Amended Annual Report (10-k/a)

Date : 09/19/2018 @ 11:05AM
Source : Edgar (US Regulatory)
Stock : United Rail, Inc. (URAL)
Quote : 0.00884  -0.00008 (-0.90%) @ 8:50PM

Amended Annual Report (10-k/a)


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K/A
Amendment No.1

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2015

Commission file number
000-54648

LAS VEGAS RAILWAY EXPRESS, INC.
(Exact name of Registrant as Specified in its Charter)


Delaware
56-2646797
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
 
9480 South Eastern Ave, Suite 205
Las Vegas, NV  89123
(Address of principal executive offices)

702-583-6715
(Issuer's telephone number)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $0.0001 PAR VALUE
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [  ] No [ X ]
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes [X  ] No [  ]
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X  ] No [  ]
          
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [X] No [  ]
           
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ] 
   Accelerated filer [  ] 
   Non-accelerated filer [  ] (Do not check if a smaller reporting company)  
  Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes [  ] No [X]

Aggregate market value of Common Stock held by non-affiliates based on the closing price of the registrant's Common Stock on the OTCBQ on September 30, 2014 was $526,492.

Number of outstanding shares of common stock as of September 17, 2018 was 3,686,426,488.

Documents Incorporated by Reference:  None.
 

LAS VEGAS RAILWAY EXPRESS, INC.
TABLE OF CONTENTS

PART I
 
PAGE
     
Item 1.
Business
3
     
Item 1A.
Risk Factors
15
     
Item 1B.
Unresolved Staff Comments
17
     
Item 2
Properties
18
     
Item 3.
Legal Proceedings
18
     
Item 4.
Mine Safety Disclosures
18
     
PART II
 
18
     
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
18
     
Item 6.
Selected Financial Data
20
     
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
20
     
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
27
     
Item 8.
Financial Statements and Supplementary Data
28
     
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
46
     
Item 9A.
Controls and Procedures
46
     
Item 9B.
Other Information
47
     
PART III
 
47
     
Item 10.
Directors, Executive Officers and Corporate Governance
47
     
Item 11.
Executive Compensation
51
     
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
52
     
Item 13.
Certain Relationships and Related Transactions and Director Independence.
53
     
Item 14.
Principal Accountant Fees and Services
54
     
PART IV
 
54
     
Item 15.
Exhibits and Financial Statement Schedules
54
     
SIGNATURES
58


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LAS VEGAS RAILWAY EXPRESS, INC.

PART I

Item 1.  Business
 
Las Vegas Railway Express, Inc. (the "Company", "we", "us", or "our"), formerly known as Liberty Capital Asset Management, Inc., acquired 100% of the issued and outstanding stock of Las Vegas Railway Express, a Nevada corporation on January 21, 2010.  In connection with the acquisition, the Company changed its name to Las Vegas Railway Express, Inc. and changed its business plan to one of developing passenger rail transportation and ancillary ticketing and reservation services between the Los Angeles area and Las Vegas, Nevada. In November 2012, the Company executed an agreement with Union Pacific Railroad which allowed the Company to operate its passenger service on their property from Daggett, California to Las Vegas, a distance of 175.8 miles.  In May 2013, the Company and Amtrak, which was planning to haul the Company's rail cars from Los Angeles to Las Vegas in regular service, was informed by BNSF Railway ("BNSF") that it would not approve Amtrak's request to operate on the BNSF system. Although the Company tried several alternative approaches to satisfy BNSF's denial, none were accepted and both Amtrak and the Company were forced to suspend their efforts to establish the planned service over the Cajon Pass route.
 
During the development period for the Los Angeles to Las Vegas route, the Company became visible in the press and several independently owned passenger rail companies discussed how the Company's Club X style railcars could be deployed on existing excursion lines. The Company began to focus its infrastructure towards acquiring independently owned passenger rail operations throughout the United States and providing upscale commuter Club X railcars for various state Department of Transportation municipal transportation agencies.

Company Overview

Our company, Las Vegas Railway Express, Inc., is establishing a new and innovative passenger train service between Las Vegas and the Los Angeles metropolitan area by hiring Amtrak to haul our passenger cars for a fee, between Los Angeles and Las Vegas. The proposed service, called the "X-Train," will introduce a "Las Vegas" style experience on the train, while traversing the route in approximately 5 ½ hours. We will be profitable on the very first run based on our pricing model.

We plan to offer our train service as a tour package in much the same way as cruise lines work with a package of train ticket, hotel, transfers and complimentary first cocktail on board. F&B offerings are not included. Customers can book their tour package with any one of several major hotels in Las Vegas via the X Train website www.vegasxtrain.com or via www.xtrainvacations.com.   X Train handles all the bookings and our choice hotels are MGM Resorts, The Wynn Resort, Caesars Resort, The Plaza Hotel and Mandalay Resorts. X Train captures 100% of the hotel bookings for which it receives a commission.

Our business plan emanates from a regional transportation feasibility study published in 2007, which suggested that a well-run rail service between Los Angeles and Las Vegas could garner up to 30% of the approximately 12 million passengers who regularly drive between these two metropolitan areas. See: www.rtcsouthernnevada.com.

Over the last 18 months, we have been engaged in activities designed to secure the necessary rights, equipment and facilities required to commence commercial service in the fall of 2015. These include: hiring Amtrak to provide regularly scheduled excursion charter services on the LA to Las Vegas route, purchasing or leasing appropriate locomotive and passenger cars designed to move passengers over the route in comfort; and securing leases on terminal facilities and passenger depots in Los Angeles and in Las Vegas.

We are assisted in this project by North Star Rail, LLC, which owns the rail set of passenger cars we plan to lease. We have an agreement with them to manage for us the charter process with Amtrak as well as leasing their rail car consist to run on our planned route.
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The Company has retained the law firm of Sichenzia Ross Friedman LLP 61 Broadway, New York, New York as securities counsel.

The Company's common stock is currently quoted on the PINK under the symbol "XTRN". The company website is www.vegasxtrain.com . The contents of this website are not incorporated into this Memorandum.

The Company maintains offices at 9480 South Eastern Avenue, Suite 205, Las Vegas, Nevada 89123.

Our Competitive Strengths

We have developed a business model that focuses on leisure travelers between Los Angeles and Las Vegas.  We believe the following strengths will allow us to maintain a competitive advantage in the market we serve:

Large Untapped Market of 12 Million Drivers.  There has been no regular passenger rail service between the Los Angeles and Las Vegas areas for over 18 years. The only major highway between Los Angeles and Las Vegas is Interstate 15 ("I-15"). Of the more than 12,000,000 annual visitors from the Southern California/Los Angeles market, 94% use automobile transportation to Las Vegas via this corridor every year. We only need to capture 28,000 of these drivers (approximately 0.025 % of the total marketplace) to meet our plan on an operating basis.  As the LA population grows, so will the traffic on this highway; the forecast for traffic on I-15 is expected to be 17 million passengers by 2030. Congestion on I-15 is increasing, with motor vehicle travelers experiencing substantial delays during peak travel times (e.g., generally over 6 hours of drive time on Friday and Sunday afternoons). With increasing gasoline costs, increasingly restrictive highway capacity, and reduced air travel from LA to Las Vegas, a rail transportation product - with both First Class and Coach – should be an attractive and viable alternative. Our trains will offer a service that will set us apart from other travel options by extending our customers' "Las Vegas" experience while en route.
Amtrak Charter Services. Amtrak recently began encouraging the use of its passenger rail services to private companies under an expanded charter services group. Private companies can hire Amtrak to charter a train for them, which will include locomotives, crew, on board services, logistics and scheduling and conductors for a market-based fee. There is no restriction to the routes where Amtrak will charter a train for a private event or service. Amtrak works with the railroads to co-ordinate logistics with the existing freight rail traffic to select available slots for the requested charter to run. Pricing for the X Train route will vary depending on departure location, car consist and on board services. Amtrak will provide us with locomotive engineers, conductors, train servicing, maintenance, and other services associated with the operations of the X-Train. Amtrak offers many charter type services to numerous rail charter companies in the US.
 "Las Vegas Style" Service. The focus of our approach is to create a unique, Vegas class, "must see" mode of travel that not only serves the functional purpose of transporting passengers to Las Vegas, but also integrates seamlessly into the traditional and iconic Las Vegas experience. To accomplish this goal, our award winning team of design professionals and staff has assembled an on-board product reflective of the "Las Vegas" theme, which is comprised of a comfortable, fun, upscale and provocative atmosphere with multiple on-board amenities. Each car will have two "Conductress', who will provide regular table services throughout the duration of each trip. In addition, each train ticket entitles a passenger to an assigned seat with a high-quality meal and an alcoholic beverage.
Our "X-Train" model also includes many premium options to tailor our customers' experiences to their individual preferences. Each passenger car will be served by a bartender who will prepare premium alcoholic beverages not included in the base ticket fare. Snacks and various X-Train merchandising will also be offered for purchase through our free mobile application. Our "Ultra Lounge" cars will have tables that passengers and their travel companions can reserve at an additional charge.
Oversize baggage, access to the on-board Wi-Fi network, and other premium options will also be available for additional ancillary fees. Commissions will be derived through our call centers, our website, and our on-board mobile application, where customers will be presented with the option to book ahead for various Vegas attractions and necessities such as hotels, shows, tours, restaurant reservations, and rental cars.
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Low Equipment and Facilities Cost.  All locomotive equipment and maintenance costs are borne by Amtrak under our charter agreement. In a similar fashion, all of the costs of maintenance for the rail car consist of the "261" consist we are leasing, are borne by the owners of that consist, "The Friends of the 261". We are renovating the Amtrak station at the Plaza Hotel to accept train service for 2015.
Experienced Management and Board of Directors.  We have a strong management team and board of directors comprised of both experienced industry professionals and successful entrepreneurs. Our CEO, Michael Barron has been a successful entrepreneur establishing and growing several companies over the past 30 years. Our board of directors is led by Dr. Harry Teng, Head of the School of Rail Engineering at UNLV in Las Vegas and Lou Schillinger, CEO of Short Line Insurance Company, with over 300 industry rail clients insured. Company management has operated passenger service on a railroad with our own Club X cars and staff.


Our Business Strategy
To grow our business and increase our profitability, our strategy will be to provide a first class "Las Vegas" style travel experience at attractive fares together with a more moderate Coach Class for the economical visitor, while keeping our operating costs low and pursuing ways to make our operations more efficient.  We intend to grow by adding additional trains and increasing the number of trips from Los Angeles to Las Vegas, raising our average fare over time, expanding our relationships with premier leisure companies and growing the level of ancillary services provided to our customers.
The following are the key elements of our strategy:
Finalize Resources for Commencement of Service in Late 2015 .   We have made a significant capital investment in this business opportunity and are now in the development stage of execution. Our capital investment in Las Vegas Railway Express, Inc. stands now at approximately $12 million and, subject to obtaining needed funding, we plan to invest an additional $2.5 million in 2015 to begin operations of our X-Train service beginning late 2015. The first train set of 10 passenger railcars has been arranged via a third party owner and will be available to run following this offering. We expect to complete station construction and the remaining components of our business plan upon funding.
 
Stimulate Demand Among Higher Budget Customers Who Drive .   We see the Southern California corporate environment as a lucrative one. There are over 50 Fortune 500 companies in California with most having significant employment populations within the two counties of the LA region. With the increasing Las Vegas convention penetration, the Southern California business community alone is diverse enough to provide a sufficient number of higher budget clientele to fill our travel offerings. We plan to undertake an aggressive marketing campaign targeted at the higher budget corporate clientele in the Los Angeles greater area. Additionally, we plan to have partnerships with several of the major Las Vegas casinos in order to jointly market our services. [Company to expand on casino partnerships/agreements]
 
Grow Non-Rail Revenues .   Traditional travel options have included many amenities built into their pricing models. With recent evolutions in the travel industry, the airline sector has begun to unbundle this pricing model to its benefit. In fact, several newer airline companies have eliminated this model in favor of a low priced "à la Carte" pricing model with little traveler resistance.  Traditional, higher fare legacy airlines have adopted parts of this strategy and are implementing them profitably.  Our business plan incorporates a premium all-inclusive pricing formula, yet plans to also benefit from a "à la Carte" pricing model by providing potential upgrades across several services, most noticeably with food and beverage. In addition, we expect to derive a meaningful portion of our revenue from the sale of ancillary items, such as hotel rooms, rental cars, show tickets, nightclub packages and other attractions. Importantly, most of our ancillary revenue will command high margins with low operating costs thus improving our profitability.
 
