UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A10-Q
(Amendment No. 1)
(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, 2021February 28, 2023
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 |
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 $0.0001
(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 |
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 OctoberApril 12, 2021,2023, there were shares of the registrant’s common stock outstanding.
EXPLANATORY NOTE
Purebase Corporation, a Nevada corporation (the “Company”), is filing this Amendment No. 1 to Form 10-Q/A (the “Amended 10-Q”) to amend the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2021, originally filed with the Securities and Exchange Commission (the “SEC”) on October 13, 2021 (the “Original 10-Q”), solely to amend certain disclosures related to a promissory note the Company issued to U.S. Mine, LLC, a related party, on May 27, 2021, which was retroactively rescinded, ab initio, on October 6, 2021.
Except as described above, no other amendments are being made to the Original 10-Q. This Amended 10-Q does not reflect events occurring after the filing of the Original 10-Q or modify or update the disclosure contained therein in any way other than as required to reflect the amendments discussed above.
The Company is filing with this Amended 10-Q updated certifications executed as of the date of this Amended 10-Q by its Principal Executive Officer and Principal Financial and Accounting Officer as required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002. These updated certifications are attached as Exhibits 31 and 32 to this Amended 10-Q.
PUREBASE CORPORATION AND SUBSIDIARIES
FOR THE QUARTERLY PERIOD ENDED MAY 31, 2021FEBRUARY 28, 2023
| 2 |
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| May 31, | November 30, | February 28, | November 30, | |||||||||||||
| 2021 | 2020 | 2023 | 2022 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 12,890 | $ | 7,450 | $ | 21,423 | $ | 19,055 | ||||||||
| Accounts receivable, net of allowances for uncollectables of $18,277 | 32,500 | 2,500 | ||||||||||||||
| Accounts receivable, net of allowances for uncollectables of zero | 53,880 | - | ||||||||||||||
| Prepaid expenses and other assets | 1,014 | 5,390 | 2,957 | 4,731 | ||||||||||||
| Total Current Assets | 46,404 | 15,340 | 78,260 | 23,786 | ||||||||||||
| Property and equipment, net | 620,000 | 620,000 | 620,000 | 620,000 | ||||||||||||
| Right of use asset | 24,169 | - | 69,649 | 79,599 | ||||||||||||
| Total Assets | $ | 690,573 | $ | 635,340 | $ | 767,909 | $ | 723,385 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||
| Current Liabilities: | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 184,249 | $ | 164,040 | $ | 236,006 | $ | 115,478 | ||||||||
| Settlement liability | 400,000 | 400,000 | 400,000 | 400,000 | ||||||||||||
| Lease liability | 17,161 | - | ||||||||||||||
| Lease liability, current | 39,372 | 38,882 | ||||||||||||||
| Note payable to officer | 89,716 | 127,816 | 18,716 | 28,716 | ||||||||||||
| Due to affiliated entities | 281,000 | 1,091,158 | ||||||||||||||
| Convertible notes payable - affiliated entity, net of discount of $27,224 | 150,776 | - | ||||||||||||||
| Convertible notes payable, related party | 42,000 | 36,000 | ||||||||||||||
| Notes payable, related party | 25,000 | 25,000 | - | 25,000 | ||||||||||||
| Notes payable | ||||||||||||||||
| Total Current Liabilities | 1,147,902 | 1,808,014 | 736,094 | 644,076 | ||||||||||||
| Lease liability, net of current portion | 7,408 | - | 30,852 | 40,880 | ||||||||||||
| Convertible notes payable - affiliated entity, net of current portion, and net of discount of $- and $49,000, respectively | 1,401,769 | 129,000 | ||||||||||||||
| Convertible notes payable; related party, net of current portion | 919,209 | 610,889 | ||||||||||||||
| Total Liabilities | 2,557,079 | 1,937,014 | 1,686,155 | 1,295,845 | ||||||||||||
| Commitments and Contingencies (Note 8) | - | - | ||||||||||||||
| Commitments and Contingencies (Note 9) | - | - | ||||||||||||||
| Stockholders’ Deficit: | ||||||||||||||||
| Preferred stock, $ par value; shares authorized; and shares issued and outstanding, respectively | - | - | ||||||||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding, at May 31, 2021 and November 30, 2020, respectively | 144,977 | 144,547 | ||||||||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding, at February 28, 2023 and November 30, 2022 | - | - | ||||||||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding, at February 28, 2023 and November 30, 2022, respectively | 160,050 | 160,350 | ||||||||||||||
| Additional paid in capital | 11,386,887 | 11,307,806 | 58,396,152 | 52,910,839 | ||||||||||||
| Accumulated deficit | (13,398,370 | ) | (12,754,027 | ) | (59,474,448 | ) | (53,643,649 | ) | ||||||||
| Total Stockholders’ Deficit | (1,866,506 | ) | (1,301,674 | ) | (918,246 | ) | (572,460 | ) | ||||||||
| Total Liabilities and Stockholders’ Deficit | $ | 690,573 | $ | 635,340 | $ | 767,909 | $ | 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)
| February 28, 2023 | February 28, 2022 | |||||||
| For the Three Months Ended | ||||||||
| February 28, 2023 | February 28, 2022 | |||||||
| Revenue, net | $ | 52,256 | $ | - | ||||
| Operating Expenses: | ||||||||
| Selling, general and administrative | 5,886,870 | 11,200,401 | ||||||
| Product fulfillment | 22,463 | 3,252 | ||||||
| Total Operating Expenses | 5,909,333 | 11,203,653 | ||||||
| Loss From Operations | (5,857,077 | ) | (11,203,653 | ) | ||||
| Other Income (Expense): | ||||||||
| Other income | 35,401 | 2,007 | ||||||
| Interest expense | (9,123 | ) | (20,898 | ) | ||||
| Total Other Income (Expense) | 26,278 | (18,891 | ) | |||||
| Net Loss | $ | (5,830,799 | ) | $ | (11,222,544 | ) | ||
| Loss per Common Share - Basic and Diluted | $ | (0.03 | ) | $ | (0.05 | ) | ||
| Weighted Average Shares Outstanding - Basic and Diluted | 230,749,672 | 215,380,751 | ||||||
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |||||||||||||
| Revenue, net | $ | 30,000 | $ | 1,619 | $ | 30,000 | $ | 6,129 | ||||||||
| Operating Expenses: | ||||||||||||||||
| Selling, general and administrative | 412,861 | 193,456 | 633,787 | 355,434 | ||||||||||||
| Product fulfillment | 15,594 | 3,435 | 17,708 | 5,194 | ||||||||||||
| Total Operating Expenses | 428,455 | 196,891 | 651,495 | 360,628 | ||||||||||||
| Loss From Operations | (398,455 | ) | (195,272 | ) | (621,495 | ) | (354,499 | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Other income | 23,200 | - | 23,200 | - | ||||||||||||
| Interest expense, net | (31,088 | ) | 3,226 | (46,048 | ) | 6,041 | ||||||||||
| Total Other Income (Expense) | (7,888 | ) | 3,226 | (22,848 | ) | 6,041 | ||||||||||
| Net Loss | $ | (406,343 | ) | $ | (192,046 | ) | $ | (644,343 | ) | $ | (348,458 | ) | ||||
| Loss per Common Share - Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted Average Shares Outstanding - Basic and Diluted | 214,981,071 | 208,650,741 | 214,965,990 | 208,650,741 | ||||||||||||
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 MONTHS ENDED FEBRUARY 28, 2023 AND 2022
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| 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 | ) | ||||||||||||||
| Stock based compensation - shares | - | - | - | - | 10,949,738 | - | 10,949,738 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (11,222,544 | ) | (11,222,544 | ) | |||||||||||||||||||
| Balance as of February 28, 2022 | - | $ | - | 215,380,751 | $ | 144,977 | $ | 29,680,601 | $ | (32,283,768 | ) | $ | (2,458,190 | ) | ||||||||||||||
| 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 | ) | ||||||||||||||
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)
| February 28, 2023 | February 28, 2022 | |||||||
| For the Three Months Ended | ||||||||
| February 28, 2023 | February 28, 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (5,830,799 | ) | $ | (11,222,544 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | 5,485,013 | 10,949,738 | ||||||
| Amortization of debt discount | - | 5,329 | ||||||
| Non-cash director compensation | 6,000 | - | ||||||
| Non-cash effect of right of use asset | - | (52 | ) | |||||
| Gain on debt forgiveness | (35,401 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (53,880 | ) | - | |||||
| Prepaid expenses and other assets | 1,774 | (8,470 | ) | |||||
| Right of use asset | 9,950 | - | ||||||
| Accounts payable and accrued expenses | 139,249 | 36,455 | ||||||
| Lease liability | (9,538 | ) | - | |||||
| Net Cash Used In Operating Activities | (287,632 | ) | (239,544 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Advances from related party | 300,000 | 118,000 | ||||||
| Payments on notes payable, related party | (10,000 | ) | ||||||
| Net Cash Provided By Financing Activities | 290,000 | 118,000 | ||||||
| Net Increase (Decrease) In Cash and Cash Equivalents | 2,368 | (121,544 | ) | |||||
