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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 DECEMBER 31, 2017
    
  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):

 

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

 

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:

 

As of February 6, 2018, there were outstanding 55,276,518 shares of the registrant’s common stock, $0.00005 par value.

 

 

 
 

 

Table of Contents

 

  Page
   
PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements  
  Consolidated Balance Sheets as of December 31, 2017 and March 31, 2017 (unaudited) 3
  Consolidated Statements of Operations for the Three and Nine months ended December 31, 2017 and 2016 (unaudited) 4
  Consolidated Statements of Cash Flows for the Nine months ended December 31, 2017 and 2016 (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
     
     
  PART II. OTHER INFORMATION  
     
Item 1. Legal Proceedings 15
Item 1A. Risk Factors 15
Item 6. Exhibits and Reports on Form 8-K 16
     
Signatures 17
   
Exhibit Index 18

 

 
 

 

PART I.  FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS.

 

ENXNET, INC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

ASSETS 

December 31,

2017

 

March 31,

2017

CURRENT ASSETS          
Cash  $16,197   $8,123 
Restricted cash   35,465    52,277 
TOTAL CURRENT ASSETS   51,662    60,400 
           
OTHER ASSETS          
Oil and gas cash bond   100,000    —   
Oil and gas properties, unproven (full cost method)   110,217    66,396 
TOTAL OTHER ASSETS   210,217    66,396 
TOTAL ASSETS  $261,879   $126,796 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $664,804   $636,563 
Advances from officer - related party   10,500    16,500 
Advances from stockholder   31,000    31,000 
Note payable – stockholder   100,000    —   
Convertible notes payable - stockholders   300,000    300,000 
Convertible notes payable - related parties   920,101    890,101 
TOTAL CURRENT LIABILITIES   2,026,405    1,874,164 
           
LONG-TERM LIABILITIES          
Convertible note payable - stockholders   100,000    50,000 
          TOTAL LIABILITIES  2,126,405   1,924,164 
STOCKHOLDERS’ DEFICIT          

Common stock, $0.00005 par value; 200,000,000 shares authorized,

55,276,518 and 54,401,518 shares issued and outstanding

   2,764    2,720 
Additional paid-in capital   5,689,654    5,649,704 
Accumulated deficit   (7,456,944)   (7,349,792)
Other comprehensive income   (100,000)   (100,000)
TOTAL STOCKHOLDERS’ DEFICIT   (1,864,526)   (1,797,368)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $261,879   $126,796 

 

 

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

 3 

 

 

ENXNET, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three months Ended  Nine months Ended
   December 31,  December 31,
   2017  2016  2017  2016
EXPENSES            
          Consulting  $—     $300   $12,196   $1,450 
          Oil and gas exploration   —      —      600     
          Payroll   1,500    1,500    21,998    4,500 
          Professional services   4,579    4,650    23,775    22,843 
          Occupancy and office   1,899    936    4,988    3,494 
          Travel   276    149    893    425 
          Other   507    532    1,521    1,623 
                    Total Expenses   8,761    8,067    65,971    34,335 
LOSS FROM OPERATIONS   (8,761)   (8,067)   (65,971)   (34,335)
OTHER INCOME (EXPENSE)                    
          Interest expense   (12,756)   (8,777)   (41,181)   (27,260)
          NET LOSS  $(21,517)  $(16,844)  $(107,152)  $(61,595)
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

   55,209,127    54,401,518    54,848,154    54,293,977 


 

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

 

 4 

 

ENXNET, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For the Nine Months Ended
   December 31,
   2017  2016
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss  $(107,152)  $(61,595)
Adjustments to reconcile net loss to net cash used by operations:          
Debt issuance costs   —      2,000 
Common stock issued for additional interest   10,300    —   
Common stock issued for compensation   7,650    —   
Stock options extended   22,044    —   
Changes in operating assets and liabilities:          
Accounts payable and accrued expenses   28,241    25,225 
Net cash used in operating activities   (38,917)   (34,370)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
             Change in restricted cash   16,812    (11,174)
Purchase of cash bond   (100,000)   —   
Mineral rights, unproven   (43,821)   (33,525)
Net cash used in investing activities   (127,009)   (44,699)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
             Proceeds from advances from officer   500    —   
Payment of advances from officer   (500)   15,000 
Proceeds from convertible note payable -stockholder   50,000    50,000 
Proceeds from convertible notes payable – related parties   24,000    —   
Proceeds from note payable - stockholder   100,000    —   
Net cash provided by financing activities   174,000    65,000 
NET CHANGE IN CASH   8,074    (14,069)
CASH - Beginning of period   8,123    24,608 
CASH - End of period  $16,197   $10,539 
SUPPLEMENTAL CASH FLOW DISCLOSURES:          
Interest expense  $2,750   $—   
Income taxes  $—     $—   
NON-CASH FINANCING AND INVESTING TRANSACTIONS          
Conversion of advances from officer - related party to convertible notes payable – related party  $6,000   $10,000 
           

 

 

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

 

 5 

 

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 nine months ended December 31, 2017 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, 2017 Annual Report on Form 10-K.