Build Partnerships with Key Institutions .   We have established relationships with several of the major Las Vegas casinos including the Plaza Hotel, Wynn Resort, Caesars Resorts and MGM Resorts and key institutions throughout Las Vegas.  Additionally, we have developed a co-operative plan with Metrolink. Metrolink operates commuter passenger rail service in the greater Los Angeles metro area and services over 12 million riders annually. Metrolink has 55 local train stations, which share the same right of way and/or connect to the X-Train. By joint venturing a marketing plan with Metrolink, X-Train gains access to its ridership for travel to Las Vegas.
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Train Equipment and Service
 
Each of our trains will consist of two locomotives and one railcar set. Each railcar set will consist of ten cars. Trains can be expanded or contracted depending on the planned event/excursion and marketing & sales demand. X Train has contracted with The Friends of the 261, a private family business, which owns a finished rail set of cars suitable for the X Train, planned service. These cars are already certified to run on Amtrak trains and have been in charter service for over 100 charters all over the country. X train has contracted with the "261" team to manage the charter interface with Amtrak as they have greater experience with Amtrak. Their equipment is leased to X Train on a run by run basis and fees differ depending on the route mileage and services required.
Sales and Distribution
We intend to distribute our product primarily through our website, X Train Vacations www.xtrainvacations.com and our call center/customer support group. We will additionally sell through third party distributors such as Expedia, Travelocity, Orbitz and other Internet travel agencies. We will also be able to use certain of the distribution links provided by the Amtrak network and website.
We see the Southern California corporate environment as a lucrative one. There are over 50 Fortune 500 companies in California with most having significant employment populations within the two counties of the LA region. With the increasing Las Vegas convention penetration, the Southern California business community alone is diverse enough to provide a sufficient number of higher budget clientele to fill our travel offerings. We plan to market our services through advertising and promotions in billboards, newspapers, magazines, television and radio, Fun City rack cards, and through targeted public relations and promotional efforts in our target market. We also rely on public relations and word-of-mouth to promote our brand. We intend to run special promotions in coordination with peak periods and events, such as New Year's Eve, Super Bowl Weekend, Final Four Weekend, and Chinese New Year's and when boxing matches or tradeshows are held in Las Vegas.
Our trains are also available to be connected via Metrolink, the commuter passenger rail service in the greater Los Angeles metro area that services over 12 million riders annually. Metrolink has 55 local train stations, which share the same right of way and/or connect to our planned station at Fullerton, California.
Passenger Rail Development in the U.S.
Our Project is to re-open a passenger rail route between Los Angeles and Las Vegas 
   
 
Capital Corridor – Union Pacific Railroad/Joint Powers Authority - 10 years
     
 
Chicago – St. Louis Express project – Union Pacific Railroad/METRA - 12 years (not yet complete)
     
 
All Aboard Florida – Florida East Coast Railway/Fortress - 6 years (not yet complete)
     
 
Union Pacific
     
 
BNSF
     
 
Amtrak
     
 
FRA
     
 
Cities for station construction
     
 
STB

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Company Experience in the Rail Industry
Successfully negotiated rail access with Class 1 railroads
   
Working relationship with Amtrak for five years
   
Actual operating experience with a passenger rail service
   
Designed and built passenger railcars in the X Train motif
   
Complete engineering drawings for Plaza station location
   
Experience in moving railcars via Amtrak, BNSF and UPRR across the country
   
Rail infrastructure experience
   
Complete rail logistics planning experience
   
Food and Beverage on board trains experience
   
Ticketing and Sales experience for passenger train operations

The Excursion Tour Product to Las Vegas from Los Angeles
The company is preparing to operate a Los Angeles to Las Vegas "Party Train" concept it calls "Club X" which provides an entertaining and exciting trip by conventional passenger rail, from Los Angeles to Las Vegas. Las Vegas has many events which it hosts during the year and virtually every weekend is scheduled with some sort of convention, show, sports event or holiday party. Our trains are chartered by Las Vegas Railway Express, Inc. for customers who wish to come to these events via rail instead of driving or flying. Our market is the Los Angeles area resident that visits Las Vegas 1-3 times per year and usually drives the 300 miles on the I-15 highway.
X Train packages will generally run for 3 days and 2 nights with amenities included at selected hotel and casino properties. The target customer for the service is in the $60,000 or more per year income bracket, likes gaming, and is between 35 – 60 years old.
Amtrak Charter Services
Upon request, Amtrak provides LVRE with trained engineering crews, to ensure safe and reliable passenger rail operations on our charter route. The Charter service offered by Amtrak is a form request for a private train car movement. Amtrak offers this service for a fee to anyone requesting such a service and where there are rails, regardless of whether or not Amtrak currently has passenger service in the route. Requests are processed and logistics are worked out with the impacted railroads and a schedule is formed to accommodate the requested train movement. Charters may not be rejected and are not regular train service. Each time our train will run, the route logistics must be applied for and the schedule for that run established. Once a schedule is established, LVRE will schedule its ticket sales.
There are many companies in the U.S, which use charter services as a commercial enterprise for passenger rail. Companies such as the Rocky Mountaineer, Friends of the 261 (who manage our charter service interface with Amtrak) Key Holidays Reno Fun Train, Iowa Pacific's City of New Orleans operate under the Amtrak charter and run many trains on their routes each year. Each run requires the logistics to be worked out prior to operation. Charters are not regular commuter service and the LVRE schedules will vary depending on which events we plan to service via the X Train.
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Pricing and Revenue Management
Our fare structure is based on the Allegiant Air model which is a standard fare for tickets and all amenities are up sells. Ticket prices for coach are $199 per segment. All food and beverage and ancillary items are extra charges. Hotels and other events packages can be booked via X Train's call center. Margins on hotel rooms are up to 30%.
Ancillary Revenues
In addition to the basic X-Train service offering, our business model also includes many premium options that will serve as sources of ancillary revenue. Each X-Train passenger car will have bartender who will prepare premium alcoholic beverages not included in the base ticket fare. Snacks and various X-Train merchandising will also be offered for purchase through our free mobile application. Our "Ultra Lounge" cars will offer tables that passengers and their travel companions can reserve at an additional charge. Oversize baggage, access to the on-board Wi-Fi network, movies, and other premium options will also be available for additional fees.
We also aim to capture significant revenue as a "one stop" booking agent for our passengers' complete Las Vegas itinerary. In these activities, commissions will be derived through our call centers, our website, and our on-board mobile application, where customers will be allowed the option to book ahead for various Vegas attractions and necessities such as hotels, shows, tours, restaurant reservations, and rental cars.
Depot Locations
Our passenger rail terminals will provide features customarily found at a large airport today: a ticketing/customer service counter and electronic ticket machines; a station agent and employee area (including security); a baggage handling and storage area; a passenger waiting area; restrooms; a café and retail space to provide meals, snacks, and sundries; on-site parking (short- and long-term); a passenger pick-up and drop-off area; and a transit, taxi, resort shuttle pick-up and drop-off area.
Los Angeles Union Station : As the Los Angeles departure and arrival points of our service, Union Station was chosen for a number of reasons, including its proximity to downtown for Las Vegas marketing efforts; its location in the second largest population county in the United States; its links to Los Angeles County via public roads, bus and rail routes; its very affluent and tourism-centric locale; and its connection to Metrolink services where there are over 15,000 daily boardings with easy connection to Union Station passengers.
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Las Vegas Station :
Our Las Vegas arrival station will be located within the historic Downtown Las Vegas gaming and resort district bordering the famous Fremont Street Experience. Adjacent to Union Pacific's main track line and Symphony Plaza, our re-modeled station (formally Amtrak's Las Vegas station) was chosen for its location along the Union Pacific Railroad mainline; its parking and local transportation ease of ingress and egress; its 10-minute drive from over 150,000 hotel rooms; its access to ridership views along the famous Las Vegas "Strip"; its strategic alliances with Fremont Street Experience, Downtown Redevelopment Agency and Las Vegas Convention and Visitors Agency; and its low cost proximity to traveling staff accommodations.
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Conceptual future station rendering at the Plaza Hotel.


Train Operations
The proposed route of the X-Train is approximately 338 miles beginning at LA Union Station, California and proceeding non-stop to the destination at Las Vegas, Nevada. The railroad rights-of-way (ROW), over which passenger train service could operate between Las Vegas and Los Angeles, include privately and publicly owned segments. The privately held portions are owned either by BNSF Railway (BNSF) or by Union Pacific Railroad (UPRR).
Our charter agreement with Amtrak will give our X-Train the priority status needed to meet our scheduled travel times. In other words, the owners of the track will allow our X-Train to pass slower and longer freight trains by having those freight trains move to the numerous sidings along the route. Further, as an attractive and profitable railroad customer, they will ensure immediate and urgent maintenance of any and all track maintenance and other services that we would rely upon for prompt and safe service.

Proposed Operating Schedule
Our Charter runs to Las Vegas from Los Angeles are planned around weekend events held in Las Vegas.  As such our operating schedule is not fixed and may vary depending on the event we are service, The operating table below is the general operations plan for the train movement of our consist and the placement, layover and operating times we generally expect. Actual results may vary.
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Project Development Timeframe
Below is our planned project development timeframe for initiating the service. The chart is an estimate of our development schedule and actual results may vary.


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Maintenance Facilities
Amtrak maintains their fleet, and the Friends of the 261 maintain their fleet under our lease agreement with them.
Insurance
Our agreement with Amtrak will provide liability insurance caps. Outside of our agreement, we are required through our conditional agreement with Union Pacific to maintain, during the life of the agreement, liability insurance with a limit of not less than $200 million; as well as other insurance policies we believe are of types customary in the industry and as required by the DOT and in amounts we believe are adequate to protect us against material loss. The policies principally provide coverage for public liability, passenger liability, baggage and cargo liability, property damage, including coverage for loss or damage to our rail equipment and workers' compensation insurance. There is no assurance, however, that the amount of insurance we carry will be sufficient to protect us from material loss.
Employees
We currently have no employees other than our management team. Initially, we anticipate hiring a team of approximately 30 employees to assist in train and depot operations. Each train consist will require approximately 20 employees to operate it and the Las Vegas depot will require approximately 10 employees. Most of our train personnel will be classified as servers / entertainers and will not be covered by any collective bargaining agreements. Our other train operations personnel, including technical operations and maintenance, will be provided through our outsourcing agreement with Amtrak; and our food and beverage personnel will be provided on an outsourced basis.
Growth of Passenger Rail; Environment
There is widespread acknowledgement that improved intercity passenger rail service will help address many major national transport challenges. Among the challenges faced are congested highways and airports, rising fuel costs and energy independence, and climate and environmental concerns.
We are also aware of the urgency passenger rail service has established as evidenced by recent Congressional legislation, including the FY 2008 Appropriation Act, The Rail Safety Improvement Act of 2008 (RSIA), The Passenger Rail Investment and Improvement Act of 2008 (PRIIA), and The American Recovery and Reinvestment Act of 2009 (ARRA).
Many higher density city pairs have been increasing their use of rail transportation over the last decade. Set forth below is a list of selected top city-pair markets for passenger rail transportation and the traffic in each of the last six years.
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Here in Las Vegas, the news regarding the prospect of high-speed rail has brought back into the public's consciousness the idea that intercity passenger rail service has returned as a viable alternative to existing modes of transportation. What has not been discussed, and is the strategic aim of our company, LVRE, is the popularization of conventional passenger rail service and the advantages it brings to the community.
In addition, we are confident that we can advance the recent legislative efforts of Congress to improve our nation's transportation infrastructure by assisting in our nation's goal of diverting automobile traffic to intercity passenger rail. Such activities ought to: relieve increasingly congested highways by taking cars off the inter-state highways; demonstrate that there is a profitable market for intercity passenger rail; reduce overall CO2 emissions; eliminate an estimated total of 4.5 million automobiles from I-15 over a five year period; and reduce CO2 emissions on I-15 by an estimated amount of 42 million pounds in year one and 1.1 billion pounds over five years.
Competition
We will have no direct passenger rail service competition. Although there have been two proposed high speed rail alternatives announced, we believe these options will be economically infeasible in today's challenging fiscal environment.
The Xpress West (formerly DesertXpress), which has a private Las Vegas sponsor, is a high-speed rail proposal for service from Las Vegas to Victorville, CA (85 miles from Los Angeles). This project requires an ambitious right-of-way acquisition, as well as $6 billion to construct a new rail system and 7-10 years to complete, if ever funded.
The other proposal is the MagLev, a passenger train utilizing high-speed magnetic levitation technology. The MagLev would travel between Las Vegas and Anaheim, CA (25 miles from Los Angeles). This project, like the Xpress West, requires an ambitious right-of-way acquisition, $15 billion to construct, and 15 years to complete if ever funded.
The Nevada Department of Transportation recently reviewed the proposals for rail service from Los Angeles to Las Vegas and has chosen to support the Las Vegas Railway Express proposed project. www.nvrailplan.com
We will compete indirectly with a variety of transportation modes including automobiles, bus service, limousine service and air transportation. With the exception of automobiles, some portion of which we hope to replace, the other transportation modes are not seen as a material risk to our business strategy.
Safety
Passenger train service is among the safest form of travel in the country. In conjunction with our Class I railroad partners Burlington Northern Santa Fe, Union Pacific Railroad, Metrolink and our haulage partner, AMTRAK our commitment towards a safe method of travel will be paramount. Our ability to remove an estimated 4.5 million cars from I-15 will improve the safety of those traveling because this portion of I-15 is considered among the most dangerous stretches of road in the country.
THE LAS VEGAS / SOUTHERN CALIFORNIA TRANSPORT MARKET
Las Vegas is a world-class leisure destination and one of the most sought after travel destinations within the United States, with its gaming attractions, convention facilities, various shows and entertainment, restaurants, hotels and golf courses. Currently, approximately 12 million people travel from Southern California to Las Vegas per year, 94% of those people do so by ground transportation, and the remaining 6% travel by commercial and private air transport. Las Vegas' global reach extends well beyond its approximately 38.9 million annual visitors, and is reflected in television travel programs, reality and poker shows, movies and celebrity visits that are consistently a part of daily media and pop culture.
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As a major leisure destination, Las Vegas tracks and reports a myriad of statistics about the profile of its visitors. Set forth below are important, selected market statistics about Southern Californian visitors to Las Vegas from the LVCVA 2011 Southern California Profile:
 17 million annual visitors from Southern California to Las Vegas
 94% of annual visitors to Las Vegas from Los Angeles, travel via ground transportation, 6% via air
 One-way ground travel between the cities can take up to 6 – 7 hours
 53% visit more than once a year
 Stay for an average of 2.9 nights and 3.9 days
 23% earn between $60,000 and $80,000 annually
 49% earn more than $80,000
 24% travel with more than 2 people in their party
 Spend an average of $371 gambling with 11% spending $600 or more
When compared with other major resort markets in the United States, the Las Vegas market has shown consistent growth over both the near and long terms in both visitation and expenditures. We believe that recent growth in the Las Vegas market has been enhanced by the introduction of large luxury and thematic destination resorts and the increased capacity to host large-scale trade shows and conventions.
Source: Las Vegas Convention and Visitors Authority.
The Regional Transportation Commission ("RTC") of Southern Nevada completed a transportation study and feasibility plan, which analyzed the possibility of a conventional passenger rail service between Las Vegas and Los Angeles. The study was completed in June of 2007 with a supplement completed in 2008. In that document the RTC and participating authorities concluded that passenger rail service was viable within the LA to Las Vegas corridor and that up to 4 million people could and would switch from traveling by automobile to traveling by rail if a reliable passenger rail service could be established.
 
Recently, the University of Nevada, Las Vegas (UNLV)'s Rail Engineering Department, headed by Dr. Harry Teng, completed a rail study of the LA to Las Vegas rail corridor. In the UNLV study, the logistics of running a series of passenger trains through this corridor was determined that the railroads affected would have sufficient capacity to easily manage the proposed frequency of the X Train, once a week charter service.
14

Item 1A.  Risk Factors

Risks Related to Our Business
 
We have a limited operating history upon which an evaluation of our prospects can be made.
 