| Cash and Cash Equivalents- Beginning of Period | 19,055 | 132,309 | ||||||
| Cash and Cash Equivalents - End of Period | $ | 21,423 | $ | 10,765 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for: | ||||||||
| Interest paid | $ | - | $ | - | ||||
| Income taxes paid | $ | - | $ | - | ||||
| Noncash operating and financing activities: | ||||||||
| Vendors paid for on behalf of the Company by USMC | $ | 8,320 | $ | 2,284 | ||||
| Due to affiliates exchanged for convertible debt | $ | 300,000 | $ | - | ||||
| Director compensation - accrued as convertible debt | $ | 6,000 | $ | - | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2021 AND 2020
(Unaudited)
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Preferred Stock | Common Stock | Additional 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 - options | - | - | - | - | 10,688 | - | 10,688 | |||||||||||||||||||||
| Forgiveness of related party liabilities | ||||||||||||||||||||||||||||
| Beneficial conversion feature on convertible debt | ||||||||||||||||||||||||||||
| 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 | - | - | - | - | - | (375,753 | ) | (375,753 | ) | |||||||||||||||||||
| Balance at May 31, 2021 | - | $ | - | 215,380,741 | $ | 144,977 | $ | 11,386,887 | $ | (13,367,780 | ) | $ | (1,866,506 | ) | ||||||||||||||
| Balance at November 30, 2019 | - | - | 208,650,741 | 138,247 | 10,364,990 | (11,248,870 | ) | (745,633 | ) | |||||||||||||||||||
| Forgiveness of related party liabilities | - | - | - | - | 150,257 | - | 150,257 | |||||||||||||||||||||
| Beneficial conversion feature on convertible debt | - | - | - | - | 88,250 | - | 88,250 | |||||||||||||||||||||
| Net Loss | - | - | - | - | - | (156,412 | ) | (156,412 | ) | |||||||||||||||||||
| Balance as of February 29, 2020 | - | - | 208,650,741 | 138,247 | 10,603,497 | (11,405,282 | ) | (663,538 | ) | |||||||||||||||||||
| Stock based compensation - options | - | - | - | - | 30,335 | - | 30,335 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (192,046 | ) | (192,046 | ) | |||||||||||||||||||
| Balance as of May 31, 2020 | - | $ | - | 208,650,741 | $ | 138,247 | $ | 10,633,832 | $ | (11,597,328 | ) | $ | (825,249 | ) | ||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| May 31, 2021 | May 31, 2020 | |||||||
| For the Six Months Ended | ||||||||
| May 31, 2021 | May 31, 2020 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (644,343 | ) | $ | (348,458 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | - | 772 | ||||||
| Stock based compensation | 79,511 | 30,335 | ||||||
| Amortization of debt discount | 21,775 | 17,354 | ||||||
| Settlement liability | - | (50,000 | ) | |||||
| Non-cash effect of right of use asset | 401 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (30,000 | ) | 12,700 | |||||
| Prepaid expenses and other current assets | 4,376 | (33,332 | ) | |||||
| Accounts payable and accrued expenses | 42,359 | (25,582 | ) | |||||
| Net Cash Used In Operating Activities | (525,921 | ) | (396,211 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Bank overdraft | - | 53,795 | ||||||
| Advances from related parties | 569,461 | 160,796 | ||||||
| Proceeds from convertible notes payable - affiliated entities | - | 178,000 | ||||||
| Payments on notes due to officers | (38,100 | ) | (4,780 | ) | ||||
| Net Cash Provided By Financing Activities | 531,361 | 387,811 | ||||||
| Net Increase (Decrease) In Cash | 5,440 | (8,400 | ) | |||||
| Cash - Beginning of Period | 7,450 | 8,400 | ||||||
| Cash - End of Period | $ | 12,890 | $ | - | ||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for: | ||||||||
| Interest paid | $ | - | $ | 4,383.00 | ||||
| Income taxes paid | $ | - | $ | - | ||||
| Noncash investing and financing activities: | ||||||||
| Forgiveness of accounts payable due to USMC | $ | - | $ | 150,257 | ||||
| Vendors paid for on behalf of the Company by USMC | $ | 22,150 | $ | - | ||||
| Due to affiliates exchanged for convertible debt | $ | 1,401,769 | $ | - | ||||
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 PureBase Corporation in January 2015.U.S. Agricultural Minerals, LLC, a Nevada limited liability company (“Purebase 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 in 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 poducts 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,” consisting of its Purebase 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 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 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.owners of USMC.
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. At May 31, 2021,As of February 28, 2023, the Company had a significant accumulated deficit of approximately $13,398,00059,474,448 and working capital deficit of approximately $1,101,000657,834. For the sixthree months ended May 31, 2021,February 28, 2023, the Company had a loss from operations of approximately $621,0005,857,077 and negative cash flows from operations of approximately $526,000287,632. 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 2021, 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 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 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 and March 7, 2023 securities purchase agreement, will provide the necessary funding for the Company to continue as a going concern. However, thereconcern for the next twelve months. The March 23, 2022 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 12). 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 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 12). 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. As of the date hereof, USMC has purchased an aggregate principal amount of notes of $160,000 under the March 7, 2023 securities purchase 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 these 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, 20202022 in our Annual Report on Form 10-K filed on March 16, 2021February 28, 2023 with the SEC. The results of the three and six months ended MayMarch 31, 20212023 (unaudited) are not necessarily indicative of the results to be expected for the full year ending November 30, 2021.2023.
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.
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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 its agricultural products. 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:
| ● | ||
| ● | Unsatisfied Performance Obligations – 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 | |
| ● | 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 |
Disaggregated Revenue
Revenue consists of the following by product offering for the sixthree months ended May 31, 2021:February 28, 2023:
SCHEDULE OF DISAGGREGATED REVENUE
Humate INU Advantage | SHADE ADVANTAGE (WP) | SulFe Hume Si ADVANTAGE | Total | |||||||||||||||||||||||||
| CROP WHITE II | CROP WHITE II | SHADE ADVANTAGE (WP) | SulFe Hume Si ADVANTAGE | Total | ||||||||||||||||||||||||
| $ | - | $ | 30,000 | $ | - | $ | 30,000 | - | $ | 776 | $ | 51,480 | $ | 52,256 | ||||||||||||||
Revenue consists of the following by product offeringThe Company did not have any revenue for the sixthree months ended May 31, 2020:February 28, 2022.
| Humate INU Advantage | SHADE ADVANTAGE (WP) | SulFe Hume Si ADVANTAGE | Total | |||||||||||
| $ | 6,129 | $ | - | $ | - | $ | 6,129 | |||||||
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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 arewere 0no cash equivalents as of May 31, 2021February 28, 2023 and November 30, 2020.2022.
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. At May 31, 2021As of February 28, 2023 and November 30, 2020,2022, the Company has determined that anno allowance of $18,277 for doubtful accounts 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 three to five years.years . Expenditures that enhance the useful lives of the assets are capitalized and depreciated.
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY AND EQUIPMENT
| Equipment | 3-5 years |
| Autos and trucks | 5 years |
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, 2021,February 28, 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, 2021February 28, 2023 and 2020.February 28, 2022.
Shipping and Handling
The Company incurs shipping and handling costs which are charged back to the customer. There were 0The Company incurred shipping and handling costs incurredof $2,400 and no handling costs during the three and six months ended May 31, 2021February 28, 2023 and 2020.2022, respectively.
Advertising and Marketing Costs
The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $42,0000 and $2,052 for the six months ended May 31, 2021 and 2020, respectively, and $26,000 and $49012,040 for the three months ended May 31, 2021February 28, 2023 and 2020,February 28, 2022, respectively, and are recorded in selling, general and administrative expenses onin the statementaccompanying condensed consolidated statements of operations.
