MEXUS GOLD US AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Year Ended March 31,
|
|
|
2021
|
|
2020
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net loss
|
$
|
(3,332,130)
|
$
|
(3,218,296)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
86,496
|
|
168,757
|
Loss on settlement of debt and accounts payable
|
|
324,252
|
|
146,165
|
Stock-based compensation - consulting services
|
|
1,312,877
|
|
537,900
|
Non cash Interest expense
|
|
1,325,732
|
|
1,206,882
|
Gain on change in fair value of derivative instruments
|
|
(815,863)
|
|
(270,281)
|
Changes in operating assets and liabilities:
|
|
|
|
|
Decrease of other assets
|
|
-
|
|
5,500
|
Increase in accounts payable and accrued liabilities, including related parties
|
|
298,761
|
|
150,509
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
(799,875)
|
|
(1,272,864)
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase of equipment
|
|
(49,000)
|
|
(44,125)
|
NET CASH USED IN INVESTING ACTIVITIES
|
|
(49,000)
|
|
(44,125)
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds from issuance of notes payable
|
|
65,000
|
|
616,530
|
Proceeds from issuance of notes payable - related party
|
|
3,000
|
|
70,759
|
Payment of notes payable
|
|
(32,000)
|
|
(213,000)
|
Proceeds from the issuance of convertible promissory notes
|
|
477,000
|
|
761,750
|
Repayment of convertible promissory note
|
|
(178,855)
|
|
(402,301)
|
Proceeds from issuance of common stock, net
|
|
458,638
|
|
535,395
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
792,783
|
|
1,369,133
|
|
|
|
|
|
(DECREASE) INCREASE IN CASH
|
|
(56,092)
|
|
52,144
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD
|
|
64,173
|
|
12,029
|
|
|
|
|
|
CASH, END OF PERIOD
|
$
|
8,081
|
$
|
64,173
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Interest paid
|
$
|
-
|
$
|
7,670
|
Taxes paid
|
$
|
-
|
$
|
-
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
Shares issued for settlement of notes payable and interest
|
$
|
75,600
|
$
|
374,471
|
Shares issued for settlement of convertible notes
|
$
|
1,488,675
|
$
|
359,771
|
Shares issued to settle accounts payable
|
$
|
-
|
$
|
36,400
|
Shares issued to settle accounts payable - related party
|
$
|
50,000
|
$
|
-
|
Note payable issued to settle accounts payable and accrued interest
|
$
|
94,216
|
$
|
66,754
|
Shares issued in conjunction with the issuance of notes payable
|
$
|
71,800
|
$
|
74,500
|
Discount for beneficial conversion feature recognized on issuance of notes payable
|
$
|
-
|
$
|
102,414
|
Initial value of embedded derivative liability
|
$
|
441,021
|
$
|
683,240
|
Shares issued to purchase equipment
|
$
|
-
|
$
|
54,978
|
Reclassification of equipment under construction to property and equipment
|
$
|
-
|
$
|
17,018
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
|
F-5
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
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, 2021, the Company incurred a net loss of $3,332,130 and used cash in operating activities of $799,875, and on March 31, 2021, had an accumulated deficit of $35,677,798. On March 31, 2021, the Company is in the exploration stage. 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, 2021, 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 Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets.
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 2020 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-6
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
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 4):
Mining tools and equipment
|
7 years
|
Watercraft
|
7 years
|
Vehicles
|
3 years
|
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-7
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
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.
F-8
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
Comprehensive Loss
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. For the years ended March 31, 2021 and 2020, 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.
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, 2021 and 2020, 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
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation.
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.
F-9
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
3. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
On March 31, 2021 and 2020, 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:
|
March 31,
2021
|
|
March 31,
2020
|
Common stock issuable upon conversion of notes payable and convertible notes payable
|
16,317,058
|
|
18,009,112
|
Common stock issuable to satisfy stock payable obligations
|
4,970,315
|
|
3,437,035
|
Common stock issuable upon conversion of Series A Preferred Stock
|
1,000,000
|
|
1,000,000
|
Total
|
22,287,373
|
|
22,446,147
|
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning April 1, 2024. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our consolidated financial statements.
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. 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, 2021 and 2020:
|
|
Balance
|
|
|
|
|
|
|
|
Balance
|
|
|
March 31,
|
|
Cash
|
|
Share-based
|
|
|
|
March 31,
|
|
|
2020
|
|
Payments
|
|
Payments
|
|
Impairment
|
|
2021
|
Ures Property (a)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Santa Elena Mine (b)
|
|
505,947
|
|
-
|
|
-
|
|
-
|
|
505,947
|
San Felix Project (c)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Project Mabel (d)
|
|
324,000
|
|
-
|
|
-
|
|
-
|
|
324,000
|
|
$
|
829,947
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
829,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
|
|
|
|
Balance
|
|
|
March 31,
|
|
Cash
|
|
Share-based
|
|
|
|
March 31,
|
|
|
2019
|
|
Payments
|
|
Payments
|
|
Impairment
|
|
2020
|
Ures Property (a)
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
Santa Elena Mine (b)
|
|
505,947
|
|
-
|
|
-
|
|
-
|
|
505,947
|
San Felix Project (c)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Project Mabel (d)
|
|
324,000
|
|
-
|
|
-
|
|
-
|
|
324,000
|
|
$
|
829,947
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
829,947
|
|
|
|
|
|
|
|
|
|
|
|
F-10
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
4. MINERAL PROPERTIES AND EXPLORATION COSTS (CONTINUED)
The following is a continuity of exploration costs expensed in the consolidated statements of operation:
|
|
Balance
|
|
|
|
|
|
Balance
|
|
|
March 31,
|
|
Cash
|
|
Share-based
|
|
March 31,
|
|
|
2020
|
|
Payments
|
|
Payments
|
|
2021
|
Ures Property (a)
|
$
|
2,111,305
|
$
|
11,140
|
$
|
167,335
|
$
|
2,289,780
|
Santa Elena Mine (b)
|
|
6,260,416
|
|
518,536
|
|
-
|
|
6,778,952
|
|
$
|
8,371,721
|
$
|
529,678
|
$
|
167,335
|
$
|
9,068,732
|
|
|
Balance
|
|
|
|
|
|
Balance
|
|
|
March 31,
|
|
Cash
|
|
Share-based
|
|
March 31,
|
|
|
2019
|
|
Payments
|
|
Payments
|
|
2020
|
Ures Property (a)
|
$
|
2,089,538
|
$
|
21,767
|
$
|
-
|
$
|
2,111,305
|
Santa Elena Mine (b)
|
|
5,493,310
|
|
696,081
|
|
71,025
|
|
6,260,416
|
|
$
|
7,582,848
|
$
|
717,848
|
$
|
71,025
|
$
|
8,371,721
|
(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. On March 31, 2021, a total of $505,947 have been capitalized on the consolidated balance sheet for these property costs.