Our future operations are contingent upon generating revenues and raising capital for operations.  Because we have a limited operating history, you will have difficulty evaluating our business and future prospects.
We also face the risk that we may not be able to effectively implement our business plan.  If we are not effective in addressing these risks, we may not operate profitably and we may not have adequate working capital to meet our obligations as they become due.
We currently have no revenues and are totally dependent upon the proceeds from investors to fund our business .
We will have to fund all of our operations and capital expenditures from the net proceeds from investors, and future financings, as we have not yet generated revenues. There can be no assurance that we would be able to raise the additional funding needed to implement our business plans or that unanticipated costs will not increase our projected expenses.
We have a history of losses and can provide no assurance of our future operating results.
We have not generated revenue since inception, and may not succeed in generating revenue. We have experienced net losses and negative cash flows from operating activities since inception and we expect such losses and negative cash flows to continue in the foreseeable future. As of March 31, 2015, we had cash of $2,688. For the year ended March 31, 2015, we incurred net loss of $9,664,243. As of March 31, 2015, we had an aggregate accumulated deficit of $41,291,888.  We may never achieve profitability. The opinion of our independent registered public accountants on our audited financial statements as of and for the year ended March 31, 2015 contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.  Our ability to continue as a going concern is dependent upon raising capital from financing transactions and continued implementation of our business plan.
Our business plan, in part, relies on our ability to acquire or partner with passenger rail companies.
We engage in attracting independently owned passenger rail operations to contract with us for either sales or operating rights contracts on their railroads.  Without these agreements, the Company would have no new operations from which it could operate its service.  The Company has no guarantee that it can secure these agreements in the future nor that the agreements it has can be maintained beyond their contract limits.
We have incurred substantial indebtedness.
As of March 31, 2015, we have outstanding promissory notes of approximately $2,985,574 before debt discount of $311,279.  In the past, we have been in default under this debt. There can be no assurances that we will raise sufficient capital or generate sufficient revenue in the future to service our debt. If legal proceedings were commenced against us or we are unable to service our debt, then creditors may foreclose on the debt and seize our assets which may force us to suspend or cease operations altogether.
 Our indebtedness, combined with our other financial obligations and contractual commitments, could:
15

 
make it more difficult for us to satisfy its obligations with respect to the indebtedness and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in further event of defaults under the loan agreements and instruments governing the indebtedness;
   
 
require us to dedicate a substantial portion of any cash raised from financing or cash flow from future operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures, acquisitions, and other corporate purposes;
   
 
increase our vulnerability to adverse economic and industry conditions, which could place us at a competitive disadvantage compared to competitors that have relatively less indebtedness;
   
 
limit our flexibility in planning for, or reacting to, changes in business and the industry in which we operate; and
   
 
limit our ability to borrow additional funds, or to dispose of assets to raise funds, if needed, for working capital, capital expenditures, acquisitions, and other corporate purposes.

We may incur significant additional indebtedness in the future. If we incur a substantial amount of additional indebtedness, the related risks that we face could become more significant. Additionally, the terms of any future debt that we may incur may impose requirements or restrictions that further affect our financial and operating flexibility or subject it to other events of default.

If We Fail To Comply With The Numerous Laws And Regulations That Govern Our Industry, Our Business Could Be Adversely Affected.
Our business must comply with extensive and complex rules and regulations of various federal, state and local government authorities.  We may not always have been and may not always be in compliance with these requirements.  Failure to comply with these requirements may result in, among other things, revocation of our ability to operate a conventional rail system, class action lawsuits, administrative enforcement actions and civil and criminal liability.
The Loss Of Any Of Our Executive Officers Or Key Personnel Would Likely Have An Adverse Effect On Our Business.
Our future success depends to a significant extent on the continued services of our senior management and other key personnel, particularly Michael A. Barron.  The loss of the services of Mr. Barron or other key employees would also likely have an adverse effect on our business, results of operations and financial condition.
Our Business Will Be Adversely Affected If We Are Unable To Protect Our Intellectual Property Rights From Third Party Challenges Or If We Are Involved In Litigation.
Trademarks and other proprietary rights if any are important to our success and our competitive position.  Although we seek to protect our trademarks and other proprietary rights through a variety of means, we cannot assure you that the actions we have taken are adequate to protect these rights.  We may also license content from third parties in the future and it is possible that we could face infringement actions based upon the content licensed from these third parties.
Our common stock is quoted on the OTC Pink, which may limit the liquidity and price of our common stock more than if our common stock were quoted or listed on The Nasdaq Stock Market or a National Exchange.
Our securities are currently quoted on the OTC Pink, an inter-dealer automated quotation system for equity securities not included in the Nasdaq Stock Market.  Quotation of our securities on the OTC Pink may limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange.  Some investors may perceive our securities to be less attractive because they are traded in the over-the-counter market.  In addition, as an OTC Pink listed company, we do not attract the extensive analyst coverage that accompanies companies listed on other exchanges.  Further, institutional and other investors may have investment guidelines that restrict or prohibit investing in securities traded on the OTC Pink.  These factors may have an adverse impact on the trading and price of our common stock.
16

Our independent registered public accounting firm have expressed substantial doubt about our ability to continue as a going concern .
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net loss of $9,664,243 for the year ended March 31, 201.  The Company also has an accumulated deficit of $41,291,888 and a negative working capital of $6,442,355 as of March 31, 2015, as well as outstanding convertible notes payable of $2,985,574, before debt discount of $311,279.  Management believes that it will need additional equity or debt financing to be able to implement the business plan.  Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.

Risks Related to Our Common Stock

The application of the "Penny Stock" Rules could adversely affect the market price of our common stock and increase your transaction cost to sell those shares. .
The SEC has adopted rule 3a51-1 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
 
that a broker or dealer approve a person's account for transactions in penny stocks; and
 
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
 
obtain financial information and investment experience objectives of the person; and
     
 
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
 
sets forth the basis on which the broker or dealer made the suitability determination; and
     
 
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
 
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules.  This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
 
the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

We do not anticipate paying dividends.
We have never paid any cash dividends on our common stock since our inception, and we do not anticipate paying cash dividends in the foreseeable future.  Any dividends, which we may pay in the future, will be at the discretion of our Board of Directors and will depend on our future earnings, any applicable regulatory considerations, our financial requirements and other similarly unpredictable factors.  For the foreseeable future, we anticipate that earnings, if any, will be retained for the operation and expansion of our business.
Possible conflicts of interest exist in related party transactions.
Our Board of Directors consists of Michael A. Barron, Dr. Harry Teng and Louis M. Schillinger. These individuals are either executive officers, directors or principal shareholders of the Company.  Thus, there has in the past existed the potential for conflicts of interest in transactions between the Company and such individuals or entities in which such individuals have an interest.
There is a limited market for our common stock which may make it more difficult for stockholders to dispose of their shares.
Our common stock is currently quoted on the OTC Pink under the symbol "XTRN".  There is a limited trading market for our common stock.  Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock.
The price of our common stock is volatile, which may cause investment losses for our stockholders.
The market for our common stock is highly volatile, having ranged in the last twelve months from a low of $0.0001 to a high of $0.0002. The trading price of our common stock is subject to wide fluctuations in response to, among other things, quarterly variations in operating and financial results, and general economic and market conditions. In addition, statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to our market or relating to us could result in an immediate and adverse effect on the market price of our common stock. The highly volatile nature of our stock price may cause investment losses for our shareholders. In the past, securities class action litigation has often been brought against companies following periods of volatility in the market price of their securities. If securities class action litigation is brought against us, such litigation could result in substantial costs while diverting management's attention and resources.
  Our common stock could be further diluted as the result of the issuance of additional shares of common stock, convertible securities, warrants or options.
In the past, we have issued common stock, convertible securities (such as convertible debentures and notes) and warrants in order to raise money. We have also issued options and warrants as compensation for services and incentive compensation for our employees and directors. We have shares of common stock reserved for issuance upon the exercise of certain of these securities and may increase the shares reserved for these purposes in the future. Our issuance of additional common stock, convertible securities, options and warrants could affect the rights of our stockholders, result in a reduction in the overall percentage holdings of our stockholders, could put downward pressure on the market price of our common stock, could result in adjustments to exercise prices of outstanding warrants, and could obligate us to issue additional shares of common stock to certain of our stockholders.
Shares eligible for future sale may adversely affect the market.
From time to time, certain of our stockholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), and current public information and notice requirements. Any substantial sales of our common stock pursuant to Rule 144 may have a material adverse effect on the market price of our common stock.
A large percentage of our stock is owned by relatively few people, including officers and directors.
 
As of March 31, 2015, our officers and directors beneficially owned approximately 22.79% of our outstanding common stock.  As a result,  these stockholders could, if they were to act together, affect the outcome of stockholder votes, which could, among other things, affect elections of directors, delay or prevent a change in control or other transaction that might be beneficial other stockholders .

 
Item 1B.  Unresolved Staff Comments
 
Not applicable
17

 
Item 2.  Properties.

As of March 31, 2015, we lease approximately 1,976 square feet of general office space in premises located at 9480 South Eastern Avenue, Suite 205, Las Vegas, Nevada. Our lease for this space expires in February 2017 and provides for monthly payments of $2,964.

Item 3.  Legal Proceedings.
 
In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this annual report on Form 10-K, there have been no material changes to any legal proceedings relating to the Company which previously were not reported.
 
Item 4.  Mine Safety Disclosure

Not applicable.

PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is currently quoted on the Over-The-Counter Pink Board under the symbol "XTRN".  On September 11, 2018, the last trade of our stock was at the price of $0.0001 per share.  The following table sets forth the high and low prices per share of our common stock for each period indicated.  These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

 
Common Shares
 
Year Ended March 31, 2018:
High
 
Low
 
Quarter Ended June 30, 2017
 
$
0.0002
   
$
0.0001
 
Quarter Ended September 30, 2017
 
$
0.0002
   
$
0.0001
 
Quarter Ended December 31, 2017
 
$
0.0002
   
$
0.0001
 
Quarter Ended March 31, 2017
 
$
0.0002
   
$
0.0001
 
 
               
Year Ended March 31, 2017:
High
 
Low
 
Quarter Ended June 30, 2016
 
$
0.0002
   
$
0.0001
 
Quarter Ended September 30, 2016
 
$
0.0002
   
$
0.0001
 
Quarter Ended December 31, 2016
 
$
0.0002
   
$
0.0001
 
Quarter Ended March 31, 2016
 
$
0.0002
   
$
0.0001
 

Number of Stockholders

As of September 11, 2018, there were 342 stockholders of record of our common stock.  

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.
18

 
Equity Compensation Plan Information as of March 31, 2015

Equity Compensation Plan Information
 
Plan category
Number of securities to be issued upon exercise of outstanding options,
warrants and rights
(a)
 
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
 
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
 
Equity compensation plans approved by security holders
   
100
   
$
100,000
     
-
 
Equity compensation plans not approved by security holders
   
11,111
   
$
610
     
0
 
Total
   
11,211
   
$
1,497
     
0
 

 
19


Recent Sales of Unregistered Securities.

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchaser

None.

Item 6.  Selected Financial Data

Not applicable.

Forward-Looking Statements

Statements contained in this Form 10-K that are not historical facts are forward-looking statements.  In addition, words such as "believes," "anticipates," "expects," "intends" and similar expressions are intended to identify forward-looking statements.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements or events, or timing of events, to differ materially from any future results, performance or achievements or events, or timing of events, expressed or implied by such forward-looking statements.  We cannot assure that we will be able to anticipate or respond timely to the changes that could adversely affect our operating results in one or more fiscal quarters.  Results of operations in any past period should not be considered indicative of results to be expected in future periods.  Fluctuations in operating results may result in fluctuations in the price of our securities.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere herein.
            
Critical Accounting Policies

The preparation of our financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to collection of receivables, impairment of goodwill, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in material differences from the estimated amounts in the financial statements. There have been no material changes to these policies during the fiscal year.
20

Property and Equipment:

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  The Company expenses all purchases of equipment with individual costs of under $500, and these amounts are not material to the financial statements.

Long-Lived Assets:

In accordance with FASB ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.
Income Taxes:

The Company accounts for income taxes under FASB ASC 740 " Income Taxes ."   Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of March 31, 2015, the Company has not established a liability for uncertain tax positions.

Share Based Payment:

The Company issues stock, options and warrants as share-based compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance FASB ASC 718.  Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. 

The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 " Equity - Based Payments to Non-Employees ." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: ( a ) the goods or services received; or ( b ) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.
21


There were 3,175 shares of common stock as exercise of options issued during the years ended March 31, 2015.  There were 465 warrants issued during the year ended March 31, 2015.  Assumptions used to value warrants issued during the year ended March 31, 2015 are as follows:
 

   
Year Ended
 
   
March 31,
 
   
2015
 
       
Expected life in years
   
2.5
 
Stock price volatility
   
170.94% - 248.72
%
Risk free interest rate
   
0.73% - 1.18
%
Expected dividends
 
NA
 
Forfeiture rate
   
0
%

Certain warrants qualify as derivative instruments and were valued in the year ended March 31, 2015 using the binomial lattice method. See discussion below regarding accounting for derivative liabilities.
 
Derivative Liabilities:

In connection with the private placement of convertible notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of our then maximum of 20 thousand shares of authorized common stock under the Company's certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition created a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

On December 2, 2013, the Company effected a one-for-twenty reverse stock split of the Company's issued and outstanding common stock shares.  As a result, the Company's outstanding shares of common stock and common stock equivalents no longer exceeded the number of authorized shares.  As a result, as of December 2, 2013, these instruments that were accounted for as derivative liabilities were reclassified as equity.

The Company also has certain warrants and embedded conversion options in notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and four outstanding notes payable that had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and embedded conversion options in notes payable using the Black-Scholes model.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the condensed statement of operations.
In determining the appropriate fair value of the derivative liabilities, the Company used the following input levels for its valuation methodology (see Note 6 for more information regarding the Company's derivative instruments).
22

 
   
Fair Value
as of
   
Fair Value Measurements at
March 31, 2015
       
   
 March 31,
   
Using Fair Value Heirarchy
       
   
2015
   
Level 1
   
Level 2
   
Level 3
 
                         
Liabilities:
                       
     Derivative liability
 
$
2,243,870
   
$
-
   
$
2,243,870
   
$
-
 

Fair Value of Financial Instruments:

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities.  Derivative liabilities are recorded at fair value.  The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support asset growth, satisfy disbursement needs, maintain reserve requirements and otherwise operate on an ongoing basis. The Company has no operating revenues and is currently dependent on debt financing and sale of equity to fund operations.  
 
As shown in the accompanying financial statements, the Company has net loss of $9,664,243 for the year ended March 31, 2015.  The Company also has an accumulated deficit of $41,291,888 and a negative working capital of $6,442,355 as of March 31, 2015, as well as outstanding convertible notes payable of $2,985,574, before debt discount of $311,279.  Management believes that it will need additional equity or debt financing to be able to implement the business plan.  Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.

We believe that the successful growth and operation of our business is dependent upon our ability to do the following:
 
·  
obtain adequate sources of debt or equity financing to pay unfunded operating expenses and fund long-term business operations; and
   
·  
manage or control working capital requirements by controlling operating expenses.
 
Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability.  The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

Cash Flows

Net cash used in operating activities for the year ended March 31, 2015 was $1,811,508.  Cash used in operating activities for the year ended March 31, 2015 was primarily due to net loss of $9,664,243.  During the year ended March 31, 2015, the net loss included significant non-cash expenses of $291,227 in stock issued for services, $1,729,612 in amortization of discounts on notes payable, $2,840,645 for the stock option compensation, $329,416 for the warrants issued for services, $645,277 for loss on disposal of equipment, $250,000 for amortization of debt issuance costs, $130,625 for stock issued for compensation, $425,640 in debt conversion expenses, $1,391,203 in excess derivative liability expense and $1,201,739 for gain on change in derivative liability.
23


Net cash used in investing activities during the year ended March 31, 2015 was $3,937 for purchase of equipment.
 
Net cash provided by financing activities for the year ended March 31, 2015 was $1,740,223 which consisted of $560,350 from proceeds from sale of shares of common stock, $4,417 from exercise of warrants, $1,052,318 from proceeds from convertible notes payable and $106,138 from proceeds from related parties notes payable.

Description of Indebtedness

For a complete description of our outstanding debt as of March 31, 2015, see Notes 4 and 5 to the financial statements.

As of March 31, 2015, we had an aggregate total of $2,985,574 of outstanding convertible notes payable, before debt discount of $311,279, $204,550 is due during the fiscal year ended March 31, 2016.

A description of outstanding convertible notes payable is as follows:

On October 1, 2013, the Company entered into a promissory note with JMJ Financial which provides for the Company to borrow up to $350,000 in principal (the "JMJ Note").  As of March 31, 2014, the Company had borrowed $150,000 under this Promissory Note.  Outstanding borrowings mature two years from the effective date of each advance.  If the outstanding balance of the note is repaid by the Company on or before 90 days from the effective date of the borrowing, the interest charged is 0%.  However, if the Company does not repay the note within 90 days, a one-time interest charge of 12% shall be applied to the outstanding principal sum.  The outstanding balance of the note may be converted into common stock at the option of the debt holder at a rate equal to the lower of $450 per share, or 60% of the lowest trading price in the 25 days trading days previous to the conversion date, subject to other adjustments in the agreement.  During the three months ended June 30, 2014, the Company borrowed an additional $40,000 under the JMJ Note.  During the three months ended June 30, 2014, JMJ Financial converted $69,785 of outstanding principal into 79 shares of common stock under the terms of the agreement.  During the three months ended September 30, 2014, JMJ Financial converted an additional $39,490 of outstanding principal into 380 shares of common stock. During the three months ended December 31, 2014 JMJ converted $20,014 of outstanding principal into 1,542 shares of common stock and as of March 31, 2015, the outstanding balance of the JMJ Note amounted to $60,621.

On November 22, 2013, the Company, entered into and closed a purchase agreement (the "Purchase Agreement") with an institutional investor, pursuant to which the Company sold to the investor a senior secured convertible promissory note in the principal amount of $1,750,000 (the "Note"), and warrants to purchase 30 shares of common stock (the "Warrants"), for an aggregate purchase price of $1,750,000. The Note was scheduled to mature on June 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company's option (subject to certain conditions), and is convertible into shares of the Company's common stock at a conversion price equal to $350, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect.  The Company's obligations under the Note are secured by substantially all of the Company's assets.  The Warrants have a five-year term, are exercisable on a cash or cashless basis, and have an exercise price equal to $10,000, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the exercise price then in effect. On April 11, 2014, total principal and accrued interest of $1,818,055 were exchanged for a new note described below.

On March 24, 2014, the Company entered into a Convertible Promissory Note with Iconic Holdings, LLC (the "Iconic Note") in which the Company has access to borrow a total principal amount of $165,000.  All borrowings incur interest at a rate of 8% per annum, which is payable as of the maturity date of March 24, 2015.  The initial borrowing made by the Company amounted to $55,000, which represented the amount outstanding on the Iconic Note as of March 31, 2014.  At the option of the debt holder, the outstanding balance may be converted at any time into shares of the Company's common stock at a conversion rate equal to the lower of $5,000 or 60% of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to conversion election date.  During the three months ended June 30, 2014, the Company borrowed an additional $110,000 under the Iconic Note.  During the three months ended December 31, 2014 Iconic Holdings, LLC converted $44,240 of the principal balance into 4,753 shares of common stock. The outstanding principal balance as of March 31, 2015 amounted to $120,760.
24


On March 25, 2014, the Company entered into a convertible note agreement with KBM Worldwide, Inc. (the "KBM Note") for total principal borrowings of $68,000.  The amounts are due nine months after the issuance of the note on December 25, 2014, and bear interest at a rate of 8% per annum.  At the option of the debt holder, beginning 180 days after the issuance of the note, the debt holder may convert the outstanding balance of the KBM Note into shares of the Company's common stock at a conversion rate equal to 61% of the average of the lowest three closing trading prices during the 10 trading day period prior to the conversion election date.  During the three months ended September 30, 2014, KBM Worldwide, Inc. converted $10,000 of outstanding principal into 88 shares of common stock under the terms of the agreement.  During the three months ended December 31, 2014 KBM Worldwide, Inc. converted $58,000 of principal balance into 3,988 shares of common stock leaving an outstanding principal balance of $0 as of March 31, 2015.

On April 2, 2014, the Company entered into a convertible promissory note for $100,000 with Beaufort Capital Partners LLC with a maturity date of October 2, 2014.  The note is convertible into shares of the Company's common stock at a discount of 42% of the lowest traded price during the 5 trading days preceding the conversion date.  During the three months ended December 31, 2014 Beaufort Capital Partners LLC converted $14,300 of the principal balance into 1,908 shares of common stock leaving $85,700 outstanding as of March 31, 2015.

On April 11, 2014, the Company entered into a Note Exchange Agreement with the debt holder holding the $1,750,000 senior secured convertible promissory note originally issued on November 22, 2013 under the Purchase Agreement described above.  Under the terms of the Note Exchange Agreement, the original senior secured convertible promissory note is cancelled and replaced with a new note for $2,000,000.  The new note matured on November 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company's option (subject to certain conditions), and is convertible into shares of the Company's common stock at a conversion price equal to $450, subject to adjustments in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect.  Under the new note, the Company's obligations are secured by substantially all of the Company's assets, excluding any railcar assets. The difference between the book value of the principal and accrued interest of the old note of $1,818,055 and the value of the new note of $2,000,000 of which $181,945 was recorded as interest expense during the nine months ended December 31, 2014.  As of March 31, 2015, the note had an outstanding principal balance of $2,000,000.
On April 17, 2014, the Company entered into a convertible note payable with Vista Capital Investments, LLC providing for borrowings up to $250,000 with a maturity date of April 17, 2016.  The note has a one-time interest charge of 12% and is due on the maturity date. The outstanding balance of the note along with accrued interest is convertible into shares of the Company's common stock at a rate equal to the lesser of $2,500 or 60% of the lowest trade occurring during the 25 trading days preceding the conversion date.  The Company received proceeds under this convertible note payable of $50,000 in April 2014.  The Company converted $10,450 of the principal balance into 1,000 shares of common stock during the year ended March 31, 2015.  Balance at March 31, 2015 was $39,550.

On April 30, 2014, the Company entered into a convertible note payable with Redwood Management, LLC providing for total borrowings of $250,000, which is payable in 3 installments of $83,333, the first due installment upon execution of the note, the second installment due one month after execution, and the final installment due two months after execution.  Interest on the note equals 10% of the total principal balance, regardless of how long the note is outstanding.  The Company received proceeds of $166,667 during the three months ended June 30, 2014, and the final $83,333 during the three months ended September 30, 2014.  The convertible note matures 6 months after the issuance, at which point the outstanding principal and interest is due. The outstanding balance of the note along with accrued interest is convertible into shares of the Company's common stock at a rate equal to 45% of the lowest trade occurring during the 20 trading days preceding the conversion date. During the three months ended December 31, 2014 Redwood Management, LLC converted $2,992 of the principal amount into 350 shares of common stock so the outstanding balance related to this note amounted to $247,008 as of March 31, 2015.
25


On May 6, 2014, the Company entered into a convertible note payable with KBM Worldwide, Inc. providing for total borrowings of $32,500 which accrue interest at a rate of 8% per annum.  The convertible note matures and is due in full on February 12, 2015 along with any unpaid accrued interest.  The outstanding principal and accrued interest is convertible into shares of common stock at the option of the holder at a conversion rate equal to 61% of the average of the lowest 3 trading prices during the 10 trading days prior to the conversion.  During the three months ended December 31, 2014 KBM Worldwide, Inc. converted $13,075 of principal balance into 2,020 shares of common stock. As of March 31, 2015, the principal balance of the note is $19,425.

On May 12, 2014, the Company entered into a secured convertible promissory note with Typenex Co-Investment, LLC (the "Typenex Note") providing for total borrowings up to $335,000 which accrue interest at a rate of 10% per annum.  All outstanding borrowings mature and are due in 20 months from the issuance date.  The Company received an initial payment of $87,500 on the note issuance date.  The outstanding principal and interest are convertible into shares of common stock at the option of the holder at a conversion rate equal to the lesser of $3,500 per share or 60% of the average of the 3 lowest closing bid prices in the 20 trading days preceding the conversion date.  If the average of the 3 lowest closing bid prices is less than $1,000, then the conversion factor is reduced from 60% to 55%.  The debt holder was also issued warrants on May 12, 2014 in connection with this note payable granting the right to purchase a number of common stock shares equal to $167,500 divided by the market price (defined as the higher of the closing price on the issuance date or the volume weighted average price of the stock for the trading day that is 2 days prior to the exercise date) at an exercise price of $3,500 per share.  The outstanding balance related to this note amounted to $87,500 as of March 31, 2015.

On May 28, 2014, the Company entered into a convertible promissory note with Beaufort Capital Partners LLC providing for borrowings of $125,000.  The convertible promissory note matured on August 28, 2014, at which point the Company will owe $187,500 which includes a total of $62,500 in interest expense.  The outstanding amounts are convertible into shares of common stock at the option of the holder at a conversion rate equal to 60% of the lowest traded price during the prior 20 trading days from the date of the conversion. The balance owed as of March 31, 2015 was $125,000.

On June 13, 2014, the Company entered a convertible debenture agreement with Group 10 Holdings, LLC providing for total borrowing of $55,000 which accrue interest at the rate of 12% per annum. All borrowings mature and are due in one year from the issuance date. The debenture is convertible into shares of common stock at the option of the holder at the conversion rate lesser of 55% discount of the lowest closing bid price during the 25 trading days prior to the date of notice conversion or $0.25 per share.  In connection with the agreement, the Company issued 5 shares of common stock as a commitment fee.  The fair value of the common stock issued amounted to $8,500 which is included in interest expense at March 31, 2015.  During the three months ended December 31, 2014 Group 10 Holdings, LLC converted $990 of principal balance into 300 shares of common stock. The outstanding balance of the note amounted to $54,010 at March 31, 2015.

On June 17, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. for borrowings of $32,500 which bear interest at a rate of 8% per annum.  The outstanding borrowings and accrued interest are payable on March 19, 2015.  The outstanding amounts are convertible into shares of common stock at the debt holder's option at a conversion rate equal to 61% of the average of the lowest three trading prices during the 10 trading days prior to the conversion.    Outstanding balance on the note was $32,500 at March 31, 2015.

On July 18, 2014, the Company entered into a convertible note payable with LG Capital Funding, LLC providing for total borrowings of $90,000, which is payable in 2 installments of $45,000.  Interest on the note equals 8% of the total principal balance. The Company received proceeds of $45,000 on July 22, 2014, which represents the total amounts outstanding as of March 31, 2015.  The convertible note matures 12 months after the issuance on July 17, 2015, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading price during the fifteen trading days prior to the conversion.

On July 24, 2014, the Company entered into a security purchase agreement with ADAR Bays, LLC providing for total borrowings of $71,000, with the first note being of $36,000 and the second note being in the amount of $35,000.  Interest on the note equals 8% of the total principal balance. The Company received proceeds of $36,000 on July 28, 2014, which represents the total amount outstanding as of March 31, 2015.  The convertible note matures 12 months after the issuance on July 23, 2015, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading price during the fifteen trading days prior to the conversion.
26


On August 15, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. providing for total borrowings of $32,500 which bears interest at a rate of 8% per annum.  The convertible note matures on May 15, 2015, at which point the outstanding principal and interest are due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 61% of the average of the 3 lowest trading price during the ten trading days prior to the conversion.   Outstanding balance on the note was $32,500 at March 31, 2015

On September 23, 2014, the Company entered into a convertible promissory note with JSJ Investments, Inc. providing for total borrowings of $44,679 which bears interest at a rate of 15% per annum.  The convertible note matures on March 23, 2015, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 45% of the average of the 3 lowest trading price during the ten trading days prior to the conversion.  During the three months ended September 30, 2014, JSJ Investments, Inc. converted $15,767 of outstanding principal into 282 shares of common stock under the terms of the agreement.  During the three months ended December 31, 2014 JSJ Investments, Inc. converted $29,308 of outstanding principal into 2,483 shares of common stock and as of March 31, 2015, the note had an outstanding principal balance of $0.

The above warrants issued with respect to the Purchase Agreement, dated November 22, 2013, and Typenex Note, dated May 12, 2014, described above have anti-dilution clauses and variable exercise rates that prevent calculation of the ultimate number of shares that may be issued upon exercise, and all of the outstanding convertible note balances described above have variable conversion features that similarly prevented the calculation of the number of shares into which they were convertible.  As a result, the Company accounts for both the conversion feature associated with these notes and the warrants as derivatives.  The Company values these warrants and conversion features using the Black-Scholes method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.

The following summarizes the book value of the convertible notes payable outstanding as of March 31, 2015:
 

   
March 31,
 
   
2015
 
       
       
 Principal balance of convertible notes payable outstanding
 
$
2,985,574
 
         
 Less: discount on convertible notes payable
   
(311,279
)
         
 Convertible notes payable, net
 
$
2,674,295
 

Future scheduled maturities of these notes payable are as follows:

   
Year Ended
 
   
March 31,
 
       
2016
 
$
2,781,024
 
2017
   
204,550
 
     Total
 
$
2,985,574
 
 
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

 Not applicable

27

Item 8.  Financial Statements and Supplementary Data.
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
Board of Directors and Shareholders
Las Vegas Railway Express, Inc.
9480 S. Eastern Avenue, Suite 205
Las Vegas, NV 89123

Opinion on the Financial Statements
We have audited the accompanying balance sheet of Las Vegas Railway Express, Inc. (the "Company") as of March 31, 2015, the related statements of operations, stockholders' deficit and cash flows for the year then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2015, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Emphasis of Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has suffered recurring losses and has no operations which raise substantial doubt about its ability to continue as a going concern.  Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Other Matter
The financial statements of the Company for the year ended March 31, 2014, were audited by another auditor who expressed an unmodified opinion on those statements on June 30, 2014.

