BrewBilt Brewing Co - Annual Report: 2016 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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(Mark One)

GRID PETROLEUM CORP.

(Exact name of registrant as specified in its charter)

Securities registered under Section 12(b) of the Exchange Act:

Securities registered under Section 12(g) of the Exchange Act:

Title of class

Common Stock, Par Value $0.00001

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 [_] No [X]

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 (§ 232.405 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 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. [X]

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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [_] No [X]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of May 31, 2016 was $457,948 based upon the price ($0.0001) at which the common stock was last sold as of the last business day of the most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws. Our common stock is traded in the over-the-counter market and quoted on the Over-The-Counter Bulletin Board.

As of May 31, 2016, there were 4,579,478,015 shares of the registrant’s $0.00001 par value common stock issued and outstanding.

Documents incorporated by reference: None

Table of Contents

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:

This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Term

Except as otherwise indicated by the context, references in this report to “Company”, “GRPR”, “we”, “us” and “our” are references to Grid Petroleum Corp. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

PART I

ITEM 1. BUSINESS

Asset Purchase Agreement

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”); thereby, acquiring Intellectual Property referred to as “Media IP” and inventory consisting of finished products and raw materials and supplies. RJM will assign the Media IP asset and inventories and provide “Know-How” that will enable the Company to launch a Broadcast Equipment and Digital Media Product Line, together valued at Six Million Two Hundred Fifty Thousand Dollars ($6,250,000). As consideration for the Media IP and the “Know -How”, the Buyer shall issue, or cause to be issued, $5,000,000 of Restricted Common Stock (PAR $.00001) Ninety (90) days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of a GRPR Preferred Stock; (PAR $.001). The value of restricted common shares will be the closing price of the stock as of 90 days from this agreement. The maturity date for the restricted common shares will be 60 months from the date of this agreement. The final transaction of the Agreement will be completed after the date of this report.

As of the date of this Report, our business has changed. The Company, respectively, designs, manufactures and sells audio and video broadcast equipment worldwide. Our engineers build and thoroughly test these items in-house prior to shipping to our customers. We provide exceptional service and our products are built to the highest professional standards and rugged design.

The company currently has an expanding revenue base in the broadcast industry with long-term national and international distribution. The current customers of our products include large broadcast giants such as CBS, NBC, ABC, FOX, ESPN and DIRECTV, plus the many smaller broadcast customers which include religious facilities, international broadcast facilities and colleges, as well as various radio stations. The company sells 55 different products which include a variety of protection switches, HD Routers, analog routers, control panels, audio distribution, SyncPal™ and the new upcoming SoundPal™.

The company has initiated new product designed in augmented/virtual reality markets which allows the company to capitalize in this $120B growing industry. The digital media/augmented reality products currently in development will develop a strategic technology roadmap to enable the company to expand into high-growth digital television and over-the-top (OTT) markets. These products are being developed to serve a market segment that is presently being strongly embraced by consumers and is forecasted, by some of the most widely recognized tech companies in the world, as becoming a multi-billion dollar market in the very near future. The new products include 'SocialCast AR,' Augmented Reality, and Virtual Reality Content Server. The target technologies include Virtual Reality, Augmented Reality, Audio/Video Codecs, Audio Content Recognition, and OTT API Integration into Key Platforms. The Market Analysis and IP Portfolio will include new patents specifically developed for these products and owned by the Company.

Corporate History

Our Business

The Company focused on the development, exploration and production of oil and gas in North America. Our primary focus is on oil and gas properties with proven undeveloped reserves that are economically attractive but are underserved by major independent oil and gas companies.

Garcia #3 Well

On May 23, 2013, we acquired a ten percent working interest, seven point five percent net revenue interest, from a third party interest holder of the Garcia #3 well (10.0 % WI, 7.5% NRI). For our interest, we paid $300,000 in convertible preferred shares with a conversion rate of .01 per share.

We are subject to the terms and conditions of the operating agreement established by the operator for the Garcia#3 well, Kidd Production Inc., the property developer, Progas Energy Services and the third party vendor we acquired our 10% interest from.

In August of 2013 Scorpion Rig #1 was moved onto the Garcia #3 location. The rig drilled to a total depth of 3750 feet with oil shows in the Frio Sands. Pipe was cemented in place and the drilling rig was released. In October, a work-over unit was moved in to test the target zones. The lower zones were tested and found to contain natural gas with water produced from the zone. The decision was made to move up the well and test an oil bearing zone. This zone was determined to be tight and requiring fracking to accurately determine the potential production of this zone. The Company was not in agreement with Progas regarding the value of the fracking on this zone and we are waiting on information back from Progas regarding the fracking and any results. Progas continues to be challenging to work with.

Due to our minority interest in the Garcia#3 well, we are reviewing operational alternatives to resolve our inability to control the development of this well and the field in general for any future drilling activities. The Company continues to evaluate leases available in the same area as the Premont Field, which may be available for the Company to lease directly from the mineral rights owners.

The Company has made the determination that due to the operator in control of the Garcia #3 that it will not continue to participate in this project. Other leasable property in the area is not close enough to production to justify the risk of investment. The Company will not be active in this area.

Joaquin Basin Resources, Inc.

Effective January 20, 2011, we entered into a Shared Exchange Agreement with Joaquin Basin Resources Inc., a Nevada corporation, and its stockholders (the “Agreement”). Pursuant to the provisions of the Agreement, we agreed to issue to Joaquin Basin shareholders (i) 62,000,000 shares of our common stock and (ii) 2,076,324 shares of our convertible preferred stock, in exchange for the transfer and delivery to us of their 62,000,000 shares of common stock in Joaquin Basin, which represents all of the issued and outstanding shares in Joaquin Basin. As result of the transaction, Joaquin Basin became our wholly owned subsidiary.

On November 21, 2011, Joaquin Basin entered into an amendment (the “Amendment”) to its original Asset Transfer Agreement with Xploration, Inc., a Nevada corporation. Pursuant to the Asset Transfer Agreement, Xploration assigned Joaquin Basin a 50% working interest (37.5% net revenue interest) in mineral leases of approximately 4,000 acres in the Kreyenhagen Trend and Joaquin Basin assumed all of the liabilities associated with the leases.

Pursuant to the Amendment, in consideration for a reduction in working interest from 50% to 20% and in consideration for a reduction in net revenue interest from 37.5% to 14%, Xploration will do the following as increased compensation to Joaquin:

The total expenses that Xploration paid on behalf of Joaquin associated with the mineral leases will exceed $1,100,000. Joaquin will get a full carry on the first well drilled.

The following is a list of the expenses Xploration paid and to be paid on behalf of Joaquin:

As mentioned above, we issued 2,076,000 shares of convertible preferred stock in concluding the Joaquin Basin purchase agreement. The cost of the issue, $4,152,000, was based on the value of preferred stock as if converted to common stock. $4,152,000 was added to the cost of the Joaquin property, including liabilities assumed in the November 21, 2011 agreement with Xploration Inc.

On March 1, 2011, Joaquin Basin entered into an Operating Agreement with Solimar Energy, LLC (“Solimar”) to explore and develop the 4,000 leased acres covering extensions of the Coalinga California oil and gas field in California. The acreage is labeled as the Kreyenhagen Trend acreage is on the nose of a Coalinga anticline.

In recent months, Solimar Energy as operator has been active on the Kreyenhagen Trend Prospect. Six wells have been submitted to the State of California for permitting. The permits are currently under review by the State of California.

Bawden 1-24 - The well that we have a Carried Interest or Farm-in well where we will not have any expenses and we are carried 100%. Target Zone: Temblor Test

Vintage 1-17 - Temblor Test

Vintage 1-21 - Temblor Test

Den Hartog A-1 - Avenal Test

Den Hartog A-2 - Avenal Test

Den Hartog A-3 - Avenal Test

Each Drilling permit requires a Blunt Nose Lizard Study (the "Study") to be conducted once in the spring and once again in the fall. After the Study is finalized, the drilling permits can be issued and the drilling process is expected to start. The Blunt Nose Lizard studies are still underway and upon completion the State of California will finalize the review of the proposed drilling permits.

The Geological study was conducted on only the Kreyenhagen Ranch. Solimar Energy has chosen not to share any of the information generated by the survey done on the Ranch. As we are not the operator in the Kreyenhagen Trend acreage the Company is dependent on Solimar Energy as it relates to activity in the Trend acreage. Currently it seems that Solimar is focused on the Ranch properties and not the Trend. Company management is keeping communication open with Solimar in an attempt to have their focus to expand and include the Trend acreage development. 

The Companies participation in the Kreyenhagen Ranch was exchanged out in conjunction with the terms of the asset swap agreement dated October 18, 2013.

SE Jonah Prospect

The Company’s working interest in the remaining SE Jonah Prospect leases was allowed to expire, as the Company’s evaluation of the potential investment was conclusive in the following; the large dollars required to develop this field remained far greater than the possible revenue to be generated over an acceptable time frame. Primarily, because of the low selling price of natural gas, which is lower than the overall cost of production, and the lack of an infrastructure to allow full production of natural gas from an existing well, the time frame to develop the required infrastructure is based on the natural gas production to warrant a transportation company committing the funding to build it. Along with a low selling price for the product signifies that the money will not be spent to drill due to the lack of transportation and the transportation will not happed due to the lack of drilling. The Company has decided not to be active in this area.

Jacolitos Project

On July 31, 2013, the Company, entered into a Project Purchase Agreement (the “Purchase Agreement”) with Xploration, Inc., a Nevada corporation (“Xploration”) to acquire a twenty five percent (25%) working interest (WI) and a fourteen percent (14%) net royalty interest (“NRI”) in five hundred sixteen (516) acres in the Coalinga California area identified as the Jacolitos Project.

Pursuant to the terms and conditions of the Purchase Agreement, the Company shall acquire the Jacolitos Project Property through a purchase agreement for a total purchase price of One Hundred Thousand Dollars ($100,000) (the “Purchase Price”). This transaction was not completed by the Company.

Asset Swap Agreement

On October 18, 2013, the Company entered into an Asset Swap Agreement (the “Asset Swap Agreement”) by and amongst the Company, Xploration Inc., a Nevada Corporation (“Xploration”) and Solimar Energy, LLC, a California limited liability company (“Solimar”); thereby, swapping certain land leases as described below, forgiveness of delay rentals and terminating the (a) Kreyenhagen Trend Joint Operating Agreement dated March 1, 2011, between Solimar and Xploration (“Kreyenhagen Trend JOA”), (b) Jacalitos Joint Operating Agreement dated March 1, 2011, between Solimar and Xploration (“Jacalitos JOA”) and the (c) Farmin / Settlement Agreement dated November 3, 2011, between Solimar and Xploration, with an effective date as of September 1, 2013.  

