UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended SeptemberJune 30, 2017

2019

Commission file number: 333-218746


X RAIL ENTERTAINMENT, INC.
(Exact name of Registrant as Specified in its Charter)

Nevada
88-0203182

LAS VEGAS XPRESS, INC.

(Exact name of Registrant as Specified in its Charter)

Nevada

88-0203182

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification Number)


9480 S. Eastern Ave,

2381 St Rose Pkwy, Suite 205

200

Las Vegas,Henderson, NV 8912389052

 (Address

(Address of principal executive offices)


(702) 583-6715481-2343

(Registrant'sRegistrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act

Title of

Each Class

Trading

Symbol(s)

Name of each Exchange

on which registered

N/A

N/A

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]     No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]     No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" andfiler," "smaller reporting company"company," or “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Non-accelerated filer

Accelerated filer

Smaller reporting company

Emerging growth company


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


Number of outstanding shares of common stock as of November 14, 2017June 19, 2020 was 568,197,993.




X RAIL ENTERTAINMENT,3,518,965,736.

LAS VEGAS XPRESS, INC.

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION

PAGE

Item 1.

Financial Statements:

3

Balance Sheets – Septemberas of June 30, 2017 (Unaudited)2019 and December 31, 20162018 (Unaudited)

3

Statements of Operations - for the Three and NineSix Months Ended SeptemberJune 30, 20172019 and 20162018 (Unaudited)

4

Statements of Shareholders’ Equity (Deficit) - for the Six Months Ended June 30, 2019 and 2018 (Unaudited)

5

Statements of Cash Flows - for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)

5
Statement of Shareholders' Equity – for the NineSix Months Ended SeptemberJune 30, 20172019 and 2018 (Unaudited)

6

Notes to Financial Statements (Unaudited)

7

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

19

18

Item 4.

Controls and Procedures

19

PART II OTHER INFORMATION

Item 1.

Legal Proceedings

19

20

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

20

Item 3.

Defaults upon Senior Securities

20

Item 4.

Mine Safety Disclosures

20

Item 5.

Other Information

20

Item 6.

Exhibits

21

SIGNATURES

22

2

 
Item 4.Mine Safety Disclosures20
Item 5.Other Information20
Item 6.Exhibits20
SIGNATURES21
2

PART I FINANCIAL INFORMATION

LAS VEGAS XPRESS, INC. X RAIL ENTERTAINMENT, INC.

BALANCE SHEETSHEETS (Unaudited)


  September 30,  December 31, 
  2017  2016 
       
Assets 
       
Current assets      
Cash $4,700  $202,169 
Prepaid Expenses  11,725   - 
Deposits  235   - 
Total current assets  16,660   202,169 
         
Property and equipment, net of accumulated depreciation  125,000   833,160 
         
Total assets $141,660  $1,035,329 
         
Liabilities and Stockholders' Equity (Deficit) 
         
Current liabilities        
Accounts payable $44,800  $78,890 
Accrued expenses  292,977   76,234 
Unearned revenue  1,107   - 
Notes payable to related parties  440,753   348,825 
Current portion of convertible notes payable, net of debt discount  304,376   210,946 
Derivative liability  26,889   - 
Total current liabilities  1,110,902   714,895 
Long-term portion of convertible debt, net of current portion  -   - 
Total liabilities  1,110,902   714,895 
         
Commitments and contingencies        
         
Stockholders' equity (deficit)        
Preferred stock, $0.00001 par value, 2,011,000 shares authorized, 98,880 and 98,798 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively  1   1 
Common stock, $0.00001 par value, 1,000,000,000 shares authorized, 246,226,161 and 208,353,303 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively  2,463   2,084 
Additional paid-in capital  9,602,722   8,284,510 
Accumulated (deficit)  (10,574,428)  (7,966,161)
Total stockholders' equity  (969,242)  320,434 
Total liabilities and stockholders' equity $141,660  $1,035,329 

See accompanying notes to financial statements
3

 

June 30,

 

December 31,

 

2019

 

2018

 

Assets

 

Current assets

 

Cash

 

$

405

 

$

3,088

 

Total current assets

 

405

 

3,088

 

Total assets

 

$

405

 

$

3,088

 

Liabilities and Stockholders' Equity (Deficit)

 

Current liabilities

 

Accounts payable

 

$

77,094

 

$

57,037

 

Accrued expenses

 

2,391,395

 

2,151,867

 

Accrued expenses - related parties

 

55,076

 

45,918

 

Unearned revenue

 

-

 

1,516

 

Notes payable - related parties

 

518,520

 

445,045

 

Notes payable

 

4,515

 

2,969

 

Convertible notes payable (net of debt discount of $18,082 and $65,001, respectively)

 

305,976

 

399,111

 

Derivative liability

 

143,678

 

336,825

 

Total current liabilities

 

3,496,254

 

3,440,288

 

Total liabilities

 

3,496,254

 

3,440,288

 

Commitments and contingencies

 

Shareholders' equity (deficit)

 

Preferred stock, $0.00001 par value, 2,011,000 shares authorized, 98,800 and 98,800 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

1

 

1

 

Common stock, $0.00001 par value, 10,000,000,000 shares authorized, 3,518,465,736 and 742,331,965 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

35,185

 

7,423

 

Additional paid-in capital

 

19,597,704

 

19,375,323

 

Accumulated (deficit)

 

(23,128,739

)

 

(22,819,947

)

Total shareholders' equity (deficit)

 

(3,495,849

)

 

(3,437,200

)

Total liabilities and shareholders' equity (deficit)

 

$

405

 

$

3,088

 

See accompanying notes to these condensed financial statements

  
3

Table of Contents

LAS VEGAS XPRESS, INC.X RAIL ENTERTAINMENT, INC.

STATEMENTS OF OPERATIONS

(Unaudited)


  
Three months
 ended
  
Three months
 ended
  
Nine months
ended
  
Nine months
ended
 
  September 30,  September 30,  September 30,  September 30, 
  2017  2016  2017  2016 
             
Revenues $-  $-  $32,259  $- 
Cost of sales  -   -   (46,051)  - 
Gross loss  -   -   (13,792)  - 
                 
Operating Expenses:                
Compensation and payroll taxes $137,569  $210,842  $391,274  $1,702,480 
Selling, general and administrative  72,429   56,213   272,977   162,238 
Professional fees  101,313   48,094   565,438   188,681 
  Total expenses  311,311   315,149   1,229,689   2,053,399 
                 
Loss from operations  (311,311)  (315,149)  (1,243,481)  (2,053,399)
                 
Other income (expense)                
Interest expense  (133,630)  (70,121)  (727,727)  (89,019)
Derivative gain (expense)  1,764   -   (7,789)  - 
Loss on disposition of assets  (629,270)  -   (629,270)  - 
   Total other income (expense)  (761,136)  (70,121)  (1,364,786)  (89,019)
                 
Net income (loss) from operations before provision for income taxes  (1,072,447)  (385,270)  (2,608,267)  (2,142,418)
Provision for income taxes  -   -   -   - 
Net income (loss) $(1,072,447) $(385,270) $(2,608,267) $(2,142,418)
                 
Net income (loss) per share, basic and diluted  (0.0048)  (0.002)  (0.012)  (0.013)
                 
Weighted average number of common shares outstanding, basic and diluted  223,173,591   194,251,646   218,006,563   169,407,177 
See accompanying notes to financial statements
4

X RAIL ENTERTAINMENT,

 

 

Three months

ended

 

 

Three months

ended

 

 

Six months

ended

 

 

Six months

ended

 

 

 

June30,

 

 

June 30,

 

 

June30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

-

 

 

$-

 

 

$-

 

 

$13,145

 

Cost of sales

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,754)

Gross profit (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,391

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and payroll taxes

 

 

76,250

 

 

 

272,497

 

 

 

230,000

 

 

 

2,618,747

 

Selling, general and administrative

 

 

8,826

 

 

 

82,570

 

 

 

33,151

 

 

 

125,467

 

Professional fees

 

 

59,154

 

 

 

315,270

 

 

 

102,453

 

 

 

431,849

 

Total expenses

 

 

144,230

 

 

 

670,337

 

 

 

365,604

 

 

 

3,176,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(144,230)

 

 

(670,337)

 

 

(365,604)

 

 

(3,171,672)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Excess derivative liability expense

 

 

-

 

 

 

(60,801)

 

 

-

 

 

 

(60,801)

 Interest expense

 

 

(28,210)

 

 

(612,937)

 

 

(80,173)

 

 

(679,095)

 Gain on change in value of derivative liability

 

 

52,767

 

 

 

630,403

 

 

 

136,985

 

 

 

1,141,640

 

Total other income (expense)

 

 

24,557

 

 

 

(43,335)

 

 

56,812

 

 

 

401,744

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from operations before provision for income taxes

 

 

(119,673)

 

 

(713,672)

 

 

(308,792)

 

 

(2,769,928)

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income (loss)

 

$(119,673)

 

$(713,672)

 

$(308,792)

 

$(2,769,928)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, basic and diluted

 

$(0.00)

 

$(2.87)

 

$(0.00)

 

$(14.57)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding, basic and diluted

 

 

2,935,945,128

 

 

 

248,528

 

 

 

2,030,916,301

 

 

 

190,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these condensed financial statements

4

Table of Contents

LAS VEGAS XPRESS, INC.

