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EX-32 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 - ENXNET INC | f2sexnt10q111218ex32.htm |
EX-31.2 - ENXNET INC | f2sexnt10q111218ex31_2.htm |
EX-31.1 - ENXNET INC | f2sexnt10q111218ex31_1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] | QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018 |
OR | |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 000-30675
EnXnet, Inc.
(Name of issuer in its charter)
Oklahoma | 73-1561191 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
7450 S Winston Ave - Tulsa, Ok 74136
(Address of principal executive offices & zip code)
(918) 494 - 6663
Registrant’s telephone number, including area code:
Indicate by check mark whether
the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the last 90 days. YES [X] NO [ ] Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). YES [ ] NO
[X] Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [ ] NO
[X]
APPLICABLE
ONLY TO CORPORATE ISSUERS: Item 1. PART
I. FINANCIAL INFORMATION Financial Statements PART
II. OTHER INFORMATION
PART
I. FINANCIAL INFORMATION ENXNET,
INC CONSOLIDATED
BALANCE SHEETS (Unaudited) March 31, 2018
The
accompanying notes are an integral part of these unaudited consolidated financial statements. ENXNET,
INC CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) The
accompanying notes are an integral part of these unaudited consolidated financial statements. ENXNET,
INC CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
The
accompanying notes are an integral part of these unaudited consolidated financial statements. ENXNET,
INC NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF
PRESENTATION The
accompanying unaudited consolidated financial statements of EnXnet, Inc. (“EnXnet” or “the Company”) for
the six months ended September 30, 2018 have been prepared in accordance with generally accepted accounting principles in the
United States of America, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial
information. Accordingly, the financial statements do not include all information and footnotes required by generally accepted
accounting principles in the United States for complete annual financial statements. In the opinion of management, the accompanying
unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered
necessary for a fair presentation. The results of operations for the interim periods are not necessarily indicative of the results
to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company’s March 31, 2018 Annual Report on Form 10-K. Reclassification Certain amounts
in the 2017 financial statements have been reclassified to conform to the 2018 financial presentation. These reclassifications
have no impact on net loss. March 31, 2018 Recent
Accounting Pronouncements In November 2016,
the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues
Task Force). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash
equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described
as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period
and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for all interim and annual reporting
periods beginning after December 15, 2017. The attached financial statements include the adoption of ASU 2016-18 which was adopted
by the Company on April 1, 2018. The adoption did not have a material impact on the Company’s Consolidated Financial Statements
“, other than certain reclassifications have been made in the Company’s consolidated statements of cash flows to conform
with the current period presentation. The Company does
not expect the adoption of other recently issued accounting pronouncements to have a significant impact on the Company's results
of operation, financial position or cash flows. NOTE
2 – GOING CONCERN The Company has
a working capital deficit and has incurred losses since inception. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include any adjustments that may be necessary if the Company
is unable to continue as a going concern. Management of
the Company has undertaken certain actions to address these conditions. Funds required to carry out management’s plans are
expected to be derived from future stock sales and borrowings from outside parties. There can be no assurances that the Company
will be successful in executing its plans. NOTE
3 – NOTES PAYABLE March
31, 2018 March 31, 2018 764,455 749,455 48,900 48,900 111,350 111,350 10,396 10,396 Convertible
notes payable consists of the following: March 31, 2018 50,000 50,000 50,000 50,000 175,000 175,000 25,000 25,000 Long
Term Convertible notes payable consists of the following: March 31, 2018 - 50,000 - 50,000 On April 1,
2018, the Company converted $15,000 of the advances from an officer into a convertible note payable. The note bears interest of
2% and is convertible with the accrued interest into common shares of the Company at a rate of $0.025 per share. In April 2018,
our CEO and President acquired a $50,000 interest in a note payable-stockholder that was due May 17, 2018, On August 13, 2018
the Company paid this note with the issuance of 1,250,000 shares of stock. In addition, on August 13, 2018, The Company issued
another 1,250,000 shares of stock to pay a note payable-stockholder in the amount of $50,000. A total of 2,500,000 shares of stock
were issued to pay notes payable aggregating $100,000. The fair market value of the 2,500,000 shares issued was $117,500. The
Company recognized a loss on conversion of the notes payable in the amount of $17,500. NOTE
4 – RELATED PARTY TRANSACTIONS Advances from
Stockholder: Advances from
a stockholder at September 30, 2018 and March 31, 2018 was $31,000. Advances
from Officer: Our
CEO, Ryan Corley, has made advances to the Company in prior years. During the six months ended September 30, 2018 and the year
ended March 31, 2018, respectively, the CEO made additional unsecured advances totaling $-0- and $15,500. During the six months
ended September 30, 2018 and the year ended March 31, 2018, the Company made payments on these advances of $-0- and $500, respectively.