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.
F-11
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
4. MINERAL PROPERTIES AND EXPLORATION COSTS (CONTINUED)
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.
(d)Project Mabel
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.
On January 23, 2018, the Company paid 300,000 shares of common stock valued at $324,000 ($1.08 per share) to Cesar Maruicio Lemas Contreras as consideration to enter into three Letter of Intent agreements. On March 31, 2018, the payment was recorded as a deposit on mineral property in the consolidated balance sheet. On May 1, 2018, the $324,000 deposit on mineral properties was transferred to property costs on the consolidated balance sheet.
5. PROPERTY & EQUIPMENT
|
|
Cost
|
|
Accumulated
Depreciation
|
|
March 31,
2021
Net Book
Value
|
|
March 31,
2020
Net Book
Value
|
Mining tools and equipment
|
$
|
1,867,746
|
$
|
1,580,886
|
$
|
286,860
|
$
|
316,392
|
Vehicles
|
|
178,810
|
|
172,278
|
|
6,532
|
|
14,496
|
|
$
|
2,046,556
|
$
|
1,753,164
|
$
|
293,392
|
$
|
330,888
|
|
|
|
|
|
|
|
|
|
Depreciation expense for years ended March 31, 2021 and 2020 was $86,496 and $168,757, respectively.
F-12
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
6. ACCOUNTS PAYABLE – RELATED PARTIES
During the years ended March 31, 2021 and 2020, the Company incurred rent expense to Paul D. Thompson, the sole director and officer of the Company, of $45,600 and $45,600, respectively. On March 31, 2021 and 2020, $147,153 and $107,161 for this obligation is outstanding, respectively.
Compensation
On March 31, 2021, the Company entered into a compensation agreement with Paul D. Thompson Sr., 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, cash payment 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. On March 31, 2021 and 2020, $280,949 and $290,308 of compensation due is included in accounts payable – related party, respectively and $51,400 for 2,000,000 shares and $32,600 for 100,000 shares of common stock due is included in share subscriptions payable, respectively.
7. NOTES PAYABLE AND NOTES PAYABLE - RELATED PARTY
During the years ended March 31, 2021 and 2020 the Company received various advances for notes payable totaling $65,000 and $754,043, respectively. These notes are unsecured and are due in one to fifteen months from the date issue.
(i)During the period from June 12, 2020 to June 15, 2020, the Company issued two (2) promissory notes (“Notes”) with $20,000 in principal that earns interest at 12% per annum and a term of six months. These promissory notes together with any unpaid accrued interest are payable, at the option of the holder, in cash or shares in the Company valued at the average closing prices of the previous 14 trading days. These Notes has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity.
(ii)On July 2, 2020, the Company issued a promissory note (“Note”) for cash with $35,000 in principal that earns interest at 12% per annum and a term of six months. In conjunction with the issuance of this Note the Company issued 875,000 shares of its common stock to the Note holder which was recorded as a $35,000 debt discount.
(iii)On August 26, 2020, the Company issued a promissory note (“Note”) for cash with $10,000 in principal that earns interest at 12% per annum and a term of six months. In conjunction with the issuance of this Note the Company issued 416,667 shares of its common stock to the Note holder which was recorded as a $10,000 debt discount.
(iv)On September 4, 2020, the Company issued a promissory note (“Note”) with a principal of amount of $82,650 bearing interest of 10% per annum to settle $82,650 in accounts payable due for accounting fees. The Note is due on September 30, 2021. The Note holder, in its sole discretion, may convert any part or all of the principal, interest or other charges due and payable under this Note to restricted common stock of the Company at a variable conversion price calculated at 50% of the market price defined as the average of the five closing trading prices during the previous five trading days. The Note was analyzed by the Company in accordance with ASC 470 Debt and it was determined that there was no gain or loss on extinguishment. This Note has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity.
(v)On September 23, 2020, the Company agreed to change certain terms of a promissory note (“Note”) issued on April 15, 2019, with principal of $66,754 and accrued interest of $11,566. The Note had the following original terms (i) bearing interest of 10% per annum (ii) the holder of the Note may convert principal and interest into shares of common stock of the Company at $0.10 per share and (iii) due on June 30, 2020. The Company agreed the Note holder, in its sole discretion, may convert any part or all of the principal, interest or other charges due and payable under this Note to restricted common stock of the Company at a variable conversion price calculated at 50% of the market price defined as the average of the five closing trading prices during the previous five trading days and change the maturity date to September 30, 2021. The Note was analyzed by the Company in accordance with ASC 470 Debt and it was determined that there was no gain or loss on extinguishment. This Note has been accounted for in accordance with ASC 480 Distinguishing Liabilities from Equity. The Note is no longer convertible at a fixed price of $0.10 per share.
During the year ended March 31, 2021 and 2020, note principal of $2,000 and $255,000, respectively, was paid through the issuance of 50,000 shares and 2,432,493 shares of common stock, respectively. In addition, for year ended March 31, 2021 and 2020, the Company paid $32,000 and $210,000 in cash, respectively, to settle debt.
F-13
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
7. NOTES PAYABLE AND NOTES PAYABLE - RELATED PARTY (CONTINUED)
On March 31, 2021 and 2020, the carrying value of the notes payable totaled $1,232,576 (net of unamortized debt discount of $0) and $934,248 (net of unamortized debt discount of $43,867), respectively.
Notes payable – related party – On March 31, 2021 and 2020, notes payable – related party of $141,169 and $138,169, respectively, are due to Paul Thompson Sr., the sole officer and director of the Company. These notes bear interest from 0% to 12% per annum. On June 26, 2020, the Company issued a note payable – related party for cash with $3,000 in principal that earns interest at 10% per annum and a term of six months.
Interest and amortization of debt discount was $366,927 and $370,150 for the years ended March 31, 2021 and 2020, respectively.
On March 31, 2021 and 2020, accrued interest of $214,744 and $113,603, respectively, is included in accounts payable and accrued liabilities.
On March 31, 2021, $1,277,775 of notes payable and notes payable – related party were in default. There are no default provisions stated in these notes.