As per the terms of the Asset Swap Agreement, the Company and Xploration assigned sixteen percent (16%) interest to Solimar, in the following six (6) leases located in the Kreyenhagen Trend, instruments numbered: (i) 0922006 2009-0167477, (ii) 2007-0068080, (iii) 1122558, (iv) 801269, (v) 2007-0036755, and (vi) 2007-0036730.  Further, as part of this Asset Swap Agreement, the Company and Xploration, assigned the twenty-five percent (25%) interest in the Jacalitos Lease, instrument numbered 2009-167476, for a total assignment of 3,102.43 gross landowner acres and 3,082.43 net landowner acres to Solimar. In return, Solimar assigned eighty four percent (84%) of its interest in the Bureau of Land Management Lease, serial number: CACA 49877 representing 1,140.62 gross and net landowner acres that is a part of the Kreyenhagen Trend to the Xploration and Xploration will be assigning the eighty four (84%) to the Company at a future date.  

Additionally, as part of the Asset Swap Agreement, Solimar shall forgive Xploration and the Company of the Company’s and Xploration’s obligation to pay the delay rental on the Vintage Petroleum, LLC, lease on instrument numbered 0922006 2009-0167477, and 2009-0167476 for a total forgiveness of nine thousand nine hundred thirty one dollars and forty nine cents ($9,931.49). In connection with the Asset Swap Agreement, Xploration will pay Solimar three hundred sixty five dollars ($365) for its delay rental on the CACA 49877 lease that became due on August 31, 2013.

Competition and Marketing

We will be faced with strong competition from many other companies and individuals engaged in the oil and gas business, many are very large, well-established energy companies with substantial capabilities and established earnings records. We may be at a competitive disadvantage in acquiring oil and gas prospects since we must compete with these individuals and companies, many of which have greater financial resources and larger technical staffs. It is nearly impossible to estimate the number of competitors; however, it is known that there are a large number of companies and individuals in the oil and gas business.

Exploration for and production of oil and gas are affected by the availability of pipe, casing and other tubular goods and certain other oil field equipment including drilling rigs and tools. We expect we will depend upon independent drilling contractors to furnish rigs, equipment and tools to drill wells. Higher prices for oil and gas may result in competition among operators for drilling equipment, tubular goods and drilling crews, which may affect our ability expeditiously to drill, complete, recomplete and work-over wells.

The market for oil and gas is dependent upon a number of factors beyond our control, which at times cannot be accurately predicted. These factors include the proximity of wells to, and the capacity of, natural gas pipelines, the extent of competitive domestic production and imports of oil and gas, the availability of other sources of energy, fluctuations in seasonal supply and demand, and governmental regulation. In addition, there is always the possibility that new legislation may be enacted, which would impose price controls or additional excise taxes upon crude oil or natural gas, or both. Oversupplies of natural gas can be expected to recur from time to time and may result in the gas producing wells being shut-in. Imports of natural gas may adversely affect the market for domestic natural gas.

The market price for crude oil is significantly affected by policies adopted by the member nations of Organization of Petroleum Exporting Countries ("OPEC"). Members of OPEC establish prices and production quotas among themselves for petroleum products from time to time with the intent of controlling the current global supply and consequently price levels. We are unable to predict the effect, if any, that OPEC or other countries will have on the amount of, or the prices received for, crude oil and natural gas.

Gas prices, which were once effectively determined by government regulations, are now largely influenced by competition. Competitors in this market include producers, gas pipelines and their affiliated marketing companies, independent marketers, and providers of alternate energy supplies, such as residual fuel oil. Changes in government regulations relating to the production, transportation and marketing of natural gas have also resulted in significant changes in the historical marketing patterns of the industry. Generally, these changes have resulted in the abandonment by many pipelines of long-term contracts for the purchase of natural gas, the development by gas producers of their own marketing programs to take advantage of new regulations requiring pipelines to transport gas for regulated fees, and an increasing tendency to rely on short-term contracts priced at spot market prices.

Existing and Probable Governmental Regulation

We intend to monitor and comply with current government regulations that affect our activities, although our operations may be adversely affected by changes in government policy, regulations or taxation. There can be no assurance we will be able to obtain all of the necessary licenses and permits that may be required to carry out our exploration and development programs. It is not expected any of these controls or regulations will affect our operations in a manner materially different than they would affect other natural gas and oil companies operating in the areas in which we operate.

Government Regulation

The United States federal government and various state and local governments have adopted laws and regulations regarding the protection of human health and the environment. These laws and regulations may require the acquisition of a permit by operators before drilling commences, prohibit drilling activities on certain lands lying within wilderness areas, wetlands, or where pollution might cause serious harm, and impose substantial liabilities for pollution resulting from drilling operations, particularly with respect to operations in onshore and offshore waters or on submerged lands. These laws and regulations may increase the costs of drilling and operating wells. Because these laws and regulations change frequently, the costs of compliance with existing and future environmental regulations cannot be predicted with certainty.

The transportation and certain sales of natural gas in interstate commerce are heavily regulated by agencies of the federal government. Production of any oil and gas by properties in which we have an interest will be affected to some degree by state regulations. States have statutory provisions regulating the production and sale of oil and gas, including provisions regarding deliverability. Such statutes and the regulations are generally intended to prevent waste of oil and gas and to protect correlative rights to produce oil and gas between owners of a common reservoir.

State regulatory authorities may also regulate the amount of oil and gas produced by assigning allowable rates of production to each well or pro-ration unit.

Any exploration or production on Federal land will have to comply with the Federal Land Management Planning Act, which has the effect generally of protecting the environment. Any exploration or production on private property whether owned or leased will have to comply with the Endangered Species Act and the Clean Water Act. The cost of complying with environmental concerns under any of these acts varies on a case-by-case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.

Environmental Regulation

Oil and natural gas exploration, development and production operations are subject to stringent laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Numerous governmental agencies, such as the U.S. Environmental Protection Agency, or EPA, issue regulations, which often require difficult and costly compliance measures that carry substantial administrative, civil and criminal penalties and may result in injunctive obligations for failure to comply. These laws and regulations may require the acquisition of a permit before drilling commences, restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling and production activities, limit or prohibit construction or drilling activities on certain lands lying within wilderness, wetlands, ecologically sensitive and other protected areas, require action to prevent or remediate pollution from current or former operations, such as plugging abandoned wells or closing pits, and impose substantial liabilities for pollution. The strict liability nature of such laws and regulations could impose liability upon us regardless of fault. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent and costly pollution control or waste handling, storage, transport, disposal or cleanup requirements could materially adversely affect our operations and financial position, as well as the oil and natural gas industry in general.

The Comprehensive Environmental Response, Compensation and Liability Act, also known as CERCLA or the “Superfund” law, generally imposes joint and several liabilities, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment. These persons include the current owner or operator of a contaminated facility, a former owner or operator of the facility at the time of contamination and those persons that disposed or arranged for the disposal of the hazardous substance. Under CERCLA and comparable state statutes, such persons may be subject to strict joint and several liabilities for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. In addition, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. Governmental agencies or third parties may seek to hold us responsible under CERCLA and comparable state statutes for all or part of the costs to clean up sites at which such “hazardous substances” have been released.

We did not incur any costs in connection with the compliance with any federal, state, or local environmental laws. However, costs could occur at any time through industrial accident or in connection with a terrorist act or a new project. Costs could extend into the millions of dollars for which we could be totally liable. In the event of liability, we believe we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability were limited to our percentage share, any significant liability would wipe out our assets and resources

Employees

We do not have any employees as of March 31, 2016. As of the date of this filing, we have 4 employees, and 17 suppliers and subcontractors.

WHERE YOU CAN GET ADDITIONAL INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. We reserve the right not to provide risk factors in our future filings. Our primary risk factors and other considerations include:

The following risk factors together with other information set forth in this Annual Report on Form 10-K, should be carefully considered by current and future investors in our securities.  An investment in our securities involves substantial risks.  There are many factors that affect our business, a number of which are beyond our control.  Our business, financial condition and results of operations could be materially adversely affected by any of these factors.  The nature of our business activities further subjects us to certain hazards and risks.  The risks described below are a summary of the known material risks relating to our business. Additional risks and uncertainties not presently known to us or that we currently deem to be immaterial individually or in aggregate may also impair our business operations.  If any of these risks actually occur, it could harm our business, financial condition or results of operations and impair our ability to implement our business plan or complete development projects as scheduled.  In any such case, the trading price of our Common Stock could decline, and you could lose all, or a part, of your investment.

RISKS ASSOCIATED WITH OUR FINANCIAL CONDITION

Because we have a history of losses and have a deficit, there is substantial doubt about our ability to continue as a going concern.

We have not generated any revenues in oil and gas related projects since our inception and we will continue to incur operating expenses without revenues until we are in commercial deployment. Our net loss from March 31, 2009 (date of inception) to March 31, 2016 was $16,122,167. We had cash and cash equivalents in the amount of $2,226 as of March 31, 2016. We currently do not have any mining operations and we have no income. We cannot provide assurances that we will be able to successfully explore and develop our business. These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent auditors’ report on our audited financial statements. If we are unable to continue as a going concern, investors will likely lose all of their investments in our company. The company acquired digital media and broadcast IP on March 9, 2016 that is currently producing revenues with a global distribution. The company, at the time of this filing, has dissolved and terminated its core oil and gas business in order to focus on the revenue growth of its digital media and broadcast product lines.

Because we need additional financing to fund our operations, if we do not obtain such financing, we may have to cease our operations and investors could lose their entire investment.

There is no assurance that we will operate profitably or will generate positive cash flow in the future. We will require additional financing in order to develop our new R&D products in augmented/virtual reality, while expanding our existing product line and introducing SyncPal™. The existing revenues will allow the company to maintain the required financing for the fees we must pay to maintain our status as a public company and to sustain our business operations. We currently have several arrangements for further financing and we may not be able to obtain additional financing when required. Our R&D is dependent upon our ability to obtain additional financing. If we do not obtain such financing, our business could fail and investors could lose their entire investment.

Because we had never earned revenues from our operations prior to March 9, 2016, our business may fail.

On March 9, 2016 the company acquired IP, Inventory, parts and distribution of Broadcast and Digital Media products, and we anticipate that we will incur increased operating expenses while realizing new revenues from this Asset Purchase. Prior to March 9, 2016 the company expected to incur significant losses into the foreseeable future, and recognized that if unable to generate significant revenues it would not be able to earn profits or continue operations. There was no history upon which to base any assumption as to the likelihood that the company would prove to be successful, and could not provide assurance that it could generate any revenues or ever achieve profitability. The company has addressed these risks, while understanding that the business would fail and investors may lose all of their investment in our company. The Asset Purchase Agreement on March 9, 2016 provided assets and revenues for the company moving forward.

Our ability to reach and maintain profitable operating results is dependent on our ability to grow existing product revenues and develop new Augmented Reality and Virtual Reality Products.

Our future performance depends upon our ability to manage and grow our existing product revenues, and develop new Augmented Reality and Virtual Reality products at reasonable expense. If we are not able to develop these products economically, we may not be able to achieve and maintain profitable operating results. No assurance can be given that we will be able to develop these products on acceptable terms.  

We have experienced significant operating losses in the past, due to oil and gas related expenses, and there can be no assurance that we can maintain profitability in the future.

We have reported a net loss of $2,905,434 for the year ended March 31, 2016 due to gas and oil related expenses, and we have an accumulated deficit through March 31, 2016 of $16,122,167. Without continued management and new development of our existing broadcast products, any investment in our Company could become devalued or worthless.

