Notes to Financial Statements
June 30, 2016
(Unaudited)
NOTE 1 - ORGANIZATION
JPX Global, Inc. (the “Company”
or “JPX”) was incorporated under the laws of the state of Nevada on December 18, 2008, with 75,000,000 authorized common
shares with a par value of $0.001. On January 3, 2013, the Company approved the action to amend and restate the Articles of Incorporation
of the Company and increase the authorized common shares to 500,000,000 and create and authorize 40,000,000 shares of Preferred
Stock which was approved by written consent of the holders representing approximately 67% of the outstanding voting securities
of the Company. Series A Preferred Stock was created and designated with super-voting rights of 100,000 votes per share of Series
A Preferred Stock held, but no conversion, dividend and liquidation rights.
On February 5, 2014, the Company entered into
an agreement to acquire all the operating assets of Scorpex, Inc. (“Scorpex”) (an entity related by common control)
in exchange for 105,000,000 shares of common stock and 10,000,000 shares of Series B Preferred Stock of the Company. Scorpex is
majority owned and controlled by JPX Global, Inc.’s then controlling shareholder, Joseph Caywood. Each share of Series B
preferred stock is convertible into 10 shares of common stock and is entitled to vote ratably together with our common stockholders
on all matters upon which common stockholders may vote. With the acquisition of these assets, which consist primarily of a license
agreement, the Company has modified its business plan to include the development of waste management services including the storage,
recycling, and disposal of waste. The Company does not presently have any waste management operations.
The acquired assets consist primarily of a
license agreement between Scorpex and Tratamientos Ambientales Scorpion, S.A. de C.V. (a corporation formed under the laws of Mexico)
(“TAS”). This license agreement with TAS has been assigned to JPX. TAS is a wholly owned subsidiary of Scorpex, and
is, therefore, a common control entity. ASC 805-50-30-5 provides guidance on measuring assets and liabilities transferred between
entities under common control. As these entities are under common control and the license agreement had no basis on Scorpex’s
books they are being acquired at their carrying amounts (with no cost basis) on the date of transfer and, therefore, the transaction
value is $-0-.
The license agreement was dated July 30, 2011
and provided Scorpex with an exclusive worldwide license for the permits, property, and any and all of TAS’s other assets
necessary for the business of storing, recycling, disposing, and treating waste in Mexico for a term of 10 years. The agreement
also provided for Scorpex’s annual payment to TAS of 20% of its Net Revenues (gross cash receipts less cost of processing
and other expenses excluding general, administrative, interest, and taxes) from the license. Pursuant to the Assignment Consent
dated February 3, 2014, TAS agreed to extend the term of the agreement every 10 years if operations have commenced pursuant to
the license agreement.
NOTE 2 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited financial statements
have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting
principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim
financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are
necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented
are adequate to make the information not misleading, it is suggested that these interim financial statements be
JPX Global, Inc.
Notes to Financial Statements
June 30, 2016
(Unaudited)
read in conjunction with the Company’s audited
financial statements and notes thereto included in its Form 10-K for the year ended December 31, 2015. Operating results for the
six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.
NOTE 3 - GOING CONCERN
The accompanying financial statements have
been prepared assuming that the company will continue as a going concern. The company does not have sufficient working capital
for its planned activity, and to service its debt, which raises substantial doubt about its ability to continue as a going concern.
The Company has incurred accumulated losses of $33,928,122 from inception (December 18, 2008) through June 30, 2016.
Continuation of the company as a going concern
is dependent upon obtaining additional working capital and the management of the company has developed a strategy which it believes
will accomplish this objective through short term loans from related parties, and additional equity investments, which will enable
the company to continue operations for the coming year. These 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
this uncertainty.
NOTE 4 - NET INCOME (LOSS) PER COMMON
SHARE
The Company follows ASC Topic 260 to account
for the 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 period. 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.
For the six months ended June 30, 2016, the
common shares underlying the following dilutive securities were excluded from the calculation of diluted shares outstanding as
the effect of their inclusion would be anti-dilutive:
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Common Shares Issuable
|
Convertible loan payable – related party
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|
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1,500,000
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Series B Preferred Stock
|
|
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100,000,000
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Total common shares issuable
|
|
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101,500,000
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|
NOTE 5 - ADVANCES FROM RELATED PARTY
The advances from related party liability at
June 30, 2016 ($254,364) and December 31, 2015 ($243,864) is due to Joseph Caywood, significant stockholder of the Company. The
liability is non-interest bearing and there are no terms of repayment.
JPX Global, Inc.