8. PROMISSORY NOTES
On March 31, 2021 and 2020, outstanding Promissory Notes were $65,000 and $65,000, respectively. The Note bear interest of 4% per annum and are due on December 31, 2013. The Note is 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. As of March 31, 2021, the Company has not made the scheduled payments and is in default on this promissory note. The default rate on the notes is seven percent. On March 31, 2021 and 2020, accrued interest of $46,351 and $38,043, respectively, is included in accounts payable and accrued liabilities.
9. CONVERTIBLE PROMISSORY NOTES
Power Up Lending Group Ltd.
On November 7, 2018, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $78,000 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing August 30, 2019 for $75,500 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $50,690 which was recorded as a debt discount. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On May 10, 2019, the Company paid $111,531 in cash to Power Up Lending Group Ltd. to fully settle the Note resulting in a gain on settlement of $15,471. Interest and amortization of debt discount was $50,203 for the year ended March 31, 2020.
F-14
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On January 25, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $73,000 less transaction costs of $3,000 bearing a 12% annual interest rate and maturing November 15, 2019 for $70,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $76,073, of which $70,000 was recorded as debt discount and the remainder of $6,073 was recorded expensed and included in gain (loss) on derivative liability. The Company may repay the Note in cash if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On July 18, 2019, the Company paid $104,188 in cash to Power Up Lending Group Ltd. to fully settle the Note resulting in a gain on settlement of $14,249. Interest and amortization of debt discount was $91,207 for the year ended March 31, 2020.
On April 5, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $88,000 less transaction costs of $3,000 bearing a 12% annual interest rate and maturing February 28, 2020 for $85,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $74,311 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On October 8, 2019, the Company paid $125,830 in cash to Power Up Lending Group Ltd. to fully settle the Note resulting in a gain on settlement of $17,602. Interest and amortization of debt discount was $132,743 for the year ended March 31, 2020.
On May 9, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $83,000 less transaction costs of $3,000 bearing a 12% annual interest rate and maturing March 15, 2020 for $80,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $77,741 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. From November 14, 2019 to December 9, 2019, the Company issued 1,343,493 shares of common stock of the Company with the fair value $151,531 to Power Up Lending Group Ltd. to fully settle the Note resulting in a loss on settlement of $16,177. Interest and amortization of debt discount was $133,096 for the year ended March 31, 2020.
F-15
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On June 11, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $42,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing April 15, 2020 for $40,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $38,450 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On December 11, 2019, the Company paid $60,751 in cash to Power Up Lending Group Ltd. to fully settle the Note resulting in a gain on settlement of $8,413. Interest and amortization of debt discount was $67,614 for the year ended March 31, 2020.
On July 29, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $85,000 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing June 15, 2020 for $82,500 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $105,696 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. From January 31, 2020 to March 6, 2020, the Company issued 2,455,159 shares of common stock of the Company with the fair value $208,240 to Power Up Lending Group Ltd. to fully settle the Note resulting in a loss on settlement of $69,625. Interest and amortization of debt discount was $138,615 for the year ended March 31, 2020.
On October 3, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $82,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing August 15, 2020 for $80,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $50,377 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 170 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2020, the Note is recorded at an accreted value of $112,736 less unamortized debt discount of $20,352. From April 13, 2020 to April 22, 2020, the Company issued 2,489,415 shares of common stock of the Company with the fair value $154,491 to the Holder to fully settle the Note resulting in a loss on settlement of $19,953. Interest and amortization of debt discount was $42,155 and $62,760 for the years ended March 31, 2021 and 2020, respectively.
F-16
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On December 12, 2019, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $57,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing September 15, 2020 for $55,000 in cash. After 170 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $49,646 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2020, the Note is recorded at an accreted value of $70,450 less unamortized debt discount of $29,013. From June 17, 2020 to June 24, 2020, the Company issued 1,935,938 shares of common stock of the Company with the fair value $137,709 to the Holder to fully settle the Note resulting in a loss on settlement of $43,940. Interest and amortization of debt discount was $52,332 and $36,084 for the years ended March 31, 2021 and 2020, respectively.
On March 2, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $52,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing December 15, 2020 for $50,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $70,613 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2020, the Note is recorded at an accreted value of $53,617 less unamortized debt discount of $44,714. From September 8, 2020 to September 17, 2020, the Company issued 1,114,824 shares of common stock of the Company with the fair value $90,894 to the Holder to fully settle the Note resulting in a loss on settlement of $5,278. Interest and amortization of debt discount was $76,712 and $8,903 for the years ended March 31, 2021 and 2020, respectively.
On March 26, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $42,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing January 15, 2021 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $38,003 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2020, the Note is recorded at an accreted value of $40,495 less unamortized debt discount of $37,311. From October 2, 2020 to October 15, 2020, the Company issued 1,357,488 shares of common stock of the Company with the fair value $85,374 to the Holder to fully settle the Note resulting in a loss on settlement of $16,067 Interest and amortization of debt discount was $66,129 and $1,182 for the years ended March 31, 2021 and 2020, respectively.
F-17
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On June 9, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $52,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing April 1, 2021 for $50,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $67,285, of which $50,000 was recorded as debt discount and the remainder of $17,285 was recorded expensed and included in gain (loss) on derivative liability. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. From December 15, 2020 to December 18, 2020, the Company issued 3,399,082 shares of common stock of the Company with the fair value $105,588 to the Holder to fully settle the Note resulting in a loss on settlement of $14,359. Interest and amortization of debt discount was $91,230 for the year ended March 31, 2021.
On July 17, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $42,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing May 17, 2021 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. From January 22, 2021 to January 26, 2021, the Company issued 3,604,000 shares of common stock of the Company with the fair value $90,943 to Power Up Lending Group Ltd. to fully settle the Note resulting in a loss on settlement of $21,635. Interest and amortization of debt discount was $60,913 for the year ended March 31, 2021.
On September 17, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $47,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing September 17, 2021 for $45,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. From March 23, 2021 to March 30, 2021, the Company issued 3,120,495 shares of common stock of the Company with the fair value $86,666 to Power Up Lending Group Ltd. to fully settle the Note resulting in a loss on settlement of $9,205. Interest and amortization of debt discount was $66,222 for the year ended March 31, 2021.
On October 15, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $52,500 less transaction costs of $2,500 bearing a 12% annual interest rate and maturing October 15, 2021 for $50,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. At inception, the carrying value of the Note was $11,818 (accreted value of $80,769 less debt discount of $68,951). The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2021, the Note is recorded at an accreted value of $85,205 less unamortized debt discount of $37,404. Interest and amortization of debt discount was $35,982 for the year ended March 31, 2021.
