Mexus Gold US - Quarter Report: 2013 September (Form 10-Q)

form10q093013.htm

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2013

[ ]		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _____________

MEXUS GOLD US

Nevada	000-52413	20-4092640
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification Number)
	1805 N. Carson Street, #150
	Carson City, NV 89701
	(Address of principal executive offices)

	(916) 776 2166
	(Issuer’s Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule12b-2 of the Exchange Act.

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

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

Yes	[ ]
No	[X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court.

Yes	[ ]
No	[ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 19, 2013, 227,049,883 shares of our common stock were issued and outstanding.

PART I

ITEM 1.FINANCIAL STATEMENTS

MEXUS GOLD US

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

		September 30, 2013	March 31, 2013
ASSETS
CURRENT ASSETS
	Cash	$ -	$ 104,701
	Prepaid and other assets	4,759	25,019
TOTAL CURRENT ASSETS		4,759	129,720

FIXED ASSETS
	Equipment, net of accumulated depreciation	1,913,235	1,955,813
TOTAL FIXED ASSETS		1,913,235	1,955,813

OTHER ASSETS
	Deferred finance expense	190,185	-
	Equipment under construction	107,522	52,575
	Property costs	1,248,633	1,233,483
TOTAL OTHER ASSETS		1,546,340	1,286,058

TOTAL ASSETS		$ 3,464,334	$ 3,371,591

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Bank overdraft	$ 5,945	$ -
	Accounts payable and accrued liabilities	130,217	68,750
	Accounts payable - related party	21,221	12,863
	Notes payable	189,765	192,500
	Note payable - related party	340,132	218,992
	Promissory notes	255,000	-
	Secured convertible promissory note (net of unamortized debt discount $214,311)	185,689	-
	Secured convertible promissory note derivative liability	377,763	-
	Warrant derivative liability	255,363	-
TOTAL CURRENT LIABILITIES		1,761,095	493,105

TOTAL LIABILITIES		1,761,095	493,105

SHAREHOLDERS' EQUITY
	Capital stock
	Authorized
	9,000,000 shares of preferred stock, $0.001 par value per share, nil issued and outstanding	-	-
	1,000,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share	-	-
	500,000,000 shares of common stock, $0.001 par value per share	-	-
	Issued and outstanding
	375,000 shares of Series A Convertible Preferred Stock (375,000 - March 31, 2013)	375	375
	223,557,508 shares of common stock (212,468,077 - March 31, 2013)	223,558	212,468
	Additional paid-in capital	12,597,858	11,266,771
	Share subscription payable	816,984	417,369
	Accumulated deficit	(648,441)	(648,441)
	Accumulated deficit during the exploration stage	(10,679,118)	(7,893,186)
	Total Mexus Gold Shareholders' Equity	2,311,216	3,355,356
	Non-controlling interest	(607,977)	(476,870)
TOTAL SHAREHOLDERS' EQUITY		1,703,239	2,878,486

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$ 3,464,334	$ 3,371,591

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

MEXUS GOLD US

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


						For the Period from
						Exploration Stage re-entry
		Three Months Ended September 30,		Six Months Ended September 30,		(September 18, 2009) to
		2013	2012	2013	2012	September 30, 2013
REVENUES
	Revenues	$ 72,099	$ 50,145	$ 478,486	$ 155,728	$ 1,898,139
Total revenues		72,099	50,145	478,486	155,728	1,898,139

Expenses
	General and administrative	263,286	205,516	456,270	379,892	3,224,032
	Bad debt expense - related party	-	-	247,509	-	488,182
	Exploration costs	778,806	154,396	1,665,631	297,972	5,776,445
	Stock-based expense - consulting services	167,300	582,725	204,800	610,621	2,691,086
	Impairment of mineral property	-	185,368	-	185,368	339,664
	Loss on sale of equipment	-	18,598	-	18,598	279,317
	Loss/(gain) on settlement of debt	8,840	(647,750)	8,840	(647,750)	(274,875)
Total operating expenses		1,218,232	498,853	2,583,050	844,701	12,523,851

OTHER INCOME (EXPENSE)
	Interest expense	(270,562)	(9,452)	(432,336)	(15,169)	(547,912)
	Foreign exchange loss	(9,761)	-	(26,870)	-	(26,870)
	Loss on derivative liabilities	(348,586)	-	(353,269)	-	(353,269)
		(628,909)	(9,452)	(812,475)	(15,169)	(928,051)

NET LOSS		(1,775,042)	(458,160)	(2,917,039)	(704,142)	(11,553,763)

NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(29,256)	-	(131,107)	-	(874,645)

NET LOSS ATTRIBUTABLE TO MEXUS GOLD US		$ (1,745,786)	$ (458,160)	$ (2,785,932)	$ (704,142)	$ (10,679,118)

BASIC LOSS PER COMMON SHARE		$ (0.01)	$ (0.00)	$ (0.01)	$ (0.00)

WEIGHTED AVERAGE NUMBER OFCOMMON SHARES
OUTSTANDING- BASIC		220,275,617	188,560,115	217,441,270	184,809,066

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

Mexus Gold US

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			For the Period from
			Exploration Stage
	Six Months Ended September 30,		re-entry (September 18,
	2013	2012	2009) to September 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,917,039)	$ (704,142)	$ (11,553,763)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization	177,160	119,081	799,042
Loss on sale of equipment	-	18,598	287,117
Loss on settlement of accounts payable	-	-	11,000
Loss (gain) on settlement of debt	8,840	(647,750)	(274,875)
Stock-based compensation	204,800	610,621	2,662,616
Accrued interest expense	432,336	3,000	493,967
Impairment of equipment included in exploration costs	7,500	185,368	7,500
Impairment of mineral property	-	-	339,664
Bad debt expense - related party	247,509	-	488,182
Loss on derivatives	353,269	-	353,269
Changes in operating assets and liabilities:
Prepaid and other assets	3,964	(6,617)	48,770
Accounts payable and accrued liabilities	50,015	(10,849)	415,531
NET CASH USED IN OPERTATING ACTIVITIES	(1,431,646)	(432,690)	(5,921,980)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment	(33,586)	(219,066)	(1,997,894)
Purchase of equipment under construction	(47,647)	(2,779)	(469,255)
Purchase of mineral properties	-	(69,051)	(448,730)
Issuance of notes receivable	(247,509)	19,000	(488,182)
Proceeds from sale of equipment	7,800	-	285,989
NET CASH USED IN INVESTING ACTIVITES	(320,942)	(271,896)	(3,118,072)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft	5,945	-	5,945
Proceeds from issuance of notes payable	302,265	121,200	1,263,030
Payments on notes payable	(50,000)	(98,639)	(356,616)
Payments on loans payable	-	(204)	(1,343)
Proceeds from issuance of convertible promissory notes	375,000	-	375,000
Advances from related party	156,974	10,488	516,404
Payment on advances from related party	(35,834)	(22,490)	(89,621)
Advance from Powercom Services Inc.	-	-	800,000
Proceeds from issuance of common stock	893,537	720,994	6,479,155
Share subscriptions payable	-	-	43,393
NET CASH PROVIDED BY FINANCING ACTIVITIES	1,647,887	731,349	9,035,347