We have substantial indebtedness.  The amount of our outstanding indebtedness continues to increase and our ability to make payments towards such indebtedness could have adverse consequences on future operations.

Our outstanding indebtedness at March 31, 2016 was $10,214,753, which was comprised of a variety of short-term and long-term borrowings related to our gas and oil related projects; related party notes and payables; trade payables; and Convertible Notes. The level of indebtedness we have affects our operations in a number of ways.  We will need to use a portion of our cash flow to pay principal and interest and meet payables commitments, which will reduce the amount of funds we will have available to finance our operations. This lack of funds could limit our flexibility in planning for or reacting to changes in our business and the industry in which we operate and could limit our ability to make funds available for other purposes, such as future exploration, development or acquisition activities.  Our ability to meet our debt service obligations and reduce our total indebtedness will depend upon our future performance. Our future performance, in turn, is dependent upon many factors that are beyond our control such as general economic, financial and business conditions. We cannot guarantee that our future performance will not be adversely affected by such economic conditions and financial, business and other factors.

To execute our business plan we will need to develop current projects and expand our operations requiring significant capital expenditures which we may be unable to fund.

Our business plan contemplates the development of our current projects and the expansion of our business by identifying, acquiring, and developing new products.  We plan to rely on external sources of financing to meet the capital requirements associated with these activities.  We may obtain any additional funding we need through debt and equity markets.  There is no assurance that we will be able to obtain additional funding when it is required or that it will be available to us on commercially acceptable terms.

We may lose key management personnel which could endanger the future success of our operations.

Our Chairman, COO, President and Chief Executive Officer are the driving force behind our catalog of broadcast equipment products currently being sold worldwide. The loss of these individuals could adversely affect our business.  If any of these individuals dies, becomes disabled or voluntarily terminates employment with us, there is no assurance that a suitable or comparable substitute will be found.

We may be unable to continue as a going concern in which case our securities will have little or no value.

Our financial statements for the year ended March 31, 2016 were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. We have incurred net losses since inception which raises substantial doubt about our ability to continue as a going concern.  In the event we are not able to continue operations, an investor will likely suffer a complete loss of their investment in our securities.

In the past, we have disclosed material weakness in our internal controls and procedures. If a material weakness reoccurs, this could erode investor confidence, jeopardize our ability to obtain insurance and limit our ability to attract qualified persons to serve at Daybreak.

As of the end of the reporting period, March 31, 2016, an evaluation was conducted by the Company’s management, and our Chief Executive Officer, who is also serving as our interim principal finance and accounting officer, as to the effectiveness of the design and operation of our internal controls over financial reporting pursuant to Rule 13a-15(e) of the Exchange Act.  Based on that evaluation, our management concluded that our internal controls over financial reporting were not effective as of March 31, 2016.

Because we fail to comply with the rules regarding internal controls and procedures, it may make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance.  We may be forced to accept reduced policy limits and coverage and/or incur substantially higher costs to obtain the same or similar coverage.  The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, on committees of our Board of Directors, or as executive officers.

The market price of our Common Stock could be volatile, which may cause the investment value of our stock to decline.

Our Common Stock is quoted on the over-the-counter (“OTC”) market under the symbol SIML (f/ka/ GRPR)

The OTC market is characterized by low trading volume.  Because of this limited liquidity, shareholders may be unable to sell their shares at or above the cost of their purchase prices.  The trading price of our shares has experienced wide fluctuations and these shares may be subject to similar fluctuations in the future.

The trading price of our Common Stock may be affected by a number of factors including events described in these risk factors, as well as our operating results, financial condition, announcements of drilling activities, general conditions in the oil and gas exploration and development industry, and other events or factors.

In recent years, broad stock market indices, in general, and smaller capitalization companies, in particular, have experienced substantial price fluctuations.  In a volatile market, we may experience wide fluctuations in the market price of our Common Stock.  These fluctuations may have a negative effect on the market price of our Common Stock.

Pursuant to SEC rules our Common Stock is classified as a “penny stock” increasing the risk of investment in these shares.

Our Common Stock is designated as a “penny stock” and thus may be more illiquid than shares traded on an exchange or on NASDAQ.  Penny stocks generally are any non-NASDAQ or non-exchange listed equity securities with a price of less than $5.00, subject to certain exceptions.

The “penny stock” reporting and disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that is subject to these rules.  The market liquidity for the shares could be severely and adversely affected by limiting the ability of broker-dealers to sell these shares.

The resale of shares offered in private placements could depress the value of the shares.

Shares of our Common Stock have been offered and sold in private placements at significant discounts to the trading price of the Common Stock at the time of the offering.  Sales of substantial amounts of Common Stock eligible for future sale in the public market, or the availability of shares for sale, including shares issued upon exercise of outstanding warrants, could adversely affect the prevailing market price of our Common Stock and our ability to raise capital by an offering of equity securities.

Privately placed issuances of our Common Stock, Preferred Stock and warrants have and may continue to dilute ownership interests which could have an adverse effect on our stock prices.

Our authorized capital stock consists of 7,500,000,000 shares of Common Stock, 10,000,000 shares of Series A Preferred Stock and 10,000,000 shares of Series B Preferred Stock.  As of March 31, 2016, there were 1,615,695,657 shares of Common Stock, 1,519,500 shares of Series A Preferred Stock and 1,000 shares of Series B Preferred Stock outstanding.

Historically we have issued, and likely will continue to issue, additional shares of our Common Stock in connection with the compensation of personnel, future acquisitions, private placements, possible equity swaps for debt or for other business purposes.  Future issuances of substantial amounts of these equity securities could have a material adverse effect on the market price of our Common Stock, and would result in further dilution of the ownership interests of our existing shareholders.

We may seek to raise additional funds in the future through debt financing which may impose operational restrictions and may further dilute existing ownership interests.

We expect to seek to raise additional capital in the future to help fund our acquisition, development, and production of broadcast equipment products and new products. Subsequent debt financing, if available, may require restrictive covenants, which may limit our operating flexibility.  Future debt financing may also involve debt instruments that are convertible into or exercisable for Common Stock.  The conversion of the debt to equity financing may dilute the equity position of our existing shareholders.

We do not anticipate paying dividends on our Common Stock which could devalue the market value of these securities.

We have not paid any cash dividends on our Common Stock since our inception. We do not anticipate paying cash dividends in the foreseeable future.  Any dividends paid in the future will be at the complete discretion of our Board of Directors.  For the foreseeable future, we anticipate that we will retain any revenues which we may generate from our operations. These retained revenues will be used to finance and develop the growth of the Company.  Prospective investors should be aware that the absence of dividend payments could negatively affect the market value of our Common Stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal executive offices are located at 175 Joerschke Drive, Suite A, Grass Valley, CA 95945. A description of our oil and gas properties is set forth above in this Annual Report under the heading “Business.” As of the date of this filing, the Company has not sought to move our office. Additional space may be required as the Company expands its operations. Management does not foresee any significant difficulties in obtaining any required additional space. The Company currently does not own any real property.

ITEM 3. LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 4. MINE SAFETY DISCLOSURE

None.

PART II

ITEM 5. MARKET FOR THE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock

Our common stock is currently quoted on the OTC Markets. Our common stock has been quoted on the OTC Markets since October 17, 2007 trading under the symbol “SBRT”. On January 15, 2008, our symbol was changed to “SBTR” and on December 15, 2009, our symbol was changed to “GRPR” to reflect our Company’s name change. Because we are quoted on the OTC Markets, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange. On April 21, 2016, our symbol was changed to “SIML” to reflect our Company’s name change to Simlatus Corporation.

The following table sets forth the high and low bid prices for our Common Stock per quarter as reported by the OTCQB for the period from April 1, 2015 through March 31, 2016, and April 1, 2014 through March 31, 2015 based on our fiscal year end March 31. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

Record Holders

As of March 31, 2016, there were 1,615,695,657 shares of the registrant’s $0.00001 par value common stock issued and outstanding and were owned by approximately 17 holders of record, based on information provided by our transfer agent.

Recent Sales of Unregistered Securities

On October 1, 2015, the holder of a convertible note converted a total of $5,000 of principal into 1,000,000 shares of our common stock.

On October 5, 2015, the holder of a convertible note converted a total of $290 of principal into 2,900,000 shares of our common stock.

On October 7, 2015, the holder of a convertible note converted a total of $18,500 of principal into 7,400,000 shares of our common stock.

On October 9, 2015, the holder of a convertible note converted a total of $4,575 of principal into 1,500,000 shares of our common stock.

On October 15, 2015, the holder of a convertible note converted a total of $20,500 of principal into 8,200,000 shares of our common stock.

On October 15, 2015, the holder of a convertible note converted a total of $5,411 of principal into 2,016,506 shares of our common stock.

On October 15, 2015, the holder of a convertible note converted a total of $7,650 of principal into 3,000,000 shares of our common stock.

On October 16, 2015, the holder of a convertible note converted a total of $14,336 of principal into 3,200,000 shares of our common stock.

On October 21, 2015, the holder of a convertible note converted a total of $3,350 of principal and $1,435 of interest into 3,300,000 shares of our common stock.

On October 23, 2015, the holder of a convertible note converted a total of $6,000 of principal into 4,864,864 shares of our common stock.

On October 23, 2015, the holder of a convertible note converted a total of $8,492 of principal into 9,932,164 shares of our common stock.

On October 23, 2015, the holder of a convertible note converted a total of $4,940 of principal into 5,200,000 shares of our common stock.

On October 26, 2015, the holder of a convertible note converted a total of $7,000 of principal into 10,000,000 shares of our common stock.

On October 26, 2015, the holder of a convertible note converted a total of $2,970 of principal into 3,300,000 shares of our common stock.

On October 26, 2015, the holder of a convertible note converted a total of $5,715 of principal into 6,350,000 shares of our common stock.

On October 26, 2015, the holder of a convertible note converted a total of $3,640 of principal into 5,200,000 shares of our common stock.

On October 26, 2015, the holder of a convertible note converted a total of $8,550 of principal into 9,000,000 shares of our common stock.

On October 28, 2015, the holder of a convertible note converted a total of $4,400 of principal into 8,000,000 shares of our common stock.

On October 28, 2015, the holder of a convertible note converted a total of $6,970 of principal into 7,744,444 shares of our common stock.

On October 28, 2015, the holder of a convertible note converted a total of $4,495 of principal into 8,172,800 shares of our common stock.

On October 29, 2015, the holder of a convertible note converted a total of $3,696 of principal into 9,240,000 shares of our common stock.

On October 29, 2015, the Company issued the holder of a convertible note 3,900,000 shares of its common stock pursuant to a reset notice.

On November 2, 2015, the holder of a convertible note converted a total of $12,000 of principal into 20,000,000 shares of our common stock.

On November 3, 2015, the holder of a convertible note converted a total of $1,800 of principal into 9,000,000 shares of our common stock.

On November 3, 2015, the Company issued the holder of a convertible note 15,000,000 shares of its common stock pursuant to a reset notice.

On November 5, 2015, the holder of a convertible note converted a total of $2,160 of principal into 10,800,000 shares of our common stock.

On November 5, 2015, the holder of a convertible note converted a total of $1,789 of principal into 8,945,800 shares of our common stock.