F-18
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On December 15, 2020, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $43,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing December 15, 2021 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. At inception, the carrying value of the Note was $6,797 (accreted value of $66,923 less debt discount of $60,126). The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2021, the Note is recorded at an accreted value of $69,255 less unamortized debt discount of $42,665. Interest and amortization of debt discount was $19,790 for the year ended March 31, 2021.
On January 20, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $43,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing January 20, 2022 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. At inception, the carrying value of the Note was $0 (accreted value of $66,923 less debt discount of $66,923). The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2021, the Note is recorded at an accreted value of $68,463 less unamortized debt discount of $57,099. Interest and amortization of debt discount was $15,089 for the year ended March 31, 2021.
On March 1, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $38,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing March 1, 2022 for $35,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. At inception, the carrying value of the Note was $1,453 (accreted value of $59,231 less debt discount of $57,778). The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. On March 31, 2021, the Note is recorded at an accreted value of $59,815 less unamortized debt discount of $53,029. Interest and amortization of debt discount was $5,333 for the year ended March 31, 2021.
F-19
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
JSJ Investments Inc.
On September 16, 2019, the Company issued a Convertible Promissory Note (“Note”) to JSJ Investments Inc. (“Holder”) in the original principal amount of $142,000 less debt discount of $17,000 bearing a 6% annual interest rate and maturing September 16, 2020 for $125,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 35% discount to the average of the two lowest trading prices during the previous fifteen (15) trading days. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $103,604 which was recorded as a debt discount. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 180 days at 135% of the original principal amount plus interest. On March 31, 2020, the Note is recorded at an accreted value of $173,230 less unamortized debt discount of $38,689. Thereafter, the Company does not have the right of prepayment. From April 15, 2020 to April 29, 2020, the Company issued 5,595,893 shares of common stock of the Company with the fair value $305,082 to the Holder to fully settle the Note resulting in a loss on settlement of $78,158. Interest and amortization of debt discount was $92,381 and $113,145 for the years ended March 31, 2021 and 2020, respectively.
On June 9, 2020, the Company issued a Convertible Promissory Note (“Note”) to JSJ Investments Inc. (“Holder”) in the original principal amount of $130,000 less debt discount of $3,000 bearing a 6% annual interest rate and maturing June 9, 2021 for $127,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 35% discount to the average of the two lowest trading prices during the previous fifteen (15) trading days. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $139,417, of which $127,000 was recorded as debt discount and the remainder of $12,417 was recorded expensed and included in gain (loss) on derivative liability. The Company may repay the Note if repaid within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest, between 121 days and 150 days at 130% of the original principal amount plus interest, and between 151 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. From December 11, 2020 to December 21, 2020, the Company issued 3,764,947 shares of common stock of the Company with the fair value $116,076 to the Holder to partially settle the Note resulting in a loss on settlement of $23,769. From January 8, 2021 to January 20, 2021, the Company issued 5,636,923 shares of common stocks of the Company with the fair value $131,734 to JSJ Investments Inc. to fully settle the Note resulting in a loss on settlement of $16,664 Interest and amortization of debt discount was $207,378 for the year ended March 31, 2021.
Crown Bridge Partners, LLC
On November 21, 2019, the Company issued a Convertible Promissory Note (“Note”) to Crown Bridge Partners, LLC (“Holder”) in the original principal amount of $27,500 less transaction costs of $3,250 bearing a 12% annual interest rate and maturing November 21, 2020 for $24,250 in cash. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 60% of the market price defined as the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $18,608 which was recorded as a debt discount. The Company may repay the Note if repaid within 60 days of date of issue at 125% of the original principal amount plus interest, between 61 days and 120 days at 135% of the original principal amount plus interest and between 121 days and 180 days at 145% of the original principal amount plus interest. On March 31, 2020, the Note is recorded at an accreted value of $32,786 less unamortized debt discount of $10,784. Thereafter, the Company does not have the right of prepayment. From June 2, 2020 to August 19, 2020, the Company issued 2,310,089 shares of common stock of the Company with the fair value $171,028 to the Holder to fully settle the Note resulting in a loss on settlement of $132,785. Interest and amortization of debt discount was $29,332 and $16,359 for the years ended March 31, 2021 and 2020, respectively.
F-20
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
9. CONVERTIBLE PROMISSORY NOTES (CONTINUED)
On August 11, 2020, the Company issued a Convertible Promissory Note (“Note”) to Crown Bridge Partners, LLC (“Holder”) in the original principal amount of $55,000 less transaction costs of $5,000 bearing a 12% annual interest rate and maturing August 10, 2021 for $50,000 in cash. This Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 60% of the market price defined as the lowest trading price during the twenty trading day period ending on the latest complete trading day prior to the conversion date. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $91,113 which was recorded as a debt discount. At inception, the carrying value of the Note was $0 (accreted value of $91,667 less debt discount of $91,667). The Company may repay the Note if repaid within 60 days of date of issue at 125% of the original principal amount plus interest, between 61 days and 120 days at 135% of the original principal amount plus interest and between 121 days and 180 days at 145% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature was $91,113, of which $50,000 was recorded as debt discount and the remainder of $41,113 was recorded expensed and included in gain (loss) on derivative liability. On March 31, 2021, the Note is recorded at an accreted value of $98,659 less unamortized debt discount of $33,240. Interest and amortization of debt discount was $65,417 for the year ended March 31, 2021.
Auctus Fund, LLC
On December 19, 2019, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC, (“Holder”) relating to the issuance and sale of a Convertible Promissory Note (the “Note”) with an original principal amount of $112,750 less an original issue discount of $10,000 and transaction costs of $2,750 bearing a 12% annual interest rate and maturing September 15, 2020 for $100,000 in cash. The Company determined that upon issuance of the Note, the initial fair value of the embedded conversion feature and warrant liability was $110,475 which was recorded as a debt discount. After 180 days after the issue date, the Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 50% of the market price defined as the lowest trading price during the twenty-five trading day period ending on the latest trading day prior to the conversion date. The Company may prepay the Note in cash, if repaid within 90 days of date of issue at 135% of the original principal amount plus interest and between 90 days and 180 days at 150% of the original principal amount plus interest. . On March 31, 2020, the Note is recorded at an accreted value of $145,712 less unamortized debt discount of $61,924. Thereafter, the Company does not have the right of prepayment. On June 15, 2020, the Company paid $178,855 in cash the Holder to fully settle the Note resulting in a gain on settlement of $59,359. Interest and amortization of debt discount was $154,426 and $83,789 for the years ended March 31, 2021 and 2020, respectively.