INECREASE (DECREASE) IN CASH	(104,701)	26,763	(4,705)
CASH, BEGINNING OF PERIOD	104,701	-	4,705
CASH, END OF PERIOD	$ -	$ 26,763	$ -

Supplemental disclosure of cash flow information:
Interest paid	$ 21,250	$ 2,116	$ 43,331
Taxes paid	$ -	$ -	$ -

Supplemental disclosure of non-cash investing and financing activities:
Shares issued for notes payable	$ -	$ 212,500	$ 806,957
Shares issued for advances - related party	$ -	$ -	$ 2,200
Shares issued for accounts payable, including related party	$ 19,930	$ 21,500	$ 590,250
Deferred gain on equipment	$ -	$ -	$ 46,000
Shares issued and unissued for equipment purchase	$ 107,300	$ 165,919	$ 481,799
Shares issued for equipment under construction	$ -	$ -	$ 5,000
Shares issued for mineral property	$ 15,150	$ 12,000	$ 577,150
Asset relinquished to settle debt	$ -	$ -	$ 145,938
Asset given as settlement of payable	$ -	$ -	$ 6,500
Loan for equipment	$ -	$ -	$ 43,046
Payables issued for mineral properties	$ -	$ 19,250	$ (15,000)
Reclassified prepaid to fixed asset	$ 16,296	$ -	$ 16,296
Fixed asset reclassified to equipment under construction	$ 7,300	$ -	$ 7,300
Subscription payable settled by related party	$ -	$ (5,745)	$ (5,745)

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

MEXUS GOLD US

(AN EXPLORATION STAGE COMPANY)

Notes to Consolidated Financial Statements

September 30, 2013

(Unaudited)

1.	ORGANIZATION AND BUSINESS OF COMPANY

Mexus Gold US (the “Company”) was originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc. On October 28, 2005, the Company changed its’ name to Action Fashions, Ltd. On September 18, 2009, the Company changed its’ domicile to Nevada and changed its’ name to Mexus Gold US to better reflect the Company’s new planned principle business operations. The Company has a fiscal year end of March 31.

The Company re-entered the exploration stage as of September 18, 2009, as defined by the Financial Accounting Standard Board (FASB) in FASB ASC 915-10, “Development Stage Entities”. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since re-entry into the exploration stage has been considered part of the Company’s exploration stage activities.

The Company is a mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States, as well as, the salvage of precious metals from identifiable sources.

2.	BASIS OF PREPARATION

Pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q, the consolidated financial statements, footnote disclosures and other information normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The consolidated financial statements contained in this report are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the consolidated financial statements. All significant inter-company accounts and transactions have been eliminated in consolidation. The results of operations for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet at March 31, 2013 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 reviews these estimates and assumptions on an ongoing basis using currently available information. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid financial instruments purchased with a maturity of six months or less to be cash equivalents. As of September 30, 2013, $5,945 of bank overdrafts were classified as a current liability.

Per Share Data

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Fair Value of Financial Instruments

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.

The Company's financial instruments consist of cash, accounts payable, accrued liabilities, advances, notes payable, and a loan payable. The carrying amount of these financial instruments approximate fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Our warrant derivative liability and secured convertible promissory note derivative liability is measured at fair value on a recurring basis using Level 3 inputs.

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. The notes payable, loans payable and secured convertible promissory notes have fixed interest rates therefore the Company is exposed to interest rate risk in that they could not benefit from a decrease in market interest rates. In seeking to minimize the risks from interest rate fluctuations, the Company manages exposure through its normal operating and financing activities.

Deferred Financing Costs

Deferred financing costs are amortized to interest expense based on the terms of the related debt instruments on a straight- line basis, which approximates the effective interest rate method.

Accounting for Derivative Instruments

Accounting standards require that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. A change in the market value of the financial instrument is recognized as a gain or loss in results of operations in the period of change.

Stock-based Compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.

Revenue Recognition

The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured.

Exploration and Development Costs

Exploration costs incurred in locating areas of potential mineralization or evaluating properties or working interests with specific areas of potential mineralization are expensed as incurred. Development costs of proven mining properties not yet producing are capitalized at cost and classified as capitalized exploration costs under property, plant and equipment. Property holding costs are charged to operations during the period if no significant exploration or development activities are being conducted on the related properties. Upon commencement of production, capitalized exploration and development costs would be amortized based on the estimated proven and probable reserves benefited. Properties determined to be impaired or that are abandoned are written-down to the estimated fair value. Carrying values do not necessarily reflect present or future values.

Mineral Property Rights

Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Reclassification

The Company reclassified $18,052 of accounts payable, related party as of March 31, 2013 to accounts payable to conform to the current presentation. Additionally, the Company reclassified $16,296 of prepaid expenses as of September 30, 2013 to fixed assets to record a prepaid capital lease. The reclassifications had no effect on the Company’s financial condition, results of operations, or cash flows.

3.	GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company has a limited operating history and limited funds and has an accumulated deficit of $648,441 and an accumulated deficit since re-entry into the exploration stage of $10,679,118 at September 30, 2013. These factors, among others, may indicate that the Company may not be able to continue as a going concern.

The Company is dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plans to raise necessary funds through a private placement of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to raise the necessary funds, or that if it is successful in raising the necessary funds, that the Company will successfully execute its business plan.

The financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation as a going concern is dependent upon the ability of the Company to meet our obligations on a timely basis, and, ultimately to attain profitability.

4.	RECENT ACCOUNTING PRONOUNCEMENTS AFFECTING THE COMPANY

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the second quarter of fiscal 2014, or which are expected to impact future periods that were not already adopted and disclosed in prior periods.

5.	NOTE RECEIVABLE AND RECOVERABLE DISBURSEMENT - RELATED PARTY

On October 29, 2012, the Company entered into a note agreement with Kenneth Azuka, owner and operator of Trinidad Pacifica in the amount of $140,000. On February 28, 2013, an additional $10,000 advance was disbursed to Kenneth Azuka. The business purpose of the $140,000 note and advance of $10,000 was to pay payroll and social security tax arrears of Trinidad Pacifica that were incurred prior to November 1, 2012. This note is non-interest bearing and is due on July 29, 2013.

In addition, the Company paid $90,673 and $247,509 directly to suppliers for expenses incurred by Trinidad Pacifica from November 1, 2012 to March 31, 2013 and April 1, 2013 to September 30, 2013, respectively. The Company recorded these payments as a recoverable disbursement since these expenses were incurred by Trinidad Pacifica prior to November 1, 2012, the date of the Joint Venture Agreement. The Company plans to recover these disbursements from the other Venturers as it was represented to the Company in the Joint Venture Agreement that there were no outstanding liabilities from activities of the Venturers prior to November 1, 2013 which the Company was responsible.

At June 30, 2013, the note, advance and recoverable disbursements were determined to be impaired since the Company believes the debtor does not have the financial capacity to repay these debts at June 30, 2013. A bad debt expense of $240,673 and $247,509 was recorded in the consolidated statement of operations for the year ended March 31, 2013 (2012 - $0) and the six months ended September 30, 2013 (2012 - $0), respectively. The Company plans to recover these amounts from either Kenneth Azuka, the Joint Venture or from the other Venturers interest in the Joint Venture. The recovery, if any, will be recorded in the consolidated statement of operations in the period collectability is reasonably assured.

