NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS
ENDED March 31, 2018 and 2017
NOTE 1
– DESCRIPTION OF BUSINESS AND GOING CONCERN
EnXnet,
Inc. (“EnXnet”, “we”, “our”, the “Company”) was formed in Oklahoma on March 30, 1999. On
August 7, 2015, the Company incorporated EnXnet Energy Company LLC. in the State of Colorado as a wholly owned subsidiary.
EnXnet Inc. and its wholly owned subsidiary, EnXnet Energy Company, LLC. (“the Company”) is a natural gas and
petroleum exploitation, development and production company engaged in locating and developing hydrocarbon resources,
primarily in the Rocky Mountain region. The Company’s principal business strategy is to enhance stockholder value by
generating and developing high-potential exploitation resources in these areas. The Company’s principal business is the
acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation
and development of properties subject to these leases. The Company has leased property in Colorado and is currently searching
for additional opportunities in the natural gas and petroleum industry. Our goal is to lease the oil and gas properties of
acreage that has a high likelihood of becoming a producing property. We will require additional funding to drill and complete
a producing natural gas and petroleum well.
The Company
has a working capital deficit and has incurred losses since inception. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include any adjustments that may be necessary if the Company
is unable to continue as a going concern.
Funds required
to carry out management’s plans are expected to be derived from future stock sales and borrowings from outside parties.
There can be no assurances that the Company will be successful in executing its plans.
NOTE 2
- SUMMARY OF ACCOUNTING POLICIES
Cash and
cash equivalents
Cash equivalents
are highly liquid investments with an original maturity of three months or less.
Restricted
Cash
The Company
has cash that is restricted for use in natural gas and petroleum exploration.
Use of
estimates
The preparation
of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires
management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate
estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
The carrying amounts reported in the consolidated balance
sheets as of March 31, 2018 and 2017 for cash, accounts payable, accrued expenses, advances from officer and stockholders, notes
payable and convertible notes payable approximate fair value because of the immediate or short-term maturity of these financial
instruments.
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
Oil and
gas properties, unproved (full cost method)
The Company
uses the full cost method of accounting for exploration and development activities as defined by the SEC. Under this method of
accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties
and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development
activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss
on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter
the relationship between capitalized costs and proved reserves. Oil and gas properties include costs that are excluded from costs
being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include
non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling
costs. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir.
All items
classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are
assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration
of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical
evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves
are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date
for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject
to amortization.
Impairment
of long-lived assets
The Company
reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the
historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing
the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds
the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured
as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based upon either
discounted cash flow analysis or estimated salvage value. The Company recognized impairment expense in the years ended March 31,
2018 and 2017 in the amounts of $123,191 and $-0-, respectively.
Stock Based
Compensation
The Company
records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity
Based Payments to Non-Employees, using the fair value method. All transactions in which goods or services are the consideration
received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the
fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and
the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments
issued.
Income
taxes
Deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.
We have net operating loss carryforwards
available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the
extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future
tax benefit, a valuation allowance is established.
ENXNET, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS
ENDED March 31, 2018 and 2017
Basic and
diluted net loss per share
Basic
loss per share is computed using the weighted average number of shares of common stock outstanding during each
period. Diluted loss per share includes the dilutive effects of common stock equivalents on an “as if converted”
basis. For the year ended March 31, 2018 and 2017 share Diluted EPS excludes all dilutive potential shares if their effect is
antidilutive. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because
they are antidilutive. As of March 31, 2018, the Company has common stock equivalents related to options outstanding to
acquire 1,290,000 shares of the Company’s common stock and 48,110,834 shares issuable upon conversion of convertible
notes payable and accrued interest.
Recent
Accounting Pronouncements
In
May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April 2016, May
2016 and December 2016, the FASB issued additional guidance, addressed implementation issues and provided technical
corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained
earnings (deficit). The guidance is effective for interim and annual periods beginning after December 15, 2017. EnXnet
adopted this ASU on January 1, 2018 using the full retrospective approach. EnXnet has concluded that the adoption of this ASU
did not have an impact on its consolidated financial statements.
