Mexus Gold US - Annual Report: 2018 (Form 10-K)

Item 11. Executive Compensation

The following table sets forth the compensation paid to executive officers, for services rendered, and to be rendered. No restricted stock awards, long-term incentive plan payouts or other types of compensation, other than the compensation identified in the chart below, were paid to our executive officers during the fiscal years presented. As of the date of this Report, Mr. Thompson is our sole officer and director.

Employment Agreements

On July 2, 2015, the Company entered into a compensation agreement with Paul D. Thompson, the sole director and officer of the Company. Mr. Thompson is compensated $15,000 per month and has the option to take payment in Company stock valued at an average of 5 days closing price, cash payments or deferred payment in stock or cash. In addition, Mr. Thompson is due 2,000,000 shares of common stock at the end of each fiscal quarter. 

Compensation of Director

We currently do not compensate our director. In the future, we may compensate our current director or any additional directors for reasonable out-of-pocket expenses in attending board of directors meetings and for promoting our business. From time to time we may request certain members of the board of directors to perform services on our behalf. In such cases, we will compensate the directors for their services at rates no more favorable than could be obtained from unaffiliated parties.

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

The following table sets forth certain information regarding the beneficial ownership of the 813,188,020 issued and outstanding shares of our common stock as of July 2, 2018, by the following persons:

each person who is known to be the beneficial owner of more than five percent (5%) of our issued and outstanding shares of common stock; 

each of our directors and executive officers; and 

all of our Directors and Officers as a group 

⁽¹⁾1805 N. Carson Street, Suite 150, Carson City, NV 89701. 

⁽²⁾Includes 65,878,718 shares of common stock held by Mr. Thompson individually and 296,690 shares held by the following companies which Mr. Thompson controls, 182,918 shares of common stock are held by Mexus Gold Mining S.A. C.V. and 113,772 shares of common stock are held by Mexus Gold International. 

⁽³⁾In addition, Mr. Thompson owns 1,000,000 shares of our Series A Convertible Preferred Stock, $.001 par value. Each share of our Series A Convertible Preferred Stock converts into 10 shares of our common stock. Assuming Mr. Thomson converted 100% of the Series A Convertible Preferred Stock held by him into shares of common stock, he would hold an additional 10,000,000 shares of common stock and a grand total of 76,175,408 shares of commons stock which would be approximately 9% of our issued and outstanding shares of common stock. 

⁽⁴⁾Holders of our Series A Convertible Preferred Stock have such number of votes as is determined by multiplying: (a) the number of shares of Series A Convertible Preferred Stock held by such holder, (b) the number of issued and outstanding shares of the Corporation’s Series A Convertible Preferred Stock and common stock on a fully-diluted basis; and (c) 0.000006. Accordingly, on any stockholders’ vote, Mr. Thompson has a total of 4,955,304,428 votes, far greater than 50% of the issued and outstanding common stock of the company. 

⁽⁵⁾313 Ohio Ave. SE, Brandon, OR 97411. 

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. The number of shares and the percentage beneficially owned by each individual listed above include shares that are subject to options held by that individual that are immediately exercisable or exercisable within 60 days from the date of this annual report and the number of shares and the percentage beneficially owned by all officers and directors as a group includes shares subject to options held by all officers and directors as a group that are immediately exercisable or exercisable within 60 days from the date of this registration statement.

Item 13. Certain Relationships and Related Transactions and Director Independence.

None. 

Transactions with Promoters 

None.

Item 14. Principal Accounting Fees and Services.

Appointment of Auditors

Our Board of Directors selected RBSM LLP (“RBSM LLP”) as our auditors for the years ended March 31, 2018 and 2017.

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Audit Fees

RBSM LLP billed us $56,000 in audit fees during the year ended March 31, 2018.

RBSM LLP billed us $49,000 in audit fees during the year ended March 31, 2017. 

Audit-Related Fees

We did not pay any fees to RBSM LLP for assurance and related services that are not reported under Audit Fees above, during our fiscal years ending March 31, 2018 and 2017. 

Tax and All Other Fees

We did not pay any fees to RBSM LLP for tax compliance, tax advice, tax planning or other work during our fiscal years ending March 31, 2018 and 2017. 

Pre-Approval Policies and Procedures

We have implemented pre-approval policies and procedures related to the provision of audit and non-audit services. Under these procedures, our board of directors pre-approves all services to be provided by RBSM LLP and the estimated fees related to these services.

With respect to the audit of our financial statements as of March 31, 2018 and 2017, and for the years then ended, none of the hours expended on RBSM LLP’s engagement to audit those financial statements were attributed to work by persons other than RBSM LLPs full-time, permanent employees.

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Item 15. Exhibits, Financial Statement Schedules

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized. 

MEXUS GOLD US

/s/ Paul D. Thompson Sr.

By: Paul D. Thompson Sr.

Its: Chief Executive Officer

Principle Financial Officer

Principle Executive Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant on the capacities and on the dates indicated.

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F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Mexus Gold US. and subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Mexus Gold US. and subsidiaries (The “Company”) as of March 31, 2018 and 2017, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two year period ended March 31, 2018 and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2018, and 2017 and the consolidated results of its operations and its cash flows for each of the years in the two year period ended March 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses, and expects continuing future losses, has not earned revenue from planned operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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

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

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

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

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F-4

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F-6

MEXUS GOLD US AND SUBSIDARIES

Notes to Consolidated Financial Statements

March 31, 2018 and 2017

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 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.GOING CONCERN 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  During the year ended March 31, 2018, the Company incurred a net loss of $3,909,961 and used cash in operating activities of $1,507,569, and at March 31, 2018, had an accumulated deficit of $26,853,994. At March 31, 2018, the Company is in the exploration stage and has not earned revenue from planned operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued.  The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending March 31, 2018, expressed substantial doubt about the Company’s ability 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 consolidated 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.