STATEMENTS OF CASH FLOWS

 (Unaudited)

` Unaudited  Unaudited 
  
Nine months
ended
  
Nine months
 ended
 
  September 30,  September 30, 
  2017  2016 
       
Cash flows from operating activities      
Net loss $(2,608,267) $(2,142,418)
Adjustments to reconcile net loss to net cash used in operating activities:        
Conversion of notes payable and accrued interest to capital  88,395   - 
Common stock issued for services  130,000   1,263,702 
Derivative expense related to convertible note payable  26,889   - 
Warrant expense  499,196   - 
Amortization of debt discount on convertible notes payable  156,330   45,639 
Changes in operating assets and liabilities:        
Accounts payable and accrued expenses  182,653   58,680 
Unearned revenue  1,107   - 
Prepaid expenses and deposits  (11,960)  - 
Net cash used in operating activities  (1,535,657)  (774,397)
         
Cash flows from investing activities        
Purchases of property and equipment  -   (19,240)
Write off property and equipment  708,160   - 
Net cash used in investing activities  708,160   (19,240)
         
Cash flows from financing activities        
Repayments on convertible notes payable  (82,000)  - 
Proceeds from convertible notes payable  19,100   490,000 
Repayments on related party notes payable  (53,344)  (164,716)
Proceeds from related party notes payable  145,272   - 
Proceeds from stock purchases  421,000   237,500 
Proceeds from exercise of warrant  180,000   - 
Net cash provided by financing activities  630,028   562,784 
         
Net change in cash  (197,469)  (230,853)
Cash, beginning of the period  202,169   325,057 
Cash, end of the period $4,700  $94,204 
         
Supplemental disclosure of cash flow information:        
Income taxes paid $-  $- 
         
Supplemental disclosure of non-cash investing and financing transactions:        
Conversion of related party debt to capital $-  $- 
Conversion of notes payable and accrued interest to capital  88,395   5,000 
Debt discount on convertible notes  205,224   490,000 

See accompanying notes to financial statements
5

X RAIL ENTERTAINMENT, INC.
STATEMENTS OF SHAREHOLDERS'SHAREHOLDERS’ EQUITY
 (Unaudited)

              Additional       
  Common Stock  Preferred Stock  Paid-in  Accumulated    
  Shares  Amount  Shares  Amount  Capital  Deficit  Total 
Balance January 1, 2016  4,557,784  $46   98,798  $1  $5,835,346  $(5,398,691) $436,702 
                             
Stock issued for employees compensation  16,791,611   168   -   -   1,185,243   -   1,185,411 
Stock issued for notes conversion  200,000   2   -   -   4,998   -   5,000 
Stock issued per Share Exchange Agreement  151,885,189   1,519   -   -   (1,519)  -   0 
Stock issued for cash  33,894,719   339   -   -   738,772   -   739,111 
Stock issued for services  1,024,000   10   -   -   71,670   -   71,680 
Value of warrants allocated to notes  -   -   -   -   450,000   -   450,000 
Net loss  -   -   -   -   -   (2,567,470)  (2,567,470)
Balance January 1, 2017  208,353,303  $2,084   98,798  $1  $8,284,510  $(7,966,161) $320,434 
                             
Stock issued for services  1,460,000   15   4   -   129,985   -   130,000 
Stock issued for notes conversion  21,600,000   216   -   -   81,784   -   82,000 
Stock issued for interest conversion  127,889   1   -   -   6,394   -   6,395 
Stock issued for cash  11,620,000   116   -   -   420,884   -   421,000 
Stock issued for warrant exercise  1,200,000   12   -   -   179,988   -   180,000 
Stock issued for shares exchange  1,880,969   19           (19)      - 
Stock cancelled  (16,000)  (0)  (2)  -   -   -   - 
Warrants expense  -   -   -   -   499,196   -   499,196 
Net loss  -   -   -   -   -   (2,608,267)  (2,608,267)
Balance September 30, 2017  246,226,161  $2,463   98,800  $1  $9,602,722  $(10,574,428) $(969,242)

See accompanying notes to financial statements
6

X RAIL ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(DEFICIT)

FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172019 AND 2016

2018

(Unaudited)

(1)           Organization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Preferred Stock

 

 

Paid-in

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2017

 

 

118,049

 

 

$1

 

 

 

98,800

 

 

$1

 

 

$12,968,634

 

 

$(15,351,533)

 

$(2,382,897)

Stock issued for compensation

 

 

121,000

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

2,184,999

 

 

 

-

 

 

 

2,185,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,056,256)

 

 

(2,056,256)

Balance March 31, 2018

 

 

239,049

 

 

$2

 

 

 

98,800

 

 

$1

 

 

$15,153,633

 

 

$(17,407,789)

 

$(2,254,153)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for compensation

 

 

12,166

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

96,247

 

 

 

-

 

 

 

96,247

 

Stock issued for services

 

 

25,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

200,000

 

 

 

-

 

 

 

200,000

 

Stock issued for notes and interest conversion

 

 

15,109

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

51,300

 

 

 

-

 

 

 

51,300

 

Warrants expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

400,000

 

 

 

-

 

 

 

400,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(713,672)

 

 

(713,672)

Balance June 30, 2018

 

 

291,324

 

 

$2

 

 

 

98,800

 

 

$1

 

 

$15,901,180

 

 

$(18,121,461)

 

$(2,220,278)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2018

 

 

742,331,965

 

 

$7,423

 

 

 

98,800

 

 

$1

 

 

$19,375,323

 

 

$(22,819,947)

 

$(3,437,200)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for compensation

 

 

775,000,000

 

 

 

7,750

 

 

 

-

 

 

 

-

 

 

 

69,750

 

 

 

-

 

 

 

77,500

 

Stock issued for notes and interest conversion

 

 

1,025,758,503

 

 

 

10,258

 

 

 

-

 

 

 

-

 

 

 

110,267

 

 

 

-

 

 

 

120,525

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(189,119)

 

 

(189,119)

Balance March 31, 2019

 

 

2,543,090,468

 

 

$25,431

 

 

 

98,800

 

 

$1

 

 

$19,555,340

 

 

$(23,009,066)

 

$(3,428,294)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued for notes and interest conversion

 

 

975,375,268

 

 

 

9,754

 

 

 

-

 

 

 

-

 

 

 

42,364

 

 

 

 

 

 

 

52,118

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(119,673)

 

 

(119,673)

Balance June 30, 2019

 

 

3,518,465,736

 

 

$35,185

 

 

 

98,800

 

 

$1

 

 

$19,597,704

 

 

$(23,128,739)

 

$(3,495,849)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these condensed financial statements

 
5

Table of Contents

LAS VEGAS XPRESS, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six months

ended

 

 

Six months

ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$(308,792)

 

$(2,769,928)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Amortization of debt discount on notes payable

 

 

46,919

 

 

 

120,811

 

Common stock issued for services

 

 

-

 

 

 

200,000

 

Common stock issued for compensation

 

 

77,500

 

 

 

2,281,247

 

Change in face value of derivative liability related to convertible note payable

 

 

(136,985)

 

 

(1,141,640)

Excess derivative liability expense

 

 

 

 

 

 

60,801

 

Warrant expense

 

 

-

 

 

 

400,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

 

236,012

 

 

 

680,131

 