/s/ Pinnacle Accountancy Group of Utah
Pinnacle Accountancy Group of Utah

Farmington, Utah
September 18, 2018
We have served as the Company's independent auditor since June 2018.
 
 

28

LAS VEGAS RAILWAY EXPRESS, INC.
BALANCE SHEETS
 
   
March 31,
 
   
2015
 
       
Assets
     
       
Current assets
     
Cash
 
$
2,688
 
Other current assets
   
4,975
 
Total current assets
   
7,663
 
         
Property and equipment, net of accumulated depreciation
   
32,733
 
         
Other assets
       
   Deposits
   
4,464
 
Total assets
 
$
44,860
 
         
Liabilities and Stockholders' Deficit
       
         
Current liabilities
       
Accounts payable and accrued expenses
 
$
1,425,715
 
Derivative liability
   
2,243,870
 
Notes payable - related parties
   
106,138
 
Current portion of convertible notes payable, net of debt discount
   
2,674,295
 
Total current liabilities
   
6,450,018
 
Long-term portion of convertible debt, net of current portion
   
204,550
 
Total liabilities
   
6,654,568
 
         
Commitments and contingencies
       
         
Stockholders' deficit
       
Common stock, $0.0001 par value, 10,000,000,000 shares authorized, 47,736 shares issued and outstanding as of March 31, 2015
   
5
 
Additional paid-in capital
   
34,682,175
 
Accumulated deficit
   
(41,291,888
)
Total stockholders' deficit
   
(6,609,708
)
Total liabilities and stockholders' deficit
 
$
44,860
 


See accompanying notes to condensed financial statements
29

 
LAS VEGAS RAILWAY EXPRESS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 2015 AND 2014

   
For The Year
 Ended
 
 
 
March 31,
 
 
 
2015
 
 
     
Revenues
 
$
107,548
 
Cost of sales
   
64,535
 
Gross profit
   
43,013
 
         
Operating Expenses:
       
Compensation and payroll taxes
   
2,647,296
 
Selling, general and administrative
   
2,674,500
 
Professional fees
   
1,180,929
 
Depreciation expense
   
10,334
 
  Total operating expenses
   
6,513,059
 
         
Loss from operations
   
(6,470,046
)
         
Other income (expense)
       
Interest expense
   
(2,738,394
)
Loss on disposal of fixed asset
   
(645,277
)
Excess derivative liability gain
   
1,391,203
 
Loss on change in derivative liability
   
(1,201,729
)
   Total other expense
   
(3,194,197
)
         
Net loss from operations before provision for income taxes
   
(9,664,243
)
Provision for income taxes
   
-
 
         
Net loss
 
$
(9,664,243
)
         
Net loss per share, basic and diluted
 
$
(527
)
       
Weighted average number of common shares outstanding, basic and diluted
   
18,350
 


See accompanying notes to condensed financial statements
30

LAS VEGAS RAILWAY EXPRESS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
 
                     
Additional
             
   
Common Stock
         
Paid-in
   
Accumulated
       
   
Shares
   
Amount
   
Subscriptions
   
Capital
   
Deficit
   
Total
 
Balance, March 31, 2014
   
1,604
   
$
0.16
   
$
-
   
$
29,493,677
   
$
(31,627,643
)
 
$
(2,133,968
)
                                                 
  Stock issued for cash
   
9,951
     
1
     
-
     
567,349
     
-
     
567,350
 
  Stock issued for compensation
   
160
     
0
     
-
     
130,465
     
-
     
130,465
 
  Stock issued for debt
   
12,287
     
1
     
-
     
584,195
     
-
     
584,196
 
  Stock issued for services
   
946
     
0
     
-
     
291,227
     
-
     
291,227
 
  Exercise of options
   
3,175
     
0
     
-
     
2,840,645
     
-
     
2,840,645
 
  Stock issued for notes conversion
   
19,171
     
2
     
-
     
441,226
     
-
     
441,228
 
 Warrants issued for services
   
-
     
-
     
-
     
329,416
     
-
     
329,416
 
 Warrants exercised
   
442
     
0
     
-
     
3,975
     
-
     
3,975
 
 Net loss
   
-
     
-
     
-
     
-
     
(9,664,243
)
   
(9,664,243
)
                                                 
Balance March 31, 2015
   
47,736
     
4.77
     
-
     
34,682,175
     
(41,291,886
)
 
$
(6,609,708
)
 
See accompanying notes to financial statements
31

LAS VEGAS RAILWAY EXPRESS, INC.
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MARCH 31, 2015 AND 2014

   
For The
 Year Ended
 
   
March 31,
 
   
2015
 
       
Cash flows from operating activities
     
Net loss
 
$
(9,664,243
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
Depreciation and amortization
   
10,334
 
Amortization of discounts on note payable
   
1,729,612
 
Amortization of debt issuance costs
   
250,000
 
Impairment charge
   
645,277
 
Excess derivative liability gain
   
(1,391,203
)
Loss on change in derivative liability
   
1,201,729
 
Stock issued for services
   
291,227
 
Stock option compensation
   
2,840,645
 
Stock issued for compensation
   
130,465
 
Debt conversion expense
   
425,640
 
Warrants issued for services
   
329,416
 
         
Changes in operating assets and liabilities:
       
Other current assets
   
99,264
 
Other assets
   
17,921
 
Accounts payable and accrued expenses
   
1,272,408
 
         
Net cash used in operating activities
   
(1,811,508
)
         
Cash flows from investing activities
       
Purchases of property and equipment
   
(3,937
)
Net cash used in investing activities
   
(3,937
)
         
Cash flows from financing activities
       
Proceeds from sale on shares of common stock
   
567,350
 
Proceeds from exercise of warrants
   
4,417
 
Proceeds from convertible notes payable
   
1,052,318
 
Proceeds from notes payable - related parties
   
106,138
 
         
Net cash provided by financing activities
   
1,730,223
 
         
Net change in cash
   
(85,222
)
Cash, beginning of the period
   
87,910
 
Cash, end of the period
 
$
2,688
 
         
Supplemental disclosure of cash flow information:
 
Interest paid
 
$
13,963
 
Income taxes paid
 
$
-
 
         
Supplemental disclosure of non-cash investing and financing transactions:
 
Accounts payable converted to convertible notes payable
 
$
278,494
 
Stock issued for debt and accrued interest
 
$
596,482
 
Stock issued for notes conversion
 
$
339,744
 

See accompanying notes to condensed financial statements
32

 
LAS VEGAS RAILWAY EXPRESS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2015 and 2014
 
(1)  Description of Business:

Las Vegas Railway Express, Inc.  (the "Company") was formed as a Delaware corporation in March 9, 2007 as Corporate Outfitters, Inc., a development stage company. On November 3, 2008, pursuant to a common stock purchase agreement, the Company acquired 100% of the outstanding capital stock of Liberty Capital Asset Management, a Nevada corporation, formed in July of 2008 as a holding company for all the assets of CD Banc LLC in contemplation of the company going public via a reverse merger into a publicly trading corporation.  CD Banc LLC was formed in 2003 as a Nevada limited liability corporation with the purpose of acquiring real estate assets and holding them for long-term appreciation.  On January 21, 2010, the Company completed a share exchange and asset purchase agreement with Las Vegas Railway Express, a Nevada Corporation, and subsequently changed its name from Liberty Capital Asset Management, Inc. to Las Vegas Railway Express, Inc.

Our company, Las Vegas Railway Express, Inc., is establishing a new and innovative passenger train service between Las Vegas and the Los Angeles metropolitan area by hiring Amtrak to haul our passenger cars for a fee, between Los Angeles and Las Vegas. The proposed service, called the "X Train," will introduce a "Las Vegas" style experience on the train, while traversing the route in approximately 5 ½ hours. We will be profitable on the very first run based on our pricing model.

(2)  Summary of Significant Accounting Policies:
 
Basis of Presentation:

The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). 

Effective on December 2, 2013, the Company executed a one-for-twenty reverse split of the Company's issued and outstanding shares of common stock.  All references to number of shares and per share amounts included in this report give effect to the reverse stock split.
    
Going Concern:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net loss of $9,664,243 for the year ended March 31, 2015.  The Company also has an accumulated deficit of $41,291,888 and a negative working capital of $6,442,355 as of March 31, 2015, as well as outstanding convertible notes payable of $2,985,574, before debt discount of $311,279 and $204,550 is due during the year ending March 31, 2016.  Management believes that it will need additional equity or debt financing to be able to implement the business plan.  Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.

Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability.  The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

33

Revenue Recognition
 
The Company recognizes revenue from the sale of products and services in accordance with ASC 606," Revenue Recognition " following the five steps procedure:
 
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
 
The Company recognizes revenue when it satisfies its obligation by transferring control of the good or service to the customer. A performance obligation is satisfied over time if one of the following criteria are met:
 
 
a.
the customer simultaneously receives and consumes the benefits as the entity performs;
 
b.
the entity's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
 
c.
the entity's performance does not create an asset with an alternative use to the entity, and the entity has an enforceable right to payment for performance completed to date.

Risks and Uncertainties:

The Company generates no revenues.  The Company operates in an industry that is subject to intense competition and potential government regulations.  Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company's operations.
 
Use of Estimates:

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods.  Amounts could materially change in the future.

Cash and Cash Equivalents:

The Company considers all highly liquid holdings with maturities of three months or less at the time of purchase to be cash equivalents.

Property and Equipment:

Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  The Company expenses all purchases of equipment with individual costs of under $500.


Long-Lived Assets:

In accordance with FASB ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.
34


Basic and Diluted Loss Per Share:

In accordance with FASB ASC 260, "Earnings Per Share," the basic loss per common share is computed by dividing the net loss available to common stockholders after preferred stock dividends, by the weighted average common shares outstanding during the period.  Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock.  Common stock equivalents have not been included in the diluted earnings per share computation for the year ended March 31, 2015 as the amounts are anti-dilutive.  As of March 31, 2015, the Company had 10 outstanding options which were excluded from the computation of net loss per share because they are anti-dilutive.  As of March 31, 2015, the Company also had convertible debt that is convertible into 290,436 of common stock which was excluded from the computation.  As of March 31, 2015, the Company had 465 outstanding warrants, which were also excluded from the computation because they were anti-dilutive.

Income Taxes:

The Company accounts for income taxes under FASB ASC 740 " Income Taxes ."   Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The deferred tax liability no longer existed as of March 31, 2015.
 
The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of March 31, 2015, the Company has not established a liability for uncertain tax positions.

Share Based Payment:

The Company issues stock, options and warrants as share-based compensation to employees and non-employees.

The Company accounts for its share-based compensation to employees in accordance FASB ASC 718.  Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. 

The Company accounts for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 " Equity - Based Payments to Non-Employees ." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: ( a ) the goods or services received; or ( b ) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

The Company values stock compensation based on the market price on the measurement date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.

35

Derivative Liabilities:

In connection with the private placement of Convertible Notes beginning in February 2013, the Company became contingently obligated to issue shares of common stock in excess of the 50 thousand authorized under the Company's certificate of incorporation.  Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued on and subsequent to November 30, 2012 had been accounted for as derivative liabilities.

The Company also has certain warrants and embedded conversion options in notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and four outstanding notes payable that had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The Company values these warrants and embedded conversion options in notes payable using the binomial lattice method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations (see Note 7).

Fair Value of Financial Instruments:

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable and derivative liabilities.  Derivative liabilities are recorded at fair value.  The principal balance of notes payable approximates fair value because current interest rates and terms offered to the Company for similar debt are substantially the same.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

36


(3)  Property and Equipment:

Property and equipment consisted of the following as of March 31, 2015:
 
   
March 31,
 
   
2015
 
       
       
Office equipment
 
$
28,488
 
Computer software
   
24,167
 
Transportation equipment under construction
   
645,277
 
Impairment charge
   
(645,277
)
     
52,655
 
Less: accumulated depreciation
   
(19,922
)
         
   
$
32,733
 
 
(4)  Notes Payable – Related Parties:
 
A summary of outstanding notes payable is as follows:
 
   
March 31,
 
   
2015
 
     
Promissory notes dated  June 20, 2014 to affiliates bearing interest at 10% per month, payable on demand
 
$
72,500
 
       
Promissory note dated February 22, 2015 to employee bearing interest at 10% per month, payable on demand
 
$
33,638
 
         
 Total outstanding notes payable
 
$
106,138
 
 
(5)  Convertible Notes Payable:

A description of outstanding convertible notes payable is as follows:

On October 1, 2013, the Company entered into a promissory note with JMJ Financial which provides for the Company to borrow up to $350,000 in principal (the "JMJ Note").  As of March 31, 2014, the Company had borrowed $150,000 under this Promissory Note.  Outstanding borrowings mature two years from the effective date of each advance.  If the outstanding balance of the note is repaid by the Company on or before 90 days from the effective date of the borrowing, the interest charged is 0%.  However, if the Company does not repay the note within 90 days, a one-time interest charge of 12% shall be applied to the outstanding principal sum.  The outstanding balance of the note may be converted into common stock at the option of the debt holder at a rate equal to the lower of $450 per share, or 60% of the lowest trading price in the 25 days trading days previous to the conversion date, subject to other adjustments in the agreement.  During the three months ended June 30, 2014, the Company borrowed an additional $40,000 under the JMJ Note.  During the three months ended June 30, 2014, JMJ Financial converted $69,785 of outstanding principal into 79 shares of common stock under the terms of the agreement.  During the three months ended September 30, 2014, JMJ Financial converted an additional $39,580 of outstanding principal into 380 shares of common stock. During the three months ended December 31, 2014 JMJ converted $20,014 of outstanding principal into 1,542 shares of common stock and as of March 31, 2015, the outstanding balance of the JMJ Note amounted to $60,621.