 

Reclassification

 

Certain amounts in the 2016 financial statements have been reclassified to conform to the 2017 financial presentation. These reclassifications have no impact on net loss.

 

Recent Accounting Pronouncements

 

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.

 

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

 

Note payable-stockholder consists of the following:  

 

   December 31, 2017  March 31, 2017
5.75% note payable to a stockholder, due May 31, 2018.  $100,000   $—   

 

 

 6 

 

Convertible notes payable-related party consists of the following:  

 

   December 31, 2017  March 31, 2017
2% convertible notes payable to Ryan Corley, President of the Company, due on demand, convertible into a maximum of 37,638,984 common shares   749,455    719,455 
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   48,900    48,900 
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   111,350    111,350 
2% convertible notes payable to Douglas Goodsell, a related party, due on demand, convertible into a maximum of 519,828 common shares   10,396    10,396 
Total notes payable-related party  $920,101   $890,101 

 

 

Convertible notes payable consist of the following:  

 

   December 31, 2017  March 31, 2017
7% convertible note payable to stockholder, which is past due, convertible into a maximum of 250,000 common shares,   50,000    100,000 
7% convertible note payable to stockholder, due on August 12, 2018, convertible into a maximum of 250,000 common shares,   50,000    50,000 
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    —   
4% convertible notes payable to a stockholder, due on demand, convertible into a maximum of 350,000 common shares   175,000    175,000 
2% convertible notes payable to stockholders, due on demand, convertible into a maximum of 1,100,000 common shares   25,000    25,000 
Total notes payable  $400,000   $350,000 

 

On April 1, 2017, the Company converted $6,000 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 $0.05 per share.

 

On May 30, 2017, the Company’s subsidiary, EnXnet Energy Company, LLC, entered into a loan agreement with an individual to borrow $100,000 for an initial term of 6 months with the option to extend the note for an additional 6 months. The note is due November 30, 2017 with interest of 5.5% in the amount of $2,750 which was paid in December 31, 2017. The Company also issued 100,000 shares of common stock with a fair value of $4,000 which was recognized as interest expense during nine months ended December 31, 2017. The loan is to be used to secure a one hundred thousand ($100,000) Cash Oil and Gas Blanket Activity Bond with the State of Colorado.

 

On June 16, 2017, the Company borrowed $16,000 from our CEO, Ryan Corley. The note bears interest of 2% and is convertible with the accrued interest into common shares of the Company at a rate of $0.016 per share.

 

On August 15, 2017, the Company borrowed $50,000 from a stockholder with the primary use of the proceeds to acquire oil and gas leases in Colorado. The note bears interest of 7% and is convertible with the accrued interest into common shares of the Company at a rate of $0.20 per share. The note matures on August 15, 2019. The Company also issued 200,000 shares of common stock with a fair value of $3,600 which was recognized as interest expense during nine months ended December 31, 2017.

 7 

 

 

On September 7, 2017, the Company entered into an extension agreement with a stockholder loan in the amount of $50,000 and bearing interest of 7%. The original date of the note was September 10, 2015 with an original maturity date of September 10, 2017. The extension agreement is for 2 years with the maturity date being September 10, 2019. The Company also issued 50,000 shares of common stock with a fair value of $700 which was recognized as interest expense during nine months ended December 31, 2017. The extension agreement is not considered an extinguishment of debt.

 

On December 1, 2017, the Company entered into an extension agreement with a stockholder loan in the amount of $100,000 and bearing interest of 5.75%. The original date of the note was May 30, 2017 with an original maturity date of December 1, 2017. The extension agreement is for six months with the maturity date being May 31, 2018. The Company also issued 100,000 shares of common stock with a fair value of $2,000 which was recognized as interest expense during nine months ended December 31, 2017. The extension agreement is not considered an extinguishment of debt.

 

On November 21, 2017, the Company borrowed $8,000 from our CEO, Ryan Corley. The note bears interest of 2% and is convertible with the accrued interest into common shares of the Company at a rate of $0.0125 per share.

 

 

NOTE 4 – RELATED PARTY TRANSACTIONS

 

Oil and gas properties:

Our CEO, Ryan Corley, transferred to the Company 640 acres of unproven oil and gas properties at no cost during the nine months ended December 31, 2017.

