NOTES
TO FINANCIAL STATEMENTS
(UNAUDITED)
Note
1. Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements have been prepared on substantially the same basis as the audited financial statements included
in the Annual Report on Form 10-K for the year ended December 31, 2015. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States
have been condensed or omitted pursuant to the Securities and Exchange Commission (SEC) rules and regulations regarding interim
financial statements. All amounts included herein related to the financial statements as of March 31, 2016 and the three months
ended March 31, 2016 and 2015 are unaudited and should be read in conjunction with the audited financial statements and the notes
there to included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
In
the opinion of management, the accompanying financial statements include all necessary adjustments for the fair presentation of
the Company’s financial position, results of operations and cash flows. The results of operations for the interim periods
presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the
full fiscal year ending December 31, 2016.
U.S.
Rare Earth Minerals, Inc. was incorporated in the state of Nevada on September 9, 2008.
As
used in these Notes to the Financial Statements, the terms the "Company", "we", "us", "our"
and similar terms refer to U. S. Rare Earth Minerals, Inc.
Going
Concern
The
accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. To date, the Company has generated minimal revenue and has a working capital deficiency
of $267,002 as of March 31, 2016. These factors, among others, raise substantial doubt about the Company’s ability to continue
as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification
of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. We will need
to raise funds or implement our business plan to continue operations.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s
plan is to obtain such resources for the Company by obtaining capital sufficient to meet its minimal operating expenses by seeking
equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing
any of its plans.
The
ability of the Company to continue as a going concern is dependent upon among other things; its ability to successfully accomplish
the plans described in the preceding paragraph and eventually begin operations in accordance with its business plan. The accompanying
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Recent
Accounting Pronouncements
From
time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies
that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting
pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting
or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
Note
2. Capital Stock
The
Company is authorized to issue 50,000,000 shares of its $0.001 par value preferred stock and 300,000,000 shares of its $0.001
par value common shares.
On January 20, 2016, the Company granted 6,000,000
shares to three board members – 2,000,000 shares each - for past and future services to be provided. These shares are granted
as fully vested, but are restricted from sale or transfer for three years. The fair value of these shares is $0.041 per share based
on the stock price; thus $246,000 was recognized as stock based compensation.
On January 20, 2016, the Company granted 3,000,000
shares to two consultants – 1,500,000 shares each - for past and future services to be provided. These shares are granted
as fully vested. The fair value of these shares is $0.041 per share based on the stock price; thus $123,000 was recognized as stock
based compensation.
On February 29, 2016, 1,500,000 shares of common stock were issued to another Director for services to be
rendered to the Company during the next three years. These 1,500,000 shares are to be issued as fully vested but with an additional
legend restricting the sale or transfer of said shares for three years from date of issue. The fair value of these shares is $0.02
per share based on the stock price; thus $30,000 was recognized as stock based compensation.
On
March 28, 2016, the Company sold 1,125,000 and 125,000 shares to two individual investors for $22,500 and $2,500 respectfully.
There
were 24,066,438 shares of common stock outstanding as of March 31, 2016.
NOTE
3. Notes and Debentures Payable
As
of March 31, 2016, the Company had one debenture of $5,000 outstanding.
In
2009 the Company received multiple set of funds and the terms of each note payable are set forth: $5,000 note payable due upon
demand and then in 2013 an $80,000 note bearing 6% per annum, simple interest, payable on or before August 23, 2013. The Company
and note holders are in discussions with respect to the payoff of the notes. Said notes are in default.
At March 31, 2016, the Company has recorded
accrued interest of $1,950 related to the notes and debentures payable which is included in the $27,926 accrued interest
balance on the balance sheet.
Note
4. Loans Payable
We
have two short-term loans totaling $25,000 at March 31, 2016. These loans were due in 2012 and as of March 31, 2016, are in default.
These notes are accruing interest at a rate of 10% per annum. At March 31, 2016, the Company has recorded accrued interest of
$16,203 related to the loans payable which is included in the $27,926 accrued interest balance on the balance sheet.
Note
5. Related Party Transactions
On January 20 2016, the Company granted 6,000,000
shares to three board members – 2,000,000 shares each - for past and future services to be provided. These shares are granted
as fully vested, but are restricted from sale or transfer for three years. The fair value of these shares is $0.041 per share
based on the stock price; thus $246,000 was recognized as stock based compensation.
On February 29, 2016, 1,500,000 shares of
common stock were issued to another Director for services to be rendered to the Company during the next three years. These 1,500,000
shares are to be issued as fully vested but with an additional legend restricting the sale or transfer of said shares for three
years from date of issue. The fair value of these shares is $0.02 per share based on the stock price; thus $30,000 was recognized
as stock based compensation.
Note
6. Subsequent Events
On
April 21, 2016 the Company issued 800,000 shares of common stock to Dave Quincy Farber for a payable owed him in the amount of
$24,003.
On
May 16, 2016, the Board of Directors of the Company elected D. Quincy Farber a Director of the Company. Refer to May 17, 2016
Form 8-K.
On May 12, 2016, 1,500,000 shares were issued
to another Director for services to be rendered to the Company during the next three years. Also, on that date, 200,000 and 350,000
shares were issued to two consultants. These 2,050,000 shares are to be issued as fully paid but with an additional legend restricting
the sale or transfer of said shares for three years from date of issue. The fair value of these shares is $0.054 per share
based on the stock price; thus $110,700 was recognized as stock based compensation.
The
Board of Directors, on July 23, 2016, accepted the resignation of President and Director Michael Herod. Refer to July 26, 2016
Form 8-K.
On
July 23, 2016 the Board of Directors elected D. Quincy Farber, President and CEO of the Company. Refer to July 26, 2016 Form 8-K.