6.	ACCOUNTS PAYABLE – RELATED PARTIES

During the six months ended September 30, 2013 and 2012, the Company incurred rent expense to Paul D. Thompson, the sole director and officer of the Company, of $22,800 and $22,800, respectively. At September 30, 2013 and March 31, 2013, $21,221 and $12,863 for this obligation is outstanding, respectively.

7.	NOTES PAYABLE

On January 8, 2013, the Company entered into an unsecured promissory note agreement with William H. Brinker in the amount of $185,000. The note is due on demand upon the occurrence of certain events and at the discretion of the note holder. A finance charge of $5,000 is due on or before March 31, 2013. The note is secured by 5,000,000 shares of common stock of Mexus Gold US pledged by the Company and certain mining equipment including a radial stacker and cone crushing plant. On April 1, 2013, the Company repaid $50,000 in principal and $140,000 remains outstanding at September 30, 2013 ($190,000 – March 31, 2013).

During the six months ended September 30, 2013, the Company received advances totalling 490,000 Mexican Pesos ($37,265 USD). These advances are non-interest bearing, unsecured and have no specific terms of repayment.

Defaulted Senior Notes

On February 16, 2010, the Company made an unsecured Promissory Note Agreement with William McCreary in the amount of $2,500 at eight percent interest and due on demand or no later than September 1, 2010. The Company has not made the scheduled payments and is in default on this note as of December 31, 2011. The default rate on the note is eight percent. At September 30, 2013 and March 31, 2013, the balances on this note totalled $2,500 and $2,500, respectively. At September 30, 2013 and March 31, 2013, accrued interest of $3,235 and $3,185 on this note have been included in accounts payable and accrued liabilities, respectively.

8.	NOTES PAYABLE – RELATED PARTY

These notes are unsecured, non-interest bearing and due on demand. These notes were accumulated through a series of cash advances to the Company and are due to Paul D. Thompson, the sole director and officer of the Company. At September 30, 2013 and March 31, 2013, Notes payable – related party totalled $0 and $8,992, respectively.

Notes due to Taurus Gold, Inc. are unsecured, non-interest bearing and due on demand. These notes were accumulated through a series of cash advances to the Company. Taurus Gold, Inc. is controlled by Paul D. Thompson, the sole director and officer of the Company. As of September 30, 2013 and March 31, 2013, notes payable due to Taurus Gold Inc. totalled $340,132 and $210,000, respectively.

9.	PROMISSORY NOTES

On April 18, 2013, the Company issued Promissory Notes for $255,000 in cash. The Notes bear interest of 4% per annum and are due on December 31, 2013. The Notes are secured by all of Mexus Gold US shares of stock in Mexus Resources S.A. de C.V. and a personal guarantee of Paul D. Thompson. In addition, a fee of 2,550,000 shares of common stock of the Company valued at $501,075 ($0.1965 per share) was paid to the Note holders on April 18, 2013. These financing fees are capitalized in the consolidated balance sheet as deferred finance expense and are being amortized on a straight-line basis, which approximates the effective interest rate method, as interest expense over the life of the Promissory Notes.

10.	SECURED CONVERTIBLE PROMISSORY NOTES

On June 12, 2013, the Company entered into a Securities Purchase Agreement with Typenex Co-Investment, LLC (“Typenex”), for the sale of an 8% Secured Convertible Promissory Notes (“Notes”) in the principal amount of $557,500 consisting of an initial tranche of $307,500 comprising of $250,000 of cash at closing, Typenex legal expenses in the amount of $7,500 and a $50,000 original issue discount and an additional tranche $250,000 in cash. On June 12, 2013 the Company closed on the initial tranche and received $250,000 in cash. On August 8, 2013, the Company closed on the second tranche and received $125,000 in cash. The Company has not closed on the final tranche for $125,000 in cash. The Company has no obligation to pay Typenex any amounts on the unfunded portion of the Note. The Notes have a maturity date that is thirteen months after the issuance date. Typenex has been granted a security interest in the property of the Company.

At the option of the holder, all principal, costs, charges and interest amounts outstanding under all of the Notes shall be exchanged for shares of the Company’s common stock at the Conversion Price of $0.23 per share. The Conversion Price is subject to an anti-dilution adjustment in the event the Company at any time, while the Notes are outstanding, issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.23 a share.

In conjunction with the issuance of the Notes on June 12, 2013, the Company issued a variable number of warrants of the Company’s common stock equal to $278,750 divided by the Market Price. Market Price is defined as the higher of (i) the closing price of the common stock of the Company on June 12, 2013, and (ii) the VWAP of the common stock for the trading day that is two days prior to the exercise date. The Exercise Price of the warrants are $0.24 per share. The Exercise Price is subject to an anti-dilution adjustment in the event the Company at any time, while the Warrants are outstanding, issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.24 a share.

The anti-dilution protection for the Note and Warrants excludes (a) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as any such issuances are not for the purpose of raising capital and in which holders of such securities or debt are not at any time granted registration rights, and (b) the Company’s issuance of Common Stock or the issuance or grant of options to purchase Common Stock to employees, directors, officers and consultants, authorized by the Company’s board of directors in place on June 12, 2013.

After six months after the issuance date, monthly installments are due on the Note payable at the option of the Company (i) in cash (ii) in shares of common stock of the Company discounted depending on the Company’s share price at either 30% or 35%, or (iii) in any combination of cash or shares.

On June 12, 2013, the Company recorded a discount on the Note equal to the fair value of the warrant derivative liability and convertible promissory note derivative liability. This discount is amortized using the effective interest rate method over the term of the Note.

	Six months ended September 30,
	2013	2012
Cash advanced on closing of the initial tranche and second tranche	$ 375,000	$ -
Discounts on Note
Fair value of warrant derivative liability	(219,372)	-
Fair value of convertible promissory note liability	(75,219)	-
Loss on derivative liabilities	14,734	-
Amortization of discount on Note	90,546	-

	$ 185,689	$ -

11.	WARRANT DERIVATIVE LIABILITY

The Warrants are subject to anti-dilution adjustments that allow for the reduction in the Exercise Price in the event the Company subsequently issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.24 a share. The Company accounted for the warrants in accordance with ASC Topic 815. Accordingly, the Warrants are not considered to be solely indexed to the Company’s own stock and, as such, recorded as a liability.

The Company’s warrant derivative liability has been measured at fair value at September 30, 2013 using a binomial model. Since the Exercise Price contains an anti-dilution adjustment, the probability that the Exercise Price of the Notes would decrease as the share price decreased was incorporated into the valuation calculation. After June 12, 2013, the Company issued common stock for cash at a price of $0.05 per share and the conversion price has been adjusted accordingly.

The inputs into the binomial model are as follows:

	September 30, 2013
Closing share price	$0.082
Conversion price	$0.05
Risk free rate	1.39%
Expected volatility	147%
Dividend yield	0%
Expected life	56 months

The fair value of the conversion option derivative liability is $255,363 at September 30, 2013. The increase in the fair value of the conversion option derivative liability of $35,991 is recorded as a loss in the unaudited consolidated condensed statement of operations for the six months ended September 30, 2013.