10. CONVERTIBLE PROMISSORY NOTE DERIVATIVE LIABILITY
The Convertible Promissory Notes (“Notes”) with Power Up Lending Group Ltd., JSJ Investments Inc., Crown Bridge Partners, LLC and Auctus Fund, LLC 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 notes derivative liabilities has been measured at fair value using the Black-Scholes model.
The inputs into the Black-Scholes models are as follows:
|
|
March 31,
2019
|
|
March 31,
2020
|
|
March 31,
2021
|
Closing share price
|
$
|
0.2444
|
$
|
0.0760
|
$
|
0.0257
|
Conversion price
|
$
|
0.2000
|
$
|
0.0520- 0.0560
|
$
|
0.0233 - 0.0234
|
Risk free rate
|
|
2.44% - 2.56%
|
|
0.11% - 0.15%
|
|
0.04%
|
Expected volatility
|
|
230%
|
|
201% - 256%
|
|
136% - 161%
|
Dividend yield
|
|
0%
|
|
0%
|
|
0%
|
Expected life (years)
|
|
0.42- 0.63
|
|
0.21 – 0.79
|
|
0.36 – 0.81
|
The fair value of the conversion option derivative liabilities is $138,539, $486,663 and $113,091 on March 31, 2021, 2020 and 2019, respectively. The initial fair value of the conversion option derivative liabilities for the years ended March 31, 2021 and 2020 was $441,021 and $648,150, respectively. The decrease in the fair value of the conversion option derivative liability for the years ended March 31, 2021 and 2020 of $789,145 and $274,578, respectively, is recorded as a gain in the consolidated statements of operations.
F-21
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
11. WARRANT LIABILITY
In conjunction with the issuance of the Convertible Promissory Notes with Crown Bridge Partners, LLC on November 21, 2019 and August 11, 2020, the Company issued, with each Note, 1,100,000 warrants with an exercise price of $1.00 and a term of five years.
Also, in conjunction with the issuance of the Convertible Promissory Note with Auctus Fund, LLC (the “Note”) on December 19, 2019, the Company issued 10,000,000 warrants with an exercise price of $0.10 and a term of five years.
These warrants are subject to down round and other anti-dilution protections. These warrants are classified as a liability since there is a possibility during the life of these warrants the Company would not have enough authorized shares available if these warrants are exercised.
The inputs into the Black-Scholes models are as follows:
|
|
March 31,
2020
|
|
March 31,
2021
|
Closing share price
|
$
|
0.076
|
$
|
0.0257
|
Conversion price
|
$
|
1.00 - 0.10
|
$
|
1.00 - 0.10
|
Risk free rate
|
|
0.37%
|
|
0.35%
|
Expected volatility
|
|
181%
|
|
170 - 180%
|
Dividend yield
|
|
0%
|
|
0%
|
Expected life (years)
|
|
4.72
|
|
3.65 – 4.36
|
The fair value of the warrant liability is $12,669, $39,387 and $0 on March 31, 2021, 2020 and 2019, respectively. The initial fair value of the warrant liability for the years ended March 31, 2021 and 2020 was $0 and $35,090, respectively. The decrease (increase) in the fair value of the warrant liability of $26,718 and $(4,297) is recorded as a gain (loss) in the consolidated statements of operations for the years ended March 31, 2021 and 2020, respectively.
12. 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, 2021, 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.
13. STOCKHOLDERS’ EQUITY (DEFICIT)
On October 6, 2020, a Certificate of Amendment to our Articles of Incorporation was filed with the Secretary of State of Nevada to effect a one-for-twenty reverse stock split of our common stock became effective. All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the reverse stock split.
The stockholders’ equity of the Company comprises the following classes of capital stock as of March 31, 2021 and 2020:
Preferred Stock, $0.001 par value per share; 9,000,000 shares authorized, 0 issued and outstanding on March 31, 2021 and 2020.
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 on March 31, 2021 and 2020.
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; 5,000,000,000 shares authorized: 177,714,055 and 79,699,130 shares issued and outstanding on March 31, 2021 and 2020, respectively. Holders of Common Stock have one vote per share of Common Stock held.
F-22
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
13. STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
Common Stock Issued
(i) Year Ended March 31, 2021
On April 2, 2020, the Company issued 1,124,167 shares of common stock to satisfy obligations under share subscription agreements of $28,500 for cash and $3,800 for settlement of notes payable and interest included in share subscriptions payable.
From April 14, 2020 to May 1, 2020, the Company issued 8,085,309 shares of common stock to satisfy obligations under share subscription agreements of $459,572 for settlement of convertible notes included in share subscriptions payable.
On May 4, 2020, the Company issued 1,563,732 shares of common stock to satisfy obligations under share subscription agreements of $53,680 for settlement of services and $54,000 for the settlement of note payable included in share subscriptions payable.
On May 11, 2020, the Company issued 67,500 shares of common stock to satisfy obligations under share subscription agreements of $5,130 for settlement of services included in share subscriptions payable.
On May 12, 2020, the Company issued 352,500 shares of common stock to satisfy obligations under share subscription agreements of $14,805 for settlement of services included in share subscriptions payable.
On May 21, 2020, the Company issued 357,895 shares of common stock to satisfy obligations under share subscription agreements of $28,000 for settlement of services included in share subscriptions payable.
From June 4, 2020 to June 25, 2020, the Company issued 3,460,938 shares of common stock to satisfy obligations under share subscription agreements of $244,359 for settlement of convertible notes included in share subscriptions payable.
On June 5, 2020, the Company issued 250,000 shares of common stock to satisfy obligations under share subscription agreements of $5,000 for settlement of cash included in share subscriptions payable.
On July 13, 2020, the Company issued 250,000 shares of common stock to satisfy obligations under share subscription agreements of $20,000 for the settlement of convertible notes included in share subscriptions payable.
On July 23, 2020, the Company issued 1,979,678 shares of common stock to satisfy obligations under share subscription agreements of $33,000 for cash and $32,105 for settlement of services included in share subscriptions payable.
On July 28, 2020, the Company issued 1,395,588 shares of common stock to satisfy obligations under share subscription agreements of $14,000 for cash, $49,300 for settlement of services and $39,690 for the settlement of convertible notes included in share subscriptions payable.
