Item 1.
|
Financial
Statements
|
The condensed consolidated unaudited financial statements of
our company have been prepared in accordance with accounting principles
generally accepted in the United States (US GAAP) and are expressed in U.S.
dollars.
4
LITHIUM EXPLORATION GROUP, INC.
|
|
CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
|
|
December 31, 2015
|
|
(Unaudited)
|
F-1
Lithium Exploration Group, Inc.
|
Condensed Consolidated Balance Sheets
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2015
|
|
|
2015
|
|
|
|
(Unaudited)
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash and
cash equivalents
|
$
|
13,796
|
|
$
|
64,098
|
|
Receivable
|
|
-
|
|
|
13,421
|
|
Loan
receivable
|
|
-
|
|
|
20,000
|
|
Prepaid expenses
|
|
2,788
|
|
|
2,788
|
|
Current assets held for sale (Note 12)
|
|
23,136
|
|
|
14,713
|
|
|
|
|
|
|
115,020
|
|
Total current assets
|
|
39,720
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
39,720
|
|
$
|
115,020
|
|
|
|
|
|
|
|
|
LIABILITIES AND
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities (Note 9)
|
$
|
196,773
|
|
$
|
65,962
|
|
Derivative liability
convertible promissory notes (Note 6)
|
|
1,015,698
|
|
|
1,646,448
|
|
Derivative
liability warrants (Note 6)
|
|
749,582
|
|
|
143,375
|
|
Due to related party (Note 7
and 9)
|
|
115,000
|
|
|
115,000
|
|
Convertible
promissory notes net of unamortized discount (Note 6)
|
|
741,042
|
|
|
533,994
|
|
Accrued interest
convertible promissory notes (Note 6)
|
|
106,143
|
|
|
60,022
|
|
Current liabilities held for sale
(Note 12)
|
|
6,034
|
|
|
6,696
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
2,930,272
|
|
|
2,571,497
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFICIT
|
|
|
|
|
|
|
Lithium Explorations
Group, Inc. Stockholders Deficit
|
|
|
|
|
|
|
Capital stock (Note
3)
Authorized:
100,000,000
preferred shares, $0.001 par
value
10,000,000,000
(June 30, 2015 2,000,000,000)
common
shares, $0.001
par value
Issued and
outstanding:
Nil
preferred shares (June 30, 2015 Nil)
|
|
-
|
|
|
-
|
|
11,669,869 common shares (June 30, 2015 7,574,353)
|
|
11,662
|
|
|
7,575
|
|
Additional paid-in capital
|
|
47,816,707
|
|
|
47,383,231
|
|
Accumulated other
comprehensive loss
|
|
(37,708
|
)
|
|
(29,486
|
)
|
Accumulated deficit
|
|
(50,329,264
|
)
|
|
(49,504,347
|
)
|
Total Lithium Exploration Group, Inc. Stockholders
Deficit
|
|
(2,538,603
|
)
|
|
(2,143,027
|
)
|
Non-controlling interest
|
|
(351,949
|
)
|
|
(313,450
|
)
|
Total Deficit
|
|
(2,890,552
|
)
|
|
(2,456,477
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Deficit
|
$
|
39,720
|
|
$
|
115,020
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
F-2
Lithium Exploration Group, Inc.
|
Condensed Consolidated Statements of Operations And
Comprehensive Income (Loss)
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
|
|
|
|
|
|
Six Months
|
|
|
|
Three Months
|
|
|
Ended
|
|
|
Six Months
|
|
|
Ended
|
|
|
|
Ended
|
|
|
December 31,
|
|
|
Ended
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
2014
|
|
|
December 31,
|
|
|
2014
|
|
|
|
2015
|
|
|
(Restated)
|
|
|
2015
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mining (Notes 3
& 5)
|
|
-
|
|
|
-
|
|
|
5,000
|
|
|
15,000
|
|
Selling, general and administrative (Notes 3 & 5)
|
|
167,606
|
|
|
247,737
|
|
|
309,415
|
|
|
585,728
|
|
Total operating expenses
|
|
167,606
|
|
|
247,737
|
|
|
314,415
|
|
|
600,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
(167,606
|
)
|
|
(247,737
|
)
|
|
(314,415
|
)
|
|
(600,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (Note 6)
|
|
(255,178
|
)
|
|
(311,832
|
)
|
|
(601,960
|
)
|
|
(1,035,903
|
)
|
Gain (loss) on change in the fair value of
derivative liability (Note 6)
|
|
8,906,059
|
|
|
(305,132
|
)
|
|
464,286
|
|
|
2,918,297
|
|
Amortization of debt discount
|
|
(149,379
|
)
|
|
(875,252
|
)
|
|
(320,322
|
)
|
|
(1,584,896
|
)
|
Bad-debt write off
|
|
-
|
|
|
-
|
|
|
(20,000
|
)
|
|
-
|
|
Gain (loss) on disposal of
business operations
|
|
(72
|
)
|
|
-
|
|
|
7,565
|
|
|
-
|
|
Equity in income (loss) of unconsolidated
affiliate
|
|
-
|
|
|
(42,278
|
)
|
|
-
|
|
|
6,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
8,333,824
|
|
|
(1,782,231
|
)
|
|
(784,846
|
)
|
|
(297,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes (Note 4)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
8,333,824
|
|
|
(1,782,231
|
)
|
|
(784,846
|
)
|
|
(297,085
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued operations
|
|
(24,496
|
)
|
|
(133,316
|
)
|
|
(78,570
|
)
|
|
(281,887
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
8,309,328
|
|
|
(1,915,547
|
)
|
|
(863,416
|
)
|
|
(578,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net loss attributable to the
non-controlling interest
|
|
(12,003
|
)
|
|
(65,325
|
)
|
|
(38,499
|
)
|
|
(138,125
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Lithium
Exploration
Group, Inc. Common shareholders
|
|
8,321,331
|
|
|
(1,850,222
|
)
|
|
(824,917
|
)
|
|
(440,847
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Income (loss) per Common
Share
|
$
|
0.72
|
|
$
|
(8.80
|
)
|
$
|
(0.08
|
)
|
$
|
(3.22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Weighted Average Number
of
Common Shares Outstanding
|
|
11,500,561
|
|
|
210,194
|
|
|
10,158,023
|
|
|
136,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss)
|
|
8,309,328
|
|
|
(1,915,547
|
)
|
|
(863,416
|
)
|
|
(578,972
|
)
|
Foreign currency translation adjustment
|
|
1,336
|
|
|
(5,970
|
)
|
|
(8,222
|
)
|
|
(7,834
|
)
|
Comprehensive income (loss)
|
|
8,310,694
|
|
|
(1,921,517
|
)
|
|
(871,638
|
)
|
|
(586,806
|
)
|
Comprehensive (loss) attributable to
non-controlling interest
|
|
(12,003
|
)
|
|
(65,325
|
)
|
|
(38,499
|
)
|
|
(138,125
|
)
|
Comprehensive income (loss)
attributable to Lithium Exploration Group, Inc.
|
|
8,322,697
|
|
|
(1,856,192
|
)
|
|
(833,139
|
)
|
|
(448,681
|
)
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
F-3
Lithium Exploration Group, Inc.
|
Condensed
Consolidated Statements of Changes in Stockholders Deficit
|
(Unaudited)
|
|
|
|
Preferred
Shares
|
|
|
Common
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-in
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
|
|
|
Equity
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
Loss
|
|
|
Deficit
|
|
|
Non-controlling
|
|
|
(Deficit)
|
|
|
|
of
|
|
|
|
|
|
Number of
|
|
|
Amount
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Interest
|
|
|
$
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
$
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
$
|
|
|
(Restated)
|
|
Balance June 30, 2015
(restated)
|
|
-
|
|
|
-
|
|
|
7,574,353
|
|
$
|
7,575
|
|
$
|
47,383,231
|
|
$
|
(29,486
|
)
|
$
|
(49,504,347
|
)
|
$
|
(313,450
|
)
|
$
|
(2,456,477
|
)
|
Common shares issued for debt conversion
|
|
-
|
|
|
-
|
|
|
4,087,472
|
|
|
4,086
|
|
|
111,958
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
116,044
|
|
Common shares issued for the
reclassification of derivative liability on convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
261,331
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
261,331
|
|
Common shares issued for fractional shares
adjustment
|
|
-
|
|
|
-
|
|
|
8,044
|
|
|
1
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
1
|
|
Disposal of business
operations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
60,187
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
60,187
|
|
Foreign exchange translation
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(8,222
|
)
|
|
-
|
|
|
|
|
|
(8,222
|
)
|
Net loss for the period
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(824,917
|
)
|
|
(38,499
|
)
|
|
(863,416
|
)
|
Balance December 31, 2015
|
|
-
|
|
$
|
-
|
|
|
11,669,869
|
|
$
|
11,662
|
|
$
|
47,816,707
|
|
$
|
(37,708
|
)
|
$
|
(50,329,264
|
)
|
$
|
(351,949
|
)
|
$
|
(2,890,552
|
)
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
F-4
Lithium Exploration Group, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
Six Months
|
|
|
|
Six Months
|
|
|
Ended
|
|
|
|
Ended
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
2014
|
|
|
|
2015
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(784,846
|
)
|
$
|
(297,085
|
)
|
Loss from discontinued operations
|
|
(78,570
|
)
|
|
(281,887
|
)
|
Adjustments to
reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
Equity in income of investment held for sale
|
|
-
|
|
|
(6,145
|
)
|
Common shares issued for consulting fees
|
|
-
|
|
|
118,990
|
|
Non-cash Interest expense
|
|
545,852
|
|
|
908,387
|
|
Investment impairment
|
|
60,178
|
|
|
-
|
|
Bad debt written-off
|
|
20,000
|
|
|
-
|
|
Common shares issued for interest expenses
|
|
-
|
|
|
99,567
|
|
Gain
on change in the fair value of derivative liability
|
|
(464,286
|
)
|
|
(2,918,297
|
)
|
Amortization of discount
|
|
320,322
|
|
|
1,584,896
|
|
|
|
|
|
|
|
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
Receivable, net
|
|
13,421
|
|
|
-
|
|
Prepaid expenses
|
|
-
|
|
|
16,610
|
|
Accrued interest
|
|
46,121
|
|
|
27,947
|
|
Accounts
payable and accrued liabilities
|
|
130,812
|
|
|
33,686
|
|
Net cash used in operating
activities from continuing operations
|
|
(190,996
|
)
|
|
(713,331
|
)
|
Net
cash used in operating activities from discontinued operations
|
|
(9,084
|
)
|
|
15,779
|
|
Net cash used in operating activities
|
|
(200,080
|
)
|
|
(697,552
|
)
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities
|
|
|
|
|
|
|
Repayment to related
party
|
|
|
|
|
(45,332
|
)
|
Proceed from
issuance of convertible promissory notes
|
|
158,000
|
|
|
750,000
|
|
Net cash provided by financing activities
|
|
158,000
|
|
|
704,668
|
|
|
|
|
|
|
|
|
Effect of foreign exchange
|
|
(8,222
|
)
|
|
(7,834
|
)
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
(50,302
|
)
|
|
(718
|
)
|
Cash and cash equivalents - beginning of period
|
|
64,098
|
|
|
57,632
|
|
Cash and cash equivalents - end of period
|
$
|
13,796
|
|
$
|
56,914
|
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flow
information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
Income
taxes
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Supplementary non- cash Investing and
Financing
Activities:
|
|
|
|
|
|
|
Non-cash investing and
financing activities:
|
|
|
|
|
|
|
Common stock issued for debt conversion
|
$
|
116,043
|
|
$
|
1,474,202
|
|
Common
stock issued on cashless exercise of warrants
|
$
|
-
|
|
$
|
2,371,934
|
|
Derivative
liability re-classed to additional paid in capital
|
$
|
261,331
|
|
$
|
2,286,445
|
|
Debt discount on convertible note
and warrants
|
$
|
155,231
|
|
$
|
743,481
|
|
Initial derivative liability on note issuance
|
$
|
701,073
|
|
$
|
1,642,368
|
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
F-5
Lithium Exploration Group, Inc.
|
Notes to Condensed Consolidated Interim Financial
Statements
|
December 31, 2015
|
(Unaudited)
|
|
1. Organization
Lithium Exploration Group, Inc. (formerly Mariposa Resources,
Ltd.) (the Company) was incorporated on May 31, 2006 in the State of Nevada,
U.S.A. It is based in Phoenix, Arizona, USA. The accounting and reporting
policies of the Company conform to accounting principles generally accepted in
the United States of America, and the Companys fiscal year end is June 30.
