Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Nov. 30, 2013 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'FOCUS GOLD Corp |
Document Type | '10-Q |
Document Period End Date | 30-Nov-13 |
Amendment Flag | 'false |
Entity Central Index Key | '0001360564 |
Current Fiscal Year End Date | '--02-28 |
Entity Common Stock, Shares Outstanding | 375,235,752 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'No |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q3 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Nov. 30, 2013 | Feb. 28, 2013 | |
Current Assets | ' | ' | |
Cash | $5,025 | $1,237 | |
Total Current Assets | 5,025 | 1,237 | |
Noncurrent Assets | ' | ' | |
Notes receivable - Long-term | 0 | 2,085,602 | |
Mineral roayalty interest | 1,892,000 | 0 | |
Total Noncurrent Assets | 1,892,000 | 2,085,602 | |
Total Assets | 1,897,025 | 2,086,839 | |
Current Liabilities | ' | ' | |
Accounts payable and accrued liabilities | 471,359 | 467,336 | |
Accounts payable and accrued liabilities - related party | 10,000 | 28,093 | |
Notes payable | 1,022,200 | [1] | 832,737 |
Derivative liability | 1,831,399 | 1,773,986 | |
Total Current Liabilities | 3,334,958 | 3,102,152 | |
Total Liabilities | 3,334,958 | 3,102,152 | |
Stockholder's Equity (Deficit) | ' | ' | |
Common stock | 37,524 | [2] | 87 |
Additional paid in capital | 19,536,440 | 18,409,825 | |
Preferred Stock | 0 | [3] | 30 |
Deficit accumulated prior to exploration stage | -414,284 | -414,284 | |
Deficit accumulated during exploration stage | -20,401,788 | -18,815,146 | |
Treasury Stock | -195,825 | -195,825 | |
Total Stockholders' Equity (Deficit) | -1,437,933 | -1,015,313 | |
Total Liabilities and Stockholders' Equity (Deficit) | $1,897,025 | $2,086,839 | |
[1] | Net of debt discount | ||
[2] | $0.00001 par value, authorized 500,000,000 shares, 375,235,752 shares issued and outstanding as of November 30, 2013 and 8,734,877 shares issued and outstanding as of February 28, 2013 | ||
[3] | $0.00001 par value, authorized shares 100,000,000 shares Series A, 1,000,000 authorized and Zero outstanding as of November 30, 2013 and 3,000,000 shares issued and outstanding at February 28, 2013. Series B, 7,000,000 authorized, Zero issued and outstanding as of November 30 and at February 28, 2013. |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $) | Nov. 30, 2013 | Feb. 28, 2013 |
Shareholders' Equity: | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred Shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common Shares authorized | 500,000,000 | 50,000,000 |
Common Shares issued | 375,235,752 | 8,734,877 |
Common Shares outstanding | 375,235,752 | 8,734,877 |
Preferred Shares authorized-Series A | 0 | 3,000,000 |
Preferred Shares issued-Series A | 0 | 3,000,000 |
Preferred Shares outstanding-Series A | 0 | 3,000,000 |
Preferred Shares authorized-Series B | 7,000,000 | 7,000,000 |
Preferred Shares issued-Series B | 0 | 1,850 |
Preferred Shares outstanding-Series B | 0 | 1,850 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | 38 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | |
Income Statement | ' | ' | ' | ' | ' |
Revenues | $0 | $0 | $0 | $0 | $0 |
General & Administrative | ' | ' | ' | ' | ' |
Exploration expense | 10,000 | 37,650 | 61,638 | 40,000 | 367,683 |
Mineral property impairment | 0 | 50,000 | 0 | 50,000 | 50,000 |
General & administrative expenses | 572,920 | 204,046 | 916,595 | 617,599 | 4,175,917 |
Total Operating Expenses | 582,920 | 291,696 | 978,233 | 707,599 | 4,593,600 |
Other income (expense) | ' | ' | ' | ' | ' |
Interest income | 0 | 30,704 | 0 | 30,704 | 107,445 |
Amortization of debt discount | -113,500 | -121,724 | -358,392 | -578,669 | -1,071,613 |
Interest and financial fees | -338,522 | -227,809 | -657,474 | -1,543,852 | -2,866,220 |
Change in derivitive liabilities | 98,046 | 1,067,307 | 541,926 | 1,294,111 | 1,145,887 |
Gain on extinguishment of debt | 0 | 0 | 0 | 389,325 | 207,927 |
Note receivable impairment | 0 | 0 | 0 | 0 | -545,849 |
Loss on settlement | -128,918 | 0 | -128,918 | -111,736 | -240,654 |
Total Other Income (Expenses) | -482,894 | 748,478 | -602,858 | -520,117 | -3,263,078 |
Net Income (Loss) from Continuing Operations | -1,065,815 | 456,782 | -1,581,090 | -1,227,716 | -7,856,678 |
Loss from operations of the discontinued entities | 0 | -431,853 | 0 | -4,587,288 | -5,265,727 |
Loss on disposal of the discontinued entities | 0 | 295,900 | 0 | 295,900 | -7,399,930 |
Loss from discontinued operations attributable to non-controlling interest | 0 | 3,350 | 0 | 125,448 | 127,023 |
Loss from Discontinuing Operations attributed to Focus Gold | 0 | -132,603 | 0 | -4,165,940 | -12,538,634 |
Net income (loss) | -1,065,815 | 324,179 | -1,581,090 | -5,393,656 | -20,395,312 |
Preferred Share Dividends | 0 | 0 | 5,551 | 0 | 6,476 |
Net Income (Loss) Attributable to Focus Gold Common Stockholders | ($1,065,814) | $324,179 | ($1,586,641) | ($5,393,656) | ($20,401,788) |
CONSOLIDATED_CONDENSED_STATEME
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (USD $) | 9 Months Ended | 38 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | |
Statement of Cash Flows | ' | ' | ' |
Net income (loss) | ($1,581,090) | ($5,393,656) | ($20,395,312) |
Depreciation expense | 0 | 1,229 | 4,830 |
Increase in Amortization of debt discount | 358,392 | 630,303 | 1,123,246 |
Non-cash interest and financial fees | 657,474 | 1,513,248 | 2,716,135 |
Gain on derivitive liabilities | -541,926 | -1,294,111 | -1,145,887 |
Increase in Gain on settlement of debt | 0 | -389,325 | -207,927 |
Increase in Loss on settlement | 118,918 | 111,736 | 230,654 |
Stock based compensation | 0 | 0 | 1,842,200 |
Mineral property impairment | 0 | 50,000 | 50,000 |
Increase in Note receivable impairment | 0 | 0 | 545,849 |
Increase in Interest income | 0 | 0 | -80,097 |
Common stock issued for services | 402,272 | 47,059 | 890,881 |
Decrease in taxes and other amounts receivable | 0 | 113,808 | 114,614 |
Decrease/(Increase) in prepaid expenses | 0 | 777,685 | -6,087 |
Increase in accounts payable and accrued expenses | 90,691 | 324,680 | 699,220 |
(Decrease)/Increase in accounts payable and accrued expenses - related | 75,455 | 129,643 | 213,820 |
Discontinued operations operating | 0 | 2,933,929 | 9,475,451 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -419,814 | -443,772 | -3,928,409 |
Pre-acquisition loans to former subsidiary | 0 | 0 | -1,065,347 |
Post acquisition loan to former subsidiary | 0 | -200,000 | -1,089,525 |
Purchase of equipment | 0 | 0 | -4,826 |
Discontinued operations investing | 0 | 0 | 1,194,064 |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 0 | -200,000 | -965,634 |
Proceeds from the sale of preference stock | 0 | 0 | 30,000 |
Proceeds from the sale of common stock | 100,000 | 0 | 3,012,455 |
Proceeds from notes payable | 130,000 | 561,500 | 1,304,000 |
Proceeds from note receivable | 193,602 | 0 | 193,602 |
Discontinued operations financing | 0 | 0 | 353,714 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 423,602 | 561,500 | 4,893,771 |
Increase (Decrease) in cash and cash equivalents | 3,788 | -82,272 | -272 |
Foreign currency translation adjustment | 0 | 85,926 | 5,291 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 1,237 | 2,899 | 6 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 5,025 | 6,553 | 5,025 |
Interest | 0 | 0 | 0 |
Income taxes, net | $0 | $0 | $0 |
Organization_Consolidation_and
Organization, Consolidation and Presentation of Financial Statements | 9 Months Ended |
Nov. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements: | ' |
Organization, Consolidation and Presentation of Financial Statements Disclosure | ' |
Focus Gold Corporation (the "Company") was incorporated on December 23, 2005 under the laws of the State of Nevada under the name Real Estate Referral Center Inc. On April 21, 2009, the Company changed its name to Gold Bag, Inc. and, effective June 6, 2011, to Focus Gold Corporation. In October 2010, the Company entered into an option agreement with Victoria Gold Inc. for the right to explore and purchase mineral claims located in Ontario, Canada and since that time the Company’s principal business has been the acquisition and exploration of mineral resources. During the quarter ended November 30, 2013, the Company began discussions of forming a joint venture relating to a copper mine operation in Mexico, which it continues to pursue. In addition, during the quarter ended November 30, 2013, the company also developed a plan to expand its business operations to include the operation and acquisition of receivables management companies in order to generate positive cash flow in the short term, to augment expected future revenues from its existing operations. That new operation commenced in December 2013 with the acquisition of a 55 percent interest in two subsidiaries, Focus Gold Financial Corp., a Florida corporation, and Focus Gold Commercial Resolution, Inc., also a Florida corporation. The former will focus on retail collections activities and the latter, on commercial collections. The two subsidiaries have opened offices in upstate New York, near Buffalo, have engaged employees and commenced business operations and have begun generating operating revenues as of January, 2014. Once the basic operating models are in place, the Company plans to begin roll-up acquisitions in both the retail and commercial receivables management markets. | |
The Company has been considered an exploration stage company and its financial statements are presented in a manner similar to a development stage company as defined in FASC 915-10-05, and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. As at February 28, 2013, the Company disposed of all of its then existing mineral properties and the Company has initiated steps to restructure itself and engaged an outside consultant to identify, review, and assess additional mineral properties for purchase. The Company has developed a private equity strategy to acquire gold mining properties following several key investment criteria that include: properties that are in safe governmental jurisdictions primarily in the Americas; properties that provide geographic diversification across its portfolio; projects with significant exploration upside; and, where possible, properties with existing capable management teams to which it can then provide senior level experienced management oversight. Once a property has matured, the Company will seek to divest the property either through a strategic sale or through a spin-off into a stand-alone public company. | |
Nature of Operations | 'This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. This condensed consolidated summary should be read in conjunction with the disclosure of accounting policies in the Company’s audited financial statements for the year ended February 28, 2013 |
Use of Estimates, Policy | ' |
The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates include the determination of impairment of mineral properties and equipment, useful lives for amortization, valuation allowances for future income tax assets, fair value of non-cash stock-based compensation and reclamation and environmental obligations. Actual results, as determined by future events, may differ from these estimates. | |