12.	CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITY

The Notes are subject to anti-dilution adjustments that allow for the reduction in the Conversion Price in the event the Company subsequently issues equity securities including common stock or any security convertible or exchangeable for shares of common stock for no consideration or for consideration less than $0.23 a share. The

Company accounted for the conversion option in accordance with ASC Topic 815. Accordingly, the Conversion Option is not considered to be solely indexed to the Company’s own stock and, as such, recorded as a liability.

The Company’s convertible promissory note derivative liability has been measured at fair value at June 12, 2013 and September 30, 2013 using a binomial model. Since the Conversion Price contains an anti-dilution adjustment, the probability that the Conversion Price of the Notes would decrease as the share price decreased was incorporated into the valuation calculation. After June 12, 2013, the Company issued common stock for cash at a price of $0.05 per share and the conversion price has been adjusted accordingly.

The inputs into the binomial model are as follows:

	September 30, 2013
Closing share price	$0.082
Conversion price	$0.05
Risk free rate	0.10%
Expected volatility	111%
Dividend yield	0%
Expected life	9 months

The fair value of the conversion option derivative liability is $377,763 at September 30, 2013. The decrease in the fair value of the conversion option derivative liability of $302,544 is recorded as a loss in the unaudited consolidated condensed statement of operations for the six months ended September 30, 2013.

11.	CONTINGENT LIABILITIES

An asset retirement obligation is a legal obligation associated with the disposal or retirement of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. While the Company, as of September 30, 2013, does not have a legal obligation associated with the disposal of certain chemicals used in its leaching process, the Company estimates it will incur costs up to $50,000 to neutralize those chemicals at the close of the leaching pond.

12.	STOCKHOLDERS’ EQUITY

The stockholders’ equity of the Company comprises the following classes of capital stock as of September 30, 2013 and March 31, 2013:

Preferred Stock, $.001 par value per share; 9,000,000 shares authorized, 0 shares issued and outstanding at September 30, 2013 and March 31, 2013, respectively.

Series A Convertible Preferred Stock (‘Series A Preferred Stock”), $.001 par value share; 1,000,000 shares authorized: 375,000 shares issued and outstanding at September 30, 2013 and March 31, 2013.

On August 22, 2011, the Board of Directors designated 1,000,000 shares of its Preferred Stock, $0.001 par value as Series A Preferred Stock. Holders of Series A Preferred Stock may convert one share of Series A Preferred Stock into one share of Common Stock. Holders of Series A Preferred Stock have the number of votes determined by multiplying (a) the number of Series A Preferred Stock held by such holder, (b) the number of issued and outstanding Series A Preferred Stock and Common Stock on a fully diluted basis, and (c) 0.000006.

Common Stock, par value of $0.001 per share; 500,000,000 shares authorized: 223,557,508 and 212,468,077 shares issued and outstanding at September 30, 2013 and March 31, 2013, respectively. Holders of Common Stock have one vote per share of Common Stock held.

On May 3, 2013, the Company issued 880,714 shares of common stock to satisfy obligations under share subscription agreements for $119,250 in cash and $18,000 in services included in share subscriptions payable.

On May 21, 2013, the Company issued 823,332 shares of common stock to satisfy obligations under share subscription agreements for $125,250 in cash included in share subscriptions payable.

On May 22, 2013, the Company issued 2,550,000 shares of common stock to satisfy obligations under share subscription agreements for $501,075 in financing fees included in share subscriptions payable.

On June 17, 2013, the Company issued 387,500 shares of common stock to satisfy obligations under share subscription agreements for $27,000 in cash included in share subscriptions payable.

On June 26, 2013, the Company issued 824,509 shares of common stock to satisfy obligations under share subscription agreements for $43,000 in cash and $34,500 in services included in share subscriptions payable.

On July 18, 2013, the Company issued 125,000 shares of common stock to satisfy obligations under share subscription agreements for $10,000 in cash included in share subscriptions payable.

On July 29, 2013, the Company issued 626,571 shares of common stock to satisfy obligations under share subscription agreements for $34,800 in cash and $12,600 in services included in share subscriptions payable.

On July 30, 2013, the Company issued 66,666 shares of common stock to satisfy obligations under share subscription agreements for $6,000 in cash included in share subscriptions payable.

On July 31, 2013, the Company issued 1,014,285 shares of common stock to satisfy obligations under share subscription agreements for $71,000 in cash included in share subscriptions payable.

On August 1, 2013, the Company issued 150,000 shares of common stock to satisfy obligations under share subscription agreements for $15,150 in mineral properties included in share subscriptions payable.

On August 26, 2013, the Company issued 1,582,856 shares of common stock to satisfy obligations under share subscription agreements for $50,500 in cash and $89,700 in services included in share subscriptions payable.

On September 6, 2013, the Company issued 1,049,998 shares of common stock to satisfy obligations under share subscription agreements for $82,500 in cash included in share subscriptions payable.

On September 19, 2013, the Company issued 1,008,000 shares of common stock to satisfy obligations under share subscription agreements for $100,800 in equipment included in share subscriptions payable.

Common Stock Payable

During the six months ended September 30, 2013, the Company received $893,537 in cash in exchange for subscriptions payable of 11,772,552 shares of common stock ($0.0759 per share). During the three months ended September 30, 2013, the Company cancelled and subsequently amended three subscription payable agreements, increasing the number of shares by 367,663.

During the six months ended September 30, 2013, the Company issued subscriptions payable for 2,019,385 shares of common stock for services valued at $204,800 ($0.101 per share).

During the six months ended September 30, 2013, the Company issued subscriptions payable for 1,073,000 shares of common stock for equipment valued at $107,300 ($0.100 per share).

During the six months ended September 30, 2013, the Company issued subscriptions payable for 150,000 shares of common stock for mineral properties valued at $15,150 ($0.101 per share).

During the six months ended September 30, 2013, the Company issued subscriptions payable for 223,250 shares of common stock for settlement of accounts payable valued at $19,930 ($0.0893 per share).

During the six months ended September 30, 2013, the Company issued subscriptions payable for 2,550,000 shares of common stock for a fee valued at $501,075 ($0.1965 per share) for Promissory Notes issued on April 18, 2013 for $255,000 in cash.

13. SUBSEQUENT EVENTS

On October 31, 2013, the Company issued 679,404 shares of common stock to satisfy obligations under share subscription agreements for $40,764 in cash included in share subscriptions payable.

On November 1, 2013, the Company issued 2,312,971 shares of common stock to satisfy obligations under share subscription agreements for $143,293 in cash included in share subscriptions payable.

On November 4, 2013, the Company issued 500,000 shares of common stock to satisfy obligations under share subscription agreements for $50,000 in cash included in share subscriptions payable.

Common Stock Payable

From October 1, 2013 to November 14, 2013, the Company received $283,476 in cash in exchange for subscriptions payable of 5,513,765 shares of common stock ($0.0514 per share).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

Cautionary Statement Concerning Forward-Looking Statements

The following discussion and analysis should be read in conjunction with our unaudited interim consolidated financial statements and related notes included in this report. This report contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.

Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements. Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in our Form 10-K filed with the SEC on July 15, 2013.

The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties, and assumptions about us. For these statements, we claim the protection of the “bespeaks caution” doctrine. All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.

The Company

Mexus Gold US is an exploration stage mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States. Mexus Gold US is dedicated to protect the environment, provide employment and education opportunities for the communities that it operates in.