In February
2016, the FASB issued guidance regarding the accounting for leases. The guidance requires recognition of most leases on the balance
sheet. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented
using a modified retrospective approach. The guidance is effective for interim and annual periods beginning after December 15,
2018. EnXnet will adopt this ASU on April 1, 2019. EnXnet believes that the adoption of this ASU will not have a material
impact on its consolidated financial statements.
In November
2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging
Issues Task Force). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash,
cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally
described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling
the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for all
interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect
the adoption of ASU 2016-18 to have a material impact on the Company’s Consolidated Financial Statements.
In August
2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.
This update clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows.
This ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and for interim periods
therein with early adoption permitted and must be applied retrospectively to all periods presented. The Company does not currently
anticipate that the adoption of this standard will have a material impact on its consolidated financial statements.
Principles
of Consolidation
The consolidated
financial statements include the accounts of the Company and its subsidiary. All significant inter-company transactions and balances
have been eliminated in consolidation. References herein to the Company include the Company and its subsidiary, unless the context
otherwise requires.
NOTE 3
– OIL AND GAS CASH BOND
The
Company has deposited with the Colorado State Land Board $100,000 as a cash bond. The bond will be used to secure the
payment for damages caused by the Company’s operations on the oil and gas leased properties, and to assure compliance
with all the terms and provisions of the oil and gas leases.
NOTE 4
– OIL AND GAS PROPERTIES, UNPROVED
At March 31,
2018 and 2017, the Company had $123,191 and $66,396 in unproved oil and gas properties representing 21,867 and 17,306 acres in
the Rocky Mountain range located in the State of Colorado, respectively. In the years ended March 31, 2018 and 2017, the Company
paid $56,795 and $46,288 to lease 4,561 and 16,346 acres for a 5-year term, respectively. Initially the Company is required to
pay the first year’s lease plus any lease bonus payments. Thereafter, the Company is responsible for making annual lease
payments of $2.50 per acre to the State of Colorado for the next four years. Annual lease payments for future fiscal years are
as follows:
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
Fiscal
Year Ended March 31,
|
Acres
Leased
|
Annual
Lease Commitment
|
2019
|
21,867
|
$54,688
|
2020
|
21,867
|
$54,688
|
2021
|
21,867
|
$54,688
|
2022
|
20,907
|
$52,268
|
2023
|
9,030
|
$7,203
|
Annually,
the oil and gas properties are tested for impairment. The Company determined that there was impairment of the unproved oil and
gas properties for the years ended March 31, 2018 and 2017 in the amounts of $123,191 and $-0-.
NOTE 5 – INCOME TAXES
On December 22, 2017, H.R. 1, originally
known as the Tax Cuts and Jobs Act (“the Tax Reform Act”) was enacted. The Tax Reform Act significantly revised the
U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January
1, 2018, while also repealing the deduction for domestic production activities, implementing a territorial tax system and removing
the expiration of net operating losses. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which
the law was enacted. The Company did not record any tax expense or benefit due to a remeasurement of deferred tax assets and liabilities.
At March 31, 2018 and 2017, the
Company had net deferred tax assets of approximately $1,393,000 and $2,177,000 principally arising from net operating loss
carryforwards for income tax purposes. Because of the Tax Reform Act, the Company reduced the deferred tax asset and
allowance by $832,000 on January 1, 2018. As management of the Company cannot determine that it is more likely than not that
the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset
has been established at March 31, 2018 and 2017. At March 31, 2018, the Company has net operating loss carry forwards
totaling approximately $6,632,000 of which $6,403,000 is from the years ended March 31, 2000 through March 31, 2017
and these will begin to expire in the year 2020. Under the Tax Reform Act the loss from 2018 will not expire.
