Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended |
Aug. 31, 2014 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'FOCUS GOLD Corp |
Document Type | '10-Q |
Document Period End Date | 31-Aug-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001360564 |
Current Fiscal Year End Date | '--02-28 |
Entity Common Stock, Shares Outstanding | 1,782,718,887 |
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 | '2015 |
Document Fiscal Period Focus | 'Q2 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | Feb. 28, 2014 | |
Current Assets | ' | ' | |
Cash | $0 | $34,758 | |
Receivables | 130 | 978 | |
Due from third party | 500 | 10,700 | |
Deferred loan costs | 6,023 | 0 | |
Prepaid expenses | 13,000 | 196 | |
Total Current Assets | 19,653 | 46,632 | |
Total Assets | 19,653 | 46,632 | |
Current Liabilities | ' | ' | |
Accounts payable and accrued liabilities | 1,241,497 | 998,744 | |
Bank overdraft | 998 | 0 | |
Convertible Notes payable-Current | 786,700 | [1] | 635,155 |
Derivative liability | 1,073,582 | 6,475,564 | |
Due to third party | 92,280 | 200 | |
Payroll liabilities | 253 | 16 | |
Total Current Liabilities | 3,195,310 | 8,109,679 | |
Non-current Liabilities | ' | ' | |
Convertible Notes payable-Non-Current | 21,778 | 3,597 | |
Notes Payable-Long-term | 510,000 | [1] | 510,000 |
Total Liabilities | 3,727,088 | 8,623,276 | |
Stockholder's Equity (Deficit) | ' | ' | |
Common stock | 178,272 | [2] | 67,205 |
Additional paid in capital | 20,009,194 | 19,651,040 | |
Preferred Stock | 10 | [3] | 10 |
Accumulated deficit | -23,800,680 | -28,278,679 | |
Subscription receivable | 0 | -12,900 | |
Minority interest | -94,231 | -3,320 | |
Total Stockholders' Equity (Deficit) | -3,707,435 | -8,576,644 | |
Total Liabilities and Stockholders' Equity (Deficit) | $19,653 | $46,631 | |
[1] | Net of debt discount | ||
[2] | $0.0001 par value, authorized 2,000,000,000 shares, 1,469,662,487 shares issued and outstanding as of May 31, 2014 and 672,046,891 shares issued and outstanding as of February 28, 2014 | ||
[3] | $0.00001 par value, authorized shares 100,000,000 shares Series C, 1,000,000 authorized and outstanding as of May 31, 2014 and February 28, 2014 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $) | Aug. 31, 2014 | Feb. 28, 2014 |
Shareholders' Equity: | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Common stock, par value | $0.00 | $0.00 |
Common Shares authorized | 2,000,000,000 | 1,000,000,000 |
Common Shares issued | 1,782,718,887 | 672,046,891 |
Common Shares outstanding | 1,782,718,887 | 672,046,891 |
Preferred Shares authorized | 1,000,000 | 1,000,000 |
Preferred Shares issued | 1,000,000 | 1,000,000 |
Preferred Shares outstanding | 1,000,000 | 1,000,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 3 Months Ended | 6 Months Ended | ||
Aug. 31, 2014 | Aug. 31, 2013 | Aug. 31, 2014 | Aug. 31, 2013 | |
Income Statement | ' | ' | ' | ' |
Revenues | $99,659 | $0 | $158,450 | $0 |
General & Administrative | ' | ' | ' | ' |
Consulting fees | 80,000 | 0 | 125,000 | 0 |
Payroll expenses | 172,192 | 0 | 307,881 | 0 |
General & administrative expenses | 45,028 | 196,299 | 126,722 | 395,313 |
Total Operating Expenses | 297,220 | 196,299 | 559,603 | 395,313 |
Other income (expense) | ' | ' | ' | ' |
Interest income | 0 | 0 | 0 | 0 |
Amortization of debt discount | -36,826 | -83,014 | -81,480 | -244,892 |
Interest and financial fees | -164,159 | -231,702 | -315,884 | -318,952 |
Change in derivitive liabilities | -116,589 | 2,034,252 | 5,118,615 | 443,880 |
Total Other Income (Expenses) | -317,574 | 1,719,536 | 4,721,251 | -119,964 |
Net Income (Loss), continuing operations | -515,136 | 1,523,237 | 4,320,098 | -515,278 |
Minority interest adjustment | 105,481 | 0 | 157,901 | 0 |
Net income (loss) | -409,654 | 1,523,237 | 4,477,999 | -515,278 |
Preferred Share Dividends | 0 | 2,774 | 0 | 5,551 |
Net Income (Loss) Attributable to Focus Gold Common Stockholders | ($409,654) | $1,520,463 | $4,477,999 | ($520,829) |
Basic Net Loss Per Share | $0 | $0.03 | $0.00 | ($0.02) |
Weighted average number of shares outstanding during the period - basic | 1,578,027,552 | 46,366,652 | 1,209,971,440 | 32,595,285 |
Diluted Net Loss Per Share | $0.01 | $0.01 | $0 | ($0.02) |
Weighted average number of shares outstanding during the period - diluted | 1,349,708,024 | 32,595,285 | 1,349,708,024 | 32,595,285 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) | 6 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Statement of Cash Flows | ' | ' |
Net Income (Loss), continuing operations | $4,320,098 | ($515,278) |
Increase in Amortization of debt discount | 81,480 | 244,892 |
Non-cash interest and financial fees | 315,884 | 314,944 |
Gain on derivitive liabilities | -5,118,615 | -443,880 |
Common stock issued for services | 0 | 2,262 |
Increase in accounts receivables | 848 | 0 |
Decrease/(Increase) in prepaid expenses | -12,804 | -10,000 |
Increase in accounts payable and accrued expenses | 129,872 | 46,092 |
(Decrease)/Increase in accounts payable and accrued expenses - related | 0 | 41,907 |
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | -283,236 | -319,061 |
Redemption of preferred stock | 0 | -40,000 |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 0 | -40,000 |
Bank overdraft | 998 | 0 |
Proceeds from the sale of common stock | 0 | 100,000 |
Proceeds from subscription receivable | 12,900 | 0 |
Proceeds from third party | 92,080 | 0 |
Proceeds from notes payable | 142,500 | 65,000 |
Proceeds from note receivable | 0 | 193,602 |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 248,478 | 358,602 |