On November 22, 2013, the Company, entered into and closed a purchase agreement (the "Purchase Agreement") with an institutional investor, pursuant to which the Company sold to the investor a senior secured convertible promissory note in the principal amount of $1,750,000 (the "Note"), and warrants to purchase 300,000 shares of common stock (the "Warrants"), for an aggregate purchase price of $1,750,000. The Note was scheduled to mature on June 30, 2014, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company's option (subject to certain conditions), and is convertible into shares of the Company's common stock at a conversion price equal to $350, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect.  The Company's obligations under the Note are secured by substantially all of the Company's assets.  The Warrants have a five-year term, are exercisable on a cash or cashless basis, and have an exercise price equal to $10,000, subject to adjustment in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the exercise price then in effect. On April 11, 2014, total principal and accrued interest of $1,818,055 were exchanged for a new note described below.
37


On March 24, 2014, the Company entered into a Convertible Promissory Note with Iconic Holdings, LLC (the "Iconic Note") in which the Company has access to borrow a total principal amount of $165,000.  All borrowings incur interest at a rate of 8% per annum, which is payable as of the maturity date of March 24, 2015, currently in default.  The initial borrowing made by the Company amounted to $55,000, which represented the amount outstanding on the Iconic Note as of March 31, 2014.  At the option of the debt holder, the outstanding balance may be converted at any time into shares of the Company's common stock at a conversion rate equal to the lower of $5,000 or 60% of the lowest trading price of the Company's common stock during the 25 consecutive trading days prior to conversion election date.  During the three months ended June 30, 2014, the Company borrowed an additional $110,000 under the Iconic Note.  During the three months ended December 31, 2014 Iconic Holdings, LLC converted $44,240 of the principal balance into 4,753 shares of common stock. The outstanding principal balance as of March 31, 2015 amounted to $120,760.

On March 25, 2014, the Company entered into a convertible note agreement with KBM Worldwide, Inc. (the "KBM Note") for total principal borrowings of $68,000.  The amounts are due nine months after the issuance of the note on December 25, 2014, and bear interest at a rate of 8% per annum.  At the option of the debt holder, beginning 180 days after the issuance of the note, the debt holder may convert the outstanding balance of the KBM Note into shares of the Company's common stock at a conversion rate equal to 61% of the average of the lowest three closing trading prices during the 10-trading day period prior to the conversion election date.  During the three months ended September 30, 2014, KBM Worldwide, Inc. converted $10,000 of outstanding principal into 88 shares of common stock under the terms of the agreement.  During the three months ended December 31, 2014 KBM Worldwide, Inc. converted $58,000 of principal balance into 3,988 shares of common stock leaving an outstanding principal balance of $0 as of March 31, 2015.

On April 2, 2014, the Company entered into a convertible promissory note for $100,000 with Beaufort Capital Partners LLC with a maturity date of October 2, 2014, currently in default.  The note is convertible into shares of the Company's common stock at a discount of 42% of the lowest traded price during the 5 trading days preceding the conversion date.  During the three months ended December 31, 2014 Beaufort Capital Partners LLC converted $14,300 of the principal balance into 1,908 shares of common stock leaving $85,700 outstanding as of March 31, 2015.

On April 11, 2014, the Company entered into a Note Exchange Agreement with the debt holder holding the $1,750,000 senior secured convertible promissory note originally issued on November 22, 2013 under the Purchase Agreement described above.  Under the terms of the Note Exchange Agreement, the original senior secured convertible promissory note is cancelled and replaced with a new note for $2,000,000.  The new note matured on November 30, 2014, currently in default, bears interest at the rate of 10% per year payable on maturity in cash or shares of common stock at the Company's option (subject to certain conditions), and is convertible into shares of the Company's common stock at a conversion price equal to $450, subject to adjustments in the event of future stock splits, stock dividends, and similar transactions, or in the event of subsequent equity sales by the Company at a price lower than the conversion price then in effect.  Under the new note, the Company's obligations are secured by substantially all of the Company's assets, excluding any railcar assets. The difference between the book value of the principal and accrued interest of the old note of $1,818,055 and the value of the new note of $2,000,000.  As of March 31, 2015, the note had an outstanding principal balance of $2,000,000.

On April 17, 2014, the Company entered into a convertible note payable with Vista Capital Investments, LLC providing for borrowings up to $250,000 with a maturity date of April 17, 2016.  The note has a one-time interest charge of 12% and is due on the maturity date. The outstanding balance of the note along with accrued interest is convertible into shares of the Company's common stock at a rate equal to the lesser of $2,500 or 60% of the lowest trade occurring during the 25 trading days preceding the conversion date.  The Company received proceeds under this convertible note payable of $50,000 in April 2014.  The Company converted $10,450 of the principal balance into 1,000 shares of common stock during the year ended March 31, 2015.  Balance at March 31, 2015 was $39,550.
38


On April 30, 2014, the Company entered into a convertible note payable with Redwood Management, LLC providing for total borrowings of $250,000, which is payable in 3 installments of $83,333, the first due installment upon execution of the note, the second installment due one month after execution, and the final installment due two months after execution.  Interest on the note equals 10% of the total principal balance, regardless of how long the note is outstanding.  The Company received proceeds of $166,667 during the three months ended June 30, 2014, and the final $83,333 during the three months ended September 30, 2014.  The convertible note matures 6 months after the issuance, at which point the outstanding principal and interest is due. The outstanding balance of the note along with accrued interest is convertible into shares of the Company's common stock at a rate equal to 45% of the lowest trade occurring during the 20 trading days preceding the conversion date. During the three months ended December 31, 2014 Redwood Management, LLC converted $2,992 of the principal amount into 350 shares of common stock so the outstanding balance related to this note amounted to $247,008 as of March 31, 2015.

On May 6, 2014, the Company entered into a convertible note payable with KBM Worldwide, Inc. providing for total borrowings of $32,500 which accrue interest at a rate of 8% per annum.  The convertible note matures and is due in full on February 12, 2015, currently in default, along with any unpaid accrued interest.  The outstanding principal and accrued interest are convertible into shares of common stock at the option of the holder at a conversion rate equal to 61% of the average of the lowest 3 trading prices during the 10 trading days prior to the conversion.  During the three months ended December 31, 2014 KBM Worldwide, Inc. converted $13,075 of principal balance into 2,020 shares of common stock. As of March 31, 2015, the principal balance of the note is $19,425.

On May 12, 2014, the Company entered into a secured convertible promissory note with Typenex Co-Investment, LLC (the "Typenex Note") providing for total borrowings up to $335,000 which accrue interest at a rate of 10% per annum.  All outstanding borrowings mature and are due in 20 months from the issuance date.  The Company received an initial payment of $87,500 on the note issuance date.  The outstanding principal and interest are convertible into shares of common stock at the option of the holder at a conversion rate equal to the lesser of $3,500 per share or 60% of the average of the 3 lowest closing bid prices in the 20 trading days preceding the conversion date.  If the average of the 3 lowest closing bid prices is less than $1,000, then the conversion factor is reduced from 60% to 55%.  The debt holder was also issued warrants on May 12, 2014 in connection with this note payable granting the right to purchase a number of common stock shares equal to $167,500 divided by the market price (defined as the higher of the closing price on the issuance date or the volume weighted average price of the stock for the trading day that is 2 days prior to the exercise date) at an exercise price of $3,500 per share.  The outstanding balance related to this note amounted to $87,500 as of March 31, 2015.

On May 28, 2014, the Company entered into a convertible promissory note with Beaufort Capital Partners LLC providing for borrowings of $125,000.  The convertible promissory note matured on August 28, 2014, currently in default, at which point the Company will owe $187,500 which includes a total of $62,500 in accrued interest.  The outstanding amounts are convertible into shares of common stock at the option of the holder at a conversion rate equal to 60% of the lowest traded price during the prior 20 trading days from the date of the conversion. The balance owed as of March 31, 2015 was $125,000.

On June 13, 2014, the Company entered a convertible debenture agreement with Group 10 Holdings, LLC providing for total borrowing of $55,000 which accrue interest at the rate of 12% per annum. All borrowings mature and are due in one year from the issuance date. The debenture is convertible into shares of common stock at the option of the holder at the conversion rate of the lesser of 55% discount of the lowest closing bid price during the 25 trading days prior to the date of notice conversion or $2,500 per share.  In connection with the agreement, the Company issued 50,000 shares of common stock as a commitment fee.  The fair value of the common stock issued amounted to $8,500 which is included in interest expense at March 31, 2015.  During the three months ended December 31, 2014 Group 10 Holdings, LLC converted $990 of principal balance into 300 shares of common stock. The outstanding balance of the note amounted to $54,010 at March 31, 2015.
39


On June 17, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. for borrowings of $32,500 which bear interest at a rate of 8% per annum.  The outstanding borrowings and accrued interest are payable on March 19, 2015, currently in default.  The outstanding amounts are convertible into shares of common stock at the debt holder's option at a conversion rate equal to 61% of the average of the lowest three trading prices during the 10 trading days prior to the conversion. The outstanding balance on the note was $32,500 at March 31, 2015.

On July 18, 2014, the Company entered into a convertible note payable with LG Capital Funding, LLC providing for total borrowings of $90,000, which is payable in 2 installments of $45,000 each.  Interest on the note equals 8% of the total principal balance. The Company received proceeds of $45,000 on July 22, 2014, which represents the total amounts outstanding as of March 31, 2015.  The convertible note matures 12 months after the issuance on July 17, 2015, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading prices during the fifteen trading days prior to the conversion.

On July 24, 2014, the Company entered into a security purchase agreement with ADAR Bays, LLC providing for total borrowings of $71,000, with the first note being of $36,000 and the second note being in the amount of $35,000.  Interest on the note equals 8% of the total principal balance. The Company received proceeds of $36,000 on July 28, 2014, which represents the total amount outstanding as of March 31, 2015.  The convertible note matures 12 months after the issuance on July 23, 2015, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 57% of the lowest trading price during the fifteen trading days prior to the conversion.

On August 15, 2014, the Company entered into a convertible promissory note with KBM Worldwide, Inc. providing for total borrowings of $32,500 which bears interest at a rate of 8% per annum.  The convertible note matures on May 15, 2015, at which point the outstanding principal and interest are due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 61% of the average of the 3 lowest trading prices during the ten trading days prior to the conversion.   Outstanding balance on the note was $32,500 at March 31, 2015.

On September 23, 2014, the Company entered into a convertible promissory note with JSJ Investments, Inc. providing for total borrowings of $44,679 which bears interest at a rate of 15% per annum.  The convertible note matures on March 23, 2015, currently in default, at which point the outstanding principal and interest is due.  The outstanding amounts are convertible into shares of common stock at a conversion rate equal to 45% of the average of the 3 lowest trading prices during the ten trading days prior to the conversion.  During the three months ended September 30, 2014, JSJ Investments, Inc. converted $15,767 of outstanding principal into 282 shares of common stock under the terms of the agreement.  During the three months ended December 31, 2014 JSJ Investments, Inc. converted $29,308 of outstanding principal into 2,483 shares of common stock and as of March 31, 2015, at which time the note had an outstanding principal balance of $0.

The above warrants issued with respect to the Purchase Agreement, dated November 22, 2013, and Typenex Note, dated May 12, 2014, described above have anti-dilution clauses and variable exercise rates that prevent calculation of the ultimate number of shares that may be issued upon exercise, and all of the outstanding convertible note balances described above have variable conversion features that similarly prevented the calculation of the number of shares into which they were convertible.  As a result, the Company accounts for both the conversion feature associated with these notes and the warrants as derivatives.  The Company values these warrants and conversion features using the Black-Scholes method.  The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations.

The following summarizes the book value of the convertible notes payable outstanding as of March 31, 2015:
40



   
March 31,
 
   
2015
 
       
       
 Principal balance of convertible notes payable outstanding
 
$
2,985,574
 
         
 Less: discount on convertible notes payable
   
(311,279
)
         
 Convertible notes payable, net
 
$
2,674,295
 
 

Future scheduled maturities of these notes payable are as follows:

   
Year Ended
 
   
March 31,
 
       
2016
 
$
2,781,024
 
2017
   
204,550
 
     Total
 
$
2,985,574
 

In connection with the Convertible Notes, the Company incurred debt issuance costs, which primarily represented commissions paid to acquire the debt.  These costs have been capitalized and are being amortized through the maturity date of the notes.   Amortization of debt discount amounted to $250,000 for the year ended March 31, 2015, which is reflected as interest expense on the accompanying statement of operations.  
 
(6)  Commitments and Contingencies:

Operating Leases

The Company leases its facilities under a rental agreement that expires on February 28, 2017.  The rental agreement includes common area maintenance, property taxes and insurance.  

Future annual minimum payments under these operating leases are as follows:
 
Years ending March 31,
 
       
2015
 
$
386,554
 
2016
   
36,161
 
2017
   
39,125
 
Total
 
$
461,840
 
Rental expense under operating leases for the years ended March 31, 2015 $386,554.

Litigation

In the ordinary course of business, the Company may be or has been involved in legal proceedings from time to time. As of the date of this annual report, there have been no material changes to any legal proceedings relating to the Company which previously were not reported.
 
41

(7)  Derivative Instruments:

Excess Shares

In connection with the private placement of Convertible Notes beginning in February 2013 (see Note 5), the Company became contingently obligated to issue shares in excess of the 20 thousand shares authorized by stockholders. Consequently, the ability to settle these obligations with shares would be unavailable causing these obligations to potentially be settled in cash. This condition creates a derivative liability.

The Company has a sequencing policy regarding share settlement wherein instruments with the earliest issuance date would be settled first. The sequencing policy also considers contingently issuable additional shares, such as those issuable upon a stock split or anti-dilution, to have an issuance date to coincide with the event giving rise to the additional shares.

Using this sequencing policy, all instruments convertible into common stock, including warrants and the conversion feature of notes payable, issued subsequent to February 19, 2013 are classified as derivative liabilities.

Other Derivatives

The Company has certain warrants and notes payable with elements that qualify as derivatives. The warrants have anti-dilution clauses that prevent calculation of the ultimate number of shares that may be issued upon exercise, and two of the notes payable had a variable conversion feature that similarly prevented the calculation of the number of shares into which they were convertible.

The derivative liability, as it relates to the different instruments, is shown in the following table:
 
 
   
For The Year Ended March 31, 2015
 
           
          Conversion
 Feature
       
         
of
       
   
Warrants
   
Notes Payable
   
Total
 
                   
Beginning balance, April 1
 
$
205,248
   
$
992,770
   
$
1,198,018
 
Additional issuances
   
148,903
     
1,060,908
     
1,209,811
 
Exercised/converted
   
-
     
-
     
-
 
Reclassification to equity
   
-
     
-
     
-
 
Excess derivative liability expense
   
-
     
1,391,203
     
1,391,203
 
Gain on change in value of derivative liability
   
(353,433
)
   
(1,201,729
)
   
(1,555,162
)
Ending balance, March 31
 
$
718
   
$
2,243,152
   
$
2,243,870
 


   
Warrants
   
Notes Payable
 
   
For The Year Ended
   
For The Year Ended
 
   
March 31, 2015
   
March 31, 2015
 
             
Expected life in years
   
0.7 - 4.1
     
0.1 - 1.0
 
Stock price volatility
   
220.18 - 369.30
%
   
163.84% - 369.30
%
Discount rate
   
0.25% - 1.65
%
   
0.12% - 0.25
%
Expected dividends
 
None
   
None
 
Forfeiture rate
   
0
%
   
0
%
                 

42

(8)  Equity:

Common Stock

The Company is authorized to issue 10,000,000,000 shares of common stock and no other class of stock at this time.   The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and are not entitled to cumulate their votes in the election of directors.  The holders of common stock are entitled to any dividends that may be declared by the Board of Directors out of funds legally available therefore subject to the prior rights of holders of any outstanding shares of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock.  Holders of common stock have no preemptive or other subscription rights and no right to convert their common stock into any other securities.
 