Effective November 30, 2010, the Company changed its name to
Lithium Exploration Group, Inc., by way of a merger with its wholly-owned
subsidiary Lithium Exploration Group, Inc., which was formed solely for the
change of name.
A wholly owned subsidiary, 1617437 Alberta Ltd. was
incorporated in the province of Alberta, Canada on July 8, 2011. Effective
October 2, 2013, the subsidiary changed its name to Alta Disposal Ltd.
On October 18, 2013, the Company acquired 51% interest in Alta
Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.). Effective September
4, 2015, the Company entered into an Asset Purchase Agreement with Cancen Oil
Canada whereby the Company agrees to sell all right, title and interest of Alta
Disposal Morinville Ltd. assets for total purchase price of CAD$10,000
approximately USD$7,466.
On March 1, 2014, the Company through its 100% subsidiary Alta
Disposal Ltd. acquired 50% interest in Tero Oilfield Services Ltd. (the Tero)
On May 1, 2015, the Company entered into a Share Purchase Agreement with an
individual and disposed its 50% interest in Tero.
The Company is engaged principally in the acquisition,
exploration, and development of resource properties. Prior to June 25, 2009, the
Company had the right to conduct exploration work on 20 mineral mining claims in
Esmeralda County, Nevada, U.S.A. On July 31, 2009, the Company acquired an
option to enter into a joint venture for the management and ownership of the
Jack Creek Project, a mining project located in Elko County, Nevada. On
September 25, 2009, the joint venture was terminated and the Company entered
into an agreement with Beeston Enterprises Ltd., under which the Company was
granted an option to acquire an undivided 50% interest in eight mineral claims
located in the Clinton Mining District of British Columbia, Canada. On December
16, 2010, the Company entered into an Assignment Agreement to acquire an
undivided 100% right, title and interest in and to certain mineral permits
located in the Province of Alberta, Canada (see Note 5). On November 8, 2011,
the Company entered into a letter agreement with Glottech-USA. Pursuant to the
terms of the agreement, the Company was granted an exclusive license to use and
distribute the technology within the Swan Hills region of Alberta as well as a
non-exclusive right to distribute the technology within Canada.
F-6
2. Significant Accounting Policies
Basis of presentation and consolidation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America.
These interim financial statements as of and for the six months
ended December 31, 2015 and 2014 are unaudited; however, in the opinion of
management, such statements include all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position, results
of operations and cash flows of the Company for the periods presented. The
results for the six months ended December 31, 2015 are not necessarily
indicative of the results to be expected for the year ending June 30, 2016 or
for any future period. All references to Dec 31, 2015 and 2014 in these
footnotes are unaudited.
These unaudited condensed consolidated financial statements
should be read in conjunction with the audited financial statements and the
notes thereto for the year ended June 30, 2015, included in the Companys annual
report on Form 10-K filed with the SEC on December 3, 2015.
The condensed balance sheet as of June 30, 2015 was restated
during the period ending December 31, 2015 and has been carried forward for the
period ending December 31, 2015, and do not include all disclosures required by
the accounting principles generally accepted in the United States of America.
Principal of Consolidation
The consolidated financial statements include the accounts of
the Company, its wholly-owned subsidiary Alta Disposal Ltd. and its 51% owned
subsidiary Alta Disposal Morinville Ltd. (formerly Bluetap Resources Ltd.).
Intercompany accounts and transactions have been eliminated in consolidation in
conformity with the applicable accounting framework.
Use of Estimates
The preparation of consolidated financial statements in
conformity with United States generally accepted accounting principles 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 amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The Companys periodic filings with the Securities and Exchange
Commission include, where applicable, disclosures of estimates, assumptions,
uncertainties and markets that could affect the financial statements and future
operations of the Company. Significant estimates that may materially change in
the near term include the valuation of derivative liabilities and the underlying
warrants, as well as fair value of investments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with original maturities of less than
three months, which are readily convertible to known amounts of cash and which,
in the opinion of management, are subject to an insignificant risk of loss in
value. The Company had $13,796 and $64,098 in cash and cash equivalents at
December 31, 2015 and June 30, 2015, respectively.
F-7
2. Significant Accounting Policies -
Continued
Concentration of Risk
The Company maintains cash balances at a financial institution
which, from time to time, may exceed Federal Deposit Insurance Corporation
insured limits for banks located in the US. As of December 31, 2015 and June 30,
2015, the Company had $Nil and $Nil, respectively, in deposits in excess of
federally insured limits in its US bank. The Company has not experienced any
losses with regard to its bank accounts and believes it is not exposed to any
risk of loss on its cash in bank accounts.
Prepaid expenses
Prepaid expenses consist of security deposit for office lease
which will be expensed or refunded at the end of the lease period.
Start-Up Costs
In accordance with FASC 720-15-20
Start-Up Costs,
the
Company expenses all costs incurred in connection with the start-up and
organization of the Company.
Mineral Acquisition and Exploration Costs
The Company has been in the exploration stage since its
formation on May 31, 2006. It is primarily engaged in the acquisition,
exploration, and development of mining properties. Mineral property acquisition
and exploration costs are expensed as incurred. When it has been determined that
a mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs incurred to develop such property are
capitalized. Such costs will be amortized using the units-of-production method
over the estimated life of the probable reserves.
Concentrations of Credit Risk
The Companys financial instruments that are exposed to
concentrations of credit risk primarily consist of its cash and cash equivalents
and related party payables it will likely incur in the near future. The Company
places its cash and cash equivalents with financial institutions of high credit
worthiness. At times, its cash and cash equivalents with a particular financial
institution may exceed any applicable government insurance limits. The Companys
management plans to assess the financial strength and credit worthiness of any
parties to which it extends funds, and as such, it believes that any associated
credit risk exposures are limited.
Net Income or (Loss) per Share of Common Stock
The Company has adopted FASC Topic No. 260,
Earnings Per
Share
, (EPS) which requires presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. In
the accompanying financial statements, basic earnings (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the period.
Potentially dilutive securities are not presented in the
computation of EPS since their effects are anti-dilutive.
F-8
2. Significant Accounting Policies -
Continued
Foreign Currency Translations
The Companys functional and reporting currency is the US
dollar. All transactions initiated in other currencies are translated into US
dollars using the exchange rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies are translated into the
US dollar at the rate of exchange in effect at the balance sheet date.
Unrealized exchange gains and losses arising from such transactions are deferred
until realization and are included as a separate component of stockholders
equity (deficit) as a component of comprehensive income or loss. Upon
realization, the amount deferred is recognized in income in the period when it
is realized.
Translation of Foreign Operations
The financial results and position of foreign operations whose
functional currency is different from the Companys presentation currency are
translated as follows:
- assets and liabilities are translated at period-end
exchange rates prevailing at that reporting date; and
- income and expenses
are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign
operations are transferred directly to the Companys accumulated other
comprehensive loss in the consolidated balance sheets. Transaction gains and
losses arising from exchange rate fluctuation on transactions denominated in a
currency other than the functional currency are included in the consolidated
statements of operations.
The relevant translation rates are as follows: For the period
ending December 31, 2015 closing rate at 0.7225 CDN$: US$, average rate at
0.7565 CDN$: US$ and for the year ended June 30, 2015 closing rate at 0.8017
CDN$: US$, average rate at 0.8518 CDN$: US$.
Comprehensive Income (Loss)
FASC Topic No. 220,
Comprehensive Income,
establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. As at December 31, 2015
and June 30, 2015, the Company had no material items of other
comprehensive income except for the foreign currency translation
adjustment.
Risks and Uncertainties
The Company operates in the resource exploration industry that
is subject to significant risks and uncertainties, including financial,
operational, technological, and other risks associated with operating a resource
exploration business, including the potential risk of business failure.
F-9
2. Significant Accounting Policies -
Continued
Environmental Expenditures
The operations of the Company have been, and may in the future
be, affected from time to time in varying degree by changes in environmental
regulations, including those for future reclamation and site restoration costs.
Both the likelihood of new regulations and their overall effect upon the Company
vary greatly and are not predictable. The Company's policy is to meet or, if
possible, surpass standards set by relevant legislation by application of
technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental
and reclamation programs are charged against earnings as incurred or capitalized
and amortized depending on their future economic benefits. All of these types of
expenditures incurred since inception have been charged against earnings due to
the uncertainty of their future recoverability. Estimated future reclamation and
site restoration costs, when the ultimate liability is reasonably determinable,
are charged against earnings over the estimated remaining life of the related
business operation, net of expected recoveries.
Warrants
The Company accounts for currently outstanding detachable
warrants to purchase common stock as derivative liabilities as they are
freestanding derivative financial instruments. The warrants are recorded as
derivative liabilities at fair value, estimated using a Black-Scholes option
pricing model, and marked to market at each balance sheet date, with changes in
the fair value of the derivative liabilities recorded in the condensed
consolidated statements of operations and comprehensive Income (Loss).
Convertible Instruments
The Company evaluates and accounts for conversion options
embedded in its convertible instruments in accordance with ASC 815 Derivatives
and Hedging. It provide three criteria that, if met, require companies to
bifurcate conversion options from their host instruments and account for them as
free standing derivative financial instruments. These three criteria include
circumstances in which (a) the economic characteristics and risks of the
embedded derivative instrument are not clearly and closely related to the
economic characteristics and risks of the host contract, (b) the hybrid
instrument that embodies both the embedded derivative instrument and the host
contract is not re-measured at fair value under otherwise applicable generally
accepted accounting principles with changes in fair value reported in earnings
as they occur and (c) a separate instrument with the same terms as the embedded
derivative instrument would be considered a derivative instrument. The Company
records, when necessary, discounts to convertible notes for the intrinsic value
of conversion options embedded in debt instruments based upon the differences
between the fair value of the underlying common stock at the commitment date of
the note transaction and the effective conversion price embedded in the note.
Debt discounts under these arrangements are amortized over the term of the
related debt to their earliest date of notes redemption
F-10
2. Significant Accounting Policies -
Continued
Fair Value of Financial Instruments
ASC 820,
Fair Value Measurements and Disclosures
requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. ASC 820 establishes a fair
value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial instruments
categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. ASC 820 prioritizes the
inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets
or liabilities;
Level 2 - Inputs other than quoted prices included within Level
1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or
no market activity, therefore requiring an entity to develop its own assumptions
about the assumptions that market participants would use in pricing.
The carrying amounts of the Companys financial assets and
liabilities, such as cash and cash equivalents, prepaid expenses, deposit,
accounts payable and accrued liabilities, and due to a related party approximate
their fair values because of the short maturity of these instruments.
The Companys Level 3 financial liabilities consist of the
liability of the Companys secured convertible promissory notes and debentures
issued to investors, and the derivative warrants issued in connection with these
convertible promissory notes and debentures. There is no current market for
these securities such that the determination of fair value requires significant
judgment or estimation. The Company used a fair value model which incorporates
transaction details such as Company stock price, contractual terms, maturity,
risk free rates, as well as assumptions about future financings, volatility, and
holder behavior as of the date of issuance and each balance sheet date.
Revenue Recognition
The Company has generated little revenues to date. It is the
Companys policy that revenue from product sales or services will be recognized
in accordance with ASC 605 Revenue Recognition. Four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company will defer any revenue for
which the product/services was not delivered or is subject to refund until such
time that the Company and the customer jointly determine that the
product/service has been delivered or no refund will be required.
Sales comprise the fair value of the consideration received or
receivable for the sale of goods and rendering of services in the ordinary
course of the Companys activities. Sales are presented, net of tax, rebates and
discounts, and after eliminating intercompany sales. The Company recognizes
revenue when the amount of revenue and related cost can be reliably measured and
it is probable that the collectability of the related receivables is reasonably
assured.
F-11
2. Significant Accounting Policies -
Continued
Income Taxes
The Company recognizes the tax effects of transactions in the
year in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under FASC 740-20-20 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years.
