Recent Developments - COVID-19 Pandemic

The recent outbreak of the coronavirus COVID-19 has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have a material adverse impact on global economic conditions as well as on the Company's business activities. The extent to which COVID-19 may impact the Company's business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in the United States, Mexico and other countries to contain and treat the disease. These events are highly uncertain and, as such, the Company cannot determine their financial impact at this time. No adjustments have been made to the amounts reported in the consolidated financial statements as a result of this matter.





Critical Accounting Policies



Mineral Property Rights

Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

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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, 2022 and 2021, 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 revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured.

Accounting for Derivative Instruments

Accounting standards require that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. A change in the market value of the financial instrument is recognized as a gain or loss in results of operations in the period of change.

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, 2022 and 2021. All amounts herein are in U.S. dollars.

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Year Ended March 31, 2022 Compared with the Year Ended March 31, 2021

We had a net loss during the year ended March 31, 2022 of $2,580,694 compared to a net loss of $3,332,130 during the same period in 2021. The decrease in net loss is primarily attributable (i) a decrease in exploration costs of $125,199 (ii) a decrease in stock-based compensation - consulting services of $425,902 (iii) a decrease in interest expense of $612,428 (iv) a decrease in general and administration expense of $104,775 and (v) an increase in the sale of gold of $21,323. The decrease in the net loss is partially offset by a decrease in gain on the change in the fair value of and settlement of convertible promissory notes and derivative liabilities of $545,741.





Operating Expenses

Total operating expenses decreased to $1,682,867 for year ended March 31, 2022, compared to $2,360,066 for the year ended March 31, 2021. The decrease in operating expenses was primarily due to a decrease in stock-based expense - consulting services,

For the year ended March 31, 2022, the Company had recoveries from the sale of gold of $172,683 compared to $151,360 for the year ended March 31, 2021. Sales of gold are reported as a reduction of exploration expense in the consolidated statement of operations since the Company is in the exploration stage.





Other Income (Expense)

We reported $897,827 of other expense during the year ended March 31, 2022 compared to $972,064 of other income during the same period in 2021.

The change in other income (expense) is mainly attributable to an decrease in the gain on the change in the fair value of and settlement of convertible promissory notes and derivative liabilities and a decrease in interest expense.

Liquidity and Capital Resources

On March 31, 2022, we had cash of $7,174 compared to cash of $8,081 on March 31, 2021.

Our property and equipment decreased to $221,457 at March 31, 2022, compared to $293,392 at March 31, 2021. The decrease in equipment is largely due to depreciation expense of $70,368 during the year ended March 31, 2022 and sale of equipment of $6,357.

Our mineral properties remained unchanged at $829,947 on March 31, 2022 and 2021.

Total assets decreased to $1,058,578 on March 31, 2022, compared to $1,131,420 on March 31, 2021. The majority of the decrease in assets relates to a depreciation expense of $70,368 during the year ended March 31, 2022.

Our total liabilities increased to $2,802,972 as of March 31, 2022, compared to $2,632,722 as of March 31, 2021. The increase in our total liabilities can be primarily attributed to an increase in accounts payable and notes payable.

Our working capital deficit on March 31, 2022 and 2021 is $2,795,798 and $2,624,641, respectively.

Our net cash used in operating activities for the year ended March 31, 2022 and 2021 is $681,264 and $799,875, respectively. Our net loss for the year ended March 31, 2022 of $2,580,694 was the main contributing factor for our negative cash flow offset mainly by depreciation and amortization of $70,368, loss on settlement of debt and accounts payable of $329,401, stock-based compensation - consulting services of $886,975 and, non-cash interest expense of $835,320.

Our net cash (used in) provided by investing activities for the year ended March 31, 2022 and 2021 is $6,357 and $(49,000), respectively, mainly due to sale and the purchase of equipment.

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Our net cash provided by financing activities for the year ended March 31, 2022 and 2021 is $674,000 and $792,783, respectively, mainly due to issuance of notes payable, convertible promissory notes and common stock.

The Company is dependent upon outside financing to continue operations. 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 execute its business plan. The Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets.





Going concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

During the year ended March 31, 2022, the Company incurred a net loss of $2,580,694 and used cash in operating activities of $681,264, and on March 31, 2022, had an accumulated deficit of $38,258,492. On March 31, 2022, the Company is in the exploration stage. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year of the date that the financial statements are issued. The Company's independent registered public accounting firm, in their report on the Company's financial statements for the year ending March 31, 2022, expressed substantial doubt about the Company's ability 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 execute its business plan. The Company is unable to predict the effect, if any, that the coronavirus COVID-19 global pandemic may have on its access to the financing markets.

The consolidated 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.





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. We have added additional equipment which 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.

Therefore, our goal for the current year is to increase the cash flow of the placer mining operation, continue the drilling program which began 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.

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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.

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