Accrued expenses - related parties

 

 

9,158

 

 

 

11,090

 

Unearned revenue

 

 

(1,516)

 

 

(1,586)

 

 

 

 

 

 

 

 

 

Net cash (used in) operating activities

 

 

(77,704)

 

 

(159,074)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from convertible notes payable

 

 

-

 

 

 

154,100

 

Repayments on convertible notes payable

 

 

-

 

 

 

(46,550)

Repayments on related party notes payable

 

 

-

 

 

 

(9,933)

Proceeds from related party notes payable

 

 

73,475

 

 

 

5,344

 

Proceeds from notes payable

 

 

1,546

 

 

 

-

 

Net cash provided by financing activities

 

 

75,021

 

 

 

102,961

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

(2,683)

 

 

(56,113)

Cash, beginning of the period

 

 

3,088

 

 

 

56,983

 

Cash, end of the period

 

$405

 

 

$870

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Income paid with cash

 

$-

 

 

$-

 

Income taxes paid

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing transactions:

 

 

 

 

 

 

 

 

Conversion of notes payable and accrued interest to capital

 

$172,643

 

 

$51,300

 

Debt discount on convertible notes

 

$-

 

 

$120,811

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these condensed financial statements

6

Table of Contents

LAS VEGAS XPRESS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018

(Unaudited)

(1)

Summary of Significant Accounting Policies

Going Concern:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net loss of $308,792 for the six months ended June 30, 2019. The Company also has an accumulated deficit of $23,128,739 and basisa negative working capital of presentation


$3,495,849 as of June 30, 2019, including outstanding convertible notes payable of $324,058, before debt discount of $18,082. Management believes that it will need additional equity or debt financing to be able to implement its business plan. Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company’s ability to continue as a going concern.

While we expect the impacts of COVID-19 to have an adverse effect on our business, financial condition and results of operations, we are unable to predict the extent or nature of these impacts at this time.

Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability. The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Basis of Financial Statement Presentation:


The accompanying unaudited interim financial statements of X Rail Entertainment,Las Vegas Xpress, Inc. (the "Company") are condensed and have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP"(“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 20172019 or any other future period. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2016.


Going Concern:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has net losses of $2,608,267 for the nine months ended September 30, 2017.  The Company also has an accumulated deficit of $10,547,428, and a negative working capital of $1,094,242 as of September 30, 2017, as well as outstanding convertible notes payable of $509,600, before debt discount of $205,224.  Management believes that it will need additional equity or debt financing to be able to implement its business plan.  Given the lack of revenue, capital deficiency and negative working capital, there is substantial doubt about the Company's ability to continue as a going concern.

Management is attempting to raise additional equity and debt to sustain operations until it can market its services and achieves profitability.  The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


 (2)           Summary of Significant Accounting Policies

2018.

Risks and Uncertainties:


The Company operates in ana rail industry that is subject to intense competition and potential government regulations. Significant changes in regulations and the inability of the Company to establish contracts with rail services providers could have a materially adverse impact on the Company'sCompany’s operations.

Use of Estimates:


The preparation of financial statements in conformity with GAAP 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 financial statements, and the reported amounts of revenues and expenses during the reported periods.

7

Property Actual results could differ from those estimates.

7

Table of Contents

Cash and Equipment:


Property and equipment are recorded at historical cost and depreciated on a straight-line basis over their estimated useful lives of approximately five years once the individual assets are placed in service.  Cash Equivalents:

The Company expensesconsiders all purchaseshighly liquid instruments with a maturity of equipment with individual coststhree months or less at the time of under $500, and these amounts are not materialissuance to the financial statements.be cash equivalents. As of SeptemberJune 30, 2017, we recorded2019 and December 31, 2018, the rail cars on the balance sheet at $125,000 with no accumulated depreciation. The rail cars are currently not depreciated as they are notCompany had $405 and $3,088 in servicecash and not ready to run. The rail cars require substantial investment to retrofit. cash equivalents, respectively.

Related Parties:

The Company expensed the carrying value of 10 rail cars as they were exchanged for unpaid storage charges. The amount written off was $629,270 as of September 30, 2017.


Long-Lived Assets:

In accordance with FASBfollows ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.  The Company's management believes there has been no impairment of its long-lived assets during the nine months ended September 30, 2017, or 2016.  There can be no assurance, however, that market conditions will not change or demand850, “Related Party Disclosures,” for the Company's business model will continue.  Eitheridentification of these could result in future impairmentrelated parties and disclosure of long-lived assets.
related party transactions (see Note 2).

Income Taxes:


Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets of the Company relate primarily to operating loss carryforwards for federal income tax purposes. A full valuation allowance for deferred tax assets has been provided because the Company believes it is not more likely than not that the deferred tax asset will be realized. Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods.

The Company periodically evaluates its tax positions to determine whether it is more likely than not that such positions would be sustained upon examination by a tax authority for all open tax years, as defined by the statute of limitations, based on their technical merits. As of SeptemberJune 30, 2017,2019 and December 31, 2016,2018, the Company has not established a liability for uncertain tax positions.


Basic and Diluted Loss per Share:


In accordance with Financial Accounting Standards Board Accounting Standards Codification ("(“FASB ASC"ASC”) 260, "Earnings“Earnings per Share," the basic income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if diluted potential common stock had been converted to common stock. Common stock equivalents have not been included in the earnings per share computation for the three and ninesix months ended SeptemberJune 30, 2017,2019 and 20162018 as the amounts are anti-dilutive.anti-dilutive due to net losses. As of SeptemberJune 30, 2017,2019, the Company had 14,978,0001,436 outstanding warrants and convertible debt of $509,600, before debt discount of $205,224,$324,058, which were all excluded from the computation as they were anti-dilutive.anti-dilutive and are convertible into 5,997,561,071 shares of common stock. As of December 31, 2016,2018, the Company had 9,000,0003,426 outstanding warrants and convertible debt of $572,500,$464,112, before debt discount of $361,554,$65,001, which were all excluded from the computation as they were anti-dilutive.

Revenue Recognition:

The Company recognizes revenue from the sale of services in accordance with ASC 606, “Revenue Recognition,” only when all of the following criteria have been met:

(i)

Identify the contract(s) with a customer;

(ii)

Identify the performance obligations in the contract(s);

(iii)

Determine the transaction price;

(iv)

Allocate the transaction price to the performance obligations in the contract(s);

(v)

Recognize revenue when the Company satisfies a performance obligation.

Fair Value of Financial Instruments:

The Company’s financial instruments consist primarily of cash, prepaid expense, accounts payable and accrued liabilities, accrued expenses, convertible notes and notes payable. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.

8

Table of Contents

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is defined as follows:

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets;

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active;

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement

The following table summarizes fair value measurements by level at June 30, 2019 and December 31, 2018, measured at fair value on a recurring basis:

June 30, 2019

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Liabilities

 

$

 

 

$

 

 

$143,678

 

 

$143,678

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Liabilities

 

$

 

 

$

 

 

$336,825

 

 

$336,825

 

Share Based Payment:


Payments:

The Company issues stock, options, and warrants as share-based compensation to employees and non-employees.

8

The Company accounts for its share-based compensation to employees and non-employees in accordance FASB ASC 718. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period.


The

During the six months ended June 30, 2019 and 2018, the Company accounts for share-basedincurred $77,500 and $2,281,247 in stock- based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50 "Equity - Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

employees.

The Company values stock compensation based on the market price on the measurementgrant date. As described above, for employees this is the date of grant, and for non-employees, this is the date of performance completion.


The Company values warrants using the Black-Scholes option pricing model. Assumptions used in the Black-Scholes model to value options and warrants issued during the ninesix months ended SeptemberJune 30, 20172019 were as follows.

Variables
 Values 
Exercise Price $0.15 
Risk Free Rate .92% to 1.07%
Discount rate  0.25%
Volatility  666.26% - 634.49%
New Accounting Pronouncements:
There are no new significant accounting standards applicable tofollows:

Variables

 

Values as of

June 30,

2019

 

 

Values as of

June 30,

2018

 

Stock price

 

$0.0001

 

 

$4.00

 

Exercise Price

 

$750

 

 

$750

 

Term

 

0.66-1.23 years

 

 

1.66-2.84 years

 

Risk Free Rate

 

 

0.25%

 

 

0.25%

Volatility

 

579.6% - 674.6

%

 

262.9% - 616.2

%

9

Table of Contents

During the six months ended June 30, 2019, the Company that have been issued butdid not yet adopted byissue any shares of common stock for outside services. During the six months ended June 30, 2018, the Company asissued 25,000 shares of Septembercommon stock for outside services valued at $200,000.