Receivables
Trade and other receivables are customer obligations due under
normal trade terms and are recorded at face value less any provisions for
uncollectible amounts considered necessary. The Company includes any balances
that are determined to be uncollectible in its overall allowance for doubtful
accounts. The Company recorded $Nil (June 30, 2015 - $18,984) in allowance for
doubtful accounts.
Recent Accounting Pronouncements
In August 2015, the FASB issued ASU 2015-15 Interest
Imputation of Interest (Subtopic 835-30) Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
(Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015
EITF Meeting). The guidance issued previously in ASU 2015-03 did not address
presentation or subsequent measurement of debt issuance costs related to
line-of-credit arrangements. Given the absence of authoritative guidance within
ASU 2015-03, the SEC staff stated that they would not object to an entity
deferring and presenting debt issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs ratably over the term of the
line-of-credit arrangement, regardless of whether there are any outstanding
borrowings on the line-of-credit arrangement. The Company does not anticipate a
material impact to the Companys financial statements as a result of the
amendments.
In September 2015, the FASB issued ASU 2015-16 an update to its
guidance on business combinations. The new guidance requires that an acquirer
recognize adjustments to provisional amounts that are identified during the
measurement period in the reporting period in which the measurement amounts are
determined. The new guidance also requires that the acquirer records, in the
same periods financial statements, the effect on earnings of changes in
depreciation, amortization, or other income effects, if any, as a result of the
change to the provisional amounts, calculated as if the accounting had been
completed as of the acquisition date. The new guidance also requires an entity
to present separately on the face of the income statement, or disclose in the
notes, the portion of the amount recorded in current-period earnings by line
item that would have been recorded in previous reporting periods if the
adjustment to the provisional amounts had been recognized as of the acquisition
date. The Company does not anticipate a material impact to the Companys
financial statements as a result of the amendments.
FASB Statements:
In June 2009 the FASB established the Accounting Standards
Codification ("Codification" or "ASC") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in accordance with generally accepted
accounting principles in the United States ("GAAP"). Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") issued under
authority of federal securities laws are also sources of GAAP for SEC
registrants. Existing GAAP was not intended to be changed as a result of the
Codification, and accordingly the change did not impact our financial
statements. The ASC does change the way the guidance is organized and presented.
F-12
Accounting Standards Updates ("ASUs") through ASU No. 2014-08
which contain technical corrections to existing guidance or affect guidance to
specialized industries or entities were recently issued. These updates have no
current applicability to the Company or their effect on the financial statements
would not have been significant.
3. Capital Stock
On January 19, 2015, the Company's board of directors consented
to effect a reverse stock split of the Companys issued and outstanding shares
of common stock on a basis of 20 old shares of common stock for one 1 new share
of common stock. The reverse stock split was reviewed and approved for filing by
the FNRA effective February 25, 2015.
On July 13, 2015, the Company's board of directors consented to
effect a reverse stock split of the Companys issued and outstanding shares of
common stock on a basis of 200 old shares of common stock for one 1 new share of
common stock. The reverse stock split was reviewed and approved for filing by
the FNRA effective December 31, 2015. Upon effect of the reverse stock split the
issued and outstanding shares pre-split as at December 31, 2015 were
2,333,973,894 and the post-split were 11,669,869. The Companys authorized
capital will not be affected by the reverse stock split. The split is reflected
retrospectively in the accompanying financial statements.
Authorized Stock
At inception, the Company authorized 100,000,000 common shares
and 100,000,000 preferred shares, both with a par value of $0.001 per share.
Each common share entitles the holder to one vote, in person or proxy, on any
matter on which action of the stockholders of the corporation is sought.
On April 8, 2009, the Company increased the number of
authorized shares to 600,000,000 shares, of which 500,000,000 shares are
designated as common stock par value $0.001 per share, and 100,000,000 shares
are designated as preferred stock, par value $0.001 per share.
On October 25, 2012, the Company designated 20,000,000 series A
convertible preferred stock with a par value of $0.001 per share and stated
value of $100 per share. The designated preferred stock is convertible at the
option of the holder, at any time beginning one year from the date such shares
are issued, into common stock of the Company with a par value of $0.001. All
shares of common stock of the Company, shall be of junior rank to all series A
preferred stock in respect to the preferences as to distributions and payments
upon the liquidation, dissolution and winding up of the Company. All other
shares of preferred stock shall be of junior rank to all series A preferred
shares in respect to the preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company.
On January 3, 2014, the Company designated 2,000,000 series B
convertible preferred stock with a par value $0.001 per share, issuable only in
consideration of the extinguishment of existing debt convertible in to the
Companys common stock with a par value of $0.001. The designated preferred
stock shall be issued on the basis of 1 preferred stock for each $1 of
convertible debt. The series B convertible preferred stock shall be subordinate
to and rank junior to all indebtedness of the Company now or hereafter
outstanding.
On October 17, 2014, the Company amended its Articles of
Incorporation, which amendment was filed with the Nevada Secretary of State on
October 17, 2014, to increase the authorized capital of its common shares from
500,000,000 common shares, par value $0.001 to 2,000,000,000 common shares, par
value $0.001.
F-13
3.
Capital Stock
Continued
The Company's authorized capital consists of 2,000,000,000
common shares and 100,000,000 preferred shares, all with a par value of $0.001.
Effective June 22, 2015, the Company designated 50,000,000 of
its 100,000,000 authorized shares of preferred stock as series A preferred
stock. The series A preferred stock, par value $0.001, will rank senior to the
Companys common stock, carrying general voting rights with the common stock at
the rate of 62 votes per share. The series A preferred stock will be deemed
cancelled within 1 year of issuance and are not entitled to share in dividends
or other distributions. So long as any shares of series A preferred stock are
outstanding, the affirmative vote of not less than 75% of those outstanding
shares of series A preferred stock will be required for any change to the
Companys Articles of Incorporation.
Effective September 9, 2015, the Company increase the
authorized capital of its common shares from 2,000,000,000 common shares, par
value $0.001 to 10,000,000,000 common shares, par value $0.001.
Share Issuances
Common Stock Issuance
For the period ended December 31, 2015:
On July 8, 2015, the Company issued 125,000 common shares at a
deemed price of $0.04 per share for promissory note conversion (Note 6).
On July 10, 2015, the Company issued 201,465 common shares at a
deemed price of $0.04 per share for promissory note conversion (Note 6).
On July 21, 2015, the Company issued 250,000 common shares at a
deemed price of $0.04 per share for promissory note conversion (Note 6).
On July 22, 2015, the Company issued 100,000 common shares at a
deemed price of $0.05 per share for promissory note conversion (Note 6).
On July 29, 2015, the Company issued 298,269 common shares at a
deemed price of $0.04 per share for promissory note conversion (Note 6).
On August 17, 2015, the Company issued 250,000 common shares at
a deemed price of $0.04 per share for promissory note conversion (Note 6).
On September 11, 2015, the Company issued 80,801 common shares
at a deemed price of $0.04 per share for promissory note conversion (Note 6).
On September 11, 2015, the Company issued 434,084 common shares
at a deemed price of $0.03 per share for promissory note conversion (Note 6).
On September 15, 2015, the Company issued 438,000 common shares
at a deemed price of $0.03 per share for promissory note conversion (Note 6).
F-14
3.
Capital Stock
Continued
On September 18, 2015, the Company issued 486,623 common shares
at a deemed price of $0.02 per share for promissory note conversion (Note 6).
On September 18, 2015, the Company issued 475,000 common shares
at a deemed price of $0.03 per share for promissory note conversion (Note 6).
On September 18, 2015, the Company issued 394,231 common shares
at a deemed price of $0.03 per share for promissory note conversion (Note 6).
On October 8, 2015, the Company issued 8,044 common shares at a
deemed price of $0.0001 per share to the depository trust as a result of the
reverse stock split round-up.
On October 28, 2015 the Company issued 554,000 common shares at
a deemed price of $0.01 per share for promissory note conversion (Note 6).
Issuances of Preferred Shares
On June 22, 2015, the Company designated 50,000,000 of its
100,000,000 authorized shares of Preferred Stock as Series A Preferred Stock.
The Series A Preferred Stock, par value $0.001, ranks senior to the common
stock and carries general voting rights with the common stock at the rate of 62
votes per share. The Series A Preferred Stock will be deemed cancelled within
1 year of issuance and is not entitled to share in dividends or other
distributions. So long as any shares of Series A Preferred Stock are
outstanding, the affirmative vote of not less than 75% of those outstanding
shares of Series A Preferred Stock will be required for any change to articles
of incorporation.
On July 6, 2015, the Company issued 130,000 Series A
preferred shares in consideration of the release and discharge of a first
ranking general security interest over all current and future assets of Alta
Disposal Ltd. that was granted to secure to the promissory note entered into on
July 22, 2014. These shares were issued at par value of $0.001. These shares
were subsequently cancelled on December 5, 2015 therefore the net impact on
share capital is nil.
4. Provision for Income Taxes
The Company recognizes the tax effects of transactions in the
year in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under FASC 740-20-20 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years.
Exploration stage deferred tax assets arising as a result of
net operating loss carryforwards have been offset completely by a valuation
allowance due to the uncertainty of their utilization in future periods.
Operating loss carryforwards generated during the period from May 31, 2006 (date
of inception) through December 31, 2015 of approximately $13,213,863 will begin
to expire in 2026. Accordingly, deferred tax assets were offset by the valuation
allowance that increased by approximately $390,542 and $1,130,089 during the
periods ended December 31, 2015 and June 30, 2015 respectively.
The Company follows the provisions of uncertain tax positions
as addressed in FASC 740-10-65-1. The Company recognized approximately no
increase in the liability for unrecognized tax benefits.
F-15
4. Provision for Income Taxes -
Continued
The Company has no tax position at December 31, 2015 for which
the ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility. The Company recognizes interest accrued
related to unrecognized tax benefits in interest expense and penalties in
operating expenses. No such interest or penalties were recognized during the
periods presented. The Company had no accruals for interest and penalties at
December 31, 2015. The Companys utilization of any net operating loss carry
forward may be unlikely as a result of its intended exploration stage
activities. The tax years for June 30, 2015, June 30, 2014, June 30, 2013 and
June 30, 2012 are still open for examination by the Internal Revenue Service
(IRS).
|
|
For the six months ended December 31,
2015
|
|
|
|
Amount
|
|
|
Tax Effect (35%)
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
784,846
|
|
$
|
274,696
|
|
|
|
|
|
|
|
|
Shares issued for consulting
fees, mining expenses, investor relation and director fees
|
|
|
|
|
|
|
Interest Expense
|
|
(545,832
|
)
|
|
(191,041
|
)
|
Gain on derivative liability
|
|
464,286
|
|
|
162,500
|
|
Amortization of discount
|
|
(320,322
|
)
|
|
(112,113
|
)
|
Impairment
|
|
(7,565
|
)
|
|
(2,648
|
)
|
|
|
|
|
|
|
|
Total
|
|
390,542
|
|
|
136,690
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
(390,542
|
)
|
|
(136,690
|
)
|
|
|
|
|
|
|
|
Net deferred tax asset
(liability)
|
$
|
-
|
|
$
|
-
|
|
|
|
For the six months ended December 31,
2014
|
|
|
|
Amount
|
|
|
Tax Effect (35%)
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
297,085
|
|
$
|
103,980
|
|
|
|
|
|
|
|
|
Shares issued for consulting
fees, mining expenses, investor relation and director fees
|
|
(118,990
|
)
|
|
(41,647
|
)
|
Shares issued for interest expenses
|
|
(99,567
|
)
|
|
(34,849
|
)
|
Amortization of discount
|
|
(1,584,896
|
)
|
|
(554,714
|
)
|
Interest Expense
|
|
(898,887
|
)
|
|
(314,610
|
)
|
Gain on derivative liability
|
|
|
|
|
|
|
|
|
2,918,297
|
|
|
1,021,404
|
|
|
|
|
|
|
|
|
Total
|
|
513,042
|
|
|
179,565
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
(513,042
|
)
|
|
(179,565
|
)
|
|
|
|
|
|
|
|
Net deferred tax asset (liability)
|
$
|
-
|
|
$
|
-
|
|
F-16
5. Mineral Property Costs
Mineral Permit (Assignment Agreement with Lithium
Exploration VIII Ltd.)