Going Concern Note | ' |
The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss of $1,586,641 during the nine month period ended November 30, 2013, and has an accumulated deficit of $20,401,788 since entry into the exploration stage. Additionally, the Company is in default of various notes with principal amounts aggregating $363,410. The Company changed its principal business to the development and exploitation of mineral properties in October 2010, but has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations. | |
In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management’s plans to continue as a going concern include raising additional capital through sales of common stock and or a debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. | |
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Accounting_Changes_and_Error_C
Accounting Changes and Error Corrections | 9 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Accounting Changes and Error Corrections: | ' | ||||||||
New Accounting Pronouncements and Changes in Accounting Principles | ' | ||||||||
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations | |||||||||
Schedule of Error Corrections and Prior Period Adjustments | ' | ||||||||
Company management subsequently discovered certain errors in our condensed consolidated financial statements included in our Form 10-Q as previously filed for the quarter ended November 30, 2013. The restatement primarily comprises adjustments for the correct accounts payables, notes payables, third party settlement, and the recording of a derivative liability on a convertible note payable. | |||||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
ASSETS | |||||||||
30-Nov-13 | Adjustments | Restated | |||||||
(Unaudited) | (Unaudited) | ||||||||
Current Assets | |||||||||
Cash and cash equivalents | $ 5,025 | $ 5,025 | |||||||
Total Current Assets | 5,025 | 5,025 | |||||||
Long term note receivable | - | - | |||||||
Mineral royalty interest | 1,892,000 | 1,892,000 | |||||||
Total Assets | $ 1,897,025 | $ 1,897,025 | |||||||
LIABILITIES & STOCKHOLDERS' DEFICIT | |||||||||
Current Liabilities | |||||||||
Accounts payable and accrued expenses | $ 471,289 | 70 | (a) | $ 471,359 | |||||
Accounts payable and accrued expenses - related | 50,000 | (40,000) | (b) | 10,000 | |||||
Notes payable, net of discounts | 1,117,935 | (95,735) | (c) | 1,022,200 | |||||
Derivative liabilities | 641,036 | 1,190,363 | (d) | 1,831,399 | |||||
Total Current Liabilities | 2,280,260 | 3,334,958 | |||||||
Stockholders' Deficit | |||||||||
Preferred stock, $0.00001 par value, authorized shares 100,000,000 shares | |||||||||
Series A, 1,000,000 authorized and outstanding as of August 31, 2013 and 3,000,000 shares issued and outstanding at February 28, 2013 | - | - | |||||||
Series B, 7,000,000 authorized, 0 issued and outstanding as of November 30, 2013 and at February 28, 2013 | - | - | |||||||
Common stock, $0.00001 par value, authorized 500,000,000 shares, 375,235,752 shares issued and outstanding as of November 30, 2013 and 8,734,877 shares issued and outstanding as of February 28, 2013 | 37,524 | 37,524 | |||||||
Additional paid-in capital | 18,688,348 | 848,092 | (e) | 19,536,440 | |||||
Accumulated deficit prior to exploration stage | -414,284 | -414,284 | |||||||
Accumulated deficit during exploration stage | -18,498,998 | (1,902,790) | (f) | -20,401,788 | |||||
Treasury stock | -195,825 | -195,825 | |||||||
Total Stockholders' Deficit | -383,235 | -1,437,933 | |||||||
Total Liabilities and Stockholders' Deficit | $ 1,897,025 | $ 1,897,025 | |||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
For the Three Months Ended | |||||||||
30-Nov-13 | Adjustments | Restated | |||||||
Revenues | $ - | $ - | |||||||
Operating Expenses | |||||||||
Exploration expense | - | 10,000 | (g) | 10,000 | |||||
Mineral property impairment | - | - | |||||||
General & administrative expenses | 319,372 | 253,548 | (h) | 572,920 | |||||
Total Operating Expenses | 319,372 | 582,920 | |||||||
Other Income (Expenses) | |||||||||
Interest income | - | - | |||||||
Amortization of debt discount | -46,230 | -67,270 | (i) | -113,500 | |||||
Interest and financial fees | -102,852 | -235,670 | (j) | -338,522 | |||||
Change in derivative liabilities | 945,239 | -847,193 | (k) | 98,046 | |||||
Gain on extinguishment of debt | - | - | |||||||
Note receivable impairment | - | - | |||||||
Loss on settlement | - | -128,918 | (l) | -128,918 | |||||
Total Other Income (Expenses) | 796,158 | -482,894 | |||||||
Net Income (Loss) from Continuing Operations | $ 476,786 | $ (1,065,815) | |||||||
Loss from operations of the discontinued entities | - | - | |||||||
Loss on disposal of the discontinued entities | - | - | |||||||
Loss from discontinued operations attributable to non-controlling interest | - | - | |||||||
Loss from Discontinuing Operations attributable to Focus Gold | - | - | |||||||
Net Income (Loss) | 476,786 | -1,065,815 | |||||||
Preferred Share Dividends | - | - | |||||||
Net Income (Loss) Attributable to Focus Gold Common Stockholders | $ 476,786 | $ (1,065,815) | |||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
For the Nine Months Ended | |||||||||
30-Nov-13 | Adjustments | Restated | |||||||
Revenues | $ - | $ - | |||||||
Operating Expenses | |||||||||
Exploration expense | 51,638 | 10,000 | (g) | 61,638 | |||||
Mineral property impairment | - | - | |||||||
General & administrative expenses | 663,047 | 253,548 | (h) | 916,595 | |||||
Total Operating Expenses | 714,685 | 978,233 | |||||||
Other Income (Expenses) | |||||||||
Interest income | - | - | |||||||
Amortization of debt discount | -291,122 | -67,270 | (i) | -358,392 | |||||
Interest and financial fees | -421,804 | -235,670 | (j) | -657,474 | |||||
Change in derivative liabilities | 1,389,119 | -847,193 | (k) | 541,926 | |||||
Gain on extinguishment of debt | - | - | |||||||
Note receivable impairment | - | - | |||||||
Loss on settlement | - | -128,918 | (l) | -128,918 | |||||
Total Other Income (Expenses) | 676,194 | -602,857 | |||||||
Net Income (Loss) from Continuing Operations | $ (38,491) | $ (1,581,090) | |||||||
Loss from operations of the discontinued entities | - | - | |||||||
Loss on disposal of the discontinued entities | - | - | |||||||
Loss from discontinued operations attributable to non-controlling interest | - | - | |||||||
Loss from Discontinuing Operations attributable to Focus Gold | - | - | |||||||
Net Income (Loss) | -38,491 | -1,581,090 | |||||||
Preferred Share Dividends | 5,551 | 5,551 | |||||||
Net Income (Loss) Attributable to Focus Gold Common Stockholders | $ (44,042) | $ (1,586,641) | |||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
For the period October 1, 2010 (Entry into Exploration Stage)to November 30, 2013 | Restated | ||||||||
Revenues | $ - | $ - | |||||||
Operating Expenses | |||||||||
Exploration expense | 377,657 | -9,974 | (g) | 367,683 | |||||
Mineral property impairment | 50,000 | 50,000 | |||||||
General & administrative expenses | 5,007,182 | -831,265 | (h) | 4,175,917 | |||||
Total Operating Expenses | 5,434,839 | 4,593,600 | |||||||
Other Income (Expenses) | |||||||||
Interest income | 107,445 | 107,445 | |||||||
Amortization of debt discount | -1,055,977 | -15,636 | (i) | -1,071,613 | |||||
Interest and financial fees | -2,630,550 | -235,670 | (j) | -2,866,221 | |||||
Change in derivative liabilities | 1,993,081 | -847,195 | (k) | 1,145,887 | |||||
Gain on extinguishment of debt | 207,927 | 207,927 | |||||||
Note receivable impairment | -545,849 | -545,849 | |||||||
Loss on settlement | -111,736 | -128,918 | (l) | -240,654 | |||||
Total Other Income (Expenses) | -2,035,659 | -3,263,078 | |||||||
Net Income (Loss) from Continuing Operations | $ (7,470,497) | $ (7,856,678) | |||||||
Loss from operations of the discontinued entities | -6,951,187 | 1,685,460 | (m) | -5,265,727 | |||||
Loss on disposal of the discontinued entities | -4,558,050 | -2,841,880 | (n) | -7,399,930 | |||||
Loss from discontinued operations attributable to non-controlling interest | 127,023 | - | 127,023 | ||||||
Loss from Discontinuing Operations attributable to Focus Gold | -11,382,214 | -12,538,634 | |||||||
Net Income (Loss) | -18,852,711 | -20,395,312 | |||||||
Preferred Share Dividends | 6,476 | 6,476 | |||||||
Net Income (Loss) Attributable to Focus Gold Common Stockholders | $ (18,859,187) | $ (20,401,788) | |||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(Unaudited) | |||||||||
For the Nine Month Period Ended | |||||||||
30-Nov-13 | Adjustments | Restated | |||||||
Cash Flows from Operating Activities | |||||||||
Net Loss | $ (38,491) | (1,542,599) | $ (1,581,090) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation expense | - | - | |||||||
Amortization of debt discount | 291,122 | 67,270 | (i) | 358,392 | |||||
Non-cash interest and financial fees | 421,804 | 235,670 | (j) | 657,474 | |||||
Change in derivative liabilities | -1,389,119 | 847,193 | (k) | -541,926 | |||||
Loss on settlement | - | 118,918 | (h) | 118,918 | |||||
Common stock issued for services | 2,262 | 400,010 | (h) | 402,272 | |||||
Change in operating assets and liabilities: | |||||||||
Increase in accounts payable and accrued expenses | 3,953 | 86,738 | (a) | 90,691 | |||||
(Decrease)/Increase in accounts payable and accrued expenses - related | 21,907 | 53,548 | (b) | 75,455 | |||||
Discontinued operations | - | - | |||||||
Net Cash Used in Operating Activities | -686,564 | -419,814 | |||||||
Cash Flows From Investing Activities | |||||||||
Redemption of preference stock | -40,000 | 40,000 | (b) | - | |||||
Net Cash Used in Investing Activities | -40,000 | - | |||||||
Cash Flows From Financing Activities | |||||||||
Proceeds from the sale of common stock | 100,000 | 100,000 | |||||||
Proceeds from notes payable | 130,000 | 130,000 | |||||||
Proceeds from note receivable | 193,602 | 193,602 | |||||||
Discontinued operations | 306,750 | (306,750) | (o) | - | |||||
Net Cash Provided by Financing Activities | 730,352 | 423,602 | |||||||
Net Increase in Cash | $ 3,788 | $ 3,788 | |||||||
Foreign currency translation adjustment | - | - | |||||||
Cash and Cash Equivalents at Beginning of Period | $ 1,237 | $ 1,237 | |||||||
Cash and Cash Equivalents at End of Period | $ 5,025 | $ 5,025 | |||||||
FOCUS GOLD CORPORATION | |||||||||
(An Exploration Stage Company) | |||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||
(Unaudited) | |||||||||
For the period October 1, 2010 (Entry into Exploration Stage) to November 30,2013 | Restated | ||||||||
Cash Flows from Operating Activities | |||||||||
Net Loss | $ (18,852,711) | (1,542,601) | $ (20,395,312) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation expense | 4,830 | 4,830 | |||||||
Amortization of debt discount | 1,055,976 | 67,270 | (i) | 1,123,246 | |||||
Non-cash interest and financial fees | 2,480,465 | 235,670 | (j) | 2,716,135 | |||||
Change in derivative liabilities | -1,993,080 | 847,193 | (k) | -1,145,887 | |||||
Gain on settlement of debt | -207,927 | -207,927 | |||||||
