U. S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C.  20549





FORM 10-K





(Mark One)





[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended March 31, 2012





[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from ___________ to _____________





Commission File Number: 000-52413





MEXUS GOLD US


(Name of small business issuer as specified in its charter)





Nevada
20-4092640(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)1805 N. Carson Street, Suite 150

Carson City, NV 89701

________________________________________________________________________

(Address of principal executive offices, including zip code)





Registrant’s telephone number, including area code:                                                                                                (916) 776-2166


Securities registered pursuant to Section 12(b) of the Act:                                                                                       None


Securities registered pursuant to Section 12(g) of the Act:                                                                                       common stock, $.001par value


___________________





Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  No[X]





Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. No [X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 past 90 days.  Yes [X]





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.  Yes [ ]





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” and “smaller reporting company” in Rule12b-2 of the Exchange Act.





Large accelerated filer  [   ]

Accelerated filer    [    ]Non-accelerated filer    [   ] (Do not check if smaller reporting company)

Smaller reporting company    [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  No [X]





The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 21, 2012, based upon the $0.09 per share closing price for our common stock on the OTC Bulletin Board was $9,410,671.





APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PRECEDING FIVE YEARS





Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes [  ]  No [  ]





(APPLICABLE ONLY TO CORPORATE REGISTRANTS)





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  As of June 21, 2012, there were 184,467,187 shares of our common stock were issued and outstanding.





DOCUMENTS INCORPORATE BY REFERENCE





List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  The listed documents should be clearly described for identification purposes (e.g., annual report to securities holders for fiscal year ended December 24, 1980).













PART I





Item 1.   Business





Cautionary Statement Concerning Forward-Looking Statements





The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this report.  This report contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.





Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.  Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this report.





The forward-looking events discussed in this report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.  For these statements, we claim the protection of the “bespeaks caution” doctrine.  All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.




The Company





Mexus Gold US is an exploration stage mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States.  Mexus Gold US is dedicated to protect the environment, provide employment and education opportunities for the communities that it operates in.





Our President and CEO, Paul Thompson, brings over 40 years experience in mining and mining development to Mexus Gold US. Mr. Thompson is currently recruiting additional management personnel for its Mexico, Nevada, and submarine Cable Recovery operations to assist in growing the company.





Our executive offices are located at, 1805 N. Carson Street, #150, Carson City, Nevada 89701.  Our telephone number is (916) 776 2166.





We were originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc.  On October 28, 2009, we changed our domicile to Nevada and changed our name to Mexus Gold US to better reflect our new business operations.  Our fiscal year end is March 31st.





Description of the Business of Mexus Gold US





Mexus Gold US is engaged in the evaluation, acquisition, exploration and advancement of gold exploration and development projects in the state of Nevada and Mexico, as well as, the salvage of precious metals from identifiable sources.  Our main activities in the near future will be comprised of our mining operations in Nevada and Mexico and our cable salvage operations in Alaska and along the west coast of the United States.





Our mining opportunities located in the state of Nevada and the state of Sonora, Mexico will provide us with projects to recover gold, silver, copper and other precious metals. The cable salvage opportunity involves principally the recovery of copper and lead from abandoned cable previously utilized for communications purposes.  Each of these opportunities are discussed further herein.





In addition, our management will look for opportunities to improve the value of the gold projects that we own or may acquire knowledge of or may acquire control through exploration drilling, introduction of technological innovations or acquisition with the goal of developing those properties into operating mines. We expect that emphasis on gold project acquisition and development will continue in the future.





Business Strategy





Our business plan was developed with the overriding goal of maximizing shareholder value through the exploration and development of our mineral properties, utilizing the extensive mining-related background and capabilities of our management and employees, and also through strategic partnerships. To achieve this goal, our business plan focuses on five strategic areas:





Lida Mining District, Nevada





We believe the Nevada properties represent the potential to provide the company with a viable project with the addition of additional geologic evaluation and the drilling of prospective areas. Our strategy for this project is to utilize geological data acquired through prior studies, confirm prior drilling results, expand the delineation of the possible ore body and identify reserves through our own geological evaluations.





Mexus Gold S.A. de C.V.





Effective March 31, 2011, we have acquired Mexus Gold S.A. de C.V. We begun funding the operations in Mexico and have begun shipping equipment to the mining sites.  In addition, we have begun shipping raw materials from the mining areas for bulk processing and further analysis. We have also initiated an exploration drilling program to further identify the extent of the possible reserves now identified.





Cable Salvage Operation





We have determined that instituting a salvage operation offshore Alaska initially for the smaller diameter cable will provide us with the knowledge and experience to proceed forward with this project.





Other Exploration Properties





Our Other Exploration Properties comprise earlier-stage exploration properties. We are currently conducting a number of activities in connection with our earlier-stage exploration properties. During 2009, additional unpatented mining claims were staked in Esmeralda County, Nevada. The evaluation includes compilation of all geologic data and land information for the properties in a geological information system data base.  We also staked additional claims in the State of Sonora, Mexico in areas of interest to the company.





Mergers and Acquisitions





We will routinely review merger and acquisition opportunities. An appropriate merger and acquisition opportunity must be accretive to the overall value of Mexus Gold US. Our primary focus will be on those opportunities involving precious metal production or near-term production with a secondary focus on other resource-based opportunities. Potential acquisition targets would include private and public companies or individual properties. Although our preference would be for candidates located in the United States and Mexico. Mexus Gold US will consider opportunities located in other countries where the geopolitical risk is acceptable.





Mining Operations





We classify our mineral properties into three categories: “Development Properties”, “Advanced Exploration Properties”, and “Other Exploration Properties”. Development Properties are properties where a decision to develop the property into a producing mine has been made.  Advanced Exploration Properties are those properties where we retain a significant ownership interest or joint venture and where there has been sufficient drilling and analysis to identify and report proven and probable reserves or other mineralized material. We currently do not have a Development Property or Advanced Exploration Property. Other Exploration Properties are those that do not fall into the other categories. Please see below for information about our Other Exploration Properties.





Other Exploration Properties





Our Other Exploration Properties consist of the following:





Mining Properties located in the state of Nevada





Lida Mining District





We have entered into agreements on lands located in Esmeralda County, Nevada. We hold an option on 150 acres of patented lands, 14 mining claims and two mill sites with water rights. We have also staked additional claims as a result of our initial geological evaluations.  On July 9, 2011, we entered into an Agreement to extend the option period until July 7, 2012.





The lands are situated in an area of previous exploration and evaluation for precious metals. Past mine engineering reports have established indicated reserves through drilling and show both underground and open pit mining potential. Our plans are to conduct a drilling program to confirm the data presented in prior geological reports. Based on the results of our geological evaluation we will determine our future course of exploration and evaluation.





There have been several geological reports over the years regarding the properties. The following reports are under evaluation:





1.           A 1977 report by Andrew J. Zinkle, Mining Engineer, the property was given 52,946 tons proven, 99,500 tons probable and 278,000 tons possible mineral bearing ore with grades estimated at 20 ounces per ton silver and .05 ounces per ton gold.





2.           A report dated 1981 by E.R. Kruchowski, Mine Engineer gives the property 136,089 proven tons ore and 272,178 probable tons ore at average grades of 7.63 ounces silver per ton and .05 ounces gold per ton.





The previous Engineering reports mentioned are reported to us as covering only one third of the patented property. Additional patented claims have been included in the option agreement representing approximately 100 acres. The additional lands have no current geological evaluation, however, there are historical reports prior to 1939.





Mining Properties Located in Mexico





The following properties are located in Mexico and owned by Mexus Gold S.A. de C.V., our wholly owned subsidiary:





Caborca Project





On January 5, 2011, Mexus Gold Mining S.A. de C.V. entered into a Purchase Agreement to purchase the Caborca Project.  The Caborca Project consists of 7,400 acres (3,000 hectares) about 50 kilometers northwest of the City of Caborca, Sonora State, Mexico. The Caborca Project lies on claims filed by the owners of the Santa Elena Ranch, which controls the surface rights over the project claims. The claims lie near 112o 25' W, 31o 7.5" N. These claims were visited near the end of January, 2011.  On or about July 11, 2011, we acquired five additional claims surrounding the Caborca Project consisting of approximately 1,000 additional acres.





We have been unable to locate geologic maps of the area from the Government Geological Survey. However, pursuant to our investigation of the project, the claims were found to be underlain by an igneous complex. The rocks observed included many types of granitic rocks, exhibiting porphyrytic textures, gneissic and equigrannular textures. Quartz was variable. At times quartz "eyes" were observed, that is porphyrytic quartz which many workers consider to be indicative of a porphyry environment. In other localities, no quartz was evident. When no quartz was present, the rock was equigrannular.Quartz veining was evident throughout the claim group. A mine was developed along a major quartz vein, called the Julio 2 Mine with the vein being called the Julio Vein.





There are multiple exploration targets on the Caborca Project.  The two most important are the quartz stockwork zone and the Julio vein system.  The first target will be the quartz stockwork zone. At least four drill holes are expected to be drilled in this zone to test the mineral potential of this area. Additional holes will be completed to test the Julio vein system.





Ocho Hermanos





The main feature is a sulfide zone composed primarily of galena with some pyrite and arsenopyrite. Above this zone there is an oxide zone composed of iron and lead oxides. Recent grab samples taken indicate that values over 5,000 grams per ton of silver were encountered. These samples may not reflect the average grade. However, grab sample results indicate silver values over 3,000 grams per ton appear to be not unusual. Gold in the samples ranged from 1 gram per ton to over 5 grams per ton.





As of the date of this report, we have obtained all necessary permits to begin operations and as of June 30, 2011, we have completed the bypass water channel around the 8 brothers mine. All necessary milling equipment for the 8 brothers mine in now complete and ready to be shipped to Mexico to begin operations.





370 Area





This zone is composed of a sedimentary sequence (limestone, quartzite, shale) intruded by dacite and diorite as well as rhyolite. The dacite exhibits argillic alterations as well as silicification (quartz veins). The entire area is well oxidized on the surface. This is an area of classic disseminated low grade gold and silver mineralization. Surface grab sample assays show 0.14 grams per ton to as high as 29.490 grams per ton gold. This area is an important area for potentially defining an open pit heap leach project.





El Scorpion Project Area





This area has several shear zones and veins which show copper and gold mineralization’s. Recent assays of an 84’ drill hole shows 1.750% per ton to .750% per ton of copper and 3.971 grams per ton to 0.072 grams per ton of gold. Another assay of rock sample from the area shows greater than 4.690% per ton copper. This land form distribution appears to be synonymous to the ideal porphyry deposit at Baja La Alumbrera, Argentina.





Los Laureles





Los Laureles is a vein type deposit mainly gold with some silver and copper. Recent assays from grab samples show gold values of 67.730 grams per ton gold, 38.4 grams per ton silver, 2,800 grams per ton copper.





As of the date of this Report, we have opened up old workings at the Los Laureles claim and have discovered a gold carrying vein running north and south into the mountain to the south.





Cable Salvage Operation





Our examination of the information provided to us and our accumulation of data has identified the most prospective area to begin our salvage operations is the near coast areas of Alaska. The initial recovery operations will be comprised of acquiring two and one-half inch diameter cable with a weight of eight and one-half pounds. We are satisfied that we will be able to comply with all permits and notifications to the appropriate governmental authorities regarding the salvage operations.





On July 8, 2010, the Company entered into a Project Management Agreement with Powercom Services, Inc., a Georgia corporation, to provide the necessary capital so Mexus can proceed with the first phase of our Cable Recovery in Alaskan waters.





Mexus President/CEO Paul Thompson along with Ken Setter, the person in charge of the Alaska sub-marine cable project for Mexus, just returned from a two week trip to Alaska to verify the cable locations in Alaska waters culminating in the execution of the contract which will fund Mexus through its first barge load sale of cable.





Mr. Ken Setter directed Mr. Thompson to several sites along the Pacific Coast of Alaska where we were able to identify the sub-marine cable. We were able to retrieve several sections for sampling purposes, and to test the Company’s new innovative way of retrieving cable from the bottom of the ocean. We believe the new cable pulling equipment will have the capability of pulling up to 10 miles per day or 475,200 pounds of cable per day.





The cable is composed of copper, lead, and steel all salvageable for scrap sales or processing for end user. Mexus is now ready to start equipping its 260’ barge located in Seattle, Washington with pulling equipment for the trip to Alaska where it will be able to start pulling cable at a point identified & marked by Messrs. Setters and Thompson on their recent trip.





On October 29, 2010, our tugboat, the "Caleb", and our 230 foot barge arrived in Ketchikan, Alaska. The boats are equipped with automated cable pulling equipment and underwater electrical equipment, magtonetor, underwater cable identifier, remote cameras and a high definition scanning sensor, and a cable left buoy marking system.  As of the date of this report, we have begun cable pulling operations, weather permitting.





