In management’s opinion, the fair value of convertible notes payable and advances payable is approximate to carrying value as the interest rates and other features of these instruments approximate those obtainable for similar instruments
in the current market. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.
The carrying value of cash balances, accounts payable and accrued liabilities and due to related party approximates the fair value due to their short-term maturities.
Risk management is carried out by the Board of Directors. The Company's risk exposures and their impact on the Company's financial instruments are summarized below:
Credit risk is the risk of a financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations.
The Company’s cash and cash equivalents and are primarily held in large financial institutions. Management believes that the credit risk with respect to cash and cash equivalents is remote.
The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company’s holdings of cash. As ofMay 31, 2015, the Company had cash totaling $16 (November 30, 2014 - $0) to settle current liabilities of $2,707,040 (November 30, 2014 - $1,198,413). The Company believes it will be able to raise financing in order to settle its current liabilities as they fall due.
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.
The Company has cash balances and no interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.
The Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company uses the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission (“SEC”).
During the quarter ended May 31, 2013, the Company entered into a Property option agreement to acquire a mineral property in Mexico. Accordingly, future costs may be incurred in currencies other than its functional currency, which may result in increased exposure to foreign exchange risk.
The Company does not participate in any hedging activities to mitigate any gains or losses, which may arise as a result of exchange rate changes.
The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity
price movements and volatilities. To mitigate price risk, the Company closely monitors commodity prices of precious metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.
The Company has diligently investigated rights of ownership of all of its mineral property interests and, to the best of its knowledge, all agreements relating to such ownership rights are in good standing. However, all properties/concessions may be subject to prior claims, agreements or transfers, and rights of ownership may be affected by undetected defects.
Mineral exploration and development is highly speculative and involves inherent risks. While rewards if a feasible ore body is discovered might be substantial, few properties that are explored are ultimately developed into producing mines. There can be no assurance that the current exploration programs by the Company will result in the discovery of economically viable quantities of ore.
Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation of the Company’s operation may cause additional expenses and restrictions.
If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the property may be diminished or negated.
The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous materials and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties and properties in which it has previously had an interest, if any. The Company attempts to conduct its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing environmental problems related to any of its current or former properties, if any, interests that may result in material liability to the Company.
Certain of the Company’s property interests may from time to time be located in countries outside of Canada, and mineral exploration and mining activities may be affected in varying degrees by political stability and government regulations relating to the mining industry. Any changes in regulations or shifts in political attitudes may vary from country to country and are beyond the control of the Company and may adversely affect its business. Such changes have, in the past, included nationalization of foreign owned businesses and properties. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income and other taxes and duties, expropriation of property, environmental legislation and mine safety. These uncertainties may make it more difficult for the Company and its joint venture partners to obtain any required production financing for its mineral properties.
Note 5Mineral Properties
a) Zoro Property – Manitoba Canada
On July 6, 2010, the Company entered into a Property Option Agreement (amended May 11, 2011) to acquire an option to purchase a 100% interest in the property known as the Zoro 1 property, a mineral property comprising 52 hectares (approximately 128.50 acres) in the Snow Lake region of Manitoba Canada. In order to exercise the option, the Company must pay cash or issue stock to the Optionor by the following dates:
| | |
| i) | $59,600 (Cdn$62,000) on signing the agreement (paid) |
| | |
| ii) | $102,900 (Cdn$100,000) or issue 10,000 shares of common stock on or before June, 15, 2011. (10,000 shares issued with a fair value of $80,000) |
| | |
| iii) | $50,500 cash (Cdn$50,000) and issue 75,000 common stock on or before June, 15, 2012. ($50,500 paid (Cdn$50,000) and 75,000 shares issued with a fair value of $150,000) |
| | |
| iv) | $403,560 (Cdn$400,000) or issue a specified number of common shares still to be determined by the parties on or before June, 15, 2013 |
During the six month period ended May 31, 2015, the Company incurred $0 (six months ended May 31, 2014 - $0) of exploration expenditures on the property.
The Company is currently negotiating the final cash or stock payment with the vendor since the deadline for the $403,560 payment is not made by the Company on June 15, 2013.There is no assurance that the vendor will accept the offer from the Company for the final payment.
b) La Predilecta; La Predilecta II; La Crus and La Cascada Properties – Mexico
On May 30, 2013, the Company entered into a Property Option Agreement to acquire an option to purchase a 100% interest in four mining concessions known as La Predilecta; La Predilecta II; La Crus and La Cascada comprising approximately 1,181 hectares in the Miahuatlan District, in the southern portion of Centrales Region within Oaxaca State Mexico. The Company will hold its interest via a wholly owned Mexican subsidiary, which is yet to be incorporated when the Optionor receives the $100,000 cash.
In order to exercise the option, the Company must pay cash or issue stock to the Optionor by the following dates:
| | |
| i) | $50,000 within 60 days of signing the agreement. |
| | |
| ii) | $50,000 within 90 days of signing the agreement. |
| | |
| iii) | Issue an aggregate of 4,000,000 shares of Preferred stock. |
Each preferred share shall have an underlying voting right equivalent to 100 shares of Common stock and shall be convertible into 100 shares of Common stock.
As of this reporting period the initial $50,000 payment had been madeand is being paid by an outside investor. The remaining $50,000 is past due as of May 31, 2015.
First payment of $50,000.00 has been paid. The Company is now waiting for Seller to verify the current standing with all taxes on the property. As soon as this is confirmed the Company will authorize second payment. Once the tax verification comes from the country of Mexico the Mexican subsidiary will be established and ownership of property will be held within the Mexican subsidiary.
Note 6Advance Payable
On March 21, 2011, the Company received a cash advance of $20,000. The advance is unsecured, non-interest bearing and has no fixed repayment terms.
Note 7Related Party Transactions
Amounts due to related parties comprise:
| | | |
| May 31, |
| November 30, |
| 2015 |
| 2014 |
Tim DeHerrera | $ 715 | | $ 715 |
Direct Capital | - |
| 35,578 |
| $ 715 | | $ 36,293 |
All amounts due to related parties are unsecured, non-interest bearing and have no specific terms for repayment.
Note 8Convertible Notes Payable
| | | |
|
| May 31, | November 30, |
|
| 2015 | 2014 |
Promissory Note #6 | 20,000 | 20,000 |
Promissory Note #7 | 20,000 | 20,000 |
Promissory Note #8 | 20,000 | 20,000 |
Promissory Note #10 | 30,000 | 30,000 |
Promissory Note #13 | 3,895 | 12,710 |
Promissory Note #15 | 47,625 | 88,000 |
Promissory Note #16 | 10,325 | 11,000 |
Promissory Note #17 | - | 11,000 |
Promissory Note #18 | - | 50,000 |
Promissory Note #19 | - | 11,000 |
Promissory Note #20 | - | 11,000 |
Promissory Note #21 | - | 16,000 |
Promissory Note #22 | - | 50,000 |
Promissory Note #23 | 16,000 | 16,000 |
Promissory Note #24 | 16,000 | 16,000 |
Promissory Note #25 | 16,000 | 16,000 |
Promissory Note #26 | 16,000 | 16,000 |
Promissory Note #27 | 16,000 | 16,000 |
Promissory Note #28 | 16,000 | 16,000 |
Promissory Note #29 | - | 48,000 |
Promissory Note #30 | 75,000 | 75,000 |
Promissory Note #31 | 220,486 | 220,486 |
Promissory Note #32 | 300,000 | - |
Promissory Note #33 | 360,000 | - |
Promissory Note #34 | 75,000 | - |
Promissory Note #35 | 39,255 | - |
Promissory Note #36 | 30,000 | - |
Promissory Note #37 | 13,500 | - |
Promissory Note #38 | 25,000 | - |
Promissory Note #39 | 42,000 | - |
Promissory Note #40 | 55,000 | - |
Promissory Note #41 | 19,194 | - |
Promissory Note #42 | 25,000 | - |
Promissory Note #43 | 31,500 | - |
Promissory Note #44 | 35,000 | - |
Promissory Note #45 | 51,861 | - |
Promissory Note #46 | 75,000 | - |
|
| $ 1,720,641 | $ 790,196 |
| Debt discount | (389,758) | (234,649) |
| Accrued interest | 142,348 | 83,746 |
| | $ 1,473,231 | $ 639,293 |
As at May 31, 2015 and November 30, 2014, convertible notes payable are recorded net of unamortized debt discount of $389,758 and $234,649 respectively.