Loss on settlement | 111,736 | 118,918 | (h) | 230,654 | |||||
Stock based compensation | 1,842,200 | 1,842,200 | |||||||
Mineral property impairment | 50,000 | 50,000 | |||||||
Note receivable impairment | 545,849 | 545,849 | |||||||
Interest income | -80,097 | -80,097 | |||||||
Common stock issued for services | 490,871 | 200,010 | (h) | 890,881 | |||||
Change in operating assets and liabilities: | |||||||||
Decrease in taxes and other amounts receivable | 114,614 | 114,614 | |||||||
Decrease/(Increase) in prepaid expenses | -6,087 | -6,087 | |||||||
Increase in accounts payable and accrued expenses | 612,482 | 86,738 | (a) | 699,220 | |||||
(Decrease)/Increase in accounts payable and accrued expenses - related | 160,272 | 53,548 | (b) | 213,820 | |||||
Discontinued operations | 9,475,451 | 9,475,451 | |||||||
Net Cash Used in Operating Activities | -4,195,158 | -3,928,409 | |||||||
Cash Flows From Investing Activities | |||||||||
Pre-acquisition loans to former subsidiary | -1,065,347 | -1,065,347 | |||||||
Post-acquisition loan to former subsidiary | -1,089,525 | -1,089,525 | |||||||
Purchase of equipment | -4,826 | -4,826 | |||||||
Redemption of preference stock | -40,000 | 40,000 | (b) | - | |||||
Discontinued operations | 1,194,064 | 1,194,064 | |||||||
Net Cash Used in Investing Activities | -1,005,634 | -965,634 | |||||||
Cash Flows From Financing Activities | |||||||||
Proceeds from the sale of preference stock | 30,000 | 30,000 | |||||||
Proceeds from the sale of common stock | 3,012,455 | 3,012,455 | |||||||
Proceeds from notes payable | 1,304,000 | 1,304,000 | |||||||
Proceeds from note receivable | 193,602 | 193,602 | |||||||
Discontinued operations | 660,464 | (306,750) | (o) | 353,714 | |||||
Net Cash Provided by Financing Activities | 5,200,520 | 4,893,771 | |||||||
Net Increase in Cash | $ (272) | $ (272) | |||||||
Foreign currency translation adjustment | 5,291 | 5,291 | |||||||
Cash and Cash Equivalents at Beginning of Period | $ 6 | $ 6 | |||||||
Cash and Cash Equivalents at End of Period | $ 5,025 | $ 5,025 | |||||||
(a) Adjusted and correct payables to correct amount per financial reports. | |||||||||
(b) Adjusted related payables ($40,000) for payments made to related parties. | |||||||||
(c) Adjusted notes payable ($95,735) for additional discounts based on updated calculations and agreements. | |||||||||
(d) Adjusted derivative liabilities $1,190,363 based on updated calculations. | |||||||||
(e) Adjusted paid in capital $848,092 for related party settlement and updated derivative calculations and note conversions. | |||||||||
(f) Accumulated deficit during exploration stage adjusted $1,902,790 based on adjustments to Statement of Operations | |||||||||
(g) Adjusted exploration expenses $10,000 for stock-based compensation. | |||||||||
(h) Adjusted general & administrative expenses $253,548 for payroll expenses for related party settlement. | |||||||||
(i) Adjusted amortization of debt discount ($67,270) based on updated calculations. | |||||||||
(j) Adjusted interest and financial fees ($235,670) for derivative adjustments based on updated calculations. | |||||||||
(k) Adjusted change in derivative liabilities ($847,193) for derivative adjustments based on updated calculations. | |||||||||
(l) Adjusted loss on settlement ($128,918) based on payments and settlement to related parties. | |||||||||
(m) Adjusted loss from operations of the discontinued entities $1,685,460 based on operations being discontinued effecting prior year calculations. | |||||||||
(n) Adjusted loss from disposal of the discontinued entities ($2,841,880) based on operations being discontinued effecting prior year calculations. | |||||||||
(o) Adjusted discontinued operations ($306,750) based on operations being discontinued effecting prior year calculations. |
Intangible_Assets_Goodwill_and
Intangible Assets, Goodwill and Other | 9 Months Ended |
Nov. 30, 2013 | |
Intangible Assets, Goodwill and Other: | ' |
Goodwill and Intangible Assets Disclosure | ' |
The Company accounts for mineral properties in accordance with ASC 930: Extractive Activities-Mining. Costs of acquiring mineral properties and leases are capitalized by project area upon purchase of the associated claims (see Note 5). Mineral properties are periodically assessed for impairment of value and any diminution in value. | |
The Company accounts for mineral exploration and development costs in accordance with ASC 932: Extractive Activities. All exploration expenditures are expensed as incurred, previously capitalized costs are expensed in the period the property is abandoned. Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on units of production basis over proven and probable reserves. | |
Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the mineral property or to exploration costs as applicable. If payments received exceed the capitalized cost of the mineral property or the exploration costs incurred, the excess is recognized as income in the year received. | |
The amounts shown for mineral properties do not necessarily represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof. | |
Intangible Assets Disclosure | ' |
On October 5, 2012 the Company entered into a sales agreement with European Resource Capital Inc. for the sale of the Company’s 24,420,000 shares of common stock of Celtic (92.16% interest), 64,987,982 Metallum options providing the acquirer with the option to acquire an additional 64,987,982 common shares of Metallum for £0.10 per share through December 31, 2012 and amounts receivable from Celtic of $217,031 in exchange for payment of $2,500,000 (Canadian) ($2,553,887 at exchange rates at the date of this transaction). European Resource Capital Inc. issued the Company an eight percent (8%) 5 year $2,500,000 (Canadian) promissory note payable that is secured by the 24,420,000 shares of Celtic common stock. The sales agreement acknowledges that JMJ Financial has an unperfected lien against 25% of the purchased shares. If the Company is unsuccessful in removing JMJ Financials’ unperfected lien, European Resource Capital may settle such lien and reduce the $2,500,000 (Canadian) promissory note by 35% of its present value. | |
On March 21, 2013 the Company restructured its relationship with European Resource Capital Inc. (“ERC”) by entering an Assignment Agreement dated March 21, 2013 with ERC and Distressed Debt Investment Corp. Under the Assignment Agreement, the Company was paid $200,000 (Canadian Dollars, $193,602 at exchange rates at April 1, 2013 the date of receipt of proceeds) and received a one percent (1%) net smelter return royalty in the minerals extracted from the properties comprising the prospecting licenses in Ireland, Northern Ireland and Scotland currently registered in the name of Celtic or its subsidiaries. The fair value of the 1% smelter return royalty of $1,892,000 was based on an independent third party valuation analysis using estimates and assumptions provided by management of Celtic, and other information compiled by management of Celtic. The fair value of the consideration received during the restructuring in March 2013 aggregating $193,602 has been reflected in the determination of fair value of the $2,500,000 (Canadian) promissory note and accrued interest at February 28, 2013 and the difference of $545,849 was recorded retroactively in the statement of operations for the year ended February 28, 2013 as an impairment of the note receivable. | |
Asset Impairment Charges | ' |
The Company reviews and evaluates its long-lived assets for impairment at each balance sheet date and documents such impairment testing. The tests include an evaluation of the assets and events or changes in circumstances that would indicate that the related carrying amounts may not be recoverable. Mineral properties in the exploration stage are monitored for impairment based on factors such as the Company's continued right to explore the area, exploration reports, assays, technical reports, drill results and the Company's continued plans to fund exploration programs on the property, whether sufficient work has been performed to indicate that the carrying amount of the mineral property cost carried forward as an asset will not be fully recovered, even though a viable mine has been discovered. | |
The tests for long-lived assets in the exploration, development or producing stage that would have a value beyond proven and probable reserves would be monitored for impairment based on factors such as current market value of the mineral property and results of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result from the use of the related assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts. | |
The Company's policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value. |
Debt
Debt | 9 Months Ended |
Nov. 30, 2013 | |
Debt: | ' |
Debt Disclosure | ' |
In September 2011, the Company entered into two Demand Promissory Notes (the “Notes”) in the aggregate amount of $270,000. The Notes were due upon demand after November 14, 2011 ($200,000, the “September 14, 2011 Note”) and November 19, 2011 ($70,000, the “September 19, 2011 Note”). The Notes bear interest at the rate of 2% per month calculated and compounded monthly and a commitment arrangement and placement fee of $67,500 per month (less interest). On June 14 and 19, 2012 the Company entered into a Promissory Note Amending Agreement with the holders of the Notes where by the note holders agreed to extend the maturity of the September 14, 2011 Note to September 14, 2012 and the September 19, 2011 Note to September 19, 2012 and to settle outstanding commitment, arrangement and placement fees of $554,825 in exchange for 200,000 shares of the Company’s common stock, and eliminate any future commitment, arrangement and placement fees under these promissory notes. In September 2012 the Notes with a principal amount of $270,000 matured without payment and are in default thereafter. | |
Under the terms of the Notes as modified, in the event of non-payment by the Company at maturity, the interest rate on the Notes increases to 5% per month and the Company is required to issue 57,500 and 20,000 shares of the Company’s common stock respectively in advance for each month of non-payment of the Notes. During the nine month period ended November 30, 2013 the Company issued the note holders 497,500 shares of the Company’s common stock in settlement of $53,484 of penalty shares. The fair value at November 30, 2013 of the penalty shares outstanding of $2,968 (February 28, 2013, $48,430) and accrued interest of $428,677 (February 28, 2013, $178,101) are included in notes payable in the condensed consolidated balance sheets. | |
