SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2016

o TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________.

Commission File Number 000-54430

APEX 2, INC.

(Exact name of registrant as specified in its charter)

Delaware	80-0725943
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

1300 North Vosburg Drive Azusa CA 91702

(Address of principal executive offices)

(612) 961-5656

(Issuer's telephone number)

NA

(Former name, former address and former fiscal year, if changed since last report)

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

Indicate by check mark whether the Company is a large accelerated filer, an accelerated file, non-accelerated filer, or a smaller reporting company.

Large accelerated filer	o	Accelerated filed	o
Non-accelerated filer	o	Smaller reporting company	x

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

As of November 4, 2016, there were 10,006,800 shares of Common Stock of the issuer outstanding.

Table of Contents

		Page
Part I. FINANCIAL INFORMATION
Item 1	Financial Statements		3
	Condensed Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015		3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)		4
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (Unaudited)		5
	Notes to Condensed Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		10
Item 4.	Controls and Procedures		10
Part II. OTHER INFORMATION
Item 1	Legal Proceedings		11
Item 1A	Risk Factors		11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		11
Item 3	Defaults Upon Senior Securities		11
Item 4	Mine Safety Disclosures		11
Item 5	Other Information		11
Item 6	Exhibits		12

 

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PART I - FINANCIAL INFORMATION

ITEM 1: Financial Statements

APEX 2, Inc.

Condensed Balance Sheets

	As of September 30,			As of December 31,
	2016			2015
	(Unaudited)
ASSETS
Current Assets
Cash held in attorney trust account	$	19,689		$	--
Prepaid expense		500			--
Total current assets		20,189			--
Total Assets	$	20.189		$	--
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Due to related party	$	73,008		$	51,387
Total current liabilities		73,008			51,387
Commitments and contingencies
Stockholders’ Deficit
Preferred stock, ($.0001 par value, 5,000,000 shares authorized; none issued and outstanding)		-			-
Common stock ($.0001 par value, 100,000,000 shares authorized; 10,006,800 and 10,000,000 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		1,001			1,000
Additional paid in capital		20,399			--
Accumulated deficit		(74,219	)		(52,387	)
Total stockholders’ deficit		(52,819	)		(51,387	)
Total Liabilities and Stockholders’ Deficit	$	20,189		$	--

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

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APEX 2, Inc.

Condensed Statements of Operations.
(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
EXPENSES:
General and administrative expenses	$	14,154		$	3,250		$	21,832		$	7,750
Total expenses		14,154			3,250			21,832			7,750
Net loss	$	(14,154	)	$	(3,250	)	$	(21,832	)	$	(7,750	)
Loss per share (basic and diluted)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average common shares (basic and diluted)		10,006,800			10,000,000			10,004,810			10,000,000

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

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APEX 2, Inc

Condensed Statements of Cash Flows.

(Unaudited)

	Nine Months Ended September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(21,832	)	$	(7,750	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in operating assets and liabilities
Increase in prepaid expense		(500	)		--
Accounts payable		--			(1,750	)
Net cash used in operating activities		(22,332	)		(6,000	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from related party		21,621			6,000
Common stock issued for cash		20,400			--
Net cash provided by financing activities		42,021			6,000
Net change in Cash		19,689			--
Cash at Beginning of Period		--			--
Cash at End of Period	$	19,689		$	--
Supplemental Cash Flow Information
Interest paid	$	--		$	--
Taxes paid	$	--		$	--

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

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APEX 2, Inc.

Notes to Condensed Unaudited Financial Statements

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

APEX 2, Inc. (the “Company”) was incorporated under the laws of the State of Delaware on May 17, 2011 and has been inactive since inception. The Company intends to serve as a vehicle to effect an asset acquisition, merger, exchange of capital stock or other business combination with a domestic or foreign business.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed unaudited financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed unaudited financial statements should be read in conjunction with a reading of the Company’s financial statements and notes thereto included in the Company’s Form 10-K annual report for year ended December 31, 2015 filed with the Securities and Exchange Commission (SEC). Interim results of operations for the nine months ended September 30, 2016 are not necessarily indicative of future results for the full year.

Accounting Method

The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

 

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Income Taxes

Income taxes are provided in accordance with ASC Topic 740 Accounting for Income Taxes. A deferred tax asset or liability is recorded for all temporary differences between financial and tax

reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Basic Earnings (Loss) per Share

ASC Topic 260, “Earnings per Share”, specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC Topic 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share.

Basic net loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company and losses from operations.

Impact of New Accounting Standards

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.

NOTE 3: GOING CONCERN

As shown in the accompanying balance sheet, the Company has assets of $20,189 and an accumulated deficit of $74,219 at September 30, 2016. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on ability to identify a target acquisition. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.

