Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |
Feb. 28, 2018 | May 31, 2017 | |
Document and Entity Information: | ||
Entity Registrant Name | PureBase Corp | |
Document Type | 10-Q | |
Document Period End Date | Feb. 28, 2018 | |
Trading Symbol | pubc | |
Amendment Flag | false | |
Entity Central Index Key | 1,575,858 | |
Current Fiscal Year End Date | --11-30 | |
Entity Common Stock, Shares Outstanding | 141,347,173 | |
Entity Public Float | $ 52,272,293 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited for February 28, 2018) - USD ($) | Feb. 28, 2018 | Nov. 30, 2017 | |
Current assets | |||
Cash | $ 41,635 | $ 6,286 | |
Accounts Receivable | [1] | 26,060 | 60,888 |
Prepaid expenses and other assets | 5,882 | 5,835 | |
Total current assets | 73,577 | 73,009 | |
Property and Equipment | |||
Property and equipment | 42,103 | 42,103 | |
Autos and Trucks | 25,062 | 25,061 | |
Accumulated Depreciation | (57,660) | (54,070) | |
Total Property and Equipment | 9,505 | 13,094 | |
Mineral Rights Acquisition Costs | 200,000 | 200,000 | |
Total Assets | 283,082 | 286,103 | |
Current Liabilities | |||
Accounts Payable | 194,694 | 81,098 | |
Accrued Payroll and Related | 86,038 | 250,223 | |
Accrued Interest | 168,228 | 152,442 | |
Other Accrued Liabilities | 0 | 115,098 | |
Note Payable to Officer | 197,096 | 197,096 | |
Due to Affiliated Entities | 3,092,656 | 2,497,708 | |
Notes Payable - Current | 1,025,000 | 1,025,000 | |
Total Current Liabilities | 4,763,712 | 4,318,665 | |
Commitments and Contingencies | |||
Stockholders' Equity (Deficit) | |||
Common stock | 70,943 | 70,943 | |
Additional paid in capital | 2,897,388 | 2,847,479 | |
Accumulated deficit | (7,448,961) | (6,950,984) | |
Total Stockholders' Equity (Deficit) | [2] | (4,480,630) | (4,032,562) |
Total Liabilities and Stockholders' Deficit | $ 283,082 | $ 286,103 | |
[1] | Net of allowance for doubtful accounts of $0. | ||
[2] | Purebase Corp. |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | Feb. 28, 2018 | Nov. 30, 2017 |
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 520,000,000 | 520,000,000 |
Common Stock, Shares Issued | 141,347,173 | 141,347,173 |
Common Stock, Shares Outstanding | 141,347,173 | 141,347,173 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2018 AND FEBRUARY 28, 2017 (UNAUDITED) - USD ($) | 3 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | ||
Statement of Income | |||
Revenue | $ 124,491 | $ 24,970 | |
Operating expenses: | |||
General and administrative | 482,155 | 908,688 | |
Product fulfillment, exploration and mining expenses | 115,315 | 39,886 | |
Depreciation and amortization | 3,590 | 3,011 | |
Total Operating Expense | 601,060 | 948,585 | |
Other Income (Expenses) | |||
Interest Expense | (21,408) | (16,066) | |
Total Other Income (Expenses) | (21,408) | (16,066) | |
Net Income (Loss) | (497,977) | (939,681) | |
Less: Net Loss attributable to Non-Controlling Interest | 0 | (39,709) | |
Net Loss attributable to Stockholders | [1],[2] | $ (497,977) | $ (899,972) |
Basic and Diluted Loss Per Share | $ (0.01) | $ (0.01) | |
Weighted average common shares outstanding - basic and diluted | 141,347,173 | 141,347,173 | |
[1] | Attributable to Purebase Corp. | ||
[2] | Purebase Corp. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2018 AND FEBRUARY 28, 2017 (UNAUDITED) - USD ($) | 3 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | ||
Operating activities: | |||
Net Income (Loss) | $ (497,977) | $ (939,681) | |
Add back Net Loss attributable to Non-Controlling Interest | 0 | 39,709 | |
Net Loss attributable to Stockholders | [1],[2] | (497,977) | (899,972) |
Adjustments to reconcile net income (loss) to cash used in operating activities: | |||
Depreciation and amortization | 3,590 | 3,011 | |
Stock Based Compensation | 49,909 | 158,855 | |
Non-controlling interest | 0 | (39,709) | |
Accounts Receivable (increase/decrease) | 34,021 | 23,437 | |
Prepaid expenses and other current assets (increase/decrease) | 759 | 10,676 | |
Accounts payable and accrued expenses (increase/decrease) | 120,047 | 610,235 | |
Net cash used in operating activities | (289,651) | (133,467) | |
Financing activities: | |||
Advances from affiliated entity | 325,000 | 70,000 | |
Net cash provided by financing activities | 325,000 | 70,000 | |
Net change in cash | 35,349 | (63,467) | |
Cash, beginning of period | 6,286 | 555,648 | |
Cash, end of period | 41,635 | 492,181 | |
Supplemental cash flow information: | |||
Interest paid in cash | 0 | 0 | |
Income taxes paid in cash | 0 | 0 | |
Vendors paid by affiliated entity | $ 165,857 | $ 279,700 | |
[1] | Attributable to Purebase Corp. | ||
[2] | Purebase Corp. |
Note 1. Nature of Business
Note 1. Nature of Business | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 1. Nature of Business | Note 1. Nature of Business Business Overview Purebase Corporation (the "Company"), was incorporated in the State of Nevada on March 2, 2010 to create a web-based service that would offer boaters an easy, convenient, fun, easy to use, online resource to help them plan and organize their boating trips. Pursuant to a corporate reorganization consummated on December 23, 2014 the Company changed its business focus to an exploration, mining and product marketing company which will focus on identifying and developing advanced stage natural resource projects which show potential to achieve full production. The business strategy of the Company is to identify, acquire, define, develop and operate world-class industrial and natural resource properties and to contract for mine development and operations services to its mining properties located initially in the Western United States and currently in California and Nevada. The Company intends to engage in the identification, acquisition, development, mining and full-scale exploitation of industrial and natural mineral properties in the United States. The Company plans to package and market such industrial and natural minerals to retail and wholesale industrial and agricultural market sectors. The Company will initially seek to develop deposits of pozzolan and potassium sulfate on its own properties or acquire such minerals from other sources. These minerals have a wide range of uses including construction, agriculture additives, animal feedstock, ceramics, synthetics and absorbents. The Company's activities are subject to significant risks and uncertainties including its ability to secure additional funding to pursue its operations The Company is headquartered in Ione, California. The Company's business is divided into wholly-owned and majority-owned subsidiaries which will operate as business divisions whose sole focus is to develop sector related products and to provide for distribution of those products into primarily the agricultural and construction industry sectors. |
Note 2. Summary of Significant
Note 2. Summary of Significant Accounting Policies | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 2. Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Purebase Corporation and its wholly owned subsidiaries Purebase Agricultural, Inc. (f.k.a. Purebase, Inc.) and US Agricultural Minerals, LLC ("USAM") and its majority-owned subsidiary Purebase Networks, Inc.(until March, 2017), collectively referred to as the "Company". All intercompany transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring entries), which in the opinion of management, are necessary to present fairly the consolidated financial position at February 28, 2018 and the consolidated results of operations and cash flows of the Company for the three months ended February 28, 2018 and February 28, 2017. Operating results for the three months ended February 28, 2018 are not necessarily indicative of the results that may be expected for the year ending November 30, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and footnotes thereto for the year ended November 30, 2017 filed on Form 10-K on February 28, 2018. Going Concern The Company incurred a net loss of $497,977 for the fiscal quarter ended February 28, 2018 and generated negative cash flows from operations. In addition, the Company has generated only limited revenue in conjunction with its business plan. In order to support its operations, the Company will require additional infusions of cash from the sale of equity instruments or the issuance of debt instruments, or the commencement of profitable revenue generating activities. If adequate funds are not available or are not available on acceptable terms, the Company's ability to fund its operations, take advantage of potential acquisition opportunities, develop or enhance its properties in the future or respond to competitive pressures would be significantly limited. Such limitations could require the Company to curtail, suspend or discontinue parts of its business plan. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Accounts Receivable The Company uses the specific identification method for recording the provision for doubtful accounts, which was $0 at February 28, 2018 and February 28, 2017. Accounts receivable are written off when all collection attempts have failed. Revenue Recognition Revenue is recognized when the product has shipped, and the title has transferred to the customer. Basic and Diluted Net Loss Per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding warrants and stock options. The outstanding warrants and stock options have been excluded from the calculation of the diluted loss per share due to their anti-dilutive effect. For the quarters ended February 28, 2018 and February 28, 2017 warrants and options to purchase 500,000 and 6,805,494, respectively, have been excluded from the computation of potential dilutive securities. Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Property and Equipment Property and equipment are carried at cost. Depreciation is computed using straight line depreciation methods over the estimated useful lives as follows: Property and Equipment 5 years Autos and trucks 5 years Major additions and improvements are capitalized. Costs of maintenance and repairs which do not improve or extend the life of the associated assets are expensed in the period in which they are incurred . Cash and Cash Equivalents The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Exploration Stage In accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves. Expenditures relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred. Expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures relating to mine development activities for that particular project are capitalized as incurred. Mineral Rights Acquisition costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a "final" or "bankable" feasibility study. Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to development activities for that particular project are capitalized as incurred. Where proven and probable reserves have been established, the project's capitalized expenditures are depleted over proven and probable reserves upon commencement of production using the units-of-production method. Where proven and probable reserves have not been established, such capitalized expenditures are depleted over the estimated production life upon commencement of extraction using the straight-line method. The carrying values of the mineral rights are assessed for impairment by management on a quarterly basis or when indicators of impairment exist. Should management determine that these carrying values cannot be recovered, the unrecoverable amounts are written off against earnings. Fair Value of Financial Instruments Financial assets and liabilities recorded at fair value in the Company's condensed consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories, as defined by the standard, are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. For certain of our financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short-term nature. The carrying amount of the Company's notes payable approximates fair value based on prevailing interest rates. Income Taxes The Company is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the future. The Company is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income. The resulting deferred tax assets will be offset by a valuation allowance due to the uncertainty of its realization. The primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income before income taxes relates to the recognition of a valuation allowance for deferred income tax assets. The Company has adopted FASB ASC 740-10, " Income Taxes" Impairment of Long-lived Assets The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 350, "Intangibles Goodwill and Other "Property and Equipment" Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. ASU 2016-09 will become effective for the Company in the quarter ending February 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board's new revenue standard, ASU 201-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with the adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting. |
Note 3. Properties
Note 3. Properties | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 3. Properties | Note 3. Properties Placer Mining Claims Lassen County, CA Placer Mining Claim Notices have been filed and recorded with the US Bureau of Land Management (the "BLM") relating to 50 Placer mining claims identified as "USMC 1" thru "USMC 50" covering 1,145 acres of mining property located in Lassen County, California and known as the "Long Valley Pozzolan Deposit". The Long Valley Pozzolan Deposit is a placer claims resource in which the Company holds non-patented mining rights to 1,145acres of contiguous placer claims within the boundaries of a known and qualified Pozzolan deposit. These claims were assigned to Purebase by one of its founders at his original cost basis of $0. These claims require a payment of $30,000 per year to the BLM. Federal Preference Rights Lease in Esmeralda County NV This Preference Rights Lease is granted by the BLM covering approximately 2,500 acres of land located in the Mount Diablo Meridian area of Nevada. Contained in the leased property is the Chimney 1 Potassium/Sulfur Deposit which consists of 15.5 acres of land fully permitted for mining operation which is situated within the 2,500 acres held by Purebase. All rights and obligations under the Preference Rights lease have been assigned to the Company by US Mine Corp, a company owned by the majority stockholders and Directors of the Company, A. Scott Dockter and John Bremer. These rights are presented at their cost of $200,000. This lease requires a payment of $3,000 per year to the BLM. Snow White Mine located in San Bernardino County, CA Deposit On November 28, 2014 US Mining and Minerals Corporation entered into a Purchase Agreement in which US Mining and Minerals Corp. agreed to sell its fee simple property interest and certain mining claims to US Mine Corp. In contemplation of the Plan and Agreement of Reorganization, on December 1, 2014, US Mine Corp assigned its rights and obligations under the Purchase Agreement to the Company pursuant to an Assignment of Purchase Agreement. As a result of the Assignment, the Company assumed the purchaser position under the Purchase Agreement. The Purchase Agreement involves the sale of approximately 280 acres of mining property containing 5 placer mining claims known as the Snow White Mine located near Barstow, California in San Bernardino County. The property is covered by a Conditional Use Permit allowing the mining of the property and a Plan of Operation and Reclamation Plan has been approved by San Bernardino County and the US Bureau of Land Management ("BLM"). An initial deposit of $50,000 was paid to escrow, and the agreement required the payment of an additional $600,000 at the end of the escrow period. There was a delay in the seller receiving a clear title to the property and a fully permitted project, both of which were conditions to closing. In light of the foregoing, and the payment of another $25,000, the parties agreed to extend the closing. Due to delays in the Company securing the necessary funding to close the purchase of the Snow White Mine property, John Bremer, a shareholder and a director of Purebase, paid $575,000 to acquire the property on or about October 15, 2015. Mr. Bremer will transfer title to the Company when the Company pays Mr. Bremer $575,000 plus expenses. The mining claims require a minimum royalty payment of $3,500 per year. During the year ended November 30, 2017, US Mine Corp. agreed to offset the $75,000 deposit against money owed to US Mine Corp. Mr. Bremer has not restricted the Company from continuing its exploration on the property or access to property in any way. |
Note 4. Notes Payable
Note 4. Notes Payable | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 4. Notes Payable | Note 4. Notes Payable Purebase assumed a $1,000,000 promissory note on November 24, 2014 in connection with the acquisition of USAM by Purebase. The note bears simple interest at an annual rate of 5% and the principal and accrued interest were payable on May 1, 2016. Upon the occurrence of an event of default, which includes voluntary or involuntary bankruptcy, all unpaid principal, accrued interest and other amounts owing are immediately due, payable and collectible by the lender pursuant to applicable law. The balance of the note was $1,000,000 at February 28, 2018 and November 30, 2017. The Note is in default however, the Company continues to have discussions with Note Holder to extend the Note under the same terms and conditions. On February 26, 2016, Bayshore Capital, a major shareholder, advanced $25,000 to Purebase Corp for working capital at 6% per annum. The note was payable August 26, 2016, or when the Company closes its bridge financing, whichever occurs first. As of February 28, 2018, this note had not been repaid and is currently in default. On August 31, 2017, the Company issued a Note in the amount of $197,096 to Arthur Scott Dockter, President, CEO and a Director of the Company to consolidate the total amounts due to and assumed by Mr. Dockter. The Note to Mr. Dockter bears interest at 6% and was due the earlier of closing of bridge financing or January 15, 2018. As of February 28, 2018, this note had not been repaid and is currently in default, however, the Company is currently negotiating with Mr. Dockter to extend this Note. |
Note 5. Commitments and Conting
Note 5. Commitments and Contingencies | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 5. Commitments and Contingencies | Note 5. Commitments and Contingencies Mineral Properties Our mineral rights require various annual lease payments. See Note 3. Legal Matters Purebase and US Agricultural Minerals, LLC along with certain principals of those entities were named as defendants in a Complaint filed in the Second Judicial District Court in Washoe County, Nevada (Case # CV14 01348) on June 23, 2014. The Complaint was filed by Madelaine and Edwin Durand alleging various causes of action including breach of contract and misrepresentations by various defendants and certain principals of Purebase and USAM. The substance of the Complaint involves the alleged breach and other wrongful acts pertaining to a Mineral Lease Contract and a Non-Disclosure, Confidentiality and Non-Compete Agreement entered into between the Plaintiffs and the Defendants. On June 16, 2015 the Plaintiffs filed an Amended Complaint which, among other things, added the Company as a named Defendant. On March 2, 2016, the Court issued its decision regarding Defendant's Motion to Dismiss all claims. The Court dismissed nine (9) of the twelve (12) claims against the Defendants. The Plaintiffs were ordered to further amend their Complaint and add their corporation as a named party. On March 25, 2016, the Plaintiffs filed the Court ordered Second Amended Complaint. On April 11, 2016 Defendants filed their Answer to the Second Amended Complaint and filed their Counter Claims against the Plaintiffs. Discovery closed in June 2017. The jury trial commenced on February 12, 2018 and following the Plaintiff's presentation of their case, on February 14, 2018 the Judge entered a Directed Verdict in favor of the Defendants. On September 21, 2016 the Company's President, David Vickers, left the Company. Subsequent to his departure, Mr. Vickers has retained legal counsel and is now alleging claims of age discrimination, fraud in the inducement, violation of California Labor Code §970 and breach of contract against the Company. On April 14, 2017 the Company was served by Mr. Vickers' attorney with a demand for arbitration of the above referenced claims. It is too early to estimate the likelihood of an unfavorable outcome, however Mr. Vickers' demand for arbitration stated a claim of over $1,000,000. An evidentiary hearing is scheduled for May 23, 2018. The Company plans to vigorously defend these claims in arbitration. Contractual Matters On November 1, 2013, Purebase entered into an agreement with US Mine Corp, which performs services relating to various technical evaluations and mine development services to Purebase with regard to the various mining properties/rights owned by Purebase. Terms of services and compensation will be determined for each project undertaken by US Mine Corp. Snow White Mine The Company made payments totaling $75,000 towards the purchase of the Snow White Mine. During the year ended November 30, 2017, US Mine Corp. agreed to offset the $75,000 deposit against money owed to US Mine Corp. The Company will need to pay Mr. Bremer, a director of both US Mine Corp and Purebase, the additional sum of $650,000 plus expenses, in order to obtain title of this property. Concentration of Credit Risk The Company maintains cash accounts at financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation ("FDIC"). The cash accounts, at times, may exceed federally insured limits. At February 28, 2018 there were no accounts which exceeded FDIC insurance limits. |
Note 6. Stockholder's Equity
Note 6. Stockholder's Equity | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 6. Stockholder's Equity | Note 6. Stockholder's Equity Authorized Shares The Company's amended Articles of Incorporation authorize the issuance of up to 520,000,000 shares of $0.001 par value common stock and up to 10,000,000 shares of $0.001 par value preferred shares. No preferred stock was outstanding at February 28, 2018 and November 30, 2017. Warrants and Option Awarded Warrants Outstanding There were no warrants outstanding as of February 28, 2018. Stock Options On November 10, 2017 the Company's Board of Directors approved the 2017 Purebase Corporation Stock Option Plan which is intended to be a qualified stock option plan (the "Option Plan"). The Board allocated up to 10,000,000 shares of Purebase common stock to be issued pursuant to options granted under the Option Plan. The Company plans to obtain shareholder approval within one year of its establishment. As of February 28, 2018, no options had been granted under the Option Plan. The Company has also granted options pursuant to employment contracts entered into by the Company and the respective employee. There were no stock options granted during the three months ended February 28, 2018 or February 28, 2017. Employee stock-based options compensation expenses for the three-month period ended February 28, 2018 and 2017 included in general and administrative expense totaled $49,909 and $158,855, respectively. Common stock, stock options or other equity instruments issued to non-employees (including consultants) as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued (unless the fair value of the consideration received can be more reliably measured). The fair value of stock options is determined using the Black-Scholes option-pricing model and is periodically re-measured as the underlying options vest. The following is a schedule summarizing employee and non-employee stock option activity for the three months ended February 28, 2018: Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Contractual terms Outstanding at December 1, 2017 500,000 $ 3.00 $ 0 Granted 0 $ 0 0 Exercised 0 $ N/A 0 Expired/Cancelled 0 $ N/A 0 Outstanding 2/28/18 500,000 $ 3.00 $ 0 8.02 years Exercisable 2/28/18 300,000 $ 3.00 $ 0 8.0 years Expected to vest 2/28/18 200,000 $ 3.00 $ 0 The aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company's common stock for each of the respective periods. As of February 28, 2018, the total unrecognized fair value compensation cost related to non-vested stock options to employees was approximately $210,173 which is expected to be recognized over approximately 1 year. |
Note 7. Related Party Transacti
Note 7. Related Party Transactions | 3 Months Ended |
Feb. 28, 2018 | |
Notes | |
