NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(Unaudited)
(1) Organization and description of business
Summary of Significant Accounting Policies
Going Concern:
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net losses of $7,128,252 for the nine months ended September 30, 2018. The Company also has an accumulated deficit of $22,479,785, and a negative working capital of $5,260,535 as of September 30, 2018, as well as outstanding convertible notes payable of $454,700, before debt discount of $80,542. Management believes that it will need additional equity or debt financing to be able to implement its business plan. Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.
Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability. The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.
The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Basis of Financial Statement Presentation:
The accompanying unaudited interim financial statements of Las Vegas Xpress, Inc. (the "Company") have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or any other future period. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2017.
Risks and Uncertainties:
The Company operates in an industry that is subject to intense competition and potential government regulations. Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company's operations.
Use of Estimates:
The preparation of financial statements in conformity with GAAP 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 reported periods.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As of September 30, 2018 and December 31, 2017, the Company had $3,259 and $56,983 in cash and cash equivalents, respectively.
Property and Equipment:
Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service. The Company expenses all purchases of equipment with individual costs of under $500, and these amounts are not material to the financial statements. As of September 30, 2018, we recorded the rail cars on the balance sheet at $125,000, net of accumulated depreciation. The rail cars are currently not depreciated as they are not in service and not ready to run. The rail cars require substantial investment to retrofit.
Long-Lived Assets:
In accordance with FASB ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. The Company's management believes there has been no impairment of its long-lived assets during the nine months ended September 30, 2018, or 2017. There can be no assurance, however, that market conditions will not change or demand for the Company's business model will continue. Either of these could result in future impairment of long-lived assets.
No impairment loss was recognized for the nine months ended September 30, 2018 and 2017.
Related Parties
The Company follows ASC 850, "Related Party Disclosures," for the identification of related parties and disclosure of related party transactions (see Note 4).
Income Taxes:
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.
The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of September 30, 2018, and December 31, 2017, the Company has not established a liability for uncertain tax positions.
Basic and Diluted Loss per Share:
In accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 260, "Earnings per Share," the basic income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Common stock equivalents have not been included in the earnings per share computation for the nine months ended September 30, 2018, and 2017 as the amounts are anti-dilutive. As of September 30, 2018, the Company had 2,996 outstanding warrants and convertible debt of $454,700, before debt discount of $80,542, which were all excluded from the computation as they were anti-dilutive and are convertible into 23,552,877 shares of common stock. As of December 31, 2017, the Company had 2,996 outstanding warrants and convertible debt of $369,900, before debt discount of $324,121, which were all excluded from the computation as they were anti-dilutive.
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606,"
Revenue Recognition
" following the five steps procedure:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Company recognizes revenue when it satisfies its obligation by transferring control of the good or service to the customer. A performance obligation is satisfied over time if one of the following criteria are met:
|
a.
|
the customer simultaneously receives and consumes the benefits as the entity performs;
|
|
b.
|
the entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
|
|
c.
|
the entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.
|
Since the Company's revenues are generated when products are sold with no remaining obligations on the part of the Company, revenue is recognized at the time of sale.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash, prepaid expense, deferred financing cost, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
The Company adopted ASC Topic 820,
Fair Value Measurements
("ASC Topic 820"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.
The three-level hierarchy for fair value measurements is defined as follows:
Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;
Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;
Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement
The following table summarizes fair value measurements by level at September 30, 2018, and December 31, 2017, measured at fair value on a recurring basis:
September 30, 2018
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,452,179
|
|
|
$
|
3,452,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,787,063
|
|
|
$
|
1,787,063
|
|
Share Based Payments:
The Company issues stock, options, and warrants as share-based compensation to employees and non-employees.
The Company accounts for its share-based compensation to employees in accordance FASB ASC 718. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.
During the nine months ended September 30, 2018 and 2017, the Company incurred $3,500,025 and $0 in stock-based compensation to employees and directors.
The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 "Equity - Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (
a
) the goods or services received; or (
b
) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.
The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.
The Company values warrants using the Black-Scholes option pricing model. Assumptions used to value options and warrants issued during the nine months ended September 30, 2018 were as follows:
Variables
|
|
Values
|
|
Stock price
|
|
$
|
0.1500
|
|
Exercise Price
|
|
$
|
697.29
|
|
Term
|
|
1.41-2.58 years
|
|
Risk Free Rate
|
|
|
0.25
|
%
|
Volatility
|
|
|
806.8% - 618.2
|
%
|
During the nine months ended September 30, 2018 and 2017, the Company incurred $230,000 and $130,000 for common stock issued for outside services.