In addition, we have now located additional submarine cable in Washington State waters with our special survey equipment and we are awaiting cooperation from Washington State to pull the cable.





During the year, the Company began the first phase of its Cable Recovery Project in Alaskan waters. The cable which was recovered was smaller diameter cable which was excellent for testing the recovery equipment and vessels.  The Company has re-evaluated the project and plans to conduct exploration activities in an attempt to identify larger cable. Should those activities identify any cable suitable for salvage operations, the Company would determine the proper title and ownership of the cable and once such title is determined act accordingly as to whether or not a recovery operation is warranted.





Employees





Mexus Gold US has no employees at this time. Consultants with specific skills are utilized to assist with various aspects of the requirements of activities such as project evaluation, property management, due diligence, acquisition initiatives, corporate governance and property management.  If we complete our planned activation of the Nichols Property Exploration and Drilling Program, Cable Salvage Operations and operations of the Mexican mining properties, our total workforce will be approximately 30 persons.  Mr. Paul  D. Thompson is our sole officer and director.





Competition





Mexus Gold US competes with other mining companies in connection with the acquisition of gold properties. There is competition for the limited number of gold acquisition opportunities, some of which is with companies having substantially greater financial resources than Mexus Gold US. As a result, Mexus Gold US may have difficulty acquiring attractive gold projects at reasonable prices.





Management of Mexus Gold US believes that no single company has sufficient market power to affect the price or supply of gold in the world market.





Legal Proceedings





There are no legal proceedings to which Mexus Gold US or Mexus Gold S.A. de C.V. are a party or of which any of our properties are the subject thereof.





Property Interests, Mining Claims and Risk





Property Interests and Mining Claims





Our exploration activities are conducted in the state of Nevada. Mineral interests may be owned in this state by (a) the United States, (b) the state itself, or (c) private parties. Where prospective mineral properties are owned by private parties, or by the state, some type of property acquisition agreement is necessary in order for us to explore or develop such property. Generally, these agreements take the form of long term mineral leases under which we acquire the right to explore and develop the property in exchange for periodic cash payments during the exploration and development phase and a royalty, usually expressed as a percentage of gross production or net profits derived from the leased properties if and when mines on the properties are brought into production. Other forms of acquisition agreements are exploration agreements coupled with options to purchase and joint venture agreements. Where prospective mineral properties are held by the United States, mineral rights may be acquired through the location of unpatented mineral claims upon unappropriated federal land. If the statutory requirements for the location of a mining claim are met, the locator obtains a valid possessory right to develop and produce minerals from the claim. The right can be freely transferred and, provided that the locator is able to prove the discovery of locatable minerals on the claims, is protected against appropriation by the government without just compensation. The claim locator also acquires the right to obtain a patent or fee title to his claim from the federal government upon compliance with certain additional procedures.





Mining claims are subject to the same risk of defective title that is common to all real property interests. Additionally, mining claims are self-initiated and self-maintained and therefore, possess some unique vulnerabilities


not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims solely from an examination of the public real estate records and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location and maintenance of a claim. If the validity of a patented mining claim is challenged by the BLM or the U.S. Forest Service on the grounds that mineralization has not been demonstrated, the claimant has the burden of proving the present economic feasibility of mining minerals located thereon. Such a challenge might be raised when a patent application is submitted or when the government seeks to include the land in an area to be dedicated to another use.





Reclamation





We may be required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping and re-vegetating various portions of a site after mining and mineral processing operations are completed. These reclamation efforts will be conducted in accordance with detailed plans, which must be reviewed and approved by the appropriate regulatory agencies.





Risk





Our success depends on our ability to recover precious metals, process them, and successfully sell them for more than the cost of production. The success of this process depends on the market prices of metals in relation to our costs of production. We may not always be able to generate a profit on the sale of gold or other minerals because we can only maintain a level of control over our costs and have no ability to control the market prices. The total cash costs of production at any location are frequently subject to great variation from year to year as a result of a number of factors, such as the changing composition of ore grade or mineralized material production, and metallurgy and exploration activities in response to the physical shape and location of the ore body or deposit. In addition costs are affected by the price of commodities, such as fuel and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in production costs or a decrease in the price of gold or other minerals could adversely affect our ability to earn a profit on the sale of gold or other minerals. Our success depends on our ability to produce sufficient quantities of precious metals to recover our investment and operating costs.





Distribution Methods of the Products





The end product of our operations will usually be doré bars. Doré is an alloy consisting of gold, silver and other precious metals. Doré is sent to refiners to produce bullion that meets the required market standard of 99.95% pure gold. Under the terms of refining agreements we expect to execute, the doré bars are refined for a fee and our share of the refined gold, silver and other metals are credited to our account or delivered to our buyers who will then use the refined metals for fabrication or held for investment purposes.





General Market





The general market for gold has two principal categories, being fabrication and investment. Fabricated gold has a variety of end uses, including jewelry, electronics, dentistry, industrial and decorative uses, medals, medallions and official coins. Gold investors buy gold bullion, official coins and jewelry. The supply of gold consists of a combination of current production from mining and the draw-down of existing stocks of gold held by governments, financial institutions, industrial organizations and private individuals.





Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including duration;





We do not have any designs or equipment which are copyrighted, trademarked or patented.





Effect of existing or probable governmental regulations on the business





Government Regulation





Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We have obtained or have pending applications for those licenses, permits or other authorizations currently required to conduct our exploration and other programs. We believe that Mexus Gold US is in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the Nevada and United States and in any other jurisdiction in which we will operate. We are not aware of any current orders or directions relating to Mexus Gold US with respect to the foregoing laws and regulations.





Environmental Regulation





Our gold projects are subject to various federal and state laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. It is our policy to conduct business in a way that safeguards public health and the environment. We believe that the actions and operations of Mexus Gold US will be conducted in material compliance with applicable laws and regulations.  Changes to current state or federal laws and regulations in Nevada, where we operate currently, or in jurisdictions where we may operate in the future, could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.





Research and Development





We do not foresee any immediate future research and development costs.





Costs and effects of compliance with environmental laws





Our gold projects are subject to various federal and state laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. It is our policy to conduct business in a way that safeguards public health and the environment. We believe that our operations are and will be conducted in material compliance with applicable laws and regulations. The economics of our current projects consider the costs and expenses associated with our compliance policy.





Changes to current state or federal laws and regulations in Nevada, where we operate currently, or in jurisdictions where we may operate in the future, could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.





Item 1A.  Risk Factors




An investment in our common stock involves a high degree of risk.  You should carefully consider the following risk factors and the other information in this annual report before investing in our common stock.  Our business and results of operations could be seriously harmed by any of the following risks.








Risks Relating to Our Company





We are at an early stage of production and have minimal operating history as an independent company. Our future revenues and profits are uncertain and our auditors have expressed substantial doubt on the ability of the Company to continue as a going concern.





We are an exploration stage venture with minimal operating history as an independent company. There is no certainty that we will consistently produce revenue or consistently operate profitably or provide a return on investment in the future. If we are unable to consistently generate revenues or profits, investors might not be able to realize returns on their investment in our common stock or keep from losing their investment.  Our auditors have expressed substantial doubt on the Company’s ability to continue as a going concern.





The estimation of the ultimate recovery of gold and silver is subject to variation, subjective, and requires the use of various techniques. Actual recoveries can be expected to vary from estimations.





We estimate the ultimate recovery of gold and silver from our projects.  The actual amount recovered are not determined until a third-party smelter determines final ounces of gold and silver available for sale. We then review this end result and reconcile it to the estimates we developed and used throughout the production process. Based on this review, we adjust our estimation procedures when appropriate. Due to the complexity of the estimation process and the number of steps involved, among other things, actual recoveries can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on our financial condition and results of operations.





Each of these factors also applies to future development properties not yet in production. In the case of mines we may develop in the future, we will not have the benefit of actual experience in our estimates with respect to those mines, and there is a greater likelihood that the actual results will vary from the estimates. In addition, development and expansion projects are subject to unexpected construction and start-up problems and delays.





Reserve calculations are estimates only, subject to uncertainty due to factors including metal prices, inherent variability of the ore and recoverability of metal in the mining process.





Reserve estimates may not be accurate. There is a degree of uncertainty attributable to the calculation of reserves and corresponding grades dedicated to future production. Until reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of reserves and ore may vary depending on metal prices. Any material change in the quantity of reserves, mineralization, grade or stripping ratio may affect the economic viability of our properties. In addition, there can be no assurance that gold recoveries or other metal recoveries in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.





Our operations are subject to numerous governmental permits which are difficult to obtain and we may not be able to obtain or renew all of the permits we require, or such permits may not be timely obtained or renewed.





In the ordinary course of business we are required to obtain and renew governmental permits for our operations. Obtaining or renewing the necessary governmental permits is a complex and time-consuming process involving costly undertakings.  The duration and success of our efforts to obtain and renew permits are contingent upon many variables not within our control including the interpretation of applicable requirements implemented by the permitting authority. We may not be able to obtain or renew permits that are necessary to our operations, or the cost to obtain or renew permits may exceed our estimates. Failure to comply with applicable environmental and health and safety laws and regulations may result in injunctions, fines, suspension or revocation or permits and other penalties. There can be no assurance that we have been or will at all times be in full compliance with all such laws and regulations and with our environmental and health and safety permits or that we have all required permits. The costs and delays associated with compliance with these laws, regulations and permits and with the permitting process could stop us from proceeding with the operation or development of our projects or increase the costs of development or production and may materially adversely affect our business, results of operations or financial condition.





We may not achieve our production estimates.





We prepare estimates of future production for our operations. We develop our estimates based on, among other things, mining experience, reserve estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence of certain metallurgical characteristics) and estimated rates and costs of mining and processing. Our actual production may be lower than our production estimates.





Each of these factors also applies to future development properties not yet in production and to our current projects.   In the case of mines we may develop in the future, we do not have the benefit of actual experience in our estimates, and there is a greater likelihood that the actual results will vary from the estimates. In addition, development and expansion projects are subject to unexpected construction and start-up problems and delays.





We cannot be certain that our acquisition, exploration and evaluation activities will be commercially successful.





There will be substantial expenditures required to acquire existing gold properties, to establish ore reserves through drilling and analysis, to develop metallurgical processes to extract metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. We cannot provide assurance that any gold reserves or mineralized material acquired or discovered will be in sufficient quantities to justify commercial operations or that the funds required for development can be obtained on a timely basis. Factors including costs, actual mineralization, consistency and reliability of ore grades and commodity prices affect successful project development. The efficient operation of processing facilities, the existence of competent operational management and prudent financial administration, as well as the availability and reliability of appropriately skilled and experienced consultants can affect successful project development which, in turn, could have a material adverse effect on our future results of operations.





The price of gold is subject to fluctuations, which could adversely affect the realizable value of our assets and potential future results of operations and cash flow.





Our principal assets are gold reserves and mineralized material. We intend to attempt to acquire additional properties containing gold reserves and mineralized material. The price that we pay to acquire these properties will be, in large part, influenced by the price of gold at the time of the acquisition. Our potential future revenues are expected to be, in large part, derived from the mining and sale of gold from these properties or from the outright sale or joint venture of some of these properties. The value of these gold reserves and mineralized material, and the value of any potential gold production there from, will vary in proportion to variations in gold prices. The price of gold has fluctuated widely, and is affected by numerous factors beyond our control, including, but not limited to, international, economic and political trends, expectations of inflation, currency exchange fluctuations, central bank activities, interest rates, global or regional consumption patterns, world supply of gold and speculative activities. The effect of these factors on the price of gold, and therefore the economic viability of any of our projects, cannot accurately be predicted. Any drop in the price of gold would adversely affect our asset values, cash flows, potential revenues and profits.





Mining, exploration, development and operating activities are inherently hazardous, and if we incur material leases or liabilities in excess of our insurance coverage, our financial position could be materially and adversely affected.





Mineral exploration, development, and operating a mine involves many risks that even a combination of experience, knowledge and careful evaluation may not be able to overcome. Operations in which we have direct or indirect interests will be subject to all the hazards and risks normally incidental to exploration, development and production of gold and other metals, any of which could result in work stoppages, damage to property and possible environmental damage. The nature of these risks is such that liabilities might exceed any liability insurance policy limits. It is also possible that the liabilities and hazards might not be insurable, or, that we could elect not to insure against such liabilities due to high premium costs or other reasons, in which event, we could incur significant costs that could have a material adverse effect on our financial condition.





We may be unable to raise additional capital on favorable terms.





The costs and expenses to evaluate our exploration properties will require significant capital investment to achieve commercial production. We may have to raise additional funds from external sources in order to maintain and advance our existing property positions and to acquire new gold projects. There can be no assurance that additional financing will be available at all or on acceptable terms and, if additional financing is not available to us, we may have to substantially reduce or cease operations.





We face intense competition in the mining industry.