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Fair Value Measurements
As defined in ASC 820, “Fair“Fair 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. |
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 approximates the Company’s incremental borrowing rate.
Net loss per share of common sharestock is computed by dividing the net loss by the weighted average number of shares of common sharesstock outstanding during the year.three-month periods ended February 28, 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, theoutstanding options have been excluded from the Company’s computation of net loss per share of common sharestock for the three months ended February 28, 2023 and six months May 31, 2021 and 2020.February 28, 2022.
SCHEDULE OF OUTSTANDING SHARES EXCLUDED FROM DILUTED LOSS PER SHARE
| Six Months Ended | ||||||||
| May 31, 2021 | May 31, 2020 | |||||||
| Convertible Notes | 129,117,358 | 1,112,500 | ||||||
| Stock Options | 1,595,000 | 550,000 | ||||||
| Total | 130,712,358 | 1,662,500 | ||||||
| Three Months Ended | Three Months Ended, | |||||||||||||||
| May 31, 2021 | May 31, 2020 | February 28, 2023 | February 28, 2022 | |||||||||||||
| Convertible Notes | 129,117,358 | 1,112,500 | 2,753,278 | 6,250,000 | ||||||||||||
| Stock Options | 1,595,000 | 550,000 | 128,688,187 | 1,595,000 | ||||||||||||
| Total | 130,712,358 | 1,662,500 | 131,441,465 | 7,845,000 | ||||||||||||
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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.
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 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 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. 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 the Company will exercise that option.
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 for 1,000 square feet of office space located in Ione, California (the “Ione Lease”) with respect to its corporate operations (See Note 12). Effective November 1, 2022, the Ione Lease was amended to extend the lease through October 2024 and to add an additional 700 square feet of office space for a total monthly rental price of $3,500 per month, with automatic one-month renewals. The remaining weighted average term is 1.6 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, the Company recognized a ROU asset and corresponding lease liability on the condensed consolidated balance sheet for long-term office leases. See Note 7 – Leases for further discussion, including the impact on the 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.
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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 February 28, 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.
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 February 28, 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.
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 presented 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.
NOTE 4 – MINING RIGHTS
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 5placer 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. An initial deposit of $50,000 was paid to by 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$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 Board 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 through 19% beneficial ownership 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 shall beis payable in full in cash at the closing which canmust occur at any time before April 1, 2022. As of May 31, 2021,2022 (the “Closing Date”). On April 14, 2022, the Company has yetagreement was amended to close onextend the purchase.Closing Date to April 14, 2023. On April 7, 2023 the agreement was further amended to extend the Closing Date to April 1, 2024.
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
SCHEDULE OF PROPERTY AND EQUIPMENT
| February 28, 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 months ended February 28, 2023 and 2022, respectively.
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, 2021. The balance on the note was $25,000 as of May 31, 2021 and November 30, 2020. See (Note 10).note. Total interest expense on the note was $748255 and $752 for the six months ended May 31, 2021 and 2020, respectively. Total interest expense on the note was $370 for the three months ended May 31, 2021February 28, 2023 and 2020.February 28, 2022, respectively.
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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, CEOChief Executive Officer and a director of the Company, to consolidate the total amounts due to Mr. Dockter. The note to Mr. Dockter bears interest at 6%6% and is due upon demand. During the sixthree months ended May 31, 2021,February 28, 2023 and 2022, the Company repaidpaid $38,10010,000 and $0, respectively, towards the outstanding balance of the note. The balance on the note was $89,716 and $127,816 as of May 31, 2021 and November 30, 2020, respectively (See Note 11). Total interest expense on the note was $3,368379 and $4,834869 for the sixthree months ended May 31, 2021February 28, 2023 and 2020,2022, respectively. Total interest expenseThe balance on the note was $1,50018,716 and $2,916 28,716for the three months ended May 31, 2021 as of February 28, 2023 and 2020,November 30, 2022, respectively. There was $41,545 and $41,167 of accrued interest as of February 28, 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 12), the Company issued atwo-year convertible promissory note in the amount of $20,000 to 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, $ par value, 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 and USMC gave notice of conversion of the outstanding principal balance of $20,000 plus accrued interest totaling $2,351 through such date, into shares 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 $2,4170 and $4,783815 forduring the three and six months ended May 31, 2021February 28, 2023 and 2020,February 28, 2022, respectively. Total interest expense on Tranche #1 was approximately $2500 and $500250 for the three and six months ended May 31, 2021February 28, 2023 and 2020, respectively.February 28, 2022.
January 1, 2020
On January 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 11)12), the Company issued atwo-year convertible promissory note in the amount of $86,000 to USMC, with a maturity date of January 1, 2022 (“Tranche #2”). 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, $ par value, at any time at the option of the Holder,holder, at a conversion price of $0.16 per share. On April 7, 2022, the January 1, 2020 note was amended to extend the maturity date to April 30, 2022 and USMC gave notice of conversion of the outstanding principal balance of $86,000 plus accrued interest totaling $9,743 through such date, into shares of the Company’s common stock.
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 $8,0290 and $6,662 for the six months ended May 31, 2021 and 2020, respectively. Total straight-line amortization of this discount totaled $4,0591,412 for the three months ended May 31, 2021February 28, 2023 and 2020. Total interest expense on Tranche #2 was approximately $2,100 and $1,780 for the six months ended May 31, 2021 and 2020,February 28, 2022, respectively. Total interest expense on Tranche #2 was approximately $1,0400 and $1,0801,060 for the three months ended May 31, 2021February 28, 2023 and 2020,February 28, 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 11)12), the Company issued atwo-year 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, $ par value, at any time at the option of the Holder,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 and USMC gave notice of conversion of the outstanding principal balance of $72,000 plus accrued interest totaling $7,851 through such date, into shares of the Company’s common stock.
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 $8,9630 and $5,910 for the six months ended May 31, 2021 and 2020, respectively. Total straight-line amortization of this discount totaled $4,5313,103 for the three months ended May 31, 2021February 28, 2023 and 2020. Total interest expense on Tranche #3 was approximately $1,785 and $1,200 for the six months ended May 31, 2021 and 2020,February 28, 2022, respectively. Total interest expense on Tranche #3 was approximately $0 and $900 for the three months ended May 31, 2021February 28, 2023 and 2020.February 28, 2022.
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December 1, 2020
On December 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC a related party, (See Note 11)12), the Company issued atwo-year 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 $0.16 per 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 shares of the Company’s common stock. Total interest expense on Tranche #4 was approximately $10,1000 and $20,30010,100 for the three and six months ended May 31, 2021,February 28, 2023 and February 28, 2023 and 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 11)12), the Company issued atwo-year 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 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 $0.088 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 shares of the Company’s common stock. Total interest expense on Tranche #5 was approximately $0 and $5,8007,150 for the three and six months ended May 31, 2021.February 28, 2023 and 2022, respectively.
Convertible Promissory Note – US Mine, LLCMarch 14, 2022
On May 27, 2021,March 14, 2022, in connection with the Materials Extraction Agreement (the “Extraction Agreement”)November 25, 2020 securities purchase agreement with US Mine, LLC, a related party, (SeeUSMC (see Note 11)12), the Company issued a ten-year convertible promissory note in the principal amount of $50,000,000884,429 to US Mine, LLC (the “US Mine Note”USMC, with a maturity date of March 14, 2024 (“Tranche #6”). The US Mine Notenote bears interest at 2.5%5% per annum which is payable uponon maturity. Amounts due under the US Mine Notenote 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 $0.430.088 per share. The noteholder may convert (i) up to 50%On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance on or afterof $884,492 of the March 14, 2022 note, plus accrued interest totaling $2,908 through such date, as the Company is listed for trading on any national securities exchange, (ii) up to an additional 25%into shares of the outstanding balance on or after the six-month anniversary of the initial trading date on such national securities exchange, and (iii) the remaining 25% on or after the twelve-month anniversary of the initial trading date.Company’s common stock. Total interest expense on the US Mine NoteTranche #6 was approximately $10,3000 for the three and six months ended May 31, 2021. SubsequentFebruary 28, 2023.
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 May 31, 2021,USMC, with a maturity date of August 30, 2024 (“Tranche #7”). The note bears interest at 5% per annum which is payable on October 6,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 #7 was $5,805 for the three months ended February 28, 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 $1,726 for the three months ended February 28, 2023.
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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 $0 for the three months ended February 28, 2023.