On December 16, 2010, the Company entered into an Assignment
Agreement to acquire the following:
|
a.)
|
An undivided 100% right, title and interest in and to
certain mineral permits located in the Province of Alberta,
Canada.
|
|
b.)
|
All of the assignors right, title and interest in and to
the Option Agreement.
|
In consideration for the Assignment, the Company agreed to pay
US$90,000 by way of cash or stock of equal value (consisting of amounts
previously paid by the Assignor pursuant to the Option Agreement). The full
$90,000 (consisting of option payments i and v below) was expensed and
included in the December 31, 2011 accounts payable balance. The Option shall be
in good standing and exercisable by the Company by paying the following amounts
on or before the dates specified in the following schedule:
|
i.)
|
CDN $40,000 (paid) upon execution of the
agreement;
|
|
ii.)
|
CDN $60,000 (paid) on or before January 1,
2012;
|
|
iii.)
|
CDN $100,000 on or before January 1, 2013 (amended and
paid);
|
|
iv.)
|
CDN $300,000 on or before January 1, 2014 (not paid);
and
|
|
v.)
|
Paying all such property payments as may be required to
maintain the mineral permits in good standing.
|
The Optionee shall provide a refundable amount of CDN$50,000
(paid) to the Optionor by November 2, 2010, which shall be applied by the
Optionor towards work assessment expenses acceptable to the Government of
Alberta, with any unused portion to be applied against payments required to
maintain the permits underlying the property in good
standing.
On December 31, 2012, the Company entered into an agreement to
amend the original payment requirement of CDN$100,000 due on January 1, 2013 to
the following payments: CDN $20,000 (paid) cash payment due on January 1, 2013
and CDN $80,000 by a 15% one year promissory note starting January 1, 2013. The
promissory note is interest free until March 31, 2013. After then, interest will
accrue on the principal balance then in arrears at the rate of 15% per annum. No
payments shall be payable until December 31, 2013. At any time, the Optionor may
elect to convert the remaining balance of CDN $80,000 plus accrued interest into
common shares of the Company at 75% of the closing market price of the Companys
common shares on the election day. The full CDN$100,000 (US$95,008) (consisting
of cash payment of CDN$20,000 (US$19,164) and note payable of CDN$80,000
(US$75,844) was expensed. The note is subject to be measured at its fair value
in accordance with ASC 480-10-25-14. The fair value at issuance was CDN$106,667
(US$101,125) as of June 30, 2013. An additional $26,667 was charged to mining
expense during the year June 30, 2013. An interest expense of CDN$3,058
(US$2,899) was accrued as at June 30, 2013. On July 3, 2013, the Optionor
elected to convert the promissory note of CDN $80,000 (US$75,844) plus accrued
interest of CDN$3,058 (US$2,899) for the total amount of CDN $83,058 (US$78,743)
into 239 common shares of the Company at a price of US$330 per share. The
January 1, 2014 payment was not paid by the Company, and subsequent to the
schedule payment date, the agreement was terminated.
F-17
5. Mineral Property Costs -
Continued
Glottech Technology
On March 17, 2011 and subsequently amended on November 18,
2011, the Company entered into a letter agreement to acquire one initial unit of
proprietary and patented mechanical ultrasound technology for use in water
purification, inclusive of its process of separating from water, as the primary
fluid stock, the salt and other minerals and by products contained therein,
with Glottech USA.
To acquire the unit, the Company must make the following
payments:
|
a)
|
US$25,000 upon execution of the agreement
(paid);
|
|
b)
|
US$75,000 within 180 days of execution of the agreement
(paid);
|
|
c)
|
US$700,000 within 10 days of receipt of invoice from
Glottech USA LLC if the payment in b) is made (paid).
|
|
d)
|
The Company also granted an option to acquire 500 shares
for $1.00 to Glottech USA upon receipt of the operational ultrasonic
generator that they are building for Lithium Exploration Group. The 500
shares are to be paid from outstanding shares owned by Alex Walsh, company
CEO. During the year ended June 30, 2011, the option resulting in
additional mining expenses of $4,940,000 was valued using the fair market
value of the shares to be issued. On October 1, 2012, Alex Walsh and GD
International entered into an agreement to transfer 500 common shares
owned by Alex Walsh to GD International. The shares were received by GD
International on October 29, 2012.
|
Commencing as of the end of an initial sixty day testing and
training period following satisfactory delivery and physical setup of the
technology, and continuing thereafter for as long as the technology remains in
the possession of the Company, the Company shall pay continuing monthly
royalties in an amount equal to $2.00 per physical ton of water processed
pursuant to the usage of the technology.
On June 12, 2012, the Company filed a complaint with the court
of common pleas of Chester County, Pennsylvania against Glottech USA, LLC,
Eldredge, Inc., and the Eldredge Companies, Inc. The complaint seeks an order of
the court granting possession of the unit, in its current state, to the
Company.
Effective August 14, 2012, the Company entered into an option
agreement with GD Glottech-International, Limited (GD International) to
protect our license and distribution rights in the event that GD-Glottech-USA,
LLC (GD USA) is unable to perform and honor the obligations contingent to a
letter agreement dated November 8, 2011.
Pursuant to the terms of the option agreement, we are required
to provide an initial deposit of $150,000 to be held in escrow for the option to
obtain a license on the patent rights, as set forth in the option agreement. A
further $15,000 was required for exercising the option agreement and it will be
credited to future fees when patents rights are exercised. We exerised this
option agreement on September 1, 2012 and released the funds to GD
International.
On October 1, 2012, the Company entered into a sales agency
agreement with GD International. The agreement shall replace all agreements
entered previously. Pursuant to the agreement, the Company is appointed as GD
Internationals sales agent for the technology within the territory. As a
consideration, 10,000 common shares of the Company shall be issued to GD
International (issued: see d) above). GD International retains all right, title
and interest in the technology. The term of this agreement will be an initial
period of five years. The term shall be automatically renewable thereafter for
successive five year periods provided that the Company has sold not less than 25
or more technology units during each applicable five year period.
F-18
5. Mineral Property Costs -
Continued
On May 2, 2013, the Company entered into an agreement to retain
the future use of the unit. Pursuant to the agreement, the Company must make the
following payments:
|
a)
|
US$20,000 within three days of execution of the agreement
(paid);
|
|
b)
|
US$30,000 within three days upon the testing of the unit
has been successfully completed.
|
6. Convertible Promissory Notes
Summary of convertible promissory note at December 31, 2015 and
June 30, 2015 is as follows:
|
|
June 30,
|
|
|
Principal
|
|
|
Total
|
|
|
Total
|
|
|
December 31,
|
|
|
|
2015
|
|
|
Issued
|
|
|
converted
|
|
|
repaid
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 13, 2013
|
$
|
67,913
|
|
$
|
-
|
|
$
|
(18,680
|
)
|
$
|
-
|
|
$
|
49,233
|
|
March 15, 2014
|
|
29,394
|
|
|
-
|
|
|
(22,755
|
)
|
|
-
|
|
|
6,639
|
|
July 22, 2014
|
|
540,498
|
|
|
-
|
|
|
(46,408
|
)
|
|
-
|
|
|
494,090
|
|
August 22, 2014
|
|
37,243
|
|
|
-
|
|
|
(5,200
|
)
|
|
-
|
|
|
32,043
|
|
February 6, 2015
|
|
75,000
|
|
|
-
|
|
|
(20,000
|
)
|
|
-
|
|
|
55,000
|
|
February 24, 2015
|
|
100,000
|
|
|
-
|
|
|
|
|
|
-
|
|
|
100,000
|
|
March 3, 2015
|
|
29,000
|
|
|
-
|
|
|
(3,000
|
)
|
|
-
|
|
|
26,000
|
|
August 3, 2015
|
|
-
|
|
|
36,000
|
|
|
-
|
|
|
-
|
|
|
36,000
|
|
September 9, 2015
|
|
-
|
|
|
30,000
|
|
|
-
|
|
|
-
|
|
|
30,000
|
|
September 30, 2015
|
|
-
|
|
|
27,000
|
|
|
-
|
|
|
-
|
|
|
27,000
|
|
November 06,2015
|
|
-
|
|
|
12,000
|
|
|
-
|
|
|
-
|
|
|
12,000
|
|
December 01, 2015
|
|
-
|
|
|
18,000
|
|
|
-
|
|
|
-
|
|
|
18,000
|
|
December 01, 2015
|
|
-
|
|
|
18,000
|
|
|
-
|
|
|
-
|
|
|
18,000
|
|
December 03, 2015
|
|
-
|
|
|
17,000
|
|
|
-
|
|
|
-
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
879,048
|
|
$
|
158,000
|
|
$
|
(116,043
|
)
|
$
|
-
|
|
$
|
921,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Unamortized debt discount
|
$
|
(345,054
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(179,963
|
)
|
Total note payable, net of debt discount
|
$
|
533,994
|
|
|
|
|
|
|
|
|
|
|
$
|
741,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
$
|
533,994
|
|
|
|
|
|
|
|
|
|
|
$
|
741,042
|
|
Long term portion
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
On August 3, 2015 the Company issued an aggregate of $36,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear 10% interest per annum and is convertible into the
Companys common stock at any time at the holders option, at the conversion
rate as specified in the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $52,720 of the embedded derivative. The fair value of the embedded
derivative was determined using the Black Scholes Model based on the following
assumptions:
F-19
6. Convertible Promissory Notes
Continued
Dividend yield:
|
|
0%
|
|
Volatility
|
|
269.35%
|
|
Risk free rate:
|
|
0.17%
|
|
The initial fair values of the embedded debt derivative of
$33,231 was allocated as a debt discount up to the proceeds of the note with the
remainder $19,489 was charged to current period operations as interest expense.
On September 9, 2015, the Company issued an aggregate of
$30,000 Convertible Promissory Notes that matures in a specified period from the
date of issuance. These notes bear 10% interest per annum and is convertible
into the Companys common stock at any time at the holders option, at the
conversion rate as specified in the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $54,495 of
the embedded derivative. The fair value of the embedded derivative was
determined using the Black Scholes Model based on the following assumptions:
Dividend yield:
|
|
0%
|
|
Volatility
|
|
275.84%
|
|
Risk free rate:
|
|
0.39%
|
|
The initial fair values of the embedded debt derivative $30,000
was allocated as a debt discount up to the proceeds of the note with the
remainder $24,495 was charged to current period operations as interest expense.
On September 30, 2015, Company issued an aggregate of $27,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear 10% interest per annum and is convertible into the
Companys common stock at any time at the holders option, at the conversion
rate as specified in the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $306,808 of
the embedded derivative. The fair value of the embedded derivative was
determined using the Black Scholes Model based on the following assumptions:
F-20
6. Convertible Promissory Notes
Continued
Dividend yield:
|
|
0%
|
|
Volatility
|
|
375.79%
|
|
Risk free rate:
|
|
0.33%
|
|
The initial fair values of the embedded debt derivative $27,000
was allocated as a debt discount up to the proceeds of the note with the
remainder $279,808 was charged to current period operations as interest expense.
On November 6, 2015, the Company issued an aggregate of $12,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear interest and is convertible into the Companys common
stock at any time at the holders option, at the conversion rate as specified in
the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $115,109 of
the embedded derivative. The fair value of the embedded derivative was
determined using the Black Scholes Model based on the following assumptions:
Dividend yield:
|
|
0%
|
|
Volatility
|
|
383.46%
|
|
Risk free rate:
|
|
0.47%
|
|
The initial fair values of the embedded debt derivative of
$12,000 was allocated as a debt discount up to the proceeds of the note with the
remainder $103,109 charged to operations as interest expense.
On December 1, 2015, the Company issued an aggregate of $18,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear interest and is convertible into the Companys common
stock at any time at the holders option, at the conversion rate as specified in
the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $72,119 of
the embedded derivative. The fair value of the embedded derivative was
determined using the Black Scholes Model based on the following assumptions:
Dividend yield:
|
|
0%
|
|
Volatility
|
|
392.28%
|
|
Risk free rate:
|
|
0.51%
|
|
The initial fair values of the embedded debt derivative of
$18,000 was allocated as a debt discount up to the proceeds of the note with the
remainder $54,119 charged to operations as interest expense.