Notes to Financial Statements
June 30, 2016
(Unaudited)
NOTE 6 - NOTES PAYABLE TO RELATED
PARTY
The notes payable to related party at June
30, 2016 ($23,000) is due to Mitchell Dean Hovendick, significant stockholder of the Company, and consist of:
Promissory note dated May 20, 2015, interest at 8% per annum, interest and principal due November 20, 2015
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$
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8,000
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Promissory note dated June 24, 2015, interest at 8% per annum, interest and principal due December 24, 2015
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|
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8,000
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|
Promissory note dated November 15, 2015, interest at 8% per annum, interest and principal due May 15, 2016
|
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2,000
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|
Promissory note dated April 15, 2016, interest at 8% per annum, interest and principal due October 12, 2016
|
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3,000
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Promissory note dated May 21, 2016, interest at 8% per annum, interest and principal due November 17, 2016
|
|
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2,000
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Total
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$
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23,000
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|
NOTE 7 - CONVERTIBLE LOAN PAYABLE - RELATED
PARTY
On December 18, 2008, the company entered into
a Promissory Note agreement with the former CEO of the Company. The note is for a sum of $1,500, is non interest bearing, and was
due and payable on December 31, 2010. The note provides that if the note was not paid on December 31, 2010, the note can be converted
to shares of common stock of the Company for $.001 per share. On January 3, 2013, this note was assigned to Joseph Caywood, the
then controlling shareholder of JPX. The Company and Joseph Caywood have verbally agreed that the Company will pay the loan off
as it is able to without penalty, and Joseph Caywood will not convert the debt into shares of common stock. As of June 30, 2016
and December 31, 2015, the balance of the loan is $1,500.
NOTE 8 - CAPITAL STOCK
On January 6, 2014, the Company issued 1,000
shares of Series A preferred stock as security for outstanding debts of the Company owed to Joseph Caywood. Although the preferred
stock carries no dividend, distribution, liquidation or conversion rights, each share of Series A preferred stock carries one hundred
thousand (100,000) votes, and holders of our Series A preferred stock are able to vote together with our common stockholders on
all matters upon which common stockholders may vote.
On February 5, 2014 (see Note 1 above), the
Company entered into an agreement to acquire all the operating assets of Scorpex, Inc. (“Scorpex”) (an entity related
by common control) in exchange for 105,000,000 shares of common stock and 10,000,000 shares of Series B preferred stock of the
Company. Scorpex is majority owned and controlled by JPX Global, Inc.’s significant shareholder, Joseph Caywood. The Series
B preferred stock is convertible into 10 shares of common stock and is entitled to vote ratably together with our common stockholders
on all matters upon which common stockholders may vote.
JPX Global, Inc.
Notes to Financial Statements
June 30, 2016
(Unaudited)
On February 17, 2015, pursuant to a Consulting Agreement
with Joseph Caywood dated January 1, 2015 (term ended March 31, 2015), the Company issued a total of 2,050,000 shares of common
stock to 18 individuals/entities for services rendered to the Company. The stock was valued at $2,050,000 and was expensed as
consulting fees in the three months ended March 31, 2015.
On July 1, 2016, pursuant to a Consulting Services
Agreement with an individual consultant dated June 1, 2016 (term ending November 30, 2016), the Company issued 2,000,000 shares
of common stock to such individual for certain marketing consulting services to be rendered to the Company. The stock was valued
at $400,000 and was expensed as consulting fees in the three months ended June 30, 2016.
On June 17, 2016, pursuant to a Consulting
and Representation Agreement with an entity consultant dated June 14, 2016 (extended term ending June 14, 2017), the Company issued
1,000,000 shares of common stock to such entity for certain investor relations services to be rendered to the Company. The stock
was valued at $200,000 and was expensed as consulting fees in the three months ended June 30, 2016.
NOTE 9 - SUBSEQUENT EVENTS
On July 22, 2016, the Company issued a $166,000
Convertible Promissory Note to Auctus Fund, LLC (“Auctus”) for net loan proceeds of $150,000. The note bears interest
at a rate of 10% per annum (24% per annum default rate), is due April 22, 2017, and is convertible at the option of Auctus into
shares of the Company common stock at a Conversion Price equal to the lesser of (a) 55% of the lowest Trading Price during the
25 Trading Day period prior to July 22, 2016 or (b) 55% of the lowest Trading Price during the 25 Trading Day period prior to the
Conversion Date.
On July 25, 2016, the Company disbursed a total
of $140,000 cash: $58,500 in partial repayment of advances from related party Joseph Caywood, $30,000 to an entity for advisory
services, $21,500 in payment of certain accounts payable, $20,000 to an individual for certain Mexican mining permits, and $10,000
to an entity to assist the Company in obtaining DTC eligibility for its common stock.