On November 5, 2015, the holder of a convertible note converted a total of $1,820 of principal into 9,100,000 shares of our common stock.

On November 5, 2015, the holder of a convertible note converted a total of $2,500 of principal into 12,500,000 shares of our common stock.

On November 5, 2015, the holder of a convertible note converted a total of $2,500 of principal into 12,500,000 shares of our common stock.

On November 9, 2015, the holder of a convertible note converted a total of $5,400 of principal into 27,000,000 shares of our common stock.

On November 9, 2015, the holder of a convertible note converted a total of $3,270 of principal into 24,222,222 shares of our common stock.

On November 9, 2015, the holder of a convertible note converted a total of $1,250 of principal into 12,500,000 shares of our common stock.

On November 9, 2015, the holder of a convertible note converted a total of $1,480 of principal into 14,800,000 shares of our common stock.

On November 10, 2015, the holder of a convertible note converted a total of $1,430 of principal into 14,300,000 shares of our common stock.

On November 10, 2015, the Company issued the holder of a convertible note 20,135,556 shares of its common stock pursuant to a reset notice.

On November 12, 2015, the holder of a convertible note converted a total of $305 of principal and $695 of interest into 20,000,000 shares of our common stock.

On November 12, 2015, the holder of a convertible note converted a total of $466 of principal into 9,414,500 shares of our common stock.

On November 13, 2015, the holder of a convertible note converted a total of $285 of principal into 5,700,000 shares of our common stock.

On November 13, 2015, the holder of a convertible note converted a total of $950 of principal into 19,000,000 shares of our common stock.

On November 13, 2015, the holder of a convertible note converted a total of $1,000 of interest into 20,000,000 shares of our common stock.

On November 13, 2015, the Company issued the holder of a convertible note 14,300,000 shares of its common stock pursuant to a reset notice.

On November 16, 2015, the holder of a convertible note converted a total of $2,175 of principal into 43,500,000 shares of our common stock.

On November 16, 2015, the holder of a convertible note converted a total of $1,403 of principal into 28,344,900 shares of our common stock.

On November 17, 2015, the holder of a convertible note converted a total of $450 of principal, $256 of interest and $1,470 in professional fees into 43,519,200 shares of our common stock.

On November 19, 2015, the holder of a convertible note converted a total of $1,240 of principal into 24,800,000 shares of our common stock.

On November 19, 2015, the holder of a convertible note converted a total of $1,125 of principal into 22,500,000 shares of our common stock.

On November 20, 2015, the holder of a convertible note converted a total of $1,712 of principal into 34,587,950 shares of our common stock.

On November 23, 2015, the holder of a convertible note converted a total of $1,300 of principal into 26,000,000 shares of our common stock.

On November 24, 2015, the holder of a convertible note converted a total of $750 of principal, $104 of interest and $1,320 in professional fees into 43,470,000 shares of our common stock.

On December 8, 2015, the holder of a convertible note converted a total of $760 of principal into 76,000,000 shares of our common stock.

On December 8, 2015, the holder of a convertible note converted a total of $1,905 of principal into 38,100,000 shares of our common stock.

On December 14, 2015, the holder of a convertible note converted a total of $125 of principal, $301 of interest and $1,220 in professional fees into 32,920,000 shares of our common stock.

On February 23, 2016, the holder of a convertible note converted a total of $1,950 of principal, $1,041 of interest and $1,370 in professional fees into 87,216,400 shares of our common stock.

On February 29, 2016, the holder of a convertible note converted a total of $4,300 of principal into 86,000,000 shares of our common stock.

On March 15, 2016, the holder of a convertible note converted a total of $5,950 of principal into 119,000,000 shares of our common stock.

On March 15, 2016, the holder of a convertible note converted a total of $2,387 of principal into 47,741,900 shares of our common stock.

On March 16, 2016, the holder of a convertible note converted a total of $2,850 of principal, $288 of interest and $1,370 in professional fees into 90,156,200 shares of our common stock.

On March 17, 2016, the holder of a convertible note converted a total of $3,121 of principal into 62,420,000 shares of our common stock.

On March 21, 2016, the holder of a convertible note converted a total of $3,200 of principal, $34 of interest and $1,370 in professional fees into 92,081,800 shares of our common stock.

On March 21, 2016, the holder of a convertible note converted a total of $5,500 of principal into 110,000,000 shares of our common stock.

On March 28, 2016, the holder of a convertible note converted a total of $6,980 of principal into 69,800,000 shares of our common stock.

Subsequent Issuances

On April 3, 2016, 1,000 Preferred Stock Series B shares issued to Santa Rosa Resources, Inc. was transferred in equal amounts of 250 shares each to Robert Stillwaugh, Mike Schatz, Gary Tilden and Donna Marie Murtaugh.

On April 5, 2016, the holder of a convertible note converted a total of $7,800 of principal into 156,000,000 shares of our common stock.

On April 6, 2016, the holder of a convertible note converted a total of $4,180 of principal into 83,600,000 shares of our common stock.

On April 8, 2016, the holder of a convertible note converted a total of $4,000 of principal and $153 of interest into 83,050,958 shares of our common stock.

On April 8, 2016, the holder of a convertible note converted a total of $4,404 of principal into 88,078,000 shares of our common stock.

On April 8, 2016, the Company issued the holder of a convertible note 150,000,000 shares of its common stock pursuant to a reset notice.

On April 12, 2016, the holder of a convertible note converted a total of $3,072 of interest into 61,440,000 shares of our common stock.

On April 14, 2016, the holder of a convertible note converted a total of $4,000 of principal into 80,000,000 shares of our common stock.

On April 15, 2016, the holder of a convertible note converted a total of $2,114 of principal into 42,282,200 shares of our common stock.

On April 22, 2016, the holder of a convertible note converted a total of $5,090 of principal into 181,800,000 shares of our common stock.

On April 26, 2016, the holder of a convertible note was issued 200,000,000 shares of our common stock pursuant to a Settlement and Release Agreement.

On April 28, 2016, the holder of a convertible note converted a total of $3,842 of principal into 76,831,600 shares of our common stock.

On April 28, 2016, the holder of a convertible note converted a total of $6,000 of principal into 120,000,000 shares of our common stock.

On April 29, 2016, the holder of a convertible note converted a total of $4,800 of principal into 96,000,000 shares of our common stock.

On May 2, 2016, the holder of a convertible note converted a total of $2,510 of principal into 50,200,000 shares of our common stock.

On May 3, 2016, the holder of a convertible note converted a total of $2,900 of principal and $85 of interest into 67,699,600 shares of our common stock.

On May 3, 2016, the holder of a convertible note converted a total of $10,850 of principal into 217,000,000 shares of our common stock.

On May 3, 2016, the holder of a convertible note converted a total of $6,000 of principal into 120,000,000 shares of our common stock.

On May 3, 2016, the holder of a convertible note converted a total of $6,975 of principal into 139,500,000 shares of our common stock.

On May 5, 2016, the holder of a convertible note converted a total of $9,740 of principal into 194,800,000 shares of our common stock.

On May 5, 2016, the holder of a convertible note converted a total of $7,500 of principal into 150,000,000 shares of our common stock.

On May 10, 2016, the holder of a convertible note converted a total of $4,275 of principal into 85,500,000 shares of our common stock.

On May 13, 2016, the holder of a convertible note converted a total of $19,600 of principal into 400,000,000 shares of our common stock.

On May 17, 2016, the holder of a convertible note converted a total of $10,000 of principal into 200,000,000 shares of our common stock.

Re-Purchase of Equity Securities

None.

Dividends

We have not paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend upon, among other things, future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future.

Securities Authorized for Issuance Under Equity Compensation Plans

None.

ITEM 6. SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Working Capital

Cash Flows

Results for the Year Ended March 31, 2016 Compared to the Year Ended March 31, 2015

Revenues:

The Company’s revenues were $0 for the year ended March 31, 2016 compared to $0 in 2015.

Cost of Revenues:

The Company’s cost of revenue was $0 for the year ended March 31, 2016, compared to $0 in 2015.

Operating Expenses:

Operating expenses for the year ended March 31, 2016, and March 31, 2015, were $1,031,829 and $1,324,833, respectively. Operating expenses consisted primarily of consulting fees, management fees, office expenses and preparing reports and SEC filings relating to being a public company. The increase was primarily attributable to an increase is consulting and professional fees.

Other Income (Expense):

Other income (expense) for the year ended March 31, 2016, and March 31, 2015, were $(1,873,605) and $(99,746), respectively. Other income (expense) consisted of debt forgiveness, gain or loss on derivative valuation and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable the initial interest expense associated with the valuation of derivative instruments at issuance and the accretion of the convertible debentures over their respective terms.

Net Loss:

Net loss for the year ended March 31, 2016, was $(2,905,434) compared with a net loss of $(1,424,579) for the year ended March 31, 2015. The increased net loss is due to the settlement of debt and a loss on the derivative valuation of convertible notes.

Impact of Inflation

We believe that the rate of inflation has had a negligible effect on our operations.

Liquidity and Capital Resources

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing funds.

As of March 31, 2016, total current assets were $207,082.

As of March 31, 2016, total current liabilities were $10,214,753, which consisted primarily of accounts payable and accrued expenses, short term liabilities and convertible debentures. We had negative net working capital of $(10,007,671) as of March 31, 2016.

Intangible Assets

The Company’s intangible assets were $5,972,311 as of March 31, 2016.

Material Commitments

The Company’s material commitments were $0 as of March 31, 2016.

Going Concern

As of March 31, 2016, we have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 GRID PETROLEUM CORP. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

Index to Consolidated Financial Statements

Scrudato & Co., PA

CERTIFIED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Grid Petroleum, Corp.

We have audited the accompanying balance sheet of Grid Petroleum Corp. as of March 31, 2016 and 2015, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Grid Petroleum Corp. at March 31, 2016 and 2015, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has experienced substantial losses since its inception and has limited business operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Scrudato & Co., PA

Califon, New Jersey

June 28, 2016

7 Valley View Drive Califon, New Jersey 07830 (908) 534-0008

Registered Public Company Accounting Oversight Board Firm

GRID PETROLEUM CORP.

(KNOWN AS SUNBERTA RESOURCES INC.)

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements

GRID PETROLEUM CORP.

(KNOWN AS SUNBERTA RESOURCES INC.)

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

The accompanying notes are an integral part of these financial statements

GRID PETROLEUM CORP.

(KNOWN AS SUNBERTA RESOURCES INC.)

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FROM THE PERIOD FROM APRIL 1, 2014 TO MARCH 31, 2016

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

The accompanying notes are an integral part of these consolidated financial statements

GRID PETROLEUM CORP.

(KNOWN AS SUNBERTA RESOURCES INC.)

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these financial statements

GRID PETROLEUM CORP.

(KNOWN AS SUNBERTA RESOURCES INC.)

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

Grid Petroleum Corp. (the “Company”) was incorporated in the State of Nevada with the name Sunberta Resources Inc. on November 15, 2006. The Company moved through the exploration stage and the Exploration Stage and is currently in the exploration stage once more. Its principal business is the acquisition and exploration of mineral claims and oil & gas properties.