New Accounting Pronouncements:
None.
(3) Property and Equipment
Property and equipment consisted of the following.
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Rail cars (not in service)
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
Less: accumulated depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
Based on management analysis as of September 30, 2018 and December 31, 2017, there is no indication of impairment.
(4) Related Party Notes Payable
A summary of outstanding notes payable is as follows:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand
|
|
$
|
50,010
|
|
|
$
|
49,910
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand
|
|
|
39,101
|
|
|
|
39,101
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand
|
|
|
69,794
|
|
|
|
74,044
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated September 30, 2015, bearing no interest, payable on demand
|
|
|
192,940
|
|
|
|
154,998
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated September 30, 2017, bearing 10% interest, payable on demand
|
|
|
59,044
|
|
|
|
53,700
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated September 30, 2017, bearing 10% interest, payable on demand
|
|
|
3,200
|
|
|
|
7,400
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$ 414,089
|
|
|
$
|
379,153
|
|
During the nine months ended September 30, 2018, the Company repaid $4,200 of promissory note dated September 30, 2017 to Wanda Witoslawski (the Chief Financial Officer of the Company), leaving the balance outstanding of $3,200 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company borrowed $100 of promissory note dated December 15, 2015 to Wanda Witoslawski (the Chief Financial Officer of the Company), leaving the balance outstanding of $50,010 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company borrowed $37,942 of promissory note dated September 30, 2017 to Las Vegas Railway Express, Inc., leaving the balance outstanding of $192,940 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company added $5,344 to the promissory note dated September 30, 2017 to Allegheny Nevada Holdings Corporation (Michael A. Barron, the CEO and President of the Company, is a 100% owner and President of Allegheny Nevada Holdings Corporation), leaving the balance outstanding of $59,044 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company repaid $4,250 of promissory note dated December 15, 2015 to Dianne David, leaving the balance outstanding of $69,794 as of September 30, 2018.
(5) Convertible Notes Payable
The following summarizes the book value of the convertible notes payable outstanding as of September 30, 2018 and December 31, 2017:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Promissory note, dated June 2, 2017, bearing interest of 4% annually, payable within a year, convertible to common stock at a discount of 40% of the lowest traded price of the common stock during 45 trading days prior to the conversion date.
|
|
|
19,100
|
|
|
|
19,100
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated September 30, 2017, bearing 10% interest, payable on demand, convertible to common stock at the discount of 35% of the lowest traded price of the common stock during 20 trading days prior to the conversion
|
|
|
12,000
|
|
|
|
40,800
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated November 1, 2017, bearing interest of 12% annually, payable on August 10, 2018, convertible to common stock at a discount of 42% of the lowest two traded prices of the common stock during the 15 trading days prior to the conversion date.
|
|
|
-
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated November 27, 2017, with principal amount of $85,000 and aggregate purchase price of $79,900 , bearing interest of 12% annually, payable within a year, convertible to common stock at the conversion price equal to the lower of (i) the closing sale price of the common stock on the principal market on the trading day immediately preceding the closing date, and (ii) 50% of either the lowest sale price for the common stock during the 20 consecutive trading days including and immediately preceding the conversion date
|
|
|
79,450
|
|
|
|
85,000
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated December 18, 2017, bearing interest of 12% annually, payable within a year convertible at a conversion rate equal to 50% of the lowest of: (i) the lowest trading price during the twenty trading days prior to the conversion, or (ii) the lowest trading price during the 20 trading days preceding the date of this note
|
|
|
7,150
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated December 20, 2017, bearing interest of 12% annually, payable on September 20, 2018, convertible to common stock at a discount of 50% of the lowest two traded prices of the common stock during the 25 trading days prior to the conversion date.
|
|
|
112,000
|
|
|
|
112,000
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated December 21, 2017, bearing interest of 12% annually, payable on September 30, 2018, convertible to common stock at a discount of 49% of the lowest two traded prices of the common stock during the 30 trading days prior to the conversion date.
|
|
|
-
|
|
|
|
28,000
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated April 17, 2018, bearing interest of 8% annually, payable on October 17, 2019, convertible to common stock at $15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated April 20, 2018, bearing interest of 12% annually, payable on April 20, 2019, convertible to common stock at a discount of 50% of the average closing bid of the common stock during the 10 trading days prior to the conversion date.