NOTE 4: RELATED PARTY TRANSACTIONS

Since inception, the Company’s former officer and director advanced a total $40,137 and the present officer advanced the Company $32,871, both of which remain unpaid as of September 30, 2016. These amounts are non-interest bearing and due on demand.

NOTE 5: STOCKHOLDER’S DEFICIT

On May 17, 2011 the Company issued 10,000,000 shares of common stock (founder’s shares) valued at $1,000 with a par value of $0.0001 per share.

During the nine-month period ended September 30, 2016 the Company issued 6,800 shares of common stock to 40 individuals at $3.00 per share for aggregate proceed of $20,400.

 

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

Statements made in this Form 10-Q that are not historical or current facts are forward-looking statements. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. Among the factors that could cause actual results to differ materially from the forward-looking statements are the following: the Company’s ability to obtain necessary capital, the Company’s ability to meet anticipated development timelines, the Company’s ability to protect its proprietary technology and knowhow;, the Company’s ability to successfully consummate future acquisitions and such other risk factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those filed with this Form 10-Q quarterly report. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

Overview

The Company will attempt to locate and negotiate with a business entity for the combination of that target company with the Company. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for-assets exchange. No assurances can be given that the Company will be successful in locating or negotiating with any target business.

The Company has not restricted its search for any specific kind of businesses, and it may acquire a business which is in its preliminary or development stage, which is already in operation, or in essentially any stage of its business life. It is impossible to predict the status of any business in which the Company may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Company may offer.

In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.

 

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It is anticipated that any securities issued in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Company may agree

to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after the Company has entered into an agreement for a business combination or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market which may develop in the Company's securities may depress the market value of the Company's securities in the future if such a market develops, of which there is no assurance.

The Company will participate in a business combination only after the negotiation and execution of appropriate agreements. Negotiations with a target company will likely focus on the percentage of the Company which the target company shareholders would acquire in exchange for their shareholdings. Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing and will include miscellaneous other terms. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by the Company's shareholders at such time.

The Company will engage in very limited activities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholder.

Results of Operations

The Company has not generated any revenue since inception. Expenses for the three and nine months ended September 30, 2016 were $14,154 and $21,832, respectively while the expenses for the same periods in 2015 were $3,250 and $7,750, respectively. The three and nine month expenses in 2016 compared to the same periods in 2015 were higher for both periods due to the addition of consulting fees during the third period in 2016 and none in the same period in 2015 along with the expenses related to the costs for accounting, bank charges, auditing and filing of financial reports.

Net loss for the three and nine months ended September 30, 2016, was $14,154 and $21,832, compared to $3,250 and $7,750 for the same periods ended September 30, 2015.

 

9

Liquidity

The Company has negative working capital of $52,819 as of September 30, 2016. Funds used in operating activities during the nine months ended September 30, 2016 were $22,332 while funds provided from financing activities were $42,021 consisting of sale of common stock of $20,400 and advances by related party of $21,621. This compares to funds used in operating activities of $6,000 and funds from financing activities of $6,000 for the period ended September 30, 2015.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 3: Quantitative and Qualitative Disclosures About Market Risk.

Item 4: Controls and Procedures.

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of September 30, 2016 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2016. Such conclusion reflects the identification of material weakness as follows: (1) lack of accounting proficiency of our chief executive officer who is our sole officer and our principal accounting officer which has resulted in a reliance on part-time outside consultants to perform substantially all of our accounting functions, (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, and (3) lack of control procedures that include multiple levels of review. Until we are able to remedy these material weaknesses, we have engaged third party consultants and accounting firm to assist with financial reporting.

Changes in internal controls

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the nine months ended September 30, 2016. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no changes occurred in the Company's internal controls over financial reporting during the nine months ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

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PART II - OTHER INFORMATION

Item 1: Legal Proceedings

There are not presently any material pending legal proceedings to which the Registrant is a party or as to which any of its property is subject, and no such proceedings are known to the Registrant to be threatened or contemplated against it.

Item 1A: Risk Factors

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

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds.

During the nine-month period ended September 30, 2016 the Company issued 6,800 shares of common stock to 40 individuals at $3.00 per share for aggregate proceeds of $20,400.

Item 3: Defaults Upon Senior Securities

None

Item 4: Mine Safety Disclosures

Not applicable

Item 5: Other Information

None

 

11

Item 6: Exhibits.

No.	Description
31	Chief Executive Officer Certification
32	Section 1350 Certification

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SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	APEX 2, INC.
Dated: November 4, 2016	By:	/s/ Xiang Dong (Steve)Wang
		Xiang Dong (Steve)Wang
		Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors

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