Promissory Note #6
On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.
Promissory Note #7
On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.
Promissory Note #8
On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand.
Promissory Note #10
On March 20, 2012, the Company received $30,000 cash and the Company issued a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand.
The note may be converted at the option of the holder into common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly, the note may be converted into 3,000,000 common shares of the Company. The note also contains a provision whereby should the Company perform a stock split or reverse stock split, the conversion price of the note reverts to the lesser of 40% of market value at the time of conversion, or $0.01 per share. Accordingly, subsequent to the period end on June 14, 2013, this conversion provision was triggered.
The Company determined that Promissory notes # 6, 7, 8, and 10 should be accounted for in accordance with FASB ASC 470-20, which addresses “Accounting for Convertible Securities with Beneficial Conversion Features".The intrinsic value of the conversion feature is calculated as the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (being $0.05 for notes # 6, 7 and 8 and $0.02 for note 10), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature is calculated as pro rata portion of the proceeds from issuance of the convertible debt, being equal to proceeds received multiplied by intrinsic value divided by the total value received (i.e. the aggregate of proceeds and intrinsic value). This beneficial conversion feature is allocated to debt discount and additional paid in capital. Because the debt is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of convertible notes of $0 (six months endedMay 31, 2014 - $0) was recorded in the financial statements, with a corresponding increase to additional paid in capital.
Promissory Note #13
On September 12, 2012, the Company received $75,000 cash and the Company issued a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 14, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. During the six months endedMay 31, 2015, the Company accrued $973 (six months endedMay 31, 2014 - $1,837) in interest expense.
After 180 days the note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “50% multiplied by market price where market price is determined as the average of the lowest three bid prices during the ten trading days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered.
In March 2013, upon the holders’ option to convert becoming active, the Company recorded debt discount of $75,000, charged $1,800 to interest expense and also recorded a derivative liability of $76,800 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term on the note or to the date of conversion. The derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $12,374 (six months endedMay 31, 2014 – gain of $2,472) due to the change in value of the derivative liability during the period.
During the six months endedMay 31, 2015, the Company issued 4,971,060 common shares upon the conversion of $8,815 of the principal balance into common stock, and $25,179 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $3,895 (May 31, 2014 - $30,140), accrued interest of $15,547 (May 31, 2014 - $9,018) and a derivative liability of $7,766 (May 31, 2014 - $29,565) was recorded.
Promissory Note #15
On June 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $88,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $8,142 (six months endedMay 31, 2014 - $3,510) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $481) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 4,225,000 common shares upon the conversion of $5,375 of the principal balance into common stock.
On March 26, 2015, the Company transferred $35,000 of the note balance to Adar Bays, LLC.
As of May 31, 2015, principal amount of $47,625 (May 31, 2014 - $88,000) and accrued interest of $31,012 (May 31, 2014 - $7,020) was recorded.
Promissory Note #16
On July 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on January 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,160 (six months endedMay 31, 2014 - $439) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $1,913) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 675,000 common shares upon the conversion of $675 of the principal balance into common stock.
As of May 31, 2015, principal amount of $10,325 (May 31, 2014 - $11,000) and accrued interest of $3,811 (May 31, 2014 - $805) was recorded.
Promissory Note #17
On August 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $703 (six months endedMay 31, 2014 - $439) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $3,766) was accreted to the statement of operations.
On March 16, 2015, the Company transferred $11,000 of the principal balance and $2,262 of interest to Service Trading Company, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $11,000) and accrued interest of $887 (May 31, 2014 - $731) was recorded.
Promissory Note #18
On August 7, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $50,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 7, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $3,195 (six months endedMay 31, 2014 - $1,994) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $18,750) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $50,000) and accrued interest of $9,003 (May 31, 2014 - $3,254) was recorded.
Promissory Note #19
On September 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $703 (six months endedMay 31, 2014 - $439) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $5,530) was accreted to the statement of operations.
On March 16, 2015, the Company transferred $11,000 of the principal balance and $2,262 of interest to Service Trading Company, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $11,000) and accrued interest of $691 (May 31, 2014 - $656) was recorded.
Promissory Note #20
On October 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $703 (six months endedMay 31, 2014 - $439) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $7,374) was accreted to the statement of operations.
On March 16, 2015, the Company transferred $11,000 of the principal balance and $250 of interest to GW Holdings Group, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $11,000) and accrued interest of $2,503 (May 31, 2014 - $584) was recorded.
Promissory Note #21
On November 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,022 (six months endedMay 31, 2014 - $639) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $13,436) was accreted to the statement of operations.
On March 16, 2015, the Company transferred $16,000 of the principal balance and $250 of interest to GW Holdings Group, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $16,000) and accrued interest of $3,461 (May 31, 2014 - $741) was recorded.
Promissory Note #22
On November 30, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $50,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $2,381 (six months endedMay 31, 2014 - $1,994) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $50,000) was accreted to the statement of operations.
On February 17, 2015, the Company transferred $50,000 of the principal balance and $4,822 of interest to Union Capital, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $50,000) and accrued interest of $5,088 (May 31, 2014 - $1,994) was recorded.
Promissory Note #23
On December 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $635) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $15,955) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $16,000) and accrued interest of $4,145 (May 31, 2014 - $635) was recorded.
Promissory Note #24
On January 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $526) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $14,138) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $16,000) and accrued interest of $3,856 (May 31, 2014 - $526) was recorded.
Promissory Note #25
On February 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $418) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $11,337) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $16,000), accrued interest of $3,557 (May 31, 2014 - $418) was recorded.
Promissory Note #26
On March 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $319) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $7,913) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $16,000) and accrued interest of $3,265 (May 31, 2014 - $319 was recorded.
Promissory Note #27
On April 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $210) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $5,246) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $0) and accrued interest of $2,976 (May 31, 2014 - $210) was recorded.
Promissory Note #28
On May 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $1,755 (six months endedMay 31, 2014 - $105) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $2,609) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $16,000 (May 31, 2014 - $16,000) and accrued interest of $2,680 (May 31, 2014 - $105) was recorded.
Promissory Note #29
On June 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $48,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $4,282 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $132 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
On April 27, 2015, the Company transferred $48,000 of the principal balance and $3,861 of interest to Union Capital, LLC.
As of May 31, 2015, principal amount of $0 (May 31, 2014 - $0) and accrued interest of $2,335 (May 31, 2014 - $0) was recorded.
Promissory Note #30
On October 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $4,718 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $0 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $50,275 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $75,000 (May 31, 2014 - $0), accrued interest of $5,704 (May 31, 2014 - $0) and debt discount of $0 (May 31, 2014 - $0) was recorded.
Promissory Note #31
On October 1, 2014, the Company entered into a Convertible Promissory note with New Venture Attorneys, PC in the sum of $220,486. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2015. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $8,795 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $294,767 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $111,842 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $147,670 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $220,486 (May 31, 2014 - $0), accrued interest of $11,695 (May 31, 2014- $0), debt discount of $36,572 (May 31, 2014 - $0) and a derivative liability of $401,541 (May 31, 2014 - $0) was recorded.