March 20, 2023
On March 20, 2023, the Company entered into a securities purchase agreement with USMC, effective March 7, 2023, pursuant to which USMC may purchase up to $1,000,000 of the Company’s 8% 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 $0.10 per share. As of the date hereof, USMC has purchased an aggregate principal amount of notes of $160,000 under the securities purchase agreement.
Convertible Debt – Board of Directors
On April 8, 2021, the Extraction Agreement wasCompany entered into a twelve month director agreement with Jeffrey Guzy, as amended and the US Mine Note was retroactively rescinded, ab initio; referon August 26, 2022 (the “Guzy Director Agreement”) pursuant to Note 11 for more detailswhich Mr. Guzy will serve as a director of the amendment.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 $ per month which accrues as % 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 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 volume-weighted average price (“VWAP”) of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. As of February 28, 2023, cash fees owed to Mr. Guzy as per the terms of the agreement were deferred and debt in the amount of $ 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 $ 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. As of February 28, 2023, cash fees owed to Dr. Kurtis as per the terms of the agreement were deferred and debt in the amount of $ 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
| Three Months Ended February 28, 2023 | ||||
| Lease cost | ||||
| Operating lease cost (cost resulting from lease payments) | $ | 10,500 | ||
| Short term lease cost | - | |||
| Sublease income | - | |||
| Net lease cost | $ | 10,500 | ||
| Operating lease – operating cash flows (fixed payments) | $ | 10,500 | ||
| Operating lease – operating cash flows (liability reduction) | $ | 9,538 | ||
| Non-current leases – right of use assets | $ | 69,649 | ||
| Current liabilities – operating lease liabilities | $ | 39,372 | ||
| Non-current liabilities – operating lease liabilities | $ | 30,852 | ||
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| Three Months Ended February 28, 2022 | ||||
| Lease cost | ||||
| Operating lease cost (cost resulting from lease payments) | $ | 4,500 | ||
| Short term lease cost | - | |||
| Sublease income | - | |||
| Net lease cost | $ | 4,500 | ||
| Operating lease – operating cash flows (fixed payments) | $ | 4,500 | ||
| Operating lease – operating cash flows (liability reduction) | $ | 4,107 | ||
| Non-current leases – right of use assets | $ | 28,434 | ||
| Current liabilities – operating lease liabilities | $ | 15,504 | ||
| Non-current liabilities – operating lease liabilities | $ | 13,223 | ||
Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the three months ended February 28, 2023:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
| Fiscal Year | Operating Leases | |||
| Remainder of 2023 | $ | 42,000 | ||
| 2024 | 31,500 | |||
| Total future minimum lease payments | 73,500 | |||
| Amount representing interest | (3,276 | ) | ||
| Present value of net future minimum lease payments | $ | 70,224 | ||
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
| May 31, 2021 | November 30, 2020 | |||||||
| Accounts payable | $ | 77,988 | $ | 84,600 | ||||
| Accrued interest – related party | 81,800 | 39,948 | ||||||
| Accrued compensation | 21,138 | 39,492 | ||||||
| Accrued expenses | 3,323 | - | ||||||
| Accounts payable and accrued expenses | $ | 184,249 | $ | 164,040 | ||||
NOTE 7 – LEASES
With the adoption of ASC 842, operating lease agreements are required to be recognized on the balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities.
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 11). The Ione Lease expires in November 2022 (subject to automatic extensions of one month) and has an annual base rental during the initial term of $1,500.
On December 1, 2020, the Company recognized ROU assets and lease liabilities of $35,543. The Company elected to not recognize ROU assets and lease liabilities arising from short-term office leases (leases with initial terms of twelve months or less, which are deemed immaterial) on its balance sheets.
When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at December 1, 2020. The weighted average incremental borrowing rate applied was 5%.
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, 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, 2021:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
| Fiscal Year | Operating Leases | |||
| Remainder of 2021 | $ | 9,000 | ||
| 2022 | 16,500 | |||
| Total future minimum lease payments | 25,500 | |||
| Amount representing interest | (932 | ) | ||
| Present value of net future minimum lease payments | $ | 24,568 | ||
| February 28, 2023 | November 30, 2022 | |||||||
| Accounts payable | $ | 145,349 | $ | 30,078 | ||||
| Accrued interest – related party | 55,030 | 57,226 | ||||||
| Accrued compensation | 35,627 | 28,134 | ||||||
| Accounts payable and accrued expenses | $ | 236,006 | $ | 115,478 | ||||
NOTE 89 – COMMITMENTS AND CONTINGENCIES
Office and Rental Property Leases
The Company is leasing office space from USMC, a company that is owned by the Company’s majority shareholders and directors. A. Scott Dockter and John Bremer (See Note 12).
Mineral Properties
The Company’s mineral rights require various annual lease payments (See Note 4).
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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 amount 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 the normal course,accordance with its terms, and was not renewed by 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, Calvanico has not exercised his stock options. This dispute is currently in the midst of theThe binding arbitration discovery phase. An arbitration hearing date has been scheduled for January 24, 2022.
On January 11, 2019, the Company filed a complaint in the Nevada District Court for 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 VP of Agricultural Research and Development. Mr. Hurtado was terminated in March 2018 and since that time the Company alleges that he conspired 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 Company is 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 heldconcluded on February 3, 2023. Initial Closing Briefs are due on April 26, 201925, 2023, and a pre-trial conference was heldReply Briefs are due on July 10, 2019. On March 13, 2020, the Company filed a First Amended Complaint, adding Todd Gauer and John Gingerich as additional defendants. A default has been taken against Mr. Gingerich. LitigationMay 25, 2023. The arbitrator’s decision is actively proceeding against Mr. Hurtado, Mr. Gauer, and Agregen. Thedue June 2021 trial date was postponed due to Covid-related delays but is in the process of being rescheduled.30, 2023.
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 seeks damages of approximately $300,000400,000. and, although the Company is vigorously defending such claims and believes that there is little to no risk of liability, it has accrued $400,000 for such risk. The Company filed its answer on May 6, 2019, denying responsibility for the mis-labellingmislabeling and denying any liability for damages therefrom. The parties are currentlymatter is set for trial in settlement negotiations. The Company believes its potential exposure to be approximately $400,000 and, as such, has accrued this amount on the unaudited condensed consolidated balance sheet at May 31, 2021.
On April 16, 2021, LexisNexis, a division of RELX, Inc., filed a Complaint against the Company and its former attorney, Michael Kessler, Esq., in the Superior Court of the State of California, Amador County (Case No. 21-CV-12123). This is a limited jurisdiction lawsuit seeking payment of $18,211. The basis of the Complaint is that Mr. Kessler incurred this debt to LexisNexis, a legal research company. Mr. Kessler is alleged to have failed to pay the annual bill. After the matter was sent to collections, it is the Company’s understanding that Mr. Kessler claimed that he was employed by the Company as its general counsel at the time and that Purebase is therefore responsible for payment. The Company strongly disputes this characterization and maintains that it has no obligation to LexisNexis under the facts or the law. The Company and LexisNexis are engaged in settlement negotiations. The Company believes its potential exposure to be $0 and that the lawsuit will be dismissed.2023.
Contractual Matters
USMC
On November 1, 2013, the Companywe entered into an agreement with USMC, a related party, underin which USMC performs services relating toprovides 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 arewill be determined for each project undertaken by USMC.
On October 12, 2018, the Board approved a material supply agreement with USMC, a related party, pursuant to which USMC provides designated natural resources to the Company at predetermined prices (See(see Note 11)12).
NOTE 9 –Note 10 - STOCKHOLDERS’ DEFICITEQUITY
Equity Transactions DuringOn May 19, 2022, the Period
DuringCompany 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 six months ended May 31, 2021,Company. As consideration therefor, the Company issued an aggregate ofNewbridge 350,000300,000 shares of common stock withon June 17, 2022 which shares are subject to a fair value range between $ and $ per share to an investment banking firm pursuant to an investment banking agreement for services rendered to12-month lockup from the Company.
During the six months ended May 31, 2021, the Companydate of issuance. The shares were issued shares of common stock withat a fair value of $ per share to a director pursuant to a directors agreement for services rendered.share.
The Company accounted for its stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718, “Compensation – Stock Compensation.”
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 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, 2021,February 28, 2023, options to purchase an aggregate of shares of common stock have been granted under the Option Plan.
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The Company has also granted options to purchase an aggregate of shares of common stock pursuant to employment contracts with certain employees prior to the adoption of the Option Plan.