Note 7. Related Party Transactions | Note 7. Related Party Transactions The Company entered into a Contract Mining Agreement with USMC, a company owned by the majority stockholders of the Company, A. Scott Dockter and John Bremer, pursuant to which USMC will provide Product fulfillment and various technical evaluations and mine development services to the Company. Services totaling $104,091 and $17,888 were rendered by USMC for the three-month period ended February 28, 2018 and 2017, respectively. During the three-month period ended February 28, 2018, USMC paid $165,857 of expenses to the Company's vendors and creditors on behalf of the Company and also made cash advances to the Company of $325,000. The balance due to USMC is $3,092,656 and $2,497,708 at February 28, 2018 and November 30, 2017, respectively. On August 31, 2017, the Company issued a Note in the amount of $197,096 to Arthur Scott Dockter, President, CEO and a Director of the Company to consolidate the total amounts due to and assumed by Mr. Dockter. The Note to Mr. Dockter bears interest at 6% and was due on January 15, 2018. As of February 28, 2018, this Note is in default. However, the Company is currently negotiating with Mr. Dockter to extend this Note. Purebase is using office space provided by U S Mine Corp, a company that is owned by the Company's majority stockholders and Directors, A. Scott Dockter and John Bremer. There is currently no lease between the two Companies for its use of the office space provided. |
Note 2. Summary of Significan13
Note 2. Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Purebase Corporation and its wholly owned subsidiaries Purebase Agricultural, Inc. (f.k.a. Purebase, Inc.) and US Agricultural Minerals, LLC ("USAM") and its majority-owned subsidiary Purebase Networks, Inc.(until March, 2017), collectively referred to as the "Company". All intercompany transactions have been eliminated in consolidation. The condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring entries), which in the opinion of management, are necessary to present fairly the consolidated financial position at February 28, 2018 and the consolidated results of operations and cash flows of the Company for the three months ended February 28, 2018 and February 28, 2017. Operating results for the three months ended February 28, 2018 are not necessarily indicative of the results that may be expected for the year ending November 30, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements and footnotes thereto for the year ended November 30, 2017 filed on Form 10-K on February 28, 2018. |
Note 2. Summary of Significan14
Note 2. Summary of Significant Accounting Policies: Going Concern (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Going Concern | Going Concern The Company incurred a net loss of $497,977 for the fiscal quarter ended February 28, 2018 and generated negative cash flows from operations. In addition, the Company has generated only limited revenue in conjunction with its business plan. In order to support its operations, the Company will require additional infusions of cash from the sale of equity instruments or the issuance of debt instruments, or the commencement of profitable revenue generating activities. If adequate funds are not available or are not available on acceptable terms, the Company's ability to fund its operations, take advantage of potential acquisition opportunities, develop or enhance its properties in the future or respond to competitive pressures would be significantly limited. Such limitations could require the Company to curtail, suspend or discontinue parts of its business plan. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
Note 2. Summary of Significan15
Note 2. Summary of Significant Accounting Policies: Accounts Receivable (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Accounts Receivable | Accounts Receivable The Company uses the specific identification method for recording the provision for doubtful accounts, which was $0 at February 28, 2018 and February 28, 2017. Accounts receivable are written off when all collection attempts have failed. |
Note 2. Summary of Significan16
Note 2. Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Revenue Recognition | Revenue Recognition Revenue is recognized when the product has shipped, and the title has transferred to the customer. |
Note 2. Summary of Significan17
Note 2. Summary of Significant Accounting Policies: Basic and Diluted Net Loss Per Share (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding warrants and stock options. The outstanding warrants and stock options have been excluded from the calculation of the diluted loss per share due to their anti-dilutive effect. For the quarters ended February 28, 2018 and February 28, 2017 warrants and options to purchase 500,000 and 6,805,494, respectively, have been excluded from the computation of potential dilutive securities. |
Note 2. Summary of Significan18
Note 2. Summary of Significant Accounting Policies: Use of Estimates and Assumptions (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Note 2. Summary of Significan19
Note 2. Summary of Significant Accounting Policies: Property and Equipment (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Property and Equipment | Property and Equipment Property and equipment are carried at cost. Depreciation is computed using straight line depreciation methods over the estimated useful lives as follows: Property and Equipment 5 years Autos and trucks 5 years Major additions and improvements are capitalized. Costs of maintenance and repairs which do not improve or extend the life of the associated assets are expensed in the period in which they are incurred . |
Note 2. Summary of Significan20
Note 2. Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. |
Note 2. Summary of Significan21
Note 2. Summary of Significant Accounting Policies: Exploration Stage (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Exploration Stage | Exploration Stage In accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves. Expenditures relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred. Expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures relating to mine development activities for that particular project are capitalized as incurred. |
Note 2. Summary of Significan22
Note 2. Summary of Significant Accounting Policies: Mineral Rights (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Mineral Rights | Mineral Rights Acquisition costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a "final" or "bankable" feasibility study. Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to development activities for that particular project are capitalized as incurred. Where proven and probable reserves have been established, the project's capitalized expenditures are depleted over proven and probable reserves upon commencement of production using the units-of-production method. Where proven and probable reserves have not been established, such capitalized expenditures are depleted over the estimated production life upon commencement of extraction using the straight-line method. The carrying values of the mineral rights are assessed for impairment by management on a quarterly basis or when indicators of impairment exist. Should management determine that these carrying values cannot be recovered, the unrecoverable amounts are written off against earnings. |
Note 2. Summary of Significan23
Note 2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Financial assets and liabilities recorded at fair value in the Company's condensed consolidated balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories, as defined by the standard, are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. For certain of our financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short-term nature. The carrying amount of the Company's notes payable approximates fair value based on prevailing interest rates. |
Note 2. Summary of Significan24
Note 2. Summary of Significant Accounting Policies: Income Taxes (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Income Taxes | Income Taxes The Company is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the future. The Company is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income. The resulting deferred tax assets will be offset by a valuation allowance due to the uncertainty of its realization. The primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income before income taxes relates to the recognition of a valuation allowance for deferred income tax assets. The Company has adopted FASB ASC 740-10, " Income Taxes" |
Note 2. Summary of Significan25
Note 2. Summary of Significant Accounting Policies: Impairment of Long-Lived Assets (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Impairment of Long-Lived Assets | Impairment of Long-lived Assets The Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 350, "Intangibles Goodwill and Other "Property and Equipment" |
Note 2. Summary of Significan26
Note 2. Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations. ASU 2016-09 will become effective for the Company in the quarter ending February 2018. Early adoption is permitted in any interim or annual period. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In April 2016, the FASB issued AS 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board's new revenue standard, ASU 201-09, Revenue from Contracts with Customers. The standard should be adopted concurrently with the adoption of ASU 2014-09 which is effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting. |
Note 5. Commitments and Conti27
Note 5. Commitments and Contingencies: Legal Matters (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Legal Matters | Legal Matters Purebase and US Agricultural Minerals, LLC along with certain principals of those entities were named as defendants in a Complaint filed in the Second Judicial District Court in Washoe County, Nevada (Case # CV14 01348) on June 23, 2014. The Complaint was filed by Madelaine and Edwin Durand alleging various causes of action including breach of contract and misrepresentations by various defendants and certain principals of Purebase and USAM. The substance of the Complaint involves the alleged breach and other wrongful acts pertaining to a Mineral Lease Contract and a Non-Disclosure, Confidentiality and Non-Compete Agreement entered into between the Plaintiffs and the Defendants. On June 16, 2015 the Plaintiffs filed an Amended Complaint which, among other things, added the Company as a named Defendant. On March 2, 2016, the Court issued its decision regarding Defendant's Motion to Dismiss all claims. The Court dismissed nine (9) of the twelve (12) claims against the Defendants. The Plaintiffs were ordered to further amend their Complaint and add their corporation as a named party. On March 25, 2016, the Plaintiffs filed the Court ordered Second Amended Complaint. On April 11, 2016 Defendants filed their Answer to the Second Amended Complaint and filed their Counter Claims against the Plaintiffs. Discovery closed in June 2017. The jury trial commenced on February 12, 2018 and following the Plaintiff's presentation of their case, on February 14, 2018 the Judge entered a Directed Verdict in favor of the Defendants. On September 21, 2016 the Company's President, David Vickers, left the Company. Subsequent to his departure, Mr. Vickers has retained legal counsel and is now alleging claims of age discrimination, fraud in the inducement, violation of California Labor Code §970 and breach of contract against the Company. On April 14, 2017 the Company was served by Mr. Vickers' attorney with a demand for arbitration of the above referenced claims. It is too early to estimate the likelihood of an unfavorable outcome, however Mr. Vickers' demand for arbitration stated a claim of over $1,000,000. An evidentiary hearing is scheduled for May 23, 2018. The Company plans to vigorously defend these claims in arbitration. |
Note 5. Commitments and Conti28
Note 5. Commitments and Contingencies: Contractual Matters (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Contractual Matters | Contractual Matters On November 1, 2013, Purebase entered into an agreement with US Mine Corp, which performs services relating to various technical evaluations and mine development services to Purebase with regard to the various mining properties/rights owned by Purebase. Terms of services and compensation will be determined for each project undertaken by US Mine Corp. Snow White Mine The Company made payments totaling $75,000 towards the purchase of the Snow White Mine. During the year ended November 30, 2017, US Mine Corp. agreed to offset the $75,000 deposit against money owed to US Mine Corp. The Company will need to pay Mr. Bremer, a director of both US Mine Corp and Purebase, the additional sum of $650,000 plus expenses, in order to obtain title of this property. |
Note 5. Commitments and Conti29
Note 5. Commitments and Contingencies: Concentration of Credit Risk (Policies) | 3 Months Ended |
Feb. 28, 2018 | |
Policies | |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash accounts at financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation ("FDIC"). The cash accounts, at times, may exceed federally insured limits. At February 28, 2018 there were no accounts which exceeded FDIC insurance limits. |
Note 2. Summary of Significan30
Note 2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments: Fair Value, Measurement Inputs, Disclosure (Tables) | 3 Months Ended |
Feb. 28, 2018 | |
Tables/Schedules | |
Fair Value, Measurement Inputs, Disclosure | Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. |
Note 6. Stockholder's Equity_ S
Note 6. Stockholder's Equity: Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity (Tables) | 3 Months Ended |
Feb. 28, 2018 | |
Tables/Schedules | |
Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity | Number of Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Contractual terms Outstanding at December 1, 2017 500,000 $ 3.00 $ 0 Granted 0 $ 0 0 Exercised 0 $ N/A 0 Expired/Cancelled 0 $ N/A 0 Outstanding 2/28/18 500,000 $ 3.00 $ 0 8.02 years Exercisable 2/28/18 300,000 $ 3.00 $ 0 8.0 years Expected to vest 2/28/18 200,000 $ 3.00 $ 0 |
Note 2. Summary of Significan32
Note 2. Summary of Significant Accounting Policies: Going Concern (Details) - USD ($) | 3 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Details | ||
Net Income (Loss) | $ 497,977 | $ 939,681 |
Note 2. Summary of Significan33
Note 2. Summary of Significant Accounting Policies: Accounts Receivable (Details) | Feb. 28, 2018USD ($) |
Details | |
Allowance for Doubtful Accounts Receivable, Current | $ 0 |
Note 2. Summary of Significan34
Note 2. Summary of Significant Accounting Policies: Income Taxes (Details) | 3 Months Ended |
Feb. 28, 2018USD ($) | |
Details | |
Income Tax Examination, Penalties and Interest Expense | $ 0 |
Note 4. Notes Payable (Details)
Note 4. Notes Payable (Details) | Feb. 28, 2018USD ($) |
Details | |
Medium-term Notes, Current | $ 1,000,000 |
Note 6. Stockholder's Equity (D
Note 6. Stockholder's Equity (Details) - USD ($) | 3 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Nov. 30, 2017 | |
Details | |||
Common Stock, Shares Authorized | 520,000,000 | 520,000,000 | |
Common Stock, Par Value | $ 0.001 | $ 0.001 | |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | |
Preferred Stock, Par Value | $ 0.001 | $ 0.001 | |
Employee Stock Ownership Plan (ESOP), Compensation Expense | $ 49,909 | $ 158,855 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 210,173 |
Note 7. Related Party Transac37
Note 7. Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Nov. 30, 2017 | |
Details | |||
General Contractor Costs | $ 104,091 | $ 17,888 | |
Vendors paid by affiliated entity | 165,857 | 279,700 | |
Advances from affiliated entity | 325,000 | $ 70,000 | |
Due to Affiliated Entities | $ 3,092,656 | $ 2,497,708 |