Promissory Note #32
On January 1, 2015 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $300,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $9,863 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $300,000 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $265,084 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $300,000 (May 31, 2014 - $0), accrued interest of $9,863 (May 31, 2014 - $0) and debt discount of $34,916 (May 31, 2014 - $0) was recorded.
Promissory Note #33
On January 1, 2015 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $360,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .00001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $11,836 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $360,000 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $318,100 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $360,000 (May 31, 2014 - $0), accrued interest of $11,836 (May 31, 2014 - $0) and debt discount of $41,900 (May 31, 2014 - $0) was recorded.
Promissory Note #34
On January 2, 2015 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 2, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $2,449 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $75,000 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $65,916 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $75,000 (May 31, 2014 - $0), accrued interest of $2,449 (May 31, 2014 - $0) and debt discount of $9,084 (May 31, 2014 - $0) was recorded.
Promissory Note #35
On February 17, 2015, the Company arranged a debt swap under which a Direct Capital Group note in the amount of $50,000 in principal and $4,822 in interest was transferred to Union Capital, LLC. Under the terms of the note, the Company has borrowed a total of $54,822 from Union Capital, LLC, which accrues interest at an annual rate of 8% and has a maturity date of February 17, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $1,182 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $177,731 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a gain of $104,327 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $27,810 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 18,625,000 common shares upon the conversion of $15,567 of the principal balance and $275 of interest into common stock, and $30,799 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $39,255 (May 31, 2014 - $0), accrued interest of $907 (May 31, 2014- $0), debt discount of $27,012 (May 31, 2014 - $0) and a derivative liability of $42,605 (May 31, 2014 - $0) was recorded.
Promissory Note #36
On February 17, 2015, the Company entered into a Convertible Promissory note with Union Capital, LLC in the sum of $30,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 17, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $677 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $97,259 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a gain of $46,796 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $9,115 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $30,000 (May 31, 2014 - $0), accrued interest of $677 (May 31, 2014- $0), debt discount of $20,885 (May 31, 2014 - $0) and a derivative liability of $50,463 (May 31, 2014 - $0) was recorded.
Promissory Note #37
On March 16, 2015, the Company arranged a debt swap under which two Direct Capital Group notes in the amount of $27,000 in principal and $500 in accrued interest was transferred to GW Holdings Group, LLC. Under the terms of the note, the Company has borrowed a total of $27,500 from GW Holding Group, LLC, which accrues interest at an annual rate of 8% and has a maturity date of March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $365 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $49,259 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $5,600 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $16,803 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 14,570,458 common shares upon the conversion of $14,000 of the principal balance and $130 of interest into common stock, and $29,931 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $13,500 (May 31, 2014 - $0), accrued interest of $235 (May 31, 2014- $0), debt discount of $10,697 (May 31, 2014 - $0) and a derivative liability of $24,928 (May 31, 2014 - $0) was recorded.
Promissory Note #38
On March 16, 2015, the Company entered into a Convertible Promissory note with GW Holdings Group, LLC in the sum of $25,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $416 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $44,781 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $1,381 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $5,191 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $25,000 (May 31, 2014 - $0), accrued interest of $416 (May 31, 2014- $0), debt discount of $19,809 (May 31, 2014 - $0) and a derivative liability of $46,162 (May 31, 2014 - $0) was recorded.
Promissory Note #39
On March 16, 2015, the Company arranged a debt swap under which a Syndication Capital note in the amount of $50,000 in principal and $5,129 in accrued interest was transferred to LG Capital Funding, LLC. Under the terms of the note, the Company has borrowed a total of $55,129 fromLG Capital Funding, LLC, which accrues interest at an annual rate of 8% and has a maturity date of March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $819 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $98,749 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $6,937 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $21,850 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 12,574,837 common shares upon the conversion of $13,129 of the principal balance and $118 of interest into common stock, and $28,133 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $42,000 (May 31, 2014 - $0), accrued interest of $701 (May 31, 2014- $0), debt discount of $33,279 (May 31, 2014 - $0) and a derivative liability of $77,553 (May 31, 2014 - $0) was recorded.
Promissory Note #40
On March 16, 2015, the Company entered into a Convertible Promissory note withLG Capital Funding, LLC in the sum of $55,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $916 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $98,518 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $3,039 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $11,421 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $55,000 (May 31, 2014 - $0), accrued interest of $916 (May 31, 2014- $0), debt discount of $43,579 (May 31, 2014 - $0) and a derivative liability of $101,557 (May 31, 2014 - $0) was recorded.
Promissory Note #41
On March 16, 2015, the Company arranged a debt swap under which two Direct Capital notes in the amount of $22,000 in principal and $4,525 in accrued interest was transferred to Service Trading Company, LLC. Under the terms of the note, the Company has borrowed a total of $26,525 fromService Trading Company, LLC, which accrues interest at an annual rate of 8% and has a maturity date of March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $379 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $47,512 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $3,013 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $11,317 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 6,208,851 common shares upon the conversion of $7,331 of the principal balance and $31 of interest into common stock, and $15,084 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $19,194 (May 31, 2014 - $0), accrued interest of $348 (May 31, 2014- $0), debt discount of $15,208 (May 31, 2014 - $0) and a derivative liability of $35,441 (May 31, 2014 - $0) was recorded.
Promissory Note #42
On March 16, 2015, the Company entered into a Convertible Promissory note withService Trading Company, LLC in the sum of $25,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 16, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $416 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $44,781 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $1,381 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $5,191 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $25,000 (May 31, 2014 - $0), accrued interest of $416 (May 31, 2014- $0), debt discount of $19,809 (May 31, 2014 - $0) and a derivative liability of $46,162 (May 31, 2014 - $0) was recorded.
Promissory Note #43
On March 26, 2015, the Company arranged a debt swap under which a Direct Capital note in the amount of $35,000 was transferred to Adar Bays, LLC. Under the terms of the note, the Company has borrowed a total of $35,000 fromAdar Bays, LLC, which accrues interest at an annual rate of 8% and has a maturity date of March 26, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $475 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $62,372 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $1,724 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $9,180 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
During the six months endedMay 31, 2015, the Company issued 4,242,424 common shares upon the conversion of $3,500 of the principal balance into common stock, and $5,932 of the derivative liability was re-classified as additional paid in capital upon conversion.
As of May 31, 2015, principal balance of $31,500 (May 31, 2014 - $0), accrued interest of $475 (May 31, 2014- $0), debt discount of $25,820 (May 31, 2014 - $0) and a derivative liability of $58,164 (May 31, 2014 - $0) was recorded.
Promissory Note #44
On March 26, 2015, the Company entered into a Convertible Promissory note withAdar Bays, LLC in the sum of $35,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 26, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $506 (six months endedMay 31, 2014 - $0) in interest expense.
Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $62,372 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period.
During the six months endedMay 31, 2015, the Company recorded a loss of $2,255 (six months endedMay 31, 2014 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $6,311 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal balance of $35,000 (May 31, 2014 - $0), accrued interest of $506 (May 31, 2014- $0), debt discount of $28,689 (May 31, 2014 - $0) and a derivative liability of $64,627 (May 31, 2014 - $0) was recorded.
Promissory Note #45
On April 27, 2015, the Company arranged a debt swap under which a Direct Capital note in the amount of $48,000 in principal and $3,861 in accrued interest was transferred to Union Capital, LLC. Under the terms of the note, the Company has borrowed a total of $51,861 fromUnion Capital, LLC, which accrues interest at an annual rate of 8% and has a maturity date of April 27, 2016. The note also contains customary events of default. During the six months endedMay 31, 2015, the Company accrued $386 (six months endedMay 31, 2014 - $0) in interest expense.