TheOn June 3, 2022, in connection with the settlement agreement with Agregen, Robert Hurtado, James Todd Gauer and John Gingerich, the Company granted optionsJames Todd Gauer an immediately exercisable option to purchase shares of common stock, during the six months ended May 31, 2021.equivalent number of shares of common stock that were surrendered to the Company, at an exercise price of $ per share and a fair value of $. The option was valued using the Black-Scholes option pricing model under the assumptions in the below table.
TheOn August 26, 2022, the Company granted an immediately exercisable options to purchase an aggregate of shares of common stock duringto members of the six months ended May 31, 2020.Board, consultants and employees for services to be performed. The options were issued at an exercise price of $ per share and a total fair value of $. The options were valued using the Black-Scholes option pricing model under the assumptions in the below table.
| Grant Date | Number of Options | Stock Price | Exercise Price | Expected Volatility | Risk-free Interest Rate | Dividend Rate | Expected Term | Fair Value | ||||||||||||||||||||||
| 250,000 | $ | 0.15 | $ | 0.10 | 281.00 | % | 0.85 | % | 0.00 | % | years | $ | 36,708 | |||||||||||||||||
| 200,000 | $ | 0.46 | $ | 0.36 | 266.00 | % | 0.79 | % | 0.00 | % | years | $ | 90,944 | |||||||||||||||||
| 116,000,000 | $ | 0.38 | $ | 0.38 | 278.00 | % | 1.26 | % | 0.00 | % | years | $ | 43,808,780 | |||||||||||||||||
| 8,669,400 | $ | 0.22 | $ | 2.50 | 274.50 | % | 2.95 | % | 0.00 | % | years | $ | 1,856,151 | |||||||||||||||||
| 1,734,615 | $ | 0.24 | $ | 0.24 | 269.24 | % | 3.20 | % | 0.00 | % | years | $ | 411,668 | |||||||||||||||||
| 242,424 | $ | 0.24 | $ | 0.24 | 276.76 | % | 3.20 | % | 0.00 | % | years | $ | 57,264 | |||||||||||||||||
| 246,748 | $ | 0.24 | $ | 0.24 | 207.37 | % | 3.20 | % | 0.00 | % | years | $ | 53,479 | |||||||||||||||||
The weighted averageCompany did not grant date fair value ofstock options granted and vested during the sixthree months ended May 31, 2021 was $February 28, 2023 and $February 28, 2022.
19,481, respectively. The weighted average grant date fair value of options granted and vested during the six months ended May 31, 2020, was $
23,905 and $, respectively. The weighted average non-vested grant date fair value of non-vested options was $ and $ at May 31, 2021.February 28, 2023 and November 30, 2022, respectively.
SCHEDULE OF STOCK OPTION ACTIVITY
| Weighted | Weighted | |||||||||||||||
| Average | Number | Average | ||||||||||||||
| Shares | Exercise Price | of Shares | Exercise Price | |||||||||||||
| Outstanding at November 30, 2020 | 1,345,000 | $ | 1.18 | |||||||||||||
| Outstanding at November 30, 2021 | $ | |||||||||||||||
| Granted | 250,000 | 0.10 | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired or cancelled | - | - | ||||||||||||||
| Outstanding at May 31, 2021 | 1,595,000 | 1.01 | ||||||||||||||
| Outstanding at February 28, 2022 | ||||||||||||||||
| Outstanding at November 30, 2022 | $ | |||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired or cancelled | ||||||||||||||||
| Outstanding at February 28, 2023 | $ | |||||||||||||||
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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 | $ | 0.099 | 200,000 | |||||||||||||
| 0.10 | 645,000 | 0.10 | 350,000 | |||||||||||||||
| 0.12 | 50,000 | 0.12 | 50,000 | |||||||||||||||
| 3.00 | 500,000 | 3.00 | 500,000 | |||||||||||||||
| 1,595,000 | $ | 1.01 | 1,100,000 | |||||||||||||||
| Weighted- | Weighted- | |||||||||||||||||
| Average | Average | |||||||||||||||||
| Exercise | Outstanding | Remaining Life | Exercise | Number | ||||||||||||||
| Price | Options | In Years | Price | Exercisable | ||||||||||||||
| $ | $ | |||||||||||||||||
| $ | ||||||||||||||||||
The compensation expense attributed to the issuance of the options is recognized as they are vested.options vest.
The stock options granted under the Option Plan are exercisable for over various terms from thee to from the grant date and
On April 8, 2020, the Company granted a director an option to purchase shares of the Company’s common stock at an exercise price of $ per share and a fair value of $. The options vest immediately at the grant date. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $; strike price - $0.10; expected volatility – ; risk-free interest rate – ; dividend rate – ; and expected term – years.
On April 15, 2020, the Company granted two advisory board members options to purchase an aggregate of shares of the Company’s common stock at an exercise price of $ per share and a fair value of $. The options vest one year from the date of grant. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $; strike price - $0.10; expected volatility – ; risk-free interest rate – ; dividend rate – ; and expected term – years.
On April 8, 2021, the Company granted a director an option to purchase shares of the Company’s common stock at an exercise price of $ per share and a fair value of $. These options vest one year from the grant date. The options were valued using the Black-Scholes option pricing model under the following assumptions: stock price - $; strike price - $0.10; expected volatility – ; risk-free interest rate – ; dividend rate – ; and expected term – years.
The aggregate intrinsic value totaled $ and was based on the Company’s closing stock price of $ as of May 31, 2021, which would have been received by the option holders had all option holders exercised their options as of that date.
Total compensation expense related to the options was $ and $ for the three months ended May 31, 2021February 28, 2023 and 2020, respectively. Total compensation expense related to the options was $ and $ for the six months ended May 31, 2021 and 2020,February 28, 2022, respectively. As of May 31, 2021,February 28, 2023, there was $36,4281,819,638 in future compensation cost related to non-vested stock options.
As of February 28, 2023 of the outstanding and exercisable options had an intrinsic value as the options exercise prices were greater than the estimated fair value of the common stock of $.
NOTE 1112 – 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 at May 31, 2021.was $255 and $370 for the three months ended February 28, 2023 and February 28, 2022, respectively.
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 will provideprovides various technical evaluations and mine development services to the Company. During the three and six months ended May 31, 2021February 28, 2023 and 2022, the Company made $12,00021,914 in purchases from USMC. During the three and six months ended May 31, 2020, the Company did not make any$0 of purchases from USMC. No services were rendered by USMC for the three and six months ended May 31, 2021February, 2023 and 2020.2022. In addition, during the three and six months ended May 31, 2021,February 28, 2023 and 2022, USMC paid $22,1508,320 to the Company’s vendors and creditors on behalf$2,284 respectively, of the Company which is recorded as part of due to affiliates on the Company’s unaudited condensed consolidated balance sheets. During the three and six months ended May 31, 2020, USMC made no paymentexpenses to the Company’s vendors and creditors on behalf of the Company. During the three and six months ended May 31, 2021February 28, 2023 and 2020,2022, USMC made cash advances to the Company of $316,000300,000 and $558,077 and $33,000 and $125,000118,000, respectively, which are recorded as part of due to affiliates on the Company’s unaudited condensed consolidated balance sheets. During the six months ended June 30, 2021,All amounts owed for services rendered, expenses paid on behalf of the Company, and USMCcash advances were converted an aggregate of $1,401,769 of outstanding payables into two convertible notesthe Company’s common stock pursuant to the September 5, 2019 Debt Exchange Agreement, the November 25, 2020 Securities Purchase Agreement (See Note 5)6) and the April 7, 2022 Securities Purchase Agreement (See Note 6). The Company did not have a balance due to USMC was $269,616 and $1,091,158 at May 31, 2021on February 28, 2023 and November 30, 2020, respectively.2022.
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USMC Notes
On September 26, 2019, theThe Company has entered into aone or more securities purchase agreementagreements with USMC 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.(see Note 6). The outstanding balance on the convertible notes are convertible into the Company’s common stock at a conversion price ofdue to USMC was $0.16919,209 per share. As of May 31, 2021, USMC has purchased notes totalingand $1,000,000610,889 with maturity dates ranging from December 1, 2021 throughon February 28, 2023 and November 25,30, 2022, (See Note 5). respectively. Interest expense on thesethe convertible notes due to USMC totaled $12,4667,532 and $3,46126,991 for the three months ended May 31, 2021February 28, 2023 and 2020,February 28, 2022, respectively. Interest expense on these notes totaled $24,795 and $3,461 for the six months ended May 31, 2021 and 2020, respectively, and is recorded as part of accrued expenses on the unaudited condensed consolidated balance sheets.