|
|
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated April 30, 2018, bearing interest of 12% annually, payable on April 30, 2019, convertible to common stock at a discount of 50% of the average closing bid of the common stock during the 10 trading days prior to the conversion date.
|
|
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Promissory note, dated May 14, 2018, bearing interest of 12% annually, payable on November 14, 2018, convertible to common stock at a discount of 55% of the average of 2 lowest traded prices of the common stock during the 30 trading days prior to the conversion date.
|
|
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Convertible notes before debt discount
|
|
|
454,700
|
|
|
|
369,900
|
|
|
|
|
|
|
|
|
|
|
Less debt discount
|
|
|
(80,542
|
)
|
|
|
(324,121
|
)
|
|
|
|
|
|
|
|
|
|
Total outstanding convertible notes payable
|
|
$
|
374,158
|
|
|
|
45,779
|
|
(6) Notes Payable
On June 27, 2018, the Company issued a promissory note to an investor for $4,100 payable by December 27, 2018 with $615 in interest expense.
On September 28, 2018, the Company issued a promissory note to the investor for $1,900 payable by March 27, 2019 with $285 in interest expense.
(7) Derivative Instruments
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, "
Derivatives and Hedging,"
and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of September 30, 2018 and December 31, 2017. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Black-Scholes valuation model. The following weighted-average assumptions were used in September 30, 2018 and December 31, 2017:
|
|
Nine Months
Ended
|
|
|
Year Ended
|
|
|
|
September 30,
2018
|
|
|
December 31,
2017
|
|
Expected term
|
|
0.1- 0.58 years
|
|
|
0.4 – 0.96 years-
|
|
Expected average volatility
|
|
|
987.1
|
%
|
|
|
313.6
|
%
|
Expected dividend yield
|
|
|
-
|
|
|
|
-
|
|
Risk-free interest rate
|
|
|
1.65 – 2.97
|
%
|
|
|
1.28 – 1.76
|
%
|
The Company valued the conversion feature using the Black-Scholes valuation model. The fair value of the derivative liability for all the notes that became convertible as of September 30, 2018 amounted to $3,452,179. During the nine months ended September 30, 2018, $80,542 of the value assigned to the derivative liability was recognized as a debt discount to the convertible notes and $1,135,539 was recorded as loss on change in fair value of derivative liability.
|
Nine Months
Ended
September 30,
2018
|
|
Year Ended
December 31,
2017
|
|
|
Conversion Feature
|
|
Conversion Feature
|
|
|
of
|
|
of
|
|
|
Notes Payable
|
|
Notes Payable
|
|
|
|
|
|
|
Beginning balance, January 1
|
|
|
1,787,063
|
|
|
|
-
|
|
Additional issuances
|
|
|
-
|
|
|
|
1,079,942
|
|
Change in value of derivative liability
|
|
|
2,800,655
|
|
|
|
707,121
|
|
Excess derivative liability expense
|
|
|
(1,135,539
|
)
|
|
|
-
|
|
Ending balance
|
|
$
|
3,452,179
|
|
|
$
|
1,787,063
|
|
(8) Equity
Common and Preferred Stock
The Company is authorized to issue 10,000,000,000 shares of common stock and 1,000,000 shares of preferred A, 10,000 shares of preferred A-2, 1,000,000 shares of preferred B and 1,000 shares of preferred C class. The increase in authorized shares of common stock from 500,000,000 to 1,000,000,000 was approved by the shareholders and Board of Directors on September 27, 2017. The increase from 1,000,000,000 to 3,000,000,000 shares was effective December 12, 2017, the increase from 3,000,000,000 to 5,000,000,000 shares was effective March 21, 2018 and the increase from 5,000,000,000 to 10,000,000,000 was effective May 17, 2018.
As of September 17, 2018, a reverse stock split in the ratio 5,000 for 1 share and the name change from X Rail Entertainment, Inc. to Las Vegas Xpress, Inc. was effective.
During the nine months ended September 30, 2018, the Company issued an aggregate of 90,769,617 shares of common stock for compensation of $3,505,927 and 10,025,000 shares of common stock for outside services of $230,000. During the nine months ended September 30, 2017, the Company issued an aggregate of 292 shares of common stock for services resulting in an expense of $130,000.
During the nine months ended September 30, 2018, the Company issued 292,052 shares of common stock for note and interest conversion of $192,588. During the nine months ended September 30, 2017 the Company issued 4,346 shares of common stock for the conversion of $88,395 of outstanding notes payable and interest.