On August 19, 2020, the Company issued 5,566,667 shares of common stock to satisfy obligations under share subscription agreements of $109,516 for cash, $14,800 for settlement of services and supplies and $41,000 for the settlement of interest included in share subscriptions payable.
On August 20, 2020, the Company issued 185,189 shares of common stock to satisfy obligations under share subscription agreements of $17,778 for settlement of convertible notes included in share subscriptions payable.
On September 9, 2020, the Company issued 384,615 shares of common stock to satisfy obligations under share subscription agreements of $33,077 for settlement of convertible notes included in share subscriptions payable.
On September 10, 2020, the Company issued 2,510,901 shares of common stock to satisfy obligations under share subscription agreements of $49,500 for cash, $14,402 for settlement of services and supplies, $4,000 for interest and $47,278 for the settlement of equipment included in share subscriptions payable.
F-23
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
13. STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
On September 15, 2020, the Company issued 300,000 shares of common stock to satisfy obligations under share subscription agreements of $23,400 for settlement of convertible notes included in share subscriptions payable.
On September 18, 2020, the Company issued 430,208 shares of common stock to satisfy obligations under share subscription agreements of $34,417 for settlement of convertible notes included in share subscriptions payable.
From October 2, 2020 to October 16, 2020, the Company issued 1,357,488 shares of common stock to satisfy obligations under share subscription agreements of $85,374 for settlement of convertible notes included in share subscriptions payable.
On October 6, 2020, as a result of the one-for-twenty reverse stock split of our common stock the Company issued 150 shares of common stock due to rounding.
On October 7, 2020, the Company issued 625,000 shares of common stock to satisfy obligations under share subscription agreements of $15,000 for settlement of cash included in share subscriptions payable.
On November 6, 2020, the Company issued 2,135,000 shares of common stock to satisfy obligations under share subscription agreements of $123,830 for settlement of services included in share subscriptions payable.
On December 3, 2020, the Company issued 12,750,000 shares of common stock to satisfy obligations under share subscription agreements of $399,200 for settlement of services included in share subscriptions payable.
On December 10, 2020, the Company issued 4,649,280 shares of common stock to satisfy obligations under share subscription agreements of $111,139 for settlement of cash included in share subscriptions payable.
On December 11, 2020, the Company issued 3,500,000 shares of common stock to satisfy obligations under share subscription agreements of $125,400 for settlement of services included in share subscriptions payable.
From December 15, 2020 to December 22, 2020, the Company issued 7,164,029 shares of common stock to satisfy obligations under share subscription agreements of $221,664 for settlement of convertible notes included in share subscriptions payable.
From January 8, 2021 to January 20, 2021, the Company issued 5,636,923 shares of common stock to satisfy obligations under share subscription agreements of $131,734 for settlement of convertible notes included in share subscriptions payable.
On January 8, 2021, the Company issued 3,075,000 shares of common stock to satisfy obligations under share subscription agreements of $81,675 for settlement of services included in share subscriptions payable.
On January 14, 2021, the Company issued 4,051,666 shares of common stock to satisfy obligations under share subscription agreements of $57,645 for settlement of services and $25,000 for settlement of cash included in share subscriptions payable.
From January 22, 2021, to January 26, 2021, the Company issued 3,604,000 shares of common stock to satisfy obligations under share subscription agreements of $90,943 for settlement of convertible notes included in share subscriptions payable.
On February 2, 2021, the Company issued 1,400,000 shares of common stock to satisfy obligations under share subscription agreements of $8,400 for settlement of services and $15,000 for settlement of cash included in share subscriptions payable.
On February 15, 2021, the Company issued 4,000,000 shares of common stock to satisfy obligations under share subscription agreements of $110,000 for settlement of services included in share subscriptions payable.
On February 19, 2021, the Company issued 2,233,333 shares of common stock to satisfy obligations under share subscription agreements of $16,300 for settlement of services and $22,000 for settlement of cash included in share subscriptions payable.
On February 23, 2021, the Company issued 1,197,674 shares of common stock to satisfy obligations under share subscription agreements of $17,500 for settlement of cash included in share subscriptions payable.
F-24
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
13. STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
On March 1, 2021, the Company issued 7,000,000 shares of common stock to satisfy obligations under share subscription agreements of $129,000 for settlement of services and $21,000 for settlement of cash included in share subscriptions payable.
On March 8, 2021, the Company issued 500,000 shares of common stock to satisfy obligations under share subscription agreements of $10,000 for settlement of cash included in share subscriptions payable.
On March 22, 2021, the Company issued 1,750,000 shares of common stock to satisfy obligations under share subscription agreements of $52,500 for settlement of services included in share subscriptions payable.
From March 23, 2021 to March 30, 2021, the Company issued 3,120,495 shares of common stock to satisfy obligations under share subscription agreements of $86,666 for settlement of convertible notes included in share subscriptions payable.
(ii) Year Ended March 31, 2020
On April 17, 2019, the Company issued 2,689,964 shares of common stock to satisfy obligations under share subscription agreements of $47,600 for settlement of services, $4,392 for interest and $139,500 for cash receipts included in share subscriptions payable.
On April 30, 2019, the Company issued 772,222 shares of common stock to satisfy obligations under share subscription agreements of $7,000 for settlement of services and $15,500 for cash receipts included in share subscriptions payable.
On May 8, 2019, the Company issued 2,294,107 shares of common stock to satisfy obligations under share subscription agreements of $48,496 for settlement of services, $117,400 to settle accounts payable, $2,254 for interest and $32,100 for cash receipts included in share subscriptions payable.
On June 4, 2019, the Company issued 833,917 shares of common stock to satisfy obligations under share subscription agreements of $13,291 for settlement of services and $23,000 for cash receipts included in share subscriptions payable.
On June 18, 2019, the Company issued 1,172,250 shares of common stock to satisfy obligations under share subscription agreements of $101,078 for settlement of services, $18,050 for cash receipts, $6,500 to settle notes payable and $3,960 for interest included in share subscriptions payable.
On July 2, 2019, the Company issued 250,000 shares of common stock to satisfy obligations under share subscription agreements of $10,000 for cash receipts.
On July 9, 2019, the Company issued 865,700 shares of common stock to satisfy obligations under share subscription agreements of $57,200 for settlement of services and $20,785 for cash receipts included in share subscriptions payable.
On July 10, 2019, the Company issued 3,055,417 shares of common stock to satisfy obligations under share subscription agreements of $90,000 for settlement of services and $90,110 for cash receipts included in share subscriptions payable.