The mining industry is intensely competitive in all of its phases. As a result of this competition, some of which is with large established mining companies with substantial capabilities and with greater financial and technical resources than ours, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. This, in turn, may adversely affect our financial condition and our future results of operations. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully attract and retain qualified employees, our exploration and development programs may be slowed down or suspended. In addition, we compete with other gold companies for capital. If we are unable to raise sufficient capital, our exploration and development programs may be jeopardized or we may not be able to acquire, develop or operate gold projects.





We may depend on outside sources to place our mineral deposit properties into production.





Our ability to place our properties into production may be dependent upon using the services of appropriately experienced personnel or contractors and purchasing additional equipment, or entering into agreements with other major resource companies that can provide such expertise or equipment. There can be no assurance that we will have available to us the necessary expertise or equipment when and if we place our mineral deposit properties into production. If we are unable to successfully retain such expertise and equipment, our development and growth could be significantly curtailed.





Our exploration and development operations are subject to environmental regulations, which could result in the incurrence of additional costs and operational delays.





All phases of our operations are subject to environmental regulation. Environmental legislation is evolving in some jurisdictions in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect our projects. We will be subject to environmental regulations with respect to our properties in Nevada, under applicable federal and state laws and regulations.




Our properties in Nevada occupy private and public lands. The public lands include unpatented mining claims on lands administered by the BLM Nevada State Office. These claims are governed by the laws and regulations of the U.S. federal government and the state of Nevada.





U.S. Federal Laws





Under the U.S. Resource Conservation and Recovery Act, mining companies may incur costs for generating, transporting, treating, storing, or disposing of hazardous waste, as well as for closure and post-closure maintenance once they have completed mining activities on a property. We currently do not have any mining operations, however, if we institute such operations, we may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources such as trucks and heavy construction equipment which are subject to review, monitoring and/or control requirements under the Federal Clean Air Act and state air quality laws. Permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the rules.




The U.S. Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (CERCLA) imposes strict joint and several liability on parties associated with releases or threats of releases of hazardous substances. The groups who could be found liable include, among others, the current owners and operators of facilities which release hazardous substances into the environment and past owners and operators of properties who owned such properties at the time the disposal of the hazardous substances occurred. This liability could include the cost of removal or remediation of the release and damages for injury to the surrounding property. We cannot predict the potential for future CERCLA liability with respect to our properties.





Nevada Laws





At the state level, mining operations in Nevada are also regulated by the Nevada Department of Conservation and Natural Resources, Division of Environmental Protection. Should we elect to place a property into production, Nevada state law requires the operator of the property to hold Nevada Water Pollution Control Permits, which dictate operating controls and closure and post-closure requirements directed at protecting surface and ground water. In addition, we would be required to hold Nevada Reclamation Permits required under NRS 519A.010 through 519A.170. These permits mandate concurrent and post-mining reclamation of mines and require the posting of reclamation bonds sufficient to guarantee the cost of mine reclamation. Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, required changes to operating constraints, technical criteria, fees or surety requirements.





Legislation has been proposed that would significantly affect the mining industry.





Members of the U.S. Congress have repeatedly introduced bills which would supplant or alter the provisions of the Mining Law of 1872. If enacted, such legislation could change the cost of holding unpatented mining claims and could significantly impact our ability to develop mineralized material on unpatented mining claims. Such bills have proposed, among other things, to either eliminate or greatly limit the right to a mineral patent and to impose a federal royalty on production from unpatented mining claims. Although it is impossible to predict at this point what any legislated royalties might be, enactment could adversely affect the potential for development of such mining claims and the economics of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our financial performance.





Increased costs could affect our financial condition.





We anticipate that costs associated properties that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, such as changing ore grade, metallurgy and revisions to mine plans in response to the physical shape and location of the ore body. In addition, costs are affected by the price of commodities such as fuel and electricity. Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.





The global financial crisis may have impacts on our business and financial condition that we currently cannot predict.





The continued credit crisis and related instability in the global financial system has had, and may continue to have, an impact on our business and our financial condition. We may face significant challenges if conditions in the financial markets do not improve. Our ability to access the capital markets may be severely restricted at a time when we would like, or need, to access such markets, which could have an impact on our flexibility to react to changing economic and business conditions. The credit crisis could have an impact on any potential lenders or on our customers, causing them to fail to meet their obligations to us should any such obligations exist.





Difficult conditions in the global capital markets and the economy generally may materially adversely affect our business and results of operations and we do not expect these conditions to improve in the near future.





Our results of operations are materially affected by conditions in the domestic capital markets and the economy generally. The stress experienced by domestic capital markets that began in the second half of 2007 has continued and substantially increased to the present. Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectations for the economy and the markets going forward. These factors, combined with volatile oil and gas prices, declining business and consumer confidence and increased unemployment, have precipitated an economic slowdown and fears of a possible recession. In addition, the fixed-income markets are experiencing a period of extreme volatility which has negatively impacted market liquidity conditions.





Initially, the concerns on the part of market participants were focused on the subprime segment of the mortgage-backed securities market. However, these concerns have since expanded to include a broad range of mortgage-and asset-backed and other fixed income securities, including those rated investment grade, the U.S. and international credit and interbank money markets generally, and a wide range of financial institutions and markets, asset classes and sectors. As a result, capital markets have experienced decreased liquidity, increased price volatility, credit downgrade events, and increased probabilities of default. These events and the continuing market upheavals may have an adverse effect on us because our liquidity and ability to fund our capital expenditures is dependent in part upon our bank borrowings and access to the public capital markets. Even in the absence of a market downturn, we are exposed to substantial risk of loss due to market volatility.





Factors such as business investment, government spending, the volatility and strength of the capital markets, and inflation all affect the business and economic environment and, ultimately, our ability to identify and place a commercial grade property into production. In an economic downturn characterized by higher unemployment, lower corporate earnings and lower business investment, our operations could be negatively impacted.





There can be no assurance that actions of the U.S. Government, Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets will achieve the intended effect.





In response to the financial crises affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions, the Federal Government has enacted measures for the purpose of stabilizing the financial markets. The Federal Government, Federal Reserve and other governmental and regulatory bodies have taken or are considering taking other actions to address the financial crisis. There can be no assurance as to what impact such actions will have on the financial markets, including the extreme levels of volatility recently experienced. Continued volatility could materially and adversely affect our business, financial condition and results of operations, or the trading price of our common stock.





A shortage of equipment and supplies could adversely affect our ability to operate our business.





We are dependent on various supplies and equipment to carry out our mining exploration and development operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of production.





If we are unable to attract and retain additional personnel, we may be unable to establish and develop our business.





Our development in the future will be highly dependent on the efforts of our officer and director, Paul Thompson and key employees that we hire in the future. We will need to recruit and retain qualified managerial and technical employees to build and maintain our operations. If we are unable to successfully recruit and retain such persons, our development and growth could be significantly curtailed.





Our lack of operating experience may cause us difficulty in managing our growth.





Our operations were changed to mining operations during the year ended March 31, 2010. We are establishing operating procedures for evaluating, acquiring and developing properties, and negotiating, establishing and maintaining strategic relationships. Our ability to manage our growth, if any, will require us to improve and expand our management and our operational and financial systems and controls. If our management is unable to manage growth effectively, our business and financial condition would be materially harmed. In addition, if rapid growth occurs, it may strain our operational, managerial and financial resources.





There are uncertainties as to title matters in the mining industry. Any defects in such title could cause us to lose our rights in mineral properties and jeopardize our business operations.





Our U.S. mineral properties consist of private mineral rights, leases covering state and private lands, leases of patented mining claims, and unpatented mining claims. Many of our mining properties in the U.S. are unpatented mining claims to which we have only possessory title. Because title to unpatented mining claims is subject to inherent uncertainties, it is difficult to determine conclusively ownership of such claims. These uncertainties relate to such things as sufficiency of mineral discovery, proper posting and marking of boundaries and possible conflicts with other claims not determinable from descriptions of record. Since a substantial portion of all mineral exploration, development and mining in the U.S. now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry.





The present status of our unpatented mining claims located on public lands allows us the exclusive right to mine and remove valuable minerals, such as precious and base metals. We also are allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the land remains with the U.S. We remain at risk that the mining claims may be forfeited either to the U.S. or to rival private claimants due to failure to comply with statutory requirements.





There may be challenges to title to the mineral properties in which we hold a material interest. If there are title defects with respect to any properties, we might be required to compensate other persons or perhaps reduce our interest in the affected property. Also, in any such case, the investigation and resolution of title issues would divert our management’s time from ongoing exploration and development programs.





Our principal stockholders will be able to exert significant influence over matters submitted to stockholders for approval, which could delay or prevent a change in corporate control or result in the entrenchment of management or the board of directors, possibly conflicting with the interests of our other stockholders.





Paul Thompson, Sr. owns approximately 43% of the issued and outstanding shares of common stock of Mexus Gold US. In addition to being a major stockholder, Mr. Thompson is a director of Mexus Gold US. Because of Mr. Thompson’s major shareholding and Mr. Thompson’s position on the Mexus Gold US Board of Directors, Mr. Thompson could exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise control our business. This control could have the effect of delaying or preventing a change in control of us or entrenching our management or the board of directors, which could conflict with the interests of our other stockholders and, consequently, could adversely affect the market price of our common stock.





Risks Relating to Our Common Stock





Our common stock has limited trading history and the market price of our shares may fluctuate widely.





Our common stock only recently began trading and there can be no assurance that an active trading market for Mexus Gold US common stock can be established or sustained in the future. We cannot predict the prices at which Mexus Gold US common stock may trade. The market price of the common stock may fluctuate widely, depending upon many factors, some of which may be beyond the control of Mexus Gold US including, but not limited to, fluctuations in the price of gold; announcements by us or competitors of significant acquisitions or dispositions; and overall market fluctuations and general economic conditions. Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.





Investors may be unable to accurately value our common stock.





Investors often value companies based on the stock prices and results of operations of other comparable companies. Currently, we do not believe another public gold exploration company exists that is directly comparable to our size and scale. Prospective investors have limited historical information about certain of the properties held by Mexus Gold US upon which to base an evaluation of the performance of Mexus Gold US and the prospects held by Mexus Gold US. As such, investors may find it difficult to accurately value our common stock.




We do not intend to pay dividends for the foreseeable future.





We have never declared or paid any dividends on our common stock. We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases. Our Board of Directors retains the discretion to change this policy.





Issuing preferred stock with rights senior to those of our common stock could adversely affect holders of common stock.





Our charter documents give our board of directors the authority to issue series of preferred stock without a vote or action by our stockholders.  The board also has the authority to determine the terms of preferred stock, including price, preferences and voting rights.  The rights granted to holders of preferred stock may adversely affect the rights of holders of our common stock.  For example, a series of preferred stock may be granted the right to receive a liquidation preference – a pre-set distribution in the event of a liquidation – that would reduce the amount available for distribution to holders of common stock.  In addition, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock.  As a result, common stockholders could be prevented from participating in transactions that would offer an optimal price for their shares.





Item 1B.  Unresolved Staff Comments.





None.





Item 2.  Properties





Real Property





At present, we do not own any property.  Our business office is located at 13601 East River Road, Sacramento, CA 95690, in a leased facility where we have local access to all commercial freight systems. The current retail facility is approximately 5,000 square feet of building and one acre of concrete padded yard. This facility contains our administrative and sales as well as our manufacturing facility.  The current lease runs until May 31, 2011, for rent of $3,500 per month.





Item 3.  Legal Proceedings





Currently, we are not a party to any pending legal proceedings.





Item 4.  Mining Safety Disclosures





Not applicable.




PART II





Item 5.  Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities.





Market information





Our common stock has traded over the counter and has been quoted on the Over-The-Counter Bulletin Board on or about March 2009. The stock currently trades under the symbol "MXSG.OB." The following table sets forth the high and low bid prices for our common stock for each quarter during the last two fiscal years, so far as information is reported, as quoted on the Over-the-Counter Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.





High

$
Low

$For the Fiscal Year Ended March 31, 2012Fourth Quarter ended March 31, 2012
0.10
0.06Third Quarter ended December 31, 2011
0.15
0.04Second Quarter ended September 30, 2011
0.21
0.11First Quarter ended June 30, 2011
0.26
0.15For the Fiscal Year Ended March 31, 2011Fourth Quarter ended March 31, 2011
0.28
0.21Third Quarter ended December 31, 2010
0.37
0.21Second Quarter ended September 30, 2010
0.30
0.03First Quarter ended June 30, 2010
0.05
0.02





As of June 21, 2012, we have 184,467,187 shares of our common stock issued and outstanding, of which 137,438,961 shares are restricted.  The closing price of our common stock on June 21, 2012 was $0.09.





Holders





At of the date of this report, we have approximately 185 holders of record of our common stock.





Dividends





We have not declared any cash dividends on any class of our securities and we do not have any restrictions that currently limit, or are likely to limit, our ability to pay dividends now or in the future.