On March 22, 2012 the Company issued a Convertible Promissory Note to JMJ Financial (“JMJ”) in aggregate principal amount of $2,110,000 (the “JMJ Note”) to be advanced over time. In consideration for issuing of the JMJ Note and 125,000 warrants, JMJ provided the initial funding of $275,000 and total funding of $356,000 through February 28, 2013). The JMJ Note bears interest at a one-time amount of 10%, matures three years from the date of issuance, is secured by 25% of the Company’s investment property and ownership or other equity interests the Company holds in Focus Celtic Gold Corporation, its wholly owned subsidiary, and is convertible into shares of the Company’s common stock, at JMJ’s option, at a conversion price, equal to 80% of the average of the three lowest trade prices for the Company’s common stock during the 20 trading days prior to the conversion. The Note was issued with a 10% original issue discount. The original issue discount of $39,556 is being accreted to amortization of debt discount over the term of the note. JMJ has agreed to restrict their ability to convert the JMJ Note and receive shares of common stock so that the number of shares of common stock held by JMJ and its affiliates in the aggregate after such conversion or exercise, does not exceed 4.99% of the then issued and outstanding shares of the Company’s common stock. No interest or principal payments are required until the maturity date. The Note may be prepaid at any time prior to Maturity Date at 150%. The 125,000 warrants issued to JMJ entitle JMJ to purchase up to 125,000 shares of the Company’s common stock at $4.00 per share, subject to adjustment to maintain an aggregate exercise price of $500,000. The 125,000 common share purchase warrants may in certain circumstances be exercised in whole or part in a cashless exercise equal to the difference between the VWAP on the trading day immediately preceding the date on which the holder elects to exercise the warrant, and the exercise price of the warrant times the number of warrants so being exercised. The warrant exercise price may be adjusted to a lesser amount than $4.00 where, at any time while the warrant is outstanding, and the Company sells or grants an option to purchase or sell, or grants any right to re-price, or issues any share of common stock or security convertible into the Company’s common stock, at an effective price less than the $4.00 exercise price, the exercise price shall be reduced to that lesser amount. The warrant is non-transferrable. The Company has determined that the warrants and the convertible feature of the JMJ Note are derivative liabilities with fair values of $418,531 and $867,469 respectively at their dates of issue. The fair value of the derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 3.0 years; volatility of 102.6%; no dividend yield; and a risk free interest rate of 0.56%. The fair value of the derivative liability was recorded as a discount to the debt of $337,692 and $948,308 of interest and financing fees. The discount is being amortized to amortization of debt discount over the term of the JMJ Note. The unamortized discount at November 30, 2013 was $94,166 (February 28, 2013 - $193,858). | |
At November 30, 2013, the fair value of the derivative liability on the warrants and conversion feature was determined to be $408,118 (February 28, 2013 - $1,018,675) and $979,269 (February 28, 2013 - $291,921) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. During the nine month period ended November 30, 2013, the holder of the JMJ Note exercised conversion rights and the Company issued an aggregate of 29,440,000 of its common stock for $69,696 principal amount of this note. The principal balance due on the note at November 30, 2013 was $307,654. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of 1.307 years; volatility of 380.57%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On July 23, 2012 the Company issued a 6% Redeemable Convertible Note (the “GEL Note”) to GEL Properties LLC. (“GEL”) in the amount of $100,000. The Company received net proceeds of $94,485. The GEL Note is due and payable July 23, 2013 and accrues interest on the outstanding principal balance at the rate of 6% per annum. The GEL Note is convertible at any time after January 23, 2013, into shares of the Company's common stock at a conversion price that is equal to 70% of the lowest closing bid price of the Company’s common stock as reported on the OTC Markets OTC QB on which the Company’s shares are traded, for any of the five trading days including the day upon which a notice of conversion is received by the Company. | |
At any time, the Company has the option to redeem the GEL Note and pay to the holder, 150% of the unpaid principal amount of the GEL Note, in full. As part of the loan, the Company issued to the note holder 71,429 transferable warrants to purchase one common share per warrant at $1.40 per share for a period of three years. | |
The fair value of the warrants was calculated at the grant date using the Black-Scholes option pricing model with the following assumptions: expected life of 3.0 years; volatility of 91.32%; no dividend yield; and a risk free interest rate of 0.34%. The GEL Note was determined to have a derivative liability related to its conversion feature with a fair value of $104,954 at July 23, 2012 which was recorded as a discount to the debt of $100,000 and $4,954 of interest and financing fees. The fair value of the derivative liability was determined at the grant date using the Black-Scholes option pricing model with the following assumptions: expected life of 1 year; volatility of 84.96%; no dividend yield; and a risk free interest rate of 0.14%. The discount was amortized to amortization of debt discount over the term of the note and has been fully amortized. During the nine month period ended November 30, 2013, the holder of the GEL Note exercised conversion rights and the Company issued an aggregate 13,157,580 shares of its common stock for $31,500 principal amount of this note. The outstanding principal balance of the GEL Note at November 30, 2013 was $59,000 (February 28, 2013 $90,500). The GEL Note matured July 23, 2013 without payment or settlement and is currently in default. The holder has converted principal of the note into common stock and the principal balance on the note at November 30, 2013 was $59,000. | |
At November 30, 2013, the fair value of the derivative liability conversion feature was determined to be $71,480 (February 28, 2013 - $53,480) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .25 years; volatility of 383.07%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On October 15, 2012, the Company issued an 8% convertible promissory note (the “October 15 Note”) to Asher Enterprises, Inc. for a principal amount of $37,500.The Company received net proceeds of $33,125. The October 15 Note was due and payable July 17, 2013 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time after 180 days following the date of this note, the October 15 Note is convertible into shares of the Company's common stock at a conversion price that is equal to 58% of the average of the lowest three trading prices during the ten trading days preceding the date of conversion. The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. At any time up and until 180 days from the date of the October 15 Note, the Company has the option to redeem the October 15 Note for payment to the note holder ranging from 115% to 140% of the unpaid principal amount of the October 15 Note. In event of default, the Company is required to pay the note holder the greater of (i) 150% of the principal as well as interest and other amounts payable to the note holder or (ii) parity value of the common shares that would be issuable upon conversion multiplied by the highest closing price for the common stock during the period beginning on the date of the first occurrence of the default and ending one day prior to the mandatory payment date. In the event of default interest on the October 15 Note accrues at the rate of 22% per annum. The October 15 Note has been determined to have a derivative liability related to its conversion feature with a fair value of $34,105 at October 15, 2012. The fair value of the derivative liability was determined using the Binomial option pricing model with the following assumptions: expected life of 0.75 years; volatility of 82.54%; no dividend yield; and a risk free interest rate of 0.18%. | |
The fair value of the derivative liability was recorded as a discount to the debt of $34,105. The discount was amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $0 (February 28, 2013 - $15,559) and $0 (February 28, 2013 - $31,457) respectively. | |
The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. During the nine month period ended November 30, 2013, the holder of the October 15 Note exercised conversion rights and the Company issued an aggregate 14,039,622 shares of its common stock for the full principal and interest due on this note and the note has been fully paid and discharged. | |
On November 30, 2012, the Company entered into a 6% convertible promissory note with Circadian Group in the amount of $54,325 in settlement of amounts payable due Circadian Group (the “Circadian Note”). The Circadian Note matured on May 31, 2013 and has a redemption premium of 110% of the principal amount including 6% interest payable on the principal amount. The holder of the Circadian Note may convert the principal amount and interest to shares of the Company’s common stock at any time at a conversion price equal to a 20% discount to the lowest closing price during the five trading days immediately prior to conversion notice, as reported by nasdaq.com. | |
The Company has determined that the convertible feature of the Circadian Note is a derivative liability with fair value of $30,148 at November 30, 2012 which was recorded as a discount to the debt of $30,148 and was amortized to amortization of debt discount over the term of the note. The fair value of the derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 0.5 years; volatility of 79.84%; no dividend yield; and a risk free interest rate of 0.13%. The redemption premium of $5,435 was amortized to amortization of debt discount over the life of the note. On August 9, 2013, the holder of the Circadian Note assigned their rights in the Circadian Note to Redwood Management, LLC, and the Company and Redwood Management, LLC entered into a Securities Settlement Agreement dated August 9, 2013 to settle the Circadian Note in exchange for the amount of $54,325 payable to Redwood Management, LLC maturing February 9, 2014 (the “Redwood-Circadian Note”). The Redwood-Circadian Note bears interest at 12% of the principal amount regardless of when repaid and the holder of the Redwood-Circadian Note may convert the principal amount and interest to shares of the Company’s common stock at any time at a conversion price equal to a 50% discount to the lowest closing price determined on the current trading market for the Company’s common stock during the twenty trading days immediately prior to conversion notice. The Company may, if the Redwood-Circadian Note is not in default, prepay any portion of the principal amount at 125% of such amount upon seven days written notice. The Company has determined that the convertible feature of the Redwood-Circadian Note is a derivative liability with fair value of $110,351 at August 9, 2013. The fair value of the derivative liability was calculated using the Binomial option pricing model with the following assumptions: expected life of 0.5 years; volatility of 114.44%; no dividend yield; and a risk free interest rate of 0.05%. The fair value of the derivative liability was recorded as a discount to the debt of $54,325 and $56,025 of interest and finance fees. | |
This discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount, and the fair value of the derivative liability at November 30, 2013 was $6,430 (February 28, 2013 - $nil), and $34,143 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. During the nine month period ended November 30, 2013, the holder of the Redwood-Circadian Note exercised conversion rights and the Company issued an aggregate 67,627,284 shares of its common stock for $38,065 principal amount of this note. | |
At November 30, 2013, the fair value of the derivative liability conversion feature was determined to be $34,143 (February 28, 2013 - $24,526). The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .20 years; volatility of 309.98%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On December 20, 2012, the Company entered into a 6% convertible promissory note with William Leiberman in the amount of $50,000 in settlement of litigation between the parties (the “Leiberman Note”). The Leiberman Note matured on September 30, 2013 and has a redemption premium of 110% of the principal amount including 6% interest payable on the principal amount. The holder of the Leiberman Note may convert the principal amount and interest to shares of the Company’s common stock at any time at a conversion price equal to a 15% discount to the lowest closing price during the five trading days immediately prior to conversion notice, as reported by nasdaq.com. The Company has determined that the convertible feature of the Leiberman Note is a derivative liability with fair value of $29,139 at December 20, 2012 which was recorded as a discount to the debt of $29,139 and has been fully amortized to amortization of debt discount over the term of the note.. The fair value of the derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 0.6 years; volatility of 113.40%; no dividend yield; and a risk free interest rate of 0.18%. The redemption premium of $5,000 has been fully amortized to amortization of debt discount over the life of the note. The fair value of the derivative liability at November 30, 2013 was $26,312 (February 28, 2013 - $27,278) respectively. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of 0.25 years; volatility of 383.07%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. This note is currently in default as of September 30, 2013. | |
On January 16, 2013, the Company issued an 8% convertible promissory note (the “January 16 Note”) to Asher Enterprises, Inc. for a principal amount of $42,500.The Company received net proceeds of $38,300. The January 16 Note is due and payable September 18, 2013 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time after 180 days following the date of this note, the January 16 Note is convertible into shares of the Company's common stock at a conversion price that is equal to 58% of the average of the lowest three trading prices during the ten trading days preceding the date of conversion. | |
The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. At any time up and until 180 days from the date of the January 16 Note, the Company has the option to redeem the January 16 Note for payment to the note holder ranging from 115% to 140% of the unpaid principal amount of the January 16 Note. In event of default, the Company is required to pay the note holder the greater of (i) 150% of the principal as well as interest and other amounts payable to the note holder or (ii) parity value of the common shares that would be issuable upon conversion multiplied by the highest closing price for the common stock during the period beginning on the date of the first occurrence of the default and ending one day prior to the mandatory payment date. In the event of default interest on the January 16 Note accrues at the rate of 22% per annum. The January 16 Note has been determined to have a derivative liability related to its conversion feature with a fair value of $77,474 at January 16, 2013 which was recorded as a discount to the debt of $42,500 and $34,974 of interest and financing fees. The fair value of the derivative liability was determined using the Black-Scholes option pricing model with the following assumptions: expected life of 0.70 years; volatility of 117.87%; no dividend yield; and a risk free interest rate of 0.18%. The discount has been fully amortized to amortization of debt discount over the term of the note. The fair value of the derivative liability at November 30, 2013 was $2,806 (February 28, 2013 - $37,556. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. This note had a principal balance at November 30, 2013 of $4,410, and has been fully paid as of as of December 6, 2013. | |
On June 7, 2013, the Company issued an 8% convertible promissory note (the “June 8% Note”) for a principal amount of $47,500 to Asher Enterprises. The Company received net proceeds of $45,000. The June 8% Note is due and payable March 8, 2014 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time after 180 days following the date of this note, the June 8% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 58% of the average of the lowest three trading prices during the ten trading days preceding the date of conversion. | |
The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. At any time up and until 180 days from the date of the June 8% Note, the Company has the option to redeem the June 8% Note for payment to the note holder ranging from 115% to 140% of the unpaid principal amount of the June 8% Note. In event of default, the Company is required to pay the note holder the greater of (i) 150% of the principal as well as interest and other amounts payable to the note holder or (ii) parity value of the common shares that would be issuable upon conversion multiplied by the highest closing price for the common stock during the period beginning on the date of the first occurrence of the default and ending one day prior to the mandatory payment date. In the event of default interest on the June 8% Note accrues at the rate of 22% per annum. The June 8% Note has been determined to have a derivative liability related to its conversion feature with a fair value of $110,035 at June 7, 2013 which was recorded as a discount to the debt of $47,500 and $62,535 of interest and financing fees. This note had a balance due of $47,500 at November 30, 2013. | |
The fair value of the derivative liability was determined using the Black-Scholes option pricing model with the following assumptions: expected life of 0.80 years; volatility of 95.33%; no dividend yield; and a risk free interest rate of 0.08%. The discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $17,320 (February 28, 2013 - $nil) and $58,473 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .016 years; volatility of 305.60%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On August 9, 2013, the Company issued a 12% Promissory Note to Redwood Management, LLC for $125,000 principal amount (the “Redwood Note”). The Company received net proceeds of $12,500 upon execution and was to receive thereafter the amount of $12,500 each 30 days from execution until the full $125,000 was funded. The Redwood Note is due and payable February 1, 2014 with interest charged on the unconverted and then outstanding principal amount at the rate of 12% regardless of how long this note remains outstanding, and the holder of the Redwood Note may convert the principal amount and interest to shares of the Company’s common stock at any time at a conversion price equal to a 50% discount to the lowest closing price determined on the current trading market for the company’s common stock during the twenty trading days immediately prior to conversion notice. The Company may, where the Redwood Note is not in default, prepay any portion of the principal amount at 125% of such amount upon seven days written notice. The Company has determined that the convertible feature of the Redwood-Circadian Note is a derivative liability with fair value of $35,783 at the dates of receipt. The fair value of the derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 0.65 – 0.75 years; volatility of 102.64 – 117.42%; no dividend yield; and a risk free interest rate of 0.05 – 0.08%. The fair value of the derivative liability was recorded as a discount to the debt of $17,500 and $18,283 of interest and finance fees. This discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $6,430 (February 28, 2013 - $nil) and $35,183 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
At November 30, 2013, the fair value of the derivative liability conversion feature was determined to be $35.183 (February 28, 2013 - $nil). The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .173 years; volatility of 326.92%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On October 28, 2013, the Company issued an 8% convertible promissory note (the “October 8% Note”) for a principal amount of $47,500 to Asher Enterprises. The Company received net proceeds of $65,000. The October 8% Note is due and payable July 30, 2014 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time after 180 days following the date of this note, the June 8% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 35% of the lowest trading price during the ten trading days preceding the date of conversion. The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. At any time up and until 180 days from the date of the October 8% Note, the Company has the option to redeem the October 8% Note for payment to the note holder ranging from 115% to 140% of the unpaid principal amount of the October 8% Note. In event of default, the Company is required to pay the note holder the greater of (i) 150% of the principal as well as interest and other amounts payable to the note holder or (ii) parity value of the common shares that would be issuable upon conversion multiplied by the highest closing price for the common stock during the period beginning on the date of the first occurrence of the default and ending one day prior to the mandatory payment date. In the event of default interest on the October 8% Note accrues at the rate of 22% per annum. This note had a balance due of $65,000 at November 30, 2013. The Company has determined that the convertible feature of the Asher Note is a derivative liability with fair value of $290,326 at the date of receipt. The fair value of the derivative liability was calculated using the Binomial option pricing model with the following assumptions: expected life of 0.671 years; volatility of 352.49%; no dividend yield; and a risk free interest rate of .18%. The fair value of the derivative liability was recorded as a discount to the debt of $65,000 and $225,326 of interest and finance fees. This discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $57,405 (February 28, 2013 - $nil) and $166,366 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .581 years; volatility of 339.59%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On November 1, 2013, the Company issued a 5% convertible promissory note (the “November 5% Note”) for a principal amount of $12,500 to Common Stock, LLC. The Company received net proceeds of $12,500. The November 5% Note is due and payable October 31, 2014 and accrues interest on the outstanding principal balance at the rate of 5% per annum. Any time after 180 days following the date of this note, the November 5% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 50% of the average closing stock price during the ten trading days preceding the date of conversion. The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. This note had a balance due of $12,500 at November 30, 2013. The Company has determined that the convertible feature of the Common Stock LLC Note is a derivative liability with fair value of $15,543 at the date of receipt. The fair value of the derivative liability was calculated using the Binomial option pricing model with the following assumptions: expected life of 0.997 years; volatility of 394.90%; no dividend yield; and a risk free interest rate of .17%. The fair value of the derivative liability was recorded as a discount to the debt of $12,500 and $3,043 of interest and finance fees. This discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $11,381 (February 28, 2013 - $nil) and $13,439 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .918 years; volatility of 378.60%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
On November 1, 2013, the Company issued a 5% convertible promissory note (the “November 5% Note”) for a principal amount of $30,000 to JSJ Investments, Inc. The Company received net proceeds of $30,000. The November 5% Note is due and payable October 31, 2014 and accrues interest on the outstanding principal balance at the rate of 5% per annum. Any time after 180 days following the date of this note, the November 5% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 50% of the average closing stock price during the ten trading days preceding the date of conversion. The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. This note had a balance due of $30,000 at November 30, 2013. The Company has determined that the convertible feature of the JSJ Investments, Inc. Note is a derivative liability with fair value of $37,302 at the date of receipt. The fair value of the derivative liability was calculated using the Binomial option pricing model with the following assumptions: expected life of 0.997 years; volatility of 394.90%; no dividend yield; and a risk free interest rate of .17%. The fair value of the derivative liability was recorded as a discount to the debt of $30,000 and $7,302 of interest and finance fees. This discount is being amortized to amortization of debt discount over the term of the note. The unamortized discount and the fair value of the derivative liability at November 30, 2013 was $27,313 (February 28, 2013 - $nil) and $32,550 (February 28, 2013 - $nil) respectively. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. The fair value of the derivative liability at November 30, 2013 was determined using the Binomial option pricing model with the following assumptions: expected life of .918 years; volatility of 395.47%; no dividend yield; and a risk free interest rate of 0.17%. The Company estimates the fair value of this derivative liability at each reporting period and records any change in the fair value of the derivative liability to the statement of operations. | |
Equity
Equity | 9 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Equity: | ' | ||||||||
Stockholders' Equity Note Disclosure | ' | ||||||||
(a) Authorized capital | |||||||||
The Company is authorized to issue: | |||||||||
10,000,000 shares of Preferred stock, $0.0001 par value | |||||||||
2,000,000,000 shares of Common stock, $0.0001 par value | |||||||||
On October 28, 2013, the Articles of Incorporation were amended to increase the number of shares authorized to 2,000,000,000 common shares, par value $0.00001, and 10,000,000 preferred shares, par value $0.00001 | |||||||||
Series A Preferred Stock: | |||||||||
At November 30, 2013, the Series A Preferred Stock outstanding consisted of Three Million (3,000,000) shares of $.00001 par value. The Series A Preferred ranked senior to the common stock and all other shares of preferred stock that may be later authorized. Each outstanding share of Series A Preferred Stock had two hundred fifty (250) votes on all matters submitted to the stockholders of the Company and votes with the common stock on all matters. The shares of Series A Preferred: (i) did not have any liquidation preference; (ii) did not accrue, earn, or participate in any dividends; and (iii) was subject to redemption by the Corporation at a price of two cents ($.02) per share. | |||||||||
As a result of the Settlement agreement with Gordon F. Lee, the former CEO, the Series A shares have been revoked and cancelled, and are no longer issued and outstanding. | |||||||||
Series B Non-Voting 6% Convertible Preferred Stock: | |||||||||
The Series B Non-Voting Convertible Preferred Stock consisted of Seven Million (7,000,000) authorized shares of $0.00001 par value and a stated value of $100 per share. There were 1,850 shares of Series B Preferred Stock issued and outstanding at November 30, 2013. | |||||||||
Conversion rights: Each share of Series B Non-Voting 6% Convertible Preferred Stock is convertible at any time at the election of the holder into that number of shares of the Company's common stock determined by dividing the stated value of such shares of preferred stock into the conversion price. The conversion price is defined as twenty percent (20%) of the lowest closing bid price of the Company's common stock during five (5) trading days immediately preceding a conversion date. At November 30, 2013, the conversion of the Series B Preferred Stock would have resulted in the issuance of approximately 144,531,250 common shares. | |||||||||
Dividend rights: The holders of the Series B Preferred are entitled to receive cumulative dividends at a rate per share of 6% per annum, or an annual aggregate total of $11,100, payable in arrears on June 30 and December 31, and on each conversion date, either in cash or at the Company's irrevocable option, in shares of the Company's common stock. The number of shares of Common Stock so issuable is defined as 50% of the previous ten (10) day variable weighted average price of the Company's common stock, with certain limitations. | |||||||||
Dividends on the Series B Non-Voting 6% Convertible Preferred Stock accrue daily commencing on the original issuance date and are deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. | |||||||||
As a result of the Settlement agreement with Gordon F. Lee, the former CEO, the Series B shares, and the common shares into which they were converted, have been revoked and cancelled, and are no longer issued and outstanding. | |||||||||
Series C Voting 6% Convertible Preferred Stock: | |||||||||
In October, 2013, Novation Holdings, Inc., (OTCIQ NOHO) subscribed for 1,000,000 shares of Series C Voting Convertible Preferred stock for total consideration of $65,000, to be paid in installments. As of November 30, 2013, the Series C shares had not yet been issued. The Series C Preferred will carry voting power equal to sixty percent of the total voting power of all classes of stock entitled to vote on any matter, and is convertible after six months at the election of the holder into sixty percent of the total common shares then issued and outstanding after the conversion. The Statement of Preferences for the Class C Convertible Preferred Stock will be filed with the Secretary of State of Nevada. | |||||||||
As a result of the settlement with Gordon F. Lee, the Class C Preferred Stock issued to NOHO will be the only class of preferred stock issued and outstanding. | |||||||||
(b) Share issuances, returns and cancellations during the nine month periods ended November 30, 2013 and 2012: | |||||||||
On April 5, 2013, the Company received and approved a subscription from Gordon Lee, the Company’s Chief Executive Officer, for 5,000,000 units at $0.01 per unit for gross proceeds of $50,000 in a private placement. Each unit consisted of one common share and one transferable share purchase warrant that entitles the holder to purchase one additional common share at $0.02 per share for a period of five years. The fair value of the common shares was determined to be $295,000 and the fair value of the warrants was determined to be $268,021 at the subscription date. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 5.0 years; volatility of 123.25%; no dividend yield; and a risk free interest rate of 0.68%. The net proceeds of the financing of $50,000 was allocated on a relative fair value basis as $26,198 to common shares and $23,802 to warrants. The difference between the issue price of the common shares of $26,198 and the fair value of the common shares as so determined of $295,000, and the issue price of the warrant of $23,802 and the market value of the warrant, of $268,021, has not been recorded in the books of the Company. | |||||||||
On May 21, 2013, the Company received and approved a subscription from Gordon Lee, the Company’s Chief Executive Officer, for 15,000,000 units at $0.0033 per unit for gross proceeds of $50,000 by way of private placement. Each unit consisted of one common share and one transferable share purchase warrant that entitles the holder to purchase one additional common share at $0.01 per share for a period of five years. The fair value of the common shares was determined to be $85,500 and the fair value of the warrants was determined to be $67,608 at the subscription date. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 5.0 years; volatility of 124.74%; no dividend yield; and a risk free interest rate of 0.84%. The net proceeds of the financing of $50,000 was allocated on a relative fair value basis as $27,921 to common shares and $22,079 to warrants. The difference between the issue price of the common shares of $27,921 and the fair value of the common shares as so determined of $85,500, and the issue price of the warrant of $22,079 and the market value of the warrant, of $67,608, has not been recorded in the books of the Company. | |||||||||
On October 21, 2013, the Company entered into a Mutual Release and Settlement Agreement with the former CEO, Gordon F. Lee, pursuant to which Mr. Lee agreed to resign all positions with the Company after appointing Mr. Michael Gelmon as a second director of the Company, to terminate and rescind all employment agreements, consulting agreements, options and warrants held by Mr. Lee or entered into between Mr. Lee and the Company, to cancel and rescind the issuance of all stock issued to Mr. Lee by the Company after May 31, 2013, as well as to cancel and to rescind as of September 30, 2013, the consulting agreement between the Company and Victoria Blackburn. | |||||||||