On July 22, 2019, the Company issued 1,104,167 shares of common stock to satisfy obligations under share subscription agreements for $25,500 for cash receipts included in share subscriptions payable.
On July 29, 2019, the Company cancelled 50,000 shares of common stock originally issued to satisfy obligations under share subscription agreements of $5,000 for cash receipts.
On August 9, 2019, the Company issued 1,646,667 shares of common stock to satisfy obligations under share subscription agreements of $63,300 for settlement of services, $29,900 for cash receipts and $38,500 for interest included in share subscriptions payable.
On August 13, 2019, the Company issued 500,000 shares of common stock to satisfy obligations under share subscription agreements of $103,000 for settlement of services included in share subscriptions payable.
F-25
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
13. STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
On August 20, 2019, the Company issued 1,979,167 shares of common stock to satisfy obligations under share subscription agreements of $56,700 for settlement of cash receipts included in share subscriptions payable.
On September 17, 2019, the Company issued 2,158,333 shares of common stock to satisfy obligations under share subscription agreements $62,400 for cash receipts and $10,000 for settlement of notes payable included in share subscriptions payable.
On October 1, 2019, the Company issued 995,625 shares of common stock to satisfy obligations under share subscription agreements of $37,200 for settlement of services, $25,200 for cash receipts, $3,384 for interest and $112,788 for the settlement of notes payable included in share subscriptions payable.
On October 29, 2019, the Company issued 1,499,993 shares of common stock to satisfy obligations under share subscription agreements of $200,000 for settlement of notes payable included in share subscriptions payable.
On November 1, 2019, the Company issued 190,217 shares of common stock to satisfy obligations under share subscription agreements of $53,350 for settlement of services included in share subscriptions payable.
On November 20, 2019, the Company issued 113,636 shares of common stock to satisfy obligations under share subscription agreements of $22,500 for settlement of convertible notes included in share subscriptions payable.
On November 21, 2019, the Company issued 174,419 shares of common stock to satisfy obligations under share subscription agreements of $20,930 for settlement of convertible notes included in share subscriptions payable.
On November 25, 2019, the Company issued 208,333 shares of common stock to satisfy obligations under share subscription agreements of $22,917 for settlement of convertible notes included in share subscriptions payable.
On December 2, 2019, the Company issued 281,250 shares of common stock to satisfy obligations under share subscription agreements of $28,125 for settlement of convertible notes included in share subscriptions payable.
On December 4, 2019, the Company issued 277,778 shares of common stock to satisfy obligations under share subscription agreements of $30,556 for settlement of convertible notes included in share subscriptions payable.
On December 9, 2019, the Company issued 288,077 shares of common stock to satisfy obligations under share subscription agreements of $26,503 for settlement of convertible notes included in share subscriptions payable.
On January 8, 2020, the Company issued 741,250 shares of common stock to satisfy obligations under share subscription agreements of $28,500 for cash receipts, $62,000 for interest and $24,510 for the settlement of notes payable included in share subscriptions payable.
On January 31, 2020, the Company issued 165,000 shares of common stock to satisfy obligations under share subscription agreements of $9,250 for cash receipts and $7,700 for equipment included in share subscriptions payable.
On January 31, 2020, the Company issued 285,714 shares of common stock to satisfy obligations under share subscription agreements of $18,286 for settlement of convertible notes included in share subscriptions payable.
On February 7, 2020, the Company issued 416,667 shares of common stock to satisfy obligations under share subscription agreements of $28,333 for settlement of convertible notes included in share subscriptions payable.
On February 14, 2019, the Company issued 500,000 shares of common stock to satisfy obligations under share subscription agreements of $40,000 for settlement of convertible notes included in share subscriptions payable.
On February 19, 2020, the Company issued 734,868 shares of common stock to satisfy obligations under share subscription agreements of $16,500 for cash receipts and $21,250 for services included in share subscriptions payable.
F-26
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
13. STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
On February 20, 2020, the Company issued 916,667 shares of common stock to satisfy obligations under share subscription agreements of $21,000 for cash included in share subscriptions payable.
On February 21, 2020, the Company issued 210,000 shares of common stock to satisfy obligations under share subscription agreements of $4,000 for cash receipts and $35,100 for services included in share subscriptions payable.
On February 25, 2020, the Company issued 582,500 shares of common stock to satisfy obligations under share subscription agreements of $11,500 for cash receipts and $17,425 for services included in share subscriptions payable.
On March 3, 2020, the Company issued 555,556 shares of common stock to satisfy obligations under share subscription agreements of $63,333 for settlement of convertible notes included in share subscriptions payable.
On March 9, 2020, the Company issued 697,222 shares of common stock to satisfy obligations under share subscription agreements of $58,288 for settlement of convertible notes included in share subscriptions payable.
Common Stock Payable
(iii) Year Ended March 31, 2021
On March 31, 2021, the Company had total subscriptions payable for 6,645,315 shares of common stock for $54,366 in cash, shares of common stock for interest valued at $27,911, shares of common stock for services valued at $119,769 and shares of common stock for notes payable of $20,673.
(iv) Year Ended March 31, 2020
On March 31, 2020, the Company had total subscriptions payable for 3,437,035 shares of common stock for $71,882 in cash, shares of common stock for interest valued at $5,111, shares of common stock for equipment of $47,278, shares of common stock for services valued at $182,863 and shares of common stock for notes payable of $20,673.
14. RELATED PARTY TRANSACTIONS
During the years ended March 31, 2021 and 2020, 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 6
Notes payable and notes payable – related parties – Note 7
F-27
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
15. INCOME TAXES
The Company had no income tax expense due to operating loss incurred for the years ended March 31, 2021 and 2020.
United States
On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act or Act below). (References to the Code below are references to the Internal Revenue Code of 1986, as amended. Section references below are references to sections of the Act.), provisions relevant to the Company:
Section 2303. Modifications for net operating losses (NOL): Under Code Section 172(a) the amount of the NOL deduction is equal to the lesser of (a) the aggregate of the NOL carryovers to such year and NOL carrybacks to such year, or (b) 80% of taxable income computed without regard to the deduction allowable in this section. Thus, NOLs are currently subject to a taxable-income limitation and cannot fully offset income. The Act temporarily removes the taxable income limitation to allow an NOL to fully offset income.
Section 2306. Modifications of limitation on business interest: The 2017 Tax Cuts and Jobs Act of 2017 (TCJA) generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income. The Act temporarily and retroactively increases the limitation on the deductibility of interest expense under Code Section 163(j)(1) from 30% to 50% for tax years beginning in 2019 and 2020. (Code Section 163(j)(10)(A)(i) as amended by Act Section 2306(a)).