There were no warrants exercised during the nine months ended September 30, 2018. During the nine months ended September 30, 2017, the Company issued 2,400 shares of common stock for the exercise of warrant.
During the nine months ended September 30, 2018, the Company has issued 53,000 shares of common stock for cash of $53,000. During the nine months ended September 30, 2017, the Company issued 2,324 shares of common stock for cash of $421,000.
During the nine months ended September 30, 2017, the Company cancelled 2 shares of preferred stock series A-2 issued to Michael Barron and issued to him 4 shares of preferred stock series C. Each share of preferred stock series C is not convertible into common stock shares. Total aggregate issued shares of series C preferred stock, at any given time, have voting rights equal to four times the sum of the total number of shares of common stock and total number of shares of preferred stock series A, A-2 and B which are issued and outstanding at the time of voting.
W
arrants
The Company accounted for the issuance of warrants in conjunction from the issuance of convertible notes as an equity instrument and recognized the warrants under the Black-Scholes valuation model based on the company's market share price on the grant date. The warrants were granted for compensation.
The below table summarizes warrant activity during the nine months ended September 30, 2018:
|
|
Number of
Shares
|
|
|
Weighted-
Average
Exercise
Price
|
|
Balances as of December 31, 2017
|
|
|
1,436
|
|
|
$
|
750.00
|
|
Granted
|
|
|
1,140
|
|
|
$
|
12.10
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Balances as of September 30, 2018
|
|
|
2,576
|
|
|
$
|
423.46
|
|
The fair value of each warrant on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for options granted during the nine months ended September 30, 2018 and 2017:
|
Nine Months Ended
|
|
|
September 30,
|
|
|
2018
|
|
2017
|
|
Exercise price
|
|
$
|
423.46
|
|
|
$
|
750
|
|
Expected term
|
1.41 – 2.58 years
|
|
|
1.88-2.9 years
|
|
Expected average volatility
|
|
|
742.95
|
%
|
|
|
642.19
|
%
|
Expected dividend yield
|
|
|
-
|
|
|
|
-
|
|
The following table summarizes information relating to outstanding and exercisable warrants as of September 30, 2018:
Warrants Outstanding
|
|
Warrants Exercisable
|
|
|
|
Weighted
Average
Remaining
Contractual
life (in years)
|
|
Weighted
Average
Exercise
Price
|
|
|
|
Weighted
Average
Exercise
Price
|
|
|
2,576
|
|
|
|
1.63
|
|
|
$
|
423.46
|
|
|
|
2,576
|
|
|
$
|
423.46
|
|
Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company's stock exceeded the exercise price of the warrants at September 30, 2018, for those warrants for which the quoted market price was in excess of the exercise price ("in-the-money" warrants). As of September 30, 2018, the aggregate intrinsic value of warrants outstanding was $0 based on the closing market price of $0.15 on September 30, 2018.
The Company values warrants using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options and warrants issued during the nine months ended September 30, 2018 were as follows:
Variables
|
|
Values
|
|
Stock price
|
|
$
|
0.1500
|
|
Exercise Price
|
|
$
|
697.29
|
|
Term
|
|
1.41-2.58 years
|
|
Risk Free Rate
|
|
|
0.25
|
%
|
Volatility
|
|
|
806.8% - 618.2
|
%
|
(9) Related Party Transactions
During the nine months ended September 30, 2018, the Company repaid $4,200 of promissory note dated September 30, 2017 to Wanda Witoslawski (the Chief Financial Officer of the Company), leaving the balance outstanding of $3,200 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company borrowed $100 of promissory note dated December 15, 2015 from Wanda Witoslawski (the Chief Financial Officer of the Company), leaving the balance outstanding of $50,010 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company borrowed $37,942 of promissory note dated September 30, 2017 to Las Vegas Railway Express, Inc., leaving the balance outstanding of $192,940 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company added $5,344 to the promissory note dated September 30, 2017 to Allegheny Nevada Holdings Corporation (Michael A. Barron, the CEO and President of the Company, is a 100% owner and President of Allegheny Nevada Holdings Corporation), leaving the balance outstanding of $59,044 as of September 30, 2018.
During the nine months ended September 30, 2018, the Company repaid $4,250 of promissory note dated December 15, 2015 to Dianne David, leaving the balance outstanding of $69,794 as of September 30, 2018.
(10) Subsequent Events
In October 2018, the Company issued 550,000,000 shares of common stock for compensation to management and 60,000,000 shares of common stock for outside services.