The accompanying notes are an integral part of these consolidated financial statements.
MEXUS GOLD US AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Year ended March 31,
|
|
|
2019
|
|
2018
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
$
|
(2,273,378)
|
$
|
(3,909,961)
|
Adjustments to reconcile net loss
|
|
|
|
|
to net cash used in operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
255,215
|
|
255,776
|
(Gain) loss on sale of equipment
|
|
(10,000)
|
|
-
|
Loss on settlement of debt and accounts payable
|
|
(171,112)
|
|
428,918
|
Stock-based compensation - services
|
|
427,839
|
|
1,306,013
|
Non cash Interest expense
|
|
634,755
|
|
477,923
|
Loss on change in fair value of derivative instrument
|
|
(151,533)
|
|
2,729
|
Impairment of mineral property
|
|
-
|
|
75,000
|
Changes in operating assets and liabilities:
|
|
|
|
|
Decrease (Increase) of other assets
|
|
(5,500)
|
|
32,972
|
Accounts payable and accrued liabilities, including related parties
|
|
298,542
|
|
273,061
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
(995,172)
|
|
(1,057,569)
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase of equipment
|
|
(111,981)
|
|
(105,196)
|
Proceeds from sale of equipment
|
|
10,000
|
|
-
|
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
|
(101,981)
|
|
(105,196)
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from issuance of notes payable
|
|
555,487
|
|
135,000
|
Proceeds from issuance of notes payable - related party
|
|
67,410
|
|
-
|
Payment of notes payable
|
|
(13,000)
|
|
-
|
Proceeds from the issuance of convertible promissory notes
|
|
220,500
|
|
150,000
|
Repayment of convertible promissory note
|
|
(288,851)
|
|
-
|
Advances from related party
|
|
4,312
|
|
16,000
|
Payment of advances from related party
|
|
(38,118)
|
|
(91,904)
|
Proceeds from issuance of common stock, net
|
|
475,500
|
|
989,060
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
983,240
|
|
1,198,156
|
|
|
|
|
|
INCREASE IN CASH
|
|
(113,913)
|
|
35,391
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD
|
|
125,942
|
|
90,551
|
|
|
|
|
|
CASH, END OF PERIOD
|
$
|
12,029
|
$
|
125,942
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Interest paid
|
$
|
-
|
$
|
-
|
Taxes paid
|
$
|
-
|
$
|
-
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Discount for beneficial conversion feature recognized on issuance of notes payable
|
$
|
150,513
|
$
|
80,000
|
Shares issued for settlement of notes payable and interest
|
$
|
234,949
|
$
|
399,418
|
Shares issued to settle accounts payable
|
$
|
100,288
|
$
|
264,500
|
Shares issued for equipment
|
$
|
-
|
$
|
115,317
|
Shares issued for deposit on mineral property
|
$
|
-
|
$
|
324,000
|
Shares issued in conjunction with the issuance of notes payable and convertible promissory note
|
$
|
83,201
|
$
|
61,487
|
Initial value of embedded derivative liability
|
$
|
-
|
$
|
66,205
|
Reclassification of equipment held for sale of property and equipment
|
$
|
56,438
|
$
|
-
|
Reclassification of deposit on mineral property to property costs
|
$
|
324,000
|
$
|
-
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
F-6
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
1. ORGANIZATION AND BUSINESS OF COMPANY
Mexus Gold US (the “Company”) was originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc. On October 28, 2005, the Company changed its’ name to Action Fashions, Ltd. On September 18, 2009, the Company changed its’ domicile to Nevada and changed its’ name to Mexus Gold US to better reflect the Company’s new planned principle business operations. The Company has a fiscal year end of March 31.
The Company is a mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States, as well as, the salvage of precious metals from identifiable sources.
2. GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended March 31, 2019, the Company incurred a net loss of $2,273,378 and used cash in operating activities of $995,172, and at March 31, 2019, had an accumulated deficit of $29,127,372. At March 31, 2019, the Company is in the exploration stage and has not earned revenue from planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending March 31, 2019, expressed substantial doubt about the Company’s ability to continue as a going concern.
The Company is dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plans to raise necessary funds through a private placement of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to raise the necessary funds, or that if it is successful in raising the necessary funds, that the Company will successfully execute its business plan.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation as a going concern is dependent upon the ability of the Company to meet our obligations on a timely basis, and, ultimately to attain profitability.
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. Certain 2018 financial statement amounts have been reclassified to conform to the financial statement presentation adopted in the current year.
These accounting policies conform to accounting principles generally accepted in the United States of America and are presented in U.S. dollars.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and controlled subsidiaries, Mexus Gold Mining, S.A. de C.V. (“Mexus Gold Mining), Mexus Enterprises S.A. de C.V. (“Mexus Gold Enterprises”) and Mexus Gold MX S.A. DE C.V. (“Mexus Gold MX”). Significant intercompany accounts and transactions have been eliminated.
F-7
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
Use of Estimates
The preparation of consolidated 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 reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Management believes that the estimates used are reasonable. The more significant estimates and assumptions by management include, among others, the accrual of potential liabilities, the assumptions used in valuing share-based instruments issued for services, valuation of derivative liabilities and the valuation allowance for deferred tax assets.
Cash and cash equivalents
The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
Equipment
Equipment consists of mining tools and equipment, watercraft and vehicles which are depreciated on a straight-line basis over their expected useful lives as follows (see Note 5):
Mining tools and equipment
|
|
7 years
|
Watercrafts
|
|
7 years
|
Vehicles
|
|
3 years
|
Equipment under Construction
Equipment under construction comprises mining equipment that is currently being fabricated and modified by the Company and is not presently in use. Equipment under construction totaled $17,018 and $73,456 as of March 31, 2019 and 2018, respectively. Equipment under construction at March 31, 2019 comprises a Hydraulic Drum 12YD, Skid Mounted Mill and Survey Winch Marine.
Exploration and Development Costs
Exploration costs incurred in locating areas of potential mineralization or evaluating properties or working interests with specific areas of potential mineralization are expensed as incurred. Development costs of proven mining properties not yet producing are capitalized at cost and classified as capitalized exploration costs under property, plant and equipment. Property holding costs are charged to operations during the period if no significant exploration or development activities are being conducted on the related properties. Upon commencement of production, capitalized exploration and development costs would be amortized based on the estimated proven and probable reserves benefited. Properties determined to be impaired or that are abandoned are written-down to the estimated fair value. Carrying values do not necessarily reflect present or future values.
Mineral Property Rights
Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15,
Impairment or Disposal of Long-Lived Assets
.
F-8
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
Long-Lived Assets
In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Fair Value of Financial Instruments
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The Company's financial instruments consist of cash, accounts payable, accrued liabilities, advances, notes payable, and a promissory note payable. The carrying amount of these financial instruments approximate fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Secured convertible promissory note derivative liability is measured at fair value on a recurring basis using Level 3 inputs.