3.SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES  

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. Certain 2017 financial statement amounts have been reclassified to conform to the financial statement presentation adopted in the current year.

These accounting policies conform to accounting principles generally accepted in the United States of America and are presented in U.S. dollars.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and controlled subsidiaries, Mexus Gold Mining, S.A. de C.V. (“Mexus Gold Mining), Mexus Enterprises S.A. de C.V. (“Mexus Gold Enterprises”) and Mexus Gold MX S.A. DE C.V. (“Mexus Gold MX”). Significant intercompany accounts and transactions have been eliminated.  

F-7

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Management believes that the estimates used are reasonable. The more significant estimates and assumptions by management include, among others, the accrual of potential liabilities, the assumptions used in valuing share-based instruments issued for services, valuation of derivative liabilities and the valuation allowance for deferred tax assets.

Cash and cash equivalents

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Equipment

Equipment consists of mining tools and equipment, watercraft and vehicles which are depreciated on a straight-line basis over their expected useful lives as follows (see Note 5):

Equipment under Construction

Equipment under construction comprises mining equipment that is currently being fabricated and modified by the Company and is not presently in use. Equipment under construction totaled $73,456 and $73,456 as of March 31, 2018 and 2017, respectively.  Equipment under construction at March 31, 2018 comprises a Gold Recovery Cyanide Plant, Hydraulic Drum 12YD, Skid Mounted Mill and Survey Winch Marine.

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 are 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.

F-8

Long-Lived Assets

In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

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 promissory note 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.

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.

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.

Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated to United States dollars in accordance with ASC 740, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

To the extent that the Company incurs transactions that are not denominated in its functional currency, they are undertaken in Mexican Pesos. The Company has not, as of the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Comprehensive Loss

ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at March 31, 2018 and 2017, the Company had no items that represent a comprehensive loss, and therefore has not included a schedule of comprehensive loss in the consolidated financial statements.

F-9

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Tax”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Asset Retirement Obligations

In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The associated asset retirement costs are supposed to be capitalized as part of the carrying amount of the related mineral properties. As of March 31, 2018 and 2017, the Company has not recorded AROs associated with legal obligations to retire any of the Company’s mineral properties as the settlement dates are not presently determinable.

Revenue Recognition

The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 104 for revenue recognition and Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition.” Accordingly, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the selling price to the customer is fixed or determinable and collectability of the revenue is reasonably assured.

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.  

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.

At March 31, 2018 and 2017, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive:

F-10

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606).  ASU 2014-09, as amended, is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.  Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.  In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.  ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017.   Under ASU 2014-09, revenue will be recognized when performance obligations under the terms of a contract are satisfied, which generally occurs upon shipment or delivery to customers based on written sales terms, which is also when control is transferred.  Revenue will be measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer.   The Company will adopt the guidance of ASU 2014-09 on April 1, 2018.  As the Company does not currently have revenue, the adoption of the new guidance is not expected to impact the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.  ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018.  Early adoption is permitted.  A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.  The Company is currently evaluating the expected impact that the standard could have on its consolidated financial statements and related disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

4.DEPOSIT ON MINERAL PROPERTIES 

On January 18, 2018, Mexus Gold MX, entered into three Letter of Intent (“LOI”) agreements (collective known as Project Mabel) to exploit and transfer mineral rights owed by Cesar Mauricio Lemas Contreras.

(i)Project “Mabel” – Declaration of Intent dated January 18, 2018 with participation of 90% Mexus Gold MX and 10% Pacific Comox S.A. de C.V. (“Pacific Comox”). The administrator of Pacific Comox is Cesar Maruicio Lemas Contreras. This LOI contemplates transfers of mining rights at concessions 216136, 216137, 218587, 218588, 190649, 172975, 2019102, 172960, 180700, 222782 and 222783, which together add up to 2,128.2003 hectares 

(ii)Project “El Plomito” – Declaration of Intent dated January 23, 2018 with participation of 50% Mexus Gold MX and 50% Pacific Comox. This LOI contemplates transfers of mining rights at concessions 220563, 213711, 215941, 216544, 200395 and 222989, which together add up to 275.02 hectares. 

(iii)Project “La Famosa” – Declaration of Intent dated January 21, 2018 with participation of 50% Mexus Gold MX and 50% Pacific Comox. This LOI contemplates transfers of mining rights at concessions 220394, 220395, 220840, 220841 and 199006, which together add up to 200.0568 hectares 

The Company paid 6,000,000 shares of common stock valued at $324,000 ($0.0540 per share) to Cesar Maruicio Lemas Contreras as consideration to enter into these three LOI agreements. As of March 31, 2018, agreement related to these three properties were not finalized and the consideration is recorded as a deposit.

F-11

5.MINERAL PROPERTIES AND EXPLORATION COSTS 

The following is a continuity of mineral property acquisition costs capitalized on the consolidated balance sheets during the years ended March 31, 2018 and 2017:

The following is a continuity of exploration costs expensed in the consolidated statements of operation:

(a)Ures Property 

On May 25, 2010, the Company entered into a Mineral Exploration and Mining Lease with Option to Purchase mineral rights approximately 80 km NE of Hermosillo, Sonora, Mexico. The properties comprise approximately 10,000 acres over 9 concessions (including Ocho Hermanos, 370, San Ramon, Plat Osa, Edgar 1, Edgar 2, El Scorpio, Los Laureles and Mexus Gold). These property rights are owned by Mexus Gold S.A. de C.V. The Company is currently evaluating two properties, the El Scorpio and Ocho Hermanos. The evaluation involves trench testing and sampling.

