MINR Minerva Gold Inc (PK)

Notes to Consolidated Financial Statements

Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements - In the three months ended September 30, 2019, the Financial Accounting Standards Board issued several new Accounting Standards Updates which the Company believes will have no material impact to the Company.

Subsequent Events - Management has evaluated any subsequent events occurring in the period from September 30, 2019 through the date the financial statements were issued, to determine if disclosure in this report is warranted (see Note 9).

(3)Going Concern 

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not generated any revenues and has suffered recurring losses totaling $3,113,581 since inception. These factors, among others, indicate that there is substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of this filing. In order to obtain the necessary capital to sustain operations, Management’s plans include, among other things, the possibility of pursuing new equity sales and/or making additional debt borrowings. There can be no assurances, however, that the Company will be successful in obtaining such additional financing. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.

(4)Acquisition of Power Blockchain 

Effective February 1, 2018, the Company acquired 100% of the equity interests in Power Blockchain through an exchange agreement between the Company and the two owners of Power Blockchain. Pursuant to the exchange agreement, the sole consideration in this transaction was the issuance by the Company of unsecured convertible notes payable to the two owners of Power Blockchain in the amount of $2,200,000.  Such notes payable were structured to: (i) mature five years from the date of issuance, (ii) accrue interest at the rate of 5% per annum, (iii) require repayment in four equal installments beginning on the second anniversary of issuance, and (iv) are convertible into the Company’s common stock at a conversion price of $0.13 per share, subject to certain limitations. The Company performed an analysis to determine whether there was a beneficial conversion feature and noted none.

(5)Stockholders’ Equity 

There have been no issuances of stock options or warrants.  However, in March 2018, the Board approved the establishment of a new 2018 Stock Option Plan with an authorization for the issuance of up to 1,000,000 shares of common stock.  The Plan is designed to provide for future discretionary grants of stock options, stock awards and stock unit awards to key employees and non-employee directors.

9

(6)Notes Payable 

As of September 30, 2019 and March 31, 2019, the Company had the following long-term and short-term debt obligations:

The Company performed an analysis of the convertible notes payable in the amount of $2,200,000 to determine whether there was a beneficial conversion feature and noted none.  Future maturities of notes payable as of September 30, 2019 are as follows:

At the time of the Power Blockchain acquisition, Power Blockchain had outstanding unsecured notes payable to the two owners in the amount of $570,000, which were overdue and in default.  Shortly thereafter, the Company entered into negotiations with the note holders in an attempt to settle these obligations.  As a result of those efforts, a settlement agreement was reached in March 2018 to convert the notes payable into the right for the two note holders (“the Plaintiffs”) in an attempt to settle these obligations. As a result of those efforts, a settlement agreement was reached in March 2018 to convert the notes payable into the right for the two note holders to receive periodic issuances of the Company’s common stock of up to approximately 3,000,000 shares each, that would be exempted from registration pursuant to Section 3(a)(10) of the Securities Act of 1933. The settlement agreement stipulated that the issuance of such shares shall occur in respective tranches such that the resulting number of shares owned by each holder would not exceed 4.99% of the Company’s then outstanding shares of common stock.  Per the settlement agreement, the Plaintiffs’ right to make requests for periodic tranche issuances expired on September 17, 2019, however, the Company agreed on September 10, 2019 to extend the exercise period to December 31, 2019, in recognition of the continuing funding support provided by affiliates of the note holders to the Company subsequent to the settlement agreement.

(7)Related Party Transactions 

The Company does not lease or rent any property.  Office services are provided without charge by a director. Such costs are immaterial to the consolidated financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

10

(8)Commitments and Contingencies 

From time to time in the ordinary course of our business, the Company may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary stages, and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii) many of these proceedings involve matters of which the outcomes are inherently difficult to predict. We have insurance policies covering potential losses where such coverage is cost effective.

We are not at this time involved in any legal proceedings.

(9)Subsequent Events 

Management has evaluated any subsequent events occurring in the period from September 30, 2019 through the date the financial statements were issued, to determine if disclosure in this report is warranted.  In the month of October 2019, the Company made additional short-term borrowings from a related party in the total amount of $5,000 on the same terms as the borrowings made through September 30, 2019.  There have been no other reportable subsequent events that have occurred since September 30, 2019

11