Securities authorized for issuance under equity compensation plans





We do not have any securities authorized for issuance under equity compensation plans.





Item 6.  Selected Financial Data.





As a smaller reporting company, we are not required to provide the information required by this item.





Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations





The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes included in this annual report.  This annual report contains “forward-looking statements.” The statements contained in this report that are not historic in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “estimates,” “believes,” or “plans” or comparable terminology are forward-looking statements based on current expectations and assumptions.





Various risks and uncertainties could cause actual results to differ materially from those expressed in forward-looking statements.  Factors that could cause actual results to differ from expectations include, but are not limited to, those set forth under the section “Risk Factors” set forth in this annual report.





The forward-looking events discussed in this annual report, the documents to which we refer you and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us.  For these statements, we claim the protection of the “bespeaks caution” doctrine.  All forward-looking statements in this document are based on information currently available to us as of the date of this report, and we assume no obligation to update any forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.





Critical Accounting Policies





Equipment under Construction





Equipment under construction comprises mining equipment that is currently being fabricated and modified by the Company and is not presently in use. Equipment under construction totaled $158,907 and $416,415 as of March 31, 2012 and 2011 respectively.  Equipment under construction at March 31, 2012 comprises Cone 1709, Conveyor Belts, Crusher, Equipment Fabrication Materials, Hopper, Sand Drill/Gold Separator, Screen Plant, Skid Mounted Mill and Survey Winch Marine.





Mineral Property Costs





Under US GAAP mineral property acquisition costs are ordinarily capitalized when incurred using FASB ASC Topic 805-20-55-37, Whether Mineral Rights are Tangible or Intangible Assets. The carrying costs are assessed for impairment under ASC Topic 360-36-10-35-20, Accounting for Impairment or Disposal of Long-Lived Assets whenever events or changes in circumstances indicate that the carrying costs may not be recoverable.





The Company also evaluates the carrying value of acquired mineral property rights in accordance with ASC Topic 930-360-35-1, Mining Assets: Impairment and Business Combinations, using the Value Beyond Proven and Probable (VBPP) method. The fair value of a mining asset generally includes both VBPP and an estimate of the future market price of the minerals.





When the Company has capitalized mineral property costs, these properties will be periodically assessed for impairment of value. Once a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method. Additionally the Company expenses as incurred all maintenance and exploration property costs. No impairment of mineral property costs have been recorded for the years ended March 31, 2012 and 2011.





Long-Lived Assets





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





Asset Retirement Obligations





In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The associated asset retirement costs are supposed to be capitalized as part of the carrying amount of the related mineral properties. As of March 31, 2012 and 2011, the Company has not recorded AROs associated with legal obligations to retire any of the Company’s mineral properties as the settlement dates are not presently determinable.





Revenue Recognition





The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.





Stock-based compensation





The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.





ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.





Results of Operations





The following management’s discussion and analysis of operating results and financial condition of Mexus Gold US is for the years ended March 31, 2012 and 2011 and for the period from September 18, 2009 (exploration stage entry) through March 31, 2012. All amounts herein are in U.S. dollars.





Year Ended March 31, 2012 Compared with the Year Ended March 31, 2011 and September 18, 2009 (exploration Stage Entry) through March 31, 2012





We had a net loss during the year ended March 31, 2012 of $1,511,932 compared to a net loss of 1,832,779 during the same period in 2011.  We had a cumulative net loss of $4,303,287 for the period from September 18, 2009 (Exploration Stage Entry) through March 31, 2012.  The decrease in net loss are attributable the increase in revenue and decreases in general and administration expense and stock-based compensation.





Revenue





For the year ended March 31, 2012, we had revenues of $239,911 compared to $21,000 for the year ended March 31, 2011.  We recorded revenues of $260,911 for the cumulative period from September 18, 2009 (Exploration Stage Entry) through March 31, 2012.  The revenues of $239,911 for the year ended March 31, 2012, are from our mining and salvage operations.





Operating Expenses





Total operating expenses increased to $1,698,898 during the year ended March 31, 2012, compared to $1,824,646 for the year ended March 31, 2011.  Total operating expenses for the period from September 18, 2009 (exploration stage entry) through March 31, 2012 were $4,458,987.  The increase in operating expenses for each of these periods was due to our expansion into the mining industry through the exploration activities of its properties and administration costs.  In addition, we have had substantial expenses relating to its submarine cable salvage operations, including a loss on the sale of Tugboat “Caleb”..





Other Income (Expense)





We incurred $52,945 of interest expense during the year ended March 31, 2012 compared to $29,133 during the same period in 2011. The increase is attributable to our borrowings during the year ended March 31, 2012 to further and establish our operations.





Liquidity and Capital Resources





The Company had cash on hand of $- and $109,142 at March 31, 2012 and 2011, respectively.  The decrease in cash is primarily due our net loss of $1,464,786 and expenditures on equipment and mineral properties.





Our equipment increased to $1,131,097 at March 31, 2012, compared to $913,048 at March 31, 2011. The increase in equipment is largely due to the completion of projects previously reported as equipment under construction.  This increase was partially offset by the sale of Tugboat “Caleb”.





Equipment under construction decreased to $158,907 at March 31, 2012, compared to $416,415 at March 31, 2011.  The decrease was due to the completion in construction of various items equipment transferred to Mexico during fiscal 2012. Our equipment under construction represents our process of fabricating and modifying equipment relating to mining and salvage operations.  We anticipate equipment under construction will be used to perform bulk sampling projects on our exploration properties or will have the capacity of being placed into a production process pending a determination by management as to the most beneficial application of the equipment.





Our mineral properties increased to $682,374 at March 31, 2012, compared to $451,569 at March 31, 2011.





Total assets increased to $1,980,797 at March 31, 2012, compared to $1,896,158 at March 31, 2011.  The majority of the increased assets related to expenditures on equipment and mineral properties during the year ended March 31, 2012.





Our total liabilities decreased to $1,303,029 at March 31, 2012, compared to $1,554,654 as of March 31, 2011.  This total includes current liabilities of $1,266,171 and long-term liabilities of $36,858 as of March 31, 2012.  At March 31, 2011, current liabilities totaled $1,360,512 and long-term liabilities totaled $194,142.





In addition to anticipated revenues from operations, we believe that we have sufficient available cash and available loans from our sole officer and director and other individual sources to satisfy our working capital and capital expenditure requirements during the next 12 months.  There can be no assurance, however, that cash and cash from loans will be sufficient to satisfy our working capital and capital requirements for the next 12 months or beyond.





Future goals





The Caborca Properties have become our primary focus after our installation of a small placer recovery plant to conduct tests on prospective placer areas and determine the viability of the placer deposits while we conducted evaluations of the other Mexico properties.  The positive results of the placer mining project quickly became interesting and began to show a cash flow which allowed the project to become a breakeven endeavor. The decision was then made to add additional equipment which also was successful and will allow the continuation of mining operations of the placer deposits.





The Company has now scheduled the installation of a crushing/milling recovery plant for the high grade Julio quartz deposit as a result of the values of the assay analysis from the deposit which range from .250 to 5.5 ounces of gold per ton. This equipment should be in place and operational by August, 2012.





Therefore, our goal for the current year is to increase the cash flow of the placer mining operation, continue the drilling program begun during 2011, initialize mining operations on the Julio quartz deposit while we conduct a thorough geological study by an independent geological firm of the future potential of other vein deposits located near the Julio deposit.





Foreign Currency Transactions





The majority of our operations are located in United States and most of our transactions are in the local currency.  We plan to continue exploration activities in Mexico and therefore we will be exposed to exchange rate fluctuations.  We do not trade in hedging instruments and a significant change in the foreign exchange rate between the United States Dollar and Mexican Peso could have a material adverse effect on our business, financial condition and results of operations.





Off-balance Sheet Arrangements





The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.





Item 7A.  Quantitative and Qualitative Disclosures About Market Risk





We currently do not utilize sensitive instruments subject to market risk in our operations.





Item 8.   Financial Statements and Supplementary Data.





Our financial statements and related explanatory notes can be found on the “F” Pages at the end of this Report.





Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.





None.





Item 9A.  Controls and Procedures.





We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report.





Based on this evaluation, our chief executive officer and chief financial officer concluded that as of the evaluation date our disclosure controls and procedures were not effective. Our procedures were designed to ensure that the information relating to our company required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure.  Management is currently evaluating the current disclosure controls and procedures in place to see where improvements can be made.





Management Report on Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America. The Company's internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of  unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the Company's financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of the Company's internal control over financial reporting at March 31, 2012.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control--Integrated Framework. Based on that assessment under those criteria, management has determined that, at March 31, 2012, the Company's internal control over financial reporting was not effective.





This Annual Report on Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management's report in this annual report.





Inherent Limitations of Internal Controls





Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:





●

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;●

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and●

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.





Our management does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.




Management has not identified any change in our internal control over financial reporting in connection with its evaluation of our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Item 9B.  Other Information.





During the year, the Company began the first phase of its Cable Recovery Project in Alaskan waters. The cable which was recovered was smaller diameter cable which was excellent for testing the recovery equipment and vessels.  The Company has re-evaluated the project and plans to conduct exploration activities in an attempt to identify larger cable. Should those activities identify any cable suitable for salvage operations, the Company would determine the proper title and ownership of the cable and once such title is determined act accordingly as to whether or not a recovery operation is warranted.





PART III





Item 10.
Directors, Executive Officers and Corporate Governance.





The following table sets forth, as of the date of this registration statement, the name, age and position of our sole director/executive officer.





NAME

AGE

POSITIONPaul D. Thompson

70

President

Chief Executive Officer

Chief Financial Officer

Principle Accounting Officer

Secretary

Director





The background of our sole director/executive officer is as follows:





Paul D. Thompson





Mr. Paul D. Thompson is our sole director and officer acting in the capacity of Chief Executive Officer, Chief Financial Officer and Secretary. Mr. Thompson is 70 years old and has been involved in mining and the construction of mining equipment since 1959.  Past mining companies which Mr. Thompson has established and operated include:  Thompson Mining Corp. which developed mining and milling prospects; Thompson Yellow Jacket Mining which performed underground mining and milling; and Golden Eagle Mining Corp. which performed drilling and exploration.  Mr. Thompson’s past mining activities include the Centennial Mine Project; the Otter Creek (placer) Project; and the "Big Hole" project on the Cosumnes River all located in El Dorado County, California.  In addition, during the late 1980’s Mr. Thompson successfully developed the Crystal Caves Mobil Home Park in South El Dorado County.  In Virginia City, Nevada, Mr. Thompson constructed a fully operating 1860's style 2 stamp mill for crushing and processing gold as an ongoing business to educate people on how gold was historically processed.  Currently, Mr. Thompson and his son, run Paul's Water Trucks which manufactures water trucks for the construction industry.  In addition, for the past three years, Mr. Thompson has been conducting mineral exploration in Sonora, Mexico resulting in the acquisition of approximately 9,000 hectares of claims and six mining concessions.





Information about our Board and its Committees.





Audit Committee





We currently do not have an audit committee although we intend to create one as the need arises.  Currently, our Board of Directors serves as our audit committee.





Compensation Committee





We currently do not have a compensation committee although we intend to create one as the need arises.  Currently, our Board of Directors serves as our Compensation Committee.





Advisory Board





We currently do not have an advisory board although we intend to create one as the need arises.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.  To our knowledge, based solely on review of the copies of such reports furnished to us for the period ended March 31, 2012, the Section 16(a) reports required to be filed by our executive officers, directors and greater-than-10% stockholders were filed on a timely basis.





Code of Ethics





Effective February 22, 2006, our board of directors adopted the Company’s Code of Business Conduct and Ethics.  The board of directors believes that our Code of Business Conduct and Ethics provides standards that are reasonably designed to deter wrongdoing and to promote the following: (1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submits to, the Securities and Exchange Commission; (3) compliance with applicable governmental laws, rules and regulations; the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons; and (4) accountability for adherence to the Code of Business Conduct and Ethics.  We will provide a copy of our Code of Business Conduct and Ethics by mail to any person without charge upon written request to us at:  1805 N. Carson Street, Suite 150, Carson City, NV 89701.





Item 11. Executive Compensation





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











Summary Compensation TableNon-Equity

Nonqualified
AllName and











Incentive

Deferred
OtherPrincipal







Stock

Option

Plan

Compensation
CompenPosition

Year

Salary

Bonus

Awards

Awards

Compensation

Earnings
-sation
TotalPaul D.Thompson

2012

0

0

0

0

0

0
0
0President, Chief Executive Officer, Chief Financial Officer, Secretary, and Director

2011

0

0

0

0

0

0
0
0





Employment Agreements





We currently do not have an employment agreement with Mr. Thompson, our sole officer and director.