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The notes payable, loans payable and secured convertible promissory notes have fixed interest rates therefore the Company is exposed to interest rate risk in that they could not benefit from a decrease in market interest rates. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposure through its normal operating and financing activities.
Derivative Instruments
Accounting standards require that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. A change in the market value of the financial instrument is recognized as a gain or loss in results of operations in the period of change.
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated to United States dollars in accordance with ASC 740, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
To the extent that the Company incurs transactions that are not denominated in its functional currency, they are undertaken in Mexican Pesos. The Company has not, as of the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
F-9
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
Comprehensive Loss
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at March 31, 2019 and 2018, the Company had no items that represent a comprehensive loss, and therefore has not included a schedule of comprehensive loss in the consolidated financial statements.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Tax”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Asset Retirement Obligations
In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The associated asset retirement costs are supposed to be capitalized as part of the carrying amount of the related mineral properties. As of March 31, 2019 and 2018, the Company has not recorded AROs associated with legal obligations to retire any of the Company’s mineral properties as the settlement dates are not presently determinable.
Revenue Recognition
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.
Stock-based Compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.
F-10
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (Continued)
Per Share Data
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
At March 31, 2019 and 2018, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive:
|
March 31,
2019
|
|
March 31,
2018
|
Common stock issuable upon conversion of convertible notes payable
|
77,245,894
|
|
13,675,741
|
Common stock issuable to satisfy stock payable obligations
|
105,502,659
|
|
48,641,961
|
Total
|
182,748,553
|
|
62,317,702
|
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09, as amended, is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017. Under ASU 2014-09, revenue will be recognized when performance obligations under the terms of a contract are satisfied, which generally occurs upon shipment or delivery to customers based on written sales terms, which is also when control is transferred. Revenue will be measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer. The Company adopted the guidance of ASU 2014-09 on April 1, 2018. As the Company does not currently have revenue, the adoption of the new guidance did not have an impact on the Company’s consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use of asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
F-11
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
4. DEPOSIT ON MINERAL PROPERTIES
On January 18, 2018, Mexus Gold MX, entered into three Letter of Intent (“LOI”) agreements (collective known as Project Mabel) to exploit and transfer mineral rights owed by Cesar Mauricio Lemas Contreras.
(i)
Project “Mabel” – Declaration of Intent dated January 18, 2018 with participation of 90% Mexus Gold MX and 10% Pacific Comox S.A. de C.V. (“Pacific Comox”). The administrator of Pacific Comox is Cesar Maruicio Lemas Contreras. This LOI contemplates transfers of mining rights at concessions 216136, 216137, 218587, 218588, 190649, 172975, 2019102, 172960, 180700, 222782 and 222783, which together add up to 2,128.2003 hectares
(ii)
Project “El Plomito” – Declaration of Intent dated January 23, 2018 with participation of 50% Mexus Gold MX and 50% Pacific Comox. This LOI contemplates transfers of mining rights at concessions 220563, 213711, 215941, 216544, 200395 and 222989, which together add up to 275.02 hectares.
(iii)
Project “La Famosa” – Declaration of Intent dated January 21, 2018 with participation of 50% Mexus Gold MX and 50% Pacific Comox. This LOI contemplates transfers of mining rights at concessions 220394, 220395, 220840, 220841 and 199006, which together add up to 200.0568 hectares.
On January 23, 2018, the Company paid 6,000,000 shares of common stock valued at $324,000 ($0.0540 per share) to Cesar Maruicio Lemas Contreras as consideration to enter into three Letter of Intent agreements. At March 31, 2018, the payment was recorded as a deposit on mineral property in the consolidated balance sheet. On May 1, 2018, the $324,000 deposit on mineral properties was transferred to property costs on the consolidated balance sheet.
5. MINERAL PROPERTIES AND EXPLORATION COSTS
The following is a continuity of mineral property acquisition costs capitalized on the consolidated balance sheets during the years ended March 31, 2019 and 2018:
|
Balance
March 31,
2018
|
Cash
Payments
|
Share-based
Payments
|
Impairment
|
Balance
March 31,
2019
|
Ures Property (a)
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
Santa Elena Mine (b)
|
505,947
|
-
|
-
|
-
|
505,947
|
San Felix Project (c)
|
-
|
-
|
-
|
-
|
-
|
Project Mabel (See Note 4)
|
-
|
-
|
324,000
|
-
|
324,000
|
|
$ 505,947
|
$ -
|
$ 324,000
|
$ -
|
$ 829,947
|
|
Balance
March 31,
2017
|
Cash
Payments
|
Share-based
Payments
|
Impairment
|
Balance
March 31,
2018
|
Ures Property (a)
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
Santa Elena Mine (b)
|
505,947
|
-
|
-
|
-
|
505,947
|
San Felix Project (c)
|
75,000
|
-
|
-
|
(75,000)
|
-
|
|
$ 580,947
|
$ -
|
$ -
|
$ (75,000)
|
$ 505,947
|
The following is a continuity of exploration costs expensed in the consolidated statements of operation:
|
Balance
March 31,
2018
|
Cash
Payments
|
Share-based
Payments
|
Balance
March 31,
2019
|
Ures Property (a)
|
$ 2,089,538
|
$ -
|
$ -
|
$ 2,089,538
|
Santa Elena Mine (b)
|
4,668,410
|
724,786
|
100,114
|
5,493,310
|
|
$ 6,757,948
|
$ 724,786
|
$ 100,114
|
$ 7,582,848
|
F-12
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
5. MINERAL PROPERTIES AND EXPLORATION COSTS (Continued)
|
Balance
March 31,
2017
|
Cash
Payments
|
Share-based
Payments
|
Balance
March 31,
2018
|
Ures Property (a)
|
$ 1,929,984
|
$ 138,644
|
$ 20,910
|
$ 2,089,538
|
Santa Elena Mine (b)
|
3,940,761
|
483,149
|
244,500
|
4,668,410
|
|
$ 5,870,745
|
$ 621,793
|
$ 265,410
|
$ 6,757,948
|
(a)
Ures Property
On May 25, 2010, the Company entered into a Mineral Exploration and Mining Lease with Option to Purchase
mineral rights approximately 80 km NE of Hermosillo, Sonora, Mexico. The properties comprise approximately 10,000 acres over 9 concessions (including Ocho Hermanos, 370, San Ramon, Plat Osa, Edgar 1, Edgar 2, El Scorpio, Los Laureles and Mexus Gold). These property rights are owned by Mexus Gold S.A. de C.V. The Company is currently evaluating two properties, the El Scorpio and Ocho Hermanos. The evaluation involves trench testing and sampling.