After 180 days from issuance, the note may be converted at the option of the holder into common stock of the Company. The conversion price is 60% of the market price, where market price is defined as “the lowest closing bid price on the OTCBB for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company.”
As of May 31, 2015, principal balance of $51,861 (May 31, 2014 - $0) and accrued interest of $386 (May 31, 2014- $0) was recorded.
Promissory Note #46
On May 31, 2015 the Company entered into a Convertible Promissory Note with Rancho Capital Management in the sum of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the six months endedMay 31, 2015, the Company accrued $0 (six months endedMay 31, 2014 - $0) in interest expense.
A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance.
During the six months endedMay 31, 2015 interest expense relating to the beneficial conversion feature of this convertible note of $22,500 (May 31, 2014 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $0 (six months endedMay 31, 2014 - $0) was accreted to the statement of operations.
As of May 31, 2015, principal amount of $75,000 (May 31, 2014 - $0), accrued interest of $0 (May 31, 2014 - $0) and debt discount of $22,500 (May 31, 2014 - $0) was recorded.
Note 9Derivative Liabilities
The Company issued financial instruments in the form of convertible notes with embedded conversion features. Many of the convertible notes payable have conversion rates, which are indexed to the market value of the Company’s stock price.
During the six month period ended May 31, 2015, the Company recorded derivative liabilities for embedded conversion features related to convertible notes payable of face value $783,334 (year ended November 30, 2014 - $294,767). During the six month period ended May 31, 2015,$68,946 (year ended November 30, 2014, $51,350) of convertible notes payable principal and accrued interest was converted into common stock of the Company. For the six month period ended May 31, 2015, the Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes of and the carrying amount of the derivative liability related to the conversion feature of $135,058 (year ended November 30, 2014 - $91,498) was re-classed to additional paid in capital on the date of conversion in the statement of shareholders’ deficit. During the six month period ended May 31, 2015, the Company recognized a gain of $1,577 (year ended November 30, 2014–loss of $16,704) based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations.
These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP ASC 815. The valuation assumptions are determined by Level 3 inputs. The following table represents the Company’s derivative liability activity for the embedded conversion features discussed above:
| | |
| May 31, | November 30, |
| 2015 | 2014 |
Balance, beginning of year | $ 310,270 | $ 90,297 |
Initial recognition of derivative liability | 783,334 | 294,767 |
Conversion of derivative instruments to Common Stock | (135,058) | (91,498) |
Mark-to-Market adjustment to fair value | (1,577) | 16,704 |
Balance, end of year | $ 956,969 | $ 310,270 |
Note 10Asset Retirement Obligations
During the period November 2007 to October 2009, the Company acquired in tranches a 50% working interest in the Hayter 10-8-40-1 W4M oil and gas well in Alberta Canada, known as the “Hayter Prospect”. During the year ended November 30, 2012, due to financial restrictions in the current capital markets, management determined the focus of the Company in the future would predominantly be the exploration and development of the Zoro Mineral Property, and as the Company had no current plans to further develop the Hayter property, the Company recorded an impairment provision of $135,427 during the fiscal year ended November 30, 2012, resulting in the book value of the Hayter prospect being $0 at November 30, 2012. As of May 31, 2015 and November 30, 2014, the Company determined the asset retirement obligation to be $19,239 and $19,523, respectively.
Total future asset retirement obligations were estimated by management based on the Company’s net ownership interest, estimated costs to reclaim and abandon the wells and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total asset retirement obligations at February 28, 2013 to be $16,889 based on a total undiscounted liability of $17,057 (Cdn$17,500) in the Hayter Prospect, Alberta, Canada. These payments are expected to be made over the next seven years, with the majority of the cost incurred between 2016 and 2019.
The Company’s credit adjusted risk free rate of 15% and an inflation rate of 8% were used to calculate the present value of the asset retirement obligation.
| | |
| May 31, | November 30, |
| 2015 | 2014 |
Balance, beginning of year | $ 19,523 | $ 18,861 |
Liabilities incurred | - | - |
Accretion expense | 1,366 | 2,728 |
Effect of foreign exchange | (1,650) | (2,066) |
Balance, end of year | $ 19,239 | $ 19,523 |
Note 11Capital Stock
Authorized
10,000,000 Preferred shares, par value $0.001 – 4,000,000 issued
(November 30, 2014 – 4,000,000 shares issued)
750,000,000 Common shares par value $0.10 –79,940,864 issued
(November 30, 2014 – 13,848,234 shares issued)
On June 6, 2013, the Board of Directors authorized a 100:1 reverse stock split of the common shares. The reverse stock split received regulatory approval on June 28, 2013. The record date for the reverse stock split was June 14, 2013. The authorized number of common shares remained unchanged. All references in the accompanying financial statements to the number of common shares have been restated to reflect the reverse stock split.
Issued
Preferred Stock
On May 14, 2013, the Company issued 4,000,000 preferred shares pursuant to the Mexican mineral property option agreement. Each share has an underlying voting right equivalent to 100 common shares, and is convertible into 100 common shares of the Company.
Common Stock
Between December 12, 2012 and November 30, 2013, the Company issued an aggregate of 245,868 common shares with an aggregate fair value of $100,200, upon the conversion of $50,000 of a convertible note, which was due upon demand.
Between January 12, 2013, and August 31, 2013, the Company issued 192,576 common shares with an aggregate fair value of $86,500, upon the conversion of accrued interest of $1,700 and $42,500 principal of a convertible note.
Between May 2, 2013 and August 31, 2013, the Company issued 189,679 common shares with an aggregate fair value of $51,300, upon the conversion of $25,900 of a convertible note.
Between June 1, 2013 and August 31, 2013, the Company issued 236,102 common shares upon the conversion of accrued interest of $900 and $16,600 principal of a convertible note.
Between September 1, 2013 and November 30, 2013, the Company issued 558,167 common shares upon the conversion of principal of $10,940 of a convertible note.
Between December 1, 2013 and February 28, 2014, the Company issued 1,388,584 common shares upon the conversion of principal of $21,023 of a convertible note.
Between March 1, 2014 and May 31, 2014, the Company issued 2,489,410 common shares upon the conversion of principal of $12,897 of a convertible note.
Between June 1, 2014 and August 31, 2014, the Company issued 2,451,940 common shares upon the conversion of principal of $8,540 of a convertible note.
Between September 1, 2014, and November 30, 2014, the Company issued 4,513,690 common shares upon the conversion of principal of $8,890 of a convertible note.
Between December 1, 2014 and February 28, 2015, the Company issued 3,257,991 common shares upon the conversion of principal and interest of $4,460 of convertible notes.
Between March 1, 2015 and May 31, 2015, the Company issued 66,092,630 common shares upon the conversion of principal and interest of $68,946 of convertible notes.
Note 12Supplemental Disclosure with Respect to Cash Flows
During the six month period ended May 31, 2015, the following non-cash investing and financing activities occurred:
| | |
| i) | An aggregate of 66,092,630 common shares were issued upon the conversion into stock of $68,946 of the principal and interest of convertible notes payable. |
Note 13Commitment
| | |
|
| On May 5, 2012, the Company entered into a consultancy agreement with Primary Capital LLC. (“Primary”), whereby Primary would provide financial advisory and investment banking services to the Company for a period of two years commencing May 7, 2012. Pursuant to the agreement, the Company paid Primary a non-refundable signing fee of $10,000 and issued Primary common stock equivalent to 4.9% (the “Applicable Percentage”) of the common shares on a fully diluted basis after giving effect to the conversion of all outstanding derivative securities at the time of inception of the agreement. |
| | |
|
| Accordingly, on May 5, 2012, 26,919 common shares were issued with a fair value of $53,838. |
Pursuant to the agreement should the Company issue further potentially dilutive derivative instruments, or issue stock from treasury at any time, then within 5 days of the end of the fiscal quarter in which such instruments or stock was issued, the Company will issue to Primary additional common shares (the “Adjustment shares”) such that Primary continues to hold common stock equivalent to the Applicable Percentage.
