The accompanying notes are an integral part
of these unaudited financial statements.
The accompanying notes are an integral part
of these unaudited financial statements
.
The accompanying notes are an integral part
of these unaudited financial statements
.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation and Summary of Significant
Accounting Policies
Basis of Presentation
The accompanying financial statements have
been prepared on substantially the same basis as the audited financial statements included in the Annual Report on Form 10-K for
the year ended December 31, 2017. Certain information and footnote disclosures normally included in annual financial statements
prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant
to the Securities and Exchange Commission (SEC) rules and regulations regarding interim financial statements. All amounts included
herein related to the financial statements as of the three months ended March 31, 2018, are unaudited and should be read in conjunction
with the audited financial statements and the notes there to included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2017.
In the opinion of management, the accompanying
financial statements include all necessary adjustments for the fair presentation of the Company’s financial position, results
of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of the
operating results to be expected for any subsequent interim period or for the full fiscal year ending December 31, 2018.
U.S. Rare Earth Minerals, Inc. was incorporated
in the state of Nevada on September 9, 2008.
As used in these Notes to the Financial
Statements, the terms the "Company", "we", "us", "our" and similar terms refer to U. S.
Rare Earth Minerals, Inc.
Going Concern
The accompanying financial statements have
been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going
concern. To date, the Company has generated minimal revenue and has a working capital deficiency of $165,031 as of March 31, 2018.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial
statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts
and classification of liabilities that might result from this uncertainty. We will need to raise funds or implement our business
plan to continue operations.
In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for
the Company by obtaining capital sufficient to meet its minimal operating expenses by seeking equity and/or debt financing. However
management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue
as a going concern is dependent upon among other things; its ability to successfully accomplish the plans described in the preceding
paragraph and eventually begin operations in accordance with its business plan. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
Recent Accounting Pronouncements
From time to time new accounting pronouncements
are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s
accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance
for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not
be material to its financial position, results of operations and cash flows when implemented.
U.S. RARE EARTH MINERALS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 2. Capital Stock
On February 27, 2015, the Company filed
a Certificate of Change with the Nevada Secretary of State changing the number of authorized common shares from 6,000,000 to 300,000,000.
The Company is currently authorized to issue 50,000,000 shares of its $0.001 par value preferred stock and 300,000,000 shares of
its $0.001 par value common shares.
The Company formally filed a Certificate
of Designation authorizing 500,000 of the 50,000,000 authorized preferred shares to be designated as $0.001 par value, Class “A”
6% Cumulative, Convertible Voting Preferred Stock with the Nevada Secretary of State on December 31, 2013.
The preferred stock ranks senior to the
common stock of the Company in each case with respect to dividend distribution and distributions of assets upon liquidation, dissolution
or winding up of the Company whether voluntary or involuntary.
These shares are issued as Class “A”
6% Cumulative, Convertible Voting Preferred Stock. Each share is valued at $1.00 per share for purposes of calculating interest
and for conversion purposes and accrues interest at 6% per annum from the date of issue. Interest is cumulative for a maximum of
two years and compounds annually. Interest accrued thereon shall become due and payable and shall be paid by the Company on or
prior to thirty (30) days after the second anniversary of issue date and each consecutive two year period thereafter.
As of March 31,2018 and 2017, a total of
$126,618 and $94,517 has not been declared by the Company, respectively.
Each share is convertible at any time from
date of issue into five (5) shares of Company common stock. Each share shall be entitled to five (5) votes that may be cast by
the holder at any shareholder meeting or event requiring a shareholder vote. All interest accrued to date of conversion will be
paid by Company to holder within sixty (60) days of date of conversion by holder. These shares are callable by the Company at any
time after three (3) years from date of issue at $1.00 plus accrued but unpaid interest unless previously converted.
As of March 31, 2018 and December 31, 2017,
there were 440,500 and 440,500 shares of Class “A” 6% Cumulative, Convertible Voting Preferred Stock issued and outstanding,
respectively.
On January 13, 2017, 4,350,000 common
shares were cancelled.
On April 25, 2017, the Company issued 8,100,000
shares of common stock to 3 directors and various consultants for past services rendered. The fair value of these shares is $0.02
per share based on the stock price; thus $162,000 was recognized as stock-based compensation. Also, on that date, the Company issued
3,000,000 shares of common stock to two consultants. The fair market value of these shares is $0.02 per share based on the stock
price; thus $60,000 was recognized as stock-based compensation.