Compensation of Director





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





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





The following table sets forth certain information regarding the beneficial ownership of the 179,401,712 issued and outstanding shares of our common stock as of March 31, 2012, by the following persons:





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


·
each of our directors and executive officers; and


·
All of our Directors and Officers as a group





Name And Address
Number Of Shares

Beneficially Owned
Percentage

OwnedPaul D. Thompson (1)
76,904,175(2)
43%All Officers and Directors as Group
76,904,175
43%Total
76,904,175
43%





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


(2)           Includes 24,677,903 shares held by Mr. Thompson individually, 42,500,000 shares held by TaurusGold, Inc., 9,312,500 shares held by Mexus Gold Mining S.A. C.V. and 413,772 shares held byMexus Gold International





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





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





On October 16, 2009, the Company acquired an eight (8) month option, with a six (6) month extension, to purchase certain patented and unpatented mining claims situated in Esmeralda County, Nevada, United States.  The option price was 250,000 restricted shares of the Company’s common stock.  The exercise price of the option is five million dollars ($5,000,000) payable in installments of both cash and restricted shares of the Company’s common stock. The approximate dollar value of the amount involved in the transaction is unknown. On July 9, 2011, we entered into an Agreement to extend the option period until July 7, 2012.




Transactions with Promoters





None.





Item 14. Principal Accounting Fees and Services


Appointment of Auditors





Our Board of Directors selected De Joya Griffith & Company, LLC (“De Joya”) as our auditors for the years ended March 31, 2011 and 2012.





Audit Fees





De Joya billed us $33,750 in audit fees during the year ended March 31, 2012.





De Joya billed us $5,000 in audit fees during the year ended March 31, 2011.





Audit-Related Fees





We did not pay any fees to De Joya for assurance and related services that are not reported under Audit Fees above, during our fiscal years ending March 31, 2011 and 2012.





Tax and All Other Fees





We did not pay any fees to De Joya for tax compliance, tax advice, tax planning or other work during our fiscal years ending March 31, 2011 and 2012.





Pre-Approval Policies and Procedures





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





With respect to the audit of our financial statements as of March 31, 2011 and March 31, 2012, and for the year then ended, none of the hours expended on De Joya’s engagement to audit those financial statements were attributed to work by persons other than De Joyas full-time, permanent employees.





Item 15. Exhibits, Financial Statement Schedules.





StatementsReport of Independent Registered Public Accounting FirmBalance Sheets at March 31, 2012 and 2011Statements of Operations for the years ended March 31, 2012 and 2011and from September 18, 2009 to March 31, 2012Statement of Changes in Shareholders' Deficit for the years ended March 31, 2012 and 2011 and from September 18, 2009 to March 31, 2012Statements of Cash Flows for the years ended March 31, 2012 and 2011 and from September 18, 2009 to March 31, 2012Notes to Financial StatementsSchedulesAll schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or notes thereto.Exhibit
Form
Filing
Filed withExhibits
#
Type
Date
This ReportArticles of Incorporation filed with the Secretary of State of Colorado on June 22, 1990
3.1
10-SB
1/24/2007Articles of Amendment to the Articles of Incorporation filed with the Secretary of State of Colorado on October 17, 2006
3.2
10-SB
1/24/2007Articles of Amendment to Articles of Incorporation filed with the Secretary of State of the State of Colorado on January 25, 2007
3.3
10KSB
6/29/2007Amended and Restated Bylaws dated December 30, 2005
3.3
10-SB
1/24/2007Code of Ethics
14.1
10-KSB
6/29/2007Certification of Paul D. Thompson, pursuant to Rule 13a-14(a)
31.1


XCertification of Paul D. Thompson pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1


X











SIGNATURES





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








MEXUS GOLD US



/s/  Paul D. Thompson

By:  Paul D. Thompson

Its:   President

Principle Accounting Officer





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








Signatures

Title

Date/s/ Paul D. Thompson

Paul D. Thompson

Chief Executive Officer

Chief Financial Officer

Principal Accounting Officer

President

Secretary

Director

June 29, 2012









De Joya Griffith & Company, LLC
 
 CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
  
 
 
 Report of Independent Registered Public Accounting Firm
 
 To the Directors and Stockholders of
 Mexus Gold US
 
 We have audited the accompanying consolidated balance sheets of Mexus Gold US (An Exploration Stage Company) (the “Company) as of March 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for the years then ended, and for the period from exploration stage re-entry date (September 18, 2009) to March 31, 2012. Mexus Gold US’ management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mexus Gold US as of March 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended, and for the period from exploration stage re-entry date (September 18, 2009) to March 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
 
 The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 De Joya Griffith & Company, LLC
 
 /s/ De Joya Griffith & Company, LLC
 Henderson, NV
 June 26, 2012
  2580 Anthem Village Drive, Henderson, NV  89052
 Telephone (702) 563-1600  ●  Facsimile (702) 920-8049




MEXUS GOLD US(An Exploration Stage Company)CONSOLIDATED FINANCIAL STATEMENTSMarch 31, 2012(Audited)CONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS






































MEXUS GOLD US(An Exploration Stage Company)CONSOLIDATED BALANCE SHEETS(Audited)March 31, 2012

March 31, 2011ASSETSCURRENT ASSETSCash




$
-
$
109,142Prepaid and other assets




8,419

5,984TOTAL CURRENT ASSETS



8,419

115,126FIXED ASSETSEquipment, net of accumulated depreciation




1,131,097

913,048TOTAL FIXED ASSETS




1,131,097

913,048OTHER ASSETSEquipment under construction




158,907

416,415Mineral properties




682,374

451,569TOTAL OTHER ASSETS




841,281

867,984TOTAL ASSETS



$
1,980,797
$
1,896,158LIABILITIES AND STOCKHOLDERS’ EQUITYCURRENT  LIABILITIESAccounts payable and accrued liabilities

$
96,561
$
53,805Accounts payable – related party




52,637

86,675Advance from Powercom Services Inc.




800,000

800,000Notes payable




199,747

347,000Notes payable - related party




115,942

71,893Loan payable




1,284

1,139TOTAL CURRENT LIABILITIES



1,266,171

1,360,512LONG TERM LIABILITIESNotes payable, net of current portion




-

156,000Loan payable, net of current portion




36,858

38,142TOTAL LONG TERM LIABILITIES


36,858

194,142TOTAL LIABILITIES






1,303,029

1,554,654STOCKHOLDERS’  EQUITYCapital stockAuthorized9,000,000 shares of preferred stock, $0.001 par value per share, nil issued and outstanding

-

-1,000,000 shares of Series A Convertible Preferred Stock, $0.001 par value per share500,000,000 shares of common stock, $0.001 par value per shareIssued and outstanding375, 000 shares of Series A Convertible Preferred Stock (0 – March 31, 2011)

375

-179,381,712 shares of common stock (161,117,595 - March 31, 2011)

179,382

161,118Additional paid-in capital



5,381,846

3,464,937Share subscriptions payable




67,893

155,245Accumulated deficit




(648,441)

(648,441)Accumulated deficit during the exploration stage




(4,303,287)

(2,791,355)TOTAL STOCKHOLDERS’ EQUITY






677,768

341,504TOTAL LIABILITIES AND STOCKHOLDERS’  EQUITY

$
1,980,797
$
1,896,158The accompanying notes are an integral part of these consolidated financial statements.
































MEXUS GOLD US(An Exploration Stage Company)CONSOLIDATED STATEMENTS OF OPERATIONS(Audited)For the Period from explorationstage re-entryYear ended

Year ended

(September 18, 2009) toMarch 31, 2012

March 31, 2011

March 31, 2012REVENUESRevenues
$
239,911
$
21,000
$
260,911Total revenues

239,911

21,000

260,911EXPENSESGeneral and administrative

705,080

1,048,469

1,868,993Exploration costs

561,926

170,124

829,580Stock-based compensation

303,619

612,433

1,662,782Loss (gain) on sale of equipment

128,273

(6,380)

119,878Total expenses

1,698,898

1,824,646

4,481,233OTHER INCOME (EXPENSE)Interest expense

(52,945)

(29,133)

(82,965)NET LOSS
$
(1,511,932)
$
(1,832,779)
$
(4,303,287)BASIC LOSS PER COMMON SHARE$
(0.01)
$
(0.01)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC165,769,742

152,341,689


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


















MEXUS GOLD US(An Exploration Stage Company)CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFor the Period from Exploration Stage re-entry (September 18, 2009) to March 31, 2012(Audited)Preferred Stock
Series A Preferred Stock
Common Stock

Additional Paid-in Capital

Share Subscription Payable

Accumulated Deficit

Deficit Accumulated During

Exploration Stage

TotalNumber of

shares

Amount
Number of shares
Amount
Number of

shares

AmountBalance, September 18, 2009
-
$
-
-
$
-
136,614,000
$
136,614
$
-

-
$
(648,441)
$
-
$
(511,827)Forgiveness of debt by related party and Cancellation of shares for cash
-

-
-
-
(129,025,000)

(129,025)

540,127

-

-

-

411,102Shares issued for services
-

-
-
-
12,225,000

12,225

734,525

-

-

-

746,750Shares issued for equipment
-

-
-
-
40,213,846

40,214

27,587

-

-

-

67,800Shares issued for cash
-

-
-
-
44,389,833

44,390

175,564

-

-

-

219,954Shares issued for options on mineral properties
-

-
-
-
250,000

250

-

-

-

-

250Shares issued to Mexus Gold Mining S.A. de C.V.
-

-
-
-
40,000,000

40,000

2,180,000

-

-

-

2,220,000Deemed Distribution to Mexus Gold Mining S.A. de C.V.
-

-
-
-
-

-

(2,220,000)

-

-

-

(2,220,000)Share subscription payable
-

-
-
-
-

-

-

20,000

-

-

20,000Net loss
-

-
-
-
-

-

-

-

-

(958,576)

(958,576)Balance, March 31, 2010
-
$
-
-
$
-
144,667,679
$
144,668
$
1,437,803
$
20,000
$
(648,441)
$
(958,576)
$
(4,546)Shares issued for services
-

-
-
-
5,337,500

5,338

607,095

-

-

-

612,433Shares issued for equipment
-

-
-
-
2,981,464

2,981

320,970

-

-

-

323,951Shares issued for cash
-

-
-
-
6,630,952

6,631

820,069

-

-

-

826,700Shares issued for options on mineral properties
-

-
-
-
1,500,000

1,500

279,000

-

-

-

280,500Share subscription payable
-

-
-
-
-

-

-

155,245

-

-

135,245Net loss
-

-
-
-
-

-

-

-

-

(1,832,779)

(1,832,779)Balance, March 31, 2011
-
$
-
-
$
-
161,117,595
$
161,118
$
3,464,937
$
155,245
$
(648,441)
$
(2,791,355)
$
341,504Shares issued for services and supplies
-

-
-
-
2,671,367

2,671

272,460

-

-

-

275,131Shares issued for equipment
-

-
-
-
955,034

955

165,236

-

-

-

166,191Shares issued for cash
-

-
-
-
12,651,914

12,652

1,069,093

-

-

-

1,081,745Shares issued for mineral properties
-

-
-
-
750,000

750

149,250

-

-

-

150,000Shares issued for payments of loans, accounts payable and accrued interest
-

-
375,000
375
1,235,802

1,236

260,870

-

-

-

262,481Share subscription payable
-

-
-
-
-

-

-

(87,352)

-

-

(87,352)Net loss
-

-
-
-
-

-

-

-

-

(1,511,932)

(1,511,932)Balance, March 31, 2011
-
$
-
375,000
375

$179,381,712
$
179,382
$
5,381,846
$
67,893
$
(648,441)
$
(4,303,287)
$
677,768The accompanying notes are an integral part of these financial statements.












MEXUS GOLD US(An Exploration Stage Company)CONSOLIDATED STATEMENTS OF CASH FLOWS(Audited)Year ended March 31, 2012


Year ended March 31, 2011


For the Period from exploration stage re-entry

(September 18, 2009) to March 31, 2012CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(1,511,932
)

$
(1,832,779
)

$
(4,303,287
)Adjustments to reconcile net loss to net cashused in operating activitiesDepreciation and amortization


221,404



95,050



319,637Loss (gain) on sale of equipment


128,273



(6,380
)


119,877Loss on settlement of accounts payable


11,000



-



11,000Stock-based compensation


275,132



612,433



1,634,315Stock issued for interest


26,020



3,000



29,020Change in operating assets and liabilities:Increase in prepaid and other assets


(2,435
)


(5,984
)


(8,419
)Increase in accounts payable and accrued liabilities


34,218



106,409



156,764NET CASH USED IN OPERATING ACTIVITIES


(818,320
)


(1,028,251
)


(2,041,093
)CASH FLOWS FROM INVESTING ACTIVITIESPurchases of equipment


(149,793
)


(661,147
)


(822,190
)Purchases of equipment under construction


(135,223
)


(253,068
)


(418,828
)Mineral properties


(80,805
)


(141,318
)


(251,624
)Proceeds from sale of equipment


26,989



-



76,989NET CASH USED IN INVESTING ACTIVITIES


(338,832
)


(1,055,533
)


(1,415,653
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of notes payable


150,319



467,000



649,819Payment on notes payable


(141,312
)


-



(141,312
)Payment on loans payable


(1,139
)


-



(1,139
)Advances from related party


65,340



37,459



127,426Payment on advances from related party


(19,091
)


-



(19,091
)Advance from Powercom Services Inc.