On November 16, 2006, the Company acquired all the issued and outstanding shares of Sunberta Resources Inc. (“Sunberta Alberta”) an inactive corporation incorporated in the province of Alberta, Canada on September 19, 2006. The consideration for the acquisition of Sunberta Alberta was 2,000 shares (on a post-split basis) of the Company.

In January, 2007, Sunberta Alberta acquired seven placer claim tenures on southern Vancouver Island, British Columbia, Canada. During the year ended March 31, 2009, the Company abandoned three of the placer claim tenures and decided to abandon the remaining four properties. Between May 31, 2009 and June 14, 2009, the remaining four placer claim tenures expired. The carrying cost of the properties was written off and the operations associated with the properties were treated in the financial statements as discontinued operations in the year ended March 31, 2009. The Company entered the Exploration Stage on March 31, 2009, to seek other opportunities. See also note 2.

On November 18, 2009, the Company changed its name to Grid Petroleum Corp. (formerly known as Sunberta Resources, Inc.).

The Company’s activities to December 31, 2009, were carried on in Alberta and British Columbia, Canada. In February, 2010, operations were carried on in England. In mid-2010 the Company began to focus on its mineral properties in the United States, and activities of the Company thenceforth were controlled from the United States.

On May 14, 2010, the Company acquired from the CEO for nominal consideration all the issued shares of Grid Petroleum Ltd. (“Grid UK”), a company incorporated in January 27, 2010, under the laws of England. The purpose of Grid UK is to maintain bank accounts in the UK as nominee for the Company. Grid UK does not have any assets, liabilities or operations of its own.

On January 20, 2011, the Company entered into a Share Exchange Agreement (the “Agreement”) with a Nevada corporation, Joaquin Basin Resources Inc., (“Seller”), and its stockholders, (“Selling Shareholders”). Pursuant to the provisions of the Agreement, the Company issued to the Selling Shareholders (i) 62,000,000 shares of Company common stock and (ii) 2,076,324 shares of convertible preferred stock, in exchange for the transfer and delivery to the Company by the Selling Shareholders of the 62,000,000 shares of common stock issued by the Seller, which were all of the issued and outstanding securities of the Seller. As a result of the related transaction on February 1, 2011, the Seller became a wholly owned subsidiary of the Company. The issue of preferred stock was delayed until February 2012. None of the parties to the Agreement is a related person.

On May 23, 2012, we executed an agreement to acquire a 10% percent working interest, 7.5% net revenue interest, from a third party interest holder of the Garcia #3 well in Jim Wells County, Texas. The Company agreed to purchase the working interest for $300,000, payable in convertible promissory note with Direct Capital, convertible into 0.001 shares of the Company’s common stock. The convertible promissory note was executed on May 23, 2012.

On October 1, 2013 the Company executed a Convertible Promissory Note for $384,000 for oilfield management and industry support for the Company’s expansion efforts into California, Texas, and Oklahoma. Additional support has been is being provided on an ongoing basis for evaluation into North Dakota and Colorado for future expansion efforts. The note represents a monthly fee of $16,000 per month for the last 24 months of work provided to the company.

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”); thereby, acquiring Intellectual Property referred to as “Media IP” and inventory consisting of finished products and raw materials and supplies. RJM will assign the Media IP asset and inventories and provide “Know-How” that will enable the Company to launch a Broadcast Equipment and Digital Media Product Line, together valued at Six Million Two Hundred Fifty Thousand Dollars ($6,250,000). As consideration for the Media IP and the “Know -How”, the Buyer shall issue, or cause to be issued, $5,000,000 of Restricted Common Stock (PAR $.00001) Ninety (90) days from the date of this agreement and $1,250,000 of Preferred Series-A Shares of a GRPR Preferred Stock; (PAR $.001). The value of restricted common shares will be the closing price of the stock as of 90 days from this agreement. The maturity date for the restricted common shares will be 60 months from the date of this agreement.

On March 25, 2016, the Company approved a name change to Simlatus Corp, stock symbol SIML, which was executed on April 4, 2016. The new name change better described the Company’s new business and new revenues in selling commercial broadcast equipment on a global basis.

Principles of Consolidation

The consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries, Sunberta Alberta, Grid Petroleum Ltd. (“Grid UK”) and Joaquin Basin Resources, Inc. All significant inter-company balances and transactions are eliminated.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash and highly liquid investments with original maturity dates of less than three months that may not be reported as investments. While the Company may maintain cash and cash equivalents in bank deposit accounts, which at times exceed Federal Deposit Insurance Corporation insured limits, they have not experienced any losses in such accounts.

Management believes it is not exposed to any significant credit risk on cash and cash equivalents.

Mineral Properties and Exploration Expenses

Mineral properties purchased are capitalized and carried at cost. Exploration and development cost are charged to operations as incurred until such time that proven or probable ore reserves are discovered. From that time forward, the Company will capitalize all costs to the extent that future cash flow from reserves equals or exceeds the cost deferred. The deferred cost will be amortized using the unit-of-production method when a property reaches commercial production.

Oil and Gas Properties and Exploration Expenses

Oil and gas property acquisition costs are capitalized and carried at cost. Exploration and development costs are accounted for on the successful-efforts method, whereby the costs related to successful projects are capitalized and all costs incurred as a result of unsuccessful projects are expensed when it is determined that the exploration efforts on that property are unsuccessful. The Company will periodically analyze exploration efforts, once exploration on its oil and gas properties has commenced, to determine which projects have been unsuccessful in establishing proved reserves. The costs of unsuccessful projects will be expensed.

Impairment of Long-Lived Assets

The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operating cash flows in accordance with ASC No. 144, Property, Plant and Equipment. If impairment is deemed to exist, it will be written down to its fair value. Fair value is generally determined using a discounted cash flow analysis. As of March 31, 2016, the Company does not believe any adjustment for impairment is required.

Asset Retirement Obligations

The Company has adopted FASB Accounting Standards Codification Topic (“ASC”) No. 410, Asset Retirement and Environmental Obligations which requires that the fair value of liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC No. 410 requires a liability to be recorded for the present value of the estimated site restoration costs with a corresponding increase to the carrying amount of the related long-lived asset. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. The Company has not incurred any asset retirement obligations as of March 31, 2016.

Advertising Expenses

Advertising costs are expensed as incurred.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles of United States of America 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 reporting period.

Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.

Loss Per Share

Basic loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding during the period after giving retroactive effect to the reverse stock split affected on July 27, 2015 (see Note 10). Diluted earnings (loss) per share is equal to the basic per share for the years ended March 31, 2016 and 2015. Common stock equivalents are not included in the loss per share since they are anti-dilutive. All per share amounts have been adjusted for the reverse stock split.

Inventories

Inventories are stated at the lower of cost, computed using the first-in, first-out method and net realizable value. Any adjustments to reduce the cost of inventories to their net realizable value are recognized in earnings in the current period. As of March 31, 2016, the Company’s inventories consist primarily of raw materials and supplies rather than finished goods.

Long Lived Assets Including Goodwill and Other Acquired Intangible Assets

The Company amortizes its intangible assets with definite useful lives over their estimated useful lives and reviews these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years.

Fair Value of Financial Instruments

The carrying value of cash, notes payable, and accounts at March 31, 2016 and 2015 reflected in these financial statements approximates their fair value due to the short-term maturity of these financial instruments.

Income Taxes

The Company records deferred taxes in accordance with FASB ASC No. 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

Comprehensive Income

The Company has adopted ASC No. 220, Comprehensive Income. Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities.

Exploration Stage

The Company entered the exploration stage upon its inception. The Company exited the development stage and entered the Exploration Stage on March 31, 2009 when the Company’s mineral claims tenures in British Columbia were abandoned and the Company started seeking new business. The Company exited the Exploration Stage and entered a new exploration stage on March 31, 2010 after the Company acquired oil and gas properties in Wyoming. In January 2011, the Company acquired oil and gas properties in California and started planning to explore the properties.

Recent Accounting Pronouncements

On June 10, 2014, The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, consolidation removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. For the first annual period beginning after December 15, 2014, the presentation and disclosure requirements in Topic 915 will no longer be required for the public business entities. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company has adopted this amendment effective the current reporting period.

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of any other pronouncements to have an impact on its results of operations or financial position.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

2. GOING CONCERN

These consolidated financial statements have been prepared on a going-concern basis which assumes the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future.

The Company has experienced substantial losses since its inception and has limited business operations, which raises substantial doubt about the Company’s ability to continue as going concern. The ability of the Company to meet its commitments as they become payable, including the completion of acquisitions, exploration and development of oil and gas properties and projects, is dependent on the ability of the Company to obtain necessary financing or achieving a profitable level of operations. There is no assurance the Company will be successful in achieving these goals.

The Company does not have sufficient cash to fund its desired exploration for the next twelve months. The Company has arranged financing as described in Note 5 and intends to draw upon this financing arrangement to fund exploration, production and administration. This financing may be insufficient to fund expenditures or other cash requirements required to find, develop and exploit oil and reserves to the point of profitable operations. There can be no assurance the Company will be successful in finding oil and gas reserves. The Company plans to seek additional financing if necessary in private or public equity offering to secure future funding for operations. There can be no assurance the Company will be successful in raising additional funding. If the Company is not able to secure additional funding, the implementation of the Company’s business plan will be impaired. There can be no assurance that such additional financing will be available to the Company on acceptable terms or at all.

These financial statements do not give effect to adjustments to the amounts and classification to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

3. OIL AND GAS PROPERTIES

The Company has oil and gas properties in California.

On January 20, 2011, the Company purchased, through its subsidiary Joaquin Basin Resources Inc., a 50% working interest (37% net revenue interest) in a mineral lease on 4,000 acres in Kings and Fresno counties in California. The lease was initially recorded at the cost of issuing 62,000,000 common shares. On January 20, 2012, 2,076,000 shares of convertible preferred stock were issued in concluding the Joaquin Basin purchase agreement. The cost of the issue, $4,152,000, was based on the value of preferred stock as if converted to common stock. The total cost, $7,026,666, was supported by a volumetric analysis.

On November 21, 2011, a portion of the interest in the lease was swapped for a future “carry” of exploration costs and administration of the lease. Grid’s 50% working interest (37.5% net revenue interest) was reduced to 30% and 14% respectively. The co-lessee, is the obligor under the agreement. Future exploration costs include the operating “carry” costs of the lease and drilling costs of the first well, named “First Farmin Well.” The exploration costs were valued based on the percentage reduction in net revenue interest. A reduction of $4,825,334 in the value of the Joaquin Basin property was recorded.

Impairment of the California properties from their recorded acquisition values was considered at March 31, 2015 and 2014. Management considered that there were no changes in circumstances that would warrant impairment from the estimated values indicated by independently prepared geological reports.

On October 18, 2013, the Company entered into an Asset Swap Agreement (the “Asset Swap Agreement”) by and amongst the Company, Xploration Inc., a Nevada Corporation (“Xploration”) and Solimar Energy, LLC, a California limited liability company (“Solimar”); thereby, swapping certain land leases as described below, forgiveness of delay rentals and terminating the (a) Kreyenhagen Trend Joint Operating Agreement dated March 1, 2011, between Solimar and Xploration (“Kreyenhagen Trend JOA”), (b) Jacalitos Joint Operating Agreement dated March 1, 2011, between Solimar and Xploration (“Jacalitos JOA”) and the (c) Farmin / Settlement Agreement dated November 3, 2011, between Solimar and Xploration, with an effective date as of September 1, 2013. 