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 May 31, 2021, USMC has purchased notes totaling $5,798,769 with a maturity date of March 17, 2023 (See Note 5). Interest expense on these notes totaled $5,877 for the three and six months ended May 31, 2021 and is recorded as part of accrued expenses on the unaudited condensed consolidated balance sheets.Mining Agreements
The outstanding balance due on the above notes to USMC is $1,579,769 and $178,000 at May 31, 2021 and November 30, 2020, respectively.
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 shallwill 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 three months ended February 28, 2023 and 2022, the Company purchased $21,914 and $0, respectively, under the Supply Agreement. Since April 22, 2020, the Company has purchased $280,356 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.extracted. As compensation for such right, the Company issued a ten-yearten-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 of 2.5%2.5% 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 $ 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. In addition, the Company will pay US Mine, LLC a royalty fee of $5.00 per ton of materials extracted and any royalty not paid in a timely manner with be subject to 15% interest per annum and compounded monthly.
Subsequent to May 31, 2021, onOn 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”) (See Note 13). Pursuant to the Amendment, the US Mine Note was retroactively rescinded, ab initio and an option to purchase an aggregate of shares of the Company’s common stock at an exercise price of $ per share until April 6, 2028, was issued to US Mine, LLC as compensation. Shares subject to the option vestvested as to shares on April 6, 2022, shares on October 6, 2022, and shares will vest on April 6, 2023.
Leases
On October 1, 2020 This agreement was further amended and restated on June 21, 2022, with the same option purchase, vesting and exercise schedule. For the three months ended February 28, 2023 the Company entered into a expensed $-year lease agreement for its office space with USMC with a monthly rent in stock-based compensation expense related to the issuance of $1,500 (See Note 7).the option on October 16, 2021 to US Mine LLC under the Materials Extraction Agreement.
Transactions with Officers
On August 31, 2017, the Company issued a note in the amount of $197,096 to ArthurA. Scott Dockter, President, CEOChief Executive Officer and a director of the Company, to consolidate the total amounts due to and assumed by Mr. Dockter. The note bears interest at 6%6% and is due upon demand. During the sixthree months ended May 31, 2021,February 28, 2023 and 2022, the Company repaidpaid $38,10010,000 and $0, respectively, towards the outstanding balance of the note. As of May 31, 2021 and November 30, 2020, the principalThe balance due on this note was $89,716 and $127,816, respectively, and is recorded as Note Payable to Officer on the unaudited condensed consolidated balance sheet. Total interest expense on the note was $3,36818,716 and $4,83428,716 for the six months ended May 31, 2021as of February 28, 2023 and 2020,November 30, 2022, respectively. Total interest expense on the note was $1,500379 and $2,916869 for the three months ended May 31,February 28, 2023 and 2022, respectively. There was $41,545 and $41,167 of accrued interest on the note as of February 28, 2023 and November 30, 2022, respectively.
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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 $ per month which accrues as % 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 $ 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.
Leases
On October 1, 2020, respectively.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 1213 – 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, 2021February 28, 2023 and November 30, 2020,2022, the Company had no deposits in excess of the FDIC insured limit.
Revenues
One customer accounted for 100% of total revenue for the six months ended May 31, 2021.
ThreeTwo customers accounted for 100%100% of total revenuepurchases for the sixthree months ended May 31, 2020,February 28, 2023, as set forth below:
SCHEDULE OF CONCENTRATION OF CREDIT RISK
| Customer A | % | |||
| Customer B | ||||
| % |
The Company had no revenue for the three months ended February 28, 2022.
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Accounts Receivable
One customer accounted for 92%100% of the accounts receivable as of May 31, 2021.February 28, 2023. There were no
Two customers accounted for 100% of the accounts receivable as ofreceivables on November 30, 2020, as set forth below:2022.
Vendors
Three vendorsOne supplier accounted for 84%100% of purchases asfor the three months ended February 28, 2023.
Four suppliers accounted for 70% of May 31, 2021,purchases for the three months ended February 28, 2022, as set forth below:
| Vendor A | % | |||
| Vendor B | % | |||
| Vendor C | % | |||
| Vendor D | 14 | % |
One supplier accounted for 85% of purchases as of November 30, 2020.
NOTE 1314 – SUBSEQUENT EVENTS
In 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 February 28, 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 October 6, 2021, prior to the consummation of activities under the Extraction Agreement,March 20, 2023, the Company and US Mine executed an amendmententered into a securities purchase agreement with USMC, effective March 7, 2023, pursuant to which USMC may purchase up to $1,000,000 of the Extraction Agreement (the “Amendment”). Pursuant to the Amendment, the US Mine Note was retroactively rescinded, ab initio, and an option to purchase an aggregate ofCompany’s 116,000,0008 shares of% unsecured convertible two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at an exercisea conversion price of $0.380.10 per share until April 6, 2028, was issued to US Mine as compensation. Shares subject toshare. As of the option vest as to date hereof, USMC has purchased an aggregate principal amount of notes of $58,000,000160,000 shares on April 6, 2022, shares on October 6, 2022, and shares on April 6, 2023.under the securities purchase agreement.
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 us and members 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, 2020,2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2021,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 | |
| ● | the impact of potentially losing the rights to properties; | |
| ● | the impact of the increase in the price of natural | |
| ● | 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
The Company,We are an industrial mineral and natural resource company that provides solutions to the agriculture and construction materials markets in the United States, through itsour two divisions,subsidiaries, Purebase AgAG, and Purebase SCM, is engaged in the agriculturalrespectively. The Company has not yet commenced mining operations and construction-materials sectors.relies on US Mine LLC for its raw materials.
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Agricultural Sector
In the agricultural sector, the Company’s business is toWe 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.
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,” consisting of its Purebase Shade Advantage WP product, a kaolin-clay based sun protectant for crops. It 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, a Nevada corporation (“USMC”), 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 and John Bremer are officers, directors, and owners of USMC.
Recent Developments
Minerals Extraction Agreement and Convertible Debt – US Mine LLC
On May 27, 2021, the Company entered in a Materials Extraction Agreement (the “Extraction Agreement”) with US Mine LLC, a California limited liability company (“US Mine”), pursuant to which the Company acquired the right to extract up to 100,000,000 of metakaolin supplementary cementitious materials (“SCM”) from property owned by US Mine in Ione, California (the “Property”), for a purchase price of $50,000,000, which was paid through the Company’s issuance to US Mine of a ten-year convertible promissory note (the “Note”) in the principal amount of $50,000,000. The Extraction Agreement will remain in effect until such time as 100,000,000 tons of SCM have been extracted from the Property, or the Extraction Agreement is sooner terminated.
On October 6, 2021, prior to the consummation of activities under the Extraction Agreement, the Company and US Mine executed an amendment to the Extraction Agreement (the “Amendment”). Pursuant to the Amendment, the Note was retroactively rescinded, ab initio, and an option to purchase an aggregate of 116,000,000 shares of the Company’s common stock at an exercise price of $0.38 per share until April 6, 2028, was issued to US Mine as compensation. Shares subject to the option vest 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.
In addition, the Company will pay US Mine LLC a royalty fee of $5.00 per ton of materials extracted and any royalty not paid in a timely manner will be subject to 15% interest per annum and compounded monthly.
A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also officers, directors and owners and manager members of US Mine.USMC.
Recent Developments
On February 28, 2023, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party, 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.
On March 20, 2023, the Company entered into a securities purchase agreement with USMC, effective March 7, 2023, pursuant to which USMC may purchase up to $1,000,000 of the Company’s 8% 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 $0.10 per share. As of the date hereof, USMC has purchased an aggregate principal amount of notes of $160,000 under the securities purchase agreement.