Should the Board of Directors grant options, warrants or other securities pursuant to a restricted stock purchase plan or stock option plan approved by the stockholders and Board of Directors of the Company, to employees or Directors such grants shall be considered Excluded Securities for the purposes of determining the Applicable Percentage and the calculation of Adjustment shares in future periods.
Also if the Company completes any financing during the engagement period and also within 2 years of the termination of the agreement with any party introduced to the Company by Primary, Primary will be entitled to:
| | |
| i) | a cash fee of 8% of the gross proceeds of the financing, |
| | |
| ii) | a 5 year warrant to purchase that number of shares equal to 8% of the number of shares issued in the financing on the same terms as the financing. Any such warrant issued will be in a form provided by Primary and may include terminology allowing for full ratchet anti-dilution provisions, standard and cashless exercise provisions and the same registration rights as received by the original investors. |
The agreement can be terminated by either party by providing written notice at any time after the first anniversary of the agreement if either party is in breach of the agreement and fails to cure such breach within 15 days after it receives notice of such breach. During the quarter ended May 31, 2013, the Company terminated the contract.
On October 1, 2014, the Company entered into a consulting contract with Nathan Lewis. Mr. Lewis will act as the President, Treasurer, Secretary, and Director for the Company. The Company will distribute the equivalent in $2,000 restricted common stock for each month.
On December 1, 2014, the Company entered into a consulting contract with Zoom Companies, Inc. The Company will distribute the equivalent in $10,000 in duly authorized, validly issued, fully paid and non-assessable common stock for each month.
Note 14Subsequent Events
On March 9, 2015 the Company acquired Crypto Currency CandyCoin, a digital crypto currency company and its digital mining assets and intellectual properties.
Note 15Prior Year Restatement
| | |
| i) | Mineral Property Option Costs |
| | |
|
| The Company reviewed its accounting policy for the capitalization of mineral option costs, and has determined that the mineral option costs incurred in the year ended November 30, 2010, amounting to $59,600 were expensed, when they should have been capitalized and accordingly, the results for the year ended November 30, 2010, were restated. The effect of the restatement was to increase the value of the Mineral Property Option by $59,600 at November 30, 2010, 2011 and 2012 and to reduce the loss for the year ended November 30, 2010 by $59,600, resulting in the accumulated deficit being reduced by $59,600 at November 30, 2010, 2011 and 2012, respectively. |
| | |
| ii) | Convertible Notes Payable |
| | |
|
| The Company has determined that certain transactions relating to the convertible notes payable were not correctly accounted for in the three and nine month periods ended May 31, 2012 and accordingly the results of the nine and three month periods ended May 31, 2012 have been restated. |
The Company did not recognize any embedded derivative liabilities arising upon the inception or during the term of certain convertible notes payable. As a result of this, at May 31, 2012, the value of the convertible notes on the balance sheet was overstated by $150,724 and derivative liabilities were understated by $170,900.
In the condensed consolidated statement of loss, for the nine month period ended May 31, 2012 accretion of convertible debt and interest discount expense was overstated by $68,311, interest expense on beneficial conversion feature of convertible notes was overstated by $140,000 gain on elimination of convertible debt was overstated by $21,888 and interest expense was understated by $162,868. Finally, the loss on change in fair value of derivative liability was understated by $40,200.
In the condensed consolidated statement of loss, for the three month period ended May 31, 2012 accretion of convertible debt and interest discount expense was overstated by $30,630, interest expense on beneficial conversion feature of convertible notes was overstated by $50,000 gain on elimination of convertible debt was overstated by $21,888 and interest expense was understated by $66,434. Finally the loss on change in fair value of derivative liability was understated by $21,000.
| | |
| iii) | Accumulated Other Comprehensive Income |
| | |
|
| The Company also determined the accounting for foreign exchange with respect to the translation adjustments arising on the translation of its Canadian subsidiary had been incorrectly recorded. Such gains or losses arising had been included in the operations of the year, rather than being treated as elements of other comprehensive income, which forms a separate part of equity. |
| | |
|
| As a result of the restatement, the Company has increased the balance of other comprehensive income at November 30, 2011 by $6,388 and also increased the accumulated deficit by a corresponding amount. During the nine month period ended May 31, 2012, foreign exchange charged to the income statement was reduced by $830 and a corresponding reduction to accumulated comprehensive income was recorded. During the three month period ended May 31, 2012, foreign exchange credited to the income statement was reduced by $454 and a corresponding increase to accumulated comprehensive income was recorded. |
The net effect of the above restatements at May 31, 2012 is to increase the carrying value of the mineral property by $59,600 to $139,600, reduce the carrying value of the convertible notes payable from $357,432 to $206,708 and to increase the derivative liability from $0 to $170,900. Accumulated other comprehensive income increased from $0 to $6,561. Also the previously reported loss for the nine month period ended May 31, 2012, was increased by $16,095 to $416,491 and the previously reported loss for the three month period ended May 31, 2012 increased by $29,145 to $221,476. The previously reported accumulated deficit at May 31, 2012 decreased by 44,176 from $3,300,141 to $3,255,965.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors, which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Company Overview
We are currently engaged in the business of identifying, evaluating, and qualifying potential mineral properties and investing in interests in those properties with the goal of producing commercially marketable quantities of various types of minerals.
The Hayter Well
We presently hold a 50% working interest of the County Line Energy Corp. interest in the Hayter Well located in Alberta, Canada. However, for the time being we have decided to abandon our pursuit of extracting oil and gas from this or any other oil and gas property. Instead, we plan to focus our efforts on our current mineral properties.
Zoro 1 Mineral Claim
On July 6, 2010, we entered into an option agreement with Dalton Dupasquier, pursuant to which Mr. Dupasquier has granted to us the sole and exclusive right and option, exercisable in the manner described below, to acquire a 100% net undivided interest in the property known as the Zoro 1 mineral claim, located near the East Shore of Wekusko Lake in west-central Manitoba, Canada.
| | |
Amount of Payment | Date Payment is Due | Additional Notes |
$59,600 | July 6, 2010 | This amount was paid. |
$102,900 | June 15, 2011 | This amount was paid in 1,000,000 shares of common stock. |
$194,800 | June 15, 2012 | This amount was agreed to be paid in $50,500 and 7,500,000 shares of common stock. We have paid $50,500 and issued 7,500,000 shares of common stock. |
$403,560 | June 15, 2013 | We did not make the payment as of June 15, 2013. We are in negotiations to extend the payment date. No assurance can be made, however, that we will come to terms with Mr. Dupasquier. As such, we may lose our option on the property. Company is confident that this will not impact its ability to retain property. |
During the year ended November 30, 2012, we incurred $8,639 on exploration expenditures on the property. During the sixmonths ended May 31, 2015, we incurred $0 on exploration expenditures on the property.
We have no rights to the Zoro 1 mineral claim unless and until we exercise the option.
We acquired the option to explore the potential for deposits of lithium on the Zoro 1 mineral claim. According to the United States Geological Survey (USGS), global end-use markets for lithium include ceramics and glass, batteries, lubricating greases, air treatment, continuous casting and primary aluminum production. Batteries, especially rechargeable batteries, are the market for lithium compounds with the largest growth potential as major automobile companies pursue the development of lithium batteries to power hybrid electric cars.
In September 2009, we received a Technical Report on the Zoro 1 mineral claim. The report was authored by Mr. Mark Fedikow, PhD., and P.Eng. of Mount Morgan Resources Ltd. The objectives of the report were to summarize the geology, review the historic ore reserves, and economic potential of the spodumene-bearing dykes delineated on the property and their surrounding geological environment.