Income tax provision (benefit) for the years ended March
31, 2018 and 2017 is summarized below:
|
|
|
2018
|
|
|
|
2017
|
|
Current:
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
-
|
|
State
|
|
|
-
|
|
|
|
-
|
|
Total current
|
|
|
-
|
|
|
|
-
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(48,000
|
)
|
|
|
(27,000
|
)
|
State
|
|
|
—
|
|
|
|
—
|
|
Total deferred
|
|
|
(48,000
|
)
|
|
|
(27,000
|
)
|
Increase in valuation allowance
|
|
|
48,000
|
|
|
|
27,000
|
|
The provision for income taxes
differs from the amount computed by applying the statutory federal income tax rate before provision for income taxes. The sources
and tax effect of the differences are as follows:
|
|
2018
|
|
2017
|
Income tax provision at the federal statutory rate
|
|
|
21.0
|
%
|
|
|
34.0
|
%
|
State income taxes, net of federal benefit
|
|
|
—
|
%
|
|
|
—
|
%
|
Effect of net operating loss
|
|
|
(21.0
|
%)
|
|
|
(34.0
|
%)
|
|
|
|
—
|
%
|
|
|
—
|
%
|
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
Components of the net deferred
income tax assets at March 31, 2018 and 2017 were as follows:
|
|
2018
|
|
2017
|
Net operating loss carryover
|
|
$
|
1,393,000
|
|
|
$
|
2,177,000
|
|
Valuation allowance
|
|
|
(1,393,000
|
)
|
|
|
(2,177,000
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ASC 740 requires
a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely than
not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both
positive and negative, management has determined that a $1,393,000 and $2,177,000 allowance at March 31, 2018 and 2017, respectively,
is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation
allowance for the current year is $48,000.
As
of March 31, 2018, we have a net operating loss carry forward of approximately $6,632,000. The loss will be available to offset
future taxable income.
The Company
has identified its “major” tax jurisdictions to include the U.S. government. The Company's fiscal 2015 through 2017
federal tax returns remain open by statute.
NOTE 6
– CONVERTIBLE NOTES PAYABLE
Note payable-stockholder
consists of the following:
|
March 31,
|
|
|
2018
|
|
|
2017
|
5.75% note payable
to stockholder, due May 17, 2018.
|
$
|
100,000
|
|
$
|
-
|
Convertible
notes payable-related party consists of the following:
|
March
31,
|
|
|
2018
|
|
|
2017
|
2% convertible notes
payable to Ryan Corley, President of the Company, due on demand, convertible into a maximum of 37,638,984 common shares
|
$
|
749,455
|
|
$
|
719,455
|
2% convertible note
payable to an entity controlled by Ryan Corley, President of the Company, due on demand, convertible into a maximum of 978,000
common shares
|
|
48,900
|
|
|
48,900
|
3% convertible notes
payable to an entity controlled by Ryan Corley, President of the Company, due on demand, convertible into a maximum of 1,619,500
common shares
|
|
111,350
|
|
|
111,350
|
2% convertible notes
payable to Douglas Goodsell, a related party, due on demand, convertible into a maximum of 519,828 common shares
|
|
10,396
|
|
|
10,396
|
Total notes payable-related
party
|
$
|
920,101
|
|
$
|
890,101
|
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
Convertible notes payable consists of the following:
|
|
March 31,
|
|
|
2018
|
|
2017
|
7% convertible notes payable to stockholder, which is past due, convertible into a maximum of 250,000 common shares,
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
7% convertible notes payable to stockholder, due August 12, 2018 convertible into a maximum of 250,000 common shares,
|
|
|
50,000
|
|
|
|
—
|
|
4% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares
|
|
|
175,000
|
|
|
|
175,000
|
|
2% convertible notes payable to stockholders, due on demand, convertible into a maximum of 1,100,000 common shares
|
|
|
25,000
|
|
|
|
25,000
|
|
Total notes payable
|
|
$
|
300,000
|
|
|
$
|
350,000
|
|
Long Term Convertible notes payable consists of the following:
|
|
March 31,
|
|
|
2018
|
|
2017
|
7% convertible notes payable to stockholders, due August 12, 2018 convertible into a maximum of 250,000 common shares,
|
|
$
|
—
|
|
|
$
|
50,000
|
|
7% convertible note payable to stockholder, due on August 15, 2019, convertible into a maximum of 250,000 common shares,
|
|
|
50,000
|
|
|
|
—
|
|
7% convertible note payable to stockholder, due on September 10, 2019,
convertible into a maximum of 250,000 common shares,
|
|
|
50,000
|
|
|
|
—
|
|
Total notes payable
|
|
$
|
100,000
|
|
|
$
|
50,000
|
|
On
April 1, 2017, the Company converted $6,000 of the advances from our CEO, Ryan Corley into a convertible note payable. The note
bears interest of 2% and is convertible with the accrued interest into common shares of the Company at a rate of $0.05 per share.