During the year ended March 31, 2015, the company issued an aggregate of 12,287 shares of common stock for the conversion of $584,196 in convertible notes payable.

During the year ended March 31, 2015, the Company issued 160 shares of common stock as employee compensation for total expense of $130,465, for services 946 shares of common stock for $291,227 and as for exercise of options the Company issued 3,175 shares of common stock in total expense of $2,840,645.
 
During the year ended March 31, 2015, the Company issued 442 shares of common stock, respectively, for the exercise of warrants.  

During the year ended March 31, 2015, the Company sold an aggregate of 9,951 shares of common stock for total proceeds of $567,350.

During the year ended March 31, 2015, the Company issued 19,171 shares of common stock for the conversion of $441,228 in convertible notes.

On May 30, 2014, the Company entered into a Debt Securities Assignment and Purchase agreement, along with a Securities Exchange and Settlement Agreement with Beaufort Capital Partners LLC ("Beaufort").  Per the terms of the agreements, the Company assigned $105,588 of outstanding accounts payable to Beaufort, in exchange for allowing Beaufort to convert the amounts into common stock, at a date of their choosing, at a rate equal to 40% of the lowest traded price over the 20 days previous to the conversion date.  During the year ended March 31, 2015, Beaufort elected to convert $89,543 into 736 shares of common stock per the terms of the agreement.  As of March 31, 2015, shares for the conversion have not been issued and the balance of $15,713 is included in stock payable.

On August 8, 2014, the Company entered into Debt Securities Assignment with Macallan Partners LLC ("Macallan") which provides for the assignment of $20,000 of liabilities from the Company to Macallan in exchange for allowing Macallan to convert the amount into 1,300,000 shares of common stock at the set price of $154. The difference between the conversion amount of $20,000 and the fair value of the shares issued amounted to $45,000, and was recorded as interest expense during the year ended March 31, 2015.

On September 12, 2014, the Company entered into Debt Securities Assignment with Macallan Partners LLC ("Macallan") which provides for the assignment of $15,000 of liabilities from the Company to Macallan in exchange for allowing Macallan to convert the amount into 2,000,000 shares of common stock at the set price of $75. The difference between the conversion amount of $15,000 and the fair value of the shares issued amounted to $51,000, and was recorded as interest expense during the year ended March 31, 2015.

On October 6, 2014, the Company entered into Assignment Agreement with JSJ Investments, which provides for the assignment of $25,780 of liabilities from the Company to JSJ Investments in exchange for allowing JSJ Investments to convert the amount into shares of common stock at the at a rate equal to 45% of the lowest traded price over the 20 days previous to the conversion date.   As of March 31, 2015, shares for the conversion have not been issued and the balance of $25,780 is included in stock payable.
43


On November 24, 2014, the Company entered into Assignment and Assumption Agreement with Microcap Equity Group, LLC, which provides for the assignment of $41,800 of liabilities from the Company to Microcap Equity Group, LLC in exchange for allowing Microcap Equity Group, LLC to convert the amount into shares of common stock at the at a rate equal to 50% of the lowest traded price over the 20 days previous to the conversion date.  As of March 31, 2015, shares for the conversion have not been issued and the balance of $41,800 is included in stock payable.

On January 15, 2015, the Company entered into Assignment and Assumption Agreement with Microcap Equity Group, LLC, which provides for the assignment of $70,940 of liabilities from the Company to Microcap Equity Group, LLC in exchange for allowing Microcap Equity Group, LLC to convert the amount into shares of common stock at the at a rate equal to 50% of the lowest traded price over the 20 days previous to the conversion date.  During the year ended March 31, 2015, Microcap Equity Group, LLC elected to convert $46,300 into 11,222 shares of common stock per the terms of the agreement.  As of March 31, 2015, shares for the remaining convertible debt had not been issued and the balance of $24,640 is included in stock payable.

As of March 31, 2015, shares of common stock for the amount of $120,652 for debt conversion were not issued. As the amounts are required to be paid in common stock, the Company has classified these amounts as "Common Stock Payable", a component of stockholders' equity on the accompanying condensed balance sheet as of March 31, 2015.
           
Warrants

During the year ended March 31, 2015, the Company issued 750 shares of common stock warrants, of which 75 shares were issued in connection with convertible promissory notes and 675 shares were issued in connection with stock purchase agreements.

 The following summarizes the Company's warrant activity during the year ended March 31, 2015:

   
Warrants
 
Outstanding - March 31, 2013
   
292
 
         
Granted
   
154
 
Exercised
   
(2
)
Cancelled
   
(288
)
Outstanding - March 31, 2014
   
157
 
         
Granted
   
750
 
Exercised
   
(442
)
Cancelled
   
-
 
Outstanding - March 31, 2015
   
465
 

Average exercise price of the warrants was $14,514 as of March 31, 2015.
 
 (9)  Share Based Compensation:
 
Stock-Option Plan

The Company's 2015 Stock Option Plan provides for the issuance of a total of 1 million shares of common stock at the price of $0.0001 per share. Employees, who share the responsibility for the management growth or protection of the business of the Company, are eligible to receive options which are approved by the Board of Directors.  These options are exercisable for a five-year period from the date of the grant.

44

Employment Agreements

The Company has an employment agreement with Michael Barron, the CEO and President of the Company, which provides for an annual salary of $200,000.  In addition, Mr. Barron is entitled to receive an incentive or performance bonus equal to 17% of all outstanding shares of common stock. His employment agreement provides that if we terminate him without cause, he is entitled to receive a lump sum payment equal to twice his annual salary plus the present value of a performance bonus computed on the basis that we achieve all of our performance targets.  Mr. Barron's employment agreement commenced as of February 1, 2015.

The Company has an employment agreement with Wanda Witoslawski which requires her to perform the duties of Chief Financial Officer and Treasurer of the Company for the duration of the employment agreement.  During the term of this Agreement, the Company agrees to pay Ms. Witoslawski a base salary at the rate of $180,000 per year.  In addition, Ms. Witoslawski is entitled to receive an incentive or performance bonus equal to 12% of all outstanding shares of common stock. Her employment agreement provides that if we terminate her without cause, she is entitled to receive a lump sum payment equal to twice her annual salary plus the present value of a performance bonus computed on the basis that we achieve all of our performance targets.  Mrs. Witoslawski's employment agreement commenced as of February 1, 2015.
   
(10)  Income Taxes:

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of March 31, 2015, the Company has not established a liability for uncertain tax positions.

Any uncertain tax positions would be related to tax years that remain open and subject to examination by the relevant tax authorities.  The Company has no liabilities related to uncertain tax positions or unrecognized benefits as of the year end March 31, 2015.  The Company has not accrued for interest or penalties associated with unrecognized tax liabilities.
 
As of March 31, 2015, the Company had federal net operating loss carry forwards of approximately $41.01 million, which may be available to offset future taxable income for tax purposes.  These net operating loss carry forwards begin to expire in 2027 through 2032.  This carry forward may be limited upon the ownership change under IRC Section 382.

(11)  Related-Party Transactions:
 
Michael A. Barron, the CEO and President of the Company, is a 100% owner and President of Allegheny Nevada Holdings Corporation, "Allegheny".  The Company was indebted to Allegheny by a certain promissory note with 10% monthly interest.   As of March 31, 2015, the balance of the note was $20,400 and the accrued interest was $9,204.

Dianne David, the Company's Director of Asset Development, is the spouse of the CEO, Michael A. Barron and as of March 31, 2015 holds a promissory note with 10% monthly interest and as of March 31, 2015 the principal balance is $33,638 and accrued interest of $2,922. Dianne David is a 100% owner of Eclipse Holding, which holds a promissory note, dated June 19, 2014 with a balance of $23,000 and accrued interest of $16,100 as of March 31, 2015

Wanda Witoslawski, the CFO of the Company, holds a promissory note of $29,100 with 10% monthly interest, which equals to $18,772 as of March 31, 2015.
45

 
(12)  Subsequent Event

On April 17, 2015, the Company held special meeting in which the increase of authorized shares from 500,000,000 to 10,000,000,000.

During the quarter ended June 30, 2015, the Company sold 151,250 shares of common stock for $175,000.

During the quarter ended June 30, 2015, the Company issued 76,612 shares of common stock for promissory note conversions of $111,345.

During the quarter ended June 30, 2015, the Company issued 38,996 shares of common stock to employees per employment agreements.

During the quarter ended June 30, 2015, the Company issued 412,947 shares of common stock for conversion of debt of $373,576.
 
 
Item 9.  Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.
 
Item 9A.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our CEO and our CFO, evaluated the effectiveness of our disclosure controls and procedures as March 31, 2015.  Based on that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2015 such that material information required to be disclosed is made known to management and others, as appropriate, to allow timely decision regarding required disclosure and that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
 
Management's Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
 
Our management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company's internal control over financial reporting as of March 31, 2015. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this evaluation, our management, with the participation of the CEO and CFO, concluded that, as of March 31, 2015, our internal control over financial reporting was not effective.
 
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to an exemption for smaller reporting companies under Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
 
Changes in Internal Control over Financial Reporting .

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
46


Item 9B.  Other Information

None.
 
PART III

Item 10.  Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

The following table sets forth information regarding our executive officers and directors:

Name
Age
Office
 
 
 
Michael A. Barron
64
Chairman of the Board of Directors, Chief Executive Officer
Dr. Harry Teng
52
Director
Louis M. Schillinger
65
Director
Wanda Witoslawski
50
Chief Financial Officer and Treasurer

Directors hold office for a period of one year from their election at the annual meeting of stockholders and until their successors is duly elected and qualified. Officers are elected by, and serve at the discretion of, the Board of Directors. None of the above individuals has any family relationship with any other.

Set forth below is a brief description of the background and business experience of each of our executive officers and directors.

Michael A. Barron – Chairman and Chief Executive Officer, 64

Mr. Barron has been a developer of new business enterprises for nearly 30 years. Mr. Barron began his career in 1971 where he was the Senior Planner for the City of Monterey and was the HUD liaison for the City's downtown redevelopment project. He master planned the city's redevelopment of famous Cannery Row, Fisherman's Wharf, and was Secretary of the Architectural Review Committee. Mr. Barron was the founder of Citidata, the first electronic provider of computerized real estate multiple listing service (MLS) information in the nation from 1975 to 1979. Citidata became the nation's largest provider of electronic real estate information and was sold to Moore Industries in 1979. In June 1979, TRW hired Mr. Barron to develop its real estate information services division (TRW/REIS) that acquired 11 companies in the field and eventually became the world's largest repository of real estate property information - Experian. In November 1988, he founded and served as President, until 1992, of Finet Holdings Corporation (NASDAQ:FNCM), a publicly traded mortgage broker and banking business specializing in e-mortgage financing on site in real estate offices and remote loan origination via the Internet (www.finet.com). The company was publicly traded and maintained a market capitalization of $500 million. From March 1995-1998, Mr. Barron pioneered the first nationwide commercially deployed video conference mortgage financing platform for Intel Corporation which as a licensed mortgage banker and broker in 20 states funded over $1 billion in closed loans. He later went on to serve as CEO for Shearson Home Loans and founded Liberty Capital, a $100 million asset management company based in Las Vegas, Nevada. Mr. Barron holds a B.S. degree from California Polytechnic University. Michael A. Barron has served as Director on Las Vegas Railway Express' Board of Directors since inception. Mr. Barron's experience as our president and chief executive officer quality him to serve on our board of directors.

Dr. Harry Teng – Director, 52

Dr. Teng, an Associate Professor in Transportation Engineering at the University of Nevada, Las Vegas (UNLV), has approximately 30 years of research and education experience in transportation engineering and management. He graduated from China's Beijing Jiaotong University with his B.S. and M.S. degrees in railroad engineering and management. He has a second M.S. degree from West Virginia University on railroad operations, and a Ph.D. in civil engineering from Purdue University. He has taught at Beijing Jiaotong University, Polytechnic University of New York, The University of Virginia (UVa), and UNLV. He was the Associate Director for the Center of Transportation Studies at UVa. 
47


Dr. Teng leads the railroad and high-speed rail program at UNLV. Currently, he is operating the Transit UTC at UNLV for which he has been involved in research with federal and local agencies and organized distinguished seminars. He has initiated the railroad, high-speed rail, and transit program at UNLV for which he has developed a curriculum and certificate program on railroad. He is the advisor for the AREMA student chapter at UNLV. In addition, he has been active in railroad professional activities. 

Dr. Teng also is interested in Intelligent Transportation Systems, infrastructure maintenance, air quality analysis, freight transportation, safety, and demand forecasting. So far, he has published approximately 40 peer-reviewed technical papers.  

Louis M. Schillinger – Director, 65

Insurance Specialty and Program Development, Reinsurance Negotiation terms. Experience in Risk Retention Group formation, capitalization, structure and management and 25 years experience in the Railroad Insurance Industry, as a Managing General Agent throughout North America. Created the first Railroad Owned Insurance Company filed as Risk Retention Group in Vermont. Experience Claims Management, Underwriting and Coverage development for the Rail Industry.

Created the first Michigan based Wind Energy Managing General Agency, providing development phase, construction phase, and operational phase coverage for the national wind industry.

Certified by Michigan State University in Railway Management in 2009

Steam tourist train President 2007-2011

Specialties: Railroad Risk Management, and Transfer
Energy Industry Risk Management and Transfer
Risk Retention Group Formation Management
Insurance Program Management
Railway Management
Licensed in 44 States, Resident, Non Resident, Surplus Lines
   
Wanda Witoslawski - Chief Financial Officer, 50

Prior to joining the Company, Ms. Witoslawski was Controller for Ocean West Enterprises 1999-2005 and managed the mortgage banking function of that California mortgage bank.  Her duties included accounting responsibility for over 200 branch offices, management of a $100 million mortgage bank warehouse line, payroll, general ledger and corporate accounting for SEC filings of the publicly traded company.  Upon acquisition of Ocean West by Shearson Home Loans in 2005, she became Controller of publicly traded Shearson conducting the accounting operation for a staff of 1,350 employees including payroll, branch accounting and credit line management for over $200 million in warehouse banking credit.  She assisted the CEO and President in the acquisition of five mortgage companies and development of a 250 office branch system with funding in excess of $1 billion per year, controlled the expense accounting & managed Shearson's eighteen consecutive quarters of profitability.  Upon Shearson's exit from mortgage banking in 2007, she joined the principals Mr. Barron and Mr. Cosio-Barron as Controller at Liberty Capital Asset Management, an investor in acquiring defaulted mortgage pools, managing public accounting documents for SEC filings and the financial supervision over the liquidation of over 4,000 mortgage loans the company had acquired.  She has a Master's Degree in Economics from the University of Gdansk, Poland, a diploma in Marketing from Kensington College of Business, London, England and a diploma in professional accounting from Learning Tree University, Irvine, CA. Ms. Witoslawski is fluent in English, Polish and Russian.
48

 
Code of Ethics
 
The Company has adopted a Code of Ethics that applies to the Company's principal executive officer, principal financial officer and principal accounting officer.
 