(b)
Santa Elena Mine
Santa Elena Mine (also known as Caborca or Julio) comprise seven concessions with a total of 898.028 hectares of exploration
properties located 54km NW of Caborca, State of Sonora, Mexico. These property rights are owned by Mexus Gold Mining S.A. de C.V. At March 31, 2019, a total of $505,947 have been capitalized on the consolidated balance sheet for these property costs.
On May 19, 2016, Mexus entered into a new joint venture agreement to continue the exploration program under the Exploration, Exploitation and Mining Concessions Agreement (“Marmar Agreement”) with Marmar Holdings SA de CV (“Marmar”) for the Santa Elena property (title 221448) and Marta Elena property (title 221447). The Marmar Agreement requires Mexus to contribute its interest in the Santa Elena and Marta Elena properties and Marmar will bear all costs associated with operations and administration. Profits from net revenues will be distributed 5% Mexus and 95% Marmar until Marmar recovers its operating and administration costs. Thereafter, net revenues with be distributed 50% Mexus and 50% Marmar.
On April 16, 2018, the Company announced that it terminated its joint venture agreement with MarMar. The agreement outlined the contractual obligations at the Santa Elena project in Caborca, Sonora State, Mexico. The decision to terminate the agreement was made due to MarMar’s lack of funding for the project, non-compliance with various aspects of the agreement, and their inability to meet environmental standards at the site. The Company intends to move forward on the project with the proper equipment and personnel.
(c)
San Felix Project
Effective January 13, 2017, Mexus Gold Mining, S.A. de C.V., a wholly owned Mexican subsidiary of the Company, entered into a purchase agreement with Jesus Leopoldo Felix Mazon, Leonardo Elias Jaime Perez, and Elia Lizardi Perez, wherein the Company purchased
a 50% interest in the “San Felix” mining site located in the La Alameda area of Caborca, State of Sonora, Mexico. The remaining 50% of the site is owned jointly by Mar Holdings S.A. de C.V. and Marco Antonio Martinez Mora.
The San Felix mining site contains seven (7) concessions over an area of approximately 26,000 acres.
The total purchase price is US$2,000,000 of which the Company is 50% responsible. The required payment schedule is as follows: $150,000 by January 30, 2017, $500,000 by August 13, 2017, $500,000 by March 13, 2018, $500,000 by October 13, 2018, and $350,000 by May 13, 2019. On January 30, 2017, the Company paid $75,000 (50% of $150,000).
During the year ended March 31, 2018, the Company recorded an impairment of mineral property for the San Felix Project of $75,000 because the requirement payment of $500,000 due on August 13, 2017 was not paid in accordance with the purchase agreement
.
F-13
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
6. PROPERTY & EQUIPMENT
|
Cost
|
Accumulated Depreciation
|
March 31, 2019
Net Book Value
|
March 31, 2018
Net Book Value
|
Mining tools and equipment
|
$ 1,713,451
|
$ 1,349,741
|
$ 363,710
|
$ 444,266
|
Vehicles
|
167,985
|
148,171
|
19,814
|
26,054
|
|
$ 1,881,436
|
$ 1,497,912
|
$ 383,524
|
$ 470,320
|
Depreciation expense for the years ended March 31, 2019 and 2018 was $255,215 and $255,776, respectively.
7. ACCOUNTS PAYABLE – RELATED PARTIES
During the years ended March 31, 2019 and 2018, the Company incurred rent expense to Paul D. Thompson, the sole director and officer of the Company, of $45,600 and $45,600, respectively. At March 31, 2019 and 2018, $140,448 and $97,023 for this obligation is outstanding, respectively.
Compensation
On July 2, 2015, the Company entered into a compensation agreement with Paul D. Thompson, the sole director and officer of the Company. Mr. Thompson is compensated $15,000 per month and has the option to take payment in Company stock valued at an average of 5 days closing price, cash payments or deferred payment in stock or cash. In addition, Mr. Thompson is due 2,000,000 shares of common stock at the end of each fiscal quarter. At March 31, 2019 and 2018, $294,256 and $277,646 of compensation due is included in accounts payable – related party, respectively and $32,600 for 2,000,000 shares and $32,600 for 2,000,000 shares of common stock due is included in share subscriptions payable, respectively.
8. NOTES PAYABLE – RELATED PARTIES
Notes due to North Pacific Gold were accumulated through a series of cash advances to the Company which are unsecured, non-interest bearing and due on demand. North Pacific Gold is controlled by Paul Thompson, Jr., an immediate family member of Paul D. Thompson Sr., the sole director and officer of the Company. As of March 31, 2019 and 2018, notes payable due to North Pacific Gold totaled $0 and $10,851, respectively.
9. NOTES PAYABLE
During the year ended March 31, 2014, the Company received cash advances of $164,502 from three unrelated shareholders of the Company. At March 31, 2019 and 2018, the balance of these advances outstanding totaled $15,000 and $15,000, respectively.
During the years ended March 31, 2016 and 2015, the Company received various advances totaling $290,300 from nineteen investors and received various advances totaling $286,757 from twenty-two investors, respectively. These advances are unsecured and are due within 30 to 180 days of issue. Upon receipt of the cash advances, the Company paid a majority of the investors the value of their investment in shares of common stock of the Company as a finance fee. The investor has the option to be repaid when due by one of the following: (i) In cash (ii) One-half in cash and one-half in shares converted into common stock of the Company or (iii) The entire amount of the investment converted into shares of common stock of the Company. The conversion prices range from $0.0018 per share to $0.040 per share. For one promissory note with principal of $15,000 payments equal to 20% of cash proceeds received by the Company are due when equipment held for sale is sold.
During the years ended March 31, 2018 and 2017, the Company received various advances for notes payable totaling $135,000 from eight investors and received $0 in advances, respectively. These notes are unsecured, due in three to nine months of issue and earn a finance fee of 15% to 20% of principal. The investors have the option for principal and the finance fee to be repaid when due by one of the following: (i) in cash or (ii) converted into shares of common stock of the Company $0.02 to $0.10 per share. These notes were initially recorded net of a debt discount of $80,000 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $80,000. In conjunction with issuance of these notes payable 300,000 shares of common stock of the Company valued at $9,568 were issued to the note holders and recorded as debt discount. At March 31, 2018 and 2017, a debt discount of $0 and $0, respectively has been recorded on the consolidated balance sheet related to these notes.
F-14
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
9. NOTES PAYABLE (Continued)
During the years ended March 31, 2018 and 2017, note principal and interest of $95,000 and $132,000 was paid through the issuance of shares of common stock, respectively, and $0 and $26,500 in cash, respectively.