The rescission actions also include the consulting agreements entered into between the Company and Mr. Lee’s companies, Carbon Energy Handling, Inc. and Gordon F. Lee Group, LLC. In exchange for the resignations and termination of the several agreements and the cancellation of all shares issued to Mr. Lee after May 31, 2013, the Company agreed that Mr. Lee would retain 100,000,000 shares of common stock previously issued to him on conversion of preferred shares, with an agreed value of $200,000, the closing market price of the stock. All outstanding warrants held by Mr. Lee also were cancelled as part of the settlement. | |||||||||
During the nine month period ended November 30, 2013, the Company issued 222,003,375 shares of its common stock for the exercise of conversions under the Company’s convertible securities in the amount of $312,072; 497,500 shares of its common stock for penalties of $53,484 related to non-payment of notes with a principal amount of $270,000; and 4,000,000 shares of its common stock for $46,000 of services. | |||||||||
On June 3, 2013, the Company redeemed 2,000,000 shares of its Series A Preferred Stock at $0.02 per share. | |||||||||
During the nine month period ended November 30, 2012, the Company: | |||||||||
Issued 1,041,262 shares of its common stock for the exercise of conversions under the Company’s convertible securities in the amount of $499,089 and 200,000 of its common stock as settlement for $554,826 of accrued fees on the Company’s September 14 and 19, 2012 promissory notes. | |||||||||
A total of 20 million shares of common stock issued to Gordon F. Lee and his affiliated companies will be cancelled as part of the Settlement Agreement with Mr. Lee. | |||||||||
(c) Treasury stock | |||||||||
Pursuant to an agreement dated August 24, 2012 with a former director of the Company, the Company acquired 170,000 shares of its common stock at an aggregate purchase price of $129,200. Pursuant to an agreement dated February 8, 2013 with the former shareholders of Fairfields, the Company acquired an additional 512,501 shares of its common stock at an aggregate fair value of $66,625. The 682,501 shares of the Company’s common stock acquired during the year ended February 28, 2013 have been recorded as treasury stock using the cost method. These shares will be cancelled during the quarter ended February 28, 2013. | |||||||||
(d) Stock options | |||||||||
The Company has an incentive share option plan (the "Plan") that it adopted February 7, 2011, that allows it to grant incentive stock options to its officers, directors, employees and other persons associated with the Company. The Plan is intended to advance the best interests of the Company by providing those persons who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. Further, the availability and offering of stock options and common stock under the Plan supports and increases the Company's ability to attract and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends. The board of directors reserved 500,000 shares of common stock for issuance under the Plan. | |||||||||
As of the fiscal year end, February 28, 2011, the board of directors had granted options to purchase 320,000 shares of common stock at $10 per share to 7 persons. Through the nine month periods ended November 30, 2013 and 2012 no further grants of options have been made under this plan. All of the options granted to Gordon F. Lee and his affiliates have been cancelled as part of the settlement agreement with Mr. Lee. | |||||||||
Expiry date | Exercise price per share | Balance | Granted | Forfeited | Expired/Cancelled | Balance11/30/2013 | |||
2/28/13 | |||||||||
24-Feb-16 | $10.00 | 320,000 | - | - | - | 320,000 | |||
320,000 | - | - | - | 320,000 | |||||
All 320,000 stock options granted were exercisable at November 30, 2013 and 2012. | |||||||||
(e) 2012 Stock & Stock Option Compensation Plan | |||||||||
On October 15, 2012 the Company adopted an incentive share option plan referred to as the 2012 Stock & Stock Option Compensation Plan (the "2012 Plan"), for employees, directors and other persons associated with the Company, and is intended to advance the best interests of the Company by providing those persons who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. The board of directors or a committee of the board of directors are responsible for administration of the 2012 Plan and have full power to grant stock options and common stock, construe and interpret the 2012 Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. The Committee may cancel any stock options awarded under the 2012 Plan if an optionee conducts himself in a manner which the Committee determines to be inimical to the best interest of the Company. | |||||||||
The board of directors reserved 2,500,000 shares of common stock for issuance under the 2012 Plan. Through February 28, 2013, the board of directors had granted 500,000 shares of common stock to one consultant under the 2012 Plan. During the nine month period ended November 30, 2013, no grants were made under the 2012 Plan. | |||||||||
(f) Share purchase warrants | |||||||||
The continuity of share purchase warrants is as follows: | |||||||||
Expiry date | Exercise price per share | Balance February 28, 2013 | Issued | Exercised | Expired | BalanceNovember 30,2013 | |||
Class A | |||||||||
19-Dec-13 | $3.00 | 6,667 | - | - | 6,667 | expired | |||
12-Jun-14 | $8.00 | 5,000 | - | - | - | 5,000 | |||
14-Oct-16 | $10.00 | 7,500 | - | - | - | 7,500 | |||
Class B | |||||||||
15-Dec-13 | $5.00 | 33,333 | - | - | 33,333 | expired | |||
April 4, 2018* | $0.02 | - | 5,000,000 | 5,000,000 | cancelled | ||||
May 20, 2018* | $0.01 | - | 15,000,000 | - | 15,000,000 | cancelled | |||
2-Jun-18 | $0.10 | - | 5,000,000 | - | - | 5,000,000 | |||
2-Jun-18 | $0.20 | - | 5,000,000 | - | - | 5,000,000 | |||
Promissory Note Warrants | |||||||||
25-Oct-14 | $3.00 | 33,333 | - | - | - | 33,333 | |||
22-Mar-15 | $4.00 | 125,000 | - | - | - | 125,000 | |||
23-Jul-15 | $1.40 | 71,429 | - | - | - | 71,429 | |||
Total Warrants Outstanding | 282,262 | 30,000,000 | - | 20,040,000 | 10,242,262 | ||||
Weighted average exercise price | $ 3.55 | $ 0.0617 | $ - | $ - | $ 0.22 | ||||
Average remaining contractual term (years) | 1.52 | ||||||||
*All of the warrants granted to Gordon F. Lee and his affiliates have been cancelled as part of the settlement agreement with Mr. Lee. | |||||||||
The Company has issued the following classes of warrants as set out below: | |||||||||
Class A warrant Are non-transferrable, exercisable for cash and have no acceleration of the expiry date. | |||||||||
Class B warrant Are transferrable, each warrant entitles the holder to purchase one additional common share at the exercise price per share set out in the table above, subject to acceleration provisions and with a cashless exercise provision based upon the 20 day volume weighted average price per share at closing day (VWAP) the day prior to exercise. The June 2, 2018 warrants are not subject to acceleration and their cashless exercise provision uses a 5 day VWAP in its calculation. | |||||||||
Note Warrants | |||||||||
October 24, 2014 & | |||||||||
July 23, 2015 Are transferrable and entitle the holder to purchase one additional common share for a period of three years. In lieu of the cash payment the holder has the right to convert this warrant in whole or in part without payment of any kind into that number of shares of common stock of the Company equal to the quotient obtained by dividing the aggregate of the closing price of the Company’s common stock on the day immediately preceding the conversion less the aggregate purchase price of the shares being exercised divided by the closing price of the Company’s common stock on the day immediately preceding the conversion. | |||||||||
March 22, 2015 Transferable with the approval of the Company. At any time after September 22, 2012, in lieu of the cash payment the holder has the right to convert this warrant in whole or in part without payment of any kind into that number of shares of common stock of the Company equal to the quotient obtained by dividing the aggregate of the VWAP price of the Company’s common stock on the day immediately preceding the conversion less the aggregate purchase price of the shares being exercised divided by the VWAP of the Company’s common stock on the day immediately preceding the conversion. The March 22, 2015 warrants provide the warrant holder with down round protection where the Company issues any shares, or grants any warrant or convertible security, or re-prices a security, at less than the effective exercise price of the March 22, 2015 warrant at that time, then the effective exercise price shall be lowered to such lesser amount. As at November 30, 2013, the Company has estimated the re-priced warrant from 125,000 common shares at $4.00 per share to 151,515,152 common shares at $0.0033 per share. | |||||||||
During the nine month period ended November 30, 2013, the Company approved unit subscriptions for an aggregate of 20,000,000 (2012 – nil) Class B warrants as part of a private placement of units and, as a part of a professional services engagement with Weed & Co., the Company granted a five year common stock warrant to acquire 5,000,000 shares of our common stock at $0.10 per share and 5,000,000 shares of our common stock at $0.20 per share. All of the Class B warrants have either expired or been cancelled, except for the Weed & Co warrants expiring on June 2, 2018. |
Compensation_Related_Costs_Sha
Compensation Related Costs, Share Based Payments | 9 Months Ended |
Nov. 30, 2013 | |
Compensation Related Costs, Share Based Payments: | ' |
Disclosure of Compensation Related Costs, Share-based Payments | ' |
The Company accounts for stock based compensation to employees as required by ASC718: Compensation-Stock Compensation and stock based compensation to nonemployees as required by ASC505-50: Equity-Based Payments to Non-Employees. Options and warrants are valued using the Black-Scholes pricing model. The offset to the recorded stock based compensation cost is to additional paid-in capital. Consideration received on the exercise of stock options is recorded as share capital and additional paid-in capital and the related additional paid-in capital is transferred to share capital. | |
The Company accounts for warrants issued in conjunction with stock issuances under private placement using the fair value method. Under this method, the value of warrants issued is measured at fair value at the grant date using the Black-Scholes valuation model and recorded as share capital and additional paid-in capital. | |
The Company recognized the value of detachable warrants issued in conjunction with issuance of notes payable using the Black-Scholes pricing model. The Company recorded the relative fair value of the warrant as an increase to additional paid-in capital and discount against the related debt. The discount attributed to the value of the warrants is then amortized over the term of the underlying debt instrument. |
Discontinued_Operations_and_Di
Discontinued Operations and Disposal Groups | 9 Months Ended | ||||||||
Nov. 30, 2013 | |||||||||
Discontinued Operations and Disposal Groups: | ' | ||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | ||||||||
