New Colombia Resources, Inc. (OTCMKTS:NEWC) Files An 8-K Results of Operations and Financial Condition

New Colombia Resources, Inc. (OTCMKTS:NEWC) Files An 8-K Results of Operations and Financial Condition

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Item 2.02 Results of Operations and Financial Conditions

As the Company continues to complete their Audited Year End 2015
and 2016 annual report, we would like to disclose to our
shareholders our preliminary unaudited financial information for
2015 to be included in those filings. We are also attaching the
preliminary financials for the period ending September 30, 2016.

TABLE OF CONTENTS

Page

Consolidated Balance Sheet as of December 31, 2015
(unaudited) and December 31, 2014

Consolidated Statements of Operations for the Years
Ended December 31, 2015 (unaudited) and 2014

Consolidated Statements of Stockholders Equity
(Deficit) for the Years Ended December 31, 2015 (unaudited)
and 2014

Consolidated Statements of Cash Flows for the Years
Ended December 31, 2015 (unaudited) and 2014

Notes to Consolidated Financial Statements

Quarterly Financial Statements (unaudited) and
Notes to Financial Statements

NEW COLOMBIA RESOURCES, INC.

Consolidated Balance Sheets

(Unaudited)

As of

As of

December 31,

December 31,

2015

ASSETS

(unaudited)

Current Assets

Cash and cash equivalents

$

3,209

$

1,627

Prepaid expenses and other current assets

16,067

Total Current Assets

3,209

17,694

Non-Current Assets

Equipment, net of accumulated depreciation of $6,499 and
$3,823, respectively

370,680

329,209

Investment in properties

56,344

Mining rights

100,000

100,000

Equity method investment

9,967

23,120

TOTAL ASSETS

$

483,856

$

526,367

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable and accrued liabilities

$

389,723

$

349,401

Accounts payable and accrued interest related parties

86,375

53,713

Other liability

660,000

660,000

Short-term convertible debt

352,233

281,000

Derivative liability

554,910

Total Current Liabilities

2,043,241

1,344,114

Total Liabilities

2,043,241

1,344,114

Stockholders’ Deficit:

Preferred stock, $0.001 par value (shares
authorized-20,000,000;

10,000,000 shares undesignated) Series A Convertible:
10,000,000 shares designated; 10,000,000 shares issued
and outstanding at December 31, 2015 and at December 31,
2014

10,000

10,000

Preferred stock, $0.001 par value (shares
authorized-10,000,000;

-0- shares undesignated) Series B Convertible: 10,000,000
shares designated; 2,727,990 and 2,500,492 shares issued
and outstanding at December 31, 2015 and December 31,
2014

2,728

2,500

Common stock, $0.001 par value (shares
authorized-1,000,000,000);

286,256,757 shares issued and outstanding at December 31,
2015 and 125,008,477 at December 31, 2014

286,258

125,008

Additional paid-in capital

28,185,868

26,926,947

Deficit accumulated

(30,014,702)

(27,861,165)

Total Stockholders Deficit of New Columbia
Resources, Inc.

(1,529,848)

(796,710)

Non-controlling interest

(29,537)

(21,037)

Total Stockholders Equity Deficit

(1,559,385)

(817,747)

TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIT

$

483,856

$

526,367

See accompanying notes to the consolidated financial statements

NEW COLOMBIA RESOURCES, INC.

Consolidated Statements of Operations

December 31,

December 31,

(unaudited)

Operating Expenses

Geology and engineering

$

17,130

$

38,916

Royalty expense

72,200

105,000

Depreciation expense

2,676

2,677

General and administrative

1,261,571

1,724,544

Total Operating Expenses

1,353,577

1,871,137

Loss from Operations

(1,353,578)

(1,871,137)

(Gain) loss on settlement of debt

56,010

(48,662)

Interest expense

406,653

84,798

Loss on derivatives

255,933

61,950

Other expense

(71,250)

Impairment of investment

37,944

Loss from equity investment

51,920

1,880

Net loss

$

(2,162,037)

$

(1,899,853)

Net income attributable to non-controlling interest

8,500

21,037

Net loss attributable to New Columbia Resources,
Inc.

$

(2,153,537)

$

(1,878,816)

Basic and diluted loss per share

$

(0.01)

$

(0.02)

Weighted average number of shares
outstanding-

basic and diluted

183,323,031

98,029,823

See accompanying notes to the consolidated financial statements

NEW COLOMBIA RESOURCES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
DEFICIT

Common Stock

Preferred Series A

Preferred Series B

Accumulated

Non-controlling

Shares

Amount

Shares

Amount

Shares

Amount

APIC

Deficit

Interest

Total

Balance at December 31, 2013

82,400,142

$82,400

10,000,000

$10,000

1,500,000

$1,500

$24,970,866

$(25,982,349)

$ –

$(917,583)

Stock issued for cash

38,400,001

38,400

252,100

290,500

Stock issued for conversion of debt

1,000,492

1,000

195,633

196,633

Stock-based compensation

4,208,334

4,208

1,458,348

1,462,556

Contribution of capital

50,000

50,000

Non-controlling interest

(21,037)

(21,037)

Net loss for the period

(1,878,816)

(1,878,816)

Balance at December 31, 2014

125,008,477

125,008

10,000,000

10,000

2,500,492

2,500

26,926,947

(27,861,165)

(21,037)

(817,747)

Stock issued for cash

79,706,667

79,707

151,823

231,530

Stock issued for conversion of debt

30,222,318

30,223

29,483

59,706

Conversion of preferred stock

39,896,667

39,897

(2,573,000)

(2,573)

(37,324)

Additional preferred stock issued on settlement of debt

2,800,498

2,800

53,211

56,011

Stock-based compensation

11,422,628

11,423

979,570

990,993

Settlement of derivative liabilities

62,997

62,997

Contribution of capital

19,162

19,162

Non-controlling interest

(8,500)

(8,500)

Net loss for the period

(2,153,537)

(2,100,573)

Balance at December 31, 2015 (unaudited)

286,256,757

$286,258

10,000,000

$10,000

2,727,990

$2,727

$28,185,793

$(29,961,738)

$(29,537)

$(1,559,385)

See accompanying notes to the consolidated financial statements

NEW COLOMBIA RESOURCES, INC.

Consolidated Statements of Cash Flows

December 31,

December 31,

Cash Flows from Operating Activities

(unaudited)

Net loss attributable to NEWC

$

(2,153,537)

$

(1,878,816)

Non-controlling interest

(8,500)

(21,037)

Net loss for the period

(2,162,037)

(1,899,853)

Adjustments to reconcile net loss to net cash

used in operating activities:

Stock issued for compensation

990,993

863,468

Option expenses

599,088

Depreciation expense

2,676

2,677

Loss from equity investment

51,920

1,880

Loss on settlement of debt

56,011

Gain) on settlement of make whole liability and/or debt

(48,662)

(Gain) loss on derivative liability

255,933

(71,250)

Amortization of discount on convertible debenture

351,492

71,250

Royalty expense

105,000

Penalty upon loan default

16,070

61,950

Impairment expense

37,944

Changes in operating assets and liabilities:

Prepaid expenses

(15,705)

Other receivables

3,500

Accounts payable and accrued expenses

92,334

10,493

Accrued expenses and interestrelated party

(37,496)

Net cash used in operating activities

(306,664)

(353,660)

Cash Flows from Investing Activities

Cash paid for investment in properties

(5,000)

(37,968)

Cash investment in subsidiary-Sannabis SAS

(38,766)

(25,000)

Purchase of fixed assets

(4,680)

(50,532)

Net cash used in investing activities

(48,446)

(113,500)

Cash Flows from Financing Activities

Payments on convertible debentures

(24,000)

(199,616)

Proceeds received on notes payable

130,000

327,903

Issuance of shares for cash

231,530

290,500

Contribution

19,162

50,000

Net cash provided by financing
activities

356,692

223,750

Increase (Decrease) in Cash and Cash
Equivalents

1,582

1,627

Cash and Cash Equivalents–Beginning of
Period

1,627

Cash and Cash Equivalents–End of Period

$

3,209

$

1,627

Supplemental Disclosures of Cash Flow
Information

Cash paid for interest

$

$

Cash paid for income taxes

$

$

Non-Cash Investing and Financing
Activities

Reclass to fixed asset from investment

$

(23,400)

$

Reclass from make whole liability to other liability

$

$

555,000

Loan proceeds paid directly to service providers

$

$

96,097

Common stock issued for conversion of preferred stock

$

39,897

$

Preferred stock issued for accrued expenses related
parties

$

$

143,932

Preferred stock issued for accounts payable and accruals

$

$

52,700

Reclass to equipment from prepaid expenses

$

16,067

$

Debt discount from derivative liabilities

$

361,974

$

71,250

Debt conversion to common stock

$

55,355

$

Payable for equipment

$

$

270,000

Settlement of derivative liabilities through conversion

$

62,997

$

See the accompanying notes to the consolidated financial
statements

NEW COLOMBIA RESOURCES, INC.

Notes to the Consolidated Financial Statements
(unaudited)

NOTE 1ORGANIZATION AND HISTORY

New Colombia Resources Inc. (New Colombia or the Company) is
focused on the acquisition and development of high quality
metallurgical coal properties in Colombia, considered one of
the most attractive emerging markets. According to World Bank
Estimates there is an estimated US$378 billion in gross
domestic product in 2013, it became the third largest economy
in Latin America and is growing 4% to 6% per year. Colombia has
the largest coal reserves in Latin America and is the fourth
largest coal producer in the world. Total coal production
decreased by 4% in 2013 to 85.5 million tonnes. Coal producers
aim to increase coal output in 2014. Colombia privatized its
coal sector in 2004 and is committed to investing in
infrastructure to support increased mining.

Effective March 3, 2014, the Company was granted a 51% interest
in the Colombian mining company Compaa Minera San Jose Ltda.
(Cia Minera San Jose Ltda.) for no consideration, but, for the
proportionate share assumption of future and subsequent
liability for the expenses and obligations of Cia Minera San
Jose Ltda. The Company is required to present the consolidated
net income and the portion of the consolidated net income
allocable to the non-controlling interests and to the
stockholders of the Company separately in its consolidated
statements of operations. Losses applicable to the
non-controlling interests are allocated to the non-controlling
interests even when those losses are in excess of the
non-controlling interests investment basis. The Company is also
required to report its non-controlling interests as a separate
component of equity.

Effective December 1, 2014, the Company acquired 50% of
ownership interest in Sannabis SAS, a Colombian entity, for a
consideration of $25,000. The Company agreed to a total
contribution of $125,000 for the 50% ownership. As of December
31, 2014, the Company had only contributed $25,000. The Company
agreed to the acceptance of the ownership, receiving 50%,
ownership of Sannabis SAS. New Colombia will account for its
investment in Sannabis SAS as an equity method investment. As
of December 31, 2015, the Companys investment is $9,967.

The Company has reviewed the relationship between the Company
and Sannabis SAS, and has determined that the Company has
various interests in Sannabis SAS and Sannbis SAS is variable
interest entities (VIE) as defined in ASC 810
Consolidation. In fact, the Company is not primary
beneficiary as defined in ASC 810 Consolidation;
hence, the Company has not included the accounts of Sannabis
SAS in the consolidated financial statements as of and for the
year ended December 31, 2015.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Basis of Presentation

The Company prepares its financial statements in accordance
with accounting principles generally accepted in the United
States of America. The Companys fiscal years 2015 and 2014
ended on December 31, 2015 and December 31, 2014.

Consolidation

The accompanying consolidated financial statements represent
the consolidated operations of New Colombia Resources, Inc. and
its wholly-owned subsidiary, Compaa Minera San Jose, Ltda.
Intercompany balances and transactions have been eliminated in
consolidation.

Development Stage

The Company has limited operations and is considered to be in
the development stage. During the year ended December 31, 2015,
the Company has elected to early adopt Accounting Standards
Update No. 2014-10, Development Stage Entities (Topic 915):
Elimination of Certain Financial Reporting Requirements. The
adoption of this ASU allows the company to remove the inception
to date information and all references to development stage.

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
(GAAP) requires management to make estimates and assumptions
that affect (i) the reported amounts of assets and liabilities,
(ii) the disclosure of contingent assets and liabilities known
to exist as of the date the consolidated financial statements
are published, and (iii) the reported amount of net sales and
expenses recognized during the periods presented. Adjustments
made with respect to the use of estimates often relate to
improved information not previously available. Uncertainties
with respect to such estimates and assumptions are inherent in
the preparation of consolidated financial statements;
accordingly, actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an
original maturity of one year or less to be cash equivalents.
Cash equivalents include cash on hand and cash in the bank.

Property, Plant, Equipment, Depreciation, Amortization
and Long-Lived Assets

Long-lived assets include:

Property, plant and equipment Assets acquired in the normal
course of business are recorded at original cost and may be
adjusted for any additional significant improvements after
purchase. We depreciate the cost evenly over the assets
estimated useful lives. Upon retirement or sale, the cost of
the assets disposed of and the related accumulated depreciation
are removed from the accounts, with any resultant gain or loss
being recognized as a component of other income or expense.

Identifiable intangible assets These assets are recorded at
acquisition cost. Intangible assets with finite lives are
amortized evenly over their estimated useful lives.

At least annually, we review all long-lived assets for
impairment. When necessary, we record changes for impairments
of long-lived assets for the amount by which the present value
of future cash flows, or some other fair value measure, is less
than the carrying value of these assets.

Impairment of Long-Lived Assets

Management of the Company will periodically review the net
carrying value of its properties on a property-by-property
basis. These reviews will consider the net realizable value of
each property to determine whether a permanent impairment in
value has occurred and the need for any asset write-down. An
impairment loss will be recognized when the estimated future
cash flows (undiscounted and without interest) expected to
result from the use of an asset are less than the carrying
amount of the asset. Measurement of an impairment loss will be
based on the estimated fair value of the asset if the asset is
expected to be held and used.

Although management will make its best estimate of the factors
that affect net realizable value based on current conditions,
it is reasonably possible that changes could occur in the
near-term which could adversely affect management’s estimate
of net cash flows expected to be generated from its assets, and
necessitate asset impairment write-downs.

No impairment loss recognized on fair value of its mining
rights for the years ended December 31, 2014.

Impairment loss of $32,944 has been recognized on fair value of
its investment in mining farm for the years ended December 31,
2015.

Asset Retirement Obligations

The Company plans to recognize liabilities for statutory,
contractual or legal obligations, including those associated
with the reclamation of properties and any plant and equipment,
when those obligations result from the acquisition,
construction, development or normal operation of the assets.
Initially, a liability for an asset retirement obligation will
be recognized at its fair value in the period in which it is
incurred. Upon initial recognition of the liability, the
corresponding asset retirement cost will be added to the
carrying amount of the related asset and the cost will be
amortized as an expense over the economic life of the asset
using either the unit-of-production method or the straight-line
method, as appropriate. Following the initial recognition of
the asset retirement obligation, the carrying amount of the
liability will be increased for the passage of time and
adjusted for changes to the amount or timing of the underlying
cash flows needed to settle the obligation. As of December 31,
2015, the Company had not begun development activities, and
therefore, did not record a liability.

Foreign Currency

The financial statements of the Companys subsidiary in
Colombia, for which the functional currency is the local
currency, the Colombian Peso, are translated into the reporting
currency, U.S. dollars, using the exchange rate at the balance
sheet date for all assets and liabilities. The capital accounts
are translated at historical exchange rates prevailing at the
time of the transactions, while income and expenses items are
translated at the average exchange rate for the period. Gain or
losses from foreign currency transactions are recognized in
income.

Equity Method Investment

The investment consists of a 50% ownership interest in Sannabis
SAS, a Colombian company. In accordance with U.S. GAAP, we have
adopted the equity method of accounting. Under the equity
method of accounting, the Company records the investment at
cost. The Companys investment in the entity is increased by
additional contributions to the entity as well as its
proportionate share of earnings in the entity. Conversely, the
Companys investment is decreased by distributions made by the
Company and by its proportionate share of losses.

Income Taxes

The Company has adopted Accounting Standards Codification
Subtopic 740-10, Income Taxes (ASC 740-10). ASC 740-10 requires
the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined
based on the difference between financial statements and tax
basis of assets and liabilities, using enacted tax rates in
effect for the year in which the differences are expected to
reverse. Valuation allowances are established, when necessary,
to reduce deferred tax assets to amounts that are expected to
be realized.

Concentration of Credit Risk

The Company maintains its operating cash balances in banks in
Florida. The Federal Deposit Insurance Corporation (FDIC)
insures accounts at each institution up to $250,000.

Share-Based Compensation

The Company applies Topic 718 Share-Based Payments (Topic 718)
to share-based compensation, which requires the measurement of
the cost of services received in exchange for an award of an
equity instrument based on the grant-date fair value of the
award. Compensation cost is recognized when the event occurs.
The Black-Scholes option-pricing model is used to estimate the
fair value of options granted.

The Company accounts for equity-based transactions with
non-employees under the provisions of ASC Topic No. 505-50,
Equity-Based Payments to Non-Employees (Topic No. 505-50).
Topic No. 505-50 establishes that equity-based payment
transactions with non-employees shall be measured at the fair
value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably
measurable.

Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss by the
weighted average number of common shares outstanding during the
period. The weighted average number of shares was calculated by
taking the number of shares outstanding and weighting them by
the amount of time that they were outstanding. Diluted net loss
per share for the Company is the same as basic net loss per
share, as the inclusion of common stock equivalents would be
antidilutive. As of December 31, 2015, there were a total of
425,183,524 dilutive shares from convertible Series A preferred
stock, convertible Series B preferred stock, convertible debt
and employee stock options.

Fair Value of Financial Instruments

The Companys financial instruments consist primarily of cash,
affiliate receivable, settlement receivable, accounts payable
and accrued expenses and debt. 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. The estimated fair
value is not necessarily indicative of the amounts the Company
would realize in a current market exchange, or from future
earnings, or cash flows.

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 disclosure 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
measurements.

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

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

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

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

Reclassifications

Certain prior year amounts have been reclassified to conform to
the current period presentation for comparative purposes.

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred. Costs of
acquisition and option costs of mineral rights are capitalized
upon acquisition. Mine development costs incurred to develop
new deposits, to expand the capacity of mines, or to develop
mine areas substantially in advance of current production are
also capitalized once proven and probable reserves exist and
the property is determined to be a commercially mineable
property. Costs incurred to maintain current production or to
maintain assets on a standby basis are charged to operations.
If we do not continue with exploration after the completion of
the feasibility study, the cost of mineral rights will be
expensed at that time. Costs of abandoned projects are charged
to mining costs, including related property and equipment
costs. To determine if capitalized costs are in excess of their
recoverable amount, periodic evaluation of the carrying value
of capitalized costs and any related property and equipment
costs are performed based upon expected future cash flows
and/or estimated salvage value.

Non-Controlling Interest

We are required to report our non-controlling interest as a
separate component of shareholders deficit. We are also
required to present the consolidated net income and the portion
of the consolidated net income allocable to the non-controlling
interest and to our shareholders separately in our consolidated
statements of operations. Losses applicable to the
non-controlling interest are allocated to the non-controlling
interest even when those losses are in excess of the
non-controlling interests investment basis.

Recent Accounting Pronouncements

The Company has limited operations and is considered to be in
the development stage. During the year ended December 31, 2014,
the Company has elected to early adopt Accounting Standards
Update No. 2014-10, Development Stage Entities (Topic 915):
Elimination of Certain Financial Reporting Requirements. The
adoption of this ASU allows the company to remove the inception
to date information and all references to development stage.

In August 2014, the FASB issued an ASU requiring, when
applicable, disclosures regarding uncertainties about an
entitys ability to continue as a going concern. During the
preparation of quarterly and annual financial statements,
management should evaluate whether conditions or events exist
that raise substantial doubt about the entitys ability to
continue as a going concern within one year after the date the
financial statements are issued. If this evaluation indicates
that it is probable that an entity will be unable to meet its
obligations when they become due within one year of the
financial statement issuance date, management must evaluate
whether its mitigation plans will alleviate the substantial
doubt of continuing as a going concern. If substantial doubt
exists, regardless of whether the mitigation plan alleviates
the concern, additional disclosures are required in the
financial statements addressing the conditions or events that
raise substantial doubt, managements evaluation of the
significance of those conditions or events, and managements
mitigation plans. This new guidance will become effective for
the Company for all reporting periods beginning in 2016. Early
application is permitted. The Companys management currently
does not expect that this new guidance will have a significant
effect on its consolidated financial statements when adopted.

NOTE 3ACQUISITION OF INTEREST IN A
SUBSIDIARY

On February 24, 2011, the Company acquired La Tabaquera, a
Colombian mine, and the associated asset, Concession Contract
No. IE-09551 from Erasmo Almanza, granted for the Exploration
and Exploitation of a Carbon Mineral and other Grantable
Mineral Deposits by the Colombian Institute of Geology and
Mining for a period of 4 – 30 years.

Under the agreement, the Company issued 5,606,410 shares of
common stock and agreed to pay the owner $100,000 in cash. Due
to the lack of an active market for the Companys common shares,
the Company determined the fair value of the common stock was
$0 on the acquisition date. As of December 31, 2014, $78,484 of
the cash payment had been paid, with the remaining $21,516
still owed and included in accounts payable and accrued
expenses in the consolidated balance sheet. The $21,516 has no
specific terms of repayment and is unsecured. The Company
expects to pay the remaining amount upon receipt of future
funding. If the amounts are not paid, the Company may have to
re-negotiate with the seller.

On March 3, 2014, the Company was granted a 51% interest in the
Columbian mining entity, Compania Minera San Jose Ltda. (Cia
Minera San Jose Ltda.) for no consideration, but, assumption of
future liabilities and expenses for which Cia Minera San Jose
Ltda. would incur. The Company agreed to the acceptance of the
ownership, receiving 51%, or 6,120 shares, of the common stock
of Cia San Jose Ltda., consolidating the assets and
liabilities, of the Cia Minera San Jose Ltda. as a subsidiary,
reporting non-controlling interest as a separate component of
shareholders deficit and allocating the portion of consolidated
net income allocable to non-controlling interest separately in
the Companys consolidated statement of operations.

NOTE 4GOING CONCERN

As shown in the accompanying consolidated financial statements,
the Company incurred net losses of $2,162,037 and $1,899,853
for the years ended December 31, 2015, and 2014, respectively,
and had a working capital deficit of $2,040,033 as of December
31, 2015. These conditions raise substantial doubt as to the
Companys ability to continue as a going concern. The financial
statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.

Management’s plan in this regard includes raising additional
cash from current and potential stockholders and lenders,
making strategic acquisitions, and increasing the marketing of
its products and services. The Company has no current
arrangements with respect to any additional financing.
Consequently, there can be no assurance that any future
financing will be available to the Company when needed, and on
commercially reasonable terms. The Company’s inability to
derive sufficient revenues from the sale of its products, or
obtain additional financing when needed, would have a material
adverse effect on the Company, requiring the Company to curtail
or cease operations. In addition, any equity financing may
involve substantial dilution to the Company’s then current
stockholders.

NOTE 5INVESTMENT

Effective December 1, 2014, the Company acquired 50% of
ownership interest in Sannabis SAS, a Colombian entity, for
consideration of $25,000. The Company agreed to a total
contribution of $125,000 for the 50% ownership. As of December
31, 2014, the Company had only contributed $25,000. The Company
agreed to the acceptance of the ownership, receiving 50%,
ownership of Sannabis SAS.

In accordance with U.S GAAP, we have adopted the equity method
of accounting. Under the equity method of accounting, the
Company records the investment at cost. The Companys investment
in the entity is increased by additional contributions to the
entity as well as its proportionate share of earnings in the
entity. Conversely, the Companys investment is decreased by
distributions made by the Company and by its proportionate
share of losses. As of December 31, 2015 the Companys
proportionate share of losses in the investment is $11,588.
During the year ended December 31, 2015, the Company has made
additional contribution of $38,766 to maintain 50% of ownership
interest, and recognized a loss of impairment on the investment
of $40,331. As of December 31, 2015, the Companys investment in
Sannabis SAS is $9,967.

NOTE 6DEBT

Third Party Notes Payable

Debt Instrument Summary

Principle

Accrued Interest

Dec 31, 2015

Dec 31, 2014

Dec 31, 2015

Dec 31, 2014

Auctus Convertible (1)

$

23,250

$

32,250

$

5,449

$

1,103

KBM Worldwide Convertible 2)

26,250

37,500

5,271

Bold Leego Convertible (3)

27,820

50,000

3,669

Auctus Convertible (4)

39,395

55,250

1,436

KBM Worldwide Convertible (5)

43,000

43,000

6,081

LG Capital (6)

58,000

63,000

6,784

KBM Worldwide Convertible (7)

54,000

5,199

LG Capital (8)

26,500

1,260

Debt discount (8)

(1,500)

Debt discount- Derivative (8)

(10,482)

Auctus Convertible (9)

73,750

3,556

Debt discount (9)

(7,750)

$

352,233

$

281,000

$

38,705

$

3,968

(1) On July 28, 2014, the Company issued a convertible
promissory note to a third party in the amount of $32,250. The
note accrues interest at the rate of 8% per annum and has a
maturity date of April 28, 2015. The default interest rate is
22%. The note is convertible after 180 days from the date of
issuance at 55% of the average lowest two-day trading price of
common stock during the 25 days preceding the date of
conversion. Loan proceeds amounting to $5,250 were paid
directly to service providers. On January 24, 2015, the loan
became convertible and a related derivative liability was
recorded (See Note 9). During 2015, the Company repaid $9,000
of the principle amount of the note.

(2) On September 5, 2014, the Company issued a convertible
promissory note to a third party in the amount of $37,500. The
note accrues interest at the rate of 8% per annum and has a
maturity date of June 9, 2014. The note is convertible after
180 days from the date of issuance at 55% of the average lowest
three-day trading price of common stock during the 10 days
preceding the date of conversion. Loan proceeds amounting to
$11,000 were paid directly to service providers. On March 4,
2015, the loan became convertible and a related derivative
liability was recorded (See Note 9). Starting on April 30,
2015, the Company is in default under this Note. The principal
amount was increased by 50% for the amount of $12,750 and a
related derivative liability was recorded. During 2015, the
third party exercised the conversion option in connection with
$24,000 of the amount owed under the note. (See Note 7). During
2016, the Company has settled the note with full repayment.

(3) On September 18, 2014, the Company issued a convertible
promissory note to a third party in the total amount of
$50,000. The note accrues interest at the rate of 8% per annum
and has a maturity date of September 24, 2015. The note is
convertible into common stock at discount of 50% at maturity.
Loan proceeds amounting to $2,500 were paid directly to service
providers in 2014. On March 25, 2015, the loan became
convertible, and the Company is in default due to not issuing
shares upon conversion on time under this Note. Related
derivative liability was recorded (See Note 9). The principal
amount was increased by $3,320 and a related derivative
liability was recorded. The third party converted $25,500 of
the principal amount of the note into the Companys common
stock.

(4) On December 19, 2014, the Company issued a convertible
redeemable note to a third party in the amount of $55,250. The
note accrues interest at the rate of 8% per annum and has a
maturity of nine months. The note is convertible after 180 days
from the date of issuance at 55% of the lowest two trading
price of common stock during the 25 days preceding the date of
conversion. Loan proceeds amounting to $5,250 were paid
directly to the investors counsel for transaction preparation
in 2014. On June 17, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9). During
2015, the Company repaid $15,000 of the principle amount of the
note and the third party exercised the conversion option in
connection with $855 of the amount owed under the note. (See
Note 7)

(5) On November 17, 2014, the Company issued a convertible
redeemable note to a third party in the amount of $43,000. The
note accrues interest at the rate of 8% per annum and has a
maturity of nine months. The note is convertible after 180 days
from the date of issuance at 55% of the lowest three trading
price of common stock during the 10 days preceding the date of
conversion. Loan proceeds amounting to $10,500 were paid
directly to the investors counsel for transaction preparation
in 2014. On May 16, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9).

(6) On November 5, 2014, the Company entered into a securities
purchase agreement with a third party, whereby the Company
shall issue an 8% convertible note in an aggregate principal
amount of $63,000, convertible into shares of common stock of
the Company. The note shall accrue interest at a rate of 8% per
annum, commencing on November 5, 2014. The third party, at
their option, any time after 180 days after full payment of the
agreed upon cash, may convert all or any amount of the
principal face amount of the note into shares of the Companys
common stock at a price equal to 55% of the lowest trading
price of the Companys common stock on the national Quotations
Bureau (OTCQB) exchange or any exchange upon which the Companys
stock is traded, for the twenty prior trading days, including
the day upon which notice of conversion is received by the
Company. On May 4, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9). During
2015, the third party exercised the conversion option in
connection with $5,000 of the amount owed under the note. (See
Note 7)

(7) On January 29, 2015, the Company issued a convertible
promissory note to a third party in the amount of $54,000. The
note accrues interest at the rate of 8% per annum and has a
maturity date of November 2, 2015. The note is convertible
after 180 days from the date of issuance at 55% of the average
of the lowest three-day trading price of the common stock
during the 10 days preceding the date of conversion. Loan
proceeds amounting to $15,000 were paid directly to services
providers at the time of issuance. On July 28, 2015, the loan
became convertible and a related derivative liability was
recorded (See Note 9).

(8) On May 28, 2015, the Company issued a convertible
promissory note to a third party in the amount of $26,500, and
the Company received $25,000 in cash, including an additional
$1,500 paid for debt issuance cost.. The note accrues interest
at the rate of 8% per annum and has a maturity date of May21,
2016. The note is convertible after 180 days from the date of
issuance at 55% of the average of the lowest three-day trading
price of the common stock during the 20 days preceding the date
of conversion. On July 28, 2015, the loan became convertible
and a related derivative liability was recorded (See Note 9).

(9) On July 8, 2015, the Company issued a convertible
promissory note to a third party in the amount of $73,750, the
Company received $66,000 in cash, including an additional
$7,750 paid for debt issuance cost.. The note accrues interest
at the rate of 8% per annum and has a maturity date of April 8,
2016. The note is convertible after 180 days from the date of
issuance at 55% of the average of the lowest three-day trading
price of the common stock during the 25 days preceding the date
of conversion.

Related Party Notes Payable

On April 14, 2008, the Company signed a loan agreement in which
it borrowed an aggregate of $328,000 from Ararat, LLC. The note
originally matured on December 31, 2012 and carried a 10%
interest rate. On November 14, 2012, the Company restructured
the debt into a new convertible note, which does not accrue
interest. The lender has the right to convert the loan within
twenty-four months at a price of $0.30 per share. Any net
proceeds from the stock currently held by the lender or by the
preferred shareholder, which are liquidated within the next
twenty-four months, will be credited against the loan.

At the end of the twenty-four months, the lender has the right
to demand stock as payment of the debt at 90% of the bid price
for the preceding ten-day weighted average. The lender will not
be subject to the floor price of $0.30 after November 15, 2014.

The Company evaluated the aforementioned debt modification
under FASB ASC 470-50 and determined that the modification
qualified as an extinguishment of debt due to substantial
modifications, which included, an extension of the maturity
date, the modification of the interest rate, and the
modification of the conversion price. In accordance with FASB
ASC 470-50-40-2, the extinguishment of debt was accounted for
as an increase in the principal in the amount of $20,634,
resulting in a loss on debt restructuring for that same amount.
The resulting derivative liability was reclassified and
accounted for as an increase to additional paid-in capital.

On March 27, 2013, Ararat, LLC agreed to cancel the entire debt
balance in exchange for 1,500,000 preferred B shares of New
Colombia Resources. These shares can be exchanged for 1,500,000
common shares within the next 19 months. If, at the end of 19
months, the 1,500,000 common shares have a value less than
$600,000, the Company will issue additional shares, which, when
added to the aforementioned 1,500,000 shares, will total
$600,000 at 90% of the average bid price of the trailing ten
days. The Company evaluated the aforementioned debt
modification under FASB ASC 470-50 and determined that the
modification qualified as an extinguishment of debt due to
substantial modifications, which included, an increase in the
fair value of the conversion option of more than 10%. In
accordance with FASB ASC 470-50-40-2, the extinguishment of
debt was accounted for as a conversion of principal and accrued
interest of $348,634 and $53,290, respectively, a loss on
settlement of debt of $198,076, and a related make whole
liability of $550,000 was recorded as a provision for the
aforementioned 1,500,000 common shares having a market value of
less than $600,000 as of June 30, 2014.

On September 11, 2014, the Company and Ararat, LLC entered into
the Amended of the Debt Settlement Agreement and Royalty
Agreement, (the Ararat Debt Settlement Agreement) which
supersedes and replaces the Debt Settlement Agreement dated
March 27, 2013. The Ararat Debt Settlement Agreement provided
for the resolution of all debt and mutual release of all
liabilities between the Company and Ararat for future Royalty
interest payments totaling $660,000 from the sales of future
production from certain gravel and coal mines held by the
Company, of which $80,000 must be received by Ararat, LLC by
December 31, 2014. Should the Company fail to remit the $80,000
by December 31, 2014, Ararat, LLC will retain its rights to
convert the Preferred stock shares to the agreements dated,
November 114, 2012 and March 27, 2013. Should Ararat, LLC fail
to convert its shares prior to November 15, 2015, to the Debt
Settlement Agreement and Royalty Agreement, Ararat, LLC will
relinquish all rights to do so thereafter.

As a result of the above Debt Settlement Agreement and Royalty
Agreement, the Company reversed the Make Whole Liability and
recognized a current liability of $660,000 for the effective
elimination of the obligation to fulfill requirements under the
Make Whole Liability obligation. Through December 31, 2015, the
Company has recognized a total of $177,200 in royalty expense
related to the amended agreement.

Related Party Transactions

On September 29, 2014, the Company entered into a Royalty
Agreement with its Chief Executive Officer and Director, John
Campo. to the Royalty Agreement, the Company received $50,000
in cash as a contribution, and provided to Mr. Campo guaranteed
royalty payments for a period of 60 months, beginning the first
month of production of assets from certain properties in
Colombia held by the Company. There had been no production as
of December 31, 2015.

On January 2, 2015, the Company entered into a consulting
agreement with a third party. This agreement was an amendment
to an original consulting agreement dated January 1, 2013. As
per the 2015 agreement, the Company agrees to compensate the
Consultant with an amount of shares of the Companys common
stock equal to an amount of approximately $12,500 each quarter.
However, if the stock price reaches $0.25, then 100,000 shares
of the Companys common stock would be issued. Should the stock
price change, then the Company will adjust the amount of shares
issued at a five-day average price, or an approximation of what
the Company and the Consultant agree to be fair and correct, so
as to ensure that the total amount of shares issued shall equal
approximately $25,000 each six months, or an equally agreed
upon number of shares, as determined between the Company and
the Consultant. The 2015 agreement has a term of two years,
until January 2, 2017, with an option to extend at that time.
(See Note 7)

As of December 31, 2015, the accounts payable and accrued
interest related parties balance represents expenses which were
primarily paid directly to current and former officers of the
Company. As of December 31, 2015, the accounts payable and
accrued interest related parties balance was composed of
$56,376 in accrued salaries and expenses payable to the
Companys current Chief Executive Officer, as well as expenses
payable to a consulting company owned by the Companys current
Chief Executive Officer. The CEO also contributed $19,162 to
the Company during 2015.

NOTE 7SHAREHOLDERS’ EQUITY

Preferred Stock Series A

There are 20,000,000 shares of authorized preferred stock.
During 2011, the Company issued 10,000,000 shares of Series A
Convertible Preferred Stock to the Companys former Chief
Executive Officer for services. During 2015, all shares have
been transferred to current Chief Executive Officer. The shares
are convertible into 51% of outstanding common stock, hold 66
2/3% voting rights, and do not receive dividends. The Company
evaluated the preferred stock under ASC 718-10-25, ASC
480-10-25, and ASC 815-10-25, and determined that equity
classification was appropriate. As the conversion option can be
exercised into 51% of the outstanding shares of the Company,
the Company determined that the holder of the preferred shares
receives additional value each time the Company issues common
shares, thereby increasing the number of common shares the
preferred shares can be converted into. As a result, the
Company has determined the incremental value given to the
preferred shareholder upon additional issuances of common
shares should be recorded at fair value and charged to expense.
During the year ended December 31, 2015, the Company issued an
aggregate of 161,898,280 common shares. The Company determined
the aggregate incremental cost of the share issuance to be
$967,993 and recognized as general expense during 2015.

Preferred Stock Series B

On September 22, 2014, the Company issued 1,000,492 shares of
Preferred Series B Stock to certain employees, vendors and
related parties for services and to settle $250,183 of
liabilities for such services. The Preferred Series B Stock
granted can be converted into legend free common stock any time
after December 10, 2014. Upon conversion, the holder shall be
entitled to ten shares of common stock for every one share of
Preferred Series B Stock converted. Additionally, each
respective individual holder granted Preferred Series B Stock,
in settlement of the Companys obligations, is limited to not
converting more than $12,000 worth of common stock in any
single fiscal quarter commencing after December 1, 2014.

As a result of this settlement of liabilities and the exchange
of Preferred Series B Stock, the Company reduced the related
liabilities of each recipient of the shares, recognizing an
increase of $1,000 in the par value of its Preferred Series B
Stock, a gain of $53,550 on the settlement of liabilities, with
a $195,633 increase additional paid in capital.

This settlement was subsequently amended on September 5, 2015,
which the Company has issued additional 2,827,314 shares of
Preferred Series B Stock which resulted of settlement loss for
$56,546 and 2,638,000 shares have been converted into
40,546,667 shares of common stock.

Common Stock

During 2014, the Company issued 500,000 common shares to a
third party for consulting services. The shares were valued at
$4,525.

During 2014, the Company sold an aggregate of 38,400,001 common
shares to third parties. The aggregate purchase price was
$290,500.

During 2015, the Company sold an aggregate of 79,706,667 common
shares to third parties. The aggregate purchase price was
$231,530.

During 2015, the Company issued 2,181,818 common shares in a
conversion of $12,000 debt balance owed to KBM Worldwide/Asher.
(See Note 6)

During 2015, the Company issued 14,943,180 common shares in a
conversion of $25,500 debt balance owed to Bold Leego
Enterprises. (See Note 6)

During 2015, the Company issued 3,157,895 common shares in a
conversion of $12,000 debt balance owed to KBM WORLDWIDE INC.
(See Note 6)

During 2015, the Company issued 2,708,981 common shares in a
conversion of $5,000 debt balance owed to LG CAPITAL FUNDING
LLC. The shares were valued at $5,000. (See Note 6)

During 2015, the Company issued 7,230,444 common shares in a
conversion of $855 principal and $4,351 accrued interest owed
to AUCTUS FUND, LLC. (See Note 6)

During 2015, the Company issued 11,422,628 common shares to a
third party for consulting services. The shares were valued at
$50,000.

During 2015, the Company issued 4,620,000 common shares to a
third party in a conversion of 462,000 shares of the Companys
Series B Convertible Preferred stock.

During 2015, the Company issued additional 14,166,667 common
shares to a third party (Charlie Chong) for the 2,000,000
shares of the Companys Series B Convertible Preferred stock
thats cancelled in 2014.

During 2015, the Company issued 14,160,000 common shares to a
related party in a conversion of 1,416,000 shares of the
Companys Series B Convertible Preferred stock.

During 2015, the Company issued 7,600,000 common shares to a
related party (CHERISH ADAMS) in a conversion of 760,000 shares
of the Companys Series B Convertible Preferred stock.

Stock Options

On September 29, 2015, the Company entered an option agreement
with a third party, for up to a total of 22,000,000 fully paid
and non-assessable shares of common stock at the price of $0.01
per share. This option may be exercised at any time commencing
on September 29, 2015 to and include September 28, 2019.

On November 12, 2015, the Company entered an option agreement
with a third party, for up to a total of 340,000 fully paid and
non-assessable shares of common stock at the price of $0.01 per
share. This option may be exercised at any time commencing on
November 12, 2015 to and include November 11, 2019.

On November 26, 2015, the Company entered an option agreement
with a third party, for up to a total of 1,500,000 fully paid
and non-assessable shares of common stock at the price of $0.01
per share. This option may be exercised at any time commencing
on November 26, 2015 to and include November 25, 2018.

The following table summarizes the Companys stock options:

Options

Weighted

Average

Exercise

Price

Aggregate

Intrinsic

Value

Exercisable

Weighted

Average

Remaining

Life

Balance, December 31, 2013

5,000,000

$

0.10

4,583,333

No Expiration

Granted

75,666,667

0.01

Expired

Exercised

(15,500,000)

0.01

Cancelled

Balance, December 31, 2014

65,166,667

$

0.02

65,166,667

0.33

Granted

23,840,000

0.01

Expired

(54,166,667)

0.01

Exercised

Cancelled

Balance, December 31, 2015

34,840,000

0.03

34,840,000

0.84

NOTE 8FAIR VALUE MEASUREMENTS

As defined in FASB ASC Topic 820, fair value is the price that
would be received upon the sale of an asset or paid to transfer
a liability in an orderly transaction between market
participants at the measurement date. This Topic requires
disclosure that establishes a framework for measuring fair
value and expands disclosure about fair value measurements. The
statement requires fair value measurements be classified and
disclosed in one of the following categories:

Level 1: Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted
assets or liabilities. The Company considers active markets as
those in which transactions for the assets or liabilities occur
in sufficient frequency and volume to provide pricing
information on an ongoing basis.

Level 2: Pricing inputs other than quoted market prices
included in Level 1 that are based on observable market data
and are directly or indirectly observable for substantially the
full term of the asset or liability. These include quoted
market prices for similar assets or liabilities, quoted market
prices for identical or similar assets in markets that are not
active, adjusted quoted market prices, inputs from observable
data such as interest rate and yield curves, volatilities or
default rates observable at commonly quoted intervals or inputs
derived from observable market data by correlation or other
means.

Level 3: Pricing inputs that are unobservable or less
observable from objective sources. Unobservable inputs should
only be used to the extent observable inputs are not available.
These inputs maintain the concept of an exit price from the
perspective of a market participant and should reflect
assumptions of other market participants. An entity should
consider all market participant assumptions that are available
without unreasonable cost and effort. These are given the
lowest priority and are generally used in internally developed
methodologies to generate management’s best estimate of the
fair value when no observable market data is available.

Financial assets and liabilities are classified based on the
lowest level of input that is significant to the fair value
measurement. The Companys assessment of the significance of a
particular input to the fair value measurement requires
judgment, and may affect the valuation of the fair value of
assets and liabilities and their placement within the fair
value hierarchy levels.

Certain assets and liabilities are reported at fair value on a
recurring or nonrecurring basis in the Companys consolidated
balance sheets. The following methods and assumptions were used
to estimate the fair values:

Cash and Cash Equivalents, Prepaid Expenses, Mining
Rights, Accounts Payable and Accrued Liabilities

The carrying amounts approximate fair value because of the
short-term nature or maturity of the instruments.

Other Liability

As a result of the above Debt Settlement Agreement and Royalty
Agreement, the Company reversed the Make Whole Liability and
recognized a current liability of $660,000 for the effective
elimination of the obligation to fulfill requirements under the
Make Whole Liability obligation Through December 31, 2015, the
Company has recognized a total of $177,200 in royalty expense
related to the amended agreement.

NOTE 9DERIVATIVES LIABILITIES

As of December 31, 2015, the Company did not have any Level 1
or Level 2 financial assets and liabilities or any Level 3
financial assets. The Companys Level 3 liabilities consisted of
Convertible Notes and their fair values were $554,910

The Company determined that the following convertible notes
(collectively Convertible Notes) issued during the year
ended December 31, 2015, contained an embedded derivative
instrument as the conversion price was based on a variable that
was not an input to the fair value of a fixed-for-fixed
option as defined under FASB ASC Topic No. 815 40 (See Note 6):

*

Auctus Convertible (1)

*

KBM Worldwide Convertible (2)

*

Bold Leego Convertible (3)

*

Auctus Convertible (4)

*

KBM Worldwide Convertible (5)

*

LG Capital (6)

*

KBM Worldwide Convertible (7)

*

LG Capital (8)

Initial

December 31, 2015

Common stock issuable

98,841,120

106,855,668

Market value of common stock on measurement date (1)

$0.002 – $0.012

$0.0065

Adjusted exercise price

$0.0018 – $0.0068

$0.0028 – $0.003

Risk free interest rate (2)

0.01%-0.11%

0.16%-0.49%

Instrument lives in years

0.26 0.5

0.3 0.5

Expected volatility (3)

140%-180%

310%-377%

Expected dividend yields (4)

None

None

(1)

The market value of common stock is the stock price at the
close of trading on the date of issuance or at period-end, as
applicable.

(2)

The risk-free interest rate was determined by management using
between the 0.17 and 3-year Treasury Bill as of the respective
offering or measurement date.

(3)

The historical trading volatility was determined by the
Companys trading history.

(4)

Management determined the dividend yield to be -0-% based upon
its expectation that it will not pay dividends for the
foreseeable future.

Activity for embedded derivative instruments during the
six-month period ended December 31, 2015, was as follows:

Balance at

December

31, 2014

Initial

Valuation

recognized

as discount

Initial

Valuation

Day 1

Loss

Change in

Fair Value

of

Derivative

Liabilities

Settlement

through

Repayment

of Debt

Settlement

through

Debt

Conversion

Balance at

December

31, 2015

Auctus Convertible (1)

$ –

$32,250

$665

$22,096

$(9,970)

$ –

$45,042

KBM / Asher Convertible (2)

50,250

22,168

(23,630)

49,420

Bold Leego Convertible (3)

52,178

15,089

5,696

(25,367)

47,596

Auctus Convertible (4)

55,250

3,630

42,523

(17,357)

(14,001)

70,045

KBM / Asher Convertible (5)

40,256

42,252

82,508

LG Capital (6)

51,290

51,835

103,125

KBM / Asher Convertible (7)

54,000

51,812

105,812

LG Capital (8)

26,500

7,614

17,249

51,363

Total

$ –

$361,974

$27,629

$255,631

$(27,327)

$(62,997)

$554,910

NOTE 10INCOME TAX EXPENSE

At December 31, 2015, the Company had unused federal and state
net operating loss carryforwards available of approximately
$2,314,646 which may be applied against future taxable income,
if any, and which expire in various years through 2035.

The Companys deferred tax assets as of December 31, 2015 and
2014 are as follows:

Benefit from net operating losses

$

786,980

$

499,988

Valuation allowance

(786,980)

(499,988)

Net tax expense

$

$

NOTE 11SUBSEQUENT EVENTS

During 2016, the Company entered into a joint venture operating
agreement with MSG Mining Corp. (MSG) of Somerset, KY to
develop MSGs wholly owned Coal Mining Concession Contract #
JC3-15231 in the Republic of Colombia to extract coal and
possibly produce a Coke product for international or local
sales. The Company will meet at the mining site with MSG to
determine their course of action based on an existing Work Plan
developed by an experienced geological consulting firm in the
area. MSG asserts and has provided evidence it does own the
mining rights to this concession contract with an approved Plan
de Trabajo y Obra (Work Plan) from the Agencia Nacional de
Mineria (ANM) and approved Licencia Ambiental (Environmental
License) from the competent local environmental authority.

The Company and MSG are forming a Venture Company in Colombia
to execute the agreement anticipating coal mining activities
beginning in June of 2017. Plans are to extract 10,000 tonnes
of metallurgical coal per month scaling up as market conditions
and available resources allow. The Venture Company will be 51%
owned by New Colombia Resources, Inc. and 49% owned by MSG
Mining Corp. with profits and loses likewise distributed.

During 2016, the Company sold an aggregate of 68,695,000 common
shares to third parties. The aggregate purchase price was
$239,400.

During 2016, the Company issued 13,518,328 common shares in a
conversion of $80,190 debt balance owed to KBM Worldwide/Asher.

During 2016, the Company issued 1,250,000 common shares to a
third party for consulting services. The shares were valued at
trading price of transaction date.

During 2016, the Company issued 50,320,869 common shares in a
conversion of $85,620 debt balance owed to AUCTUS FUND, LLC.

During 2016, the Company issued 21,972,355 common shares in a
conversion of $27,820 debt balance owed to Bold Leego
Enterprises.

During 2016, the Company issued 25,908,126 common shares in a
conversion of $78,326 debt balance owed to LG CAPITAL FUNDING
LLC.

During 2016, the Company issued 9,249,340 common shares to a
third party in a conversion of 924,934 shares of the Companys
Series B Convertible Preferred stock.

During 2016, the Company resolved to issue 10,000,000 common
shares to a third party for the reduction of $100,000 of debt
owed for the purchase of a rock crushing plant. These shares
were issued during 2017.

During 2016, the Company issued additional 4,500,000 common
shares to a related party for property paid on behalf of the
Company.

During 2016, the Company entered into a Settlement Agreement
with Rockwell Capital Partners, Inc. (Rockwell), whereby
Rockwell acquired liabilities of the Company in an amount of
$109,894.47 (the Debt), which was owed by the Company to
various third parties related to legal and accounting services,
as well as other service providers related to the Companys
operations. The Company and Rockwell then entered into an Order
Granting Approval of the Settlement Agreement, and Rockwell
converted the Debt to a 3(a)(10) exemption into 93,530,500
shares of the Companys common stock. The conversions took place
between August 23, 2016 and October 13, 2016. The Debt has now
been fully extinguished, and all remaining shares held in
reserve for the conversion of the Debt have been returned to
treasury.

During 2016, the Company has sold 5% stake in Sannabis SAS to a
third party in exchange for $25,000. (See Note 5)

On January 5, 2017, the Company issued convertible promissory
note to AUCTUS FUND, LLC in the amount of $600,000. This note
is being issued by the Company to settle the current
liabilities owed to the Ararat LLC for the amount of $600,000
(See Note 6). The note accrues interest at the rate of 12% per
annum and has a maturity date of July 5, 2017. The note is
convertible any time from the date of issuance until the later
of (i) Maturity Date and (ii) the date of payment of Default
Amount at 60% of the lowest trading price of the common stock
during the 20 days preceding the date of conversion.
Elimination of liabilities owed to the Ararat would allow the
Company to avoid royal expense of which has significantly
improved the Companys cash flow. On April 12, 2017, this note
is extinguished through fully conversion of common stock. This
note eliminates royalty payments owed to Ararat, LLC.

During 2016, the Company issued a convertible redeemable note
to AUCTUS FUND, LLC in the amount of $57,750. The note accrues
interest at the rate of 12% per annum and has a maturity of
nine months. The note is convertible any time from the date of
issuance until the later of (i) Maturity Date and (ii) the date
of payment of Default Amount at 70% of the lowest trading price
of the common stock during the 25 days preceding the date of
conversion.

During 2017, the Company sold an aggregate of 17,700,000 common
shares to third parties. The aggregate purchase price was
$89,000.

During 2017, the Company issued 44,964,272 common shares in a
conversion of $237,866 debt balance owed to AUCTUS FUND, LLC
(Note 5).

During 2017, the Companys subsidiary entity, Compania Minera
San Jose Ltd entered into farm purchase agreement with a third
party to acquire two farms for consideration of $125,000 with
the land size of 24.7 hectares and 97.7 hectares.

During 2017, the Company entered into a second Settlement
Agreement with Rockwell Capital Partners, Inc. (Rockwell),
whereby Rockwell acquired liabilities of the Company in an
amount of $165,500 (the Debt), of which $60,000 was owed by the
Company to Ararat LLC and the remainder to various third
parties related to legal and accounting services, as well as
other service providers related to the Companys operations. The
conversions took place between January 13, 2017 and March 1,
2017. The Debt has now been fully extinguished, and all
remaining shares held in reserve for the conversion of the Debt
have been returned to treasury. During 2017, the Company issued
17,200,000 common shares in a conversion debt balance and the
note is extinguished upon conversion.

During 2017, the Company entered into a Coal Purchase Agreement
with a third party to supply 500,000 tonnes of metallurgical
coal beginning in April 2017, subject to the Company obtaining
financing. The Company has asked the Buyer for an extension on
the first delivery as they source the coal and obtain the
necessary financing and is awaiting their response. The Company
has coal mines ready to operate to fulfill this order once
financing is secured.

During 2017, the Company received notice from the Agencia
Nacional de Mineria of Colombia that the addition of gravel to
their existing approved Work Plan for coal has been approved
for their wholly owned Concession Contract ILE-09551.The
Company expects to supply gravel by June 2017.

During 2017, the Company’s subsidiary in Colombia, Compania
Minera San Jose Ltda., entered into a three month coal purchase
agreement with a third party for 3000 – 10,000 tonnes of
thermal coal per month at a purchase price of $131,000
COP/tonne (~US$45). First deliveries have been made and payment
received from Buyer.

During 2017, the Company formed a subsidiary in Colombia, Eco R
Mining, S.A.S. This subsidiary is 51% owned by the Company and
49% owned by MSG Mining Corp. (MSG) of Somerset, KY, formed to
develop MSGs coal mining Concession Contract # JC3-15231 in the
Republic of Colombia to extract coal and possibly produce a
Coke product for international and local sales. The Company
expects to be mining this concession by June 2017.

During 2017, the Company formed a subsidiary in Florida, New
Colombia Ventures, LLC. This subsidiary was formed to legally
import and distribute in the U.S. and elsewhere medical
marijuana products from another Company subsidiary in Colombia,
Sannabis S.A.S. or others. New Colombia Ventures, LLC will
become a distributor of Sannabis SAS. New Colombia Ventures,
LLC is 51% owned by the Company, the remaining 49% is owned by
others including the current Company President and a retired
MLB All Star that will assist in marketing products. Marketing
efforts have already begun.

During 2017, the Company issued a convertible promissory note
to a third party in the amount of $110,250 due on May 16, 2017.
Total proceeds received by the Company were $105,000.

ITEM 12CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure
Controls and Procedures.

Under the supervision and with the participation of our
principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and
procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act. As a result of this evaluation, we
identified material weaknesses in our internal control over
financial reporting as of December 31, 2014 as is identified
below.Accordingly, our principal executive officer and
principal financial officer concluded that our disclosure
controls and procedures were not effective as of December 31,
2014 as is described below.

Managements Annual Report on Internal Control Over
Financial Reporting.

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined
in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our
internal control over financial reporting are designed to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated
financial statements for external purposes in accordance with
U. S. generally accepted accounting principles. Our internal
control over financial reporting includes those policies and
procedures that:

i.

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

ii.

provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of ourconsolidated
financial statements inaccordance with U. S. generally accepted
accounting principles, andthat our receipts and expenditures
are being made only in accordance withauthorizations of our
management and directors; and

iii.

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

Management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2014. In
making this assessment, management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework.

Management has concluded that our internal control over
financial reporting was not effective as December 31, 2014 due
to the existence of material weaknesses. The material
weaknesses identified include the following:

Managements assessment identified several material weaknesses
in our internal control over financial reporting. These
material weaknesses include the following:

Lack of appropriate segregation of duties;

Limited capability to interpret and apply accounting principles
generally accepted in the United States;

Lack of formal accounting policies and procedures that include
multiple levels of review; and

Failure to properly record transactions related to asset
acquisitions, derivative liabilities, and equity based payments
to employees and non-employees.

NEW COLOMBIA RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

As of

As of

September 30,

December 31,

ASSETS

Current Assets

Cash and cash equivalents

$

(868)

$

3,209

Prepaid expenses and other current assets

Total Current Assets

(868)

3,209

Non-Current Assets

Fixed asset, net of accumulated depreciation of $8,505
and $6,499, respectively

368,674

370,680

Investment in properties

Mining rights

100,000

100,000

Equity method investment

36,260

9,967

TOTAL ASSETS

$

504,066

$

483,856

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities

Accounts payable and accrued liabilities

$

366,754

$

389,723

Accounts payable and accrued interest related parties

129,459

86,375

Other liability

660,000

660,000

Short-term convertible debt

210,549

352,233

Derivative liabilities

297,044

554,910

Total Current Liabilities

1,663,806

2,043,241

Total Liabilities

1,663,806

2,043,241

Stockholders’ Deficit:

Preferred stock, $0.001 par value (shares
authorized-20,000,000;

10,000,000 shares undesignated) Series A Convertible:
10,000,000 shares designated; 10,000,000 shares issued
and outstanding at September 30, 2016 and December 31,
2015

10,000

10,000

Preferred stock, $0.001 par value (shares
authorized-10,000,000;

-0- shares undesignated) Series B Convertible: 10,000,000
shares

designated; 2,727,990 shares issued and outstanding at

September 30, 2016 and December 31, 2015

2,728

2,728

Common stock, $0.001 par value (shares
authorized-1,000,000,000);

384,597,030 and 286,906,757 shares issued and outstanding
at September 30, 2016 and December 31, 2015, respectively

384,598

286,258

Additional paid-in capital

29,909,088

28,185,868

Deficit accumulated

(31,430,512)

(30,014,702)

Total Stockholders Deficit of New Columbia
Resources, Inc.

(1,064,098)

(1,529,848)

Non-controlling interest

(35,642)

(29,537)

Total Stockholders Equity Deficit

(1,099,740)

(1,559,385)

TOTAL LIABILITIES AND STOCKHOLDERS’
DEFICIT

$

504,066

$

483,856

See accompanying notes to the unaudited consolidated financial
statements

NEW COLOMBIA RESOURCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

September 30,

Revenues

$

$

$

$

Operating Expenses

Geology and engineering

13,743

4,345

Royalty expense

20,000

27,500

53,550

Depreciation expense

2,007

2,008

General and administrative

1,111,910

44,418

1,271,839

414,678

Total Operating Expenses

1,112,579

65,647

1,315,089

474,581

Loss from Operations

(1,112,579)

(65,647)

(1,315,089)

(474,581)

Loss on settlement of debt

56,010

56,010

Interest expense

102,385

165,661

226,438

356,234

(Gain)/Loss on derivatives

(373,069)

182,830

(97,113)

173,076

Impairment expense

32,944

(Gain)/Loss from equity investment

(22,500)

11,570

Net loss

$

(841,895)

$

(470,148)

$

(1,421,914)

$

(1,104,415)

Net loss attributable to non-controlling interest

6,105

6,941

Net loss attributable to New Columbia Resources,
Inc.

(841,895)

(470,148)

(1,415,809)

(1,097,474)

Basic and diluted loss per share

$

(0.00)

$

(0.00)

$

(0.00)

$

(0.00)

Weighted average number of shares
outstanding-

basic and diluted

343,743,724

197,815,642

315,920,904

161,453,345

See accompanying notes to the unaudited consolidated financial
statements

NEW COLOMBIA RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

For the Nine Months Ended

September 30,

Cash Flows from Operating Activities

Net loss for the period

$

(1,415,809)

$

(1,077,474)

Non-controlling interest

(6,105)

(6,941)

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

Impairment of fixed assets

32,944

Stock issued for compensation

1,071,885

220,192

Depreciation expense

2,007

2,008

Loss from equity investment

(22,146)

11,570

(Gain) loss on settlement of make whole liability and/or
debt

56,010

Gain on derivative liability

(97,113)

163,107

Amortization of discount on convertible debenture

165,705

316,351

Penalty upon loan default

29,500

16,070

Changes in operating assets and liabilities:

Accounts payable and accrued expenses

107,047

71,352

Accounts payable and accrued interest related parties

Net cash used in operating activities

(165,029)

(214,811)

Cash Flows from Investing Activities

Investment in properties

Investment in subsidiary-equity method

(29,148)

(32,351)

Sales of equity investment

25,000

Purchase of fixed assets

(4,680)

Net cash used in investing activities

(4,148)

(37,031)

Cash Flows from Financing Activities

Payments on convertible debentures

(23,000)

Proceeds received on convertible debt

130,000

Issuance of shares for cash

165,100

124,700

Contribution from officer

19,162

Net cash provided by financing
activities

165,100

250,862

Increase (Decrease) in Cash and Cash
Equivalents

(4,077)

(980)

Cash and Cash Equivalents–Beginning of
Period

3,209

1,627

Cash and Cash Equivalents–End of Period

$

(868)

$

Supplemental Disclosures of Cash Flow
Information

Cash paid for interest

$

$

Cash paid for income taxes

$

$

Non-Cash Investing and Financing
Activities

Reclass to fixed asset from investment

$

$

(23,400)

Preferred stock conversion to common stock

$

$

18,137

Common stock issued for conversion of debentures

$

263,139

$

54,500

Debt discount from derivative liabilities

$

183,644

$

361,975

Loan proceeds paid directly to services providers

$

$

15,000

Settlement of derivative liabilities through conversion
of related notes

$

234,502

$

39,027

Reclass from prepaid expenses to equipment

$

$

16,067

See the accompanying notes to the unaudited consolidated
financial statements

NEW COLOMBIA RESOURCES, INC.

Notes to the Consolidated Financial Statements

(Unaudited)

NOTE 1-BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of New
Colombia Resources, Inc. (New Colombia Resources or the
Company) (formerly VSUS Technologies, Inc.) have been prepared
in accordance with accounting principles generally accepted in
the United States of America and the rules of the Securities
and Exchange Commission, and should be read in conjunction with
the audited financial statements and notes thereto contained in
the Companys Annual Report on Form 10-K filed with the SEC. In
the opinion of management, the accompanying unaudited interim
financial statements reflect all adjustments, consisting of
normal recurring adjustments, necessary to present fairly the
financial position and the results of operations for the
interim period presented herein. The results of operations for
interim periods are not necessarily indicative of the results
to be expected for the full year or for any future period.
Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial
statements for fiscal 2015 as reported in the Form 10-K have
been omitted.

NOTE 2-GOING CONCERN

During the nine months ended September 30, 2016, New Colombia
Resources, Inc. has not been able to generate cash flows
sufficient to support its operations, and has been dependent
primarily on debt and equity financing. In addition to negative
cash flow from operations, New Colombia Resources has
experienced recurring losses and had an accumulated deficit of
$31,370,512 as of September 30, 2016. These conditions raise
substantial doubt as to New Colombia Resources ability to
continue as a going concern. The consolidated financial
statements do not include any adjustments that might be
necessary if New Colombia Resources is unable to continue as a
going concern.

NOTE 3-FIXED ASSET

Major classes of equipment, together with their estimated
useful lives, consisted of the following:

Years

September 30, 2016

December 31, 2015

Vehicle

$

12,500

$

12,500

Furniture and equipment

Crushing plant machinery

320,000

320,000

Construction in process

44,147

44,147

Total

377,179

377,179

Less: accumulated depreciation

(8,505)

(6,499)

Net equipment

$

368,674

$

370,680

Depreciation expense was $2,007 and $2,008 for the nine months
ended September 30, 2016 and 2015, respectively.

NOTE 4-EQUITY METHOD INVESTMENT

Effective December 1, 2014, the Company acquired 50% of
ownership interest in Sannabis SAS, a Colombian entity, for
consideration of $25,000. The Company agreed to a total
contribution of $125,000 for the 50% ownership. As of December
31, 2014, the Company had only contributed $25,000. The Company
agreed to the acceptance of the ownership, receiving 50%,
ownership of Sannabis SAS.

In accordance with U.S GAAP, we have adopted the equity method
of accounting. Under the equity method of accounting, the
Company records the investment at cost. The Companys investment
in the entity is increased by additional contributions to the
entity as well as its proportionate share of earnings in the
entity. Conversely, the Companys investment is decreased by
distributions made by the Company and by its proportionate
share of losses. During the quarter ended September 30, 2016,
the Company has made additional contribution of $29,148 to
maintain 50% of ownership interest. As of September 30, 2016,
the Companys investment in Sannabis SAS is $36,260.

On March 4th, 2016, the Company has sold 5% stake in
Sannabis SAS to a third party in exchange for $25,000 and the
Company has recognize gain for the amount of $22,500.

NOTE 5-DEBT

Third Party Notes Payable

Principle

Accrued Interest

Instrument

Sep 30, 2016

Dec 31, 2015

Sep 30, 2016

Dec 31, 2015

Auctus Convertible (1)

$

$

23,250

$

$

5,449

Debt discount- Derivative (1)

KBM Worldwide Convertible (2)

26,250

5,271

Debt discount- Derivative (2)

Bold Leego Convertible (3)

27,820

27,820

5,340

3,669

Debt discount- Derivative (3)

Auctus Convertible (4)

39,395

39,395

7,942

1,436

Debt discount- Derivative (4)

KBM Worldwide Convertible (5)

43,000

6,081

Debt discount- Derivative (5)

LG Capital (6)

50,000

58,000

14,790

6,784

Debt discount- Derivative (6)

KBM / Worldwide Convertible (7)

54,000

14,117

5,199

Debt discount- Derivative (7)

LG Capital (8)

26,500

26,500

2,852

1,260

Debt discount (8)

(1,500)

(1,500)

Debt discount- Derivative (8)

(10,482)

Auctus Convertible (9)

73,750

73,750

9,092

3,556

Debt discount- Derivative (9)

Debt discount (9)

(7,750)

(7,750)

Rockwell Convertible(10)

30,755

Debt discount (10)

(28,421)

$

210,549

$

352,233

$

54,133

$

38,705

(1) On July 28, 2014, the Company issued a convertible
promissory note to a third party in the amount of $32,250. The
note accrues interest at the rate of 8% per annum and has a
maturity date of April 28, 2015. The default interest rate is
22%. The note is convertible after 180 days from the date of
issuance at 55% of the average lowest two-day trading price of
common stock during the 25 days preceding the date of
conversion. Loan proceeds amounting to $5,250 were paid
directly to service providers. On January 24, 2015, the loan
became convertible and a related derivative liability was
recorded (See Note 9). During the quarter ended September 30,
2016, the third party exercised the conversion option in
connection with $23,250 of the amount owed under the note and
the note is fully extinguished. (See Note 7)

(2) On September 5, 2014, the Company issued a convertible
promissory note to a third party in the amount of $37,500. The
note accrues interest at the rate of 8% per annum and has a
maturity date of June 9, 2014. The note is convertible after
180 days from the date of issuance at 55% of the average lowest
three-day trading price of common stock during the 10 days
preceding the date of conversion. Loan proceeds amounting to
$11,000 were paid directly to service providers. On March 4,
2015, the loan became convertible and a related derivative
liability was recorded (See Note 9). Starting on April 30,
2015, the Company is in default under this Note. The principal
amount was increased by 50% for the amount of $12,750 and a
related derivative liability was recorded. During the quarter
ended September 30, 2016, the third party exercised the
conversion option in connection with $26,250 of the amount owed
under the note and the note is fully extinguished. (See Note 7)

(3) On September 18, 2014, the Company issued a convertible
promissory note to a third party in the total amount of
$50,000. The note accrues interest at the rate of 8% per annum
and has a maturity date of September 24, 2015. The note is
convertible into common stock at discount of 50% at maturity.
Loan proceeds amounting to $2,500 were paid directly to service
providers in 2014. On March 25, 2015, the loan became
convertible, and the Company is in default due to not issuing
shares upon conversion on time under this Note. Related
derivative liability was recorded (See Note 9). The principal
amount was increased by $3,320 and a related derivative
liability was recorded. The third party converted $25,500 of
the principal amount of the note into the Companys common
stock.

(4) On December 19, 2014, the Company issued a convertible
redeemable note to a third party in the amount of $55,250. The
note accrues interest at the rate of 8% per annum and has a
maturity of nine months. The note is convertible after 180 days
from the date of issuance at 55% of the lowest two trading
price of common stock during the 25 days preceding the date of
conversion. Loan proceeds amounting to $5,250 were paid
directly to the investors counsel for transaction preparation
in 2014. On June 17, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9).

(5) On November 17, 2014, the Company issued a convertible
redeemable note to a third party in the amount of $43,000. The
note accrues interest at the rate of 8% per annum and has a
maturity of nine months. The note is convertible after 180 days
from the date of issuance at 55% of the lowest three trading
price of common stock during the 10 days preceding the date of
conversion. Loan proceeds amounting to $10,500 were paid
directly to the investors counsel for transaction preparation
in 2014. On May 16, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9).

(6) On November 5, 2014, the Company entered into a securities
purchase agreement with a third party, whereby the Company
shall issue an 8% convertible note in an aggregate principal
amount of $63,000, convertible into shares of common stock of
the Company. The note shall accrue interest at a rate of 8% per
annum, commencing on November 5, 2014. The third party, at
their option, any time after 180 days after full payment of the
agreed upon cash, may convert all or any amount of the
principal face amount of the note into shares of the Companys
common stock at a price equal to 55% of the lowest trading
price of the Companys common stock on the national Quotations
Bureau (OTCQB) exchange or any exchange upon which the Companys
stock is traded, for the twenty prior trading days, including
the day upon which notice of conversion is received by the
Company. On May 4, 2015, the loan became convertible and a
related derivative liability was recorded (See Note 9). During
the quarter ended September 30, 2016, the third party exercised
the conversion option in connection with $8,000 of the amount
owed under the note. (See Note 7)

(7) On January 29, 2015, the Company issued a convertible
promissory note to a third party in the amount of $54,000. The
note accrues interest at the rate of 8% per annum and has a
maturity date of November 2, 2015. The note is convertible
after 180 days from the date of issuance at 55% of the average
of the lowest three-day trading price of the common stock
during the 10 days preceding the date of conversion. Loan
proceeds amounting to $15,000 were paid directly to services
providers at the time of issuance. On July 28, 2015, the loan
became convertible and a related derivative liability was
recorded (See Note 9). During the quarter ended September 30,
2016, default penalty for the amount of $8,000 has increase
outstanding principle balance. On August 18th, 2016,
the note is fully repaid by the Company.

(8) On May 28, 2015, the Company issued a convertible
promissory note to a third party in the amount of $26,500, and
the Company received $25,000 in cash, including an additional
$1,500 paid for debt issuance cost.. The note accrues interest
at the rate of 8% per annum and has a maturity date of May21,
2016. The note is convertible after 180 days from the date of
issuance at 55% of the average of the lowest three-day trading
price of the common stock during the 20 days preceding the date
of conversion. On July 28, 2015, the loan became convertible
and a related derivative liability was recorded (See Note 9).

(9) On July 8, 2015, the Company issued a convertible
promissory note to a third party in the amount of $73,750, the
Company received $66,000 in cash, including an additional
$7,750 paid for debt issuance cost.. The note accrues interest
at the rate of 8% per annum and has a maturity date of April 8,
2016. The note is convertible after 180 days from the date of
issuance at 55% of the average of the lowest three-day trading
price of the common stock during the 25 days preceding the date
of conversion. On January 4th, 2016, the loan became
convertible and a related derivative liability was recorded
(See Note 9).

(10) On August 18, 2016 the Company entered into a Settlement
Agreement with Rockwell Capital Partners, Inc. (Rockwell),
whereby Rockwell acquired liabilities of the Company in an
amount of $109,894.47 (the Debt), which was owed by the Company
to various third parties related to legal and accounting
services, as well as other service providers related to the
Companys operations. During the quarter ended September 30,
2016, the third party exercised the conversion option in
connection with $79,140 of the amount owed under the note.

NOTE 6-RELATED PARTY TRANSACTIONS

Related Party Debt

On April 14, 2008, the Company signed a loan agreement in which
it borrowed an aggregate of $328,000 from Ararat, LLC. The note
originally matured on December 31, 2012 and carried a 10%
interest rate. On November 14, 2012, the Company restructured
the debt into a new convertible note, which does not accrue
interest. The lender has the right to convert the loan within
twenty-four months at a price of $0.30 per share. Any net
proceeds from the stock currently held by the lender or by the
preferred shareholder which are liquidated within the next
twenty-four months will be credited against the loan. At the
end of the twenty-four months, the lender has the right to
demand stock as payment of the debt at 90% of the bid price for
the preceding ten-day weighted average. The lender will not be
subject to the floor price of $0.30 after November 15, 2014.
The Company evaluated the aforementioned debt modification
under FASB ASC 470-50 and determined that the modification
qualified as an extinguishment of debt due to substantial
modifications, which included, an extension of the maturity
date, the modification of the interest rate, and the
modification of the conversion price. In accordance with FASB
ASC 470-50-40-2, the extinguishment of debt was accounted for
as an increase in the principal in the amount of $20,634,
resulting in a loss on debt restructuring for that same amount.
The resulting derivative liability was reclassified and
accounted for as an increase to additional paid-in capital.

On March 27, 2013, Ararat, LLC agreed to cancel the entire debt
balance in exchange for 1,500,000 preferred B shares of New
Colombia Resources. These shares can be exchanged for 1,500,000
common shares within the next 19 months. If, at the end of 19
months, the 1,500,000 common shares have a value less than
$600,000, the Company will issue additional shares, which, when
added to the aforementioned 1,500,000 shares, will total
$600,000 at 90% of the average bid price of the trailing ten
days. The Company evaluated the aforementioned debt
modification under FASB ASC 470-50, and determined that the
modification qualified as an extinguishment of debt due to
substantial modifications, which included, an increase in the
fair value of the conversion option of more than 10%. In
accordance with FASB ASC 470-50-40-2, the extinguishment of
debt was accounted for as a conversion of principal and accrued
interest of $348,634 and $53,290, respectively, a loss on
settlement of debt of $198,076, and a related make whole
liability of $550,000 was recorded as a provision for the
aforementioned 1,500,000 common shares having a market value of
less than $600,000 as of June 30, 2014.

On September 11, 2014, the Company and Ararat, LLC entered into
the Amended of the Debt Settlement Agreement and Royalty
Agreement (the Ararat Debt Settlement Agreement), which
supersedes and replaces the Debt Settlement Agreement dated
March 27, 2013. The Ararat Debt Settlement Agreement provided
for the resolution of all debt and mutual release of all
liabilities between the Company and Ararat for future Royalty
interest payments totaling $660,000 from the sales of future
production from certain gravel and coal mines held by the
Company, of which $80,000 must be received by Ararat, LLC by
March 31, 2015. Should the Company fail to remit the $80,000 by
March 31, 2015, Ararat, LLC will retain its rights to convert
the Preferred stock shares to the agreements dated, November
14, 2012 and March 27, 2013. Should Ararat, LLC fail to convert
its shares prior to November 15, 2015, to the Debt Settlement
Agreement and Royalty Agreement, Ararat, LLC will relinquish
all rights to do so thereafter.

As a result of the above Debt Settlement Agreement and Royalty
Agreement, the Company reversed the Make Whole Liability and
recognized a current liability of $660,000 for the effective
elimination of the obligation to fulfill requirements under the
Make Whole Liability obligation. See Note 10 for subsequent
event disclosure

Related Party Transactions

As of September 30, 2016, the accounts payable and accrued
interest related parties balance represents expenses which were
primarily paid directly to current and former officers of the
Company. As of September 30, 2016, the accounts payable and
accrued interest related parties balance was composed of
$129,459 in accrued salaries and expenses payable to the
Companys current Chief Executive Officer.

NOTE 7-STOCKHOLDERS’ EQUITY

Preferred Stock Series A

There are 20,000,000 shares of authorized preferred stock.
During 2011, the Company issued 10,000,000 shares of Series A
Convertible Preferred Stock to the Companys former Chief
Executive Officer for services. During 2015, all shares have
been transferred to current Chief Executive Officer. The shares
are convertible into 51% of outstanding common stock, hold 66
2/3% voting rights, and do not receive dividends. The Company
evaluated the preferred stock under ASC 718-10-25, ASC
480-10-25, and ASC 815-10-25, and determined that equity
classification was appropriate. As the conversion option can be
exercised into 51% of the outstanding shares of the Company,
the Company determined that the holder of the preferred shares
receives additional value each time the Company issues common
shares, thereby increasing the number of common shares the
preferred shares can be converted into. As a result, the
Company has determined the incremental value given to the
preferred shareholder upon additional issuances of common
shares should be recorded at fair value and charged to expense.
For the nine months ended September 30, 2016, the Company
issued an aggregate of 102,354,162 common shares. The Company
determined the aggregate incremental cost of the share issuance
to be $1,051,447.

Common Stock

For the nine months ended September 30, 2016, the Company sold
an aggregate of 36,125,000 shares of the Companys common stock
to third parties. The aggregate purchase price was $169,600.

For the nine months ended September 30, 2016, third parties
converted total amount of $221,443 of principal into 60,965,273
shares of the Companys common stock.

For the nine months ended September 30, 2016, the Company
issued 1,250,000 shares of the Companys common stock to the
third party for accounting services. The shares were valued at
$20,438.

Stock Options

On April 28, 2016, the Company entered an option agreement with
a third party, for up to a total of 3,000,000 fully paid and
non-assessable shares of common stock at the price of $0.02 per
share. This option may be exercised at any time commencing on
September 28, 2015 to and include September 28, 2018.

On May 5, 2016, the Company entered an option agreement with a
third party, for up to a total of 250,000 fully paid and
non-assessable shares of common stock at the price of $0.02 per
share. This option may be exercised at any time commencing on
May 4, 2016 to and include May 4, 2018.

The following table summarizes the Companys stock options:

Options

Weighted

Average

Exercise

Price

Exercisable

Weighted Average

Remaining

Life

Balance, December 31, 2015

34,840,000

$

0.03

34,840,000

0.84 years

Granted

3,250,000

0.02

Expired

(6,000,000)

0.05

Exercised

Cancelled

Balance, September 30, 2016

32,090,000

0.03

13,000,000

1 years

NOTE 8-FAIR VALUE MEASUREMENTS

As defined in FASB ASC Topic 820, fair value is the price that
would be received upon the sale of an asset or paid to transfer
a liability in an orderly transaction between market
participants at the measurement date. This Topic requires
disclosure that establishes a framework for measuring fair
value and expands disclosure about fair value measurements. The
statement requires fair value measurements be classified and
disclosed in one of the following categories:

Level 1: Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted
assets or liabilities. The Company considers active markets as
those in which transactions for the assets or liabilities occur
in sufficient frequency and volume to provide pricing
information on an ongoing basis.

Level 2: Pricing inputs other than quoted market prices
included in Level 1 that are based on observable market data
and are directly or indirectly observable for substantially the
full term of the asset or liability. These include quoted
market prices for similar assets or liabilities, quoted market
prices for identical or similar assets in markets that are not
active, adjusted quoted market prices, inputs from observable
data such as interest rate and yield curves, volatilities or
default rates observable at commonly quoted intervals, or
inputs derived from observable market data by correlation or
other means.

Level 3: Pricing inputs that are unobservable or less
observable from objective sources. Unobservable inputs should
only be used to the extent observable inputs are not available.
These inputs maintain the concept of an exit price from the
perspective of a market participant and should reflect
assumptions of other market participants. An entity should
consider all market participant assumptions that are available
without unreasonable cost and effort. These are given the
lowest priority and are generally used in internally developed
methodologies to generate management’s best estimate of the
fair value when no observable market data is available.

Financial assets and liabilities are classified based on the
lowest level of input that is significant to the fair value
measurement. The Companys assessment of the significance of a
particular input to the fair value measurement requires
judgment, and may affect the valuation of the fair value of
assets and liabilities and their placement within the fair
value hierarchy levels.

Certain assets and liabilities are reported at fair value on a
recurring or nonrecurring basis in the Companys consolidated
balance sheets. The following methods and assumptions were used
to estimate the fair values:

Cash and Cash Equivalents, Prepaid Expenses, Mining Rights,
Accounts Payable and Accrued Liabilities

The carrying amounts approximate fair value because of the
short-term nature or maturity of the instruments.

Other Liability

As a result of the above Debt Settlement Agreement and Royalty
Agreement, the Company reversed the Make Whole Liability and
recognized a current liability of $660,000 for the effective
elimination of the obligation to fulfill requirements under the
Make Whole Liability obligation.

Derivative Liabilities

The estimated fair value of the derivative liabilities was
calculated using the Black-Scholes option pricing model (See
Note 9).

The following table sets forth, by level within the fair value
hierarchy, the Companys financial assets and liabilities that
were accounted for at fair value on a recurring basis as of
September 30, 2016:

Description

(Level 1)

(Level 2)

(Level 3)

Total Carrying

Value

Other liability

$

660,000

$

$

$

660,000

Derivative liability

$

$

$

297,044

$

297,044

NOTE 9-DERIVATIVE LIABILITIES

As of September 30, 2016, the Company did not have any Level 1
or Level 2 financial assets and liabilities or any Level 3
financial assets. The Companys Level 3 liabilities consisted of
Convertible Notes and their fair values were $297,044

As of September 30, 2016, the Company determined that the
following convertible notes (collectively Convertible
Notes
) contained an embedded derivative instrument as the
conversion price was based on a variable that was not an input
to the fair value of a fixed-for-fixed option as defined
under FASB ASC Topic No. 815 40 (See Note 5):

*

Auctus Convertible (1)

*

KBM Worldwide Convertible (2)

*

Bold Leego Convertible (3)

*

Auctus Convertible (4)

*

KBM Worldwide Convertible (5)

*

LG Capital (6)

*

KBM Worldwide Convertible (7)

*

LG Capital (8)

*

Auctus Convertible (9)

Initial

September 30, 2016

Common stock issuable

139,068,393

184,702,252

Market value of common stock on measurement date (1)

$0.002 – $0.0127

$0.0026

Adjusted exercise price

$0.0018 – $0.0068

$0.0012

Risk free interest rate (2)

0.01%-0.22%

0.29%

Instrument lives in years

0.26 0.5

0.25

Expected volatility (3)

140%-375%

193%

Expected dividend yields (4)

None

None

(1)

The market value of common stock is the stock price at the
close of trading on the date of issuance or at period-end, as
applicable.

(2)

The risk-free interest rate was determined by management using
between the 0.17 and 3-year Treasury Bill as of the respective
offering or measurement date.

(3)

The historical trading volatility was determined by the
Companys trading history.

(4)

Management determined the dividend yield to be -0-% based upon
its expectation that it will not pay dividends for the
foreseeable future.

The following table summarizes the Companys derivative
liabilities during the nine months ended September 30, 2016:

Balance

at

December

31, 2015

Initial

Valuation

Initial

Valuation

Day 1

Loss

Change in

Fair Value

of

Derivative

Liabilities

Settlement

through

Repayment

of Debt

Settlement

through

Debt

Conversion

Balance

at

September

31, 2016

Auctus Convertible (1)

$45,042

$ –

$ –

$(12,620)

$(32,422)

$ –

$ –

KBM Worldwide Convertible (2)

49,420

49,879

(99,299)

Bold Leego Convertible (3)

47,595

(10,218)

37,377

Auctus Convertible (4)

70,045

(17,116)

52,929

KBM Worldwide Convertible (5)

82,508

(32,747)

(49,761)

LG Capital (6)

103,125

(28,444)

(5,884)

68,797

KBM Worldwide Convertible (7)

105,812

(58,675)

(47,137)

LG Capital (8)

51,363

(14,900)

36,463

Auctus Convertible (9)

73,750

37,179

(9,451)

101,478

Total

$554,910

$73,750

$37,179

$(134,292)

$(234,503)

$ –

$297,044

NOTE 10-SUBSEQUENT EVENTS

During the last quarter of 2016, the Company entered into a
joint venture operating agreement with MSG Mining Corp. (MSG)
of Somerset, KY to develop MSGs wholly owned Coal Mining
Concession Contract # JC3-15231 in the Republic of Colombia to
extract coal and possibly produce a Coke product for
international or local sales. The Company will meet at the
mining site with MSG to determine their course of action based
on an existing Work Plan developed by an experienced geological
consulting firm in the area. MSG asserts and has provided
evidence it does own the mining rights to this concession
contract with an approved Plan de Trabajo y Obra (Work Plan)
from the Agencia Nacional de Mineria (ANM) and approved
Licencia Ambiental (Environmental License) from the competent
local environmental authority.

The Company and MSG are forming a Venture Company in Colombia
to execute the agreement anticipating coal mining activities
beginning in June of 2017. Plans are to extract 10,000 tonnes
of metallurgical coal per month scaling up as market conditions
and available resources allow. The Venture Company will be 51%
owned by New Colombia Resources, Inc. and 49% owned by MSG
Mining Corp. with profits and loses likewise distributed.

During the last quarter of 2016, Bold Leego Convertible (3)
(see Note 5) has been converted into common stock and the note
is extinguished upon conversion.

During the last quarter of 2016, Rockwell Convertible (10) (see
Note 5) has been converted into common stock and the note is
extinguished upon conversion.

During the last quarter of 2016, the Company sold an aggregate
of 32,570,000 common shares to third parties. The aggregate
purchase price was $69,800.

During the last quarter of 2016, third parties converted
principal for total amount of $619,647 into 154,284,905 shares
of the Companys common stock.

During the last quarter of 2016, the Company issued additional
4,500,000 common shares to a related party for property paid on
behalf of the Company.

During the last quarter of 2016, the Company resolved to issue
10,000,000 common shares to a third party for the reduction of
$100,000 of debt owed for the purchase of a rock crushing
plant. These shares were issued during 2017.

During 2016, the Company issued a convertible redeemable note
to AUCTUS FUND, LLC in the amount of $57,750. The note accrues
interest at the rate of 12% per annum and has a maturity of
nine months. The note is convertible any time from the date of
issuance until the later of (i) Maturity Date and (ii) the date
of payment of Default Amount at 70% of the lowest trading price
of the common stock during the 25 days preceding the date of
conversion.

On January 5, 2017, the Company issued convertible promissory
note to AUCTUS FUND, LLC in the amount of $600,000. This note
is being issued by the Company to settle the current
liabilities owed to the Ararat LLC for the amount of $600,000
(See Note 6). The note accrues interest at the rate of 12% per
annum and has a maturity date of July 5, 2017. The note is
convertible any time from the date of issuance until the later
of (i) Maturity Date and (ii) the date of payment of Default
Amount at 60% of the lowest trading price of the common stock
during the 20 days preceding the date of conversion.
Elimination of liabilities owed to the Ararat would allow the
Company to avoid royal expense of which has significantly
improved the Companys cash flow. On April 12, 2017, this note
is extinguished through fully conversion of common stock. This
Note also eliminates the royalty payments owed to Ararat, LLC.

During 2017, the Company sold an aggregate of 17,700,000 common
shares to third parties. The aggregate purchase price was
$89,000.

During 2017, the Company issued 44,964,272 common shares in a
conversion of $237,866 debt balance owed to AUCTUS FUND, LLC
(Note 5).

During 2017, the Companys subsidiary entity, Compania Minera
San Jose Ltda. closed a farm purchase agreement with a third
party that acquired two farms for consideration of $125,000
with the land size of 24.7 hectares and 97.7 hectares. The
property has several debts totaling approximately $275,000 that
were acquired with this purchase. Compania Minera San Jose
Ltda. will negotiate with these debtors to reduce this amount.

During 2017, the Company entered into a second Settlement
Agreement with Rockwell Capital Partners, Inc. (Rockwell),
whereby Rockwell acquired liabilities of the Company in an
amount of $165,500 (the Debt), of which $60,000 was owed by the
Company to Ararat LLC and the remainder to various third
parties related to legal and accounting services, as well as
other service providers related to the Companys operations. The
conversions took place between January 13, 2017 and March 1,
2017. The Debt has now been fully extinguished, and all
remaining shares held in reserve for the conversion of the Debt
have been returned to treasury. During 2017, the Company issued
17,200,000 common shares in a conversion debt balance and the
note is extinguished upon conversion.

During 2017, the Company entered into a Coal Purchase Agreement
with a third party to supply 500,000 tonnes of metallurgical
coal beginning in April 2017, subject to the Company obtaining
financing. The Company has asked the Buyer for an extension on
the first delivery as they source the coal and obtain the
necessary financing and is awaiting their response. The Company
has coal mines ready to operate to fulfill this order once
financing is secured.

During 2017, the Company received notice from the Agencia
Nacional de Mineria of Colombia that the addition of gravel to
their existing approved Work Plan for coal has been approved
for their wholly owned Concession Contract ILE-09551.The
Company expects to supply gravel by June 2017.

During 2017, the Company’s subsidiary in Colombia, Compania
Minera San Jose Ltda., entered into a three-month coal purchase
agreement with a third party for 3000 – 10,000 tonnes of
thermal coal per month at a purchase price of $131,000
COP/tonne (~US$45). First deliveries have been made and payment
received from Buyer.

During 2017, the Company issued 11,500,000 shares to a third
party to settle $200,000 of consulting services.

During 2017, the Company formed a subsidiary in Colombia, Eco R
Mining, S.A.S. This subsidiary is 51% owned by the Company and
49% owned by MSG Mining Corp. (MSG) of Somerset, KY, formed to
develop MSGs coal mining Concession Contract # JC3-15231 in the
Republic of Colombia to extract coal and possibly produce a
Coke product for international and local sales. The Company
expects to be mining this concession by June 2017.

During 2017, the Company formed a subsidiary in Florida, New
Colombia Ventures, LLC. This subsidiary was formed to legally
import and distribute in the U.S. and elsewhere medical
marijuana products from another Company subsidiary in Colombia,
Sannabis S.A.S. or others. New Colombia Ventures, LLC will
become a distributor of Sannabis SAS. New Colombia Ventures,
LLC is 51% owned by the Company, the remaining 49% is owned by
others including the current Company President and a retired
MLB All Star that will assist in marketing products. Marketing
efforts have already begun.

During 2017, the Company issued a convertible promissory note
to a third party in the amount of $110,250 due on May 16, 2017.
Total proceeds received by the Company were $105,000.

ITEM 11-CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure
Controls and Procedures.

Under the supervision and with the participation of our
principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and
procedures, as such term is defined under Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as
amended (the Exchange Act. As a result of this evaluation, we
identified material weaknesses in our internal control over
financial reporting as of December 31, 2014 as is identified
below.Accordingly, our principal executive officer and
principal financial officer concluded that our disclosure
controls and procedures were not effective as of December 31,
2014 as is described below.

Managements Annual Report on Internal Control Over
Financial Reporting.

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined
in Rule 13a-15(f) and 15d-(f) under the Exchange Act. Our
internal control over financial reporting are designed to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated
financial statements for external purposes in accordance with
U. S. generally accepted accounting principles. Our internal
control over financial reporting includes those policies and
procedures that:

i.

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

ii.

provide reasonable assurance that transactions are recorded as
necessary to permit the preparation of ourconsolidated
financial statements inaccordance with U. S. generally accepted
accounting principles, andthat our receipts and expenditures
are being made only in accordance withauthorizations of our
management and directors; and

iii.

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

Management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2014. In
making this assessment, management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway
Commission in Internal Control-Integrated Framework.

Management has concluded that our internal control over
financial reporting was not effective as December 31, 2014 due
to the existence of material weaknesses. The material
weaknesses identified include the following:

Managements assessment identified several material weaknesses
in our internal control over financial reporting. These
material weaknesses include the following:

Lack of appropriate segregation of duties;

Limited capability to interpret and apply accounting principles
generally accepted in the United States;

Lack of formal accounting policies and procedures that include
multiple levels of review; and

Failure to properly record transactions related to asset
acquisitions, derivative liabilities, and equity based payments
to employees and non-employees.


About New Colombia Resources, Inc. (OTCMKTS:NEWC)

New Colombia Resources, Inc. is a metallurgical coal company. The Company is focused on the acquisition and development of high quality metallurgical coal producers in Colombia. The Company is focusing on its La Tabaquera coal and rock project (the Project) located in the Municipality of Guaduas, approximately 100 kilometers northwest of Bogota. The 57 hectares La Tabaquera (in yellow) and the 390 hectares mine La Herradura (in Orange), are located to the west of the La Bermeja Ravine, crossing Rio Guaduero from north to south, with a linear extension of 2.5 kilometers north-south direction and 0.2 kilometers approximately, from east-west. The Company’s rock crushing plant has a processing capacity of over 100 cubic meters (m3)/hour of aggregates. The Company has a medical cannabis business in Colombia operating as Sannabis SAS.

New Colombia Resources, Inc. (OTCMKTS:NEWC) Recent Trading Information

New Colombia Resources, Inc. (OTCMKTS:NEWC) closed its last trading session down -0.00040 at 0.00770 with 17,718,641 shares trading hands.

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