-



800,000



800,000Proceeds from issuance of common stock


1,081,245



776,700



1,992,945Share subscriptions payable


(87,352
)


110,745



43,393NET CASH PROVIDED BY FINANCING ACTIVITIES


1,058,128



2,191,904



3,462,159(DECREASE) INCREASE IN CASH


(109,142
)


108,120



(4,705
)CASH, BEGINNING OF PERIOD


109,142



1,022



4,705CASH, END OF PERIOD

$
-


$
109,142


$
-Supplemental disclosure of cash payments:Interest paid

$
12,340


$
-


$
12,340Taxes paid

$
-


$
-


$
-Supplemental disclosure of non-cash investing and financing activities:Shares issued for notes payable

$
195,260


$
-


$
195,260Shares issued for advances related party

$
2,200


$
-


$
2,200Shares issued for accounts payable, including related party

$
39,000


$
-


$
39,000Deferred gain on equipment

$
-


$
-


$
46,000Shares issued for equipment purchase

$
161,691


$
31,500


$
193,191Shares issued for equipment under construction

$
5,000


$
-


$
5,000Shares issued for mineral property

$
150,000


$
-


$
150,000Asset relinquished to settle debt

$
108,000


$
-


$
108,000Asset given as settlement of payable

$
6,500


$
-


$
6,500Loan for equipment

$
-


$
39,546


$
43,046The accompanying notes are an integral part of these consolidated financial statements.





MEXUS GOLD US


(AN EXPLORATION STAGE COMPANY)


Notes to Consolidated Financial Statements


March 31, 2012 and 2011


(Audited)





1.
ORGANIZATION AND BUSINESS OF COMPANY





Mexus Gold US (the “Company”) was originally incorporated under the laws of the State of Colorado on June 22, 1990, as U.S.A. Connection, Inc. On October 28, 2005, the Company changed its’ name to Action Fashions, Ltd. On September 18, 2009, the Company changed its’ domicile to Nevada and changed its’ name to Mexus Gold US to better reflect the Company’s new planned principle business operations.





The Company re-entered the exploration stage as of September 18, 2009, as defined by the Financial Accounting Standard Board (FASB) in FASB ASC 915-10, “Development Stage Entities”. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since re-entry into the exploration stage has been considered part of the Company’s exploration stage activities.





The Company is a mining company engaged in the evaluation, acquisition, exploration and advancement of gold, silver and copper projects in the State of Sonora, Mexico and the Western United States, as well as, the salvage of precious metals from identifiable sources.





2.
GOING CONCERN





The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, the Company has a limited operating history and limited funds and has an accumulated deficit of $648,441 and an accumulated deficit since entry into the exploration stage of $4,303,287 at March 31, 2012. These factors, among others, may indicate that the Company will be unable to continue as a going concern.





The Company is dependent upon outside financing to continue operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. It is management’s plans to raise necessary funds through a private placement of its common stock to satisfy the capital requirements of the Company’s business plan. There is no assurance that the Company will be able to raise the necessary funds, or that if it is successful in raising the necessary funds, that the Company will successfully operate its business plan.





The financial statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might be necessary should the Company be unable to continue as a going concern. The continuation as a going concern is dependent upon the ability of the Company to meet our obligations on a timely basis, and, ultimately to attain profitability.




3.
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES




This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.




These accounting policies conform to accounting principles generally accepted in the United States of America and are presented in U.S. dollars. The Company’s fiscal year end is March 31.




Basis of Consolidation




The consolidated financial statements include the accounts of the Company and a controlled subsidiary, Mexus Gold Mining, S.A. de C.V. (“Mexus Gold Mining). Significant intercompany accounts and transactions have been eliminated.  On October 20, 2009, the Company entered into a 180 day option agreement with Mexus Gold Mining, pursuant to which the Company acquired the right to acquire 99% of the capital stock of Mexus Gold Mining, S.A. The option price is 20 million restricted shares of the Company’s common stock and the exercise price is 20 million restricted shares of the Company’s common stock. The agreement is conditioned upon Mexus Gold Mining, obtaining an audit of its financial records by public accountants acceptable to the standards required for financial reporting purposes in the United States of America. The term of the option may be extended by the Company for such reasonable time as is required by Mexus Gold Mining, to complete its audit.  On November 16, 2010, the Company purchased the option by issuing 20 million of its restricted shares and on February 11, 2010 the Company exercised the option by issuing 20 million its restricted shares thereby acquiring 99% of the capital stock of Mexus Gold Mining   The shareholder of Mexus Gold Mining, prior to its acquisition, was Paul Thompson Sr., the sole officer and director of Mexus Gold US.  As such, the acquisition is accounted for as a common control transaction under Accounting Standards Code ("ASC") 805-50. No new basis of accounting was established upon acquisition and the Company carried forward the carrying amounts of assets and liabilities that were contributed.





Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Management believes that the estimates used are reasonable.





Cash and cash equivalents





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





Equipment





Equipment consists of mining tools and equipment, watercraft and vehicles which are depreciated on a straight line basis over their expected useful lives as follows (see Note 6):





Mining tools and equipment                7 years


Watercraft                                               7 years


Vehicles                                                   3 years





Equipment under Construction





Equipment under construction comprises mining equipment that is currently being fabricated and modified by the Company and is not presently in use. Equipment under construction totaled $158,907 and $416,415 as of March 31, 2012 and 2011 respectively.  Equipment under construction at March 31, 2012 comprises Cone 1709, Conveyor Belts, Crusher, Equipment Fabrication Materials, Hopper, Sand Drill/Gold Separator, Screen Plant, Skid Mounted Mill and Survey Winch Marine.





Mineral Property Costs





Under US GAAP mineral property acquisition costs are ordinarily capitalized when incurred using FASB ASC Topic 805-20-55-37, Whether Mineral Rights are Tangible or Intangible Assets. The carrying costs are assessed for impairment under ASC Topic 360-36-10-35-20, Accounting for Impairment or Disposal of Long-Lived Assets whenever events or changes in circumstances indicate that the carrying costs may not be recoverable.





The Company also evaluates the carrying value of acquired mineral property rights in accordance with ASC Topic 930-360-35-1, Mining Assets: Impairment and Business Combinations, using the Value Beyond Proven and Probable (VBPP) method. The fair value of a mining asset generally includes both VBPP and an estimate of the future market price of the minerals.





When the Company has capitalized mineral property costs, these properties will be periodically assessed for impairment of value. Once a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method. Additionally, the Company expenses as incurred all maintenance and exploration property costs. No impairment of mineral property costs have been recorded for the years ended March 31, 2012 and 2010.





Long-Lived Assets





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





Financial Instruments





ASC 825, Financial Instruments requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:





Level 1





Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.





Level 2





Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data of the fair value of the assets or liabilities.





Level 3





Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.





The Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, amounts due to a related party, advances, notes payable, loan payable and other payables.





Pursuant to ASC 825, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company's financial instruments consist of cash, accounts payable, accrued liabilities, advances, notes payable, and a loan payable. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.





Foreign currency transactions are primarily undertaken in Mexican Pesos. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.





Foreign Currency Translation





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





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





Comprehensive Loss





ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at March 31, 2012 and 2010, the Company had no items that represent a comprehensive loss, and therefore has not included a schedule of comprehensive loss in the consolidated financial statements.





Income Taxes





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





Asset Retirement Obligations





In accordance with accounting standards for asset retirement obligations (ASC 410), the Company records the fair value of a liability for an asset retirement obligation (ARO) when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The associated asset retirement costs are supposed to be capitalized as part of the carrying amount of the related mineral properties. As of March 31, 2012 and 2011, the Company has not recorded AROs associated with legal obligations to retire any of the Company’s mineral properties as the settlement dates are not presently determinable.





Revenue Recognition





The Company recognizes revenue on an accrual basis. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured.





Stock-based compensation





The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.





ASC 505, "Compensation-Stock Compensation", establishes standards for the accounting for transactions in which an entity exchanges its equity instruments to non-employees for goods or services. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 505.





Per Share Data





Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share". Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.





Recently Issued Accounting Pronouncements





There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the fourth quarter of fiscal 2012, or which are expected to impact future periods that were not already adopted and disclosed in prior periods.





4.
MINERAL PROPERTIES AND EXPLORATION COSTS





The following is a continuity of mineral property acquisition costs capitalized on the consolidated balance sheet:


Balance

March 31, 2010

$
Cash

Payments

$
Stock-Based

Payments

$
Balance

March 31,

2011

$
Cash

Payments

$
Stock-Based

Payments

$
Balance

March 31,

2012

$Linda Mining District (a)
4,351
5,650
110,000
120,001
10,655
20,000
150,656Ures (b)
25,400
85,468
-
110,88
59,500
-
170,368Corborca (c)
-
50,200
170,500
220,700
10,650
130,000
361,35029,751
14,318
280,500
451,569
80,805
150,000
682,374


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




Balance

March 31, 2010

$
Cash

Payments

$
Stock-Based

Payments

$
Balance

March 31,

2011

$
Cash

Payments

$
Stock-Based

Payments

$
Balance

March 31,

2012

$Linda Mining District (a)
-
-
-
-
-
-
-Ures (b)
97,530
110,750
-
208,280
280,963
121,272
609,803Corborca (c)
-
59,374
-
59,374
280,963
121,272
460,89697,530
170,124
-
267,654
561,926
242,544
1,072,124


(a)
Lida Mining District, Esmeralda County, Nevada





On September 21, 2009, the Company entered into an agreement on lands located in Esmeralda County, Nevada. The Company holds an option on 150 acres of patented lands, 14 mining claims and two mill sites with water rights. The Company also staked additional claims as a result of our initial geological evaluations.  On June 4, 2010, the optionor granted the Company an extension of the option until June 3, 2011. In consideration for extending the option, the Company paid $5,000 and 500,000 shares of common stock of the Company valued at $0.187 per share or $110,000.





(b)
Ures, Sonora, Mexico





On May 25, 2010, the Company entered into a Mineral Exploration and Mining Lease with Option to Purchase with the owner of four mining claims (i) Ocho Hermanos (ii) 370 Area (iii) El Scorpion (iv) Los Laureles located at Ures, Sonora, Mexico.  For an initial exploration and drilling term up to June 30, 2011, the Company agreed to pay a monthly lease payment of $5,000 and a production royalty of 3% of the net smelter returns.  The Company has the option to purchase the mining claims payable, year 1 - $200,000, year 2 - $300,000, year 3 - $400,000 and year 4 - $2,100,000 for a total of $3,000,000. These property rights are owned by Mexus Gold S.A. de C.V.





(c)
Corborca, Sonora, Mexico





On January 5, 2011, the Company entered into a Mineral Exploration, Exploitation and Mining Concession Purchase Agreement for two mining properties (i) Julio II (ii) Martha Elena located in the municipality of Caborca, Sonora, Mexico.  The purchase price of these rights are (a) $50,000 cash (b) 1,000,000 shares of common stock of Mexus Gold US (c) $2,000,000 paid at a rate of 40% net smelter royalty. The term of the agreement is terminated at the option of the Company. These property rights are owned by Mexus Gold S.A. de C.V.




4.
EQUIPMENT




Cost
Accumulated

Depreciation
March 31,

2012

Net Book

Value
March 31,

2011

Net Book

ValueMining tools and equipment
511,308
65,010
446,298
122,508Watercraft
826,393
161,010
665,383
773,977Vehicles
34,635
15,209
19,416
16,5631,372,326
241,22
1,131,097
913,048


6.
ACCOUNTS PAYABLE – RELATED PARTIES





During the year ended March 31, 2012 and 2011, the Company incurred rent expense payable to Paul D. Thompson, the sole director and officer of the Company, of $45,600 and $59,400, respectively.  At March 31, 2012 and 2011, $0 and $46,400 for this obligation is outstanding, respectively.





At March 31, 2012 and 2011, the Company has an outstanding payable balance for rent due to G.K.’s Gym, Inc. of $0 and $9,600, which is owned by the parents of Philip E. Koehnke, the former majority shareholder of the Company.





At March 31, 2012 and 2011, the Company has an outstanding obligation of $52,637 and 24,637, respectively, due to Philip E. Koehnke APC, the former majority shareholder of the Company, for legal fees.





At March 31, 2012 and 2011, the Company has an outstanding obligation of $0 and $6,038, respectively, due to Philip E. Koehnke, the former majority shareholder of the Company, related to an asset purchase agreement.