On October 5, 2012 the Company entered an agreement with European Resource Capital Inc. for the sale of the Company’s 24,420,000 shares of common stock of Celtic (92.16% interest), 64,987,982 Metallum options providing the acquirer with the option to acquire an additional 64,987,982 common shares of Metallum for £0.10 per share through December 31, 2012 and amounts receivable from Celtic of approximately $217,031 in exchange for $2,500,000 (Canadian) ($2,553,887 at exchange rates at the date of this transaction). European Resource Capital Inc. issued the Company an eight percent (8%) 5 year $2,500,000 (Canadian) promissory note payable that is secured by the 24,420,000 shares of Celtic common stock. | |||||||||
On February 8, 2013, the Company’s then wholly owned subsidiary Focus Gold Mexico Limited entered into a share purchase agreement with three individuals, Santiago Leon Avaleyra, Eduardo Zayas Dueñas and Carmen Leticia Calderon Leon, as purchasers, to sell its 50 shares of common stock in Fairfields Gold, S.A. de C.V. for $1,900,000 or purchasers can return the original consideration from the December 31, 2010 transaction (512,500 shares of the Company’s common stock) on the closing date of February 20, 2013. On closing, the Company received as consideration 512,501 shares of its common stock with an aggregate fair value as at February 8, 2013 of $66,625. The 512,501 shares of common stock received has been recorded as treasury stock on the condensed consolidated balance sheet pending cancellation. | |||||||||
A summarized statement of operations for the discontinued operations for the nine month periods ended November 30, 2013 and 2012 is as follows: | |||||||||
November 30, | November 30, | ||||||||
2013 | 2012 | ||||||||
Revenues | $ | - | $ - | ||||||
Exploration expense | - | 102,590 | |||||||
General and administrative | - | 1,354,034 | |||||||
Total operating expenses | - | 1,456,624 | |||||||
Net gain on assets and liabilities written off | - | -295,898 | |||||||
Mineral property impairment | - | 2,756,456 | |||||||
Amortization of debt discount | - | 354,817 | |||||||
Interest and finance cost | - | 19,389 | |||||||
Non-controlling interest in operations | - | (125,448 | ) | ||||||
Loss from discontinued operations | $ | - | $ (4,165,940 | ) |
Derivative_Instruments_and_Hed
Derivative Instruments and Hedging Activities | 9 Months Ended |
Nov. 30, 2013 | |
Derivative Instruments and Hedging Activities: | ' |
Derivative Instruments and Hedging Activities Disclosure | ' |
Derivative instruments consist of common stock warrants and certain instruments embedded in certain notes payable and related agreements. These financial instruments are recorded in the balance sheets at fair value as liabilities. Changes in fair value are recognized in earnings in the period of change. |
Fair_Value_Measures_and_Disclo
Fair Value Measures and Disclosures | 9 Months Ended | |||||||||
Nov. 30, 2013 | ||||||||||
Fair Value Measures and Disclosures: | ' | |||||||||
Fair Value Disclosures | ' | |||||||||
The FASB’s Accounting Standards Codification defines fair value as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: | ||||||||||
Level 1 – Quoted prices for identical instruments in active markets. | ||||||||||
Level 2 – Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets. | ||||||||||
Level 3 – Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market. | ||||||||||
Given the conditions surrounding the trading of the Company’s equity securities, the Company values its derivative instruments related to embedded conversion features and warrants from the issuance of convertible debentures in accordance with the Level 3 guidelines. For the nine month period ended November 30, 2013, the following table reconciles the beginning and ending balances for financial instruments that are recognized at fair value in these condensed consolidated financial statements. The fair value of warrants and embedded conversion features that have exercise reset features are estimated using an adjusted Black-Scholes model based on the Company’s estimation of the likelihood of the occurrence of a reset. | ||||||||||
Balance at February 28, 2013 | New Issuances | Changes in Fair Values | Balance at November 30, 2013 | |||||||
Level 3 – | ||||||||||
Derivative liabilities from: | ||||||||||
Conversion features | $ | 755,311 | $ | 599,340 | $ | -502,521 | $ | 852,130 | ||
Warrants | 1,018,675 | - | -39,406 | 979,269 | ||||||
$ | 1,773,986 | $ | 599,340 | $ | -541,927 | $ | 1,831,399 | |||
Changes in the unobservable input values would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable input used in the fair value measurement is the estimation of the likelihood of the occurrence of a change to the contractual terms of the financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair value measurement. |
Related_Party_Disclosures
Related Party Disclosures | 9 Months Ended |
Nov. 30, 2013 | |
Related Party Disclosures: | ' |
Schedule of Related Party Transactions | ' |
a) Effective June 1, 2013 we agreed to pay our current CEO, as a consultant, the amount of $10,000 per month. During the nine month period ended November 30, 2013, we paid $30,000 (2012 - $nil) as compensation for such management services. That agreement has been rescinded as of October 21, 2013. | |
b) A law firm of which a former director is a partner was paid fees for nine month period ended November 30, 2013 during the period he served as a director of $45,000 (2012 - $nil). | |
c) Included in accounts payable and accrued liabilities – related at November 30, 2013 is $70,000 (February 28, 2013 - $28,093) payable to the firms and persons referred to in this Note 8 and persons or firms related with these persons and firms. | |
d) During the nine month period ended November 30, 2013, we received and approved subscriptions from Gordon F. Lee, the sole director and executive officer of the Company, for 20,000,000 units at an aggregate cost of $100,000 (see Note 6(b)). That agreement has been rescinded retroactively with regard to the common stock warrants included in the units as of October 21, 2013. | |
e) On June 1, 2013, we entered into a consulting agreement with Victoria J. Blackburn, a related party, to provide “Consulting, Research, Review and Assessment of Technical Reports of Mining Properties, and of the Mining Property, along with comparables of said properties.”, for a three month period, renewing thereafter for additional three month terms. Compensation for the services is set at $20,000 per month in stock or in cash for a period of three months. A total of 20,000,000 common shares have been issued to Victoria Blackburn as compensation for the first four months. Victoria J. Blackburn is Secretary of CH and is also the executive assistant of our CEO, Gordon F. Lee. That agreement has been rescinded retroactively as of September 30, 2013. | |
f) On June 14, 2013, we entered into an Employment Agreement with our Chief Executive Officer, Gordon F. Lee. Under this agreement, Mr. Lee will earn a salary of $1 per year, and, as an incentive bonus, has the opportunity to earn up to 100,000,000 shares of the our common stock and 100,000,000 common stock purchase options at an exercise price of $0.01 per share, expiring June 1, 2018 (“Incentive Options”). Mr. Lee will receive 20,000,000 shares of our common stock and 20,000,000 Incentive Options upon closing the acquisition of each of 4 identified properties and an additional 5,000,000 shares of the our common stock and 5,000,000 Incentive Options upon completion of each technical report for the 4 property acquisitions. As of November 30, 2013, none of the acquisitions had been completed. That agreement has been rescinded as of October 21, 2013. | |
g) On June 15, 2013, we entered into a Service Agreement with Carbon Energy Handling, Inc., a related party, to provide management, personnel, administrative, supervisory, accounting and billing services relating to all of the non-legal aspects of our operations relating to our future energy projects for a fee of $10,000 per month. That agreement has been rescinded as of October 21, 2013. | |
h) On June 15, 2013, we also entered into a Service Agreement with the Gordon F. Lee Group, LLC, a related party, to provide management, personnel, administrative, supervisory, accounting and billing services relating to all of the non-legal aspects of our operations relating to metals for a fixed monthly fee of $10,000. That agreement has been rescinded as of October 21, 2013. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Nov. 30, 2013 | |
Subsequent Events: | ' |
Schedule of Subsequent Events | ' |
In December, 2013, the Company acquired a 55 percent controlling interest in two subsidiaries, Focus Gold Financial Corp., and Focus Gold Commercial Resolution, Inc. and commenced the operation of new accounts receivable management services with offices located in Cheektowaga, New York. The two subsidiaries have commenced operations, leased office space, hired employees and begun to generate revenues. It is expected that 20 to 25 total employees will be working in the two subsidiaries by April 30, 2014. Initial operations of the two subsidiaries have been funded with the proceeds of the subscription receivable from Novation Holdings, Inc., which subscribed for 1,000,000 shares of Series A preferred stock of the Company in October, 2013 for a total amount of $65,000. The remaining 45 percent interest in the two subsidiaries is held by Todd Wier (15%) who has been instrumental in starting up the two new business operations, Michael Gelmon (10%), JBurke Consulting (10%) and Indian River Financial Services, LLC (10%), all of whom provide consulting services to the Company. | |
In October, 2013, Novation Holdings, Inc., (OTCQB: NOHO) subscribed for 1,000,000 shares of Series C Voting Convertible Preferred stock for total consideration of $65,000. The Series C Preferred will carry voting power equal to sixty percent of the total voting power of all classes of stock entitled to vote on any matter, and is convertible after six months at the election of the holder into sixty percent of the total common shares then issued and outstanding after the conversion. The Statement of Preferences for the Class C Convertible Preferred Stock will be filed with the Secretary of State of Nevada. The full subscription price has been paid and the Series C preferred shares have been issued. | |
The Company has engaged Novation Consulting Services, Inc., a subsidiary of Novation Holdings, Inc., to provide management consulting services to the Company, including financial and administrative management services, for a monthly fee of $15,000. The Company also engaged Indian River Financial Services, LLC, an unrelated party, to act as the consulting corporate legal counsel for the Company for a fixed monthly fee of $10,000. | |
The Company has continued to negotiate a joint venture or acquisition agreement with respect to a copper mining project in Mexico and expects to enter into a letter of intent for the project by the end of the next fiscal quarter, February 28, 2014. | |