 

Advances from Stockholder:

Advances from a stockholder at December 31, 2017 and March 31, 2017 was $31,000.

 

Advances from Officer:

Our CEO, Ryan Corley, has made advances to the Company in prior years. During the nine months ended December 31, 2017 and the year ended March 31, 2017, respectively, the CEO made additional unsecured advances totaling $500 and $21,000. During the nine months ended December 31, 2017 and the year ended March 31, 2017, the Company made payments on these advances of $500 and $-0-, respectively. At December 31, 2017 and March 31, 2017, respectively, advances from the CEO were $-0- and $6,000, respectively.

 

The Company has notes payable to the CEO in the aggregate amount of $749,455 and $719,455 as of December 31, 2017 and March 31, 2017, respectively. Accrued interest owed on these notes at December 31, 2017 and March 31, 2017 is $201,095 and $190,007, respectively. These notes and accrued interest are convertible into 41,220,302 and 38,901,957 shares of restricted common stock of the Company, as of December 31, 2017 and March 31, 2017 respectively.

 

At December 31, 2017 and March 31, 2017, advances from the entity controlled by the CEO was $10,500 and notes payable totaled $160,250. Accrued interest owed on these notes at December 31, 2017 and March 31, 2017 is $34,503 and $32,449, respectively. These notes and accrued interest are convertible into 3,143,818 and 3,104,417 shares of restricted common stock of the Company, as of December 31, 2017 and March 31, 2017, respectively.

 

The Company conducts its business from the office of its CEO, Ryan Corley, rent free.

 

NOTE 5 – COMMON STOCK

 

The Company issued 425,000 common shares during the nine months ended December 31, 2017 for services valued at $7,650. Of these shares, 300,000 and 125,000 respectively were issued to the CFO and to a director.

 

The Company issued 450,000 common shares during the nine months ended December 31, 2017 with a a fair value of $10,300 as additional interest on its outstanding notes (see Note 3).  

 8 

 

 

NOTE 6 – 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 13, 2017, the Company extended and repriced options that were expiring. A total of 1,290,000 options were extended. Of these, 900,000 were extended for 5 years at a price of $0.08 per option; 240,000 were extended for 5 years at a price of $0.10 per option and 150,000 were extended for 1 year with no change in the option price. 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 $22,044 in compensation expense.

 

A summary of the status of the Company’s stock options as of December 31, 2017 is presented below:

 

   December 31, 2017
Options outstanding at beginning of year   1,590,000 
Options granted   —   
Options exercised   —   
Options expired   300,000 
Options outstanding at end of year   1,290,000 

 

The following table summarizes the information about the stock options as of December 31, 2017:

 

Range of

Exercise Price

 

Number

Outstanding

 

Weighted Average

Remaining

Contractual Life

Years

 

Weighted Average

Exercise Price

(Total shares)

 

Number

Exercisable

 

Weighted Average

Exercise Price

(Exercisable

shares)

$ 0.12 – 0.08   1,290,000   4.09   $ 0.09   1,290,000   $ 0.09
                           

 

 9 

 

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

 

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. 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 initial goal has been to lease the mineral rights 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 has a plan to 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 continue exploration and drilling program until the Company can generate enough cash flow from sales to sustain its operations.

 

The Company does not anticipate any significant cash requirements for the purchase of any facilities.

 

The Company has no full-time employee and two consultants. The president and CEO of the Company is not receiving or accruing a salary at this time.

 10 

 

 

Results of Operations – Three months ended December 31, 2017 and 2016.

 

The Company incurred operating expenses of $8,761 and $ 8,067 for the three months ended December 31, 2017 and 2016, respectively, a minimal increase of $694. The increase in operating expenses for the three months ended December 31, 2017 when compared to the three-month period ended December 31, 2016 is not significant.

 

During the three months ended December 31, 2017 and 2016 we incurred interest expenses of $12,756 and $8,777, respectively. The current period expense includes $2,000 of interest expense from the issuance of 100,000 common shares as additional interest to the note holder.

 

During the three months ended December 31, 2017 and 2016 we incurred net losses of $21,517 and $16,844, respectively.

 

Results of Operations – Nine months ended December 31, 2017 and 2016.

 

The Company incurred operating expenses of $65,971 and $34,335 for the nine months ended December 31, 2017 and 2016, respectively, an increase of $31,636. The increase in operating expenses for the nine months ended December 31, 2017 when compared to the nine months ended December 31, 2016 is attributed to an increase of $10,746 in consulting services and $17,498 in payroll expenses related to the issuance of common stock for compensation to our CFO and independent Board member and the extension of expiring stock options to our board of directors, officers and consultants.