On November 18, 2017, the Company issued
67,500,000 shares of its unregistered Common Stock to a related party as consideration for acquisition of nine (9) Unpatented Placer
Mining Claims valued at $675,000 by the Company and 3,000,000 shares of unregistered Common Stock as payment for outstanding accounts
payable- related party valued at $30,000 and the remaining balance of $224,372 of the debt was forgiven and recorded to additional
paid-in capital.
As of March 31, 2018, and December 31,
2017, there were 105,416,350 shares of common stock issued and outstanding.
U.S. RARE EARTH MINERALS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 3. Notes and Debentures Payable,
Loan Payable
In 2009, the Company received multiple
set of funds and the terms of each note payable are set forth: $5,000 note payable due upon demand and then in 2013 an $80,000
note bearing 6% per annum, simple interest, payable on or before August 23, 2013. The Company and note holders are in discussions
with respect to the payoff of the notes as they both are in default.
We have two short-term loans totaling $25,000
at March 31, 2018 and December 31, 2017. These loans were due in 2012 and as of March 31, 2018 and December 31, 2017, are in default.
These notes are accruing interest at a rate of 10% per annum.
At March 31, 2018, the Company has recorded
accrued interest of $1,950 related to the debts above which is included in the $26,526 accrued interest balance on the balance
sheet.
Note 4. Related Party Transactions
The officers and directors for the Company
are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business
interest. The Company has not formulated a policy for the resolution of such conflicts.
As of March 31, 2018 and December 31, 2017,
the Company had an outstanding payable of $9,198 to a company owned by the CEO for packaging services provided in year 2017.
On July 11, 2017 Nathan Marks was appointed
as Director and his company is also a customer. The Company had no sales during the three months period ended March 31, 2018 and
2017 to this company.
The Company made payments of $700 to M.
Strata, LLC during the three months ended March 31, 2018. As of March 31, 2018, and December 31, 2017, the Company owed M. Strata,
LLC $nil and $700 related to tonnage fees, respectively.
Shareholder Advance
During the year ended December 31, 2017,
various shareholders advanced $22,700 to the Company to help pay for operating expenses. The advances don’t have re-payment
terms.
During the three months ended March 31,
2018, the Company made payments of $400. The balance owed as of March 31, 2018 is $22,300.
Note 5. Commitments and Contingencies
The Company has been advised by the Bureau
of Land Management that it must prepare and submit an amended plan of remediation for Eagle 4 and related areas where mining
and related activities are being conducted and also will be required to submit an environmental assessment as well which will
interrupt mining activities. The amended plan of remediation to be submitted may result in increasing the amount of the bond
presently posted by the Company. In addition, the Company has been advised by the BLM that it owes the BLM for materials
removed from the mine site in prior years. The amounts have not been determined. Management estimates that the cost
to be minimal and possibly zero. The Company and the BLM are waiting also for the Army Corps of Engineers to determine if a drainage
ditch adjacent to the mine site is a stream, which is regulated by them. As of March 31, 2018, no determination has been
made by the Army Corps of Engineers. No communication has been received from the Army Corps of Engineers since May 2014.
U.S. RARE EARTH MINERALS, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 5. Commitments and Contingencies
(cont’d)
The Company’s Attorney continues
an on going dialogue with the Bureau of Land Management and hopes to reach an agreement over an alleged water diversion on U.S.
Rare Earth Minerals, Inc. Panaca, NV BLM mine site. It is hoped that the Army Corps of Engineer’s will soon visit the site
and render a decision.
Note 6. Subsequent Events
The Board of Directors, on April 12, 2018,
accepted the resignation of CFO, Secretary/Treasurer and Director Donita R. Kendig. Concurrently, the Board of Directors authorized
the issuance of 463,636 shares of the Company’s common stock, valued at $0.033 per share to Ms. Kendig as payment in
full for an outstanding payable of $15,300. The Board also voted to issue as a severance bonus for Ms. Kendig an additional
556,364 shares valued at $0.033 per share.
Also on April 12, 2018, the Board of Directors authorized the
issuance of 381,818 shares of the Company’s common stock, valued at $0.033 per share to D. Quincy Farber, Officer and
Director, as payment in full for an outstanding payable of $12,600. The Board also voted to issue an additional 618,182
shares valued at $0.033 per share to Mr. Farber for past services rendered.
On April 12, 2018, the Board of Directors
of the Company elected current Chairman and Director of the Company, Larry Bonafide to Chief Financial Officer, Secretary/Treasurer.
Mr. Bonafide will also continue as Chairman.
Mr. Bonafide has served as a Director of
the Company since his election to the Board on February 10, 2014.