Solimar assigned eighty four percent (84%) of its interest in the Bureau of Land Management Lease, serial number: CACA 49877 representing 1,140.62 gross and net landowner acres that is a part of the Kreyenhagen Trend to the Company.

The Company has oil and gas properties in Wyoming which it does not wish to develop and, accordingly has recorded an impairment in the amount of $85,334 at March 31, 2013.

In connection with an Amendment to an Asset Purchase Agreement dated November 21, 2011, the Company recorded rights to future exploration costs in the amount of $4,825,334 on its balance sheet as of March 31, 2012. The Company recorded a full impairment as of March 31, 2013.

Oil and gas properties are summarized as follow as at March 31, 2016:

4. INTANGIBLE ASSETS

On March 9, 2016, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with RJM and Associates, LLC, a California limited liability company (“RJM”); thereby, acquiring Intellectual Property referred to as “Media IP” and inventory consisting of finished products and raw materials and supplies. RJM will assign the Media IP asset and inventories and provide “Know-How” that will enable the Company to launch a Broadcast Equipment and Digital Media Product Line. The total purchase price consideration for these acquisitions was Six Million Two Hundred Fifty Thousand Dollars ($6,250,000), which consisted of inventory at $204,856, and $6,045,144 to acquired intangible asset. The final transaction of the Agreement with be completed after the date of this report.

The Company’s acquired intangible assets with definite useful lives primarily consist of Media IP and “Know-How” and are amortized over a period typically five years. The following table summarizes the components of gross and net intangible asset balances as of March 31, 2016:

5. NOTE PAYABLE

Notes payable comprised as the following:

Asher Note #4

On April 4, 2013, the Company arranged a debt swap under which a Special Situations Fund note for $40,000 was transferred to Asher Enterprises. The promissory note is unsecured, bears interest at 8% per annum. Any principal amount not paid by the maturity date bears interest at 22% per annum. During the years ended March 31, 2016 and 2015, the Company accrued $2,155 and $2,860 respectively in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company. The conversion price is 55% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date”.

On June 30, 2013, the Company recorded a derivative liability of $66,774 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the years March 31, 2016 and 2015, the Company recorded a loss of $2,548 and a gain of $20,307 respectively due to the change in value of the derivative liability.

On March 21, 2016, the Company retired this note, at no penalty, in full. Both parties agreed to cancel the note and its obligations entirely.

At March 31, 2016 and 2015, principal balance of $0 and $13,000 respectively, accrued interest of $0 and $5,853 respectively, and a derivative liability of $0 and $21,088 respectively was recorded.

Special Situations Fund One Note

On March 12, 2012, the Company arranged a debt swap under which an Asher Enterprises note for $40,000 was transferred to Special Situations Fund One for the Asher note plus an additional $21,491, for a total of $61,491. On April 4, 2013, the Company transferred $40,000 of the note to Asher Enterprises. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 12, 2012. During the years ended March 31, 2016 and 2015, the Company accrued $1,724 and $1,719 respectively in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company. The conversion price is 55% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

On September 9, 2012, the Company recorded a derivative liability of $71,218, being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $3,920 and a gain of $36,521 respectively due to the change in value of the derivative liability during the period.

At March 31, 2016 and 2015, principal balance of $21,491 and $21,491 respectively, accrued interest of $12,754 and $11,030 respectively, and a derivative liability of $41,701 and $37,781 respectively was recorded.

Direct Capital Note #1

On December 31, 2012, the Company entered into a debt settlement agreement with Direct Capital Group, Inc., whereby the Company exchanged $70,671 in total outstanding debt into Convertible Preferred Shares of the Company. Each of the Convertible Preferred shares will convert into common shares of the Company with the conversion price being the lesser of $0.001 or shall equal the variable conversion price (the “Variable Conversion Price”). The Variable Conversion Price shall mean 50% multiplied by the market price (the “Market Price”). The Market Price means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading day period ending on the latest complete Trading Day prior to the Conversion Date. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 31, 2012, the Company recorded an initial derivative liability of $94,326 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $13,005 and a gain of $122,773 due to the change in value of the derivative liability during the period.

At March 31, 2016 and 2015, principal balance of $70,671 and $70,671 respectively and a derivative liability of $139,887 and $126,882 respectively was recorded.

Direct Capital Note #2

On October 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $384,000. The promissory note is unsecured, bears interest at 6% per annum, and matures on April 1, 2014. Any principal amount not paid by the maturity date shall bear interest at the rate of 12% per annum. During the years ended March 31, 2016 and 2015, the Company accrued $43,705 and $46,016 respectively in interest expense.

The note may be converted at the option of the holder into common stock of the Company. The conversion price is 70% of the market price, where market price is defined as “the average of the lowest three of the last ten closing trading prices on the OTCBB immediately prior to conversion date.”

On October 31, 2013 the Company recorded a debt discount and derivative liability of $268,330, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $45,011 and a gain of $457,279 respectively due to the change in value of the derivative liability during the period.

During the year ended March 31, 2016 the Company issued an aggregate of 391,800,000 common shares upon the conversion of principal amount of $50,765. The derivative liability amounting to $56,553 was re-classified to additional paid in capital.

On March 24, 2016, accrued interest of $30,000 was reassigned to Anthony Super.

At March 31, 2016 and 2015, principal balance of $330,035 and $380,800 respectively, accrued interest of $71,146 and $57,441 respectively, and a derivative liability of $465,704 and $477,246 respectively was recorded.

Direct Capital Note #3

On October 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $360,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2015. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $79,417 and $14,282 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 1, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $360,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $989 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $360,000 and $360,000 respectively and accrued interest of $93,699 and $14,282 respectively was recorded.

Direct Capital Note #4

On January 1, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $360,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2015. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $66,852 and $7,022 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On January 1, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $360,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $182,983 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $360,000 and $360,000 respectively and accrued interest of $53,874 and $7,022 respectively, was recorded.

Direct Capital Note #5

On March 31, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 30, 2015. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $36,099 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On March 31, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $240,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $240,000 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $240,000 and $240,000 respectively and accrued interest of $36,099 and $0 respectively, was recorded.

Direct Capital Note #6

On June 30, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 30, 2015. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $22,843 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On June 30, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $240,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $240,000 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $240,000 and $0 respectively, and accrued interest of $22,843 and $0 respectively, was recorded.

Direct Capital Note #7

On September 30, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $240,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 31, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $9,626 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On September 30, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $240,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $120,656 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $240,000 and $0 respectively, accrued interest of $9,626 and $0 respectively, and debt discount of $119,344 and $0 respectively was recorded.

Direct Capital Note #8 (formerly Syndication Capital Note #2)

On July 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $14,072.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $784 and $3,096 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On July 1, 2015, the principal amount of $14,000 was reassigned to Santa Rosa Resources, Inc.

At March 31, 2016 and 2015, principal balance of $72 and $14,072 respectively and accrued interest of $4,939 and $4,155 respectively was recorded.

Direct Capital Note #9 (formerly Syndication Capital Note #3)

On July 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $1,213 and $2,420 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 27, 2015, the principal amount of $11,000 and interest of $4,461 was reassigned to Southridge Partners.

At March 31, 2016 and 2015, principal balance of $0 and $11,000 respectively and accrued interest of $0 and $3,248 respectively was recorded.

Direct Capital Note #10 (formerly Syndication Capital Note #4)

On August 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $1,213 and $2,420 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 27, 2015, the principal amount of $11,000 and interest of $4,269 was reassigned to Southridge Partners.

At March 31, 2016 and 2015, principal balance of $0 and $11,000 respectively and accrued interest of $0 and $3,056 respectively was recorded.

Direct Capital Note #11 (formerly Syndication Capital Note #5)

On September 30, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $11,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $2,427 and $2,413 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

At March 31, 2016 and 2015, principal balance of $11,000 and $11,000 respectively and accrued interest of $5,276 and $2,849 respectively was recorded.

Direct Capital Note #12 (formerly Syndication Capital Note #6)

On October 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $1,765 and $3,330 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On September 18, 2015, the principal balance of $16,000 and accrued interest of $5,625 was reassigned to Rockwell Capital Partners Inc.

At March 31, 2016 and 2015, principal balance of $0 and $16,000 respectively and accrued interest of $0 and $3,860 respectively was recorded.

Direct Capital Note #13 (formerly Syndication Capital Note #7)

On November 30, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $1,765 and $3,140 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On September 18, 2015, the principal balance of $16,000 and accrued interest of $4,441 was reassigned to Rockwell Capital Partners Inc.

At March 31, 2016 and 2015, principal balance of $0 and $16,000 respectively and accrued interest of $0 and $3,564 respectively was recorded.

Direct Capital Note #14 (formerly Syndication Capital Note #8)

On December 31, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $1,765 and $2,952 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 15, 2015, the principal balance of $16,000 and accrued interest of $5,033 was reassigned to Microcap Equity Group LLC.

At March 31, 2016 and 2015, principal balance of $0 and $16,000 respectively and accrued interest of $0 and $3,268 respectively was recorded.

Direct Capital Note #15 (formerly Syndication Capital Note #9)

On January 31, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on August 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $2,653 and $2,765 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 2, 2015, the principal balance of $16,000 and accrued interest of $5,625 was reassigned to ARC Capital Ltd.

At March 31, 2016 and 2015, principal balance of $0 and $16,000 respectively and accrued interest of $0 and $2,972 respectively was recorded.

Direct Capital Note #16 (formerly Syndication Capital Note #10)

On February 28, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on September 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $878 and $2,575 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On July 1, 2015, the principal balance of $16,000 was reassigned to Santa Rosa Resources, Inc.

At March 31, 2016 and 2015, principal balance of $0 and $16,000 respectively and accrued interest of $3,561 and $2,684 respectively was recorded.

Direct Capital Note #17 (formerly Syndication Capital Note #11)

On March 31, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $16,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $3,530 and $2,387 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

At March 31, 2016 and 2015, principal balance of $16,000 and $16,000 respectively and accrued interest of $5,917 and $2,387 respectively was recorded.

Direct Capital Note #18 (formerly Syndication Capital Note #12)

On April 30, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $48,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2014.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $8,178 and $6,286 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 23, 2015, the principal amount of $25,000 was reassigned to GHS Investments, LLC.

At March 31, 2016 and 2015, principal balance of $23,000 and $48,000 respectively and accrued interest of $14,464 and $6,286 respectively was recorded.

Direct Capital Note #19 (formerly Syndication Capital Note #13)

On July 31, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $48,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2015.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $5,294 and $3,624 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On September 30, 2015, the principal balance of $48,000 was reassigned to Blackbridge Capital, LLC.

At March 31, 2016 and 2015, principal balance of $0 and $48,000 respectively and accrued interest of $8,919 and $3,624 respectively was recorded.