Our President and CEO, Paul Thompson, brings over 40 years’ experience in mining and mining development to Mexus Gold US. Mr. Thompson is currently recruiting additional management personnel for its Mexico, Nevada, and submarine Cable Recovery operations to assist in growing the company.

Our executive offices are located at, 1805 N. Carson Street, #150, Carson City, Nevada 89701. Our telephone number is (916) 776 -2166.

We were originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc. On October 28, 2009, we changed our domicile to Nevada and changed our name to Mexus Gold US to better reflect our new business operations. Our fiscal year end is March 31st.

Description of the Business of Mexus Gold US

Mexus Gold US is engaged in the evaluation, acquisition, exploration and advancement of gold exploration and development projects in the state of Nevada and Mexico, as well as, the salvage of precious metals from identifiable sources. Our main activities in the near future will be comprised of our mining operations in Nevada and Mexico and our cable salvage operations in Alaska and along the west coast of the United States.

Our mining opportunities located in the state of Nevada and the state of Sonora, Mexico will provide us with projects to recover gold, silver, copper and other precious metals. The cable salvage opportunity involves principally the recovery of copper and lead from abandoned cable previously utilized for communications purposes. Each of these opportunities are discussed further herein.

In addition, our management will look for opportunities to improve the value of the gold projects that we own or may acquire knowledge of or may acquire control through exploration drilling, introduction of technological innovations or acquisition with the goal of developing those properties into operating mines. We expect that emphasis on gold project acquisition and development will continue in the future.

Business Strategy

Our business plan was developed with the overriding goal of maximizing shareholder value through the exploration and development of our mineral properties, utilizing the extensive mining-related background and capabilities of our management and employees, and also through strategic partnerships. To achieve this goal, our business plan focuses on five strategic areas:

Lida Mining District, Nevada

We believe the Nevada properties represent the potential to provide the company with a viable project with the addition of additional geologic evaluation and the drilling of prospective areas. Our strategy for this project is to utilize geological data acquired through prior studies, confirm prior drilling results, expand the delineation of the possible ore body and identify reserves through our own geological evaluations.

Mexus Gold S.A. de C.V.

Effective March 31, 2011, we have acquired Mexus Gold S.A. de C.V. We began funding the operations in Mexico and have begun shipping equipment to the mining sites. In addition, we have begun shipping raw materials from the mining areas for bulk processing and further analysis. We have also initiated an exploration drilling program to further identify the extent of the possible reserves now identified.

Other Exploration Properties

Our Other Exploration Properties comprise earlier-stage exploration properties. We are currently conducting a number of activities in connection with our earlier-stage exploration properties. During 2009, additional unpatented mining claims were staked in Esmeralda County, Nevada. The evaluation includes compilation of all geologic data and land information for the properties in a geological information system data base. We also staked additional claims in the State of Sonora, Mexico in areas of interest to the company.

Mergers and Acquisitions

We will routinely review merger and acquisition opportunities. An appropriate merger and acquisition opportunity must be accretive to the overall value of Mexus Gold US. Our primary focus will be on those opportunities involving precious metal production or near-term production with a secondary focus on other resource-based opportunities. Potential acquisition targets would include private and public companies or individual properties. Although our preference would be for candidates located in the United States and Mexico. Mexus Gold US will consider opportunities located in other countries where the geopolitical risk is acceptable.

Mining Operations

We classify our mineral properties into three categories: “Development Properties”, “Advanced Exploration Properties”, and “Other Exploration Properties”. Development Properties are properties where a decision to develop the property into a producing mine has been made. Advanced Exploration Properties are those properties where we retain a significant ownership interest or joint venture and where there has been sufficient drilling and analysis to identify and report proven and probable reserves or other mineralized material. We currently do not have a Development Property or Advanced Exploration Property. Other Exploration Properties are those that do not fall into the other categories. Please see below for information about our Other Exploration Properties.

Other Exploration Properties

Our Other Exploration Properties consist of the following:

Mining Properties located in the state of Nevada

Lida Mining District

The Lida Project is located in south central Nevada, approximately 20 miles south-west of Goldfield. The project area is accessed by proceeding 15 miles south of Goldfield along US Highway 95 to Lida Junction. Then by proceeding west along Nevada State Route 266 for 19 miles to the Lida, Nevada, the project site.

Mining Properties Located in Mexico

The following properties are located in Mexico and owned by Mexus Gold S.A. de C.V., our wholly owned subsidiary:

Caborca Project

On January 5, 2011, Mexus Gold Mining S.A. de C.V. entered into a Purchase Agreement to purchase the Caborca Project. The Caborca Project consists of 7,400 acres (3,000 hectares) about 50 kilometers northwest of the City of Caborca, Sonora State, Mexico. The Caborca Project lies on claims filed by the owners of the Santa Elena Ranch, which controls the surface rights over the project claims. The claims lie near 112o 25' W, 31o 7.5" N. These claims were visited near the end of January, 2011. On or about July 11, 2011, we acquired five additional claims surrounding the Caborca Project consisting of approximately 1,000 additional acres.

We have been unable to locate geologic maps of the area from the Government Geological Survey. However, pursuant to our investigation of the project, the claims were found to be underlain by an igneous complex. The rocks observed included many types of granitic rocks, exhibiting porphyrytic textures, gneissic and equigrannular textures. Quartz was variable. At times quartz "eyes" were observed, that is porphyrytic quartz which many workers consider to be indicative of a porphyry environment. In other localities, no quartz was evident. When no quartz was present, the rock was equigrannular. Quartz veining was evident throughout the claim group. A mine was developed along a major quartz vein, called the Julio 2 Mine with the vein being called the Julio Vein.

There are multiple exploration targets on the Caborca Project. The two most important are the quartz stockwork zone and the Julio vein system. The first target will be the quartz stockwork zone. At least four drill holes are expected to be drilled in this zone to test the mineral potential of this area. Additional holes will be completed to test the Julio vein system.

Ocho Hermanos (Eight Brothers) Project

The Guadalupe de Ures Project is accessed from Hermosillo by driving via good paved road for 60 kilometers to the town of Guadalupe de Ures and then for 15 kilometers over dirt roads to the prospects. A base camp has been established near the town of Guadalupe de Ures using mainly trailers for accommodation, workshops and kitchen facilities.

370 Area

This zone is composed of a sedimentary sequence (limestone, quartzite, shale) intruded by dacite and diorite as well as rhyolite. The dacite exhibits argillic alterations as well as silicification (quartz veins). The entire area is well oxidized on the surface. This is an area of classic disseminated low grade gold and silver mineralization. Surface grab sample assays show 0.14 grams per ton to as high as 29.490 grams per ton gold. This area is an important area for potentially defining an open pit heap leach project.

El Scorpion Project Area

This area has several shear zones and veins which show copper and gold mineralization’s. Recent assays of an 84’ drill hole shows 1.750% per ton to .750% per ton of copper and 3.971 grams per ton to 0.072 grams per ton of gold. Another assay of rock sample from the area shows greater than 4.690% per ton copper. This land form distribution appears to be synonymous to the ideal porphyry deposit at Baja La Alumbrera, Argentina.