(b)Santa Elena Mine 

Santa Elena Mine (also known as Caborca or Julio) comprise seven concessions with a total of 898.028 hectares of exploration properties located 54km NW of Caborca, State of Sonora, Mexico. These property rights are owned by Mexus Gold Mining S.A. de C.V. At March 31, 2018, a total of $505,947 have been capitalized on the consolidated balance sheet for these property costs.

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On May 19, 2016, Mexus entered into a new joint venture agreement to continue the exploration program under the Exploration, Exploitation and Mining Concessions Agreement (“Marmar Agreement”) with Marmar Holdings SA de CV (“Marmar”) for the Santa Elena property (title 221448) and Marta Elena property (title 221447). The Marmar Agreement requires Mexus to contribute its interest in the Santa Elena and Marta Elena properties and Marmar will bear all costs associated with operations and administration. Profits from net revenues will be distributed 5% Mexus and 95% Marmar until Marmar recovers its operating and administration costs. Thereafter, net revenues with be distributed 50% Mexus and 50% Marmar.

On April 16, 2018, the Company announced that it terminated its joint venture agreement with MarMar. The agreement outlined the contractual obligations at the Santa Elena project in Caborca, Sonora State, Mexico. The decision to terminate the agreement was made due to MarMar’s lack of funding for the project, non-compliance with various aspects of the agreement, and their inability to meet environmental standards at the site. The Company intends to move forward on the project with the proper equipment and personnel.

(c)San Felix Project 

Effective January 13, 2017, Mexus Gold Mining, S.A. de C.V., a wholly owned Mexican subsidiary of the Company, entered into a purchase agreement with Jesus Leopoldo Felix Mazon, Leonardo Elias Jaime Perez, and Elia Lizardi Perez, wherein the Company purchased a 50% interest in the “San Felix” mining site located in the La Alameda area of Caborca, State of Sonora, Mexico. The remaining 50% of the site is owned jointly by Mar Holdings S.A. de C.V. and Marco Antonio Martinez Mora.

The San Felix mining site contains seven (7) concessions over an area of approximately 26,000 acres.

The total purchase price is US$2,000,000 of which the Company is 50% responsible. The required payment schedule is a follows: $150,000 by January 30, 2017, $500,000 by August 13, 2017, $500,000 by March 13, 2018, $500,000 by October 13, 2018, and $350,000 by May 13, 2019. On January 30, 2017, the Company paid $75,000 (50% of $150,000).

During the year ended March 31, 2018, the Company recorded an impairment of mineral property for the San Felix Project of $75,000 because the requirement payment of $500,000 due on August 13, 2017 was not paid in accordance with the purchase agreement.

6.PROPERTY & EQUIPMENT 

During the year ended March 31, 2017, equipment held for sale with a carrying value of $133,216 was reclassified as mining tools and equipment with carrying value of $220,732 resulting in gain on sale of equipment of $99,824 and write down of equipment held for sale of $12,308.

During the year ended March 31, 2017 equipment of total cost net of accumulated depreciation of $12,942 and a gain of $442 and was recognized.

Depreciation expense for the years ended March 31, 2018 and 2017 was $255,776 and $226,632, respectively.

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7.ACCOUNTS PAYABLE – RELATED PARTIES 

During the years ended March 31, 2018 and 2017, the Company incurred rent expense to Paul D. Thompson, the sole director and officer of the Company, of $45,600 and $45,600, respectively.  At March 31, 2018 and 2017, $97,023 and $65,203 for this obligation is outstanding, respectively.

Compensation

On July 2, 2015, the Company entered into a compensation agreement with Paul D. Thompson, the sole director and officer of the Company. Mr. Thompson is compensated $15,000 per month and has the option to take payment in Company stock valued at an average of 5 days closing price, cash payments or deferred payment in stock or cash. In addition, Mr. Thompson is due 2,000,000 shares of common stock at the end of each fiscal quarter. At March 31, 2018 and 2017, $277,646 and $195,657 of compensation due is included in accounts payable – related party, respectively and $32,600 for 2,000,000 shares of common stock due is included in share subscriptions payable, respectively.

8.NOTES PAYABLE – RELATED PARTIES 

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 March 31, 2018 and 2017, notes payable due to Taurus Gold Inc. totaled $0 and $67,223, respectively.

Notes due to North Pacific Gold were accumulated through a series of cash advances to the Company which are unsecured, non-interest bearing and due on demand. North Pacific Gold is controlled by Paul Thompson, Jr., an immediate family member of Paul D. Thompson, the sole director and officer of the Company. As of March 31, 2018 and 2017, notes payable due to North Pacific Gold totaled $20,078 and $19,531, respectively.

9.NOTES PAYABLE 

During the year ended March 31, 2014, the Company received cash advances of $164,502 from three unrelated shareholders of the Company. These advances are non-interest bearing, unsecured and have no specific terms of repayment. On August 19, 2014, the Company issued 1,750,020 shares of common stock valued at $70,000. The shares were issued in settlement of the convertible promissory note ($0.04 per share) to settle $87,501 in advances. As a result, the Company recorded a gain on settlement of debt of $17,501. On February 28, 2015, the Company issued 2,272,727 shares of common stock valued at $48,636 ($0.0214 per share) to settle $25,000 in advances. As a result, the Company recorded a loss on settlement of debt of $23,636. On August 24, 2015, $37,001 of these advances were settled on issuance of the convertible promissory note. At March 31, 2018 and 2017, the balance of these advances totaled $15,000 and $15,000, respectively.