During the year ended March 31, 2019, the Company received various advances for notes payable totaling $485,410 from eleven investors. These notes are unsecured and are due in one to twelve months from the date issue.
i)
Note holders with $139,500 principal earn interest at 12% per annum and received 1,992,000 shares of common stock of the Company value at $32,530 as an incentive to purchase the Notes. If the Company defaults on repayment, these Notes together with any unpaid accrued interest is secured by shares of common stock valued at 50% of market value calculated using the average of the last 30 day closing price. These Notes has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity.
ii)
Notes holders with $35,000 of principal earn interest at 0% to 20% per annum and are convertible into shares of common stock of the Company at $0.001 to $0.010 per share and received 560,000 shares of common stock of the Company value at $9,200 as an incentive to purchase Notes. These notes were initially recorded net of a debt discount of $19,200 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $19,200.
iii)
Note holders with $31,500 of principal earn interest at 0% per annum with an issue price of $28,500 in cash and are convertible into shares of common stock of the Company at $0.004 to $0.065 per share. This notes were initially recorded net of a debt discount of $28,500 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $28,500.
iv)
Notes holders with $13,000 of principal earn interest at 0% per annum with an issue price of $12,000 in cash
v)
Notes holders with $27,500 in principal earn interest at 6% to 12% per annum.
vi)
Note holder with $200,000 of principal earn interest at 6% per annum is convertible into shares of common stock of the Company at $0.00666667 per share. This note were initially recorded net of a debt discount of $40,000 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $40,000.
vii)
Note Payable – Related Party - On August 8, 2018, the Company issued a Promissory Note (“Note”) to Paul Thompson Sr., the Chief Executive Officer and the sole director of the Company, for $21,110 in cash. The Note earns interest at 12% per annum. The Note and interest are convertible, at the option of the holder, into shares of common stock of the Company at a price of $0.00455 per share. This note were initially recorded net of a debt discount of $21,110 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $21,110.
vii)
Note Payable – Related Party - On December 27, 2018, the Company issued a Promissory Note (“Note”) to Paul Thompson Sr., the Chief Executive Officer and the sole director of the Company, for $21,800 in cash. The Note earns interest at 12% per annum.
ix)
Note Payable – Related Party - On January 23, 2019, the Company issued a Promissory Note (“Note”) to Paul Thompson Sr., the Chief Executive Officer and the sole director of the Company, for $24,500 in cash. The Note earns interest at 12% per annum and is due in six months. The Note and interest are may be settled, at the option of the holder, into shares of common stock of the Company at a price per share determined by the average of the last 30 day closing share price of the Company.
ix)
Note holders with $43,217 of principal earn interest at 0% per annum with an issue price of $42,987 in cash and are convertible into shares of common stock of the Company at $0.006 per share. This notes were initially recorded net of a debt discount of $16,105 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $16,105.
xi)
On March 11, 2019, the Company entered into a Loan Agreement (“Note”) for $70,000 in cash with a term of one year and one day. Upon signing the Note, the Company agreed to issue 3,000,000 shares of common stock of the Company. In addition, the Company agreed to issue a warrant with an exercise price of $0.05 per share once the Note is fully settled. The Note also states that the Company will repay the Note from 5% of the net profit from the Santa Elena Caborca gold project net smelter royalty until the Note is paid in full. After March 31, 2019, an additional $45,000 in cash was advanced in accordance with the Note.
F-15
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
9. NOTES PAYABLE (Continued)
During the year ended March 31, 2019, note principal and interest of $64,500 and $95,000, respectively, was paid through the issuance of 12,121,153 shares of common stock with a fair value of $101,215 resulting in loss in settlement of debt of $34,172. In addition, during the years ended March 31, 2019 and 2018, the Company paid $6,500 and $0 in cash, respectively, to settle debt.
At March 31, 2019 and 2018, the carrying value of the advances received from April 1, 2013 to March 31, 2019 totaled $787,727 (net of unamortized debt discount of $94,127) and $83,600, respectively. At March 31, 2019, $394,257 of these notes were in default. There are no default provisions stated in these notes. At March 31, 2019 and 2018, accrued interest of $31,332 and $6,236, respectively, is included in accounts payable and accrued liabilities.
On January 19, 2016, the Company issued a promissory note (the “Note”) with a principal of amount of $77,150 bearing interest of 10% per annum to settle $77,150 in accounts payable due for accounting fees. Payments equal to 15% of cash proceeds received by the Company are due when equipment held for sale is sold. Any unpaid principal and interest is due in full on July 19, 2016. At March 31, 2019 and 2018, the balance of this note was $0 and $74,297, respectively. On May 25, 2018, the Company issued 7,429,654 shares of common stock valued at $133,734 ($0.0180 per share) to settle the Note resulting in a loss on settlement of $59,437.
Interest and amortization of debt discount was $327,177 and $89,567 for the year ended March 31, 2019 and 2018, respectively.
The amount by which the if-converted value of notes payable exceeds principal of notes payable at March 31, 2019 is $93,641.
10. PROMISSORY NOTES
On April 18, 2013, the Company issued Promissory Notes for $255,000 in cash. The Notes bear interest of 4% per annum and are due on December 31, 2013. The Notes are secured by all of Mexus Gold US shares of stock in Mexus Resources S.A. de C.V. and a personal guarantee of Paul D. Thompson. In addition, a fee of 2,550,000 shares of common stock of the Company valued at $501,075 ($0.1965 per share) was paid to the Note holders on April 18, 2013. These financing fees were capitalized in the consolidated balance sheet as deferred finance expense and were being amortized on a straight-line basis, which approximates the effective interest rate method, as interest expense over the life of the Promissory Notes. On August 24, 2015, $100,000 of these Promissory Notes were settled on issuance of a convertible promissory note. On December 1, 2015, $60,000 of these Promissory Notes were settled on issuance of a convertible promissory note. On September 19, 2016, the Company issued 570,750 shares of common stock with a fair value $44,234 ($0.0775 per share) to settle a promissory note with principal of $20,000. On March 31, 2017, a promissory note with principal of $10,000 was settled for no consideration and recorded as a gain on the consolidated statement of operations. At March 31, 2019 and 2018, outstanding Promissory Notes were $65,000 and $65,000, respectively. As of March 31, 2018, the Company has not made the scheduled payments and is in default on these promissory notes. The default rate on the notes is seven percent. At March 31, 2019 and 2018 accrued interest of $31,117 and $24,673, respectively, is included in accounts payable and accrued liabilities.