The Company determined that the note did not contain a beneficial conversion feature nor did the conversion option qualify for
derivative accounting.
On
May 30, 2017, the Company’s subsidiary, EnXnet Energy Company, LLC, entered into a loan agreement with an individual
to borrow $100,000 for an initial term of 6 months with the option to extend the note for an additional 6 months. The note
was due November 30, 2017 with interest of 5.5% in the amount of $2,750 which was paid in December 2017. The Company also
issued 100,000 shares of common stock with a fair value of $4,000 which was recognized as interest expense during the year.
The loan was extended on December 1, 2017 for six months with interest of 5.75% in the amount of $2,875 which was paid in
January 2018. The Company also issued 100,000 shares of common stock with a fair value of $2,000 which was recognized as
interest expense during the year. The extension agreement is not considered an extinguishment of debt. The loan was used to
secure a one hundred thousand ($100,000) Cash Oil and Gas Blanket Activity Bond with the State of Colorado.
On
June 16, 2017, the Company borrowed $16,000 from our CEO, Ryan Corley. The note bears interest of 2% and is convertible with the
accrued interest into common shares of the Company at a rate of $0.016 per share. The Company determined that the note did not
contain a beneficial conversion feature nor did the conversion option qualify for derivative accounting.
On
August 15, 2017, the Company borrowed $50,000 from a stockholder with the primary use of the proceeds to acquire oil and gas leases
in Colorado. The note bears interest of 7% and is convertible with the accrued interest into common shares of the Company at a
rate of $0.20 per share. The note matures on August 15, 2019. The Company also issued 200,000 shares of Common Stock with a fair
value of $3,600 which was recognized as interest expense during current year.
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
On
September 7, 2017, the Company entered into an extension agreement with a stockholder loan in the amount of $50,000
and bearing interest of 7%. The original date of the note was September 10, 2015 with an original maturity date of September
10, 2017. The extension agreement is for 2 years with the maturity date being September 10, 2019. The Company also issued
50,000 shares of common stock with a fair value of $700 which was recognized as interest expense during the current year. The
extension agreement is not considered an extinguishment of debt.
On
November 21, 2017, the Company borrowed $8,000 from our CEO, Ryan Corley. The note bears interest of 2% and is convertible with
the accrued interest into common shares of the Company at a rate of $0.0125 per share. The Company determined that the note did
not contain a beneficial conversion feature nor did the conversion option qualify for derivative accounting.
NOTE 7
– RELATED PARTY TRANSACTIONS
Advances
from Stockholder:
Advances from
a stockholder at March 31, 2018 and 2017 were $31,000 and $31,000, respectively.
Advances
from Officer:
Our CEO, Ryan
Corley, has made advances to the Company in prior years. During the years ended March 31, 2018 and 2017, the CEO made additional
unsecured advances totaling $15,500 and $21,000, respectively. During the years ended March 31, 2018 and 2017, the Company made
payments on these advances of $500 and $-0-, respectively. Also during the years ended March 31, 2018 and 2017, the Company converted
$6,000 and $15,000 of the advances into notes payable, respectively. At March 31, 2018 and 2017, advances from the CEO were $15,000
and $6,000 respectively.
The Company
has notes payable to the CEO in the aggregate amount of $749,455 and $719,455 as of March 31, 2018 and 2017, respectively. Accrued
interest owed on these notes at March 31, 2018 and 2017 amounted to $204,861 and $190,007, respectively. These notes and accrued
interest are convertible into 41,411,316 and 38,901,957 shares of restricted common stock of the Company, respectively.