During the years ended March 31, 2017, 2016 and 2015, the Company received $0 in advances, various advances totaling $290,300 from nineteen investors and received various advances totaling $286,757 from twenty-two investors, respectively. These advances are unsecured and are due within 30 to 180 days of issue. Upon receipt of the cash advances, the Company paid a majority of the investors the value of their investment in shares of common stock of the Company as a finance fee. The investor has the option to be repaid when due by one of the following: (i) In cash (ii) One-half in cash and one—half in shares converted into common stock of the Company or (iii) The entire amount of the investment converted into shares of common stock of the Company. The conversion prices range from $0.0018 per share to $0.040 per share. For one promissory note with principal of $15,000 payments equal to 20% of cash proceeds received by the Company are due when equipment held for sale is sold.

During the year ended March 31, 2018 and 2017, the Company received various advances for notes payable totaling $135,000 from eight investors and received $0 in advances, respectively. These notes are unsecured, due in three to six months of issue and earn a finance fee of 15% to 20% of principal. The investors have the option for principal and the finance fee to be repaid when due by one of the following: (i) In cash or (ii) Converted into shares of common stock of the Company $0.02 to $0.10 per share. These notes were initially recorded net of a debt discount of $80,000 for a beneficial conversion feature with a corresponding increase in additional paid-in capital of $80,000. In conjunction with issuance of these notes payable 300,000 shares of common stock of the Company valued at $9,568 were issued to the note holders and recorded as debt discount. At March 31, 2018 and 2017, a debt discount of $0 and $0, respectively has been recorded on the consolidated balance sheet related to these notes.

During the year ended March 31, 2018 and 2017, note principal and interest of $95,000 and $132,000 was paid through the issuance of shares of common stock, respectively, and $0 and $26,500 in cash, respectively.

F-14

At March 31, 2018 and 2017, the balance of these advances totaled $83,600 and $43,600, respectively. At March 31, 2018, $53,300 of these notes were in default. There are no default provisions stated in the notes.  At March 31, 2018 and 2017 accrued interest of $6,236 and $6,236, respectively, is included in accounts payable and accrued liabilities.

On January 19, 2016, the Company issued a promissory note (“Note”) with a principal of amount of $77,150 bearing interest of 10% per annum to settle $77,150 in accounts payable due for accounting fees. Payments equal to 15% of cash proceeds received by the Company are due when equipment held for sale is sold. Any unpaid principal and interest is due in full on July 19, 2016. At March 31, 2018 and 2017, the balance of this note was $74,297 and $74,297, respectively. At March 31, 2018, this note was in default. There are no default provisions stated in the Note. On May 25, 2018, the Company issued 7,429,654 shares of common stock valued at $133,734 ($0.0180 per share) to settle the Note resulting in a loss on settlement of $56,584. See Note 16 Subsequent Events.

Amortization of debt discount was $89,567 and $54,112 for the year ended March 31, 2018 and 2017, respectively.

The amount by which the if-converted value of notes payable exceeds principal of notes payable at March 31, 2018 is $70,544.

10.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 were capitalized in the consolidated balance sheet as deferred finance expense and were being amortized on a straight-line basis, which approximates the effective interest rate method, as interest expense over the life of the Promissory Notes. On August 24, 2015, $100,000 of these Promissory Notes were settled on issuance of a convertible promissory note. On December 1, 2015, $60,000 of these Promissory Notes were settled on issuance of a convertible promissory note. On September 19, 2016, the Company issued 570,750 shares of common stock with a fair value $44,234 ($0.0775 per share) to settle a promissory note with principal of $20,000. On March 31, 2017, a promissory note with principal of $10,000 was settled for no consideration and recorded as a gain on the consolidated statement of operations. At March 31, 2018 and 2017, outstanding Promissory Note were $65,000 and $65,000, respectively. As of March 31, 2018, the Company has not made the scheduled payments and is in default on these promissory notes.  The default rate on the notes is seven percent.  At March 31, 2018 and 2017 accrued interest of $24,673 and $25,399, respectively, is included in accounts payable and accrued liabilities.

On August 24, 2015, the Company issued a convertible promissory note (“Note”) for a total amount of $343,973 due on February 24, 2017 to William H. Brinker (“Holder”). The total amount of the Note is due in three equal payments plus any accrued interest at 180 days, 360 days and 540 days from the issuance date. The Holder upon annual election may elect to be paid in cash or stock (but not both) as follows: (a) in cash, with interest at 4% per annum (b) in shares of common stock of the Company, with interest at 12% per annum (“Stock Payment”). For a Stock Payment, the number of shares is determined by multiplying the outstanding principal of the Note by 12% divided by 100% of the average of the closing price of the Stock for ten trading days immediately preceding the payment date. This Note has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity. In consideration of the Company issuing the Note, the Holder agreed to cancel all other notes, contracts or other agreements with a carrying value totaling $458,402 prior to the issuance of the Note comprising unsecured promissory note dated January 8, 2013 of $140,000, promissory note of $100,000 dated April 18, 2013, various notes payable of $41,001, interest payable of $9,372 and share subscriptions payable of $168,029. In conjunction with the Note, on September 2, 2015, the Company issued the Holder 8,732,880 shares of common stock with a fair value of $134,486 ($0.0154 per share) which was recorded as debt discount. The issuance of the Note resulted in gain on settlement of $114,429. On September 19, 2016, the Company issued 6,665,786 shares of common stock with a fair value $516,597 ($0.0775 per share) to fully settle the Note with principal of $343,973 and a note payable with principal of $30,000. At March 31, 2018 and 2017, the outstanding Note payable was $0.