 Section 16(a) Beneficial Ownership Compliance

Our officers, directors and shareholders owning greater than ten percent (10%) of our shares are required to file beneficial ownership reports pursuant to Section 16(a) of the Securities and Exchange Act (the "Exchange Act"). To the Company's knowledge, all such reporting obligations were complied with during the year ended March 31, 2015.

Committees of the Board

The Company does not have an audit committee nor compensation committee because of the small size and early stage of the Company.

Nominating Committee

We do not have a separately designated nominating committee because the board makes all decisions regarding director nominations.

Involvement in Certain Legal Proceedings

Except as set forth below, to our knowledge, during the last ten years, none of our directors and executive officers have:

  ·
Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

  ·
Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.

  ·
Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities.

  ·
Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

  ·
Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.  

Shearson Financial Network, a mortgage company,   filed for Chapter 11 bankruptcy protection in 2008. Michael A. Barron was CEO of the company at the time.

Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law permits a corporation to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a pending or completed action, suit or proceeding if the officer or director acted in good faith and in a manner the officer or director reasonably believed to be in the best interests of the corporation.

Our certificate of incorporation provides that, except in certain specified instances, our directors shall not be personally liable to us or our stockholders for monetary damages for breach of their fiduciary duty as directors, except for the following:
49


  ●
any breach of their duty of loyalty to our company or our stockholders;
 
  ●
acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
 
  ●
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and
 
  ●
any transaction from which the director derived an improper personal benefit.
 

In addition, our certificate of incorporation and bylaws obligate us to indemnify our directors and officers against expenses and other amounts reasonably incurred in connection with any proceeding arising from the fact that such person is or was an agent of ours. Our bylaws also authorize us to purchase and maintain insurance on behalf of any of our directors or officers against any liability asserted against that person in that capacity, whether or not we would have the power to indemnify that person under the provisions of the Delaware General Corporation Law. We expect to continue to enter into agreements to indemnify our directors and officers as determined by our Board of Directors. These agreements provide for indemnification of related expenses including attorneys' fees, judgments, fines, and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract any retain qualified persons as directors and officers.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder's investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding, which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

Insofar as the provisions of our certificate of incorporation or bylaws provide for indemnification of directors or officers for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, we have been informed that in the opinion of the Commission this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Family Relationships

There are no family relationships between any of our directors or executive officers and any other directors or executive officers, except that Dianne David Barron, the Company's Director Asset Development is the spouse of the CEO, Michael A. Barron.

50

Item 11.  Executive Compensation.

SUMMARY COMPENSATION TABLE

Annual Compensation

 

(1)  
Stock value calculation based on the market price of the stock at March 31, 2015.
 
Employment Agreements

The Company has an employment agreement with Michael Barron, the CEO and President of the Company, which provides for an annual salary of $200,000.  In addition, Mr. Barron is entitled to receive an incentive or performance bonus equal to 17% of all outstanding shares of common stock. His employment agreement provides that if we terminate him without cause, he is entitled to receive a lump sum payment equal to twice his annual salary plus the present value of a performance bonus computed on the basis that we achieve all of our performance targets.  Mr. Barron's employment agreement commenced as of February 1, 2015.

The Company has an employment agreement with Wanda Witoslawski which requires her to perform the duties of Chief Financial Officer and Treasurer of the Company for the duration of the employment agreement.  During the term of this Agreement, the Company agrees to pay Ms. Witoslawski a base salary at the rate of $180,000 per year.  In addition, Ms. Witoslawski is entitled to receive an incentive or performance bonus equal to 12% of all outstanding shares of common stock. Her employment agreement provides that if we terminate her without cause, she is entitled to receive a lump sum payment equal to twice her annual salary plus the present value of a performance bonus computed on the basis that we achieve all of our performance targets.  Mrs. Witoslawski's employment agreement commenced as of February 1, 2015.

Director Compensation for Year Ended March 31, 2015

The following table sets forth director compensation for the year ended March 31, 2015 (excluding compensation to our executive officers set forth in the summary compensation table above).


(1)  
Stock value calculation based on the market price of the stock at March 31, 2015.

We currently compensate our directors for being a Board member the equivalent of an initial 10,000,000 shares of common stock plus $12,000 annual fee for each member.  Thomas Mulligan resigned as a director on June 18, 2014. George Rebensdorf resigned as a director on July 29, 2014. John D. McPherson, Ronald Batory, Gilbert H. Lamphere and John O'Connor resigned as directors in 2015.

51

Outstanding Equity Awards at 2015 Fiscal Year-End
 
The following table sets forth outstanding equity awards to our named executive officers as of March 31, 2015:
 
OPTION AWARDS
STOCK AWARDS
 
Name
Number of Securities Underlying Unexercised Options
(#)
Exercisable
 
Number of
Securities Underlying Unexercised
Options
(#) Unexercisable
 
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
 
Option Exercise Price
($)
 
Option
Expiration
 Date
Number of Shares or Units of Stock That Have Not Vested
(#)
 
Market Value of Shares or Units of Stock That Have Not Vested
($)
 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
 
Michael A. Barron
   
5
     
-
     
-
   
$
100,000
 
November 1, 2018
   
-
     
-
     
-
     
-
 
 
Stock Option Plan

The Company's 2015 Stock Option Plan provides for the issuance of a total of 30% of issued and outstanding undiluted shares of common stock at the price of $0.0001 per share. Employees, who share the responsibility for the management growth or protection of the business of the Company, are eligible to receive options which are approved by the Board of Directors.  These options are exercisable for a five-year period from the date of the grant.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of March 31, 2015 by (a) each of the Company's directors and executive officers, (b) all of the Company's directors and executive officers as a group and (c) each person known by the Company to be the beneficial owner of more than five percent of its outstanding common stock.
 
   
Amount of Beneficial
   
Percent of
 
Directors and Officers (1)
 
Ownership (2)
   
Class (3)
 
             
Michael Barron, CEO/President and Chairman (4)
   
4,732
     
9.52
%
                 
Wanda Witoslawski, CFO and Treasurer (5)
   
3,215
     
6.56
%
                 
Harry Teng, Director (6)
   
1,000
     
2.10
%
                 
Louis M. Schillinger, Director (7)
   
2,250
     
4.61
%
                 
All directors and officers as a group
   
11,197
     
22.79
%

 
52

 
(1)
The address of each of the beneficial owners is 9480 South Eastern Ave, Suite 205, Las Vegas, Nevada 89123.
 
 
 
 
(2)
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable, or become exercisable within 60 days are deemed outstanding. However, such shares are not deemed outstanding for purposes of computing the percentage ownership of any other person.
 
 
 
 
(3)
Based on 47,736 shares outstanding as of March 31, 2015.
 
 
 
 
(4)
Includes 33 shares held by Allegheny Nevada Holdings Corporation, which is in the sole control of Michael Barron, warrants to purchase 52 shares of common stock and fully vested option to exercise 3,106 shares of common stock.
 
 
 
 
(5)
Includes fully vested option to exercise 2,467 shares of common stock.
 
 
 
 
(6)
Includes 1,000 shares of common stock to be issued as a directors' compensation.
 
 
(7)
Includes 1,000 shares of common stock to be issued as a directors' compensation and 1,250 shares of common stock to be issued as per stock purchase agreement.

Item 13.  Certain Relationships and Related Transactions and Director Independence

Two of our directors, Harry Teng and Louis M. Schillinger, are independent directors, using the NASDAQ definition of independence.
 
Certain officers and directors have a beneficial ownership and are officers and directors companies which are or have been parties to financial transactions. We may be subject to various conflicts of interest in our relationship with Mr. Barron, who is executive officer, CEO and President, of the Company.

Michael A. Barron, the CEO and President of the Company, is a 100% owner and President of Allegheny Nevada Holdings Corporation, "Allegheny".  The Company was indebted to Allegheny by a certain promissory note with 10% monthly interest, of which Allegheny loaned the Company funds for working capital needs.   As of March 31, 2015, the balance of the note was $20,400 and the accrued interest was $9,204.

Dianne David, the Company's Director Asset Development, is the spouse of the CEO, Michael A. Barron and as of March 31, 2015 holds a promissory note with principal balance of $33,638 and accrued interest of $2,922. Dianne David is a 100% owner of Eclipse Holding, which holds a promissory note, dated June 19, 2014 with a balance of $23,000 and accrued interest of $16,100.

Wanda Witoslawski, the CFO of the Company, holds a promissory note of $29,100 with 10% monthly interest, which equals to $18,772 as of March 31, 2015.
53


Item 14.  Principal Accountant Fees and Services
 
In accordance with the SEC's definitions and rules, "audit fees" are fees for professional services for the audit and review of our annual financial statements, and includes fees for the audit and review of our annual financial statements included in a registration statement filed under the Securities Act as well as issuance of consents and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements except those not required by statute or regulation.  "Audit-related fees" are fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements, including attestation services that are not required by statute or regulation, due diligence and services related to acquisitions.  "Tax fees" are fees for tax compliance, tax advice and tax planning, and "all other fees" are fees for any services not included in the first three categories.

Audit Fees

The aggregate fees billed by the Company's auditor for the professional services rendered in connection with the audit of the Company's annual financial statements, and reviews of the financial statements included in the Company's Forms 10-Ks for fiscal 2015 were approximately $13,000.

Audit Related Fees
 
There were no audit related fees for the fiscal year ended March 31, 2015.
 
Tax Fees
 
None.
 
All Other Fees

None.
 
PART IV

Item 15.  Exhibits and Financial Statement Schedules.

(1)
Financial Statements: The following financial statements are included in Item 8 of this report:
 
 
●     Balance Sheets as of March 31, 2015 and 2014.
   
 
●     Statements of Operations for the fiscal years ended March 31, 2015 and 2014.
   
 
●     Statements of Cash Flows for the fiscal years ended March 31, 2015 and 2014.
   
 
●     Statement of Stockholders' (Deficit) for the fiscal years ended March 31, 2015 and 2014.
   
 
●     Notes to Financial Statements.
   
 
●     Report of Independent Registered Public Accounting Firm.

54

   (2)        Exhibits :
 
Exhibit No.
 
Description
 
 
 
3.2
 
Articles of Incorporation (incorporated herein by reference to Form SB-2, filed on July 31, 2007)
     
3.3
 
By-Laws of the Registrant (incorporated herein by reference to Form SB-2, filed on July 31, 2007)
     
3.4A
 
Amended By-Laws of the Registrant dated November 3, 2008 (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
     
3.4B
 
Amended Articles of Incorporation (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
     
3.5
 
Amended Articles of Incorporation as dated March 19, 2010 (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
     
3.6
 
Certificate of Merger, as dated March 19, 2010, by and between Liberty Capital Asset Management, Inc. and Las Vegas Railway Express (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
     
3.7
 
Amended Articles of Incorporation as dated April 19, 2010 (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
     
3.8
 
Amended By-Laws of the Registrant (incorporated herein as referenced on Form 10-K, as filed on June 30, 2010)
 
 
55

10.1
 
Advisory Agreement, by and between E/W Capital and Las Vegas Railway Express, Inc., dated July 1, 2010 (incorporated herein as referenced to Exhibit 12 on Form 8-K, as filed July 8, 2010)
     
10.2
 
Employment Agreement with Michael A. Barron, dated February 1, 2012 (incorporated herein as referenced on Form 10-K, as filed on July 10, 2012)
     
10.3
 
Employment Agreement with Wanda Witoslawski, dated February 1, 2012 (incorporated herein as referenced on Form 10-K, as filed on July 10, 2012)
     
10.4
 
Memorandum of Understanding with T-UPR (The Plaza Hotel & Casino), dated May 1, 2012 (incorporated herein as referenced on Form 10-K, as filed on July 10, 2012)
     
10.5
 
Union Pacific Railroad Company Public Project Reimbursement Agreement, dated December 1, 2010 (incorporated herein as referenced on Form 10-K/A, as filed on June 28, 2011)
     
10.6
 
Memorandum of Understanding with National Railroad Passenger Corporation, dated January 13, 2011 (incorporated herein as referenced on Form 10-K/A, as filed on June 28, 2011)
     
10.7
 
Form of Subscription Agreement (filed as exhibit to 8-K filed on March 19, 2013 and incorporated herein by reference).
     
10.8
 
Form of Note (filed as exhibit to 8-K filed on March 19, 2013 and incorporated herein by reference).
     
10.9   Form of Investor Warrant (filed as exhibit to 8-K filed on March 19, 2013 and incorporated herein by reference).
     
10.10   Employment Agreement with Penny White, dated June 20, 2012 (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
     
10.11   Asset Purchase Agreement, dated November 23, 2009, closing on January 21, 2010, between the Company and Las Vegas Railway Express, a Nevada corporation. (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
     
10.12   Consulting Agreement between the Company and Transportation Management Services, Inc. dated May 1, 2013. (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
     
10.13   Advisory Agreement between the Company and FlatWorld Capital dated November 30, 2012. (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
     
10.14   Leasing Agreement with Mid America Leasing Company dated September 5, 2013. (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
 
56

10.15   Agreement with Masterpiece Cuisine dated November 25, 2013 (incorporated herein as referenced on Form 10-K/A, as filed on September 22, 2014)
 
 
 
31.1
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1
 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
32.2
 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
57


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on September 18, 2018.

LAS VEGAS RAILWAY EXPRESS, INC.
   
By:
/ s/Michael A. Barron
 
Michael A. Barron, Chief Executive Officer
Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated:

Name
 
Title
 
Date
         
/ s/Michael A. Barron
Michael A. Barron
 
Chief Executive Officer, President and Chairman (principal executive officer)
 
September 18, 2018
         
         
 /s/Wanda Witoslawski
Wanda Witoslawski
 
Chief Financial Officer (principal financial and accounting officer)
 
September 18, 2018
         
         
/s/Harry Teng
 
Director
 
September 18, 2018
Harry Teng
       
         
         
/ s/Louis M. Schillinger
 
Director
 
September 18, 2018
Louis M. Schillinger
       

 
 

58

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