At September 30, 2018 and March 31, 2018, respectively, advances from the CEO were $-0- and $15,000, respectively. Accrued
Interest - officer The
Company has notes payable to the CEO in the aggregate amount of $764,455 and $749,455 as of September 30, 2018 and March 31, 2018,
respectively. Accrued interest owed on these notes at September 30, 2018 and March 31, 2018 is $212,506 and $204,861, respectively.
These notes and accrued interest are convertible into 42,388,166 and 41,411,316 shares of restricted common stock of the Company,
as of September 30, 2018 and March 31, 2018 respectively. Advances
from officer - related party At
September 30, 2018 and March 31, 2018, advances from the entity controlled by the CEO was $10,500 and notes payable totaled $160,250.
Accrued interest owed on these notes at September 30, 2018 and March 31, 2018 is $36,557 and $35,188, respectively. These notes
and accrued interest are convertible into 3,180,115 and 3,155,917 shares of restricted common stock of the Company, as of September
30, 2018 and March 31, 2018, respectively. Oil
and Gas Leases During
the six months ended September 30, 2018, the Company paid $100 in transfer fees to acquire a lease on an additional 640 acres
in the Rocky Mountain range located in the state of Colorado for a 4-year term. The lease was acquired from our President and
CEO. Each year, the Company is responsible for making additional lease payments of $2.50 per acre to keep the lease The
Company conducts its business from the office of its CEO, Ryan Corley, rent free. NOTE
5 – STOCK OPTIONS On July 24, 2001,
the Company filed with the SEC Form S-8, for its 2002 Stock Option Plan, (the Plan). An aggregate amount of common stock that
may be awarded and purchased under the Plan is 3,000,000 shares of the Company’s common stock. On July 10, 2018,
the Company extended and repriced options that were expiring. A total of 150,000 options were expiring, of these 100,000 options
were extended for 1 years at an exercise price of $0.25 per option. The Company used the Black-Scholes option pricing method to
determine if there were additional compensation expenses to recognize. The extension and repricing resulted in the recognition
of $1,672 in compensation expense. A summary of the
status of the Company’s stock options as of September 30, 2018 is presented below: The following table
summarizes the information about the stock options as of September 30, 2018: Weighted Average of Exercise Price NOTE 6 – COMMON
STOCK TRANSACTIONS On July 16, 2018,
the Company issued 600,000 common shares in exchange for $30,000 in cash. On August 13,
2018, the Company issued 2,500,000 common shares to retire two note payable in the aggregate amount of $100,000. These notes were
in default. Prior to retiring the note, our CEO acquired a one-half interest in the note. Of these shares, 1,250,000 were issued
to the CEO as payment of the note. The fair market value of the 2,500,000 shares issued was $117,500. The Company recognized a
loss on conversion of the notes payable in the amount of $17,500. STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS. This Quarterly Report
includes “forward-looking statements” within the meaning of Section 27A of the Exchange Act which represent the expectations
or beliefs concerning future events that involve risks and uncertainties, including but not limited to the demand for Company
products and services and the costs associated with such goods and services. All other statements other than statements of historical
fact included in this Quarterly Report including, without limitation, the statements under “Management’s Discussion
and Analysis or Plan of Operations” and elsewhere in the Quarterly Report, are forward-looking statements. While the Company
believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. The following
discussion of the results of operations and financial conditions should be read in conjunction with the financial statements and
related notes appearing in this report. EnXnet,
Inc. (the “Company”) was formed under the laws of the State of Oklahoma on March 30, 1999. On August 7, 2015, the
Company incorporated EnXnet Energy Company LLC. in the State of Colorado as a wholly owned subsidiary. EnXnet Inc. and its wholly
owned subsidiary, EnXnet Energy Company, LLC. (“the Company”) is a natural gas and petroleum exploitation, development
and production company engaged in locating and developing hydrocarbon resources, primarily in the Rocky Mountain region. The Company’s
principal business strategy is to enhance stockholder value by generating and developing high-potential exploitation resources
in these areas. The Company’s principal business is the acquisition of leasehold interests in petroleum and natural gas
rights, either directly or indirectly, and the exploitation and development of properties subject to these leases. The Company
has leased property in Colorado and is currently searching for additional opportunities in the natural gas and petroleum industry.