A historic reserve estimate for Lithium oxide (Li2O) has been calculated on limited drilling on a single dyke on the Zoro 1 mineral claim. Drill indicated spodumene reserves coupled with data from trenching have been calculated with a total undiluted tonnage given as 1,727,550 at 0.945% Li2O. However, the historic data upon which the resource of 1,727,550 tons grading 0.945% Li2O was based is not dispositive. When the historic work was done, there was no “Qualified Person” in place, assay labs were not ISO Certified and insufficient drilling was undertaken to define the resource. It therefore became necessary to conduct more exploration activities to support the limited historic data available.
There are seven zoned pegmatite dykes on the Zoro 1 mineral claim. An exploration team explored the main dyke, located the additional seven trenches that had historically been noted on the Zoro 1 claim and produced a geologic map of each trench. Once areas of interest were located, the crew cleaned out the trenches and used a pick and shovel method to look at rocks to find pegmatite. They then took channel samples using a rock saw on historic trenches hosting pegmatite.
While exploring the main and additional seven dykes on the project area the crew identified several additional trenches that had not been noted in previous exploration programs. These findings suggest a potential for a greater amount of resource to be spread across the property, and give further encouragement for more detailed exploration.
Altogether 170 channel samples were sent for assay at Activation Laboratories in Ancaster, Ontario. The samples were analyzed to confirm historical lithium assays, and to assess the pegmatite for rare earth elements, including gold, rubidium, niobium, tantalum, tin, tungsten, and beryllium, all of which add to the prospectively and economic viability of the Zoro 1 property.
Analysis of the channel samples collected from historic trenches in the pegmatite target has confirmed that a significant zone of lithium mineralization is present on the Zoro 1 claim. Analytical results are summarized in Table 1, which is attached to our annual report as Exhibit 99.2 that we filed with the Securities and Exchange Commission on February 23, 2012.
With the current and future importance of lithium and the mineralized zone at Zoro 1, we are now preparing for the next phase of our exploration program. This phase, which will require a drill program, will assess the third dimension of the deposit and its historic resource, and determine the economic viability of mining the resource. This will be dependent on the Company maintaining control of the property.
We plan to continue to explore the Zoro 1 mineral claim using the Exploration Recommendations outlined by Dr. Fedikow in the NI 43-101 Technical Report, which are set forth below along with a table of recommended expenditures.
Initially, the Zoro 1 pegmatite’s should be the focus of the following exploration approaches. These are as follows:
| | |
| 1. | Trench rehabilitation including overburden stripping and washing. |
| | |
| 2. | Geologic mapping of individual trenches at a scale of 1:20. |
| | |
| 3. | Detailed geological mapping at a scale appropriate to document relevant features on the property. This will include the seven pegmatite dykes, trench locations, historic drill collars and geological attributes of the dykes. It is likely this mapping will be undertaken at a scale of 1:1000. |
| | |
| 4. | Trench and channel sampling should be undertaken to confirm historic assay results. |
| | |
| 5. | Re-log historic drill core as possible. |
| | |
| 6. | A grid should be re-established on the property and an attempt made to tie-in the collar locations of all-previous drilling. This information would help to structure new diamond drill programs. Initially, an attempt should be made to re-construct the historic grid although it is unlikely this will be possible given the length of time that has elapsed since the grid was first cut. |
| | |
| 7. | The geochemistry of the spodumene with particular relevance to iron content should be evaluated. Albite-rich portions of the pegmatite should be assayed for tantalum, tin, and niobium values. Altered and mineralized wallrocks should be assayed for gold particularly where the mineral assemblage of pyrrhotite, chalcopyrite and arsenopyrite are observed. Any subsequent drill program should be accompanied by a multi-element geochemical approach to assaying core including assays for gold. This will be followed up with assays for specific metals that may be present in the pegmatite dykes. The new assay program should be accompanied by a quality assurance and quality control program. |
| | |
| 8. | Diamond drilling should initially target Dyke No. 1 with the aim of ascertaining the physical size and extent of this dyke. Additional drilling will be necessary in the vicinity of the nine remaining known dykes as well as any additional lithium-bearing pegmatite uncovered during exploration on the remainder of the property. |
Tres Hermanas Silver-Lead-Zinc Property
On May 14, 2013, we entered into a Mineral Property Acquisition Agreement (the "MPAA") with Highlander Overseas, Inc., a West Indies corporation (“Highlander”). Pursuant to the terms and conditions of the MPAA, Highlander shall grant us with the right to acquire one hundred percent (100%) of the mining interests in those certain four concessions known as La Predilecta, La Predilecta II, La Crus, and La Cascada (the “Property”), which is comprised of a total of approximately Three Thousand One Hundred Eighty One Hectares (3,181 ha) and is located in Miahuatlan District, in the Southern portion of Valles Centrales Region within Oaxaca State, Mexico. In exchange, we are required to: (i) pay two cash payments of Fifty Thousand dollars ($50,000) to Highlander for a total of One Hundred Thousand dollars ($100,000), the first payment of $50,000 is to be paid within 60 days after both parties have executed the MPAA, and the second payment is to be paid 90 days after both parties have executed the MPAA, and (ii) issue an aggregate of four million (4,000,000) restricted shares of our preferred common stock to Highlander, pursuant the terms and conditions of the MPAA.
First payment of $50,000.00 has been paid. The Company is now waiting for Seller to verify the current standing with all taxes on the property. As soon as this is confirmed the Company will authorize second payment. Once the tax verification comes from the country of Mexico the Mexican subsidiary will be established and ownership of property will be held within the Mexican subsidiary.
An NI 43-101 Report was prepared on the Tres Hermanas Silver-Lead-Zinc Property by Geologists Richard R. Culbert and David M. Pollard. A brief description of their Report follows.
The Tres Hermanas Property comprises 3,671 hectares, covering a mountainous area in the vicinity of the village of San Sebastian Rio Dulce, some 50 kilometers southwest of the city of Oaxaca.
Although there is some quartz of epithermal character, most of the vein is composed of sulphides. Silver, lead, zinc and molybdenum are the elements of value, while the gangue includes pyrite, arsenopyrite and barite, in addition to some quartz. Much of the sulphides occur as a fine, black intergrowth. Samples taken by the geologists verify the tenor of the silver grades reported from the earlier work, although most of the samples had to be taken from adit mouths and dumps.
The exploration conducted so far has yielded consistently encouraging results from surface sampling, adit sampling, soil geochemistry and four diamond drill cores. Looking forward, future work within a Phase I budget of $796,385, will include further soil geochemistry that extends the current grid further to the south-west, ground geophysics, in the form of a resistivity survey, Magnetometry and I.P. together with a 3,000 meter drilling program. This program will consist of approximately 26 drill holes focusing on the San Sebastian structure.
If this program gives the positive results that are anticipated, further funding will be sought (Phase II). This funding would finance a further 10,000 meters of drilling together with opening up all the adits with conventional mining equipment. These adits could then be mapped and sampled. Following this, an underground drilling program, using bazooka drills, should establish a measured and indicated resource. Bulk metallurgical tests would then be necessary to determine what concentrates can be produced at the mine and, how effectively local smelters would be able to recover these metals from the concentrate. A scoping study would then be undertaken to consider the economic viability of the project.
RESULTS OF OPERATIONS
Working Capital
| | | |
|
|
|
|
| May 31, 2015 |
| November 30, 2014 |
| $ |
| $ |
Total Current Assets | 16 |
| - |
Total Current Liabilities | 2,707,060 |
| 1,198,413 |
Working Capital (Deficit) | (2,707,044) |
| (1,198,413) |
Cash Flows
| | | |
| Six months |
| Six months |
| Ended |
| Ended |
| May 31, 2015 |
| May 31, 2014 |
| $ |
| $ |
Cash Flows from (used in) Operating Activities | (942,757) |
| (113,577) |
Cash Flows from (used in) Investing Activities | - |
| - |
Cash Flows from (used in) Financing Activities | 944,422 | | 114,641 |
Net Increase (decrease) in Cash During Period | 16 |
| 23 |
Results for the Three Months Ended May 31, 2015 Compared to the Three Months Ended May 31, 2014.