F-15

On December 1, 2015, the Company issued a convertible promissory note (“Note”) dated August 24, 2015 for a total amount of $41,189 due on February 24, 2017 to David Long (“Holder”). The total amount of the Note is due in three equal payments plus any accrued interest at 180 days, 360 days and 540 days from the date of the Note. The Holder upon annual election may elect to be paid in cash or stock (but not both) as follows: (a) in cash, with interest at 4% per annum (b) in shares of common stock of the Company, with interest at 12% per annum (“Stock Payment”). For a Stock Payment, the number of shares is determined by multiplying the outstanding principal of the Note by 12% divided by 100% of the average of the closing price of the Stock for ten trading days immediately preceding the payment date. This Note has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity. In consideration of the Company issuing the Note, the Holder agreed to cancel all other notes, contracts or other agreements with a carrying value totaling $60,000 prior to the issuance of the Note comprising a promissory note of $60,000 dated April 18, 2013. In conjunction with the Note, on September 2, 2015, the Company issued the Holder 686,475 shares of common stock with a fair value of $10,297 ($0.015 per share) which was recorded as debt discount. The issuance of the Note resulted in gain on settlement of $18,811. On September 19, 2016, the Company issued 800,000 shares of common stock with a fair value $62,000 ($0.0775 per share) to fully settle the promissory note with principal of $41,189. At March 31, 2018 and 2017, the outstanding Note payable was $0.

Amortization of debt discount was $0 and $88,480 for the years ended March 31, 2018 and 2017, respectively.

11.CONVERTIBLE PROMISSORY NOTE 

On November 14, 2017, the Company issued a Convertible Promissory Note (“Note”) to JMJ Financial (“Holder”), for a principal sum of $166,667 plus one-time 10% interest charge of $16,667 which matures on May 14, 2018 for $150,000 in cash. The Company may repay the Note and interest any time in cash before the maturity date without a prepayment penalty. If the Company defaults on repayment, this Note together with any unpaid accrued interest is convertible into shares of common stock at the Holder’s option at a variable conversion price calculated as lesser of (a) $0.0375 or (b) 50% (40% if the conversion shares are not deliverable by DWAC) of the lowest trade occurring during the 25 consecutive trading days immediately preceding the conversion date. On issuance of the Note, an embedded derivative with a fair value of $66,205 was identified and recorded as debt discount (See Note 11). In conjunction with the Note, the Company issued 3,591,940 shares of common stock (“Origination Shares”) of the Company which was recorded as debt discount. The number of Origination Shares is subject to a reset on the six month anniversary of the Note equal to the $166,667 divided by the lowest daily price of shares of common stock (i) during the 10 days before the delivery of the Origination Shares (ii) during the ten days prior to the date of the Note or (iii) during the ten days prior to the date of the six month anniversary (“Top-off Liability”). The Origination Shares and the Note were valued at $51,920 and $31,875 upon issuance, respectively, using the relative fair value method. Additional interest expense is accreted on the Note between issuance and maturity dates with the expectation that principal and interest is likely to be settled in shares of common stock of the Company at a variable conversion price calculated at 40% of trade price of common stock of the Company. At March 31, 2018, the principal and interest outstanding of $391,482 is recorded net of unamortized debt discount of $36,818 and a Top-off Liability of $58,067 is included accounts payable and accrued liabilities. Interest and amortization of debt discount was $380,856 for the year ended March 31, 2018.

12.CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITY 

The Convertible Promissory Notes with JMJ Financial with an issue date of November 14, 2017 was accounted for under ASC 815.  The variable conversion price is not considered predominately based on a fixed monetary amount settleable with a variable number of shares due to the volatility and trading volume of the Company’s common stock. The Company’s convertible promissory note derivative liabilities has been measured at fair value at November 14, 2017 and March 31, 2018 using the Black-Scholes model.

The inputs into the Black-Scholes models are as follows:

F-16

The fair value of the conversion option derivative liability is $66,205 and $68,934 at November 14, 2017 and March 31, 2018, respectively. The increase in the fair value of the conversion option derivative liability of $2,729 is recorded as a loss in the consolidated statements of operations for the year ended March 31, 2018.

13.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 March 31, 2018, 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.

14.STOCKHOLDERS’ EQUITY (DEFICIT) 

The stockholders’ equity of the Company comprises the following classes of capital stock as of March 31, 2018 and 2017:

Preferred Stock, $0.001 par value per share; 9,000,000 shares authorized, 0 issued and outstanding at March 31, 2018 and 2017.

Series A Convertible Preferred Stock (‘Series A Preferred Stock”), $0.001 par value share; 1,000,000 shares authorized: 1,000,000 shares issued and outstanding at March 31, 2018 and 2017.

Holders of Series A Preferred Stock may convert one share of Series A Preferred Stock into ten shares 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; 2,000,000,000 shares authorized: 755,922,947 and 665,556,526 shares issued and outstanding at March 31, 2018 and 2017, respectively. Holders of Common Stock have one vote per share of Common Stock held.