Our goal is to lease the oil and gas properties of acreage that has a high likelihood of becoming a producing property. We will
require additional funding to drill and complete a producing natural gas and petroleum well. The
Company currently can satisfy its current cash requirements for approximately 90 days and will raise additional working capital
by the sale of shares of the Company common stock to select perspective individuals and from additional borrowings. This plan
should provide the additional necessary funds required to enable the Company to initiate its drilling program on the oil and gas
lease properties. The Company does
not anticipate any significant cash requirements for the purchase of any facilities. The Company currently has no full-time employee
on the payroll. Results
of Operations – Three months ended September 30, 2018 and 2017. The Company incurred
operating expenses of $26,238 and $ 46,983 for the three months ended September 30, 2018 and 2017, respectively, a decrease of
$20,745. The decrease in operating expenses for the three months ended September 30, 2018 when compared to the three-month period
ended September 30, 2017 consist of: During the three months
ended September 30, 2018 and 2017 we incurred net losses of $53,672 and $62,039, respectively. Results
of Operations – Six months ended September 30, 2018 and 2017. The Company incurred
operating expenses of $62,086 and $57,210 for the six months ended September 30, 2018 and 2017, respectively, an increase of $4,876.
The increase in operating expenses for the six months ended September 30, 2018 when compared to the six-month period ended September
30, 2017 consist of: During the six months
ended September 30, 2018 and 2017 we incurred net losses of $100,403 and $85,635, respectively. Liquidity
and Capital Resources. From inception
through September 30, 2018, the Company has issued 58,376,518 shares of its Common Stock to officers, directors and outside shareholders.
The Company has little operating history and no material assets other than the oil and gas cash bond and 22,507 acres of mineral
lease properties. The Company has $8,922 of unrestricted cash and $2,313 of restricted cash as of September 30, 2018. The Company has
incurred operating losses each year since its inception and has a working capital deficit at September 30, 2018. At September
30, 2018 and March 31, 2018, the working capital deficit was $2,059,647 and $2,008,416, respectively. The working capital deficit
and operating losses raise substantial doubt about the Company’s ability to continue as a going concern. As a result of
these factors, the Company’s independent certified public accountants have included an explanatory paragraph in their reports
on the Company’s March 31, 2018 financial statements which expressed substantial doubt about the Company’s ability
to continue as a going concern. Contractual
Obligations. At the present time,
the Company has no material commitments for capital expenditures. If capital expenditures are required after operations commence,
the Company will pay for the same through the sale of common stock, or through loans from third parties. There
is no assurance, however, that such financing will be available and in the event such financing is not available, the Company
may have to cease operations. CRITICAL
ACCOUNTING POLICIES AND ESTIMATES. Management’s
discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements.
These statements have been prepared in accordance with generally accepted accounting principles in the United States of America. Use
of estimates in preparation of financial statements The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates,
judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, based on historical experience, and various
other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions. The following critical accounting policies rely upon assumptions,
judgments and estimates and were used in the preparation of our consolidated financial statements:
Cash and cash equivalents Cash equivalents
are highly liquid investments with an original maturity of three months or less. Use of estimates The preparation
of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires
management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate
estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ
from those estimates. Fair Value of
Financial Instruments Under FASB ASC
825 the Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The Company’s
financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and debt. The Company believes
that the carrying amounts approximate fair value for all such instruments. FASB
ASC 820 defines fair value, establishes a framework
for measurement, and expands disclosure about fair value measurements. Topic No.