During the six months ended June 30, 2017,2019 and through2018, the dateCompany issued 2,001,133,771 shares of this filing.

(3)            Propertycommon stock for conversions of promissory notes and Equipment

Propertyinterest of $172,643. During the six months ended June 30, 2018, the Company issued 15,109 shares of common stock for conversions of promissory notes and equipment consistedinterest of $51,300.

(2)

Related Party Notes Payable

The Company acquires on-going funding on an as-needed basis from related parties that include the following.


  September 30,  December 31, 
  2017  2016 
       
Rail cars (not in service) $125,000  $833,160 
Less: accumulated depreciation  -   - 
         
  $125,000  $833,160 


9

(4)           Related Party Notes Payable

Company’s officers, directors, majority shareholders, and these parties’ affiliates, pursuant to promissory notes with various origination dates in 2015 and 2017.  A summary of outstanding notes payable is as follows:

  September 30,  December 31, 
  2017  2016 
      
Promissory note,  dated  December 15, 2015, bearing interest at 10% annually, payable on demand $49,910  $55,994 
         
Promissory note,  dated  December 15, 2015, bearing interest at 10% annually, payable on demand  39,101   52,240 
        
Promissory note,  dated  December 15, 2015, bearing interest at 10% annually, payable on demand  74,044   78,359 
         
Promissory note,  dated  September 30, 2015, bearing no interest, payable on demand  155,798   162,232 
        
Promissory note,  dated  September 30, 2017, bearing 10% interest, payable on demand  53,700   - 
        
Promissory note,  dated  September 30, 2017, bearing 10% interest, payable on demand  49,800   - 
        
Promissory note,  dated  September 30, 2017, bearing 10% interest, payable on demand  18,400   - 
         
  $$ 440,753  $348,825 


10

(5)           Convertible Notes Payable

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand

 

$53,070

 

 

$41,810

 

 

 

 

 

 

 

 

 

 

Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand

 

 

33,863

 

 

 

24,101

 

 

 

 

 

 

 

 

 

 

Promissory note, dated December 15, 2015, bearing interest at 10% annually, payable on demand

 

 

74,981

 

 

 

53,994

 

 

 

 

 

 

 

 

 

 

Promissory note, dated September 30, 2015, bearing no interest payable on demand

 

 

336,371

 

 

 

308,814

 

 

 

 

 

 

 

 

 

 

Promissory note, dated September 30, 2017, bearing 10% interest, payable on demand

 

 

70,976

 

 

 

59,044

 

 

 

 

 

 

 

 

 

 

Promissory note, dated September 30, 2017, bearing 10% interest, payable on demand

 

 

4,335

 

 

 

3,200

 

Total notes payable, including accrued interest

 

 

573,596

 

 

 

490,963

 

Less accrued interest

 

 

(55,076)

 

 

(45,918)

Net notes payable

 

$518,520

 

 

$445,045

 

For the six months ended June 30, 2019, proceeds from related parties totaled $73,475, and interest of $9,158 was accrued. For the six months ended June 30, 2018, proceeds from related parties were $5,344 and repayments were $9,933, while interest of $11,090was accrued.

10

Table of Contents

(3)

Convertible Notes Payable

The following summarizes the book value of the convertible notes payable outstanding as of SeptemberJune 30, 20172019 and December 31, 2016:


  September 30,  December 31, 
  2017  2016 
      
Promissory note,  dated  April 30, 2008, bearing interest at 10% annually, payable on demand, convertible to  shares of common stock at $.05 per share**  $80,500   $82,500 
         
Promissory note,  dated  May 12, 2016, bearing interest at 10% annually, payable within a year, convertible to shares of common stock at $.05 per share  -   60,000 
        
Promissory note,  dated  May 19, 2016, bearing interest at 10% annually, payable within a year, convertible to shares of common stock at $.05 per share  -   20,000 
        
Promissory note,  dated  May 20, 2016, bearing interest at 10% annually, payable within a year, convertible to shares of common stock at $.05 per share*  20,000   20,000 
        
Promissory note,  dated  May 31, 2016, bearing interest at 10% annually, payable within a year, convertible to shares of common stock at $.05 per share*  40,000   40,000 
        
Promissory note,  dated  June 3, 2016, bearing interest at 10% annually, payable within a year, convertible to shares of common stock at $.05 per share*  350,000   350,000 
        
Promissory note,  dated  June 2, 2017, bearing interest at 4% annually, payable within a year, convertible to common stock at a discount of 40% off the lowest traded price of the common stock during 45 trading days prior the conversion date.  19,100   - 
         
Convertible notes before debt discount  509,600   572,500 
         
Less debt discount  (205,224)  (361,554)
         
Total outstanding convertible notes payable $304,376  $210,946 
*These promissory notes were2018:

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

Promissory note,  dated  June 2, 2017, bearing interest of 4% annually, payable within a year, convertible to common stock at a discount of 40% of the lowest traded price of the common stock during 45 trading days prior to the conversion date. Note is currently in default.

 

 

18,260

 

 

 

19,100

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  September 30, 2017, bearing 10% interest, payable on demand, convertible to common stock at the discount of 35% of the lowest traded price of the common stock during 20 trading days prior to the conversion. Note is currently in default.

 

 

12,000

 

 

 

12,000

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  November 27, 2017, with principal amount of $85,000 and aggregate purchase price of $79,900 , bearing interest of 12% annually, payable within a year, convertible to common stock at the conversion price equal to the lower of (i) the closing sale price of the common stock on the principal market on the trading day immediately preceding the closing date, and (ii) 50% of either the lowest sale price for the common stock during the 20 consecutive trading days including and immediately preceding the conversion date Note is currently in default.

 

 

19,580

 

 

 

68,396

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  December 20, 2017, bearing interest of 12% annually, payable on September 20, 2018, convertible to common stock at a discount of 50% of the lowest two traded prices of the common stock during the 25 trading days prior to the conversion date. Note is currently in default with interest rate increased to 24%.

 

 

68,686

 

 

 

112,000

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  April 17, 2018, bearing interest of 8% annually, payable on October 17, 2018, convertible to common stock at $15. Note is currently in default with interest rate increased to 24%.

 

 

67,916

 

 

 

75,000

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  April 20, 2018, bearing interest of 12% annually, payable on April 20, 2019, convertible to common stock at a discount of 50% of the average closing bid of the common stock during the 10 trading days prior to the conversion date. Note is currently in default.

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  April 30, 2018, bearing interest of 12% annually, payable on April 30, 2019, convertible to common stock at a discount of 50% of the average closing bid of the common stock during the 10 trading days prior to the conversion date. Note is currently in default.

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  January 5, 2018, bearing interest of 10% annually, payable on July 5, 2018, convertible to common stock at a discount of 25% of the average of 5 lowest traded prices of the common stock during the 10 trading days prior to the conversion date. Note is currently in default.

 

 

37,616

 

 

 

37,616

 

 

 

 

 

 

 

 

 

 

Promissory note,  dated  November 14, 2018, bearing interest of 14% annually, payable on August 30, 2019, convertible to common stock at a discount of 45% of the one lowest traded price of the common stock during the 25 trading days prior to the conversion date.

 

 

-

 

 

 

40,000

 

 

 

 

 

 

 

 

 

 

Convertible notes before debt discount

 

 

324,058

 

 

 

464,112

 

 

 

 

 

 

 

 

 

 

Less debt discount

 

 

(18,082)

 

 

(65,001)

 

 

 

 

 

 

 

 

 

Total outstanding convertible notes payable

 

$305,976

 

 

 

399,111

 

During the six months ended June 30, 2019, the Company converted on November 8, 2017. The company issued$140,054 convertible note principal and $32,589 in interest ($172,643 total 66,967,499 shares of restricted common stock for conversion of promissory notes of $410,000 and corresponding interest of $59,675.


** The promissory note conversion was executed on November 13, 2017. 8,050,000debt) into 2,001,133,771 shares of common stock to be issued for conversion(Note 5), and recorded debt discount amortization of promissory$46,919.