(i)Year Ended March 31, 2018 

On April 11, 2017, the Company issued 1,097,826 shares of common stock to satisfy obligations under share subscription agreements for $9,000 for settlement of equipment and $50,000 in cash receipts included in share subscriptions payable.

On April 17, 2017, the Company issued 621,954 shares of common stock to satisfy obligations under share subscription agreements for $15,000 for settlement of services and $25,000 in cash receipts included in share subscriptions payable.

On May 15, 2017, the Company issued 108,696 shares of common stock to satisfy obligations under share subscription agreements for $10,000 for settlement of services included in share subscriptions payable.

On June 2, 2017, the Company issued 4,593,333 shares of common stock to satisfy obligations under share subscription agreements for $41,300 for settlement of services and $36,500 in cash receipts included in share subscriptions payable.

On July 5, 2017, the Company issued 600,000 shares of common stock to satisfy obligations under share subscription agreements for $5,760 for settlement of services and $32,485 for settlement of stock payable included in share subscriptions payable.

On July 11 2017, the Company issued 2,949,253 shares of common stock to satisfy obligations under share subscription agreements for $25,975 for settlement of services and $88,500 in cash receipts included in share subscriptions payable.

On August 1, 2017, the Company issued 3,693,333 shares of common stock to satisfy obligations under share subscription agreements for $38,000 for settlement of services and $76,500 in cash receipts included in share subscriptions payable.

On August 15, 2017, the Company issued 11,436,667 shares of common stock to satisfy obligations under share subscription agreements for $102,000 for settlement of accounts payable, $405,500 for settlement of services and $36,000 in cash receipts included in share subscriptions payable.

On September 12, 2017, the Company issued 4,500,000 shares of common stock to satisfy obligations under share subscription agreements for $85,400 for settlement of services and $71,600 in cash receipts included in share subscriptions payable.

F-17

On September 25, 2017, the Company issued 3,500,000 shares of common stock to satisfy obligations under share subscription agreements for $61,300 for settlement of services and $45,000 in cash receipts included in share subscriptions payable.

On September 28, 2017, the Company issued 2,275,000 shares of common stock to satisfy obligations under share subscription agreements for $23,500 for settlement of services and $35,500 in cash receipts included in share subscriptions payable.

On October 13, 2017, the Company issued 3,814,232 shares of common stock to satisfy obligations under share subscription agreements for $47,000 for settlement of services, $10,000 for settlement of notes payable, interest of $2,303 and $44,785 in cash receipts included in share subscriptions payable.

On November 6, 2017, the Company issued 5,430,030 shares of common stock to satisfy obligations under share subscription agreements for $57,575 for settlement of services, $4,000 for settlement of notes payable, interest of $2,395 and $16,040 in cash receipts included in share subscriptions payable.

On November 13, 2017, the Company issued 6,591,666 shares of common stock to satisfy obligations under share subscription agreements for $6,000 for settlement of services, $57,500 for settlement of notes payable, interest of $1,632 and $50,000 in cash receipts included in share subscriptions payable.

On November 30, 2017, the Company issued 3,591,940 shares of common stock to satisfy obligations under share subscription agreements for interest of $51,920 and included in share subscriptions payable.

On December 12, 2017, the Company issued 2,283,333 shares of common stock to satisfy obligations under share subscription agreements for $29,000 in cash receipts included in share subscriptions payable.

On December 14, 2017, the Company issued 3,600,000 shares of common stock to satisfy obligations under share subscription agreements for $136,800 for settlement of services included in share subscriptions payable.

On December 20, 2017, the Company issued 8,050,000 shares of common stock to satisfy obligations under share subscription agreements for $106,400 for settlement of services, $80,000 for equipment and $44,200 in cash receipts included in share subscriptions payable.

On December 28, 2017, the Company issued 6,250,000 shares of common stock to satisfy obligations under share subscription agreements for $250,000 for settlement of notes payable included in share subscriptions payable.

On January 5, 2018, the Company issued 7,666,666 shares of common stock to satisfy obligations under share subscription agreements for $79,400 for settlement of services, $162,500 for settlement of accounts payable, $825 for interest and $39,000 in cash receipts included in share subscriptions payable.

On January 19, 2018, the Company issued 583,332 shares of common stock to satisfy obligations under share subscription agreements for $9,000 for settlement of cash receipts included in share subscriptions payable.

On January 29, 2018, the Company issued 3,187,000 shares of common stock to satisfy obligations under share subscription agreements for $8,448 for settlement of services and $36,600 in cash receipts included in share subscriptions payable.

On January 30, 2018, the Company issued 527,779 shares of common stock to satisfy obligations under share subscription agreements for $13,895 for settlement of services and $3,556 in cash receipts included in share subscriptions payable.

On February 21, 2018, the Company issued 11,324,223 shares of common stock to satisfy obligations under share subscription agreements for $371,600 for settlement of services, $15,000 for settlement of notes payable and $31,000 in cash receipts included in share subscriptions payable.

On March 21, 2018, the Company issued 12,090,158 shares of common stock to satisfy obligations under share subscription agreements for $66,250 for settlement of services, $71,918 for settlement of notes payable, $35,317 for equipment and $28,500 in cash receipts included in share subscriptions payable.

F-18

(ii)Year Ended March 31, 2017 

On May 19, 2016, the Company issued 19,027,777 shares of common stock to satisfy obligations under share subscription agreements for $35,300 in cash receipts included in share subscriptions payable.

On April 21, 2016, the Company issued 17,791,176 shares of common stock to satisfy obligations under share subscription agreements for $75,000 for settlement of interest, $47,400 in services and $5,000 in cash receipts included in share subscriptions payable.