11. CONVERTIBLE PROMISSORY NOTE
JMJ Financial
On November 14, 2017, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), for a principal sum of $166,667 plus one-time 10% interest charge of $16,667 which matures on May 14, 2018 for $150,000 in cash. The Company may repay the Note and interest any time in cash before the maturity date without a prepayment penalty. If the Company defaults on repayment, this Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lesser of (a) $0.0375 or (b) 50% (40% if the conversion shares are not deliverable by DWAC) of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On issuance of the Note, an embedded derivative with a fair value of $66,205 was identified and recorded as debt discount (See Note 12). In conjunction with the Note, the Company issued 3,591,940 shares of common stock (“Origination Shares”) of the Company which was recorded as debt discount. The Origination Shares and the Note were valued at $51,920 and $31,875 upon issuance, respectively, using the relative fair value method. Additional interest expense is accreted on the Note between issuance and maturity dates with the expectation that principal and interest is likely to be settled in shares of common stock of the Company at a variable conversion price calculated at 40% of trade price of common stock of the Company. On May 16, 2018, the Company paid JMJ Financial $183,333 in cash to fully settle the Convertible Promissory Note issued on November 14, 2017 resulting in a gain on settlement of $275,000. At March 31, 2019 and 2018, the principal and interest outstanding of $0 and $391,482, respectively, is recorded net of unamortized debt discount of $0 and $36,818, respectively and a top-off liability of $58,067 was included in accounts payable and accrued liabilities at March 31, 2018. Interest and amortization of debt discount was $103,669 and $380,856 for the years ended March 31, 2019 and 2018.
F-16
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
11. CONVERTIBLE PROMISSORY NOTE (Continued)
Power Up Lending Group Ltd.
On August 21, 2018, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $77,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing May 30, 2019 for $75,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $110,737, of which $77,500 was recorded as debt discount and the remainder of $33,237 was recorded expensed and included in gain (loss) on derivative liability. The Company may repay the Note in cash if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On January 17, 2019, the Company paid $105,520 in cash to Power Up Lending Group Ltd. to fully settle the Convertible Promissory Note resulting in a gain of settlement of $19,121. Interest and amortization of debt discount was $124,638 for the year ended March 31, 2019.
On November 7, 2018, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $78,000 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing August 30, 2019 for $75,500 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $50,690 which was recorded as a debt discount. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. At March 31, 2019, the Note is recorded at an accreted value of $125,681 less unamortized debt discount of $48,879. Interest and amortization of debt discount was $51,990 for the year ended March 31, 2019.
On January 25, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $73,000 bearing a 12% annual interest rate and maturing November 15, 2019. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note in cash if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. At March 31, 2019, the Note is recorded at an accreted value of $114,708 less unamortized debt discount of $87,476. Interest and amortization of debt discount was $27,230 for the year ended March 31, 2019.
F-17
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
12. CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITY
The Convertible Promissory Notes (“Notes”) with JMJ Financial with an issue date of November 14, 2017 and Power Up Lending Group Ltd. was accounted for under ASC 815. The variable conversion price is not considered predominately based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible promissory notes derivative liabilities has been measured at fair value at November 14, 2017, March 31, 2018, August 21, 2018, November 7, 2018 and December 31, 2018, January 25, 2019 and March 31, 2018 using the Black-Scholes model.
The inputs into the Black-Scholes models are as follows:
|
November 14,
2017
|
March 31,
2018
|
August 21,
2018
|
November 7,
2018
|
December 31,
2018
|
January 25,
2019
|
March 31,
2019
|
Closing share price
|
$0.038
|
$0.02467
|
$0.0155
|
$0.0085
|
$0.0066
|
$0.0080
|
$0.0112
|
Conversion price
|
$0.0348
|
$0.0200
|
$0.0076
|
$0.0078
|
$0.0057
|
$0.0055
|
$0.0100
|
Risk free rate
|
0.050%
|
0.050%
|
0.050%
|
0.050%
|
2.56%
|
2.56%
|
2.44% - 2.56%
|
Expected volatility
|
109%
|
157%
|
163%
|
176%
|
168% - 178%
|
185%
|
230%
|
Dividend yield
|
0%
|
0%
|
0%
|
0%
|
0%
|
0%
|
0%
|
Expected life (years)
|
0.5
|
0.13
|
0.77
|
0.81
|
0.41 – 0.66
|
0.81
|
0.42- 0.63
|
The fair value of the conversion option derivative liabilities is $113,091 and $68,934 at March 31, 2019 and 2018, respectively. The decrease (increase) in the fair value of the conversion option derivative liability for the year ended March 31, 2019 and 2018 of $151,533 and $(2,729), respectively, is recorded as a gain (loss) in the consolidated statements of operations.
13. CONTINGENT LIABILITIES
An asset retirement obligation is a legal obligation associated with the disposal or retirement of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. While the Company, as of March 31, 2019, does not have a legal obligation associated with the disposal of certain chemicals used in its leaching process, the Company estimates it will incur costs up to $50,000 to neutralize those chemicals at the close of the leaching pond.
14. STOCKHOLDERS’ EQUITY (DEFICIT)
The stockholders’ equity of the Company comprises the following classes of capital stock as of March 31, 2019 and 2018:
Preferred Stock, $0.001 par value per share; 9,000,000 shares authorized, 0 issued and outstanding at March 31, 2019 and 2018.
Series A Convertible Preferred Stock (‘Series A Preferred Stock”), $0.001 par value share; 1,000,000 shares authorized: 1,000,000 shares issued and outstanding at March 31, 2019 and 2018.
Holders of Series A Preferred Stock may convert one share of Series A Preferred Stock into ten shares of Common Stock. Holders of Series A Preferred Stock have the number of votes determined by multiplying (a) the number of Series A Preferred Stock held by such holder, (b) the number of issued and outstanding Series A Preferred Stock and Common Stock on a fully diluted basis, and (c) 0.000006.
Common Stock, par value of $0.001 per share; 2,000,000,000 shares authorized: 1,011,848,975 and 755,922,947 shares issued and outstanding at March 31, 2019 and 2018, respectively. Holders of Common Stock have one vote per share of Common Stock held.
Increase in the Number of Authorized Shares
On June 4, 2018, the Company’s board of directors and the majority shareholder approved an increase in the number of authorized shares of common stock of the Company from eight hundred fifty million (850,000,000) shares of common stock, par value $0.001 per share, to two billion (2,000,000,000) shares of common stock, par value $0.001 per share. A Certificate of Amendment for the increase in authorized shares was filed with the State of Nevada on July 6, 2018.
F-18
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
14. STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
(i)
Year Ended March 31, 2019
On April 2, 2018, the Company issued 5,300,000 shares of common stock to satisfy obligations under share subscription agreements of $22,610 for settlement of services and $25,000 for cash receipts included in share subscriptions payable.
On April 16, 2018, the Company issued 18,600,000 shares of common stock to satisfy obligations under share subscription agreements of $186,000 for cash receipts included in share subscriptions payable.