820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (exit price). Topic No. 820 classifies
the inputs used to measure fair value into the following hierarchy: Stock Based Compensation FASB ASC 718 requires
that measurement of the cost of employee services received in exchange for an award of equity instruments be based on the grant-date
fair value of the award. Such costs are recorded over the periods employees are required to render services in exchange for the
awards. Income taxes Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between
the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected
to reverse. We
have net operating loss carryforwards available
to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that
realization of these benefits is considered more likely than not. To the extent that
we will not realize a future tax benefit, a valuation allowance is established. Basic
and diluted net loss per share Basic loss per
share is computed using the weighted average number of shares of common stock outstanding during each period. Diluted loss per
share includes the dilutive effects of common stock equivalents on an “as if converted” basis. For the periods ended
September 30, 2018 and 2017, potential dilutive securities had an anti-dilutive effect and were not included in the calculation
of diluted net loss per common share Recent
Accounting Pronouncements In November 2016,
the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues
Task Force). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash
equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described
as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period
and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for all interim and annual reporting
periods beginning after December 15, 2017. The attached financial statements include the adoption of ASU 2016-18. The adoption
did not have a material impact on the Company’s Consolidated Financial Statements “, other than certain reclassifications
have been made in the Company’s consolidated statements of cash flows to conform with the current period presentation. The Company
does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operation, financial position or cash flows. Unaudited
Financial Statements The accompanying unaudited
financial statements for the six months ended September 30, 2018 have been prepared in accordance with generally accepted accounting
principles for interim financia1 information. In the opinion of management all adjustments considered necessary for a fair presentation,
which consist of normal recurring adjustments, have been included. The accompanying unaudited financial statements should be read
in conjunction with the financial statements and notes thereto included in the Company’s March 31, 2018 Annual Report on
Form 10-K. Off
Balance Sheet Arrangements We
currently have no off-balance sheet arrangements
that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. CURRENT TRADING MARKET
FOR THE COMPANY’S SECURITIES. Currently the
Company’s stock is traded under the symbol “EXNT” on the OTC PINK. There can be no assurance that an active
or regular trading market for the common stock will develop or that, if developed, will be sustained. Various factors, such as
operating results, changes in laws, rules or regulations, general market fluctuations, changes in financial estimates by securities
analysts and other factors may have a significant impact on the market of the Company securities. The market price for the securities
of public companies often experience wide fluctuations that are not necessarily related to the operating performance of such public
companies such as high interest rates or impact of overseas markets. Not Applicable Evaluation of
Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation
as of the end of the period covered by this report, that our disclosure controls and procedures (as defined in Rules 13(a)-15(e)
under the Securities Act of 1934, as amended) are not effective to ensure that all information required to be disclosed by us
in the reports filed or submitted by us under the Securities and Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that
information required to be disclosed by us in such reports is accumulated and communicated to the management, including the Chief
Executive Officer and the Chief Financial Officer, as appropriate and allow timely decisions regarding required disclosure. Changes in Internal
Controls. In connection with the above-referenced evaluation, no change in our internal control over financial reporting occurred
during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting. PART II. OTHER
INFORMATION The Company is
not involved in litigation at this time. We may from time to time be a party to various legal actions in the ordinary course of
business. There can be no assurance that the Company will not be a party to litigation in the future that could have an adverse
effect on the Company. There have
been no material changes with regard to the risk factors previously disclosed in our most recent Annual Report on Form 10- K.
Large Accelerated Filer
[ ]
Accelerated Filer
[ ]
Non-accelerated Filer
[ ]
Smaller Reporting Company
[X]
(Do not check if smaller reporting
company)
As of November 14, 2018, there were outstanding 58,376,518 shares of
the registrant’s common stock, $0.00005 par value.
Table
of Contents
Page
Consolidated Balance
Sheets as of September 30, 2018 and March 31, 2018 (unaudited)
3
Consolidated Statements
of Operations for the Three and Six months ended September 30, 2018 and 2017 (unaudited)
4
Consolidated Statements
of Cash Flows for the Six months ended September 30, 2018 and 2017 (unaudited)
5
Notes to Consolidated
Financial Statements (unaudited)
6
Item 2.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
10
Item 3.
Quantitative and
Qualitative Disclosures About Market Risk
14
Item 4.
Controls and Procedures
14
Item 1.
Legal
Proceedings
14
Item 1A.
Risk Factors
14
Item 6.
Exhibits and Reports
on Form 8-K
15
Signatures
16
Exhibit Index
17
ITEM
1. FINANCIAL
STATEMENTS.