F-21
6. Convertible Promissory Notes
Continued
On December 1, 2015, the Company issued an aggregate of $18,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear interest and is convertible into the Companys common
stock at any time at the holders option, at the conversion rate as specified in
the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair
value of the derivatives as of the inception date of the Convertible Promissory
Note and to adjust the fair value as of each subsequent balance sheet date. At
the inception of the Convertible Promissory Note, the Company determined a fair
value of $72,119 of the embedded derivative. The fair value of the embedded
derivative was determined using the Black Scholes Model based on the following
assumptions:
Dividend yield:
|
|
0%
|
|
Volatility
|
|
392.28%
|
|
Risk free rate:
|
|
0.51%
|
|
The initial fair values of the embedded debt derivative of
$18,000 was allocated as a debt discount up to the proceeds of the note with the
remainder $54,119 charged to operations as interest expense.
On December 3, 2015, the Company issued an aggregate of $17,000
Convertible Promissory Notes that matures in a specified period from the date of
issuance. These notes bear interest and is convertible into the Companys common
stock at any time at the holders option, at the conversion rate as specified in
the terms of the note.
The Company identified embedded derivatives related to the
Convertible Promissory Notes. These embedded derivatives included certain
conversion features. The accounting treatment of derivative financial
instruments requires that the Company record the fair value of the derivatives
as of the inception date of the Convertible Promissory Note and to adjust the
fair value as of each subsequent balance sheet date. At the inception of the
Convertible Promissory Note, the Company determined a fair value of $27,706 of
the embedded derivative. The fair value of the embedded derivative was
determined using the Black Scholes Model based on the following assumptions:
Dividend yield:
|
|
0%
|
|
Volatility
|
|
394.55%
|
|
Risk free rate:
|
|
0.57%
|
|
The initial fair values of the embedded debt derivative of
$17,000 was allocated as a debt discount up to the proceeds of the note with the
remainder $10,706 charged to operations as interest expense.
During the three and six months period ended December 31, 2015
the Company amortized the debt discount on all the notes of $149,379 and
$320,322 to operations as interest expense, respectively.
During the three and six months period ended December 31, 2014
the Company amortized the debt discount on all the notes of $875,252 and
$1,584,896 to operations as interest expense, respectively.
F-22
6. Convertible Promissory Notes
Continued
Derivative Liability- Debt
The fair value of the described embedded derivative on all debt
was valued at $1,015,698 and $1,646,448 at December 31, 2015 and June 30, 2015,
respectively, which was determined using the Black Scholes Model with the
following assumptions:
|
|
December
31, 2015
|
|
|
June 30,
2015
|
|
Dividend yield:
|
|
0%
|
|
|
0%
|
|
Volatility
|
|
314.39 -
459.51%
|
|
|
258.89%
|
|
Risk free rate:
|
|
.49% - 1.06 %
|
|
|
.11% - .64%
|
|
At December 31, 2015 and 2014, the Company adjusted the
recorded fair value of the derivative liability on debt to market resulting in
non-cash, non-operating gain of $1,070,492 and loss of $180,505 for the six
months ended December 31, 2015 and 2014, respectively. And for the three months
ending December 31, 2015 and December 31, 2014, the non-cash, non-operating gain
of $8,660,230 and loss of $423,387 was recorded respectively.
During the six months ended December 31, 2015 the Company
issued 4,087,472 no of shares of the Company common stock in settlement of
$116,043 of convertible note and interest.
During the six months ended December 31, 2015 the Company
reclassed the derivative liability debt of $261,331 to additional paid in
capital on conversion of convertible note.
The following table provides a summary of changes in fair value
of the Companys Level 3 financial liabilities as of December 31, 2015 and June
30, 2015:
|
|
Derivative
|
|
|
|
Liability
(convertible
|
|
|
|
promissory notes)
|
|
Balance, June 30, 2014
|
$
|
3,066,171
|
|
Initial fair value at note issuances
|
|
1,227,384
|
|
Fair value of liability at
note conversion
|
|
(3,174,990
|
)
|
Mark-to-market at June 30, 2014
|
|
527,883
|
|
Balance, June 30, 2015
|
$
|
1,646,448
|
|
Initial fair value at note issuances
|
|
701,073
|
|
Fair value of liability at
note conversion
|
|
(261,331
|
)
|
Mark-to-market at December 31, 2015
|
|
(1,070,492
|
)
|
Balance, December 31, 2015
|
$
|
1,015,698
|
|
|
|
|
|
Net gain for the period included in earnings relating to
the liabilities held at December 31, 2015
|
$
|
1,070,492
|
|
Derivative Liability- Warrants
Along with the promissory notes, the Company issued warrants
that bear a cashless exercise provision. The warrants also include anti-dilution
protection with respect to lower priced issuances of common stock or securities
convertible or exchangeable into common stock, which provision resulted in
derivative liability treatment under ASC 480. The warrants are recorded at fair
value using the Black-Scholes option pricing model and marked-to-market at each
reporting period, with the changes in the fair value recorded in the
consolidated statement of operations and comprehensive income (loss).
F-23
6. Convertible Promissory Notes
Continued
During the six months ended December 31, 2015 no warrants were
issued along with convertible note.
The fair value of the described embedded derivative on all
warrants was valued at $749,582 at December 31, 2015 and $143,375 at June 30,
2015 which was determined using the Black Scholes Model with the following
assumptions:
|
|
December 31, 2015
|
|
|
June 30, 2015
|
|
Dividend yield:
|
|
0%
|
|
|
0%
|
|
Volatility
|
|
248,6%
|
|
|
288.96%
|
|
Risk free rate:
|
|
1.31%
1.76%
|
|
|
1.01% - 1.63%
|
|
|
|
Warrants
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
Outstanding
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
|
Exercise
|
|
|
Remaining
|
|
|
|
|
|
|
Price
|
|
|
life
|
|
Balance, June 30, 2014
|
|
15,204
|
|
$
|
242.57
|
|
|
2.62 years
|
|
Warrants issued
|
|
19,104
|
|
|
236.92
|
|
|
4.46 years
|
|
Exercised
|
|
(5,927
|
)
|
|
257.08
|
|
|
-
|
|
Cancelled
|
|
-
|
|
|
-
|
|
|
-
|
|
Expired
|
|
(1,289
|
)
|
|
240.00
|
|
|
-
|
|
Balance, June 30, 2015
|
|
27,092
|
|
$
|
100.98
|
|
|
3.79 years
|
|
Warrants issued
|
|
-
|
|
|
-
|
|
|
-
|
|
Exercised
|
|
-
|
|
|
-
|
|
|
-
|
|
Cancelled
|
|
-
|
|
|
-
|
|
|
-
|
|
Expired
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
27,092
|
|
$
|
100.98
|
|
|
3.29 years
|
|
The following table provides a summary of changes in fair value
of the Companys Level 3 financial liabilities as of December 31, 2015 and June
30, 2015:
|
|
Derivative
|
|
|
|
Liability (warrants)
|
|
Balance, June 30, 2014
|
$
|
5,416,000
|
|
Initial fair value of warrant derivatives at
note issuances
|
|
791,407
|
|
Fair value of warrant
exercised
|
|
(2,730,022
|
)
|
Mark-to-market at June 30, 2014 warrant liability
|
|
(3,334,009
|
)
|
Balance, June 30, 2015
|
$
|
143,376
|
|
Initial fair value of warrant derivatives at
note issuances
|
|
-
|
|
Fair value of warrant
exercised
|
|
-
|
|
Mark-to-market at December 31, 2015 warrant liability
|
|
606,206
|
|
Balance, December 31, 2015
|
$
|
749,582
|
|
|
|
|
|
Net loss for the period included in earnings relating to
the liabilities held at December 31, 2015
|
$
|
749,582
|
|
At December 31, 2015 and 2014, the Company adjusted the
recorded fair value of the derivative liability on warrants to market resulting
in non-cash, non-operating loss of $606,206 and gain of $3,098,801 for the six
months ended December 31, 2015 and 2014, respectively. Non-cash, non-operating
gain of $245,829 and gain of $118,255 was recorded for the three months ended
December 30, 2015 and December 30, 2014 respectively.
During the six months ended December 31, 2015 the Company
reclassed the derivative liability on warrants of $0 to additional paid in
capital on exercise of warrants.
F-24
7. Related Party Transactions
During the six months ended December 31, 2015, the Company
incurred consulting fees of $1,115 (June 30, 2015 - $157,086) with directors and
officers out of which there were no stock payments (June 30, 2015 - $58,990 were
paid by issuance of 2,167 shares of the Company common stock).
As of December 31, 2015, the Company repaid to a director for a
non-interest bearing demand loan of $nil (Note 9) (June 30, 2015 payable
$47,537).
These transactions are in the normal course of operations and
are measured at the exchange amount of consideration established and agreed to
by the related parties.
8. Going Concern and Liquidity Considerations
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern, which
contemplates, among other things, the realization of assets and satisfaction of
liabilities in the normal course of business. As at December 31, 2015, the
Company had a working capital deficiency of $2,890,554 (June 30, 2015 -
$2,456,477) and an accumulated deficit of $50,329,265 (June 30, 2015 -
$49,504,350). The Company intends to fund operations through equity financing
arrangements, which may be insufficient to fund its capital expenditures,
working capital and other cash requirements for the next twelve months.
The ability of the Company to emerge from the exploration stage
is dependent upon, among other things, obtaining additional financing to
continue operations, explore and develop the mineral properties and the
discovery, development and sale of ore reserves.
In response to these problems, management intends to raise
additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the
Companys ability to continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
9. Commitments and Contingencies
Employment Agreements
On January 12, 2014, the Company entered into an employment
agreement with a director and officer. Commencing on January 12, 2014, the
director and officer will be employed for 24 months ending on January 12, 2016.
Pursuant to the agreement, annual salary of US$120,000 is payable monthly in
cash or if the Company does not have available cash, in shares of the Companys
common stock.
F-25
9. Commitments and Contingencies -
Continued
Consulting Agreements
On January 1, 2014, the Company entered in a consulting
agreement with a consultants to provide services as members of the Board of
Directors in regards to the Companys management and operations. The
compensation for the services to be provided will be $12,000 payable monthly in
cash or if the Company does not have available cash, in shares of the Companys
common stock. The consulting agreement was amended on October 22, 2014 to
include an additional aggregate of $30,000 payable as of October 22, 2014 in
cash or in shares of the Companys common stock, and changed the term of agreement from 12 months to 10 months. Effective November 1,
2014, the consultant resigned as member of the Board of Directors.
On April 28, 2014, the Company entered into a consulting
agreement with a consultant to provide services as members of the Board of
Directors in regards to the Companys management and operations. Pursuant to the
terms of the agreement, the consultant will receive compensation of $12,000 in
unregistered restricted common shares of the Company's common stock at a deemed
value of $200.0 per share, issuable on May 15, 2014, effective April 28, 2014 to
April 27, 2015. The consultant resigned as member of the Board of Directors and
these shares were not issued.
On May 30, 2014, the Company entered into a consulting
agreement with a consultant to provide services as member of the Board of
Directors in regards to the Companys management and operation. The compensation
for the services to be provided will be $10,000 per month payable in common
stock of the Company from a period of six months from the effective date of May
30, 2014.
On August 1, 2014, the Company entered into a consulting
agreement with a consultant to provide advice relative to corporate and business
services and to perform other related activities. Pursuant to the terms of the
agreement, the Company will issue 500 common shares of the Company valued at
$68,000. These shares were issued in full effective October 22, 2014.
Lease Commitment
On May 15, 2014, the Company entered into a sublease agreement
for a term of twenty four and one half months and expiring on May 31, 2016.
Future minimum rental payments required under operating lease (exclusive of
other additional rent payments) are $13,656.
Litigation
From time to time we may be a defendant and plaintiff in
various other legal proceedings arising in the normal course of our business.
Except as disclosed above, we are currently not a party to any material legal
proceedings or government actions, including any bankruptcy, receivership, or
similar proceedings. In addition, we are not aware of any known litigation or
liabilities involving the operators of our properties that could affect our
operations. Furthermore, as of the date of this Annual Report, our management is
not aware of any proceedings to which any of our directors, officers, or
affiliates, or any associate of any such director, officer, affiliate, or
security holder is a party adverse to our company or has a material interest
adverse to us.