Results of Operations
Comparison of the Three Months Ended May 31, 2021 andFebruary 28, 2023 to the Three Months Ended May 31, 2020February 28, 2022
A comparison of the Company’s operating results for the three months ended May 31, 2021 and May 31, 2020 are summarized as follows:
| February 28, | February 28, | |||||||||||
| 2023 | 2022 | Variance | ||||||||||
| Revenue, net | $ | 52,256 | $ | - | $ | 52,256 | ||||||
| Operating Expenses: | ||||||||||||
| Selling, general and administrative | 5,886,870 | 11,200,401 | (5,313,531 | ) | ||||||||
| Product fulfillment | 22,463 | 3,252 | 19,211 | |||||||||
| Loss from operations | (5,857,077 | ) | (11,203,653 | ) | (5,346,576 | ) | ||||||
| Other income (expense) | 35,401 | 2,007 | 33,394 | |||||||||
| Interest expense | (9,123 | ) | (20,898 | ) | (11,775 | ) | ||||||
| Net Loss | $ | (5,830,799 | ) | $ | (11,222,544 | ) | $ | (5,391,745 | ) | |||
| May 31, | May 31, | |||||||||||
| 2021 | 2020 | Variance | ||||||||||
| Revenues | $ | 30,000 | $ | 1,619 | $ | 28,381 | ||||||
| Operating expenses: | ||||||||||||
| Selling, general & administrative | 412,861 | 193,456 | 219,405 | |||||||||
| Product fulfillment, exploration and mining | 15,594 | 3,435 | 12,159 | |||||||||
| Loss from operations | (398,455 | ) | (195,272 | ) | (194,183 | ) | ||||||
| Other income (expense) | (7,888 | ) | 3,226 | (11,114 | ) | |||||||
| Net Loss | $ | (406,343 | ) | $ | (192,046 | ) | $ | (214,297 | ) | |||
Revenues
Revenue increased by $28,381, or 1,752%,$52,256 for the three months ended May 31, 2021February 28, 2023, as compared to the three months ended May 31, 2020,February 28, 2022. This increase was primarily due to an increase in purchases by the Company’s clients not buying productcustomers during the three months ended May 31, 2020 due to buying more than they anticipated needing in prior periods.February 28, 2023.
Operating Costs and Expenses
Selling, general and administrativeTotal operating expenses increaseddecreased by $219,405,$5,346,576, or 113%48%, for the three months ended May 31, 2021,February 28, 2023, as compared to the three months ended May 31, 2020, due to an increase of approximately (i) $38,000 in stock based compensation, (ii) $26,000 in advertisingFebruary 28, 2022. Selling, general and marketing costs, (iii) $140,000 in payrolladministrative expenses resulting primarily from the Company hiring a chief financial officer and additional workforce.
Product fulfillment and exploration and mining expensesdecreased by $5,313,531, or 47%, for the three months ended May 31, 2021 increased by $12,159, or 353%,February 28, 2023, as compared to the three months ended May 31, 2020,February 28, 2022. The decrease in selling, general and administrative expenses was primarily due to a decrease in stock-based compensation of $5,490,826 for the three months ended February 28, 2023, as compared to the three months ended February 28, 2022.
The Company continued to expense the option to purchase an aggregate of 116,000,000 shares of common stock granted to USMC on October 6, 2021 through March 2023. Thereafter, the Company no longer expenses such option which is expected to result in a decrease in stock-based operating expense.
Product fulfillment expenses increased by $19,211, or 591%, for the three months ended February 28, 2023, as compared to the three months ended February 28, 2022, primarily due to the increase in revenue during the three months ended May 31, 2021.February 28, 2023.
Other Income (Expense)(Expenses)
OtherTotal other income (expense) decreasedincreased by $11,114,$45,169, or 345%239%, for the three months ended May 31, 2021,February 28, 2023, as compared to the three months ended May 31, 2020,February 28, 2022, primarily due to an increasea gain on forgiveness of debt and accrued interest in the amount of $35,401 and a decrease in interest expense as a result of the Company issuing $50,597,769 of convertible debt to USMC during$11,775 for the three months ended May 31, 2021.February 28, 2023 compared to the three months ended February 28, 2022.
Comparison of the Six Months Ended May 31, 2021Liquidity and the Six Months Ended May 31, 2020Capital Resources
A comparisonAs of the Company’s operating results for the six months ended May 31, 2021February 28, 2023, we had cash on hand of $21,423 and May 31, 2020a working capital deficiency of $657,834, as compared to cash on hand of $19,055 and a working capital deficiency of $620,290 as of November 30, 2022. The increase in working capital deficiency is primarily a result of an increase in accounts payable and accrued expenses, which are summarized as follows:
| May 31, | May 31, | |||||||||||
| 2021 | 2020 | Variance | ||||||||||
| Revenues | $ | 30,000 | $ | 6,129 | $ | 23,871 | ||||||
| Operating expenses: | ||||||||||||
| Selling, general & administrative | 633,787 | 355,434 | 278,353 | |||||||||
| Product fulfillment, exploration and mining | 17,708 | 5,194 | 12,514 | |||||||||
| Loss from operations | (621,495 | ) | (354,499 | ) | (266,996 | ) | ||||||
| Other income (expense) | (22,848 | ) | 6,041 | (28,889 | ) | |||||||
| Net Loss | $ | (644,343 | ) | $ | (348,458 | ) | $ | (295,885 | ) | |||
Revenuespartially offset by an increase in accounts receivable of $53,880 and a decrease in notes payable of $25,000.
Revenue increased by $23,871, or 389%,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 six months ended May 31, 2021Company 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 compared to the six months ended May 31, 2020, primarily due to the Company’s clients not buying product during the six months ended May 31, 2020 due to buying more than they anticipated needing in prior periods.a going concern.
Operating CostsAlthough 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 Expensesdebt financing, including funding from USMC in connection with the March 23, 2022 securities purchase agreement and March 7, 2023 securities purchase agreement, will provide the necessary funding for the Company to continue as a going concern for the next twelve months.
Selling, general and administrative expenses increased by $278,353, or 78%, forOn February 28, 2023, in connection with the six months ended May 31, 2021, as compared to the six months ended May 31, 2020, due to an increase of approximately (i) $18,000 in stock based compensation, (ii) $40,000 in advertising and marketing costs, (iii) $190,000 in payroll expenses resulting primarily fromApril 7, 2022 securities purchase agreement with USMC, the Company hiringissued a chief financial officer and additional workforce.convertible promissory note in the amount of $308,320 to USMC, with a maturity date of February 28, 2025. The note bears interest at 5% per annum. 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.
Product fulfillment and exploration and mining expenses forOn March 20, 2023, the six months ended May 31, 2021 increased by $12,514, or 241%, as comparedCompany entered into a securities purchase agreement with USMC, effective March 7, 2023, pursuant to the six months ended May 31, 2020, primarily duewhich USMC may purchase up to the increase in revenue during the six months ended May 31, 2021.
Other Income (Expense)
Other income (expense) decreased by $28,889, or 478%, for the six months ended May 31, 2021, as compared to the six months ended May 31, 2020, primarily due to an increase in interest expense as a result$1,000,000 of the Company issuing $51,401,769 ofCompany’s 8% unsecured convertible debt to USMC during the six months ended May 31, 2021.
Liquidity and Capital Resources
As of May 31, 2021, we had $12,890two-year promissory notes in cash on hand and a working capital deficiency of $1,101,498, as compared to cash on hand of $7,450 and a working capital deficiency of $1,792,674 as of November 30, 2020.one or more closings. The decrease in working capital deficiency is mainly due to an approximate $1,401,000 decrease in due to affiliated entities as a result of the conversion of $1,401,000 in payables to anotes are convertible note payable.
Future Financing
We will require additional funds to implement our growth strategy. We do not believe that our current cash and cash equivalents will be sufficient to meet our working capital requirements 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 USMC, an affiliated entity. There is no assurance that we will be able to obtain necessary capital or that our estimates of our capital requirements will prove to be accurate. Even if we are able to secure outside financing, it may not be available in the amounts or times when we require or on favorable terms. We currently do not have any agreements or understandings for additional financing. If we are unable to raise sufficient capital we will be required to delay or forego some portion of our business plan or cease operations.
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 investors while incurring debt by the Company would increaseinto the Company’s cash flow requirements and may subject the Company to restrictions on its operations and corporate actions.common stock at a conversion price of $0.10 per share.
Going Concern
The unaudited condensed consolidated financial statements presentedcontained in this Quarterly Report on Form 10-Q have been prepared under the assumptionassuming that the Company will continue as a going concern. The Company has accumulated losses from inception through May 31, 2021,February 28, 2023, of approximately $13.4 million,$59,474,448, as well as negative cash flows from operating activities.activities and a working capital deficiency. During the sixthree months ended May 31, 2021,February 28, 2023, the Company received net cash proceeds of approximately $569,000$300,000 from USMC. Additionally, USMC an affiliated entity. Presentlypaid $8,320 to vendors on behalf of the Company during the three months ended February 28, 2023. The Company does not have sufficient cash resources to meet its debt obligations in the twelve months following the date of this Quarterly Report. These factorsReport if it does not generate additional revenue and obtain equity and debt financing from USMC or other third parties. There currently are no other arrangements or agreements for financing, and there 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. Management is inconcern for a period of twelve months from the processissue date of evaluating various financing alternatives in order to finance the capital requirements of the Company. There can be no assurance thatthis report. If adequate funds are not available on acceptable terms, or at all, the Company will be successful with its fund-raising initiatives.need to curtail operations, or cease operations completely.