7.
ADVANCE FROM POWERCOM SERVICES INC.





On July 8, 2010, the Company entered into a Project Management Agreement with Powercom Services, Inc (“Powercom”). Pursuant to the terms of the Agreement, Powercom will assist the Company with cable salvaging operations and receive a percent of the profit from the sale of the salvaged cable. In addition, Powercom has agreed to loan the Company up to $800,000 for the administration and development of the cable salvaging project. As of March 31, 2012 Powercom has advanced to the Company a total of $800,000. Under the terms, the advance is required to be paid in full without interest out of the proceeds from the first shipment of cable brought to port by the Company. The advances are for the purpose of funding the installation and cable pulling apparatus on the cable recovery barge operated by the Company.





8.
NOTES PAYABLE





On September 30, 2009, March 15, 2010 and June 25, 2010 the Company entered into unsecured loan agreements with Francis Stadelman in the amounts of $10,000, $8,000 and $5,000 with interest payable of 8%, 6.5% and 10%, respectively, which were due in six months. On May 6, 2011, the Company issued 63,728 shares of common stock to fully pay the promissory notes and accrued interest totalling $24,021 in full.





On December 22, 2009, the Company entered into an unsecured promissory note agreement with Mr. Williams in the amount of $7,500 with interest payable at 8% per annum and due on demand. On October 21, 2011, the Company issued 68,182 shares of common stock payable valued at $7,500 ($0.11 per share) to pay the promissory note in full.





On February 16, 2010, the Company entered into an unsecured promissory note agreement with Martin Wisby in the amount of $3,000 with interest payable at 8% per annum and due on demand.





On February 22, 2010, the Company entered into an unsecured demand note agreement with Roy Riley in the amount of $5,000 which is due on demand and without interest.  In July 2011, the note was paid in full personally by Paul Thompson, the sole officer and director of the Company.





On August 26, 2010, the Company entered into an unsecured note payable agreement with Brian Farcy in the amount of $150,000 with interest payable at 4.5 % per annum and monthly principal payments of $3,000 commencing October 1, 2010. The Company made $42,000 (March 31, 2011 - $18,000) in payments towards principal on this note in cash. The remaining principal of $108,000 plus accrued interest was paid in full in February 2012 by sale of Tugboat “Caleb” to the note holder.  The Company recorded a loss on sale of the tugboat of $125,197.





On September 1, 2010, the Company entered into an unsecured promissory note agreement to purchase Barge ITB230 with Island Tug & Barge Co. in the amount of $240,000 with interest payable at 6% per annum and four payments of $60,000 plus accrued interest due on March 1, 2011, September 1, 2011, March 1, 2012 and September 1, 2012. As of March 31, 2012, the Company made payments $120,000 towards principal and $120,000 was outstanding at March 31, 2012 (March 31, 2011 - $180,000).





On October 6, 2010, the Company entered into an unsecured loan agreement in the amount of $100,000 with William McCreary, interest payable at 6.5% per annum and due on October 6, 2011. This note may be repaid in Company stock or cash, at the option of the note holder. On May 23, 2011, the Company issued 454,545 shares of common stock payable valued at $100,000 ($0.20 per share) to pay the note in full.





On February 18, 2011, the Company entered into an unsecured promissory note agreement to Lorna D. Seals in the amount of $50,000 with interest at 12% per annum payable monthly and principal due on January 17, 2012.  At March 31, 2012 and 2011, $39,288 and $50,000, respectively, of principal was outstanding.





On April 20, 2011, the Company made an unsecured Loan Agreement with Francis Stadelman in the amount of $40,000 at eight percent interest and due on demand no later than April 20, 2012.  At the option of the holder, the loan may be paid in all or part in cash or common stock of the Company at the closing pricing at the date of election. On August 19, 2011, the Company issued 266,667 shares of common stock payable valued at $40,000 ($0.15 per share) to pay the loan.





On July 21, 2011, the Company made an unsecured Loan Agreement with Francis Stadelman in the amount of $60,000 at eight percent interest and which was due 90 days. At the option of the holder, the loan may be paid in all or part in cash or common stock of the Company at a fixed conversion price of $0.15 per share at the date of election.  The Loan Agreement resulted in a beneficial conversion feature of $10,000 since the closing price of common stock exceeds the fixed conversion price on July 20, 2011. The beneficial conversion feature of $10,000 is included in additional paid-in capital. On July 31, 2011, the Company fully converted the loan into 400,000 shares of common stock.





On December 1, 2011, the Company made an unsecured Promissory Note Agreement with Francis Stadelman in the amount of $20,000 at eight percent interest with two payments of $10,300 due no later than December 10, 2011 and January 1, 2012. As of December 31, 2011, the Company has made both scheduled payments.





On December 19, 2011, the Company made an unsecured Promissory Note Agreement with Francis Stadelman in the amount of $30,000 at eight percent interest with a payment of $10,500 due no later than January 1, 2012 and two remaining payments of $11,000 due no later than February 1, 2012 and March 1, 2012. As of March 31, 2012 the Company made all three scheduled payments.





On March 28, 2012, the Company entered into an unsecured promissory note agreement with GJB Enterprise in the amount of $10,000.  The note has no specific terms of repayment.  A finance charge of $3,000 is due upon payment.





Defaulted Senior Notes





On February 16, 2010, the Company made an unsecured Promissory Note Agreement with William McCreary in the amount of $2,500 at eight percent interest and due on demand or no later than September 1, 2010. The Company has not made the scheduled payments and is in default on this note as of March 31, 2012. The default rate on the note is eight percent.





On February 18, 2011, the Company entered into an unsecured promissory note agreement to Lorna D. Seals in the amount of $50,000 with interest payable monthly and principal due on January 17, 2012.  As of March 31, 2012, the Company has not paid the principle balance and is in default on this note.  Of the $50,000 principle balance, $39,288 remains outstanding.  The default rate on the note is eighteen percent.





9.
NOTES PAYABLE – RELATED PARTY





These notes are unsecured, non-interest bearing and due on demand.  These notes were accumulated through a series of cash advances to the Company and are due to Paul D. Thompson, the sole director and officer of the Company.  As of March 31, 2012 and 2011, Notes payable – related party totalled $115,942 and $71,893, respectively.





10.
LOAN PAYABLE





On January 25, 2011, the Company entered into an agreement to purchase a vessel for $45,866 payable in $1,000 in cash, 22,727 shares of common stock of the Company valued at $5,341 and 172 monthly payments of $483 with no stated interest rate.  The agreement to facilitate the purchase is contracted at an interest rate substantially below market rates for similar types of vessels.   Accordingly, the Company imputed a discount of $43,472 at a market interest rate of 12% in accordance FASB ASC 835, “Interest”.





11.
STOCKHOLDERS’ EQUITY (DEFICIT)





The stockholders’ equity of the Company comprises the following classes of capital stock as of March 31, 2012 and 2011:





Preferred Stock, $.001 par value per share; 9,000,000 shares authorized, zero shares issued and outstanding at March 31, 2012 and 2011, respectively.




Series A Convertible Preferred Stock, $.001 par value share; 1,000,000 shares authorized:375,000and 0 shares issued and outstanding at March 31, 2012 and 2011, respectively.




On August 22, 2011, the Board of Directors designated 1,000,000 shares of its Preferred Stock, $0.001 par value as Series A Convertible Preferred Stock (“Series A Preferred Stock”).  Holders of Series A Preferred Stock may convert one share of Series A Preferred Stock into one share of Common Stock.  Holders of Series A Preferred Stock have the number of votes determined by multiplying (a) the number of Series A Preferred Stock held by such holder, (b) the number of issued and outstanding Series A Preferred Stock and Common Stock on a fully diluted basis, and (c) 0.000006.  Holders of Common Stock have one vote per share of Common Stock held.





Common Stock, par value of $0.001 per share; 500,000,000 shares authorized: 179,381,712 and 161,117,595 shares issued and outstanding at March 31, 2012 and 2011, respectively.




Year Ended March 31, 2011





Shares issued for services





During the year ended March 31, 2011, the Company issued 5,337,500 shares of its common stock to consultants for services rendered by them for an aggregate fair value of $612,433 based on the quoted market price of the shares at time of issuance.




Shares issued for equipment




During the year ended March 31, 2011, the Company issued 2,981,464 shares of its common stock to purchase equipment for an aggregate fair value of $323,951 based on the quoted market price of the shares at time of issuance.




Shares issued for cash




On April 14, 2010, the Company issued 200,000 shares of common stock for $10,000 ($0.05 per share).




On July 27, 2010, the Company issued 714,285 shares of common stock for $25,000 ($0.035 per share).




On November 16, 2010, the Company issued 250,000 shares of common stock for $10,000 ($0.04 per share).




On November 16, 2010, the Company issued 125,000 shares of common stock for $10,000 ($0.08 per share).




On November 16, 2010, the Company issued 1,666,667 shares of common stock for $50,000 ($0.03 per share).




On November 16, 2010, the Company issued 250,000 shares of common stock for $25,000 ($0.10 per share).




On December 1, 2010, the Company received $50,000 in cash in conjunction with the cancellation of the sales-leaseback transaction (Note 11).




On January 20, 2011, the Company issued 400,000 shares of common stock for $80,000 ($0.20 per share).




On January 25, 2011, the Company issued 750,000 shares of common stock for $150,000 ($0.20 per share).




On February 16, 2011, the Company issued 500,000 shares of common stock for $100,000 ($0.20 per share) less transaction costs of $8,300.




On February 16, 2011, the Company issued 200,000 shares of common stock for $50,000 ($0.25 per share).




On February 16, 2011, the Company issued 250,000 shares of common stock for $10,000 ($0.04 per share).




On March 21, 2011, the Company issued 1,325,000 shares of common stock for $265,000 ($0.20 per share).




Shares issued for options on mineral properties




On June 4, 2010, the optionor granted the Company an extension of the option agreement to purchase mine properties located at Lida Mining District, Esmeralda County, Nevada until June 3, 2011. In consideration for extending the option, the Company paid $5,000 and issued 500,000 shares of common stock of the Company on January 20, 2011 with an aggregate fair value of $110,000 ($0.22 per share) based on the quoted market price of the shares at time of issuance.




On January 5, 2011, the Company entered into a Mineral Exploration, Exploitation and Mining Concession Purchase Agreement for two mining properties (i) Julio 2 (ii) Martha Elena located in the municipality of Caborca, Sonora, Mexico.  The purchase price of these rights are (a) $50,000 cash (b) 1,000,000 shares of common stock of Mexus Gold US (c) $2,000,000 paid at a rate of 40% net smelter royalty. In connection with this agreement, the Company issued 1,000,000 shares of common stock of the Company on January 20, 2011 with an aggregate fair value of $170,500 ($0.17 per share) based on the quoted market price of the shares at time of issuance.




Shares issued for capital lease




On December 1, 2010, the Company issued 212,000 shares of common stock, for an aggregate fair value of $53,000 ($0.25 per share) based on the quoted market price of the shares at time of issuance, to cancelled and settle in full a sale-leaseback arrangement. $50,000 was applied against the capital lease obligation and $3,000 was applied against outstanding interest payable.





Share subscription payable





On September 1, 2010, the Company incurred an obligation to issue 75,092 shares of common stock for equipment purchased with a fair value of $5,745.





On January 2, 2011, the Company incurred an obligation to issue 295,000 shares of common stock for equipment purchased with a fair value of $34,000 and for contract labor totalling $25,000.





On March 14, 2011, the Company received $10,000 in cash in exchange for a common stock payable of 50,000 shares of common stock ($0.20 per share).





On March 28, 2011, the Company incurred an obligation to issue 150,000 shares of common stock for equipment purchased with a fair value of $31,500.





On March 31, 2011, the Company received $49,000 in cash in exchange for a common stock payable of 222,727 shares of common stock ($0.22 per share).





Year Ended March 31, 2012





On April 7, 2011, the Company issued 345,000 shares of common stock to satisfy obligations under share subscription agreements for cash, equipment and services valued at $69,000 included in share subscription payable in the consolidated financial statements at March 31, 2011.





On May 6, 2011, the Company issued 222,727 shares of common stock to satisfy obligations under share subscription agreements for $49,000 of cash received and included in share subscription payable in the consolidated financial statements at March 31, 2011.





On May 6, 2011, the Company issued 63,728 shares of common stock to fully pay a promissory note and accrued interest totalling $24,021.





On August 19, 2011, the Company issued 3,141,615 shares of common stock to satisfy obligations under share subscription agreements for cash, equipment, loans payable, and services valued at $580,373 included in share subscription payable.





On August 24, 2011, the Company issued 60,000 shares of common stock to satisfy obligations under share subscription agreements for equipment valued at $12,000 included in share subscription payable.





On September 20, 2011, the Company issued 125,000 shares of common stock to satisfy obligations under share subscription agreements for $15,000 in cash received included in share subscription payable.





On September 23, 2011, the Company issued 83,333 shares of common stock to satisfy obligations under share subscription agreements for $10,000 in cash received included in share subscription payable.