Increase (Decrease) in cash and cash equivalents | -34,758 | -459 |
Cash , at Carrying Value, Beginning Balance | 34,758 | 1,237 |
Cash, at Carrying Value, Ending Balance | 0 | 778 |
Interest | 0 | 0 |
Income taxes, net | $0 | $0 |
1_Organization_and_Description
1. Organization and Description of Business | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
1. Organization and Description of Business | ' |
1. Organization and Description of Business | |
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 August 31, 2014, the Company began discussions of forming a joint venture relating to a copper mine operation in Mexico, which it continues to pursue. | |
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 focuses 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 began generating operating revenues as of January, 2014. Now that the basic operating models are in place, the Company plans to begin roll-up acquisitions in both the retail and commercial receivables operations should be spun-off to a separate public company so that the Company can focus on mineral resources operations.. | |
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. |
h_Going_Concern
(h) Going Concern | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
(h) Going Concern | ' |
(h) Going Concern | |
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 continued to incur losses from operations and has an accumulated deficit of ($23,800,680). The Company changed its principal business to the development and exploitation of mineral properties in October 2010, and expanded into accounts receivable management in December 2013, 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. |
3_Acquisitions
3. Acquisitions | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
3. Acquisitions | ' |
3. Acquisitions | |
In November 2013, we acquired 2 controlled (55%) subsidiaries, Focus Gold Commercial Resolutions, Inc. and Focus Gold Financial Group, engaged in the business of accounts receivable collections and management and also continued seeking mining company acquisitions. | |
On February 8, 2013, our 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 our 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 our common stock) on the closing date of February 20, 2013. On closing, we received as consideration 512,501 shares of our 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. The shares have been cancelled in the year ended February 28, 2014. |
4_Notes_Payable
4. Notes Payable | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
4. Notes Payable | ' |
4. Notes Payable | |
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 and as of August 31, 2014. | |
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 August 31, 2014 of the penalty shares outstanding of $50 (February 28, 2014, $279) and accrued interest of $827,308 (February 28, 2014, $542,638) 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 August 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 August 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 August 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 August 31, 2014 was $36,122 (February 28, 2014 - $68,864). The outstanding balance on the principal as of August 31, 2014 was $284,578. The Company is currently in default of this note because of the late filing in their 10-K/A as of February 28, 2014. | |
At August 31, 2014, the fair value of the derivative liability on the warrants and conversion feature was determined to be $331,800 (February 28, 2014 - $2,107,671) and $462,325 (February 28, 2014 - $2,957,281) 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 principal balance due on the note at August 31, 2014 was $284,578. The fair value of the derivative liability at August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of .556 years; volatility of 476.96%; no dividend yield; and a risk free interest rate of 0.16%. 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 year ended August 31, 2014, the holder of the GEL Note exercised conversion rights and the Company issued an aggregate 64,326,531 shares of its common stock for $29,560 principal amount of this note. The outstanding principal balance of the GEL Note at August 31, 2014 was $26,190 (February 28, 2014 $59,000). The GEL Note matured July 23, 2013 without payment or settlement and is currently in default. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
At August 31, 2014, the fair value of the derivative liability conversion feature was determined to be $56,494 (February 28, 2014 - $115,529) 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 August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of 0.334 years; volatility of 488.68%; no dividend yield; and a risk free interest rate of 0.16%. 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 August 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 August 31, 2014 was $34,156 (February 28, 2013 - $27,278) respectively. The fair value of the derivative liability at August 31, 2014 was determined using the Black Scholes 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 due to non-payment on maturity date as of September 30, 2013. | |
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 August 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 August 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 August 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 August, 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 Black Scholes 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. | |
During the quarter ended August 31, 2014, the holder of the Redwood-Circadian Note exercised conversion rights and the Company issued an aggregate 169,604,563 shares of its common stock for $21,693 principal amount of this note. | |
At August 31, 2014, the fair value of the derivative liability conversion feature was determined to be $331 (February 28, 2014 - $117,670). 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 August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of .334 years; volatility of 488.68%; no dividend yield; and a risk free interest rate of 0.16%. 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 25, 2013, the Company issued an 8% convertible promissory note for a principal amount of $17,500 to Redwood Management LLC. The Company received net proceeds of $17,500. The Note is due and payable April 25, 2014 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time following the date of this note, the note is convertible into shares of the Company’s common stock at a conversion price that is equal to 50% of the lowest closing trading price for the 20 consecutive trading days prior to 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 Note, the Company has the option to redeem the 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 Note has been determined to have a derivative liability related to its conversion feature with a fair value of $35,783 at July 25, 2013 which was recorded as a discount to the debt of $17,500 and $18,283 of interest and financing fees. This note had a balance due of $17,500 and accrued interest of $2,260 at August 31, 2014. The Company has a derivative liability related to its conversion feature with a fair value of $35,197 as of August 31, 2014. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
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 $0 at August 31, 2014. | |
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 August 31, 2014 was $0 (February 28, 2013 - $nil) and $0 (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. This note is fully converted and paid out as of August 31, 2014. | |
On October 28, 2013, the Company issued an 8% convertible promissory note (the “October 8% Note”) for a principal amount of $65,000 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 August 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. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014.This note had a principal balance due of $7,450 at August 31, 2014. | |
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 Black Scholes 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 August 31, 2014 was $0 (February 28, 2014 - $33,163) and $26,904 (February 28, 2014 - $424,805) 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 August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of .164 years; volatility of 267.21%; no dividend yield; and a risk free interest rate of 0.15%. 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 August 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 $7,145 at August 31, 2014. 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 Black Scholes 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 August 31, 2014 was $0 (February 28, 2014 - $8,290) and $14,112 (February 28, 2014 - $26,417) 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 Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
The fair value of the derivative liability at August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of .167 years; volatility of 632.76%; no dividend yield; and a risk free interest rate of 0.16%. 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 11, 2013 the Company issued a Convertible Promissory Note to JMJ Financial (“JMJ”) in aggregate principal amount of $335,000 (the “JMJ Note”) to be advanced over time. In consideration for issuing of the JMJ Note, JMJ provided the initial funding of $31,267. The JMJ Note bears interest at a one-time amount of 10%, matures two 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 60% of the average of the three lowest trade prices for the Company’s common stock during the 25 trading days prior to the conversion. The Note was issued with a 10% original issue discount. The original issue discount of $2,917 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 August be prepaid at any time prior to Maturity Date at 150%. The Company has determined that the convertible feature of the JMJ Note are derivative liabilities with fair values of $77,201 the date 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 2 years; volatility of 329.38%; no dividend yield; and a risk free interest rate of 0.17%. The fair value of the derivative liability was recorded as a discount to the debt of $25,000 and $52,201 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 February 28, 2014 was $21,918. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
At August 31, 2014, the fair value of the derivative liability on the conversion feature was determined to be $51,504. 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 principal balance due on the note at August 31, 2014 was $31,267. The fair value of the derivative liability at August 31, 2014 was determined using the Black Scholes option pricing model with the following assumptions: expected life of 1.279 years; volatility of 429.56%; no dividend yield; and a risk free interest rate of 0.16%. 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 March 10, 2014 the Company issued an 8% convertible promissory note (the “March 8% Note”) for a principal amount of $12,500 to Asher Enterprises. The Company received net proceeds of $12,000. The March 8% Note is due and payable December 13, 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 March 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 Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. | |