On May 13, 2016, the Company issued 17,141,176 shares of common stock to satisfy obligations under share subscription agreements for $306,000 for settlement of accounts payable, $2,000 in equipment and $20,000 in cash receipts included in share subscriptions payable.

On July 6, 2016, the Company cancelled 1,830,600 shares of common stock previously issued to satisfy obligations under share subscription agreements for $27,459 for settlement of notes payable.

On August 12, 2016, the Company issued 8,150,000 shares of common stock to satisfy obligations under share subscription agreements for $305,000 for services and $41,000 in cash receipts included in share subscriptions payable.

On August 24, 2016, the Company issued 14,633,333 shares of common stock to satisfy obligations under share subscription agreements for $205,800 for services, $30,000 for settlement of accounts payable, $51,666 for settlement of notes payable and $114,500 in cash receipts included in share subscriptions payable.

On August 30, 2016, the Company issued 6,025,000 shares of common stock to satisfy obligations under share subscription agreements for $120,500 in cash receipts included in share subscriptions payable.

On September 26, 2016, the Company issued 8,710,000 shares of common stock to satisfy obligations under share subscription agreements for $176,600 for services and $14,200 in cash receipts included in share subscriptions payable.

On October 10, 2016, the Company issued 21,283,782 shares of common stock to satisfy obligations under share subscription agreements for $704,539 for settlement of notes payable, $394,265 in services and $93,000 in cash receipts included in share subscriptions payable.

On November 11, 2016, the Company issued 2,916,667 shares of common stock to satisfy obligations under share subscription agreements for $2,000 for settlement of notes payable, $8,037 for settlement of accounts payable, $29,463 in services and $10,000 in cash receipts included in share subscriptions payable.

On December 2, 2016, the Company issued 14,055,555 shares of common stock to satisfy obligations under share subscription agreements for $5,000 for settlement of notes payable, $20,000 for interest, $44,900 in services and $91,000 in cash receipts included in share subscriptions payable.

On December 12, 2016, the Company issued 33,918,729 shares of common stock to satisfy obligations under share subscription agreements for $44,000 for settlement of notes payable, $190,909 for interest, $1,687 for settlement of accounts payable, $22,499 for replacement of cancellation of shares, $251,650 in services and $36,436 in cash receipts included in share subscriptions payable.

On December 12, 2016, the Company cancelled 2,248,100 shares of common stock previously issued to satisfy obligations under share subscription agreements for $22,481 for settlement of notes payable.

On December 29, 2016, the Company issued 2,583,333 shares of common stock to satisfy obligations under share subscription agreements for $11,700 for services and $24,625 in cash receipts included in share subscriptions payable.

On February 6, 2017, the Company issued 2,534,136 shares of common stock to satisfy obligations under share subscription agreements for $61,425 in services and $38,000 in cash receipts included in share subscriptions payable.

On February 24, 2017, the Company issued 2,282,378 shares of common stock to satisfy obligations under share subscription agreements for $4,500 for settlement of accounts payable, $33,500 in services and $127,728 in cash receipts included in share subscriptions payable.

F-19

On February 28, 2017, the Company issued 6,100,000 shares of common stock to satisfy obligations under share subscription agreements for $104,500 in services included in share subscriptions payable.

On March 14, 2017, the Company issued 4,207,777 shares of common stock to satisfy obligations under share subscription agreements for $5,000 for settlement of notes payable and $63,000 in cash receipts included in share subscriptions payable.

On March 21, 2017, the Company issued 2,086,667 shares of common stock to satisfy obligations under share subscription agreements for $2,000 for settlement of notes payable and $21,000 in cash receipts included in share subscriptions payable.

On March 28, 2017, the Company issued 5,586,120 shares of common stock to satisfy obligations under share subscription agreements for $45,500 for settlement of accounts payable, $92,000 in services and $71,832 in cash receipts included in share subscriptions payable.

Common Stock Payable

(iii)Year Ended March 31, 2018 

On June 26, 2017, the Company issued subscriptions payable for 500,000 shares in common stock valued at $32,485 ($0.06497 per share) to fully settle subscription payable and other liabilities totaling $137,004. The settlement resulted in an increase of additional paid-in capital of $104,519.

As at March 31, 2018, the Company had total subscriptions payable for 48,641,961 shares of common stock for $316,063 in cash, shares of common stock for equipment valued at $1,500, shares of common stock for interest valued at $7,412 and shares of common stock for services valued at $311,590.

(iv)Year Ended March 31, 2017 

As at March 31, 2017, the Company had total subscriptions payable for 26,024,576 shares of common stock for $260,287 in cash, shares of common stock for equipment valued at $10,500, shares of common stock for interest valued at $5,000, shares of common stock for services valued at $286,680 and common stock for settlement of notes payable valued at $9,000.

15.RELATED PARTY TRANSACTIONS 

During the years ended March 31, 2018 and 2017, the Company entered into the following transactions with related parties:

Paul D. Thompson, sole director and officer of the Company

Taurus Gold, Inc., controlled by Paul D. Thompson

Accounts payable – related parties – Note 7

Notes payable – related parties – Note 8

16.INCOME TAXES 

On December 22, 2017, the Tax Cuts and Jobs Act (the TCJA), which significantly modified U.S. corporate income tax law, was signed into law by President Trump. The TCJA contains significant changes to corporate income taxation, including but not limited to the reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and generally eliminating net operating loss carrybacks, allowing net operating losses to carryforward without expiration, one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and experimental expenditures that will be effective in the future). Notwithstanding the reduction in the corporate income tax rate, the overall impact of the new federal tax law is uncertain, including to what extent various states will conform to the newly enacted federal tax law.