10. Loan Receivable
Secured Bridge Loan Agreement
On December 18, 2013, the Company entered into an agreement
with GD Glottech International Ltd (GDGI) whereby the Company loaned to GDGI
the sum of $20,000. GDGI will repay the total amount of the loan plus interest
in the amount of $333.34 (representing a 10% annual interest rate), within sixty
(60) days from the receipt of the loan funds or within five (5) days of Sonic
Cavitation, LLC receiving a 5% Capital Contribution.
On April 21, 2014, the Company entered into an amended
agreement with Sonic Cavitation, whereby Sonic Cavitation agreed to facilitate
the construction of one sonic cavitation generator. The Company agreed to pay
Sonic Cavitation a consulting fee of $20,000 upon execution of the agreement and
forgive the sum of $20,000 debt upon delivery of the prototype by Sonic
Cavitation. The agreement has been executed, however the delivery of the
prototype has not yet fulfilled.
During the six months ending December 31, 2015, the directors
of the company decided that the loan is irrecoverable and has been written off
to $nil.
F-26
11. Discontinued Operations
On September 4, 2015, the Company entered into an Asset
Purchase agreement whereby the Company sells the net assets of Alta Disposal
Morinville Ltd. (of which the Company had acquired 51% interest on October 18,
2013) for total purchase price of CDN$10,000.
Operating results for the period ended December 31, 2015 and
2014 for Alta Disposal Morinville Ltd. are presented as discontinued operations
and the assets and liabilities classified as held for sale are presented
separately in the consolidated balance sheet.
A breakdown of the discontinued operations is presented as
follow:
Consolidated Statements of Operations and Comprehensive
Loss
|
|
December 31,
|
|
|
December
|
|
|
|
2015
|
|
|
31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
-
|
|
$
|
41,300
|
|
Selling, general and administrative
|
$
|
(78,570
|
)
|
|
(323,187
|
)
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
$
|
(78,570
|
)
|
$
|
(281,887
|
)
|
Consolidated Balance Sheets
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2015
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
1,189
|
|
$
|
46,731
|
|
Receivable, net
|
|
7,016
|
|
|
28,160
|
|
Prepaid expenses
|
|
-
|
|
|
-
|
|
GST Receivable
|
|
14,931
|
|
|
-
|
|
Impairment of net assets
|
|
-
|
|
|
(60,178
|
)
|
|
|
|
|
|
|
|
|
$
|
23,136
|
|
|
14,713
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
6,034
|
|
$
|
6,696
|
|
12. Subsequent Events
On January 27, 2016, the Company entered into an agreement with
an investor. Pursuant to the terms of the agreement, the investor acquired a 10%
convertible note with an aggregate face value of $5,500, with an issuance
discount of $500 and maturity of one year. The holder of this note is entitled,
at its option, to convert all or a part of the principal outstanding at the date
into shares of the companys common stock.
F-27
12. Subsequent Events -
Continued
On January 27, 2016, the Company entered into an agreement with
an investor. Pursuant to the terms of the agreement, the investor acquired a 10%
convertible note with an aggregate face value of $24,750, with an issuance
discount of $2,250 and legal fees of $2,500. The note matures in one year. The
holder of this note is entitled, at its option, to convert all or a part of the
principal outstanding at the date into shares of the companys common stock.
On March 1, 2016, the Company entered into an agreement with an
investor. Pursuant to the terms of the agreement, the investor acquired a 10%
convertible note with an aggregate face value of $13,200, with an issuance
discount of $1,200 and $2,000 of legal fees. The note matures in one year. The
holder of this note is entitled, at its option, to convert all or a part of the
principal outstanding at the date into shares of the companys common stock.
Subsequent to the issuance of June 30, 2015 financial
statements, management determined that the warrants issued were incorrectly
valued and derivative liability on the conversion option embedded in convertible
notes was not recognized and during the six months period ending December 31,
2015, these warrants were revalued and a derivative liability on the conversion
option was calculated. As a result of revaluation of the warrants, the
consolidated balance sheet for the year ending June 30, 2015, the consolidated
statements of operations and comprehensive income (loss) and consolidated
statement of cash flows for the six months period ending December 31, 2014 and
consolidated statements of changes in stockholders deficit for the period
ending June 30, 2014 and June 30, 2015 were restated.
The Company has evaluated subsequent events from January 1,
2016, through the date of this report, and determined there are no other items
to disclose.
13. Restatement to previously issued financial statements
The following tables reflect the corrections to the affected
line items in the previously issued financial statements as of and for the years
ended June 30, 2015 and for the period ended December 31, 2014.
Effect on Condensed Consolidated Balance Sheet
|
|
Year ended
June 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously
|
|
|
Effect of
|
|
|
As Restated
|
|
|
|
reported
|
|
|
Restatement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
64,099
|
|
$
|
-
|
|
$
|
64,099
|
|
Receivable
|
|
13,421
|
|
|
-
|
|
|
13,421
|
|
Loan receivable
|
|
20,000
|
|
|
-
|
|
|
20,000
|
|
Prepaid expenses
|
|
2,788
|
|
|
-
|
|
|
2,788
|
|
Current assets held for sale
|
|
14,713
|
|
|
-
|
|
|
14,713
|
|
Total current assets
|
|
115,021
|
|
|
-
|
|
|
115,021
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
115,021
|
|
$
|
-
|
|
$
|
115,021
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities (note 9)
|
$
|
65,962
|
|
$
|
-
|
|
$
|
65,962
|
|
Derivative
liability warrants (Note 6)
|
|
3,134
|
|
|
140,241
|
|
|
143,375
|
|
Derivative liability
convertible promissory notes (Note 6)
|
|
-
|
|
|
1,646,448
|
|
|
1,646,448
|
|
Due to related
party (Note 7 and 9)
|
|
115,000
|
|
|
-
|
|
|
115,000
|
|
Convertible promissory notes
(Note 6)
|
|
300,887
|
|
|
233,107
|
|
|
533,994
|
|
Accrued interest
convertible promissory notes (Note 6)
|
|
60,022
|
|
|
-
|
|
|
60,022
|
|
Liabilities of discontinued operations
|
|
6,696
|
|
|
-
|
|
|
6,696
|
|
Total Current Liabilities
|
$
|
551,701
|
|
$
|
2,019,796
|
|
$
|
2,571,497
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS DEFICIT
|
|
|
|
|
|
|
|
|
|
Capital stock (Note
3)
Authorized:
100,000,000
preferred shares, $0.001 par
value
10,000,000,000 common shares, $0.001 par
value
Issued and
outstanding:
Nil preferred shares
|
|
-
|
|
|
-
|
|
|
-
|
|
7,574,353
common shares
|
|
7,575
|
|
|
-
|
|
|
7,575
|
|
Additional paid-in capital
|
|
43,165,743
|
|
|
4,217,489
|
|
|
47,383,232
|
|
Accumulated other
comprehensive loss
|
|
(29,484
|
)
|
|
-
|
|
|
(29,484
|
)
|
Deficit accumulated during the exploration
|
|
(43,267,064
|
)
|
|
(6,237,285
|
)
|
|
(49,504,349
|
)
|
Total Lithium Exploration Group, Inc. Stockholders
Deficit
|
|
(123,230
|
)
|
|
(2,019,796
|
)
|
|
(2,143,026
|
)
|
Non-controlling interest
|
|
(313,450
|
)
|
|
-
|
|
|
(313,450
|
)
|
Total Stockholders Deficit
|
|
(436,680
|
)
|
|
(2,019,796
|
)
|
|
(2,456,476
|
)
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Deficit
|
$
|
115,021
|
|
$
|
-
|
|
$
|
115,021
|
|
F-28
13. Restatement to previously issued financial statements -
continued
Effect on Condensed Consolidated Statement of Operations and
Comprehensive Income (Loss)
|
|
Six months
ended December 31, 2014
|
|
|
|
As previously
|
|
|
Effect of
|
|
|
|
|
|
|
reported
|
|
|
Restatement
|
|
|
As Restated
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
41,300
|
|
$
|
(41,300
|
)
|
$
|
-
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
Mining (Notes 3 & 5)
|
|
15,000
|
|
|
-
|
|
|
15,000
|
|
Selling, general and administrative (Notes 3
& 5)
|
|
908,916
|
|
|
(323,188
|
)
|
|
585,728
|
|
Total operating
expenses
|
|
923,916
|
|
|
(323,188
|
)
|
|
600,728
|
|
(Loss) from operations
|
|
(882,616
|
)
|
|
(281,888
|
)
|
|
(600,728
|
)
|
Other income
(expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (Note 6)
|
|
(2,671,540
|
)
|
|
1,635,637
|
|
|
(1,035,903
|
)
|
Gain on change in the fair value of
derivative liability (Note 6)
|
|
2,818,577
|
|
|
99,720
|
|
|
2,918,297
|
|
Fair Value of Warrants issued
|
|
(97,070
|
)
|
|
(97,070
|
)
|
|
-
|
|
Amortization of discount on debt discount
|
|
-
|
|
|
(1,584,896
|
)
|
|
(1,584,896
|
)
|
Equity in income of
investment held for sale
|
|
6,145
|
|
|
-
|
|
|
6,145
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) before income
taxes
|
|
(826,504
|
)
|
|
529,419
|
|
|
(297,085
|
)
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
(Note 4)
|
|
-
|
|
|
-
|
|
|
-
|
|
(Loss) from continuing operations
|
|
(826,504
|
)
|
|
529,419
|
|
|
(297,085
|
)
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued operations
|
|
-
|
|
|
(281,887
|
)
|
|
(281,887
|
)
|
Net (loss)
|
|
(826,504
|
)
|
|
247,532
|
|
|
(578,972
|
)
|
Less: Net (loss) attributable to the
non-controlling interest
|
|
(138,125
|
)
|
|
-
|
|
|
(138,125
|
)
|
Net (loss) attributable to
Lithium Exploration Group, Inc. Common
shareholders
|
$
|
(688,379
|
)
|
$
|
247,532
|
|
$
|
(440,847
|
)
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted (loss)
per Common Share
|
|
0.00
|
|
|
(3.22
|
)
|
|
(3.22
|
)
|
Basic and Diluted Weighted Average Number
of Common Shares
Outstanding
|
|
547,109,178
|
|
|
(546,972,401
|
)
|
|
136,777
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive (loss) :
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
(826,504
|
)
|
|
247,532
|
|
|
(578,972
|
)
|
Foreign currency translation adjustment
|
|
(7,834
|
)
|
|
-
|
|
|
(7,834
|
)
|
Comprehensive (loss)
|
|
(834,338
|
)
|
|
247,532
|
|
|
(586,806
|
)
|
Comprehensive (loss) attributable to
non-controlling interest
|
|
(138,125
|
)
|
|
-
|
|
|
(138,125
|
)
|
Comprehensive (loss)
attributable to Lithium Exploration Group,
Inc.