September 30, 2018
ASSETS
CURRENT ASSETS
Cash
$ 8,922
$ 21,744
Restricted cash
2,313
19,620
Prepaid expenses
—
1,118
TOTAL CURRENT ASSETS
11,235
42,482
OTHER ASSETS
Oil and gas cash bond
100,000
100,000
TOTAL OTHER ASSETS
100,000
100,000
TOTAL ASSETS
$ 111,235
$ 142,482
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses
$ 694,281
$ 674,297
Advances from officer - related party
10,500
25,500
Advances from stockholder
31,000
31,000
Note payable-stockholder
—
100,000
Note payable-related party
—
—
Convertible notes payable
400,000
300,000
Convertible notes payable - related party
935,101
920,101
TOTAL CURRENT LIABILITIES
2,070,882
2,050,898
LONG-TERM LIABILITIES
Convertible note payable
—
100,000
TOTAL LONG-TERM LIABILITIES
—
100,000
TOTAL LIABILITIES
2,070,882
2,150,898
STOCKHOLDERS’ DEFICIT
Common stock, $0.00005 par value; 200,000,000 shares authorized, 58,376,518 and 55,276,518 shares issued and outstanding, respectively
2,919
2,764
Additional paid-in capital
5,838,671
5,689,654
Accumulated deficit
(7,701,237 )
(7,600,834 )
Other comprehensive loss
(100,000 )
(100,000 )
TOTAL STOCKHOLDERS’ DEFICIT
(1,959,647 )
(2,008,416 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
$ 111,235
$ 142,482
3
For the Three Months Ended September 30,
For the Six Months Ended September 30,
EXPENSES
2018
2017
2018
2017
Oil and gas exploration
$ —
$ —
$ —
$ 600
Impairment of oil and gas properties, unproven
15,366
—
32,494
—
Consulting
1,672
12,196
1,672
12,196
Payroll
1,500
18,998
3,000
20,498
Professional services
5,827
14,187
20,934
20,210
Occupancy and offices
1,578
1,235
3,466
3,089
Travel
295
367
520
617
Total Expenses
26,238
46,983
62,086
57,210
LOSS FROM OPERATIONS
(26,238 )
(46,983 )
(62,086 )
(57,210 )
OTHER EXPENSE
Loss on conversion of notes payable
(17,500 )
—
(17,500 )
—
Interest expense
(9,934 )
(15,056 )
(20,817 )
(28,425 )
Total Other Expenses
$ (27,434 )
$ (15,056 )
$ (38,317 )
$ (28,425 )
NET LOSS
$ (53,672 )
$ (62,039 )
$ (100,403 )
$ (85,635 )
BASIC AND DILUTED NET LOSS PER SHARE
$ (0.00 )
$ (0.00 )
$ (0.00 )
$ (0.00 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED
57,096,298
54,899,595
56,181,436
54,668,139 4
For the Six Months Ended September 30,
2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$ (100,403 )
$ (85,635 )
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for additional interest
—
8,300
Common stock issued for compensation
—
7,650
Stock options extended
1,672
22,044
Impairment of oil and gas properties, unproved
32,494
—
Loss on conversion of notes payable
17,500
—
Changes in operating assets and liabilities:
Prepaid expenses
1,118
—
Accounts payable & accrued expenses
19,984
17,414
Net cash used in operating activities
(27,635 )
(30,227 )
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to oil and gas properties, unproved
(32,494 )
(32,821 )
Purchase of cash bond
—
(100,000 )
Net cash used in investing activities
(32,494 )
(132,821 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from officer-related party
—
500
Payment of advances from officer-related party
—
(500 )
Proceeds from convertible note payable-stockholder
—
50,000
Proceeds from convertible notes payable – related parties
—
16,000
Proceeds from note payable-stockholder
—
100,000
Proceeds from sales of stock
30,000
—
Net cash provided by financing activities
30,000
166,000
NET CHANGE IN CASH AND RESTRICTED CASH
(30,129 )
2,952
CASH AND RESTRICTED CASH - Beginning of period
41,364
60,400
CASH AND RESTRICTED CASH - End of period
$ 11,235
$ 63,352
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest
$ —
$ 2,750
Cash paid for taxes
$ —
$ —
NON-CASH FINANCING AND INVESTING TRANSACTIONS:
Conversion of advances from officer-related party to convertible notes payable-related party
$ 15,000
$ 6,000
Conversion of notes payable stockholder with stock issuance
$ 100,000
$ — 5
Cash and Restricted Cash
Cash and restricted cash consist of the following:
September 30, 2018
Cash
8,922
21,744
Restricted cash
2,313
19,620
Total cash and restricted cash
$ 11,235
$ 41,364
6 Note
payable-stockholder consists of the following:
September 30, 2018
5.75% note payable to a stockholder, due May 31, 2018.