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 March 8% Note, the Company has the option to redeem the March 8% Note for payment to the note holder ranging from 115% to 140% of the unpaid principal amount of the March 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. This note had a balance due of $12,500 and accrued interest of $227at August 31, 2014. | |
On April 21, 2014, the Company issued an 8% convertible promissory note for a principal amount of $337,500 with Typenex Co-Investment, LLC. The proceeds are to be paid in installments carrying with it an OID of $30,000 and $7,500 for legal fees. The Company received net proceeds of $50,000 from the first installment of $62,500 recording an OID of $5,000 and legal fees of $7,500. Each installment is due and payable 13 months after the date of the installment (5/21/2015 for the first installment) Any time following the date of this note, the Note is convertible into shares of the Company's common stock at a conversion price that is equal to the fixed price $0.0015. This note had a balance due of $62,500 August 31, 2014. The Note is convertible into shares of the Company's common stock at a conversion price that is equal to $0.0015. | |
The Company has determined that the convertible feature of the Typenex Co-Investment, LLC. Note is a derivative liability with fair value of $59,915 at the date 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 1.082 years; volatility of 392.22%; no dividend yield; and a risk free interest rate of .15%. The fair value of the derivative liability was recorded as a discount to the debt of $59,915. 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 August 31, 2014 was $47,546 (February 28, 2014 - $nil) and $59,313 (February 28, 2014 - $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 Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
On March 21, 2014 the Company issued a 10% convertible promissory note (the “March 10% Note”) for a principal amount of $42,500 to LG Capital Funding, LLC. The Company received net proceeds of $40,000. The March 10% Note is due and payable March 21, 2015 and accrues interest on the outstanding principal balance at the rate of 10% per annum. Any time after 180 days following the date of this note, the March 10% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 55% of the lowest closing bid price during the twenty trading days preceding the date of conversion. This note had a balance due of $42,500 and accrued interest of $2,112 at August 31, 2014. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. | |
On August 19, 2014 the Company issued an 8% convertible promissory note (the “August 8% Note”) for a principal amount of $30,000 to Adar Bays, LLC. The Company received net proceeds of $30,000. The August 8% Note is due and payable August 19, 2015 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 March 10% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 55% of the lowest closing bid price during the twelve trading days preceding the date of conversion. This note had a balance due of $30,000 and accrued interest of $690 at August 31, 2014. The Company is currently in default of this note because of late filing in their 10-K/A as of February 28, 2014. The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as liabilities once the conversion option becomes effective after 180 days due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. | |
Included in total consolidated debt is a series or promissory notes assumed by Focus Gold Financial Corp. in the total principal amount of $145,000, representing working capital loans for the development of the accounts receivable management business acquired by the subsidiary in December 2013. These notes are owed in various amounts to 10 separate persons or groups. Interest totaling $6,277 on these notes was accrued as of August 31, 2014. | |
In addition, a total of $365,000 in acquisition debt incurred in December, 2013 by Focus Gold Commercial Resolution, Inc. on the acquisition of the commercial receivables business, is also included in consolidated debt, along with $15,000 in accrued interest as of August 31, 2014. | |
As a result of the minority interest adjustment to reflect the ownership of only 55 percent of the two subsidiaries, only a net of 55 percent of these liabilities is actually reflected in the financial statements of the company |
5_Share_Capital
5. Share Capital | 6 Months Ended | ||||||||
Aug. 31, 2014 | |||||||||
Notes | ' | ||||||||
5. Share Capital | ' | ||||||||
5. Share Capital | |||||||||
(a) Authorized capital | |||||||||
The Company is authorized to issue: | |||||||||
10,000,000 shares of Preferred stock, $0.00001 par value | |||||||||
2,000,000,000 shares of Common stock, $0.0001 par value | |||||||||
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. During the quarter ended August 31, 2014, the stock subscription was paid and the shares were issued to an assignee of NOHO, which has no remaining interest in the Company. The Series C Preferred 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. | |||||||||
(a) Share issuances, returns and cancellations during the three month period ended August 31, 2014: | |||||||||
During the three month period ended May 31, 2014, the Company issued 797,615,596 shares of its common stock for the exercise of conversions by the convertible note holder in converting principal balance of $132,649. | |||||||||
During the three month period ended August 31, 2014, the Company issued 313,056,400 shares of its common stock for the exercise of conversions by the convertible note holders. | |||||||||
(a) 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 six month period ended August 31, 2014 no further grants of options have been made under this plan. | |||||||||
Expiry date | Exercise price per share | Balance | Granted | Forfeited | Expired/ Cancelled | Balance 11/30/2013 | |||
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 August 31, 2014. | |||||||||
(b) 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 August 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 three month period ended August 31, 2014, no grants were made under the 2012 Plan. | |||||||||
(c) Share purchase warrants | |||||||||
The continuity of share purchase warrants is as follows: | |||||||||
Expiry date | Exercise price per share | Balance February 28, 2014 | Issued | Exercised | Expired | Balance August 31, 2014 | |||
Class A | |||||||||
14-Oct-16 | $10.00 | 7,500 | - | - | - | 7,500 | |||
Class B | |||||||||
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 | 10,237,262 | - | - | - | 10,237,262 | ||||
Weighted average exercise price | $ 3.55 | $ - | $ - | $ - | $ 0.22 | ||||
Average remaining contractual term (years) | 1.52 | ||||||||
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 August 31, 2014, 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. | |||||||||
6_Related_Party_Transactions
6. Related Party Transactions | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
6. Related Party Transactions | ' |
6. Related Party Transactions | |
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 C 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., (OTC Pink: 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 to an assignee of NOHO, which has no remaining connection to the Company. | |
The Company 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 engagement of Novation Consulting Services, Inc. terminated during the quarter. |
7_Subsequent_Events
7. Subsequent Events | 6 Months Ended |
Aug. 31, 2014 | |
Notes | ' |
7. Subsequent Events | ' |
7. Subsequent Events | |
During the quarter ended August 31, 2014, the Company determined that it was in the best interests of shareholders to return to the mining industry and, accordingly has agreed in principal to a merge with an existing mining group with a joint venture copper mining operation in Mexico. The merger agreement was not completed during the quarter and is still under negotiation. | |
a_Basis_of_Presentation_Polici
(a) Basis of Presentation (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(a) Basis of Presentation | ' |
(a) Basis of Presentation | |
These condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. All significant intercompany transactions have been eliminated. | |
These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included. Operating results for the interim periods are not necessarily indicative of financial results for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2014. |
b_Cash_and_Cash_Equivalents_Po
(b) Cash and Cash Equivalents (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(b) Cash and Cash Equivalents | ' |
(b) Cash and Cash Equivalents | |
Cash and cash equivalents include highly liquid investments with original maturities of three months or less. To limit our credit risk exposure for amounts in excess of federally insured limits, we place our deposits with financial institutions of high credit standing. |
c_Derivative_Instruments_Polic
(c) Derivative Instruments (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(c) Derivative Instruments | ' |
(c) Derivative Instruments | |
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. |
d_Stockbased_Compensation_Poli
(d) Stock-based Compensation (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(d) Stock-based Compensation | ' |
(d) Stock-based Compensation | |
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. |
f_Estimates_Policies
(f) Estimates (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(f) Estimates | ' |
(f) Estimates | |
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 derivative liability, 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, August differ from these estimates. |
g_Recent_Accounting_Pronouncem
(g) Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Aug. 31, 2014 | |
Policies | ' |
(g) Recent Accounting Pronouncements | ' |
(g) Recent Accounting Pronouncements | |
In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. The Company adopted ASU 2014-10 during the quarter ended August 31, 2014, thereby no longer presenting or disclosing any information required by Topic 915. |
k_Fair_Value_Measurements_Poli
(k) Fair Value Measurements (Policies) | 6 Months Ended | ||||||||||
Aug. 31, 2014 | |||||||||||
Policies | ' | ||||||||||
(k) Fair Value Measurements | ' | ||||||||||
(k) Fair Value Measurements | |||||||||||
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 six month period ended August31, 2014, 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, 2014 | New Issuances | Reductions | Changes in Fair Value | Balance at August 31, 2014 (Unaudited) | |||||||
Derivative liabilities from: | |||||||||||
Conversion features | $ 3,518,283 | $ 59,915 | $ (343,282) | $ (2,623,659) | $ 611,257 | ||||||
Warrants | 2,957,281 | - | (2,494,956) | 462,325 | |||||||
$ 6,475,564 | $ 59,915 | $ (343,282) | $ (5,118,615) | $ 1,073,582 | |||||||
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. |
h_Going_Concern_Details
(h) Going Concern (Details) (USD $) | Aug. 31, 2014 | Feb. 28, 2014 |
Details | ' | ' |
Accumulated deficit | ($23,800,680) | ($28,278,679) |