During the six months ended June 30, 2018, the Company received proceeds of $154,100 from convertible notes, and made repayments of $46,550, and recorded debt discount amortization of $120,811.  The Company also converted $140,055 in convertible note principal and 3,438,112$20,249 in interest ($51,300 total debt) into 15,109 shares of common stock (Note 5).

11

Table of Contents

(4)

Derivative Instruments

The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be issued for accrued interest.

Fair Valuedelivered upon settlement of Financial Instruments:

the above conversion options.

The Company's financial instruments as defined by FASB ASC 825-10-50 include cash, notes payable andCompany determined our derivative liabilities.  Derivative liabilities are recorded at fair value.  The principal balance of notes payable approximatesto be a Level 3 fair value because current interest ratesmeasurement and terms offeredused the Black-Scholes pricing model to calculate the Company for similar debt are substantially the same.


FASB ASC 820 defines fair value, establishes a framework for measuring fair value, in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observableof June 30, 2019 and December 31, 2018. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directlycould produce a significantly higher or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
11

(6)           Derivative Instruments

lower fair value measurement. The Company has afair value of each convertible note payable with elements that qualify as derivatives as the convertible note payable has variable conversion features (see note 5).

The September 30, 2017 derivative liability was valuedand warrant is estimated using the Black-Scholes valuation model.

Stock Price $0.045 
Exercise Price $0.027 
Life in Years  0.7 
Annualized Volatility  310.72%
Annual Rate of Quarterly Dividends  0.00 %
Discount Rate - Bond Equivalent Yield  0.120%
(7)             Equity

The following weighted-average assumptions were used in June 30, 2019 and December 31, 2018:

 

 

Six

Months Ended

 

 

Year

Ended

 

 

 

June 30,

2019

 

 

December 31,

2018

 

Expected term

 

0.00- 1.23 years

 

 

0.4 – 0.96 years

 

Expected average volatility

 

 

615.5%

 

 

313.6%

Expected dividend yield

 

 

-

 

 

 

-

 

Risk-free interest rate

 

1.65–2.97

 

1.28–1.76

%

The Company valued the conversion feature using the Black-Scholes valuation model. The fair value of the derivative liability for all the notes that were convertible as of June 30, 2019 and December 31, 2018 amounted to $143,678 and $336,825, respectively.

(5)

Equity

Common and Preferred Stock


The Company is authorized to issue 1,000,000,00010,000,000,000 shares of common stock and 1,000,000 shares of preferred A (each share convertible on one for one base for common stock, no voting rights), 10,000 shares of preferred A-2 convertible into four times the sum of all shares of common stock issued and outstanding with the same voting rights), 1,000,000 shares of preferred B (each share converted into 10 shares of common stock and has 10 votes for any election) and 1,000 shares of preferred C class.class (each share is not convertible and has voting rights equal to four time the sum of total common stock shares issued and outstanding plus the total number of series B, A and A-2 that are issued and outstanding.) The increase in authorized shares of common stock from 500,000,000 to 1,000,000,000 was approved by the shareholders and Board of Directors on September 27, 2017.

The increase from 1,000,000,000 to 3,000,000,000 shares was effective December 12, 2017, the increase from 3,000,000,000 to 5,000,000,000 shares was effective March 21, 2018 and the increase from 5,000,000,000 to 10,000,000,000 was effective May 17, 2018.

As of September 17, 2018, a reverse stock split in the ratio 5,000 for 1 share and the name change from X Rail Entertainment, Inc. to Las Vegas Xpress, Inc. was effective. The stock split has been retroactively reflected for all periods presented.

During the ninesix months ended SeptemberJune 30, 2017,2019, the Company issued an aggregate of 21,727,889775,000,000 shares of common stock for compensation of $77,500 valued at the conversion of $88,395 in convertible notes payable and accrued interest.stock price on grant date. During the ninesix months ended SeptemberJune 30, 20162018, the Company issued an aggregate of 200,000133,166 shares of common stock for the conversioncompensation of $5,000 of outstanding note payable.


$2,281,247.

12

Table of Contents

During the ninesix months ended SeptemberJune 30, 2017,2019, the Company issued an aggregate of 1,460,000 shares of common stock as payment for services resulting in total expense of $130,000.  During the nine months ended September 30, 2016, the Company issued an aggregate of 1,024,0002,001,133,771 shares of common stock for services and 16,791,611note or interest conversion of $172,643. During the six months ended June 30, 2018 the Company issued 15,109 shares of common stock for directors' and employee compensation resulting in an expensenote or interest conversion of $1,257,091.   


During the nine months ended September 30, 2017, the Company issued 1,200,000 shares of common stock for the exercise of warrants.  $51,300.

There were no warrants exercised during the ninesix months ended SeptemberJune 30, 2016.


2019 and 2018.

During the ninesix months ended SeptemberJune 30, 2017,2019 and 2018, the Company issued 11,620,0000 and 25,000 shares of common stock for cashservices valued at the market price of $421,000.  During$0 and $200,000 on the ninegrant date.

Warrants

The Company accounted for the issuance of Warrants in conjunction from the issuance of convertible notes as an equity instrument and recognized the warrants under the Black-Scholes valuation model based on the Company’s market share price on the grant date.

The below table summarizes warrant activity during the six months ended SeptemberJune 30, 2016,2019:

 

 

Number of

Shares

 

 

Weighted- Average Exercise Price

 

Balances as of December 31, 2018

 

 

3,426

 

 

$697

 

Granted

 

 

 

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Forfeited

 

 

1,990

 

 

 

-

 

Balances as of June 30, 2019

 

 

1,436

 

 

$750

 

The fair value of each warrant on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for warrants granted during the six months ended June 30, 2019 and 2018:

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

Exercise price

 

$750

 

 

$750

 

Expected term

 

0.66 – 1.23 years

 

 

1.91 – 2.48 years

 

Expected average volatility

 

 

629.60%

 

 

297.55%

Expected dividend yield

 

 

-

 

 

 

-

 

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2019:

Warrants Outstanding

 

 

Warrants Exercisable

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

Number

 

 

Remaining Contractual

 

 

Weighted Average

 

 

Number

 

 

Weighted Average

 

of Shares

 

 

life (in years)

 

 

Exercise Price

 

 

of Shares

 

 

Exercise Price

 

 

1,436

 

 

 

0.81

 

 

$750

 

 

 

1,436

 

 

$750

 

As of June 30, 2019, the aggregate intrinsic value of warrants outstanding was $0.14 based on the closing market price of $0.0001 on June 30, 2019.

(6)

Subsequent Events

On August 22, 2019, the Company issued 23,894,719500,000 shares of common stock for $337,500.


Duringcash.

The Company has examined events occurring subsequent to June 30, 2019 through the nine months ended September 30, 2017, the Company issued 1,880,969 shares of common stock for share exchange with certain shareholders of Las Vegas Railway Express, Inc. (LVRE). During the nine months ended September 30, 2016, the Company issued 151,885,189 shares of common stock for the shares of LVRE.

12

During the nine months ended September 30, 2017, the Company cancelled 2 shares of preferred stock series A-2 issued to Michael Barron and issued to him 4 shares of preferred stock series C. Each share of preferred stock series C is not convertible into common stock shares. Total aggregate issued shares of series C preferred stock, at any given time, have voting rights equal to four times the sum of  the total number of shares of common stock  and total number of shares of preferred stock series A, A-2 and B which aredate these financial statements were issued and outstanding at the time of voting.

Warrants

During the nine months ended September 30, 2017, the Company issued an aggregate of 7,178,000 warrants in connection with the stock purchases during the period.

During the nine months ended September 30, 2016, the Company issued 9,000,000 warrants in connection with issuances of convertible notes payable.  

(8)          Related Party Transactions

During the nine months ended September 30, 2017, the Company entered into short-term borrowings with the Allegheny Nevada Holdings Corporation (Michael A. Barron, the CEO and President of the Company, is a 100% owner and President of Allegheny Nevada Holdings Corporation), Cardio Infrared Technologies, Inc. (Wayne Bailey, the CFO of the Company, is a 100% owner and President of Cardio Infrared Technologies, Inc.) and Wanda Witoslawski ( the Chief Financial Officer of the Company) amountingdetermined there are no additional events to a total of $121,900.  The outstanding amounts accrue interest at a rate of 10% per month and are payable on demand.