$ —
$ 100,000
Convertible
notes payable-related party consists of the following:
September
30, 2018
2%
convertible notes payable to Ryan Corley, President of the Company, due on demand, convertible into a maximum of 38,238,984
common shares
2%
convertible note payable to an entity controlled by Ryan Corley, President of the Company, due on demand, convertible into
a maximum of 978,000 common shares
3%
convertible notes payable to an entity controlled by Ryan Corley, President of the Company, due on demand, convertible into
a maximum of 1,619,500 common shares
2%
convertible notes payable to Douglas Goodsell, a related party, due on demand, convertible into a maximum of 519,828 common
shares
Total notes payable-related party
$ 935,101
$ 920,101
September
30, 2018
7%
convertible note payable to stockholder, due on August 15, 2019, convertible into a maximum of 250,000 common shares,
50,000
-
7%
convertible note payable to stockholder, due on September 10, 2019, convertible into a maximum of 250,000 common shares,
50,000
-
7%
convertible notes payable to stockholder, which is past due, convertible into a maximum of 250,000 common shares,
7%
convertible notes payable to stockholder, due August 12, 2018 convertible into a maximum of 250,000 common shares,
4%
convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares
2%
convertible notes payable to stockholders, due on demand, convertible into a maximum of 1,100,000 common shares
Total notes payable
$ 400,000
$ 300,000
September
30, 2018
7%
convertible note payable to stockholder, due on August 15, 2019, convertible into a maximum of 250,000 common shares,
7%
convertible note payable to stockholder, due on September 10, 2019, convertible into a maximum of 250,000 common shares,
Total notes payable
$ -
$ 100,000 7 8
September 30, 2018
Options outstanding at beginning of year
1,290,000
Options granted
—
Options exercised
—
Options expired
(50,000 )
Options outstanding at end of year
1,240,000
Number
Outstanding
Weighted
Average Remaining Contractual Life Years
Number
Exercisable
0.08
900,000
3.80
900,000
0.10
240,000
3.80
240,000
0.25
100,000
0.80
100,000
$ 0.08
- 0.25
1,240,000
3.56
1,240,000 9
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
· Increase
in the impairment of oil and gas properties of $15,366
· Impairment
of oil and gas properties, unproved increased $15,366 for the three months ended September
30, 2018 from the previous year. In the
current period the Company determined that carrying value of the unproved oil and gas
properties was not supported as we have not been able to raise funds to complete a drilling
program on these properties.
· Decrease
in Consulting services of $10,524.
· Consulting
and payroll expenses for the prior year included the compensation value of stock options
of $9,946 that were extended, and the valuation of common stock issued for compensation
of $2,250. In the current year stock options to a consultant were extended with a compensation
value of $1,672.
· Decrease
in Payroll expense of $17,498.
· Payroll
expenses for the prior year included the compensation value of stock options of $12,098
that were extended, and the valuation of common stock issued for compensation of $5,400.
· Decrease
in professional services of $8,360
· Professional
services in the three months ended September 30, 2018 includes fees for our year end
reporting cycle. Similar fees for the prior year’s annual reporting cycle were
not recorded until the following quarter when the annual report was filed. 10
· Increase
in the impairment of oil and gas properties of $32,494
· Impairment
of oil and gas properties, unproved increased $32,494 for the six months ended September
30, 2018 from the previous year. In the
current period the Company determined that carrying value of the unproved oil and gas
properties was not supported as we have not been able to raise funds to complete a drilling
program on these properties.
· Decrease
in Consulting services of $10,524.
· Consulting
and payroll expenses for the prior year included the compensation value of stock options
of $9,946 that were extended, and the valuation of common stock issued for compensation
of $2,250. In the current year stock options to a consultant were extended with a compensation
value of $1,672.
· Decrease
in Payroll expense of $17,498.
· Payroll
expenses for the prior year included the compensation value of stock options of $12,098
that were extended, and the valuation of common stock issued for compensation of $5,400. 11
Level 1:
Quoted prices for identical
assets or liabilities in active markets.
Level 2:
Quoted market prices for similar assets or liabilities
in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.
Level 3:
Pricing inputs are unobservable for the assets
and liabilities, including situations in which there is little to no market activity. 12 13
ITEM
3. QUANTITATIVE
AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM
4. CONTROL
AND PROCEDURES.
ITEM
1. LEGAL
PROCEEDINGS.
ITEM
1A. RISK
FACTORS.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS
None
14 |
ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K. |
The following are included herein: The following are included herein:
15 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 14th day of November 2018.
ENXNET, INC. | ||
(the “Registrant”) | ||
BY: | RYAN CORLEY | |
Ryan Corley | ||
President, Principal Executive Officer and a member of the Board of Directors | ||
BY: | STEPHEN HOELSCHER | |
Stephen Hoelscher | ||
Principal Financial Officer and Principal Accounting Officer |
16 |
EXHIBIT INDEX
17 |