On September 30, 2011, the Company issued 375,000 shares of Series A preferred stock to pay related party loans and financing expenses valued at $67,500 ($0.18 per share).





On October 17, 2011, the Company issued 100,000 shares of common stock to satisfy obligations under share subscription agreements for mineral property valued at $20,000 included in share subscription payable.





On October 31, 2011, the Company issued 2,044,480 shares of common stock to satisfy obligations under share subscription agreements for cash, equipment and services valued at $233,500 included in share subscription payable.





On November 7, 2011, the Company issued 300,000 shares of common stock to satisfy obligations under share subscription agreements for mineral property valued at $60,000 included in share subscription payable.





On December 20, 2011, the Company issued 107,142 shares of common stock to satisfy obligations under share subscription agreements for equipment valued at $7,500 included in share subscription payable.





On January 25, 2012, the Company issued 833,333 shares of common stock to satisfy obligations under share subscription agreements for $50,000 in cash included in share subscription payable.





On February 10, 2012, the Company issued 2,538,461 shares of common stock to satisfy obligations under share subscription agreements for $200,000 in cash included in share subscription payable.





On February 17 2012, the Company issued 1,755,332 shares of common stock to satisfy obligations under share subscription agreements for $57,000 in cash and services and equipment valued $49,444 included in share subscription payable.





On February 29 2012, the Company issued 510,633 shares of common stock to satisfy obligations under share subscription agreements for services and accounts payable valued $49,510 at included in share subscription payable.





On March 30 2012, the Company issued 5,883,333 shares of common stock to satisfy obligations under share subscription agreements for $215,000 in cash and services and interest payable valued $125,500 included in share subscription payable.





Share Subscriptions Payable





On April 1, 2011, the Company issued 35,000 shares of common stock payable for equipment valued at $7,000 ($0.20 per share).





On April 21, 2011, the Company received $6,000 in cash in exchange for a common stock payable of 30,000 shares of common stock ($0.20 per share).





On April 27, 2011, the Company issued 22,727 shares of common stock payable for equipment valued at $5,000 ($0.22 per share).





On April 30, 2011, the Company issued 8,375 shares of common stock payable for services valued at $1,675 ($0.20 per share).





On May 11, 2011, the Company received $20,000 in cash in exchange for a common stock payable of 100,000 shares of common stock ($0.20 per share).





On May 23, 2011, the Company issued 454,545 shares of common stock payable to pay notes payable of $100,000 ($0.20 per shares).





On May 23, 2011, the Company issued 20,000 shares of common stock payable for equipment valued at $4,000 ($0.20 per share).





On May 25, 2011, the Company received $12,500 in cash in exchange for a common stock payable of 62,500 shares of common stock ($0.20 per share).





On May 27, 2011, the Company received $75,000 in cash in exchange for a common stock payable of 375,000 shares of common stock ($0.20 per share).





On June 6, 2011, the Company issued 16,506 shares of common stock payable for services valued at $2,806 ($0.17 per share).





On June 10, 2011, the Company issued 134,962 shares of common stock payable for services valued at $26,992 ($0.20 per share).





On June 16, 2011, the Company received $5,000 in cash in exchange for a common stock payable of 25,000 shares of common stock ($0.20 per share).





On June 16, 2011, the Company received $5,000 in cash in exchange for a common stock payable of 25,000 shares of common stock ($0.20 per share).





On June 17, 2011, the Company received $8,000 in cash in exchange for a common stock payable of 40,000 shares of common stock ($0.20 per share).





On June 19, 2011, the Company issued 60,000 shares of common stock payable for equipment valued at $12,000 ($0.20 per share).





On June 27, 2011, the Company issued 350,000 shares of common stock payable for mineral property valued at $58,500 ($0.195 per share).





On June 28, 2011, the Company issued 300,000 shares of common stock payable for mineral property valued at $70,000 ($0.20 per share).





On June 29, 2011, the Company received $8,410 in cash in exchange for a common stock payable of 42,050 shares of common stock ($0.20 per share).





On June 30, 2011, the Company received $13,500 in cash in exchange for a common stock payable of 67,500 shares of common stock ($0.20 per share).





On June 30, 2011, the Company received $4,000 in cash in exchange for a common stock payable of 20,000 shares of common stock ($0.20 per share).





On July 8, 2011, the Company received $12,000 in cash in exchange for a common stock payable of 60,000 shares of common stock ($0.20 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On July 20, 2011, the Company received $38,000 in cash in exchange for a common stock payable of 253,333 shares of common stock ($0.15 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On July 20, 2011, the Company issued 80,000 shares of common stock payable for materials valued at $14,400 ($0.18 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On July 21, 2011, the Company entered into an unsecured promissory note agreement with Francis Stadelman in the amount of $60,000 with interest payable at 8% per annum and due in 90 days.  At the option of the holder, the promissory note may be paid in all or part in cash or common stock of the Company at a fixed price of $0.15 per share. On July 31, 2011, the Company paid the $60,000 unsecured promissory note for a common stock payable of 400,000 shares of common stock ($0.15 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On July 31, 2011, the Company issued 24,333 shares of common stock payable for marine equipment valued at $3,650 ($0.15 per share).





On July 31, 2011, the Company issued 387,500 shares of common stock payable for equipment valued at $77,500 ($0.20 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On August 8, 2011, Paul Thompson Sr., the sole officer and director of the Company, agreed to convert $60,000 of accounts payable – related party and notes payable – related party owing to him into 375,000 shares of Series A Preferred Stock of the Company ($0.16 per share).  On September 30, 2011, the Company issued shares in satisfaction of the payable.





On August 31, 2011, the Company received $145,000 in cash in exchange for a common stock payable of 1,208,332 shares of common stock ($0.12 per share).





On August 31, 2011, the Company issued 100,000 shares of common stock payable to pay accounts payable valued at $19,000 ($0.19 per share).  On August 19, 2011, the Company issued shares in satisfaction of the payable.





On September 9, 2011, the Company received $15,000 in cash in exchange for a common stock payable of 125,000 shares of common stock ($0.12 per share).  On September 20, 2011, the Company issued shares in satisfaction of the payable.





On September 24, 2011, the Company issued 100,000 shares of common stock payable for mineral property valued at $20,000 ($0.20 per share).





On September 28, 2011, the Company received $30,000 in cash in exchange for a common stock payable of 272,727 shares of common stock ($0.11 per share).





On October 5, 2011, the Company issued 78,572 shares of common stock payable to pay accounts payable valued at $11,000 ($0.14 per share).  On October 31, 2011, the Company issued shares in satisfaction of the payable.





On October 17, 2011, the Company received $60,000 in cash in exchange for a common stock payable of 600,000 shares of common stock ($0.10 per share).





On October 20, 2011, the Company received $50,000 in cash in exchange for a common stock payable of 500,000 shares of common stock ($0.10 per share).  On October 31, 2011, the Company issued shares in satisfaction of the payable.





On October 21, 2011, the Company issued 68,182 shares of common stock payable to pay loan payable valued at $7,500 ($0.11 per share).  On October 31, 2011, the Company issued shares in satisfaction of the payable.





On November 16, 2011, the Company received $40,000 in cash in exchange for a common stock payable of 400,000 shares of common stock ($0.10 per share).





On November 29, 2011, the Company issued 107,172 shares of common stock payable for equipment valued at $7,500 ($0.07 per share).  On December 20, 2011 the Company issued shares in satisfaction of the payable.





On December 8, 2011, the Company received $100,000 in cash in exchange for a common stock payable of 1,538,461 shares of common stock ($0.065 per share).





On December 16, 2011, the Company issued 77,000 shares of common stock payable for equipment valued at $5,236 ($0.068 per share).





On January 12, 2012, the Company issued 250,000 shares of common stock payable for services valued at $17,500 ($0.07 per share).





On January 13, 2012, the Company issued 41,666 shares of common stock payable for services valued at $2,708 ($0.065 per share).





On January 25, 2012, the Company received $50,000 in cash in exchange for a common stock payable of 833,333 shares of common stock ($0.06 per share).





On January 27, 2012, the Company issued 250,000 shares of common stock payable for services valued at $17,500 ($0.07 per share).





On February 1, 2012, the Company issued 125,000 shares of common stock payable for services valued at $10,000 ($0.08 per share).





On February 3, 2012, the Company received $215,000 in cash in exchange for a common stock payable of 4,300,000 shares of common stock ($0.05 per share).





On February 6, 2012, the Company issued 575,000 shares of common stock payable for services valued at $37,950 ($0.066 per share).





On February 8, 2012, the Company issued 103,000 shares of common stock payable for equipment valued at $6,200 ($0.06 per share).





On February 17, 2012, the Company received $25,000 in cash in exchange for a common stock payable of 500,000 shares of common stock ($0.05 per share).





On February 21, 2012, the Company issued 250,000 shares of common stock payable for services valued at $24,750 ($0.099 per share).





On February 27, 2012, the Company issued 260,633 shares of common stock payable valued at $24,760 ($0.095 per share) to pay accounts payable valued at $15,638.  On February 29, 2012, the Company issued shares in satisfaction of the payable.





On February 28, 2012, the Company received $10,000 in cash in exchange for a common stock payable of 200,000 shares of common stock ($0.05 per share).





March 8, 2012, the Company reimbursed $3,400 in cash for a common stock payable of 17,000 shares of common stock ($0.20 per share).





On March 15, 2012, the Company issued 1,000,000 shares of common stock payable for services valued at $85,000 ($0.085 per share).





On March 20, 2012, the Company issued 83,333 shares of common stock payable to pay interest payable valued at $7,500 ($0.09 per share).





On March 21, 2012, the Company issued 150,417 shares of common stock payable for services valued at $13,538 ($0.09 per share).





12.
RELATED PARTY TRANSACTIONS





During the years ended March 31, 2012 and 2011, the Company entered into the following transactions with related parties:





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


Rent expense – Note 6


Notes Payable – Note 9





Philip E. Koehnke, former majority shareholder of the Company


Rent expense – Note 6


Legal fees – Note 6





13.
INCOME TAXES





The following table presents income before taxes and income tax expense as well as the taxes charged to stockholders equity:




Year Ended                          Year Ended


March 31, 2012                   March 31, 2011




Net loss before taxes                                                                                $     (1,511,931)                 $          (1,832,779)





Income tax expense charged to loss before taxes                                 $                     -                   $                           -





A reconciliation of the expected consolidated income tax expense, computed by applying a 35% U.S. Federal corporate income tax rate to income before taxes to income tax expense is as follows:





Year Ended                          Year Ended


March 31, 2012                   March 31, 2011





Expected tax expense (recovery)                                                              $     (529,176)                     $            (641,473)


Share-based payments                                                                                       146,188                                      214,352


Change in valuation allowance                                                                         422,909                                      427,121





$                 -                       $                         -





At March 31, 2012 and 2011, the Company had available a net-operating loss carry-forward for Federal tax purposes of approximately $887,000 and $504,000, respectively, which may be applied against future taxable income, if any, at various times through 2032. Certain significant changes in ownership of the Company may restrict the future utilization of these tax loss carry-forwards.





The Company recognizes interest and penalties, if any, related to uncertain tax positions in general and administrative expenses.  No interest and penalties related to uncertain tax positions were accrued at March 31, 2012 and 2011.





The tax years 2012, 2011 and 2010 remain open to examination by the major taxing jurisdictions in which the Company operates.  The Company expects no material changes to unrecognized tax positions within the next twelve months.





14.
SUBSEQUENT EVENTS





During April 2012, the Company received $85,500 in cash in exchange for a common stock payable of 1,425,000 shares of common stock ($0.06 per share).





During April 2012, the Company issued 334,250 shares of common stock payable for services valued at $6,467 ($0.02 per share).





During May 2012, the Company received $115,003 in cash in exchange for a common stock payable of 2,116,735 shares of common stock ($0.06 per share).


During May 2012, the Company issued 183,333 shares of common stock payable for equipment valued at $15,000 ($0.08 per share).





During May 2012, the Company issued 142,857 shares of common stock payable for services valued at $10,000 ($0.07 per share).





During May 2012, the Company issued 583,333 shares of common stock payable in satisfaction of notes payable and accrued interest valued at $35,000 ($0.06 per share).





On May 18, 2012, the Company issued 1,425,000 shares of common stock to satisfy obligations under share subscription agreements for $85,500 in cash included in share subscriptions payable.





On May 21, 2012, the Company issued 873,333 shares of common stock to satisfy obligations under share subscription agreements for $37,877 in services, $20,000 in cash, and $3,000 in equipment included in share subscription payable.





During June 2012, the Company received $67,500 in cash in exchange for a common stock payable of 1,350,000 shares of common stock ($0.05 per share).





On June 11, 2012, the Company issued 2,766,700 shares of common stock to satisfy obligations under share subscription agreements for $152,501 in cash included in share subscriptions payable.