The Company has not recorded the necessary provisional adjustments in the financial statements in accordance with its current understanding of the CARES Act and guidance currently available as of this filing. But is reviewing the CARES Act potential ramifications.
Mexico
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. Subject to certain limitations, losses incurred in prior years by a business may be carried forward and deducted from income earned over a subsequent ten-year period. Net operating loss carrybacks are not allowed.
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 on March 31, 2021 and 2020 are comprised of the following:
|
|
Year Ended
|
|
Year Ended
|
|
|
March 31, 2021
|
|
March 31, 2020
|
Deferred tax assets:
|
|
|
|
|
Net-operating loss carryforward
|
$
|
5,023,177
|
$
|
4,615,689
|
Total deferred tax assets
|
|
5,023,177
|
|
4,615,689
|
Valuation allowance
|
|
(5,023,177)
|
|
(4,615,689)
|
Deferred tax assets, net of allowance
|
$
|
-
|
$
|
-
|
|
|
Year Ended
|
|
Year Ended
|
|
|
March 31, 2021
|
|
March 31, 2020
|
Federal
|
|
|
|
|
Current
|
$
|
-
|
$
|
-
|
Deferred
|
|
5,023,177
|
|
4,615,689
|
State
|
|
-
|
|
-
|
Current
|
|
-
|
|
-
|
Deferred
|
|
-
|
|
-
|
Change in valuation allowance
|
|
(5,023,177)
|
|
(4,615,689)
|
Income tax provision
|
|
-
|
|
-
|
F-28
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
15. INCOME TAXES (CONTINUED)
We have a net operating loss ("NOL") carry forward for U.S. income tax purposes aggregating approximately $22.5M as of March 31, 2021 expiring through the tax year 2038, subject to the Internal Revenue Code Section 382/383, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in ownership. In addition, to U.S. NOL's, we have a Mexico NOL for our Mexico operations as of March 31, 2021 of approximately $3.3M that expires through 2031.
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 on March 31, 2021. The valuation allowance increased by approximately $0.4 million as of March 31, 2021.
The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:
|
|
Year Ended
|
|
Year Ended
|
|
|
March 31, 2021
|
|
March 31, 2020
|
Statutory Federal Income Tax Rate
|
|
21%
|
|
21%
|
Non-deductible expenses
|
|
(9%)
|
|
(9%)
|
Change in valuation allowance
|
|
(12%)
|
|
(12%)
|
Income tax provision
|
$
|
-
|
$
|
-
|
The Company has not identified any uncertain tax positions requiring a reserve as of March 31, 2021.
The Company has not filed its U.S. federal income tax returns, including, without limitation, information returns on Internal Revenue Service (“IRS”) Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations for the years ended March 31, 2010 through 2021. Failure to furnish any information with respect to any foreign business entity required, within the time prescribed by the IRS, subjects the Company to certain civil penalties.
16. SUBSEQUENT EVENTS
Common Stock Issued
On April 7, 2021, the Company issued 1,675,000 shares of common stock to satisfy obligations under share subscription agreements of $43,048 for settlement of services included in share subscriptions payable.
On April 20, 2021, the Company issued 3,735,000 shares of common stock to satisfy obligations under share subscription agreements of $20,000 for cash and $54,870 for settlement of services for the settlement of interest included in share subscriptions payable.
On April 23, 2021, the Company issued 2,307,692 shares of common stock to satisfy obligations under share subscription agreements of $60,692 for settlement of convertible notes included in share subscriptions payable.
On April 28, 2021, the Company issued 10,000,000 shares of common stock to satisfy obligations under share subscription agreements of $212,000 for settlement of services included in share subscriptions payable.
On April 29, 2021, the Company issued 1,153,846 shares of common stock to satisfy obligations under share subscription agreements of $24,519 for settlement of convertible notes included in share subscriptions payable.
On May 3, 2021, the Company issued 812,977 shares of common stock to satisfy obligations under share subscription agreements of $17,398 for settlement of convertible notes included in share subscriptions payable.
On May 20, 2021, the Company issued 4,461,163 shares of common stock to satisfy obligations under share subscription agreements of $89,223 for settlement of notes payable included in share subscriptions payable.
F-29
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
16. SUBSEQUENT EVENTS (CONTINUED)
On May 28, 2021, the Company issued 400,000 shares of common stock to satisfy obligations under share subscription agreements of $6,000 for cash included in share subscriptions payable.
On June 16, 2021, the Company issued 1,419,753 shares of common stock to satisfy obligations under share subscription agreements of $42,593 for settlement of convertible notes included in share subscriptions payable.
On June 18, 2021, the Company issued 1,471,975 shares of common stock to satisfy obligations under share subscription agreements of $39,891 for settlement of convertible notes included in share subscriptions payable.
Common Stock Payable
As at June 21, 2021, the Company had total subscriptions payable for 2,025,315 shares of common stock for $38,366 in cash, shares of common stock for interest valued at $27,911, shares of common stock for services valued at $26,010 and shares of common stock for notes payable of $24,473.
Power Up Lending Group Ltd.
On April 5, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $40,000 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing April 5, 2022 for $36,500 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment.
On April 29, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $38,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing April 29, 2022 for $35,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment.
On May 20, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $43,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing May 20, 2022 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment.
F-30
MEXUS GOLD US AND SUBSIDIARIES
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
March 31, 2021 and 2020
16. SUBSEQUENT EVENTS (CONTINUED)
On June 14, 2021, the Company issued a Convertible Promissory Note (“Note”) to Power Up Lending Group Ltd. (“Holder”) in the original principal amount of $43,500 less transaction costs of $3,500 bearing a 12% annual interest rate and maturing June 14, 2022 for $40,000 in cash. After 180 days after the issue date, this Note together with any unpaid accrued interest is convertible into shares of common stock of the Company at the Holder’s option at a variable conversion price calculated at 65% of the market price defined as the average of the lowest two trading prices during the fifteen (15) trading day period ending on the latest complete trading day prior to the conversion date. The Company may repay the Note if repaid in cash within 30 days of date of issue at 110% of the original principal amount plus interest, between 31 days and 60 days at 115% of the original principal amount plus interest, between 61 days and 90 days at 120% of the original principal amount plus interest, between 91 days and 120 days at 125% of the original principal amount plus interest and between 121 days and 180 days at 135% of the original principal amount plus interest. Thereafter, the Company does not have the right of prepayment.
F-31