Los Laureles

Los Laureles is a vein type deposit mainly gold with some silver and copper. Recent assays from grab samples show gold values of 67.730 grams per ton gold, 38.4 grams per ton silver, 2,800 grams per ton copper. As of the date of this Report, we have opened up old workings at the Los Laureles claim and have discovered a gold carrying vein running north and south into the mountain to the south.

Cable Salvage Operation

Our examination of the information provided to us and our accumulation of data has identified the most prospective area to begin our salvage operations is the near coast areas of Alaska. The initial recovery operations will be comprised of acquiring two and one-half inch diameter cable with a weight of eight and one-half pounds. We are satisfied that we will be able to comply with all permits and notifications to the appropriate governmental authorities regarding the salvage operations.

On July 8, 2010, the Company entered into a Project Management Agreement with Powercom Services, Inc., a Georgia corporation, to provide the necessary capital so Mexus can proceed with the first phase of our Cable Recovery in Alaskan waters.

Mexus President/CEO Paul Thompson along with Ken Setter, the person in charge of the Alaska sub-marine cable project for Mexus, just returned from a two week trip to Alaska to verify the cable locations in Alaska waters culminating in the execution of the contract which will fund Mexus through its first barge load sale of cable.

Mr. Ken Setter directed Mr. Thompson to several sites along the Pacific Coast of Alaska where we were able to identify the sub-marine cable. We were able to retrieve several sections for sampling purposes, and to test the Company’s new innovative way of retrieving cable from the bottom of the ocean. We believe the new cable pulling equipment will have the capability of pulling up to 10 miles per day or 475,200 pounds of cable per day.

The cable is composed of copper, lead, and steel all salvageable for scrap sales or processing for end user. Mexus is now ready to start equipping its 260’ barge located in Seattle, Washington with pulling equipment for the trip to Alaska where it will be able to start pulling cable at a point identified & marked by Messrs. Setters and Thompson on their recent trip.

On October 29, 2010, our tugboat, the "Caleb", and our 230 foot barge arrived in Ketchikan, Alaska. The boats are equipped with automated cable pulling equipment and underwater electrical equipment, magtonetor, underwater cable identifier, remote cameras and a high definition scanning sensor, and a cable left buoy marking system. As of the date of this report, we have begun cable pulling operations, weather permitting.

In addition, we have now located additional submarine cable in Washington State waters with our special survey equipment and we are awaiting cooperation from Washington State to pull the cable.

During the year, the Company began the first phase of its Cable Recovery Project in Alaskan waters. The cable which was recovered was smaller diameter cable which was excellent for testing the recovery equipment and vessels. The Company has re-evaluated the project and plans to conduct exploration activities in an attempt to identify larger cable. Should those activities identify any cable suitable for salvage operations, the Company would determine the proper title and ownership of the cable and once such title is determined act accordingly as to whether or not a recovery operation is warranted.

Employees

Mexus Gold US has no employees at this time. Consultants with specific skills are utilized to assist with various aspects of the requirements of activities such as project evaluation, property management, due diligence, acquisition initiatives, corporate governance and property management. If we complete our planned activation of the Nichols Property Exploration and Drilling Program, Cable Salvage Operations and operations of the Mexican mining properties, our total workforce will be approximately 30 persons. Mr. Paul D. Thompson is our sole officer and director.

Competition

Mexus Gold US competes with other mining companies in connection with the acquisition of gold properties. There is competition for the limited number of gold acquisition opportunities, some of which is with companies having substantially greater financial resources than Mexus Gold US. As a result, Mexus Gold US may have difficulty acquiring attractive gold projects at reasonable prices.

Management of Mexus Gold US believes that no single company has sufficient market power to affect the price or supply of gold in the world market.

Legal Proceedings

There are no legal proceedings to which Mexus Gold US or Mexus Gold S.A. de C.V. is a party or of which any of our properties are the subject thereof.

Property Interests, Mining Claims, and Risk

Property Interests and Mining Claims

Our exploration activities are conducted in the state of Nevada. Mineral interests may be owned in this state by (a) the United States, (b) the state itself, or (c) private parties. Where prospective mineral properties are owned by private parties, or by the state, some type of property acquisition agreement is necessary in order for us to explore or develop such property. Generally, these agreements take the form of long term mineral leases under which we acquire the right to explore and develop the property in exchange for periodic cash payments during the exploration and development phase and a royalty, usually expressed as a percentage of gross production or net profits derived from the leased properties if and when mines on the properties are brought into production. Other forms of acquisition agreements are exploration agreements coupled with options to purchase and joint venture agreements. Where prospective mineral properties are held by the United States, mineral rights may be acquired through the location of unpatented mineral claims upon unappropriated federal land. If the statutory requirements for the location of a mining claim are met, the locator obtains a valid possessory right to develop and produce minerals from the claim. The right can be freely transferred and, provided that the locator is able to prove the discovery of locatable minerals on the claims, is protected against appropriation by the government without just compensation. The claim locator also acquires the right to obtain a patent or fee title to his claim from the federal government upon compliance with certain additional procedures.

Mining claims are subject to the same risk of defective title that is common to all real property interests. Additionally, mining claims are self-initiated and self-maintained and therefore, possess some unique vulnerabilities not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims solely from an examination of the public real estate records and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location and maintenance of a claim. If the validity of a patented mining claim is challenged by the BLM or the U.S. Forest Service on the grounds that mineralization has not been demonstrated, the claimant has the burden of proving the present economic feasibility of mining minerals located thereon. Such a challenge might be raised when a patent application is submitted or when the government seeks to include the land in an area to be dedicated to another use.

Reclamation

We may be required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping and re- vegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts will be conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies.

Risk

Our success depends on our ability to recover precious metals, process them, and successfully sell them for more than the cost of production. The success of this process depends on the market prices of metals in relation to our costs of production. We may not always be able to generate a profit on the sale of gold or other minerals because we can only maintain a level of control over our costs and have no ability to control the market prices. The total cash costs of production at any location are frequently subject to great variation from year to year as a result of a number of factors, such as the changing composition of ore grade or mineralized material production, and metallurgy and exploration activities in response to the physical shape and location of the ore body or deposit. In addition costs are affected by the price of commodities, such as fuel and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in production costs or a decrease in the price of gold or other minerals could adversely affect our ability to earn a profit on the sale of gold or other minerals. Our success depends on our ability to produce sufficient quantities of precious metals to recover our investment and operating costs.

Distribution Methods of the Products

The end product of our operations will usually be doré bars. Doré is an alloy consisting of gold, silver and other precious metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% pure gold. Under the terms of refining agreements we expect to execute, the doré bars are refined for a fee and our share of the refined gold, silver and other metals are credited to our account or delivered to our buyers who will then use the refined metals for fabrication or held for investment purposes.

General Market

The general market for gold has two principal categories, being fabrication and investment. Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins and jewelry. The supply of gold consists of a combination of current production from mining and the draw-down of existing stocks of gold held by governments, financial institutions, industrial organizations and private individuals.

Patents, trademarks, licenses, franchises, concessions, royalty agreements, or labor contracts, including duration;

We do not have any designs or equipment which is copyrighted, trademarked or patented.

Effect of existing or probable governmental regulations on the business

Government Regulation

Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our exploration and other programs. We believe that Mexus Gold US is in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the Nevada and United States and in any other jurisdiction in which we will operate. We are not aware of any current orders or directions relating to Mexus Gold US with respect to the foregoing laws and regulations.