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
Our working capital deficiency as of May 31, 2021, in comparison to our working capital deficiency as of November 30, 2020, can be summarized as follows:
| May 31, | November 30, | February 28, | November 30, | |||||||||||||
| 2021 | 2020 | 2023 | 2022 | |||||||||||||
| Current assets | $ | 46,404 | $ | 15,340 | $ | 78,260 | $ | 23,786 | ||||||||
| Current liabilities | 1,147,902 | 1,808,014 | 736,094 | 644,076 | ||||||||||||
| Working capital deficiency | $ | 1,101,498 | $ | 1,792,674 | $ | (657,834 | ) | $ | (620,290 | ) | ||||||
The increase in current assets is primarily due to anthe increase inof accounts receivable of $30,000.$53,880. The decreaseincrease in current liabilities is primarily due to a decreaseresult of the increase in due to affiliated entitiesaccounts payable and accrued expenses of approximately $821,000 during the six months ended May 31, 2021.$120,528.
Cash Flows
| Six Months Ended | Three Months Ended February 28, | |||||||||||||||
| May 31, 2021 | May 31, 2020 | 2023 | 2022 | |||||||||||||
| Net cash used in operating activities | $ | (525,921 | ) | $ | (396,211 | ) | $ | (287,632 | ) | $ | (239,544 | ) | ||||
| Net cash provided by investing activities | - | - | ||||||||||||||
| Net cash provided by financing activities | 531,361 | 387,811 | 290,000 | 118,000 | ||||||||||||
| Increase (decrease) in cash | $ | 5,440 | $ | (8,400 | ) | $ | 2,368 | $ | (121,544 | ) | ||||||
Operating Activities
Net cash used in operating activities was $525,921$287,632 for the sixthree months ended May 31, 2021,February 28, 2023, primarily due to a net loss of $644,343$5,830,799, which primarily consisted of a non-cash expense of $5,485,013 related to stock-based compensation cost and an increase of $53,880 in accounts receivable, which was partially offset by non-cash expensesan increase 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$139,249 in accounts payable and accrued expenses, partially offset by an increase in accounts receivable. payable.
Net cash used in operating activities was $396,211$239,544 for the sixthree months ended May 31, 2020,February 28, 2022, primarily due to a net loss of $348,458$11,222,544, which primarily consisted of a non-cash expense of $10,949,738 related to stock-based compensation cost, wages of $128,217 and professional fees of $88,320, which was partially offset by non-cash expensesan increase of $1,539 related to stock based compensation, amortization of debt discount, and lawsuit settlement liability and $46,214 of cash provided by changes in the levels of operating assets and liabilities, primarily as a result in increases in prepaid expenses and other current assets, partially offset by a decrease$36,455 in accounts receivable and accounts payable and accrued expenses.payable.
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Investing Activities
There were no investing activities during the sixthree months ended May 31, 2021February 28, 2023 and May 31, 2020.February 28, 2022.
Financing Activities
For the sixthree months ended May 31, 2021,February 28, 2023, net cash provided by financing activities was $531,361, primarily due to $569,461 advanced$290,000, with $300,000 being an advance to the Company by USMC.USMC and subsequently exchanged into a convertible note.
For the sixthree months ended May 31, 2020,February 28, 2022, net cash provided by financing activities was $387,811,$118,000, which was primarily due to $178,000 received from convertible notes payable with USMC and $161,000 advanced to the Company by USMC.USMC and recorded as part of due to affiliated entities on the balance sheet.
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 the notesNote 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, 2020,2022, as filed with the SEC on March 16, 2021.February 28, 2023.
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.
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 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, 2021February 28, 2023 due to the material weaknesses in internal control over financial reporting described below.
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Material Weaknesses in Internal Control over Financial Reporting
A material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), 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 |
| ● | Lack of personnel with U.S. GAAP |
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 for a qualified chief financial officer; |
| ● | Identify gaps in our 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.
Our management feels the weaknesses identified above have not had any material effect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses and hope to implement changes in the future if and when resources permit, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.
Our managementManagement will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls 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
On March 25, 2021, Michael Fay resigned as the Company’s Chief Financial Officer.
Other than what is stated above thereThere have been no changes in our internal controlcontrols over financial reporting that occurred during the first quarter ended May 31, 2021February 28, 2023 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 set forth below, there are no pending legal proceedings to which the Company or its subsidiaries area a party or in which any director, officer or affiliate of the Company, any owner of record of beneficially or more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
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 amount 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 the normal course,accordance with its terms, and was not renewed by 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, Calvanico has not exercised his stock options. This disputeThe binding arbitration concluded on February 3, 2023. The arbitrator’s decision is currently in the midst of the arbitration discovery phase. An arbitration hearing date has been scheduled for January 24, 2022.
On January 11, 2019, the Company filed a complaint in the Nevada District Court for 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 VP of Agricultural Research and Development. Mr. Hurtado was terminated in March 2018 and since that time the Company alleges that he conspired 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 Company is 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 on July 10, 2019. On March 13, 2020, the Company filed a First Amended Complaint, adding Todd Gauer and John Gingerich as additional defendants. A default has been taken against Mr. Gingerich. Litigation is actively proceeding against Mr. Hurtado, Mr. Gauer, and Agregen. Thedue June 2021 trial date was postponed due to Covid-related delays, but is in the process of being rescheduled.30, 2023.
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 seeks damages of approximately $300,000.$400,000 and, although the Company is vigorously defending such claims and believes that there is little to no risk of liability, it has accrued $400,000 for such risk. The Company filed its answer on May 6, 2019, denying responsibility for the mis-labellingmislabeling and denying any liability for damages therefrom. The parties are currentlymatter is set for trial in settlement negotiations. The Company believes its potential exposure to be approximately $400,000 and, as such, has accrued this amount on the unaudited condensed consolidated balance sheet at May 31, 2021.2023.
On April 16, 2021, LexisNexis, a division of RELX, Inc., filed a Complaint against the Company and its former attorney, Michael Kessler, Esq., in the Superior Court of the State of California, Amador County (Case No. 21-CV-12123). This is a limited jurisdiction lawsuit seeking payment of $18,211.30. The basis of the Complaint is that Mr. Kessler incurred this debt to LexisNexis, a legal research company. Mr. Kessler is alleged to have failed to pay the annual bill. After the matter was sent to collections, it is the Company’s understanding that Mr. Kessler claimed that he was employed by Purebase Corporation as its general counsel at the time and that the Company is therefore responsible for payment. The Company strongly disputes this characterization and maintains that it has no obligation to LexisNexis under the facts or the law. The Company and LexisNexis are engaged in settlement negotiations. The Company believes its potential exposure to be $0 and that this lawsuit will be dismissed.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information required by this Item.
Investors should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for our fiscal year ended November 30, 2020, as filed with SEC on March 16, 2021. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks.
In addition:
We face risks related to health epidemics and other outbreaks, which could significantly disrupt our operations.
Our business and operating results could be adversely impacted by the effects of epidemics, including but not limited to the current COVID-19 pandemic. We are closely monitoring the impact of the COVID-19 global outbreak, although there remains significant uncertainty related to the public health situation globally.
Our results of operations could be adversely affected to the extent that such coronavirus or any other epidemic generally harms the global economy. In addition, our customers and/or personnel may be adversely impacted as a result of a health epidemic or other outbreak. Our operation may experience disruptions, such as temporary closure of our offices, facilities and/or those of our customers, suspension of services and the shut-down of our sales efforts. These disruptions may require us to curtail our sales efforts or even force us to reduce our workforce in effort to conserve capital. Additionally, the continued spread of COVID-19 and uncertain market conditions may limit the Company’s ability to access capital and adversely affect our business, financial condition and results of operations.
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.
On May 14, 2021, the Company issued 80,000 shares of common stock to a director pursuant to a directors agreement for services rendered.
On May 27, 2021, the Company issued an aggregate of 350,000 shares of common stock to an investment banking firm pursuant to an investment banking agreement for services rendered to the Company.
On April 8, 2021, the Company granted a director an option to purchase 250,000 shares of the Company’s common stock at an exercise price of $0.10 per share. These options vest one year from the grant date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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: | ||