Operating Revenues
The Company’s revenues for the three months ended May 31, 2015, and May 31, 2014, were $0 and $0, respectively. We have not earned any revenues to date, and do not anticipate earning revenues until such time as we encounter commercially productive minerals to exploit. All of our prospects are undeveloped. We anticipate that we will have to address the cash shortfall through additional equity financings in the future. We can offer no assurance, however, that such financings will be available on terms acceptable to our company.
Operating Expenses
Operating expenses for the three month period ended May 31, 2015 and May 31, 2014, were $127,646and $93,443, respectively. Operating expenses consisted primarily of advertising and promotion, consulting fees, management fees, office expenses and professional fees. The increase was primarily attributable to an increase in advertising, consulting fees and management fees appropriate for normal operations.
Net Loss from Operations
The Company’s net loss from operations for the three month period ended May 31, 2015 and May 31, 2014, was $(127,646) and $(93,443), respectively.
Other Income (Expense):
Other income (expense) consisted of loss on derivative valuation and interest expense. The gain or loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to the initial interest expense associated with the valuation of derivative instruments at issuance and the accretion of the convertible debentures over their respective terms. Interest associated with the derivative instruments for the three month period ended May 31, 2015, and May 31, 2014was $(880,736) and $(80,458), respectively. The change in value on derivative valuation expense for the three month period ended May 31, 2015, and May 31, 2014was $144,289 and $10,457, respectively.
Net Loss
Net loss for the three months endedMay 31, 2015, was $(864,092) compared with a net loss of $(163,444) for the three months ended May 31, 2014. The increased loss is due to an increase in operating expenses andother expenses associated with the valuation of derivative instruments.
Results for the Six months Ended May 31, 2015 Compared to the Six months Ended May 31, 2014.
Operating Revenues
The Company’s revenues for the six months ended May 31, 2015, and May 31, 2014, were $0 and $0, respectively. We have not earned any revenues to date, and do not anticipate earning revenues until such time as we encounter commercially productive minerals to exploit. All of our prospects are undeveloped. We anticipate that we will have to address the cash shortfall through additional equity financings in the future. We can offer no assurance, however, that such financings will be available on terms acceptable to our company.
Operating Expenses
Operating expenses for the six month period ended May 31, 2015 and May 31, 2014, were $911,254and $164,972, respectively. Operating expenses consisted primarily of advertising and promotion, consulting fees, management fees, office expenses and professional fees. The increase was primarily attributable to an increase in advertising, consulting fees and management fees appropriate for normal operations.
Net Loss from Operations
The Company’s net loss from operations for the six month period ended May 31, 2015 and May 31, 2014, was $(911,254) and $(164,972), respectively.
Other Income (Expense):
Other income (expense) consisted of loss on derivative valuation and interest expense. The loss on derivative valuation is directly attributable to the change in fair value of the derivative liability. Interest expense is primarily attributable to the initial interest expense associated with the valuation of derivative instruments at issuance and the accretion of the convertible debentures over their respective terms. Interest associated with the derivative instruments for the six month period ended May 31, 2015, and May 31, 2014was $(1,463,718) and $(172,391), respectively. The change in value on derivative valuation expense for the six month period ended May 31, 2015, and May 31, 2014was $1,577 and $2,472, respectively.
Net Loss
Net loss for the six months endedMay 31, 2015, was $(2,373,395) compared with a net loss of $(344,891) for the six months ended May 31, 2014. The increased loss is due to an increase in operating expenses and other expenses associated with the valuation of derivative instruments.
Results for the Period from November 1, 2006(inception of exploration state) Through May 31, 2015.
Operating Revenues
The Company’s revenues for the period from November 1, 2006(inception of exploration state) through May 31, 2015 were $0.
Operating Expenses
Operating expenses for the period from November 1, 2006, (inception of exploration state) through May 31, 2015, were $5,447,375.Operating expenses consist primarily of advertising and promotion, management fees, office expenses and professional fees appropriate for being a public company.
Net Loss from Operations
The Company’s net loss from operations for the period from November 1, 2006, (inception of exploration state) through May 31, 2015, was $(5,447,375).
Other Income (Expense):
Other income (expense) for the period from November 1, 2006, (inception of exploration state) through May 31, 2015, was $(2,769,264).
Net Loss
Net loss for the period from November 1, 2006, (inception of exploration state) through May 31, 2015, was $(8,216,639).
Liquidity and Capital Resources
As ofMay 31, 2015, the Company had a cash balance and asset total of $16 and $1,604,071 respectively, compared with $0 and $1,505,949 of cash and total assets, respectively, as ofNovember 30, 2014.
As ofMay 31, 2015, the Company had total liabilities of $2,725,584 compared with $1,217,936as ofNovember 30, 2014. The increase in total liabilities was attributed to an increase in accounts payable and convertible notes payable.
The overall working deficit increasedfrom $1,198,413 deficit at November 30, 2014, to $2,707,044at May 31, 2015, due to an increase in accounts payable and convertible notes payable.
Cash Flow from Operating Activities
During the six months ended May 31, 2015, cash used in operating activities was $(942,757) compared to $(113,577) for the six months ended May 31, 2014. The increase in the amounts of cash used for operating activities was primarily due to an increase in interest expenses and accounts payable.
Cash Flow from Investing Activities
During the six months ended May 31, 2015, cash used in investing activities was $0 compared to $0 for the six months ended May 31, 2014.
Cash Flow from Financing Activities
During the six months ended May 31, 2015, cash provided by financing activity was $944,442compared to $114,641 for the six months ended May 31, 2014. The increase in cash provided by financing activities is due to an increase in convertible notes payable.
Subsequent Developments
None.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Critical Accounting Policies
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the condensed financial statements are prepared. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our condensed financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2014 Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management who also serves as the Chief Executive Officer/Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective at the end of this period covered by this report to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms relating to us, and was accumulated and communicated to our management, including our CEO/CFO, as appropriate, to allow timely decisions regarding required disclosure.
As discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2014, the Company’s management identified certain material weaknesses and other deficiencies in the Company’s disclosure controls and procedures and the Company has initiated, or plans to initiate, a series of certain measures to address these material weaknesses. The Company is working as quickly as possible to implement this initiative; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.
Changes in Internal Control over Financial Reporting
There has been no change to our internal control over financial reporting during the six months ended May 31, 2015, that has materially affected, or is likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
1. Quarterly Issuances:
On March 10, 2015, Asher Enterprises converted $2,115 of principal of a convertible note into 755,357shares of its common stock at a price of $0.0028.
On March 19, 2015, LG Capital Funding, LLC converted $3,101 of principal and interest of a convertible note into 1,025,242 shares of its common stock at a price of $0.003025.
On March 24, 2015, Asher Enterprises converted $2,385 of principal of a convertible note into 954,000 shares of its common stock at a price of $0.0025.
On March 25, 2015, GW Holdings, LLC converted $2,253 of principal and interest of a convertible note into 910,286 shares of its common stock at a price of $0.002475.
On March 25, 2015, Service Trading Company, LLC converted $2,364 of principal of a convertible note into 955,207 shares of its common stock at a price of $0.002475.
On March 30, 2015, Adar Bays, LLC converted $1,000 of principal of a convertible note into 454,545 shares of its common stock at a price of $0.0022.