At March 31,
2018 and 2017, advances from the entity controlled by the CEO were $10,500 and $10,500, respectively, and notes payable totaled
$160,250 and $160,250, respectively. Accrued interest owed on these notes at March 31, 2018 and 2017 amounted to $35,188 and $32,449,
respectively. These notes and accrued interest are convertible into 3,155,917 and 3,104,417 shares of restricted common stock
of the Company, respectively.
Oil and
Gas Leases
During the year ended March
31, 2018, the Company paid $300 in transfer fees to acquire a lease on an additional 1,280 acres in the Rocky Mountain
range located in the state of Colorado for a 4-year term. The lease was acquired from our President and CEO. Each year, the
Company is responsible for making additional lease payments of $2.50 per acre to keep the lease
The Company
conducts its business from the office of its CEO, Ryan Corley, rent free.
NOTE
8- COMMON STOCK TRANSACTIONS
The Company
issued 425,000 common shares during the year ended March 31, 2018 for services valued at $7,650. Of these shares, 300,000 and
125,000 respectively were issued to the CFO and to a director.
The Company
issued 450,000 and 200,000 common shares during the year ended March 31, 2018 and 2017 with a fair value of $10,300 and $2,000,
respectively, which were recorded as additional interest on its outstanding notes.
ENXNET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE YEARS ENDED March 31, 2018 and
2017
NOTE 9
– STOCK OPTIONS
On July 24,
2001, the Company filed with the SEC Form S-8, for its 2002 Stock Option Plan, (the Plan). An aggregate amount of common stock
that may be awarded and purchased under the Plan is 3,000,000 shares of the Company’s common stock.
A summary
of the status of the Company’s stock options as of March 31, 2018 and 2017 is presented below:
|
|
2018
|
|
2017
|
Options outstanding at beginning of year
|
|
|
1,590,000
|
|
|
|
2,390,000
|
|
Options granted
|
|
|
—
|
|
|
|
—
|
|
Options exercised
|
|
|
—
|
|
|
|
—
|
|
Options canceled/expired
|
|
|
(300,000
|
)
|
|
|
(800,000
|
)
|
Options outstanding at end of year
|
|
|
1,290,000
|
|
|
|
1,590,000
|
|
On July 13, 2017, the Company
extended and repriced options that were expiring. A total of 1,290,000 options were extended. Of these, 900,000 were extended
for 5 years at a price of $0.08 per option; 240,000 were extended for 5 years at a price of $0.10 per option and 150,000 were
extended for 1 year with no change in the option price. The Company used the Black-Scholes option pricing method to determine
if there were additional compensation expenses to recognize. The extension and repricing resulted in the recognition of $22,044
in compensation expense.
The following table summarizes
the information about the stock options as of March 31, 2018:
Weighted
Average Range of
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
Years
|
|
Number
Exercisable
|
|
0.08
|
|
900,000
|
|
4.30
|
|
900,000
|
|
0.10
|
|
240,000
|
|
4.30
|
|
240,000
|
|
0.12
|
|
150,000
|
|
.30
|
|
150,000
|
$
|
0.80
- 0.12
|
|
1,290,000
|
|
3.84
|
|
1,290,000
|
The following
table summarizes the information about the stock options as of March 31, 2017:
Weighted
Average Range of
Exercise
Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
Years
|
|
Number
Exercisable
|
$
|
0.12
|
|
1,590,000
|
|
0.30
|
|
1,590,000
|
NOTE 10
– SUBSEQUENT EVENTS
On April 1,
2018, the Company converted $15,000 of the advances from officer into a convertible note payable. The note bears interest of 2%
and is convertible with the accrued interest into common shares of the Company at a rate of $.025 per share.
In April 2018,
the Company paid $100 to acquire a lease on an additional 640 acres in the Rocky Mountain range located in the state of Colorado
for a 4-year term. The lease was acquired from our President and CEO. Each year, the Company is responsible for making additional
lease payments of $2.50 per acre to keep the lease.
In
April 2018, the Company issued 2,500,000 common stock shares in payment of a $100,000 note that matured on May 31, 2018.
Prior to this payment, our CEO and President had acquired one half interest in the loan.