Environmental Regulation

Our gold projects are subject to various federal and state laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. It is our policy to conduct business in a way that safeguards public health and the environment. We believe that the actions and operations of Mexus Gold US will be conducted in material compliance with applicable laws and regulations. Changes to current state or federal laws and regulations in Nevada, where we operate currently, or in jurisdictions where we may operate in the future, could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.

Research and Development

We do not foresee any immediate future research and development costs.

Costs and effects of compliance with environmental laws

Changes to current state or federal laws and regulations in Nevada, where we operate currently, or in jurisdictions where we may operate in the future, could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.

Results of Operations

The following management’s discussion and analysis of operating results and financial condition of Mexus Gold US is for the three and six month periods ended September 30, 2013 and 2012 and for the period from September 18, 2009 (exploration stage re-entry) through September 30, 2013. All amounts herein are in U.S. dollars.

Three Months Ended September 30, 2013 compared with the Three Months Ended September 30, 2012 and September 18, 2009 (Exploration Stage Re-Entry) through September 30, 2013

We had a net loss during the three months ended September 30, 2013 of $1,775,042 compared to a net loss of $458,160 during the same period in 2012. We had a cumulative net loss of $11,553,763 for the period from September 18, 2009 (Exploration Stage Re-Entry) through September 30, 2013. The increase in net loss are attributable to the increase in (i) Exploration Costs – a $624,410 increase in exploration costs primarily attributable to the Joint Venture Agreement entered into between Mexus Gold US, Mexus Gold Mining, Minerals La Negra S. de R.L. de C.V. and Trinidad Pacifica S. de R.L. de C.V. on November 1, 2012 (ii) a $57,770 increase in general and administrative expense due to an increase in rent, audit and accounting costs.

Revenue

For the three months ended September 30, 2013, we had revenues of $72,099 compared to $50,145 for the three months ended September 30, 2012. We recorded revenues of $1,898,139 for the cumulative period from September 18, 2009 (Exploration Stage Re-Entry) through September 30, 2013.

The revenues of $72,099 for the three months ended September 30, 2013 are from our gold mining operations in Mexico. While the Company is in the exploration stage we are earning revenue from placer operations and experimental mineral processing to help fund our exploration activities.

Operating Expenses

Total operating expenses increased to $1,218,232 during three months ended September 30, 2013, compared to $498,853 for the three months ended September 30, 2012. Total operating expenses for the period from September 18, 2009 (exploration stage re-entry) through September 30, 2013 were $12,523,851. The increase in operating expenses for each of these periods was due to our expansion into the mining operations through the exploration activities of our properties and general administrative expenses.

Other Income (Expense)

We incurred $628,909 of other expenses during the three months ended September 30, 2013 compared to $9,452 during the same period in 2012.

The increase is mainly attributable to:

(a) Issuance of promissory notes for $255,000 in cash during the three month period ended September 30, 2013. The Notes bear interest of 4% per annum and are due on December 31, 2013. In addition, a fee of 2,550,000 shares of common stock of the Company valued at $501,075 ($0.1965 per share) was paid to the Note holders on April 18, 2013. During the three months ended September 30, 2013, deferred financing expense of $182,876 recognized as interest expense using the straight line method, which approximates the effective interest method, and

(b) Issuance of secured convertible promissory notes for $250,000 in cash on April 18, 2013. The notes are convertible in to shares of common stock of the Company at a price of $0.23 per shares. The conversion price is subject to adjustment by an anti-dilution clause. In conjunction with the issuance of the Notes on June 12, 2013, the Company issued a variable number of warrants of the Company’s common stock equal to $278,750 divided by the Market Price. Market Price is defined as the higher of (i) the closing price of the common stock of the Company on June 12, 2013, and (ii) the VWAP of the common stock for the trading day that is two days prior to the exercise date. The Exercise Price of the warrants are $0.24 per share. The Exercise Price is subject to adjustment by an anti-dilution clause. As a result of a discount recorded on the Note, the Company recorded $76,498 as interest accretion expense during the three months ended September 30, 2013.

(c) The fair value of the conversion option derivative liability is $353,269 at September 30, 2013. The increase in the fair value of the conversion option derivative liability of $348,586 is recorded as a loss in the unaudited consolidated condensed statement of operations for the three months ended September 30, 2013.

Six Months Ended September 30, 2013 Compared with the Six Months Ended September 30, 2012

We had a net loss during the six months ended June 30, 2013 of $2,917,039 compared to a net loss of $704,142 during the same period in 2012. The increase in net loss are attributable to the increase in (i) Exploration Costs – a $1,367,659 increase in exploration costs primarily attributable to the Joint Venture Agreement entered into between Mexus Gold US, Mexus Gold Mining, Minerals La Negra S. de R.L. de C.V. and Trinidad Pacifica S. de R.L. de C.V. on November 1, 2012 (ii) an increase in bad debt expense of $243,191 (2012 - $0) (iii) an increase in general and administrative expense of $76,378 due to an increase in rent, audit and accounting costs.

Revenue

For the six months ended September 30, 2013, we had revenues of $478,486 compared to $155,728 for the six months ended September 30, 2012.

The revenues of $478,486 for the six months ended September 30, 2013 are from our gold mining operations in Mexico. While the Company is in the exploration stage we are earning revenue from placer operations and experimental mineral processing to help fund our exploration activities.

Operating Expenses

Total operating expenses increased to $2,583,050 during six months ended September 30, 2013, compared to $844,701 for the six months ended September 30, 2012. The increase in operating expenses for each of these periods was due to our expansion into the mining operations through the exploration activities of our properties and general administrative expenses.

Other Income (Expense)

We incurred $812,475 of other expense during the six months ended September 30, 2013 compared to $15,169 during the same period in 2012.

The increase is mainly attributable to:

(a) Issuance of promissory notes for $255,000 in cash on April 18, 2013. The Notes bear interest of 4% per annum and are due on December 31, 2013. In addition, a fee of 2,550,000 shares of common stock of the Company valued at $501,075 ($0.1965 per share) was paid to the Note holders on April 18, 2013. During the six months ended September 30, 2013, deferred financing expense of $321,702 recognized as interest expense using the straight line method, which approximates the effective interest method, and

(b) Issuance of secured convertible promissory notes for $250,000 in cash. The notes are convertible in to shares of common stock of the Company at a price of $0.23 per shares. The conversion price is subject to adjustment by an anti-dilution clause. In conjunction with the issuance of the Notes on June 12, 2013, the Company issued a variable number of warrants of the Company’s common stock equal to $278,750 divided by the Market Price. Market Price is defined as the higher of (i) the closing price of the common stock of the Company on June 12, 2013, and (ii) the VWAP of the common stock for the trading day that is two days prior to the exercise date. The Exercise Price of the warrants are $0.24 per share. The Exercise Price is subject to adjustment by an anti-dilution clause. As a result of a discount recorded on the Note, the Company recorded $90,546 as interest accretion expense during the six months ended September 30, 2013.

(c) The fair value of the conversion option derivative liability is $353,269 at September 30, 2013. The increase in the fair value of the conversion option derivative liability of $353,269 is recorded as a loss in the unaudited consolidated condensed statement of operations for the six months ended September 30, 2013.

