NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

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

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

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

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

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

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

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

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

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

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

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

Principles of Consolidation

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

Cash and Cash Equivalents

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

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

Mineral Properties and Exploration Expenses

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

Oil and Gas Properties and Exploration Expenses

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

Impairment of Long-Lived Assets

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

Asset Retirement Obligations

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

Advertising Expenses

Advertising costs are expensed as incurred.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with generally accepted accounting principles of United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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

Loss Per Share

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

Inventories

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

Long Lived Assets Including Goodwill and Other Acquired Intangible Assets

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

Fair Value of Financial Instruments

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

Income Taxes

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

Comprehensive Income

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

Exploration Stage

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

Recent Accounting Pronouncements

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

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

Reclassification

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

2. GOING CONCERN

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

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

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

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

3. OIL AND GAS PROPERTIES

The Company has oil and gas properties in California.

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

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

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

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

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

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

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

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

4. INTANGIBLE ASSETS

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

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

Asher Note #4

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

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

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

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

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

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

Special Situations Fund One Note

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

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

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

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

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

Direct Capital Note #1

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

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

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

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

Direct Capital Note #2

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

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

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

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

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

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

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

Direct Capital Note #3

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

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

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

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

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

Direct Capital Note #4

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

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

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

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

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

Direct Capital Note #5

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

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

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

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

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

Direct Capital Note #6

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

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

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

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

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

Direct Capital Note #7

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Direct Capital Note #21

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

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

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

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

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

Direct Capital Note #22

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

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

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

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

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

Direct Capital Note #23

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

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

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

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

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

Direct Capital Note #24

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

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

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

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

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

Direct Capital Note #25

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

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

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

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

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

Syndication Capital Note #1  

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

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

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

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

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

Coventry Enterprises Note #2

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

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

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

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

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

LG Capital Funding Note

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

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

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

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

New Venture Attorneys Note

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

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

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

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

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

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

Santa Rosa Resources Note

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

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

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

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

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

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

Rockwell Capital Partners Note #1

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

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

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

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

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

Rockwell Capital Partners Note #2

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

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

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

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

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

Blackbridge Capital Note

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

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

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

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

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

ARC Capital Ltd Note

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

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

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

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

GW Holdings Group LLC Note

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

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

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

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

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

Microcap Equity Group LLC Note

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

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

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

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

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

Tangiers Investment Group LLC Note

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

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

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

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

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

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

GHS Investments LLC Note

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

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

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

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

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

Southridge Partners LP Note

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

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

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

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

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

Tide Pool Note

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

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

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

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

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

Anthony Super Note

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

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

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

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

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

6. DERIVATIVE LIABILITIES

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

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

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

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