Direct Capital Note #20 (formerly Syndication Capital Note #14)

On October 31, 2014 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $48,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2015.  Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. On August 8, 2015, the note was reassigned to Direct Capital Group, Inc.

During the years ended March 31, 2016 and 2015, the Company accrued $7,280 and $1,589 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 31, 2014, interest expense relating to the beneficial conversion feature of this convertible note of $48,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $5,436 and $0 respectively was accreted to the statement of operations.

On October 15, 2015, the principal balance of $48,000 and accrued interest of $6,419 was reassigned to Tangiers Investment Group, LLC.

On January 1, 2016, the principal balance of $45,157 and accrued interest of $795 was reassigned back to Direct Capital Group, LLC from Tangiers Investment Group, LLC.

At March 31, 2016 and 2015, principal balance of $45,157 and $48,000 respectively, and accrued interest of $3,245 and $1,589 respectively was recorded.

Direct Capital Note #21

On October 31, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 30, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $2,665 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On October 31, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $26,813 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $80,000 and $0 respectively, accrued interest of $2,665 and $0 respectively, and debt discount of $53,187 and $0 respectively was recorded.

Direct Capital Note #22

On November 30, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 31, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $2,139 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On November 30, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $13,552 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $80,000 and $0 respectively, accrued interest of $2,139 and $0 respectively, and debt discount of $66,448 and $0 respectively was recorded.

Direct Capital Note #23

On December 31, 2015 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 30, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $1,596 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On December 31, 2015, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $0 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $80,000 and $0 respectively, accrued interest of $1,596 and $0 respectively, and debt discount of $80,000 and $0 respectively was recorded.

Direct Capital Note #24

On January 31, 2016 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 31, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $1,052 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On January 31, 2016, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $0 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $80,000 and $0 respectively, accrued interest of $1,052 and $0 respectively, and debt discount of $80,000 and $0 respectively was recorded.

Direct Capital Note #25

On February 29, 2016 the Company entered into a Convertible Promissory Note with Direct Capital Group, Inc. in the sum of $80,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 31, 2016. Any principal amount not paid by the maturity date shall bear interest at a rate of 22% annum. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time.  The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933

During the years ended March 31, 2016 and 2015, the Company accrued $544 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On February 29, 2016, interest expense relating to the beneficial conversion feature of this convertible note of $80,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $0 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $80,000 and $0 respectively, accrued interest of $544 and $0 respectively, and debt discount of $80,000 and $0 respectively was recorded.

Syndication Capital Note #1 

On December 31, 2012, the Company entered into a debt settlement agreement with Syndication Capital, whereby the Company exchanges $105,000 in total outstanding debt into Convertible Preferred Shares of the Company. Each of the Convertible Preferred shares will convert into common shares of the Company with the conversion price being the lesser of $0.001 or shall equal the variable conversion price (the “Variable Conversion Price”). The Variable Conversion Price shall mean 50% multiplied by the market price (the “Market Price”). The Market Price means the average of the lowest three (3) Trading Prices for the Common Stock during the ten (10) Trading day period ending on the latest complete Trading Day prior to the Conversion Date. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 31, 2012, the Company recorded an initial derivative liability of $140,146 being the fair value of the conversion feature which was determined using the Black-Scholes valuation method.

On August 4, 2013, the Company transferred $100,000 of the note to Gel Properties, LLC and recorded a credit to derivative liability of $453,305.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $920 and a gain of $8,686 respectively due to the change in value of the derivative liability during the period.

At March 31, 2016 and 2015, principal balance of $5,000 and $5,000 respectively and a derivative liability of $9,897 and $8,977 respectively was recorded.

Coventry Enterprises Note #2

On March 3, 2014, the Company arranged a debt swap under which an Xploration, Inc. note for $4,000 in principal and $46,000 in interest was transferred to Coventry Enterprises, LLC. The promissory note is unsecured, bears interest at 6% per annum and matures on March 3, 2015. Any principal amount not paid by the maturity date bears interest at 24% per annum. During the years ended March 31, 2016 and 2015, the Company accrued $3,062 and $1,661 respectively in interest expense.

On March 3, 2014 the Company recorded a debt discount and derivative liability of $63,693, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $6,570 and a gain of $59,285 respectively due to the change in value of the derivative liability during the period.

During the years ended March 31, 2016 the Company issued an aggregate of 115,990,000 common shares upon the conversion of principal amount of $17,886. The derivative liability amounting to $32,653 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $2,114 and $20,000 respectively, accrued interest of $4,921 and $1,859 respectively, and a derivative liability of $3,483 and $29,566 respectively, was recorded.

LG Capital Funding Note

On March 3, 2014, the Company arranged a debt swap under which an Xploration, Inc. note for $40,000 was transferred to LG Capital Funding, LLC. The promissory note is unsecured, bears interest at 8% per annum and matures on March 3, 2015. Any principal amount not paid by the maturity date bears interest at 24% per annum. During the years ended March 31, 2016 and 2015, the Company accrued $6,979 and $2,676 respectively in interest expense.

On March 3, 2014 the Company recorded a debt discount and derivative liability of $63,048, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $5,336 and a gain of $50,380 respectively due to the change in value of the derivative liability during the period.

At March 31, 2016 and 2015, principal balance of $29,000 and $29,000 respectively, accrued interest of $9,798 and $2,819 respectively, and a derivative liability of $57,403 and $52,066 respectively was recorded.

New Venture Attorneys Note

On April 1, 2014, the Company issued a convertible promissory note to New Venture Attorneys PC for legal fees. Under the terms of the note, the Company has borrowed a total of $50,000 from New Venture Attorneys PC, which accrues interest at an annual rate of 8% and has a maturity date of April 1, 2015. Any principal amount not paid by the maturity date bears interest at 24% per annum. The note also contains customary events of default. During the years ended March 31, 2016 and 2015, the Company accrued $6,422 and $3,898 respectively in interest expense.

After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company. The conversion price is 50% of the market price, where market price is defined as “the lowest closing bid on the OTCQB for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company.”

On September 29, 2014 the Company recorded a debt discount and derivative liability of $81,987, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $10,230 and a gain of $7,782 respectively due to the change in value of the derivative liability during the period and a debt discount of $134 and $49,866 respectively was accreted to the statement of operations.

On October 13, 2015, the principal balance of $50,000 and accrued interest of $10,411 was reassigned to GW Holdings, LLC and the derivative liability amounting to $100,000 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $0 and $50,000 respectively, accrued interest of $0 and $3,989 respectively, a debt discount of $0 and $134 respectively and a derivative liability of $0 and $89,769 respectively was recorded.

Santa Rosa Resources Note

On July 1, 2015, the Company entered into a Convertible Promissory Note with Santa Rosa Resources under which two notes issued to Syndication Capital were reassigned to Santa Rosa Resources in the sum of $30,000. The promissory note is unsecured, bears interest at 8% per annum, and matured on September 1, 2014. The Conversion Price shall mean par $.00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

During the years ended March 31, 2016 and 2015, the Company accrued $1,203 and $0 respectively in interest expense.

A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.

On July 1, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $30,000 was recorded in the financial statements with a corresponding increase to additional paid in capital. During the years ended March 31, 2016 and 2015 debt discount of $30,000 and $0 respectively was accreted to the statement of operations.

On March 21, 2016, the Company retired this note, at no penalty, in full. Both parties agreed to cancel the note and its obligations entirely.

At March 31, 2016 and 2015, principal balance of $0 and $0 respectively, and accrued interest of $0 and $0 respectively was recorded.

Rockwell Capital Partners Note #1

On September 18, 2015, the Company reassigned the principal and accrued interest of a Direct Capital Note to Rockwell Capital Partners Inc. The original note was issued on November 30, 2013 in the sum of $16,000.  The promissory note is unsecured, and matured on June 1, 2014.

On September 18, 2015 the Company recorded a debt discount and derivative liability of $32,000, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $3,698 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $16,000 and $0 respectively was accreted to the statement of operations.

During the years ended March 31, 2016 the Company issued an aggregate of 77,800,000 common shares upon the conversion of principal amount of $16,000 and interest of $1,695. The derivative liability amounting to $35,698 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $0 and $0 respectively and accrued interest of $0 and $0 respectively was recorded.

Rockwell Capital Partners Note #2

On September 18, 2015, the Company reassigned the principal and accrued interest of a Direct Capital Note to Rockwell Capital Partners Inc. The original note was issued on October 31, 2013 in the sum of $16,000.  The promissory note is unsecured, and matured on May 1, 2014.

On September 18, 2015 the Company recorded a debt discount and derivative liability of $32,000, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $9,496 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $16,000 and $0 respectively was accreted to the statement of operations.

During the years ended March 31, 2016 the Company issued an aggregate of 7,300,000 common shares upon the conversion of principal amount of $16,000 and interest of $1,435. The derivative liability amounting to $41,496 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $0 and $0 respectively and accrued interest of $0 and $0 respectively was recorded.

Blackbridge Capital Note

On September 30, 2015, the Company reassigned $48,000 of the principal balance of a Direct Capital Note to Blackbridge Capital, LLC. The original note was issued on July 31, 2014 in the sum of $48,000.  The promissory note is unsecured, bears interest at 5% per annum, and matures on February 28, 2016. During the years ended March 31, 2016 and 2015, the Company accrued $135 and $0 respectively in interest expense.

On September 30, 2015 the Company recorded a debt discount and derivative liability of $96,000, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $26,596 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $48,000 and $0 respectively was accreted to the statement of operations.

During the years ended March 31, 2016 the Company issued an aggregate of 40,600,000 common shares upon the conversion of principal amount of $46,000. The derivative liability amounting to $118,637 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $2,000 and $0 respectively, accrued interest of $135 and $0 respectively, debt discount of $0 and $0 respectively, and a derivative liability of $4,959 and $0 respectively was recorded.

ARC Capital Ltd Note

On October 2, 2015, the Company reassigned $21,625 of the principal balance and accrued interest of a Direct Capital Note to ARC Capital Ltd. The original note was issued on January 31, 2014 and had a principal balance of $16,000 and accrued interest of $5,625. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 2, 2016. During the years ended March 31, 2016 and 2015, the Company accrued $858 and $0 respectively in interest expense.

On October 2, 2015 the Company recorded a debt discount and derivative liability of $51,900, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a gain of $9,095 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $21,505 and $0 respectively was accreted to the statement of operations.

At March 31, 2016 and 2015, principal balance of $21,625 and $0 respectively, accrued interest of $858 and $0 respectively, debt discount of $120 and $0 respectively, and a derivative liability of $42,805 and $0 respectively was recorded.

GW Holdings Group LLC Note

On October 13, 2015, the Company reassigned $60,411 of the principal balance and accrued interest of a New Venture Attorneys Note to GW Holdings Group LLC. The original note was issued on April 1, 2014 and had a principal balance of $50,000 and accrued interest of $10,411. The promissory note is unsecured and matured on April 1, 2015.

On October 13, 2015 the Company recorded a debt discount and derivative liability of $159,082, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a gain of $31,651 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $60,411 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 19,381,370 common shares upon the conversion of principal amount of $13,911. The derivative liability amounting to $35,387 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $46,500 and $0 respectively, and a derivative liability of $92,044 and $0 respectively was recorded.