On May 2, 2018, the Company issued 2,800,000 shares of common stock to satisfy obligations under share subscription agreements of $32,400 for settlement of accounts payable and $10,000 for cash receipts included in share subscriptions payable.
On May 24, 2018, the Company issued 5,945,410 shares of common stock to satisfy obligations under share subscription agreements of $70,050 for settlement of services and $25,280 for cash receipts included in share subscriptions payable.
On May 30, 2018, the Company issued 4,269,663 shares of common stock to satisfy obligations under share subscription agreements of $67,888 for settlement of the Top-off Liability included in accounts payable and accrued liabilities (see Note 11) included in share subscriptions payable.
On June 12, 2018, the Company issued 350,000 shares of common stock to satisfy obligations under share subscription agreements of $5,425 for services included in share subscriptions payable.
On August 23, 2018, the Company issued 61,066,666 shares of common stock to satisfy obligations under share subscription agreements of $55,896 for settlement of services, $43,840 for settlement of notes payable and $203,000 for cash receipts included in share subscriptions payable.
On September 10, 2018, the Company issued 8,324,809 shares of common stock to satisfy obligations under share subscription agreements of $55,910 for settlement of services and $18,000 for cash receipts included in share subscriptions payable.
On October 1, 2018, the Company issued 8,771,153 shares of common stock to satisfy obligations under share subscription agreements of $4,175 for settlement of services, $31,500 for settlement of notes payable and $15,000 for cash receipts included in share subscriptions payable.
On November 16, 2018, the Company issued 14,429,654 shares of common stock to satisfy obligations under share subscription agreements of $27,800 for settlement of services, $133,734 for settlement of notes payable and $25,000 for cash receipts included in share subscriptions payable.
On December 7, 2018, the Company issued 31,578,947 shares of common stock to satisfy obligations under share subscription agreements of $47,600 for settlement of services, $4,875 for settlement of notes payable and $28,000 for cash receipts included in share subscriptions payable.
On January 15, 2019, the Company issued 7,333,333 shares of common stock to satisfy obligations under share subscription agreements of $18,667 for settlement of services and $9,000 for cash receipts included in share subscriptions payable.
On January 24, 2019, the Company issued 10,732,727 shares of common stock to satisfy obligations under share subscription agreements of $47,600 for settlement of services, $21,000 for settlement of notes payable, $13,934 in interest and $6,100 for cash receipts included in share subscriptions payable.
On February 5, 2019, the Company issued 19,538,666 shares of common stock to satisfy obligations under share subscription agreements of $32,008 for interest and $32,000 for cash receipts included in share subscriptions payable.
On February 14, 2019, the Company issued 1,740,000 shares of common stock to satisfy obligations under share subscription agreements of $25,000 for services and $4,066 for interest included in share subscriptions payable.
On March 19, 2019, the Company issued 18,545,000 shares of common stock to satisfy obligations under share subscription agreements of $5,396 for services and $22,000 for cash receipts included in share subscriptions payable.
F-19
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
14. STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
On March 25, 2019, the Company issued 16,600,000 shares of common stock to satisfy obligations under share subscription agreements of $11,900 for services and $16,200 for cash receipts included in share subscriptions payable.
(ii)
Year Ended March 31, 2018
On April 11, 2017, the Company issued 1,097,826 shares of common stock to satisfy obligations under share subscription agreements for $9,000 for settlement of equipment and $50,000 in cash receipts included in share subscriptions payable.
On April 17, 2017, the Company issued 621,954 shares of common stock to satisfy obligations under share subscription agreements for $15,000 for settlement of services and $25,000 in cash receipts included in share subscriptions payable.
On May 15, 2017, the Company issued 108,696 shares of common stock to satisfy obligations under share subscription agreements for $10,000 for settlement of services included in share subscriptions payable.
On June 2, 2017, the Company issued 4,593,333 shares of common stock to satisfy obligations under share subscription agreements for $41,300 for settlement of services and $36,500 in cash receipts included in share subscriptions payable.
On July 5, 2017, the Company issued 600,000 shares of common stock to satisfy obligations under share subscription agreements for $5,760 for settlement of services and $32,485 for settlement of stock payable included in share subscriptions payable.
On July 11 2017, the Company issued 2,949,253 shares of common stock to satisfy obligations under share subscription agreements for $25,975 for settlement of services and $88,500 in cash receipts included in share subscriptions payable.
On August 1, 2017, the Company issued 3,693,333 shares of common stock to satisfy obligations under share subscription agreements for $38,000 for settlement of services and $76,500 in cash receipts included in share subscriptions payable.
On August 15, 2017, the Company issued 11,436,667 shares of common stock to satisfy obligations under share subscription agreements for $102,000 for settlement of accounts payable, $405,500 for settlement of services and $36,000 in cash receipts included in share subscriptions payable.
On September 12, 2017, the Company issued 4,500,000 shares of common stock to satisfy obligations under share subscription agreements for $85,400 for settlement of services and $71,600 in cash receipts included in share subscriptions payable.
On September 25, 2017, the Company issued 3,500,000 shares of common stock to satisfy obligations under share subscription agreements for $61,300 for settlement of services and $45,000 in cash receipts included in share subscriptions payable.
On September 28, 2017, the Company issued 2,275,000 shares of common stock to satisfy obligations under share subscription agreements for $23,500 for settlement of services and $35,500 in cash receipts included in share subscriptions payable.
On October 13, 2017, the Company issued 3,814,232 shares of common stock to satisfy obligations under share subscription agreements for $47,000 for settlement of services, $10,000 for settlement of notes payable, interest of $2,303 and $44,785 in cash receipts included in share subscriptions payable.
On November 6, 2017, the Company issued 5,430,030 shares of common stock to satisfy obligations under share subscription agreements for $57,575 for settlement of services, $4,000 for settlement of notes payable, interest of $2,395 and $16,040 in cash receipts included in share subscriptions payable.
On November 13, 2017, the Company issued 6,591,666 shares of common stock to satisfy obligations under share subscription agreements for $6,000 for settlement of services, $57,500 for settlement of notes payable, interest of $1,632 and $50,000 in cash receipts included in share subscriptions payable.
On November 30, 2017, the Company issued 3,591,940 shares of common stock to satisfy obligations under share subscription agreements for interest of $51,920 and included in share subscriptions payable.
F-20
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
14. STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
On December 12, 2017, the Company issued 2,283,333 shares of common stock to satisfy obligations under share subscription agreements for $29,000 in cash receipts included in share subscriptions payable.
On December 14, 2017, the Company issued 3,600,000 shares of common stock to satisfy obligations under share subscription agreements for $136,800 for settlement of services included in share subscriptions payable.
On December 20, 2017, the Company issued 8,050,000 shares of common stock to satisfy obligations under share subscription agreements for $106,400 for settlement of services, $80,000 for equipment and $44,200 in cash receipts included in share subscriptions payable.
On December 28, 2017, the Company issued 6,250,000 shares of common stock to satisfy obligations under share subscription agreements for $250,000 for settlement of notes payable included in share subscriptions payable.
On January 5, 2018, the Company issued 7,666,666 shares of common stock to satisfy obligations under share subscription agreements for $79,400 for settlement of services, $162,500 for settlement of accounts payable, $825 for interest and $39,000 in cash receipts included in share subscriptions payable.
On January 19, 2018, the Company issued 583,332 shares of common stock to satisfy obligations under share subscription agreements for $9,000 for settlement of cash receipts included in share subscriptions payable.
On January 29, 2018, the Company issued 3,187,000 shares of common stock to satisfy obligations under share subscription agreements for $8,448 for settlement of services and $36,600 in cash receipts included in share subscriptions payable.
On January 30, 2018, the Company issued 527,779 shares of common stock to satisfy obligations under share subscription agreements for $13,895 for settlement of services and $3,556 in cash receipts included in share subscriptions payable.
On February 21, 2018, the Company issued 11,324,223 shares of common stock to satisfy obligations under share subscription agreements for $371,600 for settlement of services, $15,000 for settlement of notes payable and $31,000 in cash receipts included in share subscriptions payable.
On March 21, 2018, the Company issued 12,090,158 shares of common stock to satisfy obligations under share subscription agreements for $66,250 for settlement of services, $71,918 for settlement of notes payable, $35,317 for equipment and $28,500 in cash receipts included in share subscriptions payable.
Common Stock Payable
(i)
Year Ended March 31, 2019
As at March 31, 2019, the Company had total subscriptions payable for 105,502,659 shares of common stock for $170,982 in cash, shares of common stock for interest valued at $40,606, shares of common stock for services valued at $340,252 and common stock for settlement of accounts payable valued at $81,000.
(ii)
Year Ended March 31, 2018
On June 26, 2017, the Company issued subscriptions payable for 500,000 shares in common stock valued at $32,485 ($0.06497 per share) to fully settle subscription payable and other liabilities totaling $137,004. The settlement resulted in an increase of additional paid-in capital of $104,519.
As at March 31, 2018, the Company had total subscriptions payable for 48,641,961 shares of common stock for $316,063 in cash, shares of common stock for equipment valued at $1,500, shares of common stock for interest valued at $7,412 and shares of common stock for services valued at $311,590.
F-21
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
15. RELATED PARTY TRANSACTIONS
During the years ended March 31, 2019 and 2018, the Company entered into the following transactions with related parties:
Paul D. Thompson, sole director and officer of the Company
Taurus Gold, Inc., controlled by Paul D. Thompson
Accounts payable – related parties – Note 7
Notes payable – related parties – Note 8
Notes payable – Note 9
16. INCOME TAXES
The Company had no income tax expense due to operating loss incurred for the years ended March 31, 2019 and 2018.
United States
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which makes broad and complex changes to the U.S. tax code. Certain of these changes may be applicable to the Company, including but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, creating a new limitation on deductible interest expense, eliminating the corporate alternative minimum tax (“AMT”), modifying the rules related to uses and limitations of net operating loss carryforwards generated in tax years ending after December 31, 2017, and changing the rules pertaining to the taxation of profits earned abroad (IRC Sec. 965. Changes in tax rates and tax laws are accounted for in the period of enactment. The Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018.
Mexico
Corporations resident in Mexico are taxable on their worldwide income from all sources, including profits from business and property. The Company is subject to Mexico tax at a rate of 30% on taxable income, if any, from Mexico operations.
The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at March 31, 2019 and 2018 are comprised of the following:
|
|
Year Ended
March 31, 2019
|
|
Year Ended
March 31, 2018
|
Deferred tax assets:
|
|
|
|
|
Net-operating loss carryforward
|
$
|
3,943,779
|
$
|
3,619,659
|
Total deferred tax assets
|
|
3,943,779
|
|
3,619,659
|
Valuation allowance
|
|
(3,943,779)
|
|
(3,619,659)
|
Deferred tax assets, net of allowance
|
$
|
-
|
$
|
-
|
|
|
Year Ended
March 31, 2019
|
|
Year Ended
March 31, 2018
|
Federal
|
|
|
|
|
Current
|
$
|
-
|
$
|
-
|
Deferred
|
|
3,943,779
|
|
3,619,659
|
State
|
|
-
|
|
-
|
Current
|
|
-
|
|
-
|
Deferred
|
|
-
|
|
-
|
Change in valuation allowance
|
|
(3,943,779)
|
|
(3,619,659)
|
Income tax provision
|
$
|
-
|
$
|
-
|
F-22
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
16. INCOME TAXES (Continued)
During the ended March 31, 2018, the deferred tax asset was decreased by $2,186,393 for the reduction in the enacted U.S. Federal corporate tax rate from 35% to 21% in 2018.
At March 31, 2019, the Company had net operating loss carry forwards for federal tax purposes of approximately $18.7 million which expires in years 2030 through 2040. It appears that the Company had generated net operating losses, since 2010, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382. The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because of potential Change of Ownerships might be completely worthless. Therefore, Management of the Company has recorded a full valuation reserve; since it is more likely than not that no benefit will be realized for the Deferred Tax Assets.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at March 31, 2019. The valuation allowance increased by approximately $0.3 million as of March 31, 2019.
Corporations resident in Mexico are taxable on their worldwide income from all sources, including profits from business and property. The Company is subject to Mexico tax at a rate of 30% on taxable income, if any, from Mexico operations.
The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:
|
Year Ended
March 31, 2019
|
|
Year Ended
March 31, 2018
|
Statutory Federal Income Tax Rate
|
21%
|
|
21%
|
Change in valuation allowance
|
(21%)
|
|
(21%)
|
Income tax provision
|
$ -
|
|
$ -
|
The Company has not identified any uncertain tax positions requiring a reserve as of March 31, 2019
The Company is delinquent in filing its United States Corporate Income Tax Returns, since the 2009 tax year end. The Internal Revenue Service can impose penalties for noncompliance upon delinquent filings. All years remain open to audit by statute, due to non-filing. Management is planning to get the Company up to date with such delinquent filings, as of the statement date.
17. SUBSEQUENT EVENTS
Common Stock Issued
On April 17, 2019, the Company issued 53,799,286 shares of common stock to satisfy obligations under share subscription agreements of $47,600 for settlement of services, $4,392 for interest and $139,500 for cash receipts included in share subscriptions payable.
On April 30, 2019, the Company issued 15,444,439 shares of common stock to satisfy obligations under share subscription agreements of $7,000 for settlement of services and $15,500 for cash receipts included in share subscriptions payable.
On May 8, 2019, the Company issued 45,882,143 shares of common stock to satisfy obligations under share subscription agreements of $48,496 for settlement of services, $117,400 to settle accounts payable, $2,254 for interest and $32,100 for cash receipts included in share subscriptions payable.
On June 4, 2019, the Company issued 16,678,333 shares of common stock to satisfy obligations under share subscription agreements of $13,291 for settlement of services and $23,000 for cash receipts included in share subscriptions payable.
F-23
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
17. SUBSEQUENT EVENTS (Continued)
On June 18, 2019, the Company issued 23,445,000 shares of common stock to satisfy obligations under share subscription agreements of $101,078 for settlement of services, $18,050 for cash receipts, $6,500 to settle notes payable and $3,960 for interest included in share subscriptions payable.
On July 2, 2019, the Company issued 5,000,000 shares of common stock to satisfy obligations under share subscription agreements of $10,000 for cash receipts.
Common Stock Payable
For the period of April 1, 2019 to July 2, 2019, the Company issued subscriptions payable for 115,280,666 shares of common stock for $194,645 in cash ($0.0017 per share).
For the period of April 1, 2019 to July 2, 2019, the Company issued subscriptions payable for 10,350,000 shares of common stock for $106,165 in services ($0.0103 per share).
For the period of April 1, 2019 to July 2, 2019, the Company issued subscriptions payable for 4,000,000 shares of common stock for $36,400 for settlement of accounts payable ($0.0091 per share).
For the period of April 1, 2019 to July 2, 2019, the Company issued subscriptions payable for 6,500,000 shares of common stock for $6,500 in equipment ($0.001 per share).
For the period of April 1, 2019 to July 2, 2019, the Company issued subscriptions payable for 1,000,000 shares of common stock for $8,500 in interest ($0.085 per share).
For the period of April 1, 2019 to July 2, 2019, the Company issued additional subscriptions payable for 2,484,750 shares of common stock to settle stock payable obligations.
Notes Payable
On April 5, 2019, the Company issued a Promissory Note (“Note”) for $41,000 in cash. The Note earns interest at 12% per annum, matures on April 6, 2020 and is convertible into shares of common stock of the Company, the option of the Holder, at $0.005 per share.
On May 14, 2019, the Company issued a Promissory Note (“Note”) for $90,000 in cash with a face value of $95,000. The face value of the Note is due on May 24, 2019 plus an additional 1,000,000 shares of common stock of the Company. On May 17, 2019 and June 16, 2019, the Company paid the holder $60,000 and $35,000, respectively.
On April 15, 2019, the Company issued a promissory note (“Note”) with a principal of amount of $66,754 bearing interest of 10% per annum to settle $66,654 in accounts payable due for accounting fees. The Note is due on June 30, 2020. The holder of the Note, may convert principal and interest into shares of common stock of the Company at $0.005 per share.
On March 11, 2019, the Company entered into a Loan Agreement (“Note”) for $70,000 in cash with a term of one year and one day. Upon signing the Note, the Company agreed to issue 3,000,000 shares of common stock of the Company. In addition, the Company agreed to issue a warrant with an exercise price of $0.05 per share once the Note is fully settled. The Note also states that the Company will repay the Note from 5% of the net profit from the Santa Elena Caborca gold project net smelter royalty until the Note is paid in full. After March 31, 2019, an additional $45,000 in cash was advanced in accordance with the Note.
F-24
MEXUS GOLD US AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2019 and 2018
17. SUBSEQUENT EVENTS (Continued)
Power Up Lending Group Ltd.
On April 5, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $88,000 bearing a 12% annual interest rate and maturing February 20, 2020. After 170 days after the issued date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest.
On May 10, 2019, the Company paid $111,531 in cash to Power Up Lending Group Ltd. to fully settle the Convertible Promissory Note issued on November 7, 2018. The carrying value of the Convertible Promissory Note on March 31, 2019 was $76,800.
On June 11, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $42,500 bearing a 12% annual interest rate and maturing April 15, 2020. After 170 days after the issued date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest.
F-25
|
Exhibit
|
Form
|
Filing
|
Filed with
|
Exhibits
|
#
|
Type
|
Date
|
This Report
|
Articles of Incorporation filed with the Secretary of State of Colorado on June 22, 1990
|
3.1
|
10-SB
|
1/24/2007
|
|
|
|
|
|
|
Articles of Amendment to the Articles of Incorporation filed with the Secretary of State of Colorado on October 17, 2006
|
3.2
|
10-SB
|
1/24/2007
|
|
|
|
|
|
|
Articles of Amendment to Articles of Incorporation filed with the Secretary of State of the State of Colorado on January 25, 2007
|
3.3
|
10KSB
|
6/29/2007
|
|
|
|
|
|
|
Articles of Incorporation filed with the Secretary of State of Nevada on October 1, 2009
|
3.4
|
10-K
|
7/27/2016
|
|
|
|
|
|
|
Certificate of Amendment filed with the Secretary of State of Nevada on March 9, 2016
|
3.5
|
10-K
|
7/27/2016
|
|
|
|
|
|
|
Certificate of Designation filed with the Secretary of State of Nevada on August 8, 2011
|
3.6
|
10-K
|
7/27/2016
|
|
|
|
|
|
|
Amended and Restated Bylaws dated December 30, 2005
|
3.7
|
10-SB
|
1/24/2007
|
|
|
|
|
|
|
Code of Ethics
|
14.1
|
10-KSB
|
6/29/2007
|
|
|
|
|
|
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.1
|
|
|
X
|
|
|
|
|
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
|
|
X
|
|
|
|
|
|
Caborca Preliminary Report and First Stage Mapping
|
99.1
|
|
|
X
|
|
|
|
|
|
XBRL Instance Document
|
101.INS
|
|
|
X
|
|
|
|
|
|
XBRL Taxonomy Extension Schema Document
|
101.SCH
|
|
|
X
|
|
|
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.CAL
|
|
|
X
|
|
|
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.DEF
|
|
|
X
|
|
|
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.LAB
|
|
|
X
|
|
|
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.PRE
|
|
|
X
|
23
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
MEXUS GOLD US
|
|
/s/ Paul D. Thompson Sr.
|
By: Paul D. Thompson Sr.
|
Its: Chief Executive Officer
|
Principle Financial Officer
|
Principle Executive Officer
|
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant on the capacities and on the dates indicated.
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Paul D. Thompson Sr.
|
|
Chief Executive Officer
|
|
July 10, 2019
|
Paul D. Thompson Sr.
|
|
Chief Financial Officer
|
|
|
|
|
Principal Executive Officer
|
|
|
|
|
Principal Financial Officer
|
|
|
|
|
President
|
|
|
|
|
Secretary
|
|
|
|
|
Director
|
|
|
24