Liquidity and Capital Resources

At September 30, 2013, we had cash of $0 compared to $104,701 at March 31, 2013. This decrease in cash is primarily due to net losses during the six months ended September 30, 2013.

Our equipment decreased to $1,913,235 at September 30, 2013, compared to $1,955,813 at March 31, 2013. The decrease in equipment is largely due to depreciation expense of $177,160 during the six months ended September 30, 2013 off set by additions of $140,886.

Our mineral properties increased to $1,248,633 at September 30, 2013, compared to $1,233,483 at March 31, 2013. The increase is due to the construction of a new plant in Mexico.

Equipment under construction increased to $107,522 at September 30, 2013, compared to $52,575 at March 31, 2013.

Total assets increased to $3,464,334 at September 30, 2013, compared to $3,371,591 at March 31, 2013. The majority of the increased assets related to the capitalized of deferred finance expense on the Promissory Notes issued during the three months ended September 30, 2013.

Our total liabilities increased to $1,761,095 at September 30, 2013, compared to $493,105 as of March 31, 2013. The increase in our total liabilities can be primarily attributed to the issuance of promissory notes and secured convertible promissory notes.

The Company is dependent upon outside financing to continue operations. It is management’s plans to raise necessary funds through a private placement of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to raise the necessary funds, or that if it is successful in raising the necessary funds, that the Company will successfully execute its business plan.

Future goals

The Caborca Properties have become our primary focus after our installation of a small placer recovery plant to conduct tests on prospective placer areas and determine the viability of the placer deposits while we conducted evaluations of the other Mexico properties. We have added additional equipment which will allow the continuation of mining operations of the placer deposits.

The Company has now scheduled the installation of a crushing/milling recovery plant for the high grade Julio quartz deposit as a result of the values of the assay analysis from the deposit which range from .250 to 5.5 ounces of gold per ton.

Therefore, our goal for the current year is to increase the cash flow of the placer mining operation, continue the drilling program which begun during 2011, initialize mining operations on the Julio quartz deposit while we conduct a thorough geological study by an independent geological firm of the future potential of other vein deposits located near the Julio deposit.

Foreign Currency Transactions

The majority of our operations are located in United States and most of our transactions are in the local currency. We plan to continue exploration activities in Mexico and therefore we will be exposed to exchange rate fluctuations. We do not trade in hedging instruments and a significant change in the foreign exchange rate between the United States Dollar and Mexican Peso could have a material adverse effect on our business, financial condition and results of operations.

Off-balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 4(T). CONTROLS AND PROCEDURES

We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report.

Based on this evaluation, our chief executive officer and chief financial officer concluded that as of the evaluation date our disclosure controls and procedures were not effective. Our procedures were designed to ensure that the information relating to our company required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. Management is currently evaluating the current disclosure controls and procedures in place to see where improvements can be made.

ITEM 5. OTHER INFORMATION

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in “Internal Control Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this evaluation, management has concluded that our internal control over financial reporting was not effective as of September 30, 2013, to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Steps that the Company believes it must undertake is to retain a consulting firm to, among other things, design and implement adequate systems of accounting and financial statement disclosure controls during the current fiscal year to comply with the requirements of the SEC. We believe that the ultimate success of our plan to improve our disclosure controls and procedures will require a combination of additional financial resources, outside consulting services, legal advice, additional personnel, further reallocation of responsibility among various persons, and substantial additional training of those of our officers, personnel and others, including certain of our directors such as our committee chairs, who are charged with implementing and/or carrying out our plan.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as required in Rule 13a-15(b). We are conducting an evaluation to design and implement adequate systems of accounting and financial statement disclosure controls. We expect to complete this review during 2013 to comply with the requirement of the SEC. We believe that the ultimate success of our plan to improve our internal control over financial reporting will require a combination of additional financial resources, outside consulting services, legal advice, additional personnel, further reallocation of responsibility among various persons, and substantial additional training of those of our officers, personnel and others, including certain of our directors such as our Chairman of the Board and Chief Financial Officer, who are charged with implementing and/or carrying out our plan. It should also be noted that the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control

There have not been any changes in our internal control over financial reporting during the three month period ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any legal proceedings responsive to this Item Number.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 18, 2013, the Company issued 125,000 shares of common stock to satisfy obligations under share subscription agreements for $10,000 in cash included in share subscriptions payable.

On July 30, 2013, the Company issued 66,666 shares of common stock to satisfy obligations under share subscription agreements for $6,000 in cash included in share subscriptions payable.

On July 31, 2013, the Company issued 1,014,285 shares of common stock to satisfy obligations under share subscription agreements for $71,000 in cash included in share subscriptions payable.

On August 26, 2013, the Company issued 1,582,856 shares of common stock to satisfy obligations under share subscription agreements for 50,500 in cash and $89,700 in services included in share subscriptions payable.

On September 6, 2013, the Company issued 1,049,998 shares of common stock to satisfy obligations under share subscription agreements for $82,500 in cash included in share subscriptions payable.

On September 19, 2013, the Company issued 1,008,000 shares of common stock to satisfy obligations under share subscription agreements for $100,800 in cash included in share subscriptions payable.

On October 31, 2013, the Company issued 679,404 shares of common stock to satisfy obligations under share subscription agreements for $40,764 in cash included in share subscriptions payable.

On November 1, 2013, the Company issued 2,312,971 shares of common stock to satisfy obligations under share subscription agreements for $143,293 in cash included in share subscriptions payable.

On November 4, 2013, the Company issued 500,000 shares of common stock to satisfy obligations under share subscription agreements for $50,000 in cash included in share subscriptions payable.

The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act of 1933 and Regulation D as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.

The Company intends to use the proceeds from sale of the securities for the purchase of equipment for mining operations, mining machinery, supplies and payroll for operations, professional fees, and working capital.

There were no underwritten offerings employed in connection with any of the transactions set forth above.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Statements

Consolidated Balance Sheets at September 30, 2013 and March 31, 2013

Consolidated Statements of Operations for the three and six months ended September 30, 2013 and 2012 and the period from September 18, 2009 (Exploration Stage Re-Entry) through September 30, 2013

Consolidated Statements of Cash Flows for the six months ended September 30, 2013 and 2012 and the period from September 18, 2009 (Exploration Stage Re-Entry) through September 30, 2013

Notes to Consolidated Financial Statements

Schedules

All schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or notes thereto.

	Exhibit	Form	Filing	Filed with
Exhibits	#	Type	Date	This Report

Articles of Incorporation filed with the Secretary of State of Colorado on June 22, 1990	3.1	10-SB	1/24/2007

Articles of Amendment to the Articles of Incorporation filed with the Secretary of State of Colorado on October 17, 2006	3.2	10-SB	1/24/2007

Articles of Amendment to Articles of Incorporation filed with the Secretary of State of the State of Colorado on January 25, 2007	3.3	10KSB	6/29/2007

Amended and Restated Bylaws dated December 30, 2005	3.3	10-SB	1/24/2007

Code of Ethics	14.1	10-KSB	6/29/2007

Certification of Paul D. Thompson, pursuant to Rule 13a-14(a)	31.1			X

Certification of Paul D. Thompson pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	32.1			X

Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

November 19, 2013

/s/ Paul D. Thompson

Paul D. Thompson

Chief Executive Officer

Chief Financial Officer

Principal Accounting Officer

Director