|
$
|
(696,213
|
)
|
$
|
247,532
|
|
$
|
(448,681
|
)
|
F-29
13. Restatement to previously issued financial statements -
continued
Effect on Condensed Consolidated Statements of Cash Flows
|
|
Six months
ending December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As previously
|
|
|
Misstatement
|
|
|
As Restated
|
|
|
|
reported
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating
Activities
|
|
|
|
|
|
|
|
|
|
Net (loss) from continuing
operations
|
$
|
(826,504
|
)
|
$
|
529,419
|
|
$
|
(297,085
|
)
|
|
|
|
|
|
|
|
|
|
|
(Loss) from discontinued
operations
|
|
-
|
|
|
(281,887
|
)
|
|
(281,887
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Equity in income of investment held for sale
|
|
(6,145
|
)
|
|
-
|
|
|
(6,145
|
)
|
Common shares issued for consulting fees
|
|
118,990
|
|
|
-
|
|
|
118,990
|
|
Interest expense
|
|
2,544,024
|
|
|
(1,635,637
|
)
|
|
908,387
|
|
Amortization of discount on derivative liabilities
|
|
-
|
|
|
1,584,896
|
|
|
1,584,896
|
|
Bad
debt written-off
|
|
-
|
|
|
-
|
|
|
-
|
|
Common shares issued for interest expenses
|
|
99,567
|
|
|
-
|
|
|
99,567
|
|
Gain
on change in the fair value of derivative liability
|
|
(2,818,577
|
)
|
|
99,720
|
|
|
(2,918,297
|
)
|
Fair value of warrants issued
|
|
97,070
|
|
|
(97,070
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Receivable, net
|
|
(1,749
|
)
|
|
1,749
|
|
|
-
|
|
Prepaid expenses
|
|
19,074
|
|
|
(2,464
|
)
|
|
16,610
|
|
Accrued interest
|
|
27,949
|
|
|
-
|
|
|
27,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
62,497
|
|
|
(28,812
|
)
|
|
33,685
|
|
Net cash used in operating
activities from continuing operations
|
|
(683,804
|
)
|
|
(29,527
|
)
|
|
(713,331
|
)
|
Net
cash provided by operating activities from discontinued operations
|
|
-
|
|
|
15,779
|
|
|
15,779
|
|
Net cash used in operating activities
|
|
(683,804
|
)
|
|
(13,748
|
)
|
|
(697,552
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
Repayment of
related party
|
|
(45,332
|
)
|
|
-
|
|
|
(45,332
|
)
|
Proceed from issuance of convertible promissory
notes
|
|
750,000
|
|
|
-
|
|
|
750,000
|
|
Net cash provided by financing activities
|
|
704,668
|
|
|
-
|
|
|
704,668
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange
|
|
(7,834
|
)
|
|
-
|
|
|
(7,834
|
)
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
|
13,030
|
|
|
(13,746
|
)
|
|
(718
|
)
|
Cash and cash equivalents - beginning of period
|
|
69,732
|
|
|
(12,100
|
)
|
|
57,632
|
|
Cash and cash equivalents - end of period
|
$
|
82,762
|
|
$
|
(25,846
|
)
|
$
|
59,914
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure
of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
$
|
2,205
|
|
|
(2,205
|
)
|
$
|
-
|
|
Income taxes
|
$
|
-
|
|
|
|
|
$
|
-
|
|
Supplementary non- cash
Investing and Financing
Activities:
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing
activities
:
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt
conversion
|
$
|
2,493,048
|
|
$
|
(1,018,846
|
)
|
$
|
1,474,202
|
|
Transfer of beneficial conversion feature to fair
value of note
|
$
|
408,962
|
|
$
|
(408,962
|
)
|
$
|
-
|
|
Common stock issued on cashless
exercise of warrants
|
$
|
766,675
|
|
$
|
1,605,259
|
|
$
|
2,371,934
|
|
Derivative liability re-classed to additional paid in
capital
|
$
|
-
|
|
$
|
2,286,445
|
|
$
|
2,286,445
|
|
Debt discount on convertible note and
warrants
|
$
|
-
|
|
$
|
743,481
|
|
$
|
743,481
|
|
Initial derivative liability on note issuance
|
$
|
-
|
|
$
|
1,642,368
|
|
$
|
1,642,368
|
|
F-30
13. Restatement to previously issued financial statements -
continued
Effect on Condensed Consolidated Statements of Changes in
Stockholders Deficit
|
|
Year ended
June 30, 2015
|
|
|
|
As previously
|
|
|
Misstatement
|
|
|
As Restated
|
|
|
|
reported
|
|
|
Adjustment
|
|
|
|
|
Additional Paid in
Capital
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
$
|
38,573,856
|
|
$
|
538,043
|
|
$
|
39,111,899
|
|
Common shares issued for debt
conversion
|
|
3,636,984
|
|
|
(1,457,586
|
)
|
|
2,179,398
|
|
Common shares issued for exercise of warrants
|
|
767,879
|
|
|
1,962,041
|
|
|
2,729,920
|
|
Common shares issued for
reclassification of
|
|
|
|
|
|
|
|
|
|
derivative liability on convertible notes
|
|
-
|
|
|
3,174,990
|
|
|
3,174,990
|
|
Closing Balance
|
$
|
43,165,743
|
|
$
|
4,217,488
|
|
$
|
47,383,231
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
$
|
(40,821,871
|
)
|
$
|
(6,166,108
|
)
|
$
|
(46,987,979
|
)
|
Net Income (Loss) for the year
|
|
(2,445,193
|
)
|
|
(71,176
|
)
|
|
(2,516,369
|
)
|
Closing Balance
|
$
|
(43,267,064
|
)
|
$
|
(6,237,283
|
)
|
$
|
(49,504,347
|
)
|
|
|
|
|
|
|
|
|
|
|
Total Equity
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
$
|
(2,355,136
|
)
|
$
|
(5,628,065
|
)
|
$
|
(7,983,201
|
)
|
Common shares issued for consulting fees
|
|
118,990
|
|
|
|
|
|
118,990
|
|
Common shares issued for
investor relations
|
|
68,000
|
|
|
|
|
|
68,000
|
|
Common shares issued for exercise of warrants
|
|
767,981
|
|
|
1,962,039
|
|
|
2,730,020
|
|
Common shares issued for debt
conversion
|
|
3,644,405
|
|
|
(1,457,585
|
)
|
|
2,186,820
|
|
Common shares issued for reclassification of
|
|
|
|
|
|
|
|
|
|
derivative liability on
convertible notes
|
|
-
|
|
|
3,174,990
|
|
|
3,174,990
|
|
Common shares issued to trust
|
|
38
|
|
|
-
|
|
|
38
|
|
Foreign exchange translation
|
|
(23,715
|
)
|
|
|
|
|
(23,715
|
)
|
Net
Income (Loss) for the year
|
|
(2,657,243
|
)
|
|
(71,176
|
)
|
|
(2,728,419
|
)
|
Closing Balance
|
$
|
(436,680
|
)
|
$
|
(2,019,797
|
)
|
$
|
(2,456,477
|
)
|
F-31
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
may, should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, that may cause our or our
industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited condensed consolidated financial statements are
stated in United States Dollars (US$) and are prepared in accordance with United
States Generally Accepted Accounting Principles. The following discussion should
be read in conjunction with our financial statements and the related notes that
appear elsewhere in this quarterly report. The following discussion contains
forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this quarterly report.
Unless otherwise specified in this quarterly report, all dollar
amounts are expressed in United States dollars and all references to common
stock refer to shares of our common stock.
As used in this quarterly report, the terms we, us, our
company, mean Lithium Exploration Group, Inc. a Nevada corporation, and our
wholly owned subsidiary, Alta Disposal Ltd., an Alberta, Canada corporation, our
partially owned subsidiary, Alta Disposal Morinville Ltd., an Alberta, Canada
corporation, unless otherwise indicated.
Corporate History
We were incorporated on May 31, 2006 in the State of Nevada
under the name Mariposa Resources, Ltd.. Effective November 30, 2010, we
changed our name to Lithium Exploration Group, Inc., by way of a merger with
our wholly-owned subsidiary Lithium Exploration Group, Inc., which was formed
solely for the change of name.
Our executive offices are located at 3800 N Central Avenue,
Suite 820, Phoenix, AZ 85012, and our telephone number is (480) 641-4790. We
also have an office at 840 6th Ave SW Suite 300, Calgary, Alberta T2P 3E5. The
phone number for our Calgary office is 403-930-1925.
5
On October 18, 2013, our company, through our then wholly owned
subsidiary, Alta Disposal Ltd. (formerly 1617437 Alberta Ltd.), an Alberta,
Canada corporation, completed the acquisition of 51% of the shares of Blue Tap
Resources Inc. for total payment of CAD$466,547. As of September 30, 2013, CDN
$300,000 (US$294,908) was paid regarding the acquisition. As a result of the
share acquisition, Blue Tap Resources Inc. is now a partially owned subsidiary
of our company through our wholly owned subsidiary, Alta Disposal Ltd. On
January 22, 2014, Blue Tap Resources Inc. changed its name to Alta Disposal
Morinville Ltd.
On August 20, 2013, we entered into a letter of intent with
Tero Oilfield Services Ltd., a private company, pursuant to which Tero agreed to
sell up to 75% of the issued and outstanding common shares of Tero to our
company in exchange for payment in the amount of $1,500,000.
On March 1, 2014, Alta Disposal Ltd., our wholly-owned
subsidiary, entered into a share purchase agreement with Tero and Garry Hofmann,
the sole shareholder of Tero. Pursuant to the agreement, Mr. Hofmann agreed to
sell and we agreed to purchase 50% of the issued and outstanding common shares
of Tero in exchange for an aggregate of CAD$1,000,000. As part of the share
purchase by Alta Disposal, on February 22, 2014, Tero declared a dividend in the
amount of $307,104, payable to Mr. Hofmann by way of a promissory note. As a
result of the share purchase agreement, Tero is now a partially owned (50%)
subsidiary of our company.
Additionally, Alta Disposal, Tero and Mr. Hofmann entered into
an option agreement entitling Alta Disposal to purchase up to an additional 25%
of the issued and outstanding common shares of Tero from Mr. Hofmann exercisable
at a price of $500,000 for a period of one year. We have subsequently sold our
interest in Tero on May 1, 2015 as further described below.
On October 17, 2014, we amended our Articles of Incorporation,
which amendment was filed with the Nevada Secretary of State on October 17,
2014, to increase the authorized capital of our common shares from 500,000,000
common shares, par value $0.001 to 2,000,000,000 common shares, par value
$0.001. Our authorized capital consists of 2,000,000,000 common shares and
100,000,000 preferred shares, all with a par value of $0.001.
On January 19, 2015, we received written consent from our
companys board of directors to effect a reverse stock split of our issued and
outstanding shares of common stock on a basis of 20 old shares of common stock
for 1 new share of common stock. Stockholders of our company originally approved
the reverse stock split on October 14, 2014 at a special meeting. Our authorized
capital will not be affected by the reverse stock split.
On May 1, 2015, our company entered into a share purchase
agreement with an individual and disposed of our 50% interest in Tero in
consideration of $300,000.
On June 22, 2015, in accordance with our articles of
incorporation, our board of Directors has designated 250,000 of our 100,000,000
authorized shares of Preferred Stock as Series A Preferred Stock. The Series
A Preferred Stock, par value $0.001, will rank senior to our common stock,
carrying general voting rights with the common stock at the rate of 62 votes per
share. The Series A Preferred Stock will be deemed cancelled within 1 year of
issuance and are not entitled to share in dividends or other distributions. So
long as any shares of Series A Preferred Stock are outstanding, the affirmative vote of not
less than 75% of those outstanding shares of Series A Preferred Stock will be
required for any change to our Articles of Incorporation.
6
On July 9, 2015 our board of directors approved a settlement
agreement dated June 25, 2015 among our company, JDF Capital Inc., and our
wholly owned subsidiary, Alta Disposal Ltd. Previously, pursuant to a General
Security Agreement dated July 22, 2014, JDF Capital Inc. was granted a first
ranking security interest over all current and future assets of Alta Disposal
Ltd. in full guarantee of $708,000 loan to our Company. Pursuant to the
Settlement Agreement, JDF Capital Inc. and its assign, Blue Citi LLC, have
agreed to release and discharge their general security interest in consideration
of the issuance of 130,000 shares of Series A Preferred Stock. The 130,000
shares of Series A Preferred Stock were relinquished and cancelled by
agreement with Blue Citi effective December 5, 2015 .
Effective September 4, 2015, our company entered into an Asset
Purchase Agreement with Cancen Oil Canada whereby we sold all right, title and
interest of Alta Disposal Morinville Ltd. assets for total purchase price of
CAD$10,000 (approximately USD$7,531.25) .
On July 13, 2015 our company's directors approved an increase
to our authorized capital from 2,000,000,000 shares of common stock, par value
$0.001 to 10,000,000,000 shares of common stock, par value of $0.001 per share
and a reverse stock split on a basis of up to 200 old shares of common stock for
one (1) share of common stock. The increase of authorized capital and stock
split was approved by shareholders on July 13, 2015. A Definitive Schedule 14C
was filed with United States Securities and Exchange Commission ("SEC") on
August 6, 2015. On September 9, 2015, we filed with the Nevada Secretary of
State a Certificate of Amendment increasing our authorized capital from
2,000,000,000 shares of common stock, par value $0.001 to 10,000,000,000 shares
of common stock, par value of $0.001 per share. The reverse split became
effective with the Over-the-Counter Bulletin Board at the opening of trading on
September 30, 2015. Effective September 30, 2015, our new CUSIP number is
53680P308.
