UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended: Ended May 31, 20222023

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Periodtransition period from ___________________________________ to ___________________________________

Commission file number: number 000-55517

PUREBASE CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada 27-2060863

(State or other Jurisdiction

(I.R.S. Employer
of Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

8631 State Highway 124

Ione, California

 95640
(Address of Principal Executive Offices) (Zip Code)

 

(209) 274-9143

(Registrant’s telephone number, including area code)

 

N/A

(Former address)

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

 

Title of each class Trading symbol(s) 

Name of each exchange on which registered

None N/A N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.001

(Title of class)

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit)submit such files). Yes ☒ No ☐

 

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

 

Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Emerging Growth Companygrowth company☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)7(a)(2)(B) of the ExchangeSecurities Act: ☐

 

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

 

As of July 13, 2022,14, 2023, there were 239,672,406 230,863,005shares of the registrant’s common stock outstanding.

 

 

PUREBASE CORPORATION AND SUBSIDIARIES

FOR THE QUARTERLY PERIOD ENDED MAY 31, 20222023

 

 Page
PART I. FINANCIAL INFORMATION
ITEM 1.Financial Statements (unaudited)3
Condensed Consolidated Balance Sheets as of May 31, 2022 and November 30, 20213
Condensed Consolidated Statements of Operations for the Three and Six Months Ended May 31, 2022 and May 31, 20214
Condensed Consolidated Statement of Changes in Stockholders’ Deficit for the Three and Six Months Ended May 31, 2022 and May 31, 20215
Condensed Consolidated Statements of Cash Flows for the Six Months Ended May 31, 2022 and May 31, 20216
Notes to Condensed Consolidated Financial Statements7
ITEM 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations22
ITEM 3.Quantitative and Qualitative Disclosures about Market Risk27
ITEM 4.Controls and Procedures27
PART II. OTHER INFORMATION 
   
ITEM 1.FINANCIAL STATEMENTS (UNAUDITED)
Legal ProceedingsCONDENSED CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2023 AND NOVEMBER 30, 2022293
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2023 AND MAY 31, 20224
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2023 AND MAY 31, 20225
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MAY 31, 2023 AND MAY 31, 20226
NOTES TO CONDENSED CONSOLIDTED FINANCIAL STATEMENTS7
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS26
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK32
ITEM 4.CONTROLS AND PROCEDURES32
PART II. OTHER INFORMATION33
ITEM 1.LEGAL PROCEEDINGS

33

   
ITEM 1A.Risk FactorsRISK FACTORS2933
   

ITEM 2.

Unregistered Sales of Equity Securities and Use of ProceedsUNREGISTERED SALES OF EQUITY SECURITES AND USE OF PROCEEDS2933
   
ITEM 3.Defaults Upon Senior SecuritiesDEFAULTS UPON SENIOR SECURITIES3033
   
ITEM 4.Mine Safety DisclosuresMINE SAFETY DISCLOSURES3033
   
ITEM 5.Other InformationOTHER INFORMAION3034
   
ITEM 6.ExhibitsEXHIBITS3034
   
SIGNATURES3135

2

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 May 31, November 30, 
 2022  2021  May 31, 2023 November 30, 2022 
 (Unaudited)    (Unaudited)   
ASSETS             
             
Current Assets:                
Cash and cash equivalents $106,529  $132,309  $23,248  $19,055 
Accounts receivable, net of allowances for uncollectables of $- and $18,277, respectively  37,696   2,000 
Accounts receivable  66,376   - 
Prepaid expenses and other assets  1,148   4,594   1,184   4,731 
Total Current Assets  145,373   138,903   90,808   23,786 
                
Property and equipment, net  620,000   620,000   620,000   620,000 
Right of use asset  7,109   15,639   59,699   79,599 
                
Total Assets $772,482  $774,542  $770,507  $723,385 
                
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                
Current Liabilities:                
Accounts payable and accrued expenses $106,563  $156,616  $412,557  $115,478 
Settlement liability  400,000   400,000   -   400,000 
Lease liability  7,407   16,095 
Lease liability, current  39,869   38,882 
Note payable to officer  48,716   58,716   13,716   28,716 
Due to affiliated entities  258,848   729,059 
Convertible notes payable - related party, net of discount of $- and $5,329, respectively  -   994,671 
Convertible notes payable, related party  12,000   36,000 
Notes payable, related party  25,000   25,000   -   25,000 
Notes payable        
Total Current Liabilities  846,534   2,380,157   478,142   644,076 
                
Convertible notes payable - related party, net of current portion, and net of discount of $-  -   579,769 
Lease liability, net of current portion  20,696   40,880 
Convertible notes payable; related party, net of current portion  1,331,742   610,889 
                
Total Liabilities  846,534   2,959,926   1,830,580   1,295,845 
                
Commitments and Contingencies (Note 8)  -   - 
Commitments and Contingencies (Note 9)        
                
Stockholders’ Deficit:                
Preferred stock, $.001 par value; 10,000,000 shares authorized; 0 and 0 shares issued and outstanding, respectively  -   - 
Common stock, $.001 par value; 520,000,000 shares authorized; 239,122,406 and 215,380,751 shares issued and outstanding, at May 31, 2022 and November 30, 2021, respectively  168,719   144,977 
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding, at May 31, 2023 and November 30, 2022  -   - 
Common stock, $0.001 par value; 520,000,000 shares authorized; 230,763,005 and 230,753,005 shares issued and outstanding, at May 31, 2023 and November 30, 2022, respectively  160,360   160,350 
Additional paid in capital  39,534,375   18,730,863   60,273,231   52,910,839 
Accumulated deficit  (39,777,146)  (21,061,224)  (61,493,664)  (53,643,649)
Total Stockholders’ Deficit  (74,052)  (2,185,384)  (1,060,073)  (572,460)
                
Total Liabilities and Stockholders’ Deficit $772,482  $774,542  $770,507  $723,385 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3

 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021 
 For the Three Months Ended For the Six Months Ended  May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022 
 May 31, 2022 May 31, 2021 May 31, 2022 May 31, 2021  For the Three Months Ended For the Six Months Ended 
          May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022 
Revenue, net $228,476  $30,000  $228,476  $30,000  $66,376  $228,476  $118,632  $228,476 
                                
Cost of goods sold  26,606   88,030   49,069   91,282 
                
Operating Income  39,770   140,446   69,563   137,194 
                
Operating Expenses:                                
Selling, general and administrative  7,622,810   412,861   18,823,211   633,787   2,321,585   7,622,810   8,208,455   18,823,211 
Product fulfillment  88,030   15,594   91,282   17,708 
Total Operating Expenses  7,710,840   428,455   18,914,493   651,495   2,321,585   7,622,810   8,208,455   18,823,211 
                                
Loss From Operations  (7,482,364)  (398,455)  (18,686,017)  (621,495)  (2,281,815)  (7,482,364)  (8,138,892)  (18,686,017)
                                
Other Income (Expense):                                
Other income  -   23,200   2,007   23,200   275,000   -   310,401   2,007 
Interest expense  (11,013)  (31,088)  (31,911)  (46,048)  (12,401)  (11,013)  (21,524)  (31,911)
Total Other Income (Expense)  (11,013)  (7,888)  (29,904)  (22,848)
Total Other Income (Expense), net  262,599   (11,013)  288,877   (29,904)
                                
Net Loss $(7,493,377) $(406,343) $(18,715,921) $(644,343) $(2,019,216) $(7,493,377) $(7,850,015) $(18,715,921)
                                
Loss per Common Share - Basic and Diluted $(0.03) $(0.00) $(0.08) $(0.00) $(0.01) $(0.03) $(0.03) $(0.08)
                                
Weighted Average Shares Outstanding - Basic and Diluted  229,316,070   214,981,071   222,424,978   214,965,990   230,473,222   229,316,070   230,609,928   222,424,978 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2023 AND 2022

(Unaudited)

 

                          Additional      
          Additional       Preferred Stock Common Stock Paid-in Accumulated Stockholders’ 
 Preferred Stock Common Stock Paid-in Accumulated Stockholders’ 
 Shares Amount Shares Amount Capital Deficit Deficit 
Balance at November 30, 2020         -  $         -   214,950,741  $144,547  $11,307,806  $(12,754,027) $    (1,301,674)
                            
Stock based compensation  -   -   -   -   10,688   -   10,688 
                            
Net loss  -   -   -   -   -   (238,000)  (238,000)
                            
Balance at February 28, 2021  -  $-   214,950,741  $144,547  $11,318,494  $(12,992,027) $(1,528,986)
                            
Stock based compensation - shares  -   -   430,000   430   24,245   -   24,675 
                            
Stock based compensation - options  -   -   -   -   44,148   -   44,148 
                            
Net loss  -   -   -   -   -   (406,343)  (406,343)
                            
Balance at May 31, 2021  -  $-   215,380,741   144,977   11,386,887   (13,398,370)  (1,866,506)
                             Shares Amount Shares Amount Capital Deficit Deficit 
Balance at November 30, 2021  -   -   215,380,751   144,977   18,730,863   (21,061,224)  (2,185,384)  -  $-  215,380,751  $144,977  $18,730,863  $(21,061,224) $(2,185,384)
                                                     
Stock based compensation - shares  -   -   -   -   10,949,738   -   10,949,738   - -  -   -   10,949,738   -   10,949,738 
                                                     
Net loss  -   -   -   -   -   (11,222,544)  (11,222,544)  -  -  -   -   -   (11,222,544)  (11,222,544)
                                                     
Balance as of February 28, 2022  -  $-   215,380,751   144,977   29,680,601   (32,283,769)  (2,458,191)  - $-  215,380,751  $144,977  $29,680,601  $(32,283,768) $(2,458,190)
                                                     
Stock based compensation - shares  -   -   -   -   7,304,345   -   7,304,345   - -  -   -   7,304,345   -   7,304,345 
                                                     
Convertible debt converted into common stock  -   -   23,741,655   23,742   2,549,429   -   2,573,171   - -  23,741,655   23,742   2,549,429   -   2,573,171 
                                                     
Net loss  -   -   -   -   -   (7,493,377)  (7,493,377)  -  -  -   -   -   (7,493,377)  (7,493,377)
                                                     
Balance at May 31, 2022  -  $-   239,122,406  $168,719  $39,534,375  $(39,777,146) $(74,052)  - $-  239,122,406  $168,719  $39,534,375  $(39,777,146) $(74,052)
                         
Balance at November 30, 2022  - $-  230,753,005  $160,350  $52,910,839  $(53,643,649) $(572,460)
                         
Stock based compensation - shares  - -  -   -   5,485,013   -   5,485,013 
                         
Settlement share surrender  - -  (300,000)  (300)  300   -   - 
                         
Net loss  -  -  -   -   -   (5,830,799)  (5,830,799)
                         
Balance as of February 28, 2023  - $-  230,453,005  $160,050  $58,396,152  $(59,474,448) $(918,246)
                         
Stock based compensation - shares  - -  -   -   1,841,389   -   1,841,389 
                         
Conversion of board of director accrued debt  - -  310,000   310   35,690   -   36,000 
                         
Net loss  -  -  -   -   -   (2,019,216)  (2,019,216)
                         
Balance at May 31, 2023     - $       -  230,763,005  $160,360  $60,273,231  $(61,493,664) $(1,060,073)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5

 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 May 31, 2022 May 31, 2021  May 31, 2023 May 31, 2022 
 For the Six Months Ended  For the Six Months Ended 
 May 31, 2022  May 31, 2021  May 31, 2023 May 31, 2022 
Cash Flows From Operating Activities:                
Net loss $(18,715,921) $(644,343) $(7,850,015) $(18,715,921)
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock based compensation  18,254,083   79,511   7,326,402   18,254,083 
Amortization of debt discount  5,329   21,775   -   5,329 
Non-cash effect of right of use asset  -   401 
Non-cash director compensation  12,000   - 
Gain on debt forgiveness  (35,401)  - 
Gain on settlement  (275,000)  - 
Changes in operating assets and liabilities:                
Accounts receivable  (35,696)  (30,000)  (66,376)  (35,696)
Prepaid expenses and other current assets  3,446   4,376 
Prepaid expenses and other assets  3,547   3,446 
Right of use asset  19,900   - 
Accounts payable and accrued expenses  62,979   42,359   323,333   62,979 
Settlement liability  (125,000)  - 
Change in settlement liability  (19,197)  - 
                
Net Cash Used In Operating Activities  (425,780)  (525,921)  (685,807)  (425,780)
                
Cash Flows From Financing Activities:                
Advances from related parties  410,000   569,461 
Payments on notes due to officers  (10,000)  (38,100)
Advances from related party  705,000   410,000 
Payments on notes payable, related party  (15,000)  (10,000)
                