The Company has not recorded the necessary provisional adjustments in the financial statements in accordance with its current understanding of the TCJA and guidance currently available as of this filing. But is reviewing the TCJA’s potential ramifications.

The Company had no income tax expense due to operating loss incurred for the years ended March 31, 2018 and 2017.

F-20

The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at March 31, 2018 and 2017 are comprised of the following:

During the ended March 31, 2018, the deferred tax asset was decreased by $2,186,393 for the reduction in the enacted U.S Federal corporate tax rate to 21% in 2018.

At March 31, 2018, the Company had net operating loss carry forwards for federal tax purposes of approximately $17.2 million which expires in years 2030 through 2038. It appears that the Company had generated net operating losses, since 2010, which the Company’s preliminary analysis indicates would be subject to significant limitations pursuant to Internal Revenue Code Section 382. The Company has not completed its IRC Section 382 Valuation, as required and the NOL’s because of potential Change of Ownerships might be completely worthless. Therefore, Management of the Company has recorded a full valuation reserve; since it is more likely than not that no benefit will be realized for the Deferred Tax Assets.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at March 31, 2018. The valuation allowance increased by approximately $0.3 million as of March 31, 2018.

Corporations resident in Mexico are taxable on their worldwide income from all sources, including profits from business and property. The Company is subject to Mexico tax at a rate of 30% on taxable income, if any, from Mexico operations.

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

The Company has not identified any uncertain tax positions requiring a reserve as of March 31, 2018

F-21

17.SUBSEQUENT EVENTS 

Increase in the Number of Authorized Shares

On June 4, 2018, the Company’s board of directors and the majority shareholder approved an increase in the number of authorized shares of common stock of the Company from eight hundred fifty million (850,000,000) shares of common stock, par value $0.001 per share, to two billion (2,000,000,000) shares of common stock, par value $0.001 per share. Information in these consolidated financial statements have been restated to retroactively reflect this increase.

Common Stock Issued

On April 2, 2018, the Company issued 5,300,000 shares of common stock to satisfy obligations under share subscription agreements of $22,610 for settlement of services and $25,000 for cash receipts included in share subscriptions payable.

On April 16, 2018, the Company issued 18,600,000 shares of common stock to satisfy obligations under share subscription agreements of $186,000 for cash receipts included in share subscriptions payable.

On May 2, 2018, the Company issued 2,800,000 shares of common stock to satisfy obligations under share subscription agreements of $32,400 for settlement of accounts payable and $10,000 for cash receipts included in share subscriptions payable.

On May 24, 2018, the Company issued 5,945,410 shares of common stock to satisfy obligations under share subscription agreements of $70,050 for settlement of services and $25,280 for cash receipts included in share subscriptions payable.

On May 30, 2018, the Company issued 4,269,663 shares of common stock to satisfy obligations under share subscription agreements of $67,888 for settlement of the Top-off Liability included in accounts payable and accrued liabilities (see Note 10) included in share subscriptions payable.

On June 12, 2018, the Company issued 350,000 shares of common stock to satisfy obligations under share subscription agreements of $5,425 for services included in share subscriptions payable.

Common Stock Payable

For the period of April 1, 2018 to July 2, 2018, the Company issued subscriptions payable for 33,150,000 shares of common stock ($0.0051 per share) for $170,000 in cash.

For the period of April 1, 2018 to July 2, 2018, the Company issued subscriptions payable for 4,750,000 shares of common stock ($0.0146 per share) for $69,425 in services.

For the period of April 1, 2018 to July 2, 2018, the Company issued subscriptions payable for 6,069,663 shares of common stock ($0.0165 per share) for $100,288 in settlement of accounts payables and accrued liabilities.

For the period of April 1, 2018 to July 2, 2018, the Company issued subscriptions payable for 7,429,654 shares of common stock ($0.0180 per share) for $133,734 for the settlement of a Promissory Note on May 25, 2018 (see Promissory Note settled for shares of common stock on May 25, 2018 below).

For the period of April 1, 2018 to July 2, 2018, the Company issued subscriptions payable for 1,752,000 shares of common stock ($0.0162 per share) for $28,345 in conjunction with Promissory Notes issued from May 9, 2018, to May 15, 2018 (see Promissory Notes issued from May 9, 2018 to May 15, 2018 below).

Promissory Notes

From May 9, 2018 to May 15, 2018, the Company issued various Promissory Notes (“Notes”) for $109,500 in cash. The Notes are unsecured, mature six months after the issue date and earn interest at 12% per annum. In addition, in conjunction with the issuance of the Notes the Company issued 16 shares of common stock of the Company for each $1 of Notes purchased for a total of 1,752,000 shares valued at $28,345. If the Notes and interest are not paid in cash on the maturity date, the Company will pay the Holders the numbers of shares of common stock of the Company calculated as the total outstanding principal and interest divided by 50% of the 30 average closing share price immediately before the maturity date.

F-22

On May 25, 2018, the Company issued 7,429,654 shares of common stock valued at $133,734 ($0.0180 per share) to settle a Promissory Note issued on January 19, 2016 with a carrying value for outstanding principal and interest of $77,150 resulting in a loss on settlement of $56,584 (See Note 8).

JMJ Financial

On May 16, 2018, the Company paid JMJ Financial $183,333 in cash to fully settle the Convertible Promissory Note issued on November 14, 2017 (see Note 10).

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