On April 13, 2015, Asher Enterprises converted $1,145 of principal of a convertible note into 954,167 shares of its common stock at a price of $0.0012.
On April 13, 2015, GW Holdings, LLC converted $1,307 of principal and interest of a convertible note into 1,080,502 shares of its common stock at a price of $0.00121.
On April 14, 2015, LG Capital Funding, LLC converted $1,342 of principal and interest of a convertible note into 1,109,297 shares of its common stock at a price of $0.00121.
On April 17, 2015, Asher Enterprises converted $1,050 of principal of a convertible note into 954,545 shares of its common stock at a price of $0.0012.
On April 17, 2015, Service Trading Company, LLC converted $1,278 of principal and interest of a convertible note into 1,106,556 shares of its common stock at a price of $0.001155.
On April 20, 2015, LG Capital Funding, LLC converted $1,279 of principal and interest of a convertible note into 1,107,281 shares of its common stock at a price of $0.001155.
On April 20, 2015, GW Holdings, LLC converted $1,661 of principal and interest of a convertible note into1,437,964 shares of its common stock at a price of $0.001155.
On April 27, 2015, GW Holdings, LLC converted $1,714 of principal and interest of a convertible note into 1,483,797 shares of its common stock at a price of $0.001155.
On April 27, 2015, Union Capital, LLC converted $3,348 of principal and interest of a convertible note into 3,000,000 shares of its common stock at a price of $0.001116.
On April 29, 2015, Service Trading Company, LLC converted $1,981 of principal of a convertible note into 1,715,000 shares of its common stock at a price of $0.001155.
On May 4, 2015, LG Capital Funding, LLC converted $2,047 of principal and interest of a convertible note into 1,772,077 shares of its common stock at a price of $0.001155.
On May 4, 2015, Direct Capital Group converted $2,300 of principal of a convertible note into 1,150,000 shares of its common stock at a price of $0.002.
On May 12, 2015, Union Capital, LLC converted $3,301 of principal and interest of a convertible note into 3,800,000 shares of its common stock at a price of $0.00086.
On May 12, 2015, GW Holdings, LLC converted $1,619 of principal and interest of a convertible note into 1,962,772 shares of its common stock at a price of $0.000825.
On May 14, 2015, GW Holdings, LLC converted $1,822 of principal and interest of a convertible note into 2,209,075 shares of its common stock at a price of $0.000825.
On May 15, 2015, LG Capital Funding, LLC converted $1,823 of principal and interest of a convertible note into 2,210,036 shares of its common stock at a price of $0.000825.
On May 19, 2015, Union Capital, LLC converted $3,667 of principal and interest of a convertible note into 4,700,000 shares of its common stock at a price of $0.00078.
On May 20, 2015, GW Holdings, LLC converted $1,723 of principal and interest of a convertible note into 2,409,931 shares of its common stock at a price of $0.000715.
On May 20, 2015, LG Capital Funding, LLC converted $1,592 of principal and interest of a convertible note into 2,226,601 shares of its common stock at a price of $0.000715.
On May 21, 2015, Direct Capital Group converted $2,400 of principal of a convertible note into 2,400,000 shares of its common stock at a price of $0.001.
On May 25, 2015, Service Trading Company, LLC converted $1,739 of principal and interest of a convertible note into 2,432,088 shares of its common stock at a price of $0.000715.
On May 27, 2015, Union Capital, LLC converted $4,538 of principal and interest of a convertible note into 6,300,000 shares of its common stock at a price of $0.00072.
On May 27, 2015, GW Holdings, LLC converted $2,030 of principal and interest of a convertible note into 3,076,131 shares of its common stock at a price of $0.00066.
On May 27, 2015, LG Capital Funding, LLC converted $2,062 of principal and interest of a convertible note into 3,124,303 shares of its common stock at a price of $0.00066.
On May 28, 2015, Adar Bays, LLC converted $2,500 of principal of a convertible note into 3,787,879 shares of its common stock at a price of $0.0066.
The foregoing quarterly conversions are a summary of the transactions by the Company, involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. Such offer and sale was made in reliance on Section 4(2) of the Securities Act, as a transaction by an issuer not involving any public offering of securities. The purchasers were “accredited investors”; as such term is defined under the Rule 501 of Regulation D promulgated under the Securities Act, an entity that is known to the Company, and its management through a pre-existing business and personal relationship. The purchaser was provided access to all material information which it requested, and all information necessary to verify such information and was afforded access to management of the registrant in connection with its securities purchase. The purchase acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the registrant. All stock certificate representing such securities that were issued contained restrictive legends, prohibiting further transfer of the stock certificates representing such securities, without such securities either being first registered or otherwise exempt from registration under the Securities Act, in any further resale or disposition.
2. Subsequent Issuances:
On June 1, 2015, GW Holdings, LLC converted $2,336 of principal and interest of a convertible note into 3,861,646 shares of its common stock at a price of $0.000605.
On June 2, 2015, Direct Capital Group converted $418 of principal of a convertible note into 4,180,000 shares of its common stock at a price of $0.00001.
On June 2, 2015, Adar Bays, LLC converted $2,299 of principal of a convertible note into 3,800,000 shares of its common stock at a price of $0.000605.
On June 5, 2015, Service Trading Company, LLC converted $1,221 of principal and interest of a convertible note into 2,465,687 shares of its common stock at a price of $0.000495.
On June 5, 2015, Union Capital, LLC converted $4,187 of principal and interest of a convertible note into 9,165,000 shares of its common stock at a price of $0.000457.
On June 8, 2015, GW Holdings, LLC converted $2,290 of principal and interest of a convertible note into 4,627,148 shares of its common stock at a price of $0.000495.
On June 8, 2015, Adar Bays, LLC converted $2,177 of principal of a convertible note into 4,700,000 shares of its common stock at a price of $0.000495.
On June 9, 2015, LG Capital Funding, LLC converted $2,307 of principal and interest of a convertible note into 4,660,000 shares of its common stock at a price of $0.000495.
On June 11, 2015, LG Capital Funding, LLC converted $2,864 of principal and interest of a convertible note into 5,785,010 shares of its common stock at a price of $0.000495.
On June 15, 2015, Union Capital, LLC converted $3,402 of principal and interest of a convertible note into 12,250,000 shares of its common stock at a price of $0.000278.
On June 15, 2015, GW Holdings, LLC converted $1,988 of principal and interest of a convertible note into6,024,358shares of its common stock at a price of $0.00033.
On June 15, 2015, Direct Capital Group converted $2,800 of principal of a convertible note into 7,000,000 shares of its common stock at a price of $0.004.
On June 15, 2015, Adar Bays, LLC converted $2,199 of principal of a convertible note into 4,700,000 shares of its common stock at a price of $0.000495.
On June 16, 2015, Service Trading Company, LLC converted $2,523 of principal and interest of a convertible note into 7,646,301 shares of its common stock at a price of $0.00033.
On June 17, 2015, LG Capital Funding, LLC converted $2,622 of principal and interest of a convertible note into 7,946,636 shares of its common stock at a price of $0.00033.
The foregoing subsequent conversions are a summary of the transactions by the Company, involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. Such offer and sale was made in reliance on Section 4(2) of the Securities Act, as a transaction by an issuer not involving any public offering of securities. The purchasers were “accredited investors”; as such term is defined under the Rule 501 of Regulation D promulgated under the Securities Act, an entity that is known to the Company, and its management through a pre-existing business and personal relationship. The purchaser was provided access to all material information which it requested, and all information necessary to verify such information and was afforded access to management of the registrant in connection with its securities purchase. The purchase acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the registrant. All stock certificate representing such securities that were issued contained restrictive legends, prohibiting further transfer of the stock certificates representing such securities, without such securities either being first registered or otherwise exempt from registration under the Securities Act, in any further resale or disposition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