Net Cash Provided By Financing Activities  400,000   531,361   690,000   400,000 
                
Net Increase In Cash  (25,780)  5,440 
Net Increase (Decrease) In Cash and Cash Equivalents  4,193   (25,780)
                
Cash - Beginning of Period  132,309   7,450 
Cash and Cash Equivalents - Beginning of Period  19,055   132,309 
                
Cash - End of Period $106,529  $12,890 
Cash and Cash Equivalents - End of Period $23,248  $106,529 
                
Supplemental Cash Flow Information:                
Cash paid for:        
Noncash operating, investing and financing activities:        
Noncash operating and financing activities:        
Forgiveness of accounts payable due to USMC $(15,853) $- 
Vendors paid for on behalf of the Company by USMC $4,282  $22,150  $8,320  $4,282 
Expenses paid for on behalf of the Company by USMC $7,533  $- 
Due to affiliates exchanged for convertible debt $884,493  $1,401,769  $-  $884,493 
Convertible debt converted to common stock $2,464,262  $-  $-  $2,464,262 
Accrued interested converted to common stock $108,909  $- 
Accrued interest converted to common stock $-  $108,909 
Director compensation - accrued as convertible debt converted to common stock $36,000  $- 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

 

 

PUREBASE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NoteNOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

 

Corporate HistoryOverview

 

The CompanyPureBase Corporation (“PureBase” or the “Company”) was incorporated in the State of Nevada on March 2, 2010 under the name Port of Call Online, Inc. to create a web-based service. The Company is an industrial mineral and natural resource company that would offer boaters an easy, convenient, fun, easy to use, online resource to help them plan and organize their boating trips. Pursuant to a corporate reorganization consummated on December 23, 2014, the Company changed its business focusprovides solutions to the identification, acquisition, exploration, developmentagriculture and full-scale exploitation of industrial and natural mineral propertiesconstruction materials markets in the United States for the development of products for the constructionthrough its two subsidiaries, PureBase Agricultural, Inc., a Nevada corporation (“PureBase AG”), and agriculture markets. In line with this business focus, the Company changed its name to U.S. Agricultural Minerals, LLC, a Nevada limited liability company (“PureBase Corporation in January 2015.SCM”), respectively.

 

The Company is headquartered in Ione, California.

Business OverviewAgricultural Sector

The Company through its two divisions, Purebase Ag and Purebase SCM, is engaged in the agricultural and construction-materials sectors. In the agricultural sector, the Company’s business is to developdevelops specialized fertilizers, sun protectants, soil amendments and bio-stimulants for organic and non-organic sustainable agriculture.

In the construction sector, the Company’s focus since 2020 has been to develop and test a kaolin-based product that will help create a lower CO2-emitting concrete (through the use of high-quality supplementary cementitious materials (“SCM’s”.)) The Company is developing a SCM that it believes can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, the Company believes there are significant opportunities for high-quality SCM products in the construction-materials sector.

In the agricultural sector, the Company has developed and will seek to develop additional products derived from mineralized materials of leonardite, kaolin clay, laterite, and other natural minerals. These mineral and soil amendments are used to protect crops, plants and fruits from the sun and winter damage, to provide nutrients to plants, and to improve dormancy and soil ecology to help farmers increase the yields of their harvests.

The Company is building a brand family under the parent trade name “Purebase,“PureBase,” consisting of its PurebasePureBase Shade Advantage WP(WP) product, a kaolin-clay based sun protectant for crops. Itcrops and Humic Advantage, a humic acid product derived from leonardite.

Construction Sector

The Company has been developing and testing a kaolin-based product that it believes will help create a lower CO2-emitting concrete through the use of high-quality supplementary cementitious materials (“SCMs”). The Company is also involveddeveloping an SCM that it believes can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, the Company believes there are significant opportunities for high-quality SCM products in the early testing of soil amendment products based on humic and fulvic acids derived from leonardite. Other agricultural products are in the development stage.construction-materials sector.

 

The Company utilizes the services of US Mine Corporation (“USMC”), a Nevada corporation and a significant shareholder of the Company, for the development and contract mining of industrial mineral and metal projects, throughout North America, exploration drilling, preparation of feasibility studies, mine modeling, on-site construction, production, site reclamation, and for product fulfillment. Exploration services include securing necessary permits, environmental compliance, and reclamation plans. In addition, a substantial portion of the minerals to be utilizedused by the Company isare obtained from properties owned or controlled by USMC. A. Scott Dockter, the Company’s Principal Executive Officer and a director, and John Bremer, a director, are also officers, directors, and owners of USMC.

7

 

NOTE 2 – GOING CONCERN AND LIQUIDITY

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. AtAs of May 31, 2022,2023, the Company had a significant accumulated deficit of $39,777,14661,493,664 and working capital deficit of $701,161387,334. For the six months ended May 31, 2022,2023, the Company had a loss from operations of $18,715,9218,138,892 and negative cash flows from operations of $425,780685,807. The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2022, as well as other potential strategic and business development initiatives.2023. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses primarily with additional infusions of cash from advances from an affiliate,USMC and the sale of equity and convertible notes. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

7

The Company’s plan, through the continued promotion of its servicesproducts to existing and potential customers, is to generate sufficient revenues to cover its anticipated expenses. The Company is currently exploring several options to meet its short-term cash requirements, including future line of credits and issuances of equity securities or equity-linked securities fromto USMC and other third parties.

 

Although no assurances can be given as to the Company’s ability to deliver on its revenue plans or that unforeseen expenses may arise, management currently believes that the revenue to be generated from operations together with equity and debt financing, including funding from USMC in connection with the March 23, 2022 securities purchase agreement, March 7, 2023 securities purchase agreement, and July 10, 2023 line of credit agreement will provide the necessary funding for the Company to continue as a going concern for the next 12twelve months. On April 7,The March 23, 2022 the Company entered into a securities purchase agreement with USMC, a related party, pursuant to whichprovides for the issuance by the Company may issueof up to an aggregate of $1,000,000of two-year convertible promissory notes to USMC a related party (see(See Note 10)6). The notes bear interest at 5% per annum and any outstanding principal or interest under the notes are convertible into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.39 per share. Currently, the Company has not issued $919,209 of convertible notes under the March 23, 2022 securities purchase agreement and may issue an additional $80,791 of convertible notes. The March 7, 2023 securities purchase agreement provides for the issuance by the Company of up to an aggregate of $1,000,000 of two-year convertible promissory notes to USMC (See Note 6). The notes bear interest at 8% per annum and any outstanding principal or interest under the notes are convertible into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.10 per share. Currently, the Company has issued $412,533 of convertible notes under the March 7, 2023 securities purchase agreement and may issue an additional $587,467 of convertible notes under such securities purchase agreement. However,The July 10, 2023 line of credit agreement provides for the issuance for up to one year of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12). The note bears interest at 8% annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of the date hereof, there have been no advances from USMC under the July 10, 2023 line of credit agreement. There currently are no other arrangements or agreements for such financing, and management cannot guarantee any other potential debt or equity financing will be available, or if available, on favorable terms. As such, these matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease its operations completely.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments, unless otherwise indicated) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and explanatory notes thereto for the year ended November 30, 20212022 in our Annual Report on Form 10-K filed on March 15, 2022February 28, 2023 with the SEC. The results of the six months ended May 31, 20222023 (unaudited) are not necessarily indicative of the results to be expected for the full year ending November 30, 2022.2023.

 

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries PureBase AG and USAM.PureBase SCM. Intercompany accounts and transactions have been eliminated upon consolidation.

 

8

 

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and equity-based transactions at the date of the financial statements and the revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the unaudited condensed consolidated financial statements. Significant estimates include the allowance for doubtful accounts, useful lives of property and equipment, deferred tax asset and valuation allowance, and assumptions used in Black-Scholes-Merton, or BSM,the Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

 

Revenue

The Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company derives revenues from the sale of products from its agricultural products.sector and construction sector. The Company’s contracted transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts have a single performance obligation which are not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company’s performance obligation is satisfied upon the transfer of risk of loss to the customer.

 

Practical Expedients

As part of ASC Topic 606, the Company has adopted several practical expedients including:

●Significant Financing Component – the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.
●Unsatisfied and Partially Unsatisfied Performance Obligations – for all performance obligations related to contracts with a duration for less than one year, the Company has elected to apply the optional exemption provided in ASC Topic 606 and therefore is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period.
●Shipping and Handling Activities – the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.
●Right to Invoice – the Company has a right to consideration from a customer in an amount that corresponds directly with the value provided to the customer of the Company’s performance completed to date. The Company may recognize revenue in the amount to which the entity has a right to invoice.

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Disaggregated Revenue

Revenue consists of the following by product offering for the six months ended May 31, 2023:

SCHEDULE OF DISAGGREGATED REVENUE

CROP WHITE II  SHADE ADVANTAGE (WP)  SulFe Hume Si ADVANTAGE  Total 
           
$                   -  $               67,152  $            51,480  $       118,632 

Revenue consists of the following by product offering for the six months ended May 31, 2022:

 SCHEDULE OF DISAGGREGATED REVENUE

CROP WHITE II  SHADE ADVANTAGE (WP)  SulFe Hume Si ADVANTAGE  Total 
           
$192,780  $       35,696  $                         -  $   228,476 

CROP

WHITE II

  

SHADE

ADVANTAGE (WP)

  

SHADE

ADVANTAGE (WPM)

  Total 
               
$192,780  $18,624  $17,072  $228,476 

Revenue consists of the following by product offering for the six months ended May 31, 2021:

CROP

WHITE II

  

SHADE

ADVANTAGE (WP)

  

SHADE

ADVANTAGE

(WPM)

  Total 
           
$       -  $30,000  $         -  $30,000 

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were 0no cash equivalents as of May 31, 20222023 and November 30, 2021.2022.

 

AccountAccounts Receivable

 

The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. If collectability of an account becomes unlikely, an allowance is recorded for that doubtful account. TheAs of May 31, 2023 and November 30, 2022, the Company has determined that there was no allowance for doubtful accounts as of May 31, 2022, and an allowance of $18,277 as of November 30, 2021.was necessary.

 

Property and Equipment

 

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally threeto five years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated.

 SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY AND EQUIPMENT

Equipment3-5 years
Autos and trucks5 years

 

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Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The Company currently has $620,000 in property and equipment, that itprimarily two ball mills, acquired on May 1, 2020. As of May 31, 2022,2023, the Company has not put the acquired property and equipment to use. As such, the Company has not recorded depreciation.depreciation related to these assets.

 

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. NaNNo impairment losses were recorded during the three and six months ended May 31, 20222023 and 2021.May 31, 2022.

 

Shipping and Handling

 

The Company incurs shipping and handling costs which are charged back to the customer. There were noThe Company did not incur shipping and handling costs incurred during the three months ended May 31, 2023 and 2022, respectively. The Company incurred shipping and handling costs of $2,000 and no shipping and handling costs during the six months ended May 31, 2023 and 2022, and 2021.respectively.

 

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Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertisingincurred and marketing expenses were $29,260 and $42,000 for the six months ended May 31, 2022 and 2021, respectively, and $17,220 and $26,000 for the three months ended May 31, 2022 and 2021, respectively, andsuch costs are recorded in selling, general and administrative expenses onin the statementaccompanying condensed consolidated statements of operations. Advertising and marketing expenses were $2,643 for the three and six months ended May 31, 2023. There were no advertising and marketing expenses for the three and six months ended May 31, 2022.

 

Fair Value Measurements

 

As defined in ASC 820, “FairFair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

 

Level 1:Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
  
Level 2:Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
  
Level 3:Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

10

Fair Value of Financial Instruments

 

The carrying value of cash, accounts receivable, accounts payable, and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of notes approximates the estimated fair value for these financial instruments as management believes that such notes constitute substantially all of the Company’s debt and interest payable on the notes approximatesbased on the Company’s incremental borrowing rate.

Net Loss Per Common Share

 

Net loss per share of common stock is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the year.three and six month periods ended May 31, 2023 and 2022. All outstanding options are considered potential common stock. The dilutive effect, if any, of stock options are calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, outstanding options have been excluded from the Company’s computation of net loss per share of common stock for the three and six months ended May 31, 20222023 and May 31, 2021.2022.

11

 

The following table summarizes the securitiesstocks that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common stock:

SCHEDULE OF OUTSTANDING SHARES EXCLUDED FROM DILUTED LOSS PER SHARE

 Six Months Ended  Three Months Ended, 
 May 31, 2022  May 31, 2021  May 31, 2023 May 31, 2022 
          
Convertible Notes  -   129,117,358   6,656,110   - 
Stock Options  59,595,000   1,595,000   128,688,187   1,595,000 
Total  59,595,000   130,712,358   135,344,297   1,595,000 

 

 Three Months Ended  Six Months Ended, 
 May 31, 2022  May 31, 2021  May 31, 2023 May 31, 2022 
          
Convertible Notes  -   129,117,358   6,656,110   - 
Stock Options  1,595,000   1,595,000   128,688,187   59,595,000 
Total  1,595,000   130,712,358   135,344,297   59,595,000 

 

Stock-Based Compensation

 

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the accompanying condensed consolidated statements of operations.

 

For stock options issued to employees and members of the Company’s Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stockcommon stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

 

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Pursuant to ASU 2018-07 Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options as noted above.

 

Leases

 

With the adoption of ASC 842,Leases, operating lease agreements are required to be recognized on the balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities. Right-of-use (“ROU”)ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that wethe Company will exercise that option.

 

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Leases in which our company is the lessee are comprised of

The Company leases its corporate offices. All of the leases are classified as operating leases. The Company is a party to a two-year lease with USMC a related party, for 1,000 square feet of office space located in Ione, California (the “Ione Lease”) with respect to its corporate operations (See Note 10)7). TheEffective November 1, 2022, the Ione Lease expires in November 2022 (subjectwas amended to automatic extensions onextend the lease through October 2024 and to add an additional 700 square feet of office space for a month-to-month basis) and has atotal monthly base rental during the initial termprice of $1,5003,500. per month, with automatic one-month renewals. The remaining weighted average term is 0.421.4 years. The Company discounted lease payments using its estimated incremental borrowing rate at December 1, 2020. The weighted average incremental borrowing rate applied was 5%.

 

In accordance with ASC 842, Leases, wethe Company recognized a ROU asset and corresponding lease liability on ourthe condensed consolidated balance sheet for long-term office leases. See Note 7 – Leases for further discussion, including the impact on ourthe accompanying unaudited condensed consolidated financial statements and related disclosures.

 

Income Taxes

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in incomeoperations in the period that includes the enactment date.

 

The Company utilizes ASC 740, “IncomeIncome Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the condensed consolidated statements of operations.

Exploration Stage

In accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time as the Company exits the exploration stage by establishing proven or probable reserves. Expenditures relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred. Expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures relating to mine development activities for that particular project are capitalized as incurred. As of May 31, 2023, the Company was not engaged in any mine exploration.

Mineral Rights

Acquisition costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time as the Company exits the exploration stage by establishing proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a “final” or “bankable” feasibility study. Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to development activities for that particular project are capitalized as incurred.

Where proven and probable reserves have been established, the project’s capitalized expenditures are depleted over proven and probable reserves upon commencement of production using the units-of-production method. Where proven and probable reserves have not been established, such capitalized expenditures are depleted over the estimated production life upon commencement of extraction using the straight-line method.

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The carrying values of the mineral rights are assessed for impairment by management on a quarterly basis or when indicators of impairment exist. Should management determine that these carrying values cannot be recovered, the unrecoverable amounts are written off against earnings. As of May 31, 2023 and 2022, the Company did not have any capitalized mineral rights.

 

Recent Accounting Pronouncements

 

All other newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

 

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NOTE 4 – MINING RIGHTS

Federal Preference Rights Lease in Esmeralda County NV

This Preference Rights Lease is granted by the Bureau of Land Management (“BLM”) covering approximately 2,500 acres of land located in the Mount Diablo Meridian area of Nevada. Contained in the leased property is the Chimney 1 Potassium/Sulfur Deposit which consists of 15.5 acres of land fully permitted for mining operation which is situated within the 2,500 acres held by the Company. All rights and obligations under the Preference Rights Lease have been assigned to the Company by USMC. These rights were initially recorded at their cost of $200,000. At November 30, 2020, the Company fully impaired the asset. This lease requires a payment of $7,503 per year to the BLM.

Snow White Mine located in San Bernardino County, CA – Deposit

On November 28, 2014 US Mining and Minerals Corporation entered into a Purchase Agreement in which it agreed to sell its fee simple property interest and certain mining claims to USMC. In contemplation of the Plan and Agreement of Reorganization, on December 1, 2014, USMC, a related party, assigned its rights and obligations under the Purchase Agreement to the Company pursuant to an Assignment of Purchase Agreement. As a result of the Assignment, the Company assumed the purchaser position under the Purchase Agreement. The Purchase Agreement involves the sale of approximately 280 acres of mining property containing 5 placer mining claims known as the Snow White Mine located near Barstow, California in San Bernardino County. The property is covered by a Conditional Use Permit allowing the mining of the property and a Plan of Operation and Reclamation Plan has been approved by San Bernardino County and the BLM.Bureau of Land Management. An initial deposit of $50,000 was paid to the Company and held in escrow, and the Purchase Agreement required the payment of an additional $600,000 at the end of the escrow period. There was a delay in the original seller, Joseph Richard Matthewson, receiving a clear title to the property and a fully permitted project, both of which were conditions to closing.the closing of the sale from US Mining and Minerals Corporation to the Company. In light of the foregoing, and the payment of an additional $25,000, the parties agreed to extend the closing. Due to delays in the Company securing the necessary funding to close the purchase of the Snow White Mine property, John Bremer, a shareholder and a director of the Company, paid $575,000 to acquire the property interest and mining claims on or about October 15, 2015. Mr. Bremer willagreed to transfer title to the Company when the Company pays Mr. Bremerupon payment of $575,000 plus expenses to Mr. Bremer, however, the Company is under no obligation to do so. The mining claims require a minimum royalty payment of $3,500 per year to be made by the Company.

During the year ended November 30, 2017, USMC, agreed to offset the $75,000 deposit against money owed toCompany, which is paid by USMC. As a result, the purchase price is $650,000 plus expenses. Mr. Bremer has not restricted the Company from continuing its exploration on or access to the Snow White mine property.

On September 5, 2019, the Company’s board of directors approved the discontinuance of all mining and related activities at the Snow White project. The Company has no further obligation related to this project.

 

On April 1, 2020, the Company entered into a purchase and sale agreement with the Bremer Family 1995 Living Trust a related party of the Company,(the “Trust”), pursuant to which the Company will purchase the Snow White Mine for $836,000 (the “Purchase Price”). from the Trust. The Purchase Price plus 5%5% interest is payable in full in cash at the closing which must occur at any time before April 1, 2022 (the “Closing Date”).closing. On April 14, 2022, the agreement was amended to extend the closing date to April 14, 2023. On April 7, 2023 the agreement was further amended to extend the Closing Date to April 14, 2023.1, 2024.   

 

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

SCHEDULE OF PROPERTY AND EQUIPMENT

  May 31, 2023  November 30, 2022 
       
Furniture and equipment $6,952  $6,952 
Machinery and equipment  35,151   35,151 
Automobiles and trucks  25,061   25,061 
Construction in process  620,000   620,000 
Property and equipment, gross  687,164   687,164 
Less: accumulated depreciation  (67,164)  (67,164)
Property and equipment, net $620,000  $620,000 

There was no depreciation expense for the three or six months ended May 31, 2023 and 2022.

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NOTE 6 – NOTES PAYABLE

 

Bayshore Capital Advisors, LLC

 

On February 26, 2016, the Company issued a promissory note to Bayshore Capital Advisors, LLC (“Bayshore Capital”), an affiliate through common ownership of a 10%10% major shareholderstockholder of the Company, for $25,000 for working capital at an interest rate of 6%6% per annum. The note was payable August 26, 2016, or when the Company closes a bridge financing, whichever occurs first. TheOn February 4, 2023, Bayshore Capital agreed to cancel the $25,000 debt, plus $10,146 of accrued and unpaid interest. Prior to the cancellation of the note, the Company iswas in default on this note at May 31, 2022. During the six months ended May 31, 2022, the Company did not make repayments towards the outstanding balance of the note. The balance on the note was $25,000 as of May 31, 2022 and November 30, 2021 (see Note 10). Total interest expense on the note was $255 and $750 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on the note was zero and $380 for the three months ended May 31, 20222023 and 2021.2022.

 

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A. Scott Dockter – President and Chief Executive Officer

 

On August 31, 2017, the Company issued a note in the amount of $197,096 to A. Scott Dockter, President, Chief Executive Officer and a director of the Company, to consolidate the total amounts due to Mr. Dockter. The note bears interest at 6%6% and is due upon demand. During the six months ended May 31, 2022,2023, the Company paid $10,00015,000 towards the outstanding balance of the note. The balance on the note was $48,716 and $58,716 as of May 31, 2022 and November 30, 2021, respectively (See Note 10). Total interest expense on the note was $1,706612 and $3,3691,706 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on the note was $837233 and $1,507837 for the three months ended May 31, 2023 and 2022, respectively. The balance on the note was $13,716and 2021,$28,716 as of May 31, 2023 and November 30, 2022, respectively. There was $41,779 and $41,167 of accrued interest as of May 31, 2023 and November 30, 2022, respectively.

 

Convertible Promissory Notes – USMC

 

December 1, 2019

 

On December 1, 2019, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 10)12), the Company issued a convertible promissory note in the amount of $20,000to USMC, with a maturity date of December 31, 2021(“ (“Tranche #1”). The note bears interest at 5% 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16per share. On April 7, 2022, the December 1, 2019 note was amended to extend the maturity date to April 30, 2022. Thereafter, on April 7, 2022, and USMC gave notice of conversion of the outstanding principal balance of $20,000of the December 1, 2019 note, plus accrued interest totaling $2,351through such date, into 139,692shares of the Company’s common stock.

 

The issuance of Tranche #1 resulted in a discount from the beneficial conversion feature totaling $20,000. Total straight-line amortization of this discount totaled $was 0zero for the three and six months ended May 31, 2023 and May 31, 2022. Total interest expense on Tranche #1 was approximately zero and $4,783350 duringfor the six months ended May 31, 20222023 and May 31, 2021, respectively. Total straight-line amortization of this discount totaled $0 and $2,417 during the three months ended May 31, 2022, and May 31, 2021, respectively. Total interest expense on Tranche #1 was approximately $350zero and $500 for the six months ended May 31, 2022 and 2021, respectively. Total interest expense on Tranche #1 was approximately $100 and $250 for the three months ended May 31, 20222023 and 2021,2022, respectively.

 

January 1, 2020

 

On January 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 10)12), the Company issued a convertible promissory note in the amount of $86,000to USMC, with a maturity date of January 1, 2022(“ (“Tranche #2”). The note bears interest at 5%per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16per share. On April 7, 2022, the January 1, 2020 note was amended to extend the maturity date to April 30, 2022. Thereafter, on April 7, 2022, and USMC gave notice of conversion of the outstanding principal balance of $86,000of the January 1, 2020 note, plus accrued interest totaling $9,743through such date, into 598,392shares of the Company’s common stock.

15

 

The issuance of Tranche #2 resulted in a discount from the beneficial conversion feature totaling $32,250. Total straight-line amortization of this discount totaled $1,412zero and $8,0291,412 for the three and six months ended May 31, 20222023 and May 31, 2021, respectively. Total straight-line amortization of this discount totaled $1,412 and $4,059 during the three months ended May 31, 2022, and May 31, 2021, respectively. Total interest expense on Tranche #2 was approximately $1,500zero and $2,1001,500 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on Tranche #2 was approximately $450zero and $1,080450 for the three months ended May 31, 20222023 and 2021,2022, respectively.

 

February 1, 2020

 

On February 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 10)12), the Company issued a convertible promissory note in the amount of $72,000 to USMC, with a maturity date of February 1, 2022 (“Tranche #3”). The note bears interest at 5%5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16 per share. On April 7, 2022, the February 1, 2020 note was amended to extend the maturity date to April 30, 2022. Thereafter, on April 7, 2022, and USMC gave notice of conversion of the outstanding principal balance of $72,000 of the February 1, 2020 note, plus accrued interest totaling $7,851 through such date, into 499,068 shares of the Company’s common stock.

14

 

The issuance of Tranche #3 resulted in a discount from the beneficial conversion feature totaling $36,000. Total straight-line amortization of this discount totaled $3,103zero and $8,9633,103 for the six months ended May 31, 20222023 and 2021, respectively. Total straight-line amortization of this discount totaled $3,103 and $4,531 during the three months ended May 31, 2022, and May 31, 2021, respectively. Total interest expense on Tranche #3 was approximately $1,260zero and $1,7951,260 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on Tranche #3 was approximately $375zero and $900375 for the three months ended May 31, 20222023 and 2021,2022, respectively.

 

December 1, 2020

 

On December 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 10)12), the Company issued a convertible promissory note in the amount of $822,000 to USMC, with a maturity date of November 25, 2022 (“Tranche 4”). The note bears interest at 5%5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.16per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $822,000 of the December 1, 2020 note, plus accrued interest totaling $55,401 through such date, into 5,483,753 shares of the Company’s common stock. Total interest expense on Tranche #4 was approximately $17,700zero and $17,20017,700 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on Tranche #4 was approximately $7,500zero and $10,4007,500 for the three months ended May 31, 20222023 and 2021,2022, respectively.

March 17, 2021

 

On March 17, 2021, in connection with the March 11, 2021 securities purchase agreement with USMC a related party (see(See Note 10)12), the Company issued a convertible promissory note in the amount of $579,769 to USMC, with a maturity date of March 17, 2023 (“Tranche #5”). The note bears interest at5% 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.088 per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $579,769.39 of the March 17, 2021 note, plus accrued interest totaling $30,656 through such date, into 6,936,656 shares of the Company’s common stock. Total interest expense on Tranche #5 was approximately $8,800zero and $13,3008,800 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on Tranche #5 was approximately $1,700zero and $7,400 1,700for the three months ended May 31, 20222023 and 2021,2022, respectively.

 

March 14, 2022

 

On March 14, 2022, in connection with the November 25, 2020 securities purchase agreement with USMC a related party (see(See Note 10)12), the Company issued a convertible promissory note in the amount of $884,429.28884,429 to USMC, with a maturity date of March 14, 2024 (“Tranche #6”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.088 per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $884,492 of the March 14, 2022 note, plus accrued interest totaling $2,908 through such date, into 10,084,093 shares of the Company’s common stock. Total interest expense on Tranche #6 was approximately zero and $2,908 for the six months ended May 31, 2023 and May 31, 2022. Total interest expense on Tranche #6 was approximately zero and $2,908 for the three months ended May 31, 2023 and May 31, 2022.

16

August 30, 2022

On August 30, 2022, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible promissory note in the amount of $470,862 to USMC, with a maturity date of August 30, 2024 (“Tranche #7”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.0880.39 per share. On April 7, 20222 USMC gave notice of conversion of the outstanding principal balance of $884,492.28 of the March 14, 2022 note, plus accrued interest totaling $2,908 through such date, into 10,084,093 shares of the Company’s common stock. Total interest expense on Tranche #6#7 was approximately $2,90811,610 for the six months ended May 31, 2022.2023. Total interest expense on Tranche #6#7 was approximately $2,9085,805 for the three months ended May 31, 2022.2023.

November 29, 2022

On November 29, 2022, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible promissory note in the amount of $140,027 to USMC, with a maturity date of August 30, 2024 (“Tranche #8”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #8 was $3,453 for the six months ended May 31, 2023. Total interest expense on Tranche #8 was $1,726 for the three months ended May 31, 2023.

February 28, 2023

On February 28, 2023, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible promissory note in the amount of $308,320 to USMC, with a maturity date of February 28, 2025 (“Tranche #9”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #9 was $3,801for the three and six months ended May 31, 2023.

May 31, 2023

On May 31, 2023, in connection with the March 20, 2023 securities purchase agreement with USMC (See Note 12), the Company issued a convertible promissory note in the amount of $412,533 to USMC, with a maturity date of May 31, 2025 (“Tranche #10”). The note bears interest at 8% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share. There was no interest expense on Tranche #10 for the three and six months ended May 31, 2023.

Line of Credit –USMC

July 10, 2023

On July 10, 2023 , the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance for up to one year of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12). The note bears interest at 8% annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of the date hereof, there have been no advances from USMC under the July 10, 2023 line of credit agreement.

17

Convertible Debt – Board of Directors

On April 8, 2021, the Company entered into a twelve-month director agreement with Jeffrey Guzy, as amended on August 26, 2022 (the “Guzy Director Agreement”) pursuant to which Mr. Guzy will serve as a director of the Company, which agreement will automatically renew (the “Renewal Date”) for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Mr. Guzy is entitled to a cash fee of $1,000 per month which accrues as 0% debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Guzy at the Renewal Date or upon Mr. Guzy’ resignation or removal (the “Termination Date”) will be converted into the Company’s common stock at a price per share equal to the market price on the exchange or trading market where such stock is then traded or quoted or the volume-weighted average price (“VWAP”) of the common stock for the 20days immediately preceding the Renewal Date or the Termination Date, as the case may be. On April 14, 2023, Mr. Guzy converted $24,000 in accrued but unpaid director fees into 80,000 shares of common stock at $0.15 per share and 150,000 shares of common stock at $0.08 per share. As of May 31, 2023, cash fees owed to Mr. Guzy under the Guzy Director Agreement were deferred and debt in the amount of $2,000 is owed to Mr. Guzy.

On August 13, 2021, the Company entered into a twelve-month director agreement with Dr. Kurtis, as amended on August 26, 2022 (the “Kurtis Director Agreement”) pursuant to which Dr. Kurtis will provide up to five hours per month of board services, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Dr. Kurtis is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Dr. Kurtis at the Renewal Date or the Termination Date will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20 days immediately preceding the Renewal Date or the Termination Date, as the case may be. On April 14, 2023, Dr. Kurtis exercised the conversion of $12,000 in accrued but unpaid director fees to purchase 80,000 shares of common stock at $0.15 per share. As of May 31, 2023, cash fees owed to Dr. Kurtis as per the terms of the Kurtis Director Agreement were deferred and debt in the amount of $10,000 is owed to Dr. Kurtis.

NOTE 7 – LEASES

The following table presents net lease cost and other supplemental lease information:

SCHEDULE OF LEASE COST AND OTHER SUPPLEMENTAL LEASE INFORMATION

  

Six Months Ended

May 31, 2023

 
Lease cost    
Operating lease cost (cost resulting from lease payments) $21,000 
Short term lease cost  - 
Sublease income  - 
Net lease cost $21,000 
     
Operating lease – operating cash flows (fixed payments) $21,000 
Operating lease – operating cash flows (liability reduction) $19,197 
Non-current leases – right of use assets $59,699 
Current liabilities – operating lease liabilities $39,869 
Non-current liabilities – operating lease liabilities $20,696 

  

Six Months Ended

May 31,2022

 
Lease cost    
Operating lease cost (cost resulting from lease payments) $9,000 
Short term lease cost  - 
Sublease income  - 
Net lease cost $9,000 
     
Operating lease – operating cash flows (fixed payments) $9,000 
Operating lease – operating cash flows (liability reduction) $8,688 
Non-current leases – right of use assets $7,109 
Current liabilities – operating lease liabilities $7,407 
Non-current liabilities – operating lease liabilities $- 

18

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended May 31, 2023:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Fiscal Year Operating Leases 
Remainder of 2023 $31,500 
2024  31,500 
Total future minimum lease payments  63,000 
Amount representing interest  (2,435)
Present value of net future minimum lease payments $60,565 

 

NOTE 68 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following amounts:amounts as of:

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

  

As of May 31,

2022

  As of November 30, 2021 
       
Accounts payable $34,918  $2,647 
Accrued interest – related party  49,496   126,806 
Accrued compensation  22,148   27,163 
Accounts payable and accrued expenses $106,563  $156,616 

15

NOTE 7 – LEASES

 

The following table presents net lease cost and other supplemental lease information:

SCHEDULE OF LEASE COST AND OTHER SUPPLEMENTAL LEASE INFORMATION

  Six Months Ended
May 31, 2022		 
Lease cost  - 
Operating lease cost (cost resulting from lease payments) $9,000 
Short term lease cost  - 
Sublease income  - 
Net lease cost $9,000 
     
Operating lease – operating cash flows (fixed payments) $9,000 
Operating lease – operating cash flows (liability reduction) $8,688 
Non-current leases – right of use assets $7,109 
Current liabilities – operating lease liabilities $7,407 
Non-current liabilities – operating lease liabilities $- 

  

Six Months Ended

May 31, 2021

 
Lease cost  - 
Operating lease cost (cost resulting from lease payments) $9,000 
Short term lease cost  - 
Sublease income  - 
Net lease cost $9,000 
     
Operating lease – operating cash flows (fixed payments) $9,000 
Operating lease – operating cash flows (liability reduction) $8,265 
Non-current leases – right of use assets $24,169 
Current liabilities – operating lease liabilities $17,161 
Non-current liabilities – operating lease liabilities $7,407 

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended May 31, 2022:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Fiscal Year Operating Leases 
Remainder of 2022 $7,500 
Total future minimum lease payments  7,500 
Amount representing interest  93 
Present value of net future minimum lease payments $7,407 
  May 31, 2023  November 30, 2022 
       
Accounts payable $316,496  $30,078 
Accrued interest – related party  66,595   57,266 
Accrued compensation  29,466   28,134 
Accounts payable and accrued expenses $412,557  $115,478 

 

NOTE 89 – COMMITMENTS AND CONTINGENCIES

Office and Rental Property Leases

 

The Company is usingleasing office space provided byfrom USMC, a related partycompany that is owned by the Company’s majority shareholders and directors, A. Scott Dockter and John Bremer.Bremer (See Note 10)12).

16

 

Mineral Properties

 

The Company’s mineral rights require various annual lease payments (See Note 4).

 

Legal Matters

 

On July 8, 2020, the Company’s former Chief Financial Officer, Al Calvanico (“Calvanico”), filed a demand for arbitration alleging retaliation, wrongful termination, and demand for a minimum of $600,000 in alleged stock value, plus interest, recovery of past and future wages, attorneys’ fees, and punitive damages (collectively, the “Calvanico Claims”). The Company denied all Calvanico Claims. The Company believes Calvanico is owed nothing because it takes the position that Calvanico was not terminated, but rather, his employment contract expired on September 21, 2019, in accordance with its terms, and was not renewed by the Company and because Calvanico never exercised his stock options. On February 14, 2020, the Company requested in writing that Calvanico exercise his stock options within 30 days. Calvanico failed to do so. To date,The Company and Calvanico has not exercised his stock options. This dispute is currentlyengaged in binding arbitration which concluded on February 3, 2023. On June 20, 2023, the arbitration discovery phase. An arbitration hearing is scheduled for November 8-11, 2022 before arbitrator Scott Silvermandecided in Los Angeles.

On January 11, 2019,favor of the Company filed a complaintwith respect to breach of contract, fraud and negligent representation and wrongful discharge and in the Second Judicial District Courtfavor of Calvanico for attorneys’ fees for Calvanico’s asserted claims in the State of Nevada, Washoe County (Case # CV19-00097) against Agregen International Corp (“Agregen”) and Robert Hurtado alleging the misuse of proprietary and confidential information acquired by Mr. Hurtado while employed by the Company as Vice President of Agricultural Research and Development. Mr. Hurtado was terminated in March 2018 and since that time the Company alleges that he conspiredaccordance with Agregen to improperly use proprietary and confidential information to compete with the Company which constitute breaches of the non-compete and confidentiality provisions of his employment agreement with the Company. The CompanyA teleconference was seeking $100,000,000 in monetary damages. On March 14, 2019, Agregen and Mr. Hurtado filed an answer to the Company’s Complaint that the allegations were false. An Early Case Conference was held on April 26, 2019, and a pre-trial conference was held onset for July 10, 2019. On March 13, 2020, the Company filed a First Amended Complaint, adding James Todd Gauer and John Gingerich as additional defendants. A settlement agreement was entered into between the parties, effective June 3, 2022 and a Notice of Settlement was filed in the District Court pursuant to which, among other things, certain shares18, 2023 for determination of the Company’s common stock beneficially owned by the defendants willamount of attorneys’ fees to be surrendered to the Company.awarded.

19

 

On March 29, 2019, the Company was served with a complaint filed by Superior Soils Supplements LLC (“Superior Soils”) in the Superior Court of the State of California in and for the County of Kings (Case #19C-0124) relating to 64 truckloads of soil amendments delivered to a customer by the Company on behalf of Superior Soils. Superior Soils alleged that the soil amendments were not labeled correctly requiring the entire shipment of product to be returned to the Company. The complaint alleges breach of contract, misrepresentations, fraudulent concealment and unfair competition. The complaint seekssought damages of approximately $300,000400,000. The and, although the Company vigorously defended such claims and believed there was little to no risk of liability, it accrued $400,000 for such risk. On April 28, 2023, the Company and Superior Soils entered into a settlement agreement and mutual release pursuant to which the Company paid $125,000 to Superior Soils and Superior Soils filed its answer on May 6, 2019, denying responsibility for the mis-labelling and denying any liability for damages therefrom. The matter is set for trial in April 2023.a dismissal with prejudice.

 

Contractual Matters

 

On November 1, 2013, wethe Company entered into an agreement with USMC, a related party, in which USMC provides various technical evaluations and mine development services for the Company with regard to the various mining properties/rights owned by the Company. Terms of services and compensation will be determined for each project undertaken by USMC.

 

On October 12, 2018, the Board approvedCompany entered into a material supply agreement with USMC, a related party, pursuant to which USMC will provideprovides designated natural resources to the Company at predetermined prices (see(See Note 10)12).

Note 10 - STOCKHOLDERS’ EQUITY

On May 19, 2022, the Company entered into an agreement with Newbridge Securities Corporation (“Newbridge”) for a twelve-month term, pursuant to which Newbridge provided investment banking and corporate advisory services to the Company. As consideration therefor, the Company issued Newbridge 300,000 shares of common stock on June 17, 2022 which shares were subject to a 12-month lockup from the date of issuance. The shares were issued at a fair value of $0.35 per share.

On June 9, 2023, effective April 8, 2023, the Company entered into a one-year advisory agreement with Dr. Karen Scrivener (“Scrivener Agreement”) pursuant to which Dr. Scrivener will provide certain strategic decision advisory  services to the Company. As compensation therefor, Dr. Scrivener was issued 100,000 shares of the Company’s common stock on June 9, 2023 at $0.08 per share.

 

Note 911 – STOCK-BASED COMPENSATION

The Company accounted for its stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718.

 

2017 Equity Incentive Plan

 

On November 10, 2017, the Board approved the 2017 PureBase Corporation Stock Option Plan which is intended to be a qualified stock option plan (the “Option Plan”). The Board reserved 10,000,000 shares of the Company’s common stock to be issued pursuant to options granted under the Option Plan. The Option Plan was subsequently approved by shareholders on September 28, 2018. As of May 31, 2022,2023, options to purchase an aggregate of 50,000128,688,187 shares of common stock have been granted under the Option Plan.

 

The Company has also granted options to purchase an aggregate of 500,000 shares of common stock pursuant to employment contracts with certain employees prior to the adoption of the Option Plan.

 

On May 19,June 3, 2022, in connection with the settlement agreement with Agregen, Robert Hurtado, James Todd Gauer and John Gingerich, the Company entered intogranted James Todd Gauer an agreement with Newbridge Securities Corporation (“Newbridge”), pursuantimmediately exercisable option to which Newbridge will provide investment banking and corporate advisory services to the Company. As consideration therefor, the Company issued Newbridgepurchase 300,000 8,669,400shares of common stock, on June 17, 2022 whichthe equivalent number of shares are subjectof common stock that were surrendered to the Company, at an exercise price of $2.50 per share and a 12-month lockup fromfair value of $1,856,151. The option was valued using the date of issuance.Black-Scholes option pricing model under the assumptions in the below table.

 

1720

 

On August 26, 2022, the Company granted immediately exercisable options to purchase an aggregate of 2,223,787 shares of common stock to members of the Board, consultants and employees for services to be performed. The options were issued at an exercise price of $0.24 per share and a total fair value of $522,411. The options were valued using the Black-Scholes option pricing model under the assumptions in the below table.

SCHEDULE OF BLACK-SCHOLES OPTION MODEL ASSUMPTIONS

Grant Date Number of Options  Stock Price  Exercise Price  Expected Volatility  Risk-free Interest Rate  Dividend Rate  Expected Term Fair Value 
4/8/2021  250,000  $0.15  $0.10   281.00%  0.85%  0.00% 2.50 years $36,708 
8/13/2021  200,000  $0.46  $0.36   266.00%  0.79%  0.00% 3.50 years $90,944 
10/6/2021  116,000,000  $0.38  $0.38   278.00%  1.26%  0.00% 3.88 years $43,808,780 
6/3/2022  8,669,400  $0.22  $2.50   274.50%  2.95%  0.00% 3.50 years $1,856,151 
8/26/2022  1,734,615  $0.24  $0.24   269.24%  3.20%  0.00% 3.50 years $411,668 
8/26/2022  242,424  $0.24  $0.24   276.76%  3.20%  0.00% 3.00 years $57,264 
8/26/2022  246,748  $0.24  $0.24   207.37%  3.20%  0.00% 2.50 years $53,479 

 

The Company did not grant stock options during the six months ended May 31, 20222023 and May 31, 2021.2022.

The weighted average non-vested grant date fair value of non-vested options was zero and $10,917,826 at May 31, 2023 and November 30, 2022, respectively.

 

Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

SCHEDULE OF STOCK OPTION ACTIVITY 

   Weighted     Weighted 
   Average  Number of Average 
 Shares  Exercise Price  Shares Exercise Price 
Outstanding at November 30, 2021  117,795,000  $0.39   117,795,000  $0.39 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Expired or cancelled  -   -   -   - 
Outstanding at May 31, 2022  117,795,000   0.39   117,795,000  $0.39 
        
Outstanding at November 30, 2022  128,688,187  $0.53 
Granted  -   - 
Exercised  -   - 
Expired or cancelled  -   - 
Outstanding at May 31, 2023  128,688,187  $0.53 

 

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at May 31, 2022:2023:

SCHEDULE OF STOCK OPTION SHARES OUTSTANDING AND EXERCISABLE 

      Weighted-  Weighted-    
      Average  Average    
Range of  Outstanding  Remaining Life  Exercise  Number 
exercise prices  Options  In Years  Price  Exercisable 
              
$0.099   400,000   2.14  $0.099   400,000 
 0.10   645,000   3.29   0.10   645,000 
 0.12   50,000   6.32   0.12   50,000 
 0.36   200,000   4.20   0.36   - 
 0.38   116,000,000   6.34   0.38   58,000,000 
 3.00   500,000   3.75   3.00   500,000 
     117,795,000   6.30  $0.39   59,595,000 
      Weighted-  Weighted-    
      Average  Average    
Exercise  Outstanding  Remaining Life  Exercise  Number 
Price  Options  In Years  Price  Exercisable 
              
$0.10   400,000   1.39  $0.10   400,000 
 0.10   645,000   2.54   0.10   645,000 
 0.12   50,000   5.57   0.12   50,000 
 0.24   2,223,787   4.16   0.24   2,223,787 
 0.36   200,000   3.45   0.36   200,000 
 0.38   116,000,000   5.59   0.38   116,000,000 
 2.50   8,669,400   4.26   2.50   8,669,400 
 3.00   500,000   3.01   3.00   500,000 
     128,688,187   5.44  $0.53   128,688,187 

 

The compensation expense attributed to the issuance of the options is recognized as they are vested.options vest.

21

 

The stock options granted under the Option Plan are exercisable forover various terms from thee to ten years from the grant date and vest over various terms from the grant date to three yearsfive years..

 

Total compensation expense related to the options was $18,254,0837,326,402 and $54,83618,254,083 for the six months ended May 31, 20222023 and May 31, 2021,2022, respectively. Total compensation expense related to the options was $7,304,3451,841,389 and $24,2457,304,345 for the three months ended May 31, 20222023 and May 31, 2021,2022, respectively. As of May 31, 2022,2023, there was $18,211,533no in future compensation cost related to non-vested stock options.

 

The aggregate intrinsic value is $152,70031,155 for total outstanding and exercisable options, which was based on ouran estimated fair value of the Company’s common stock of $0.240.13 as of May 31, 2022,2023, which is the aggregate fair value of the common stock that would have been received by the option holders had all option holders exercised their options as of that date, net of the aggregate exercise price.

 

NOTE 1012 –RELATED PARTY TRANSACTIONS

Bayshore Capital Advisors, LLC

 

On February 26, 2016, the Company issued a promissory note in the principal amount of $25,000 with an interest rate of 6% per annum to Bayshore Capital Advisors, LLC (“Bayshore Capital”), an affiliate through common ownership of a 10%10 shareholder% major stockholder of the Company, for $25,000 for working capital purposes.at an interest rate of 6% per annum. The note was payable August 26, 2016, or when the Company closes a bridge financing, whichever occurs first. TheOn February 4, 2023, Bayshore Capital agreed to cancel the $25,000 debt, plus $10,146 of accrued and unpaid interest. Prior to the cancellation of the note, the Company iswas in default on thisthe note. Total interest expense on the note atwas $255 and $750 for the six months ended May 31, 2022.2023 and 2022, respectively. Total interest expense on the note was zero and $380 for the three months ended May 31, 2023 and 2022, respectively.

18

US Mine Corporation

 

The Company entered into a contract mining agreement with USMC, a company owned by the majority stockholders of the Company,which A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, each own 33%, pursuant to which USMC provides various technical evaluations and mine development services to the Company. During the six months ended May 31, 20222023 and 2021,2022, the Company did not make anymade $34,364 and no purchases from USMC.USMC, respectively. No services were rendered by USMC for the six months ended May 31, 20222023 and 2021.2022. In addition, during the six months ended May 31, 20222023 and 2021,2022, USMC paid $4,28215,853 and $22,1504,438, respectively, of expenses to the Company’s vendors and creditors on behalf of the CompanyCompany. During the six months ended May 31, 2023 and also2022, USMC made cash advances to the Company of $410,000705,000 and $569,461410,000, respectively, which are recorded as part of due to affiliates and convertible notes payable, related party on the Company’s unauditedcondensed consolidated balance sheets. TheAll amounts owed for services rendered, expenses paid on behalf of the Company, and cash advances were converted into the Company’s common stock pursuant to the September 5, 2019 Debt Exchange Agreement, (See Note 5) and the November 25, 2020 Securities Purchase Agreement (See Note 5)6) and the April 7, 2022 Securities Purchase Agreement (See Note 6). The Company had a balance due of $406,604 and zeroto USMC was $258,848 and $729,059 aton May 31, 20222023 and November 30, 2021,2022, respectively.

 

On September 26, 2019, theUSMC Notes

The Company has entered into avarious securities purchase agreementagreements with USMC pursuant to which USMC may purchase the Company’s unsecured convertible promissory notes (See Note 6). The outstanding balance on the convertible notes due to USMC was $1,331,742 and $610,889 on May 31, 2023 and November 30, 2022, respectively. Interest expense on the convertible notes due to USMC totaled $18,864 and $32,518 for the six months ended May 31, 2023 and May 31, 2022, respectively. Interest expense on the convertible notes due to USMC totaled $11,333 and $13,033 for the three months ended May 31, 2023 and May 31, 2022, respectively.

22

USMC Line of Credit

On July 10, 2023, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance for up to one year of up to an aggregate of $1,000,000 of the Company’s 5%advances from USMC under an unsecured convertible two-yeargrid promissory notes in onenote (See Note 6). The note bears interest at 8% annum and any outstanding principal or more closings. The notes areaccrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.160.10 per share.share on the maturity date. As of April 7, 2022,the date hereof, there have been no advances from USMC had purchased notes totaling $1,000,000 with maturity dates ranging from December 1, 2021, through November 25, 2022 (see Note 5). Interest expense on these notes totaled $3,121 and $4,438 forunder the six months ended May 31, 2022 and 2021, respectively. Interest expense on these notes totaled $927 and $2,243 for the three months ended May 31, 2022 and 2021, respectively. On April 7, 2022, the December 1, 2019, January 1, 2020 and February 1, 2020 notes were amended to extend the maturity dates to April 30, 2022. Thereafter, on April 7, 2022, USMC converted the aggregate outstanding principal balanceJuly 10, 2023 line of $1,000,000 of the December 1, 2019, January 1, 2020, February 1, 2020 and December 1, 2020 notes, plus accrued interest totaling $75,346 through such date, into 6,720,906 shares of the Company’s common stockscredit agreement.

 

On November 25, 2020, the Company entered a securities purchase agreement with USMC pursuant to which USMC may purchase up to $2,000,000 of the Company’s 5% unsecured two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.088 per share. As of April 7, 2022, USMC has purchased notes totaling $1,579,769 with a maturity date of March 17, 2023 (see Note 5). Interest expense on these notes totaled $26,494 and $23,105 for the six months ended May 31, 2022 and 2021, respectively. Interest expense on these notes totaled $9,212 and $17,746 for the three months ended May 31, 2022 and 2021, respectively. On March 14, 2022, in connection with the November 25, 2020, securities purchase agreement with USMC, a related party, the Company issued a convertible promissory note in the amount of $884,492.28 to USMC, with a maturity date of March 14, 2024. The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the Holder, at a conversion price of $0.088 per share. Interest expense on this note totaled $2,908 for the six months ended May 31, 2022. Interest expense on this note totaled $2,908 for the three months ended May 31, 2022. On April 7, 2022, USMC converted the aggregate outstanding principal balance of $1,464,337 of the November 25, 2020 note and March 14, 2022 note, plus accrued interest totaling $33,564 through such date, into 17,020,749 shares of the Company’s common stock.Mining Agreements

On April 7, 2022, the Company entered into a securities purchase agreement with USMC, effective March 23, 2022, pursuant to which USMC may purchase up to $1,000,000 of the Company’s 5% unsecured convertible two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.39 per share.

There was no outstanding balance on the above notes as of May 31, 2022. The outstanding balance due on the above notes to USMC was $1,579,769 at November 30, 2021.

19

 

On April 22, 2020, the Company entered into a Material Supply Agreement (the “Supply Agreement”) with USMC which amended the prior Materials Supply Agreement entered into on October 12, 2018. AllUnder the terms of the Supply Agreement, all kaolin clay purchased by the Company from USMC under the Supply Agreement must be used exclusively for agricultural products and supplementary cementitious materials. Under the terms of the Supply Agreement, theThe Company will pay $25 per ton for the kaolin clay for supplementary cementitious materials and $145 per ton for bagged products for clay for agriculture (in each case plus an additional $5 royalty fee per ton). The Supply Agreement also provides that if USMC provides pricing to any other customer which is more favorable than that provided to the Company, USMC will adjust the cost to the Company to conform to the more favorable terms. The initial term of the Supply Agreement is three years, which automatically renews for three successive one-year terms, unless either party provides notice of termination at least sixty days prior to the end of the then current term. Either party has the right to terminate the Supply Agreement for a material breach which is not cured within 90 days. For the six months ended May 31, 2023 and 2022, the Company purchased $34,365 and $72,236, respectively, under the Supply Agreement. For the three months ended May 31, 2023 and 2022, the Company purchased $12,450 and $72,236, respectively, under the Supply Agreement. Since April 22, 2020, the Company has purchased $292,806 of materials under the Supply Agreement.

 

US Mine LLC

 

On May 27, 2021, the Company entered into the Materials Extraction Agreement with US Mine, LLC, pursuant to which the Company acquired the right to extract up to 100,000,000 of certain raw clay materials. The Materials Extraction Agreement is effective until 100,000,000 tons of material are extracted.As compensation for such right, the Company issued a ten-year convertible promissory note in the principal amount of $50,000,000 to US Mine, LLC (the “US Mine Note”). The US Mine Note bears interest at the rate of2.5% per annum which is payable upon maturity. Amounts due under the US Mine Note may be converted into shares of the Company’s common stock at the option of the noteholder, at a conversion price of $0.43 per share. The noteholder may convert (i) up to 50% of the outstanding balance on or after such date as the Company’s common stock is listed for trading on any national securities exchange, (ii) up to an additional 25% of the outstanding balance on or after the six-month anniversary of such initial trading date, and (iii) the remaining 25% on or after the twelve-month anniversary of such initial trading date.date. In addition, the Company will pay US Mine, LLC a royalty fee of $5.00per ton of materials extracted and any royalty not paid in a timely manner with be subject to 15% interest per annum and compounded monthly.monthly.

 

On October 6, 2021, and prior to consummation of activities under the Materials Extraction Agreement, the Company and US Mine, LLC executed an amendment to the Materials Extraction Agreement (the “Amendment”). Pursuant to the Amendment, the US Mine Note was retroactively rescinded, ab initio and an option to purchase an aggregate of 116,000,000shares of the Company’s common stock at an exercise price of $0.38 per share until April 6, 2028, was issued to US Mine, LLC as compensation. Shares subject to the option vestvested as to 58,000,000 shares on April 6, 2022, 29,000,000 shares on October 6, 2022, and 29,000,000 shares on April 6, 2023. This agreement was further amended and restated on June 21, 2022, with the same option purchase, vesting and exercise schedule. For the three and six months ended May 31, 2022,2023 the Company expensed $18,254,0831,841,389 and $7,326,402 in stock-based compensation expense related to the issuance of the option on October 16, 2021 to US Mine LLC under the Materials Extraction Agreement.

 

23

Leases

On October 1, 2020 the Company entered into a two-year lease agreement for its office space with USMC with a monthly rent of $1,500 (See Note 7).

Transactions with Officers

 

On August 31, 2017, the Company issued a note in the amount of $197,096 to A. Scott Dockter, President, Chief Executive Officer and a director of the Company, to consolidate the total amounts due to Mr. Dockter. The note bears interest at 6%6% and is due upon demand. During the six months ended May 31, 2022,2023, the Company madepaid $10,00015,000 repayment towards the outstanding balance of the note. The balance on the note was $48,716 and $58,716 as of May 31, 2022 and November 30, 2021, respectively (See Note 10). Total interest expense on the note was $1,706612 and $3,3691,706 for the six months ended May 31, 20222023 and 2021,2022, respectively. Total interest expense on the note was $837233 and $1,507837 for the three months ended May 31, 2023 and 2022, respectively. The balance on the note was $13,716and 2021,$28,716 as of May 31, 2023 and November 30, 2022, respectively. There was $41,779 and $41,167 of accrued interest as of May 31, 2023 and November 30, 2022, respectively.

Convertible Debt – Board of Directors

On April 8, 2021, the Company entered into the Guzy Director Agreement (See Note 6) pursuant to which Mr. Guzy will serve as a director of the Company, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Mr. Guzy is entitled to a cash fee of $1,000 per month which accrues as 0% debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Guzy at the Renewal Date or upon Mr. Guzy’ resignation or removal will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. The Agreement also includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

On August 13, 2021, the Company entered into the Kurtis Director Agreement (See Note 6) pursuant to which Dr. Kurtis will provide up to five hours per month of board services, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Dr. Kurtis is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Dr. Kurtis at the Renewal Date or upon Dr. Kurtis’ resignation or removal will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

On June 9, 2023, effective April 8, 2023, the Company entered into a one-year advisory agreement with Dr. Karen Scrivener (“Scrivener Agreement”) pursuant to which Dr. Scrivener will provide certain advisory services to the Company. As compensation therefor, Dr. Scrivener was issued 100,000 shares of the Company’s common stock on June 9, 2023 at $0.08 per share.

Leases

On October 1, 2020, the Company entered into a two-year lease agreement for its office space with USMC with a monthly rent of $1,500 (See Note 7). The lease was amended to extend the term for an additional two years to November 1, 2024 and to add an additional 700 square feet of office space for a total monthly rental price of $3,500 per month,

 

NOTE 1113 – CONCENTRATION OF CREDIT RISK

Cash Deposits

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of May 31, 20222023 and November 30, 2021,2022, the Company had no deposits in excess of the FDIC insured limit.

 

2024

 

Revenues

 

Three customers accounted for 99% of total revenue for the six months ended May 31, 2023, as set forth below:

SCHEDULE OF CONCENTRATION OF CREDIT RISK

Customer A44%
Customer B40%
Customer C15%

Three customers accounted for 100% of total revenue for the six months ended May 31, 2022, as set forth below:

 

Customer A  84%
Customer B  8%
Customer C  8%

 

One customer accounted for 100% of total revenue for the six months ended May 31, 2021.

Accounts Receivable

 

Two customers accounted for 100% of the accounts receivable as of May 31, 2022,2023, as set forth below:

 

Customer A  5573%
Customer B  4527%

 

One customer accounted forThere were 100no% of the accounts receivable receivables as of November 30, 2021.2022.

 

Vendors

Six

One supplier accounted for 100% of purchases for the three months ended May 31, 2023.

Three suppliers accounted for 8560% of purchases as of May 31, 2022, as set forth below:

 

Vendor A  31%
Vendor B  16%
Vendor C  13%
Vendor D9%
Vendor E9%
Vendor F8%

Two suppliers accounted for 88% of purchases as of November 31, 2021, as set forth below:

Vendor A, a related party75%
Vendor B13%

NOTE 1214 – SUBSEQUENT EVENTS

 

A settlement agreement wasIn accordance with ASC 855, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events and transactions that occurred after May 31, 2023 through the date the condensed consolidated financial statements were filed. During this period the Company did not have any material reportable subsequent events other than those stated below:

On July 10, 2023, the Company entered into betweena line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the Companyissuance for up to one year of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12). The note bears interest at 8% annum and Agregen International Corp, Robert Hurtado, James Todd Gauer and John Gingerich, effective June 3, 2022, and a Notice of Settlement was filed inany outstanding principal or accrued interest under the Second Judicial District Court in the State of Nevada, Washoe County pursuant to which, among other things, certainnote is convertible into shares of the Company’s common stock beneficially owned by the defendants will be surrendered to the Company. Refer to Note 8 for more information.

On May 19, 2022, the Company entered into an agreement with Newbridge Securities Corporation (“Newbridge”), pursuant to which Newbridge will provide investment banking and corporate advisory services to the Company. As consideration therefor, the Company issued Newbridge 300,000 shares of common stock on June 17, 2022 which shares are subject toat a 12-month lockup from the date of issuance.

On June 9, 2022, the Company issued 250,000 shares of common stock to Jeffrey Guzy, a director, pursuant to his exercise of a stock option at an exerciseconversion price of $0.10per share.share on the maturity date. As of the date hereof, there have been no advances from USMC under the July 10, 2023 line of credit agreement.

 

2125

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

 

This Quarterly Report on Form 10-Q includes forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are statements in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021,2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 15, 2022,February 28, 2023, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in our forward-looking statements. These risks and factors include, by way of example and without limitation:

 

●absence of contracts with customers or suppliers;
●our ability to maintain and develop relationships with customers and suppliers;
●the impact of competitive products and pricing;
●supply constraints or difficulties;
●the retention and availability of key personnel;
●general economic and business conditions;
●substantial doubt about our ability to continue as a going concern;
●our ability to successfully implement our business plan;
●our need to raise additional funds in the future;
●our ability to successfully recruit and retain qualified personnel in order to continue our operations;
●our ability to successfully acquire, develop or commercialize new products;
●the commercial success of our products;
●the impact of any industry regulation;
●our ability to develop existing mining projects or establish proven or probable reserves;
●our dependence on one vendor for our minerals for our products;
●the impact of potentially losing the rights to properties;
●the impact of the increase in the price of natural resources; and
●the continued impact of the COVID-19 pandemic.

 

We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report, except as required by law.

 

As used in this Quarterly Report and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our,” refer to PureBase Corporation and its wholly-owned subsidiaries, PureBase Agricultural, Inc., a Nevada corporation (“PureBase AG”) and U.S. Agricultural Minerals, LLC, a Nevada limited liability company (“USAM”PureBase SCM”).

 

Business Overview

 

We are an industrial mineral and natural resource company that provides solutions to the agriculture and construction materials markets in the United States, through our two subsidiaries, PureBase AG, and PureBase SCM, respectively. The Company throughhas not yet commenced mining operations and relies on US Mine LLC for its two divisions, Purebase Ag and Purebase SCM, is engaged in the agricultural and construction-materials sectors. In the agricultural sector, the Company’s business is toraw materials.

26

Agricultural Sector

We develop specialized fertilizers, sun protectants, soil amendments and bio-stimulants for organic and non-organic sustainable agriculture.

In the construction sector, the Company’s focus since 2020 has been to develop and test a kaolin-based product that will help create a lower CO2-emitting concrete (through the use of high-quality SCM’s.) The Company is developing a SCM that it believes can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, the Company believes there are significant opportunities for high-quality SCM products in the construction-materials sector.

22

In the agricultural sector, the Company has We have developed and will seek to develop additional products derived from mineralized materials of leonardite, kaolin clay, laterite, and other natural minerals. These mineral and soil amendments are used to protect crops, plants and fruits from the sun and winter damage, to provide nutrients to plants, and to improve dormancy and soil ecology to help farmers increase the yields of their harvests.

The Company is We are building a brand family under the parent trade name “Purebase,“PureBase,” consisting of its PurebasePureBase Shade Advantage WP product, a kaolin-clay based sun protectant for crops. The Company is also involved in the early testing of soil amendment products based oncrops and Humic Advantage a humic and fulvic acidsacid product derived from leonardite. Other agricultural products are in the development stage.

 

The Company utilizesConstruction Sector

We are developing and testing a kaolin-based product that it believes will help create a lower CO2-emitting concrete through the use of high-quality supplementary cementitious materials (“SCMs”). We are developing SCMs for the construction material markets, particularly the cement markets that we believe can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, we believe there are significant opportunities for high-quality SCM products in the construction-materials sector.

We utilize the services of US Mine Corporation (“USMC”), a Nevada corporation, and a significant shareholder of the CompanyUSMC, for the development and contract mining of industrial mineral and metal projects, throughout North America, exploration drilling, preparation of feasibility studies, mine modeling, on-site construction, production, site reclamation and for product fulfillment. Exploration services include securing necessary permits, environmental compliance, and reclamation plans. In addition, a substantial portion of the minerals to be utilizedused by the Company isare obtained from properties owned or controlled by USMC.

A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also officers, directors and owners of USMC.

 

Recent Developments

 

On March 14, 2022,July 10, 2023, the Company issuedentered into a two-year 5%line of credit agreement and unsecured convertible grid promissory note to USMC in the principal amount of $884,492.28 (the “March 14, 2022 Note”), pursuant to the terms of a securities purchase agreement, dated March 17, 2021, with USMC. Amounts dueThe July 10, 2023 line of credit agreement provides for the issuance for up to one year of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12). The note bears interest at 8% annum and any outstanding principal or accrued interest under the March 14, 2022 Note may be convertednote is convertible into shares of the Company’s common stock at any time at the option of the holder, at a conversion price of $0.088$0.10 per share. The conversion price and number of shares issuable upon conversionshare on the maturity date. As of the March 14, 2022 Note is subject to adjustmentdate hereof, there have been no advances from time to time for any subdivision or consolidation of the Company’s shares and other dilutive events.

On April 7, 2022, the “Company entered into a First Amendment to Promissory Notes (the “Note Amendment”) with USMC the holder of the Company’s outstanding 5% unsecured convertible promissory notes (the “2019/2020 Notes”) issued under a securities purchase agreement, dated September 26, 2019. Pursuant to the Note Amendment, the maturity dates were extended, to April 30, 2022, for: (i) a 2019/2020 Note in the principal amount of $20,000, originally issued on December 1, 2019, with a maturity date of December 1, 2021, (ii) a 2019/2020 Note in the principal amount of $86,000, originally issued on January 1, 2020, with a maturity date of January 1, 2022, and (iii) a 2019/2020 Note in the principal amount of $72,000, originally issued on February 1, 2022, with a maturity date of February 1, 2022 (collectively, the “2019/2020 Amended Notes”). In addition, USMC waived any “Event of Default” under the 2019/2020 Amended Notes for the Company’s failure to pay any principal amount or interest due under the 2019/2020 Amended Notes, or failure to perform any other covenant, obligation, condition or agreement contained in anyJuly 10, 2023 line of the 2019/2020 Amended Notes. Except as expressly provided in the Note Amendment, all of the terms of the 2019/2020 Notes remain in full force and effect.

On April 7, 2022, the Company also entered into a securities purchase agreement with USMC, effective as of March 23, 2022, pursuant to which USMC may purchase up to an additional $1,000,000 of two year 5% unsecured convertible promissory notes (“2022/2023 Notes”), in one or more closings. Amounts due under the 2022/2023 Notes are convertible into shares of common stock at any time at the option of the holder, at a conversion price of $0.39 per share, subject to adjustment for any subdivision or consolidation of the Company’s shares and other standard dilutive events.

On April 7, 2022, USMC elected to convert all amounts due under the 5% unsecured convertible promissory notes into shares of common stock of the Company as follows: (i) the principal amount of $20,000, and accrued interest in the aggregate amount of $2,350.68, due under the outstanding note issued on December 1, 2019, into an aggregate of 139,692 shares, (ii) the principal amount of $86,000, and accrued interest in the aggregate amount of $9,742.74, due under the outstanding note issued on January 1, 2020, into an aggregate of 598,392 shares, (iii) the principal amount of $72,000, and accrued interest in the aggregate amount of $7,850.96, due under the outstanding note issued on February 1, 2020, was an aggregate of 499,068 shares, (iv) the principal amount of $822,000, and accrued interest in the aggregate amount of $55,400.55, due under the outstanding note issued on November 25, 2020, was converted into a total of 5,483,753 shares, (v) the principal amount of $579,769.39, and accrued interest in the aggregate amount of $30,656.30, due under the outstanding note issued on March 17, 2021, an aggregate of 6,936,656 shares, and (vi) the principal amount of $884,492.28, and accrued interest in the aggregate amount of $2,907.92, due under the outstanding note issued on March 14, 2022, an aggregate of 10,084,093 shares.

On May 19, 2022, the Company entered into an agreement with Newbridge Securities Corporation (“Newbridge”), whereby, Newbridge will provide investment banking and corporate advisory services to the Company in exchange for 300,000 shares of the Company’s restricted common stock. The common stock was issued on June 17, 2022 and will vest 12 months from the date of issuance.

23

A. Scott Dockter, the principal executive officer and a director and shareholder of the Company, and John Bremer, a director and shareholder of the Company, are also officers, directors and shareholders of USMC.credit agreement.

 

Results of Operations

 

Comparison of the Three Months Ended May 31, 2022 and2023 to the Three Months Ended May 31, 20212022

 

A comparison of the Company’s operating results for the three months ended May 31, 2022 and May 31, 2021 are summarized as follows:

  May 31, 2023  May 31, 2022  Variance 
Revenue, net $66,376  $228,476  $(162,100)
             
Cost of goods sold  26,606   88,030   (61,424)
             
Operating income $39,770  $140,446  $(100,676)
             
Operating Expenses:            
Selling, general and administrative  2,321,585   7,622,810   (5,301,225)
Loss from operations  (2,281,815)  (7,482,364)  5,200,549 
Other income (expense)  275,000   -   275,000 
Interest expense  (12,401)  (11,013)  1,388 
Net Loss $(2,019,216) $(7,493,377) $5,474,161 

 

  May 31,  May 31,    
  2022  2021  Variance 
Revenues $228,476  $30,000  $198,476 
Operating expenses:            
Selling, general & administrative  7,622,810   412,861   7,209,949 
Product fulfillment, exploration and mining  88,030   15,594   72,436 
Loss from operations  (7,482,364)  (398,455)  (7,083,909)
Other income (expense)  (11,013)  (7,888)  (3,135)
Net Loss $(7,493,377) $(406,343) $(7,087,034)
27

 

Revenues

 

Revenue increaseddecreased by $198,476,$162,100, or 662%,71% for the three months ended May 31, 20222023, as compared to the three months ended May 31, 2021,2022. This decrease was primarily due to a decrease in purchases by the Company’s customers buying more product during the three months ended May 31, 2022.2023.

Cost of Goods Sold

Cost of goods sold decreased by $61,424, or 70%, for the three months ended May 31, 2023, as compared to the three months ended May 31, 2022, directly corresponding with the decrease in revenue during the three months ended May 31, 2023.

 

Operating Expenses

 

Total operating expenses increaseddecreased by $7,282,385,$5,301,225, or 1,700%70%, for the three months ended May 31, 20222023, as compared to the three months ended May 31, 2021 as2022. The decrease in operating expenses was primarily due to a resultdecrease in stock-based compensation of an increase in stock compensation cost resulting primarily from the Company issuing stock options to US Mine, LLC.

Selling, general and administrative expenses increased by $7,209,949, or 1,746%,$5,462,956 for the three months ended May 31, 2022,2023, as compared to the three months ended May 31, 2021, due to an increase of approximately $7,280,100 in stock compensation cost due primarily from the Company issuing stock options to US Mine, LLC.

Product fulfillment, exploration and mining expenses for the three months ended May 31, 2022, increased $72,436, or 465% as compared to the three months ended May 31, 2021 due to an increase in exploration costs.

Other Income (Expense)

Other income (expense) increased by $3,125, or 40%, for the three months ended May 31, 2022, as compared to the three months ended May 31, 2021, primarily due to an increase in interest expense as a result of the Company issuing a convertible note in the principal amount of $884,492 to USMC subsequent to the three months ended May 31, 2022.

 

The Company continued to expense the option to purchase an aggregate of 116,000,000 shares of common stock granted to US Mine LLC on October 6, 2021 through March 2023, which constituted 99% of stock-based compensation during the period. As of April,2023, the Company no longer expensed such option which resulted in a decreased stock-based compensation expense during the three months ended May 31, 2023 compared to the three months ended May 31, 2022.

Other Income

The increase in other income for the three months ended May 31, 2023, as compared to the three months ended May 31, 2022, is due to a recognized gain of $275,000 from the settlement with Superior Soils on April 28, 2023.

Interest Expense

Interest expense increased by $1,388 or 13%, for the three months ended May 31, 2023, as compared to the three months ended May 31, 2022, primarily due to a increase in outstanding debt.

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Comparison of the Six Months Ended May 31, 2022 and2023 to the Six Months Ended May 31, 20212022

 

A comparison of the Company’s operating results for the six months ended May 31, 2022 and May 31, 2021 are summarized as follows:

  May 31,  May 31,    
  2022  2021  Variance 
Revenues $228,476  $30,000  $198,476 
Operating expenses:            
Selling, general & administrative  18,823,211   633,787   18,189,424 
Product fulfillment, exploration and mining  91,282   17,708   73,574 
Loss from operations  (18,686,017)  (621,495)  (18,064,522)
Other income (expense)  (29,904)  (22,848)  (7,056)
Net Loss $(18,715,921) $(644,343) $(18,071,578)
  May 31, 2023  May 31, 2022  Variance 
Revenue, net $118,632  $228,476  $(109,844)
             
Cost of goods sold  49,069   91,282   (42,213)
             
Operating income $69,563  $137,194  $(67,631)
             
Operating Expenses:            
Selling, general and administrative  8,208,455   18,823,211   (10,614,756)
Loss from operations  (8,138,892)  (18,868,017)  10,547,125 
Other income (expense)  310,401   2,007   308,394 
Interest expense  (21,524)  (31,911)  10,387 
Net Loss $(7,850,015) $(18,715,921) $10,865,906 

 

Revenues

 

Revenue increaseddecreased by $198,476,$109,844, or 662%48%, for the six months ended May 31, 20222023, as compared to the six months ended May 31, 2021,2022. This decrease was primarily due to a decrease in purchases by the Company’s customers buying more product during the threesix months ended May 31, 2022.2023.

Cost of Goods Sold

Cost of goods sold expenses decreased by $42,213, or 46%, for the six months ended May 31, 2023, as compared to the six months ended May 31, 2022, directly corresponding with the decrease in revenue during the six months ended May 31, 2023.

 

Operating Expenses

 

Total operating expenses increaseddecreased by $18,262,998,$10,614,756, or 2,803%56%, for the six months ended May 31, 20222023, as compared to the six months ended May 31, 2021 as2022. The decrease in operating expenses was primarily due to a resultdecrease in stock-based compensation of an increase in stock compensation cost resulting primarily from the Company issuing stock options to US Mine, LLC.

Selling, general and administrative expenses increased by $18,189,424, or 2,870%,$10,927,681 for the six months ended May 31, 2022,2023, as compared to the six months ended May 31, 2021, due to an increase of approximately $18,219,150 in stock compensation cost due primarily from the Company issuing stock options to US Mine, LLC.2022.

 

Product fulfillment, exploration and mining expensesThe Company continued to expense the option to purchase an aggregate of 116,000,000 shares of common stock granted to US Mine LLC on October 6, 2021 through March 2023, which constituted 99% of stock-based compensation during the period. As of April, 2023, the Company no longer expensed such option which resulted in a decreased stock-based compensation expense during the six months ended May 31, 2023 compared to the six months ended May 31, 2022.

Other Income

Other income increased by $308,394 for the six months ended May 31, 2022, increased $73,574, or 415%2023, as compared to the six months ended May 31, 20212022, primarily due to an increasea gain on legal settlement of $275,000, and gain on forgiveness of debt and accrued interest in exploration costs.the amount of $35,401.

 

Other Income (Expense)Interest Expense

 

Other income (expense) increasedInterest expense decreased by $7,056,$10,387, or 31%33%, for the six months ended May 31, 2022,2023, as compared to the six months ended May 31, 2021,2022, primarily due to an increasea decrease in interest expense as a result of the Company issuing a convertible note in the principal amount of $884,492 to USMC subsequent to the six months ended May 31, 2022outstanding debt.

 

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Liquidity and Capital Resources

 

As of May 31, 2022,2023, we had $106,529 in cash on hand of $23,248 and a working capital deficiency of $701,161,$387,334, as compared to cash on hand of $132,209$19,055 and a working capital deficiency of $2,241,254$620,290 as of November 30, 2021.2022. The decrease in working capital deficiency is mainly dueprimarily a result of a decrease in settlement liability from $400,000 to $225,000 and an increase in accounts receivable of $66,376, which were partially offset by an increase in accounts payable and accrued expenses of $297,079.

The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2023, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses with cash advances from USMC and the sale of equity and convertible notes. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Although no assurances can be given as to the conversion of notes dueCompany’s ability to deliver on its revenue plans or that unforeseen expenses may arise, management currently believes that the revenue to be generated from operations together with equity and debt financing, including funding from USMC in connection with the amountMarch 23, 2022 securities purchase agreement, March 7, 2023 securities purchase agreement, and July 10, 2023 line of $2,573,171 into common stock.

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Wecredit agreement will require additional fundsprovide the necessary funding for the Company to implement our growth strategy. We do not believe that our current cash and cash equivalents will be sufficient to meet our working capital requirementscontinue as a going concern for the next twelve months. We have had negative cash flow from operating activities as we have not yet begun to generate sufficient and consistent revenues to cover our operating expenses. Until we are able to establish a sufficient revenue stream from operations our ability to meet our current financial liabilities and commitments will be primarily dependent upon proceeds from outside capital sources including

On February 28, 2023, in connection with the securities purchase agreement with USMC, an affiliated entity. Ondated April 7, 2022, the Company entered intoissued a securities purchase agreement with USMC, a related party, pursuant to which the Company may issue up to an aggregate of $1,000,000 of two-year5% convertible promissory notesnote in the principal amount of $308,320 to USMC, a related party (see Note 10). The notes bear interest at 5% per annum and any outstanding principal or interestwhich matures on February 28, 2025. Amounts due under the notes are convertiblenote may be converted into shares of the Company’s common stock at any time at the option of the holder,noteholder, at a conversion price of $0.39 per share. Currently,

On May 31, 2023, in connection with the securities purchase agreement with USMC, dated March 20, 2023, the Company issued an 8% convertible promissory note in the principal amount of $412,533 to USMC, which matures on May 31, 2025 Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share.

On July 10, 2023, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance for up to one year of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12). The note bears interest at 8% annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of the date hereof, there have been no advances from USMC under the July 10, 2023 line of credit agreement.

Going Concern

The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses from inception through May 31, 2023 of $61,493,664 as well as negative cash flows from operating activities and a working capital deficiency. During the six months ended May 31, 2023, the Company received net cash proceeds of $705,000 from USMC and USMC paid $15,853 to vendors on behalf of the Company. If the Company does not issued any notes under such securities purchase agreement. However, theregenerate additional revenue and obtain equity and debt financing from USMC or other third parties, it will not have sufficient cash to meet its obligations for the twelve months following the date of this Quarterly Report. There currently are no other arrangements or agreements for such financing, and management cannot guaranteethere can be no assurances that any other potential debt or equity financing will be available, or if available, on favorable terms. As such, these matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

 

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Furthermore, such outside financing would likely take the form of bank loans, private offerings of debt or equity securities, advances from affiliates or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current shareholders while incurring debt and may subject the Company to restrictions on its operations and corporate actions.

Going Concern

The unaudited condensed consolidated financial statements presented in this Quarterly Report have been prepared under the assumption that the Company will continue as a going concern. The Company has accumulated losses from inception through May 31, 2022, of $39,777,146, as well as negative cash flows from operating activities. During the six months ended May 31, 2022, the Company received net cash proceeds of $410,000 from USMC, an affiliated entity. Presently the Company does not have sufficient cash to meet its debt and due to affiliated entities obligations in the twelve months following the date of this Quarterly Report. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in order to finance the capital requirements of the Company. There can be no assurance that the Company will be successful with its fund-raising initiatives.

The unaudited condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

 

Working Capital Deficiency

  May 31, 2023  November 30, 2022 
Current assets $90,808  $23,786 
Current liabilities  478,142   644,076 
Working capital deficiency $(387,334) $(620,290)

Our working capital deficiencyThe increase in current assets as of May 31, 2022, in comparison to our working capital deficiency as of November 30, 2021, is summarized as follows:

  May 31,  November 30, 
  2022  2021 
Current assets $145,373  $138,903 
Current liabilities  846,534   2,380,157 
Working capital deficiency $701,161  $(2,241,254)

The $6,740 increase, or 5%, increase in current assets2023 is primarily due to the increase of accounts receivable of $66,376. The decrease in current liabilities is primarily a result of a reduction in settlement liability from $400,000 to $225,000, partially offset by an increase in accounts receivablepayable and accrued expenses of $35,696, partially offset by a decrease in cash of $25,780 and a decrease in prepaid expenses and other assets of $3,446. Current liabilities decreased $1,533,623, or 64% during the six months ended May 31, 2022, as compared to the six months ended May 31, 2021 primarily due to a decrease in convertible notes payable of $994,671 and a decrease of amounts due to affiliated entities of $470,211 during the six months ended May 31, 2022.$297,079.

 

Cash Flows

 

  Six Months Ended 
  May 31, 2022  May 31, 2021 
Net cash used in operating activities $(425,780) $(525,921)
Net cash provided by financing activities  400,000   531,361 
Increase or (decrease) in cash $(25,780) $5,440 

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  Six Months Ended May 31, 
  2023  2022 
Net cash used in operating activities $(685,807) $(425,780)
Net cash provided by investing activities  -   - 
Net cash provided by financing activities  690,000   400,000 
Increase (decrease) in cash $4,193  $(25,780)

 

Operating Activities

Net cash used in operating activities was $685,807 for the six months ended May 31, 2023, primarily due to a net loss of $7,850,015, which primarily consisted of a non-cash expense of $7,326,402 related to stock-based compensation cost, professional fees of $542,885 and wages of $258,840, partially offset by a decrease of $275,000 in a settlement liability.

 

Net cash used in operating activities was $425,780 for the six months ended May 31, 2022, primarily due to a net loss of $18,715,921, which primarily consisted of a non-cash expense of $18,254,083 related to stock-based compensation cost, wages of $252,068 and professional fees of $239,529.

 

Net cash used in operating activities was $525,921 for the six months ended May 31, 2021, primarily due to a net loss of $644,343 which was partially offset by non-cash expenses of $101,687 related to stock-based compensation and amortization of debt discount and $16,735 of cash provided by changes in the levels of operating assets and liabilities, primarily as a result of increases in accounts payable and accrued expenses, partially offset by an increase in accounts receivable.

Investing Activities

 

There were no investing activities during the six months ended May 31, 20222023 and May 31, 2021.2022.

 

Financing Activities

For the six months ended May 31, 2022, net cash provided by financing activities was $690,000, consisting of $705,000 which was advanced to the Company by USMC and recorded as part of convertible notes payable, related party on the Company’s balance sheet. The advance was partially offset by $15,000 of principal payments to notes due to officers.

 

For the six months ended May 31, 2022, net cash provided by financing activities was $400,000, consisting of $410,000 which was advanced to the Company by USMC and recorded as part of due to affiliated entitiesconvertible notes payable, related party on the Company’s balance sheet and a $10,000 principal payment to notes due to officers.

 

For the six months ended May 31, 2020, net cash provided by financing activities was $387,811, which was primarily due to $178,000 received from convertible notes payable with USMC and $161,000 advanced to the Company by USMC.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

 

Critical Accounting Policies and Procedures

 

Our significant accounting policies are more fully described in Note 1 to our condensed consolidated financial statements included in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021,2022, as filed with the SEC on March 15, 2022.February 28, 2023.

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Recently Adopted Accounting Pronouncements

 

Our recently adopted accounting pronouncements are more fully described in Note 23 to our unaudited condensed consolidated financial statements included in this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company we are not required to provide the information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e)13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

 

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Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, our disclosure controls and procedures were not effective as of May 31, 20222023 due to the material weaknesses in internal control over financial reporting described below.

 

Material Weaknesses in Internal Control over Financial Reporting

 

A material weakness, as defined in the standards established by the Sarbanes-Oxley is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

 

The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses:

 

●Inadequate segregation of duties consistent with control objectives;
●Lack of formal policies and procedures;
●Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner; and
●Lack of personnel with U.S. GAAP experience.experience including a chief financial officer.

Management’s Plan to Remediate the Material Weakness

 

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:

 

●Continue to search for and evaluate qualified independent outside directors;
●Continue to search forHiring a qualified chief financial officer;officer before December 31, 2023;
●Identify gaps in ourthe Company’s skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and
●Continue to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing controls and procedures.

We have engaged a third-party financial operations consulting firm to assist with the preparation of SEC reporting.

 

Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal controlcontrols over financial reporting that occurred during the quarter ended May 31, 20222023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

Except as described below, there are no material pending legal proceedings in which we or any of our subsidiaries is a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.

On July 8, 2020, the Company’s former Chief Financial Officer, Al Calvanico (“Calvanico”), filed a demand for arbitration alleging retaliation, wrongful termination, and demand for a minimum of $600,000 in alleged stock value, plus interest, recovery of past and future wages, attorneys’ fees, and punitive damages (collectively, the “Calvanico Claims”). The Company denied all Calvanico Claims. The Company believes Calvanico is owed nothing because it takes the position that Calvanico was not terminated, but rather, his employment contract expired on September 21, 2019, in accordance with its terms, and was not renewed by the Company and because Calvanico never exercised his stock options. On February 14, 2020, the Company requested in writing that Calvanico exercise his stock options within 30 days. Calvanico failed to do so. To date,The Company and Calvanico has not exercised his stock options. This dispute is currentlyengaged in binding arbitration which concluded on February 3, 2023. On June 20, 2023, the arbitration discovery phase. An arbitration hearing is scheduled for November 8-11, 2022 before arbitrator Scott Silvermandecided in Los Angeles.

On January 11, 2019,favor of the Company filed a complaintwith respect to breach of contract, fraud and negligent representation and wrongful discharge and in the Second Judicial District Courtfavor of Calvanico for attorneys’ fees for Calvanico’s asserted claims in the State of Nevada, Washoe County (Case # CV19-00097) against Agregen International Corp (“Agregen”) and Robert Hurtado alleging the misuse of proprietary and confidential information acquired by Mr. Hurtado while employed by the Company as Vice President of Agricultural Research and Development. Mr. Hurtado was terminated in March 2018 and since that time the Company alleges that he conspiredaccordance with Agregen to improperly use proprietary and confidential information to compete with the Company which constitute breaches of the non-compete and confidentiality provisions of his employment agreement with the Company. The CompanyA teleconference was seeking $100,000,000 in monetary damages. On March 14, 2019, Agregen and Mr. Hurtado filed an answer to the Company’s Complaint that the allegations were false. An Early Case Conference was held on April 26, 2019, and a pre-trial conference was held onset for July 10, 2019. On March 13, 2020, the Company filed a First Amended Complaint, adding James Todd Gauer and John Gingerich as additional defendants. A settlement agreement was entered into between the parties, effective June 3, 2022 and a Notice of Settlement was filed in the District Court pursuant to which, among other things, certain shares18, 2023 for determination of the Company’s common stock beneficially owned by the defendants willamount of attorneys’ fees to be surrendered to the Company.awarded.

 

On March 29, 2019, the Company was served with a complaint filed by Superior Soils Supplements LLC (“Superior Soils”) in the Superior Court of the State of California in and for the County of Kings (Case #19C-0124) relating to 64 truckloads of soil amendments delivered to a customer by the Company on behalf of Superior Soils. Superior Soils alleged that the soil amendments were not labeled correctly requiring the entire shipment of product to be returned to the Company. The complaint alleges breach of contract, misrepresentations, fraudulent concealment and unfair competition. The complaint seekssought damages of approximately $300,000. The$400,000 and, although the Company vigorously defended such claims and believed there was little to no risk of liability, it accrued $400,000 for such risk. On April 28, 2023, the Company and Superior Soils entered into a settlement agreement and mutual release pursuant to which the Company paid $125,000 to Superior Soils and Superior Soils filed its answer on May 6, 2019, denying responsibility for the mis-labelling and denying any liability for damages therefrom. The matter is set for trial in April 2023.a dismissal with prejudice.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company we are not required to provide the information required by this Item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

 

Except as set forth below, thereThere were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.Company other than those noted below.

 

On May 19, 2022, the Company enteredApril 14, 2023, Jeffrey Guzy, a director, converted $24,000 in accrued but unpaid director fees into an agreement with Newbridge Securities Corporation (“Newbridge”), pursuant to which Newbridge will provide investment banking and corporate advisory services to the Company. As consideration therefor, the Company issued Newbridge 300,00080,000 shares of common stock on June 17, 2022 which shares are subject to a 12-month lockup from the date of issuance.

On June 9, 2022, the Company issued 250,000at $0.15 per share and 150,000 shares of common stock to Jeffrey Guzy, a director, pursuant to his exercise of a stock option at an exercise price of $0.10$0.08 per share.

On July 7, 2022, the Company issued an aggregate of 23,741,655 shares of its common stock to USMC pursuant to USMC’s notices of conversion, dated April 7, 2022, of an aggregate of $2,464,261.74 of principal amount of convertible promissory notes and $108,909 of accrued interest on such convertible promissory notes.

 

On April 14, 2023, Dr. Kimberly Kurtis, a director, converted $12,000 in accrued but unpaid director fees into 80,000 shares of common stock at $0.15 per share.

The above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe are exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

29

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

There are no defaults upon senior securities that were not previously reported in a Current Report on Form 8-K.None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

33

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

Exhibit

Number

Description
31*Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer and Chief Financial Officer
32*Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer and the Chief Financial Officer
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

 

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

 

PUREBASE CORPORATION

 
By:/s/ A. Scott Dockter 
A. Scott Dockter 
Chief Executive Officer and Chief Financial Officer 
(Principal Executive Officer and Principal Financial and Accounting Officer) 
Date:
Date: July 13, 202214, 2023 

 

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