 

During the nine months ended December 31, 2017 and 2016 we incurred interest expenses of $41,181 and $27,260, respectively. The current period expense includes $10,300 of interest expense from the issuance of 450,000 common shares as additional interest to the note holder.

 

During the nine months ended December 31, 2017 and 2016 we incurred net losses of $107,152 and $61,595, respectively.

 

 

Liquidity and Capital Resources.

 

From inception through December 31, 2017, the Company has issued 55,276,518 shares of its Common Stock to officers, directors and outside shareholders.  The Company has little operating history and no material assets other than cash and restricted cash and the oil and gas properties that are unproven. The Company has $16,197 of unrestricted cash and $35,465 of restricted cash as of December 31, 2017.

 

The Company has incurred operating losses each year since its inception and has a working capital deficit at December 31, 2017. At December 31, 2017 and March 31, 2017, the working capital deficit was $1,974,743 and $1,813,764, 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, 2017 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.

 11 

 

 

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:

 

  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 

 

 

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 December 31, 2017 and 2016, 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

 

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 nine months ended December 31, 2017 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, 2017 Annual Report on Form 10-K.

 

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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.

 

 

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable

 

 

ITEM 4.CONTROL AND PROCEDURES.

 

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.

 

 

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PART II. OTHER INFORMATION

 

 

ITEM 1.LEGAL PROCEEDINGS.

 

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.

 

 

ITEM 1A.RISK FACTORS.

 

There have been no material changes with regard to the risk factors previously disclosed in our most recent Annual Report on Form 10-K.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On December 1, 2017, the Company entered into an extension agreement with a stockholder loan in the amount of $100,000 and bearing interest of 5.75%. The original date of the note was May 30, 2017 with an original maturity date of December 1, 2017. The extension agreement is for six months with the maturity date being May 31, 2018. The Company also issued 100,000 shares of Common Stock with a fair value of $2,000 which was recognized as interest expense during nine months ended December 31, 2017. The extension agreement is not considered an extinguishment of debt.

 

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ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K.

 

The following are included herein: The following are included herein:

 

    Incorporated by reference Filed
Exhibit Document Description Form Date Number herewith
3.1 Articles of Incorporation. 10-SB 5/22/00 3.1  
           
3.2 First Amendment to Articles of Incorporation. 10-SB 5/22/00 3.2  
           
3.3 Second Amendment to Articles of Incorporation. 10-SB 5/22/00 3.3  
           
3.4 Bylaws. 10-SB 5/22/00 3.4  
           
10.1 Sub-License Agreement with Ryan Corley as Nominee. 10-SB 5/22/00 10.1  
           
10.2 License agreement for Clear Video. 10-SB 5/22/00 10.2  
           
10.3 License agreement for Clear Video – addendum. 10-SB 5/22/00 10.3  
           
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
           
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
           
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
           
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
           
101.INS XBRL Instance Document.       X
           
101.SCH XBRL Taxonomy Extension – Schema.       X
           
101.CAL XBRL Taxonomy Extension – Calculations.       X
           
101.DEF XBRL Taxonomy Extension – Definitions.       X
           
101.LAB XBRL Taxonomy Extension – Labels.       X
           
101.PRE XBRL Taxonomy Extension – Presentation.       X

 

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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 12th day of February, 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

 

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EXHIBIT INDEX

 

    Incorporated by reference Filed
Exhibit Document Description Form Date Number herewith
3.1 Articles of Incorporation. 10-SB 5/22/00 3.1  
           
3.2 First Amendment to Articles of Incorporation. 10-SB 5/22/00 3.2  
           
3.3 Second Amendment to Articles of Incorporation. 10-SB 5/22/00 3.3  
           
3.4 Bylaws. 10-SB 5/22/00 3.4  
           
10.1 Sub-License Agreement with Ryan Corley as Nominee. 10-SB 5/22/00 10.1  
           
10.2 License agreement for Clear Video. 10-SB 5/22/00 10.2  
           
10.3 License agreement for Clear Video – addendum. 10-SB 5/22/00 10.3  
           
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
           
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
           
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
           
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
           
101.INS XBRL Instance Document.       X
           
101.SCH XBRL Taxonomy Extension – Schema.       X
           
101.CAL XBRL Taxonomy Extension – Calculations.       X
           
101.DEF XBRL Taxonomy Extension – Definitions.       X
           
101.LAB XBRL Taxonomy Extension – Labels.       X
           
101.PRE XBRL Taxonomy Extension – Presentation.       X

 

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