During the nine months ended September 30, 2017, the Company accrued travel and office expenses of $11,716 advanced and paid by Allegheny Nevada Holdings Corporation. The amount due is to be paid in the short term and does not accrue interest.
(9)          Subsequent Events

During the month of October of 2017, the Company issued total of 255,004,333 shares of common stock as follows:
disclose.

·235,000,000 shares of common stock to management for compensation
·5,000,000 shares of common stock for cash of $50,00013
·15,000,000 shares of common stock for consulting services

·4,333 sharesTable of common stock for share exchangeContents

On November 8, 2017, the company issued total 66,967,499 shares of common stock as follows:

·20,000,000 shares of common stock to directors of the board for compensation
·46,967,499 shares of common stock for conversion of promissory notes of $410,000 and corresponding interest of $59,675

On November 1, 2017, the Company entered into a convertible promissory note agreement with Power Lending Group LTD. for total principal borrowings of $45,000.  The amounts are due nine months after the issuance of the note on August 10, 2018, and bear interest at a rate of 12% per annum.  At the option of the debt holder, beginning 180 days after the issuance of the note, the debt holder may convert the outstanding balance of the note into shares of the Company's common stock at a conversion rate equal to 58% of the average of the lowest two closing trading prices during the 15 trading day period prior to the conversion election date.
On November 13, 2017, the Company and the note holder of a promissory note dated April 30, 2008 with outstanding principal balance of $80,500, executed conversion of said note into 8,050,000 shares of common stock. The Company is to issue 3,438,112 shares of common stock for interest accrued on this note.


13

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about the Company's business, financial condition and prospects that reflect management's assumptions and beliefs based on information currently available. There can be no assurance that the expectations indicated by such forward-looking statements will be realized. If any of management's assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, X Rail Entertainment,Las Vegas Xpress, Inc.,’s actual results may differ materially from those indicated by the forward- looking statements.

The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, managements' ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry, as well as the risk factors identified in the Company'sCompany’s filings.


When used in this Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions. However, the forward-looking statements contained herein are not covered by the safe harbors created by Section 21E of the Securities Exchange Act of 1934.


The following discussion should be read in conjunction with our consolidatedcondensed financial statements and notes thereto included elsewhere herein.


Business Overview

X Rail Entertainment,

Las Vegas Xpress, Inc. is in the specialty passenger train business and has three operating divisions, Thedivisions: the X Train, currently in the planning stages, will beis an excursion railroad between metropolitan areas and resort/casino destinations,destinations: X Wine Railroads which is planned to be a rail excursion from metropolitan areas to wine regions,regions: and Club X Train, currently in the planning stages, will beis a riders membership club for X Train customers.


X Train


The X Train will be an excursion passenger rail service operated by United Rail, between Los Angeles and Las Vegas. We expect service to begin in late 2017. XREE plans to have its casino guests ride

United Rail is a related party company that will provide the exclusive train servicelocomotives, crew and to managerailcars for the host activity of its guests throughout their stay in the resort/casino. We anticipate that, in addition to the service between Los Angeles andproject. Las Vegas future X Train runs will be added in the coming years.


We expect to operate the X Train as an Amtrak train listed on the Amtrak national timetable. X TrainXpress, Inc. will provide a complete bundled package of services including ticket, rooms and transfers to & from the station and weekend events such as access to nightclubs, golf outings and restaurants. It will be scheduled as a Friday through Sunday service with passengers in Los Angeles boarding the train at Union Station and arriving at a new station to be built in Las Vegas and owned and operated by the X Train. Only the X Train will be able to use our station in Las Vegas. A typical X Train will carry 10 passenger cars and will include food service and will carry, on average 500 passengers per trip. This number can be increased by adding more cars to the route.

Our LA to Vegas business plan emanates from a regional transportation feasibility study published in 2007, which suggested that a well-run rail service between Los Angeles and Las Vegas could garner up to 30% of the approximately 12 million passengers who regularly drive between these two metropolitan areas. See: www.rtcsouthernnevada.com. We believe that with our current business plan, we would be able to break-even, on an operating basis, with approximately 20,000 riders per year.

To commence commercial service of the Las Angeles to Las Vegas route, we will need to negotiate and secure the necessary rights, equipment and facilities. These items include: securing a regularly scheduled train agreement from Amtrak to operate our excursion service on a weekly basis beginning with one round trip train per week and increasing to six round trips per week over the next several years as demand dictates, securing operating rights to run our trains over tracks owned by private railroads, obtaining the capability to operate train equipment safely and in conformity with applicable government regulations, and purchasing or leasing appropriate locomotive and passenger cars designed to move passengers over the route in comfort and securing leases on terminal facilities and passenger depots in Los Angeles and in Las Vegas. We expect the X Train to begin running in first quarter of 2018.
14

X Wine Railroad


The Company'sCompany’s X Wine Railroad service from LA Union Station to Santa Barbara California runsis planned to run on a scheduled basis, once a month on Saturdays, with individual riders (retail) as well as charters for corporate outings and special events. It began running from February 2017 to May 2017 and then again on November 4, 2017. One additional run is planned for December 2, 2017 and service is planned to run in 2018 from February to November.events (corporate). The X Wine Railroad provideswill provide a unique wine tasting experience to riders who take the train aboard special period classic railcars and an excursion to the Los Olivos wine area of Southern California. Over 250 private wineries reside in the area and the X Wine Railroad provideswill provide private access to these vineyards on an exclusive basis. Ticket prices are $369 per person, all inclusive. Since February 2017 this train has run once and the Company anticipates to continue to run this train intermittently, depending on demand. X Wine Railroad provides an all-inclusive day trip including a gourmet breakfast, wine tasting in the wineries, wine and cheese lunch at the wineries, and a gourmet dinner on the train's return trip.


The Company temporarily suspended the service until 2021 due to change in Amtrak policies.

14

Table of Contents

Club X Train


Club X Train, which is still in the planning stage, will be a one stop shop for all Las Vegas rooms, activities, tours, show tickets and packages. Las Vegas shows, hotel rooms, tours, nightclubs and attractions will all available for members of ClubXTrain.com. This will be the only site riders need to plan their Vegas vacation getaway.


We anticipate that when a customer purchases a train ticket on either the X Train (once it commences operations) or any of the X Wine Railroad excursions, such tickets will include enrollment in our Club X membership club. Members will receive points from each excursion they ride and will be provided discounts on products and services we provide. The more they ride, the more points they will receive. Club X train will be the customer's ticket within Vegas for access to nightclubs, hosted bottle service, pool parties, gentlemen's clubs and the Club X Train Crawl: a high end to visiting three nightclubs in one night. Customers will outline their desired plan for the evening and Club X Train will take care of arranging all the details. We expect to commence offering Club X Train service when the X Train commences running, currently anticipated to be first quarter of 2018.


The Company maintains offices at 9480 S Eastern Ave, Suite 205, Las Vegas, Nevada 89123.

January 2022.

Critical Accounting Policies


The preparation of our condensed financial statements and notes thereto requires management to make estimates and assumptions that affect the amounts and disclosures reported within those financial statements. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, contingencies, litigation and income taxes. Management bases its estimates and judgments on historical experiences and on various other factors believed to be reasonable under the circumstances. Actual results under circumstances and conditions different than those assumed could result in differences from the estimated amounts in the financial statements. There have been no material changes to these policies during the fiscal year.

15

Table of Contents

Results of Operations for the Three Months Ended SeptemberJune 30, 20172019 as Compared to the Three Months Ended SeptemberJune 30, 2016


2018

The following is a comparison of the results of operations for the three months ended SeptemberJune 30, 20172019 and 2016.

15

  Three months ended       
  September 30,  September 30,       
  2017  2016  $ Change  % Change 
             
Revenues $-  $-  $-   100.0%
Cost of sales  -   -   -   100.0%
Gross profit (loss)  -   -   -   100.0%
                 
Operating Expenses:                
Compensation and payroll taxes $137,569  $210,842  $(73,273)  -34.8%
Selling, general and administrative  72,429   56,213   16,216   28.8%
Professional fees  101,313   48,094   53,219   110.7%
  Total expenses  311,311   315,149   (3,838)  -1.2%
                 
Loss from operations  (311,311)  (315,149)  3,838   -1.2%
                 
Other income (expense)                
Interest expense  (133,630)  (70,121)  (63,509)  90.6%
Derivative expense  1,764   -   1,764   -100.0%
Loss on disposition of assets  (629,270)  -   (629,270)  -100.0%
   Total other income (expense)  (761,136)  (70,121)  (691,015)  985.5%
                 
Net income (loss) from operations before provision for income taxes  (1,072,447)  (385,270)  (687,177)  178.4%
Provision for income taxes  -   -   -   0.0%
Net income (loss) $(1,072,447) $(385,270) $(687,177)  178.4%
2018.