Microcap Equity Group LLC Note

On October 15, 2015, the Company reassigned the principal balance and accrued interest of a Direct Capital Group Note to Microcap Equity Group LLC. The original note was issued on December 31, 2013 and had a principal balance of $16,000 and accrued interest of $5,033. The promissory note is unsecured and matured on July 30, 2015.

On October 15, 2015 the Company recorded a debt discount and derivative liability of $32,000, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $978 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $16,000 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 179,520,000 common shares upon the conversion of principal amount of $11,820 and accrued interest of $1,961. The derivative liability amounting to $24,704 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $4,180 and $0 respectively, accrued interest of $3,072 and $0 respectively, and a derivative liability of $8,274 and $0 respectively, was recorded.

Tangiers Investment Group LLC Note

On October 15, 2015, the Company reassigned $56,919 of the principal balance and accrued interest of a Direct Capital Note to Tangiers Investment Group LLC. The original note was issued on October 31, 2014, and had a principal balance of $48,000 and accrued interest of $6,419.  The promissory note is unsecured, bears interest at 8% per annum, and matures on October 15, 2016. During the years ended March 31, 2016 and 2015, the Company accrued $795 and $0 respectively in interest expense.

On October 15, 2015 the Company recorded a debt discount and derivative liability of $113,838, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $8,939 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $56,919 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 34,154,386 common shares upon the conversion of principal amount of $11,762. The derivative liability amounting to $32,463 was re-classified to additional paid in capital.

On January 1, 2016, the principal balance of $45,157 and accrued interest of $795 was reassigned back to Direct Capital Group, LLC. The derivative liability balance of $90,314 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $0 and $0 respectively, accrued interest of $0 and $0 respectively, debt discount of $0 and $0 respectively, and a derivative liability of $0 and $0 respectively, was recorded.

GHS Investments LLC Note

On October 23, 2015, the Company reassigned $25,000 of the principal amount of a Direct Capital Note to GHS Investments LLC. The original note was issued on April 30, 2014 with a principal balance of $48,000.  The promissory note is unsecured, bears interest at 8% per annum, and matures on July 25, 2016. During the years ended March 31, 2016 and 2015, the Company accrued $588 and $0 respectively in interest expense.

On October 23, 2015 the Company recorded a debt discount and derivative liability of $76,316, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a gain of $24,785 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $20,725 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 137,207,850 common shares upon the conversion of principal amount of $12,253. The derivative liability amounting to $26,298 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $12,748 and $0 respectively, accrued interest of $588 and $0 respectively, debt discount of $4,725 and $0 respectively, and a derivative liability of $25,233 and $0 respectively was recorded.

Southridge Partners LP Note

On October 27, 2015, the Company reassigned $30,730 of the principal balance and accrued interest of two Direct Capital Note to Southridge Partners LP. The original notes were issued on July 31, 2013 and August 31, 2013, and had a principal balance of $11,000 and $11,000 respectively and accrued interest of $4,461 and $4,269 respectively. The promissory note is unsecured, bears interest at 8% per annum, and matured on March 1, 2014. During the years ended March 31, 2016 and 2015, the Company accrued $2,023 and $0 respectively in interest expense.

On October 27, 2015 the Company recorded a debt discount and derivative liability of $38,817, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a loss of $23,135 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $30,730 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 417,243,600 common shares upon the conversion of principal amount of $15,075 and $2,023 in interest. The derivative liability amounting to $30,964 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $15,655 and $0 respectively, accrued interest of $0 and $0 respectively, and a derivative liability of $30,988 and $0 respectively was recorded.

Tide Pool Note

On March 11, 2016, the Company reassigned $20,000 of the accrued interest amount of a Direct Capital Note to Tide Pool Ventures Corporation. The original note was issued on January 1, 2015 with a principal balance of $360,000. The promissory note is unsecured and matured on July 1, 2015.

On March 11, 2016 the Company recorded a debt discount and derivative liability of $39,725, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a gain of $102 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $20,000 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 110,000,000 common shares upon the conversion of principal amount of $5,500. The derivative liability amounting to $10,921 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $14,500 and $0 respectively, debt discount of $0 and $0 respectively, and a derivative liability of $28,702 and $0 respectively was recorded.

Anthony Super Note

On March 24, 2016, the Company reassigned $30,000 of the accrued interest amount of a Direct Capital Note to Anthony Super. The original note was issued on October 1, 2013 with a principal balance of $384,000.  The promissory note is unsecured, and matured on April 1, 2014.

On March 11, 2016 the Company recorded a debt discount and derivative liability of $59,572, being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.

During the years ended March 31, 2016 and 2015, the Company recorded a gain of $145 and $0 respectively due to the change in value of the derivative liability during the period and debt discount of $30,000 and $0 respectively was accreted to the statement of operations.

During the year ended March 31, 2016 the Company issued an aggregate of 69,800,000 common shares upon the conversion of principal amount of $6,980. The derivative liability amounting to $13,861 was re-classified to additional paid in capital.

At March 31, 2016 and 2015, principal balance of $23,020 and $0 respectively, debt discount of $0 and $0 respectively, and a derivative liability of $45,566 and $0 respectively was recorded.

6. DERIVATIVE LIABILITIES

The Company issued financial instruments in the form of convertible notes with embedded conversion features. Some of the convertible notes payable have conversion rates, which are indexed to the market value of the Company’s stock price.

During the years ended March 31, 2016 and 2015, the Company recorded derivative liabilities for embedded conversion features related to convertible notes payable of face value $731,250 and $81,987 respectively. During the years ended March 31, 2016 and 2015, $231,066 and $92,844 respectively of convertible notes payable principal and accrued interest was converted into common stock of the Company. For the years ended March 31, 2016 and 2015, the Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes of and the carrying amount of the derivative liability related to the conversion feature of $673,585 and $161,255 respectively, was re-classed to additional paid in capital on the date of conversion in the statement of shareholders’ deficit. During the years ended March 31, 2016 and 2015, the Company recognized a loss of $94,605 and a gain of $824,734 respectively based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations. 

These derivative liabilities have been measured in accordance with fair value measurements, as defined by ASC 820. The valuation assumptions are classified within Level 1 and Level 2 inputs. The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above.

The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above:

These instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes in the fair value will be recognized currently in earnings until such time as the instruments are exercised, converted or expire. 

7. SECURITIES PURCHASE AGREEMENT

On April 23, 2010, the Company entered into an agreement with an investor whereby the investor committed to purchase up to $5,000,000 of units, consisting of shares of the Company’s common stock and share purchase warrants, until April 22, 2013. The Company may draw on the facility from time to time, as and when it determines appropriate in accordance with the terms and conditions of the agreement. Each advance shall be in an aggregate amount of not more than $1,000,000 and in integral multiples of $100,000. The Company will use the advances to fund operating expenses, acquisitions, and exploration and general corporate activities. The investor also has an option to subscribe up to a further $2,500,000.

Each unit consists of one share of the Company’s common stock and one share purchase warrant. The unit price will be the price to the higher of either: (a) $0.75; or (b) 90% of the volume weighted average of the closing price of common stock, for the five banking days immediately preceding the date of the notice of advance. Each warrant shall entitle the investor to purchase one additional share of common stock at an exercise price equal to 150% of the unit price at which the unit containing the warrant being exercised was issued.

The Company issued 401,067 shares under the agreement during the fiscal year ended March 31, 2011, realizing $400,000. This option expired as of April 22, 2013.

8. RELATED PARTY TRANSACTIONS

Related party transaction not disclosed elsewhere in the consolidated financial statements are as follows:

On March 8, 2010, the Company entered an employment agreement with the newly-appointed President, James Powell. Pursuant to the terms of the agreement, the President will receive a base salary of $5,000 per month. The employment agreement will continue indefinitely subject to termination by either party without cause on 30 days’ notice.

On October 24, 2011, the Company entered into a new employee agreement with President, James Powell. Pursuant to the terms of the agreement, the President will receive a base salary of $2,500 per month. This agreement supersedes any prior agreements made between the Company and the President.

On March 8, 2010, the Company entered an employment agreement with the newly-appointed Chairman of the Board, Tim DeHerrera. Pursuant to terms of the terms of the agreement, Mr. DeHerrera will receive a base salary of $8,000 per month with an incremental rise of $500 per quarter until an amount of $10,000 per month is achieved.

Mr. DeHerrera agreed to acquire 6,000,000 shares of the former CEO’s shares at $0.02 per share. The new CEO’s shares were be held in escrow in the form of eight certificates each representing 750,000 shares which were released between April 30, 2010 and March 5, 2012 (a minimum of twenty-one months from the first release date).

On December 2, 2011, the Company entered into a new employee agreement with Chairman, Tim DeHerrera. Pursuant to the terms of the agreement, the Chairman will receive an annual salary of $90,000 payable as follows; $7,500 per month for months 1-12 and $10,000 per month for months 13-24. The parties agreed that if the Company does not have the capital available to compensate the cash portion of the agreement, Mr. DeHerrera shall have the option of converting the fees earned into common stock at $.01 per share. As additional compensation for services, the Company shall issue common stock of the Company equal up to an amount of 12,000,000 shares upon signing the agreement and an additional 12,000,000 on December 12, 2013. This agreement supersedes any prior agreements made between the Company and the Chairman.

On December 2, 2011, pursuant to the employment and consulting agreement, Mr. DeHerrera was issued 12,000,000 restricted common shares.

On May 23, 2012, pursuant to the employment consulting agreement, Mr. Powell was issued 2,500,000 common shares.

On March 3, 2015, Tim DeHerrera, resigned from his position with the Company as Treasurer, Secretary and a member of the Board. His resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On March 21, 2016 Mr. DeHererra, agreed to convert all of his outstanding salary and unpaid expenses to Preferred Series A Stock. The Company issued 200,000 shares of Preferred Series A stock to satisfy $358,459 of debt owed to Mr. DeHererra. The stock is locked-up for 24 months.

During the years ended March 31, 2016 and 2015, the Company recorded $0 and $110,000 respectively in consulting fees and other expenses.

On March 3, 2015, James Powell was appointed as the Company’s Treasurer, Secretary and as a member of the Board.

On September 9, 2015 James Powell announced his resignation as President, Secretary, Treasure, and Director of the Company. There are no known disagreements with Mr. Powell regarding such resignation or any claims the Company may have against him.

During the years ended March 31, 2016 and 2015, the Company recorded $12,500 and $30,000 respectively in consulting fees for Mr. Powell increasing the amount due to $162,500.

On September 9, 2015 Edward Aruda was appointed President, Director, Secretary, and Treasurer of the Company.

On March 9, 2016, Mr. Aruda, tendered his resignation as President, Secretary and Treasurer. Mr. Aruda will remain a Director of the Company.  Mr. Aruda’s resignation was not due to any disagreement on any matter relating to the operations, policies, or practices of the Company.

On March 21, 2016, Mr. Aruda, signed an agreement to waive all of his unpaid salary and expenses to date in the amount of $8,000. This debt has been canceled and removed from the financial statements.

During the years ended March 31, 2016 and 2015, the Company recorded $0 and $0 respectively in consulting fees.

The Company is indebted to its officers as follow: