywalls, P2P lending and other popular digital-currency services.

 

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.

 

Unaudited Interim Financial Statements

 

The accompanying interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and the instructions to Article 8 of Regulation S-X, and should be read in conjunction with the consolidated financial statements and related notes of the Company filed in its 2016 Annual Report on Form 10-K. The financial statements as of August 31, 2016 and for the three months ended August 31, 2016 and 2015 presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management such financial statements reflect all adjustments, consisting solely of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results that might be expected for future interim periods or for the full year. The balance sheet at May 31, 2016 was derived from audited financial statements but does not include all disclosures required by GAAP.

 

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 to support its 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.

 

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.

 

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 August 31, 2016, there was $25,000 of principal and accrued interest of $2,312 outstanding on this note.

 

Notes Payable Related Party

 

On March 2, 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 August 31, 2016, $100,000 of principal and $4,400 of accrued interest were outstanding. On August 18, 2016, the Company issued a promissory note to this same party in the aggregate principal amount of $20,000 with interest at 8% per annum and a maturity date of August 18, 2017. At August 31, 2016, $20,000 of principal and $62 of accrued interest were outstanding.

 

Expenses

 

The Company uses a consulting firm owned by the CEO for consulting services. During the three months ended August 31, 2016 and 2015, we incurred consulting fees to this related party of $33,500 and $40,000, respectively. There were no payables outstanding to this company as of August 31, 2016 or 2015.

 

 

Other

 

On September 29, 2015, 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.

 

On September 26, 2016, the Company canceled the non-binding letter of intent with LXCC and entered into an Asset Purchase Agreement dated as of September 26, 2016 (the “Purchase Agreement”) with LXCC pursuant to which specific assets of LXCC were acquired by the Company. In exchange for the assets acquired, the Company issued to LXCC 14,243,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Following consummation of the asset purchase transaction, LXCC owned approximately 57.97% of the Company’s issued and outstanding shares of the Common Stock, which shares gave LXCC effective control of the Company.

 

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 August 31, 2016 and is shown as a common stock subscription receivable on the balance sheet. 

 

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. As of October 14, 2016, this promissory note was still outstanding and in default. The Company is currently renegotiating the terms of the promissory note with the borrower.

 

  

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.

 

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 August 31, 2016, there was $75,000 of principal and $6,938 of accrued interest outstanding on this note.

 

Note 5. Subsequent Event

 

On September 26, 2016, the Company canceled the non-binding letter of intent with LXCC and entered into an Asset Purchase Agreement dated as of September 26, 2016 (the “Purchase Agreement”) with LXCC pursuant to which specific assets of LXCC were acquired by the Company. In exchange for the assets acquired, the Company issued to LXCC 14,243,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Following consummation of the asset purchase transaction, LXCC owned approximately 57.97% of the Company’s issued and outstanding shares of the Common Stock, which shares gave LXCC effective control of the Company.

The Company plans to use the assets acquired as part of its planned digital-currency payment processing platform that will enable other companies to provide an assortment of online and mobile payment services for products and services that they sell. The Company plans to both white-label and private-label its payment processing platform for other companies. In addition, the Company plans to further develop its payment processing platform to support micro-payments, online paywalls, P2P lending and other popular digital-currency services.

 

ITEM 2. 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 September 26, 2016, we purchased certain assets of LXCCoin Ltd. (“LXCC) pursuant to an Asset Purchase Agreement dated as of September 26, 2016 (the “Purchase Agreement”) with LXCC. In exchange for the assets acquired, we issued to LXCC 14,243,000 shares of our common stock. Following consummation of the asset purchase transaction, LXCC owned approximately 57.97% of our issued and outstanding shares of the common stock, which shares gave LXCC effective control of our company.

 

We plan to use the assets acquired as part of our planned digital-currency payment processing platform that will enable other companies to provide an assortment of online and mobile payment services for products and services that they sell. We plan to both white-label and private-label its payment processing platform for other companies. In addition, we plan to further develop our payment processing platform to support micro-payments, online paywalls, P2P lending and other popular digital-currency services.

 

 

Critical 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.

 

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.

 

Concentration of Credit Risk. The Company maintains its cash principally at one commercial bank. Management does not believe significant credit risk existed at August 31, 2016. 

 

 

Results of Operations

 

Comparison of Three-Month Periods Ended August 31, 2016 and August 31, 2015 (unaudited)

 

Revenues. We did not record any revenues related to our operations during the three-month periods ended August 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 three-months ended August 31, 2016, selling, general and administrative expenses decreased by $4,660 to $58,138, as compared to $62,798 during the three-months ended August 31, 2015. This decrease was primarily related to decreased professional fees related to seeking a candidate for merger and SEC filing requirements.

 

Interest Expense. For the three-months ended August 31, 2016, interest expense increased by $3,490 to $6,979, as compared to $3,489 during the three-months ended August 31, 2015. This increase was primarily related to borrowings under the convertible notes payable from related parties and the notes payable.

 

Income Taxes. No provision for or benefit of 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 three months ended August 31, 2016 were limited primarily to amounts required for the payment of consulting and professional fees in connection with our company meeting its requirements under the securities laws and in seeking a candidate for merger.

 

During the three months ended August 31, 2016, we funded our operations with the cash derived from the convertible notes payable from related parties. As of August 31, 2016, we had cash and cash equivalents of $430. As of August 31, 2015, we did not have any cash and cash equivalents.

 

Net cash used in operating activities was $61,645 and $35,000 for the three months ended August 31, 2016 and 2015, respectively. During the three months ended August 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 and consulting fees.

 

Net cash provided by financing activities was $0 and $35,000 for the three months ended August 31, 2016 and 2015, respectively. During the three months ended August 31, 2016, we received a loan from a related party of $20,000 and repaid $20,000 to the same related party. During the three months ended August 31, 2015, we received a refundable deposit on the former purchase agreement with Fision of $35,000.

 

 

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.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

The management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the Company’s 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 August 31, 2016 to ensure that information required to be disclosed by the Company in the reports it files or submits 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 the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to its management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of August 31, 2016, the 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, the Company performed additional analysis to ensure its 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, the 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 the Company in bookkeeping and accounting functions, which prevents the Company from appropriately segregating duties within its 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 August 31, 2016, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level. Management will continue to evaluate the Company’s 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.

 

Changes in Internal Controls

 

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

 

 

 

PART II.     OTHER INFORMATION

 

ITEM 6. EXHIBITS

 

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

 

 

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.

 

	NX CHAIN INC.
October 14, 2016	By:	/s/ Michael B. Campbell
		Michael B. Campbell, Chief Executive Officer and Chief Financial Officer

 

 

Exhibit Index

 

Exhibit No.		Description
10.1		Asset Purchase Agreement dated as of September 26, 2016 between NXChain, Inc. and LXCCoin Ltd.
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
101.INS		XBRL Instance Document.*
101.SCH		XBRL Taxonomy Extension Schema Document.*
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.*

 

*

XBRL (eXtensible Business Reporting Language) interactive data files are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

 

16