 

 

Three months ended

 

 

 

 

 

 

 

June30,

 

 

June 30,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$-

 

 

$-

 

 

$-

 

 

 

0.0%

Cost of sales

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.0%

Gross profit (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and payroll taxes

 

$76,250

 

 

$272,497

 

 

$(196,247)

 

 

-72.0%

Selling, general and administrative

 

 

8,826

 

 

 

82,570

 

 

 

(73,744)

 

 

-89.3%

Professional fees

 

 

59,154

 

 

 

315,270

 

 

 

(256,116)

 

 

-81.2%

Total expenses

 

 

144,230

 

 

 

670,337

 

 

 

(526,107)

 

 

-78.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(144,230)

 

 

(670,337)

 

 

526,107

 

 

 

-78.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess derivative liability expense

 

 

-

 

 

 

(60,801)

 

 

60,801

 

 

 

0.0%

Interest expense

 

 

(28,210)

 

 

(612,937)

 

 

584,727

 

 

 

-95.4%

Gain (loss) on change in value of derivative liability

 

 

52,767

 

 

 

630,403

 

 

 

(577,636)

 

 

-91.6%

Total other income (expense)

 

 

24,557

 

 

 

(43,335)

 

 

67,892

 

 

 

-156.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from operations before provision for income taxes

 

 

(119,673)

 

 

(713,672)

 

 

593,999

 

 

 

-83.2%

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.0%

Net income (loss)

 

$(119,673)

 

$(713,672)

 

$593,999

 

 

 

-83.2%

Revenue

During the three months ended June 30, 2019 and 2018, the Company didn’t generate any revenue, since it temporarily discontinued its operation of the X Wine Railroad. The Company plans to reestablish the service in 2021.

Operating Expenses


Compensation expense decreased by $73,273,$196,247, or 34.8%72.0%, during the quarterthree months ended SeptemberJune 30, 20172019 as compared to the quarterthree months ended SeptemberJune 30, 2016.2018. The decrease in compensation expense was primarily due to fewer employees.lower payroll in 2019 and issuances of stock to management in 2018. Selling, general and administrative expenses increaseddecreased by $16,216,$73,744, or 28.8%89.3%, during the quarterthree months ended SeptemberJune 30, 20172019 as compared to the same period in 20162018 primarily due to increasedecrease in travel and office expenses. Professional fees increaseddecreased by $53,219,$256,116, or 110.7%81.2%, during 20172019 as compared to 20162018 due primarily to increasesdecreases in consulting services and accounting expenses.  

services.

Other (Expense) Income

Interest expense increaseddecreased by $63,509,$584,727, or 90.6%95.4%, during the quarter ended SeptemberJune 30, 20172019 as compared to the same period in 20162018 due to issuances of certainlower convertible promissory notes.notes in 2019. During the three months ended SeptemberJune 30, 2017, the Company expensed the carrying2019, change in fair value of 10 rail cars of $629,270 as they were repossessedderivative liability decreased by the rail yard storage facility for unpaid storage charges.

$577,636 or 91.6%.

16

Table of Contents

Results of Operations for the NineSix Months Ended SeptemberJune 30, 20172019 as Compared to the NineSix Months Ended SeptemberJune 30, 2016

2018

The following is a comparison of the results of operations for the ninesix months ended SeptemberJune 30, 20172019 and 2016.

16


             
  Nine months ended       
  September 30,  September 30,       
  2017  2016  $ Change  % Change 
             
Revenues $32,259  $-  $32,259   100.0%
Cost of sales  (46,051)  -   (46,051)  100.0%
Gross profit (loss)  (13,792)  -   (13,792)  100.0%
                 
Operating Expenses:                
Compensation and payroll taxes $391,274  $1,702,480  $(1,311,206)  -77.0%
Selling, general and administrative  272,977   162,238   110,739   68.3%
Professional fees  565,438   188,681   376,757   199.7%
  Total expenses  1,229,689   2,053,399   (823,710)  -40.1%
                 
Loss from operations  (1,243,481)  (2,053,399)  809,918   -39.4%
                 
Other income (expense)                
Interest expense  (727,727)  (89,019)  (638,708)  717.5%
Derivative expense  (7,789)  -   (7,789)  -100.0%
Loss on disposition of assets  (629,270)  -   (629,270)  -100.0%
   Total other income (expense)  (1,364,786)  (89,019)  (1,275,767)  1433.1%
                 
Net income (loss) from operations before provision for income taxes  (2,608,267)  (2,142,418)  (465,849)  21.7%
Provision for income taxes  -   -   -   0.0%
Net income (loss) $(2,608,267) $(2,142,418) $(465,849)  21.7%

2018.

 

 

Six months ended

 

 

 

 

 

 

 

June30,

 

 

June 30,

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

$ Change

 

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$-

 

 

$13,145

 

 

$(13,145)

 

 

-100.0%

Cost of sales

 

 

-

 

 

 

(8,754)

 

 

8,754

 

 

 

-100.0%

Gross profit (loss)

 

 

-

 

 

 

4,391

 

 

 

(4,391)

 

 

-100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and payroll taxes

 

$230,000

 

 

$2,618,747

 

 

$(2,388,747)

 

 

-91.2%

Selling, general and administrative

 

 

33,151

 

 

 

125,467

 

 

 

(92,316)

 

 

-73.6%

Professional fees

 

 

102,453

 

 

 

431,849

 

 

 

(329,396)

 

 

-76.3%

Total expenses

 

 

365,604

 

 

 

3,176,063

 

 

 

(2,810,459)

 

 

-88.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(365,604)

 

 

(3,171,672)

 

 

2,806,068

 

 

 

-88.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess derivative liability expense

 

 

-

 

 

 

(60,801)

 

 

60,801

 

 

 

-100.0%

Interest expense

 

 

(80,173)

 

 

(679,095)

 

 

598,922

 

 

 

-88.2%

Gain (loss) on change in value of derivative liability

 

 

136,985

 

 

 

1,141,640

 

 

 

(1,004,655)

 

 

-88.0%

Total other income (expense)

 

 

56,812

 

 

 

401,744

 

 

 

(344,932)

 

 

-85.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from operations before provision for income taxes

 

 

(308,792)

 

 

(2,769,928)

 

 

2,461,136

 

 

 

-88.9%

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income (loss)

 

$(308,792)

 

$(2,769,928)

 

$2,461,136

 

 

 

-88.9%

Revenue


Revenue increased by $32,259, or 100% during

During the ninesix months ended September 30,2017 asJune 30, 2019, the Company starteddidn’t generate any revenue, since it temporarily discontinued its operation running aof the wine train. During the six months ended June 30, 2018, the Company generated some revenue from operating the wine train between Los Angeles andin Santa Barbara, CA. Revenue was generated from selling train tickets, food and beverage and wine tours.


Cost of Sales

Cost of sales increased by $46,051, or 100% during The Company plans to reestablish the nine months ended September 30, 2017, which represents costs of operating the wine train.

service in 2021.

Operating Expenses


Compensation expense decreased by $1,311,206,$2,388,747, or 77.0%91.2%, during the ninesix months ended SeptemberJune 30, 20162019 as compared to the ninesix months ended SeptemberJune 30, 2016.2018. The decrease in compensation expense during the nine months ended September 30, 2017 iswas primarily due to the issuanceissuances of stock compensation to employees and Board members resultingmanagement in additional expenses in 2016.2018. Selling, general and administrative expenses increaseddecreased by $110,739,$92,316, or 68.3%73.6%, during the ninesix months ended SeptemberJune 30, 20172019 as compared to the same period in 20162018 primarily due to increasedecrease in travel and office expenses. Professional fees increaseddecreased by $376,757,$329,396, or 199.7%76.3%, during 20172019 as compared to 20162018 due primarily to increasesdecreases in professionalconsulting services.


Other (Expense) Income

Interest expense increaseddecreased by $638,708, or717.5%$598,922, or 82.2%, during the ninesix months ended SeptemberJune 30, 20172019 as compared to the same period in 20162018 due to issuances of promissory notes and accruing interest.lower debt. During the ninesix months ended SeptemberJune 30, 2017, the Company expensed the carrying2019, change in fair value of 10 rail cars of $629,270 as they were repossessedderivative liability decreased by the rail yard storage facility for unpaid storage charges.

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$1,004,655 or 88.0%.

Liquidity and Capital Resources


Liquidity is the ability of a company to generate funds to support asset growth, satisfy disbursement needs, maintain reserve requirements and otherwise operate on an ongoing basis. The Company has limited operating revenues and is currently dependent on debt financing and sale of equity to fund operations.

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As shown in the accompanying financial statements, the Company has a net lossesloss of $1,072,447$308,792 for the threesix months ended SeptemberJune 30, 20172019, and $2,608,267a net loss of $2,769,928 for the ninesix months ended SeptemberJune 30, 2017.2018. The Company also has an accumulated deficit of $10,547,428$23,128,739 and a negative working capital of $1,094,242$3,495,849 as of SeptemberJune 30, 2017, as well as2019, which includes outstanding convertible notes payable of $509,600, before debt discount of $205,224.$324,058. Management believes that it will need additional equity or debt financing to be able to implement its business plan. Given the lack of significant revenue, capital deficiency and negative working capital, there is substantial doubt about the Company'sCompany’s ability to continue as a going concern.


We believe that the successful growth and operation of our business is dependent upon our ability to do the following:

·

obtain adequate sources of debt or equity financing to acquire existing passenger rail operations; and

·

manage or control working capital requirements by controlling operating expenses.

Management is attempting to raise additional equity and debt to acquire several operating passenger rail operations which will sustain operations until it can market its services and achieves profitability. The successful outcome of future activities cannot be determined at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.

Cash Flows


Net cash used in operating activities for the ninesix months ended SeptemberJune 30, 20172019 and 20162018 were $1,535,657$77,704 and $774,397,$159,074, respectively. Cash used in operating activities for the ninesix months ended SeptemberJune 30, 20172019 and 20162018 were primarily due to net lossesloss of $2,608,267$308,792 and $2,142,418,$2,769,928, respectively. During the ninesix months ended SeptemberJune 30, 2017,2019, the net loss included significant non-cash expenses of $130,000$46,919 in debt discount amortization, $77,500 in stock issued for services, $156,330compensation, and $136,985 in amortization of discountsgain on change in derivative liability related to convertible notes payable, $88,395as well as $243,654 in conversion of notes payablechanges in operating assets and accrued interest and $499,196 in issuing warrants.liabilities. During the ninesix months ended SeptemberJune 30, 2016,2018, the net loss included significant non-cash expenses of $1,263,702$2,281,247 in stock issued for compensation, $120,811 in debt discount amortization, $200,000 in stock issued for services, $60,801 in derivative expense and $45,639$1,141,640 gain on change in amortization of discounts onderivative liability related to convertible notes payable.


Net cash usedpayable, and $400,000 in warrant expense, as well as $530,561 in changes in operating assets and liabilities.

There were no investing activities during the ninesix months ended SeptemberJune 30, 2017 amounted to $708,160, which represented writing off rail cars2019 and related costs.  Net cash used in investing activities during the nine months ended September 30, 2016 was $19,240 primarily due to the capitalized costs towards the rail cars. 

2018.

Net cash provided by financing activities for the ninesix months ended SeptemberJune 30, 20172019 amounted to $630,028,$75,021, which consisted of $19,100$1,546 in proceeds from the issuance of convertible notes payable $82,000 in repayments on convertible notes payable, $145,272and $73,475 in proceeds from related party notes payable, $53,344 in repayments on related party notes payable, $421,000 in common stock proceeds and $180,000 from exercise of warrant.payable. Net cash provided by financing activities for the ninesix months ended SeptemberJune 30, 20162018 was $562,784$102,961, which consisted of $490,000 from$154,100 in proceeds from convertible notes payable and $237,500$46,550 in repayments on convertible notes payable, as well as $5,344 from proceeds from stock purchases. There was a repayment on related party notes payable of $164,716. 


and $9,933 in repayments on related party notes.

Description of Indebtedness


For a complete description of our outstanding debt as of SeptemberJune 30, 20172019 and December 31, 2016,2018, see Notes 42 and 53 to the financial statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk


As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.


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Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures and Changes in Internal Control over Financial Reporting


Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness 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 (the "Exchange Act"“Exchange Act”) as of SeptemberJune 30, 2014.2019. In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of SeptemberJune 30, 2017,2019, our disclosure controls and procedures were not effective.


Management'sManagement’s Responsibility for Financial Statements


Our management is responsible for the integrity and objectivity of all information presented in this Quarterly Report on Form 10-Q. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and include amounts based on management'smanagement’s best estimates and judgments. Management believes the consolidated financial statements fairly reflect the form and substance of transactions and that the financial statements fairly represent the Company'sCompany’s financial position and results of operations.

Changes in Internal Control Over Financial Reporting


There were no changes during the threesix months ended SeptemberJune 30, 20172019 in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


On June 11, 2020, Michael Barron resigned as a CEO of Las Vegas Xpress, Inc. Albert Koenigsberg was appointed by the Board of Directors as a new CEO effective June 11, 2020.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations and there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries'subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.


As a "smaller“smaller reporting company"company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.


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


During the 3six months ended SeptemberJune 30, 2017,2019, the Company issued shares of its common stock as follows:


·

20,000,000 shares issued to convertible promissory notes holder for conversion of $2,000 of outstanding note payable.

·

175,750775,000,000 shares issued for share exchange.compensation valued at $77,500.
·

4,450,000

·

2,001,133,771 shares issued to investors for purchasing stock of $62,500.notes and interest conversion valued at $172,643.

The above referenced issuances were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.


Item 3. Default Upon Senior Securities


As of SeptemberJune 30, 20172019, we are not in default on any of our borrowings.


certain convertible promissory notes:

·

Promissory note dated December 20, 2017 payable on September 20, 2018 to Auctus Fund, LLC with outstanding balance of $68,686.

·

Promissory note dated January 5, 2018 payable on July 5, 2018 to GPL Ventures LLC with outstanding balance of $37,616.

·

Promissory note dated April 18, 2018 payable on October 17, 2018 to L2 Capital, LLC with outstanding balance of $67,916.

·

Promissory note dated June 2, 2017 payable on June 2, 2018 to East Shore Equities with outstanding balance of $18,260.

·

Promissory note dated September 30, 2017 payable on September 30, 2018 to Vortex Capital with outstanding balance of $12,000.

·

Promissory note dated November 27, 2017 payable on November 27, 2018 to EMA Financial, LLC with outstanding balance of $19,580.

·

Promissory note dated April 20, 2018 payable on April 20, 2019 to BGR Government Affairs with outstanding balance of $50,000.

·

Promissory note dated April 30, 2018 payable on April 30, 2019 to Albee There Too, LLC with outstanding balance of $50,000.

Item 4. Mine Safety Disclosures


Not applicable to our Company.


Item 5. Other Information.

None

Item 6.  Exhibits.

Exhibit
No.
Description
 
31.120

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Item 6. Exhibits.

Exhibit No.

Description

10.1

Resignation letter of CEO dated June 11, 2020

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002.

32.

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002


EX-101.INS

EX-101.INS

XBRL INSTANCE DOCUMENT

EX-101.SCH

XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

EX-101.CAL

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

EX-101.DEF

EX-101.DEF

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

EX-101.LAB

XBRL TAXONOMY EXTENSION LABELS LINKBASE

EX-101.PRE

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 14, 2017June 19, 2020

X Rail Entertainment,

Las Vegas Xpress, Inc.

By:

/s/ Albert Koenigsberg

Chief Executive Officer

(principal executive officer)

Date: June 19, 2020

By:

/s/ Wanda Witoslawski

Chief Financial Officer

(principal financial officer)

 
By: /s/ Michael A. Barron
Chief Executive Officer (principal executive officer)
Date: November 14, 2017
By: /s/ Wanda Witoslawski
Chief Financial Officer (principal financial officer)22
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