Other than as set out herein, we have not been involved in any
bankruptcy, receivership or similar proceedings, nor have we been a party to any
material reclassification, merger, consolidation or purchase or sale of a
significant amount of assets not in the ordinary course of our business.
Disclosure Adjustments for Reverse Stock Split
On January 19, 2015, our board of directors consented to effect
a reverse stock split of our issued and outstanding shares of common stock on a
basis of 20 old shares of common stock for one 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FINRA effective
February 25, 2015. Our authorized capital was not affected by the reverse stock
split.
On July 13, 2015, our board of directors consented to effect a
reverse stock split of our issued and outstanding shares of common stock on a
basis of 200 old shares of common stock for 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FINRA effective September 30, 2015. Our authorized capital was
not affected by the reverse stock split.
7
In this Quarterly Report and in the accompanying financial
statements and notes, the above described reverse splits are reflected
retrospectively in the descriptions of shares and warrants, and their
corresponding issuance and exercise prices, except where otherwise indicated.
Our Current Business
We are corporation engaged principally in the acquisition,
exploration, and development of resource properties. Through our subsidiary Alta
Disposal Morinville Ltd., we also operate in the waste water disposal industry.
Assignment Agreement with Lithium Exploration VIII Ltd.
On December 16, 2010, we entered into an assignment agreement
with Lithium Exploration VIII Ltd. (not related to our company) to acquire an
undivided 100% right, title and interest in and to certain mineral permits
located in the Province of Alberta, Canada. Lithium Exploration VIII and Golden
Virtue Resources Inc. (formerly First Lithium Resources Inc.) (not related to
our company) had entered into an underlying option agreement dated October 6,
2010, which option agreement and interest were assigned to our company.
On December 31, 2012, our company entered into an amending
agreement to amend an original payment requirement of the assignment agreement
of CAD$100,000 due on January 1, 2013 to the following payments:
|
|
CAD$20,000 (USD$20,000) cash payment due on
January 1, 2013; and
|
|
|
CAD$80,000 (USD$80,000) by a 15% one year
promissory note starting January 1, 2013.
|
The note was interest free until March 31, 2013. After March
31, 2013, interest accrued on the principal balance then in arrears at the rate
of 15% per annum. Payments were due and payable by December 31, 2013. Further,
at any time, Lithium Exploration VIII and Golden Virtue could elect to convert
the remaining balance of the note and accrued interest into common shares of our
company at 75% of the closing market price of our companys common shares on the
election day.
On July 3, 2013, Lithium Exploration VIII and Golden Virtue
elected to convert the note and accrued interest in the combined aggregate
amount of CAD$83,057.53 (USD$78,743) into common shares of our company. Pursuant
to this election, we issued an aggregate of 239 shares (on a pre-reverse split
basis) of our common stock at the price of USD$330 per share.
Glottech
On November 8, 2011, we entered into a letter agreement with
Glottech-USA. Pursuant to the terms of the agreement, we were granted an
exclusive license to use and distribute the technology within the Swan Hills region of Alberta as well as a
non-exclusive right to distribute the technology within Canada.
8
We previously made the following payments in association with
the production of a working unit of Glottech-USAs technology:
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$25,000 on March 21, 2011 in consideration for
entering into the letter agreement dated March 17, 2011;
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$75,000 on May 27, 2011 in consideration for
continuance of the March 17, 2011 agreement; and
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$700,000 on May 27, 2011 in consideration for a
licensing and technology payment.
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As part of the November 8, 2011 agreement, our officer and
director, Alexander Walsh, agreed to provide Glottech-USA with the option, for a
period of 12 months from delivery of the first unit, to acquire 500 shares (of
our common stock currently held by him , for a total price of $4,000 ($1
pre-reverse splits). Additionally, if, for any reason, Mr. Walsh failed to
deliver the 500shares of our common stock to Glottech-USA, we agreed to issue
the shares from treasury.
On June 12, 2012, we filed a complaint against Glottech-USA in
the Court of Common Pleas of Chester County, Pennsylvania, alleging that
Glottech-USA misused our funds and was in breach of our agreements that called
for Glottech-USA to deliver one initial unit of the mechanical ultrasound
technology. We further alleged that Glottech-USA was financially insolvent and
unable to fulfill its promises to us.On June 12, 2012, we filed a complaint with
the Court of Common Pleas of Chester County, Pennsylvania against Glottech-USA,
LLC, Eldredge, Inc., and the Eldredge Companies, Inc. Pursuant to an unopposed
motion, the Eldredge parties were dismissed in October of 2012. The complaint
initially sought an order of the Court granting possession of the initial unit.
Effective August 14, 2012, we entered into an option agreement
with GD Glottech International to protect our license and distribution rights in
the event that Glottech-USA became unable to perform and honor its obligations
to us.
Pursuant to the terms of the option agreement, we were required
to provide an initial amount of $150,000 to be held in escrow for the option to
obtain a license on the patent rights, as set forth in the option agreement. On
September 1, 2012, Glottech-USAs license to the technology expired and also on
September 1, 2012, we exercised this option agreement and released the funds to
GD Glottech International.
On October 1, 2012, we entered into a license agreement and a
sales agency agreement with GD Glottech, regarding GD Glottech Internationals
proprietary and patented mechanical ultrasound technology for use in water
purification in the process of separation of salt and other minerals from
lithium bearing brine produced from oil and gas operations. The license
agreement and sales agency agreement expands and replaces all prior agreements
among our company, GD Glottech International and Glottech-USA, LLC regarding our
rights to use and sell the mechanical ultrasound technology, included in our
letter of intent dated November 18, 2011, and our option agreement dated August
14, 2012.
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Pursuant to the sales agency agreement we were appointed as
sales agent for the patented mechanical ultrasound technology within Canada. Our
appointment is exclusive within the field of non petrochemical mining and
non-exclusive in all other fields of use. In consideration of the sales agency
rights, we agreed to issue to GD Glottech International 500 common shares of our
capital stock which obligation has been satisfied through the transfer to GD
Glottech International of 500 shares held by our officer and director, Alexander
Walsh. It was the explicit intention of the parties that this share transfer
fulfills the prior obligations of Alexander Walsh and our company with respect
to the option contemplated in the March and November 2011 agreements with
Glottech-USA.
We will receive a royalty in respect of sales of the technology
secured by us. The term of the initial agreement will be for 5 years with the
possibility of extension if sales targets are achieved.
Pursuant to the license agreement, we obtained the exclusive
right to use the mechanical ultrasound technology within the field of
non-petrochemical mining within the territory of Canada. We may also sublicense
our rights under the license in respect of one or more units of the technology
to any entity operating within the field of use in which we own or beneficially
own at least a 20% equity interest. GD Glottech International agreed to supply
us with up to 5 technology units per 12-month period from the effective date of
the license term, which will start from the month of delivery of the unit of the
technology. The first unit of the technology provided under the license to be
provided at no additional cost to us and subsequent units shall be subject to a
fee based on the then current retail price of the units. If we sublicense any of
our rights, the term of the applicable license will be for 5 years from the date
the applicable unit is delivered. Pursuant to the license agreement, GD Glottech
International shall provide ongoing technical assistance and training in respect
of our use of the technology at our cost.
In consideration of the license, we will pay to GD Glottech
International a royalty based on the tonnage of water produced by our use of the
technology in accordance with the agreement. A minimum annual royalty will be
applicable. The term of the license agreement shall be for an initial period of
5 years and shall be renewable for additional terms of 5 years provided that we
satisfy the minimum royalty requirements during each period.
GD Glottech Internationals technology is designed to separate
suspended solids from water (brine), which is one step in the process that we
are taking to produce commercially viable minerals. The technology produces
extremely high temperatures, which destroy organic substances such as bacteria
and other toxic agents. We believe that GD Glottech Internationals technology
can provide lower costs of operation as well as reduced time for site clean-up
than traditional methods of water treatment. We anticipate using this
application to extract dissolved solids like lithium, potassium, and magnesium
from oil field brine. The disposal of produced water (brine) from oil and gas
production in Alberta is a significant environmental issue for the province and
presents a considerable economic issue for producers. We intend to use the
technology on our Valleyview Property in Alberta, in cooperation with oil and
gas producers, to treat and dispose of their produced water while monetizing the
minerals that are contained within that produced water stream that is being
brought to the surface during the oil and gas production process. As we own the
MAIM (Metals and Industrial Minerals) claims to the minerals on the Valleyview
Property, the minerals contained in their produced water stream fall under our
rights.
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While we have had discussions with oil and gas consultants and
oil operators regarding their difficulties in treating the brine at some of
their fields, we have no formal agreements in place.
The technical process is based on the use of mechanical
ultrasound generated through the production of a series of cavitations.
Mechanical ultrasound is a machine-produced sound of a frequency above the upper
limit of the normal range of human hearing. Cavitations are the rapid formation
and collapse of bubbles in liquids, caused by the movement of something such as
a propeller or by waves of high-frequency sound. The production of mechanical
ultrasound allows GD Glottech Internationals technology to distill the fluid
stock. Using mechanical ultrasound for distillation has been attempted before,
but the external energy requirement needed to produce the mechanical ultrasound
was far too expensive to make it commercially viable. GD Glottech
Internationals technology uses the energy released during the cavitations in
order to make it commercially viable from an economic perspective. During these
cavitations, a millisecond of energy is released. During this release,
temperatures can reach 5,000 degrees centigrade.
On August 27, 2012, we filed a motion to amend our complaint to
include claims of breach of trust and fiduciary duty, breach of good faith and
fair dealing, breach of contract, conversion of funds, fraud, and the imposition
of a constructive trust. We believe that this action was necessary to protect
our interests against possible misuse of funds by Glottech-USA, LLC and its
principals. On October 19, 2012, GD Glottech International moved to intervene as
an interested party in the litigation pending against Glottech-USA. GD Glottech
International cited its role as owner of the patents as a basis for intervening
in the litigation against Glottech-USA. We believe GD Glottech Internationals
entry into the litigation against Glottech-USA is favorable to our cause in the
litigation.
On October 22, 2012, the Court of Common Pleas in Chester
County, Pennsylvania, granted our motion to amend our complaint against
Glottech-USA to add claims for fraud and damages reflective of the malfeasance
which we allege against Glottech-USA and its officers.
On December 12, 2012, GD Glottech International removed the
management of Glottech-USA and appointed itself as the manager of Glottech-USA.
On the same day, Larry Nesbit, Mark Siegel and Ron Fender filed a motion to
dissolve Glottech-USA in Mississippi on the basis that Glottech-USA was unable
to meet its financial obligations and could not finish or deliver the unit to
us.
On December 19, 2012, an attorney purportedly acting on behalf
of Glottech-USA filed a motion in the lawsuit pending in Chester County,
Pennsylvania, seeking possession of the unit. In addition, Glottech-USA filed a
counterclaim seeking possession of the unit.
GD Glottech International immediately filed a motion to quash
Glottech-USAs motion and for sanctions against the law firm that filed the
motion. We also filed a motion, seeking disqualification of the law firm that
purported to represent Glottech-USA on the basis that the new management for
Glottech-USA had fired the law firm and, as such, the law firm no longer had
authority to represent Glottech-USA.
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On April 25, 2013, we attended a hearing on the motions pending
in the lawsuit filed in Chester County, Pennsylvania. The Court did not rule on
any of the motions and, instead, stayed the case as to Glottech-USA until
December of 2013 pending the outcome of the lawsuit seeking dissolution of
Glottech-USA. The matter in Pennsylvania is no longer stayed. An attorney
purporting to represent Glottech-USA and the receiver appointed in Mississippi
has filed motions and other documents that may move the matter forward. We have
pending preliminary objections to the counterclaim, including a request for a
determination of which group is in control of Glottech-USA.
Certain members of Glottech-USA continued to pursue dissolution
of the company in Mississippi. The members of Glottech-USA who seek dissolution
have stated in court filings that it is not practicable for Glottech-USA to
continue as an ongoing business. In addition, Sulzer filed suit against
Glottech-USA Texas for unfulfilled obligations.
We do not believe that Glottech-USA has sufficient capital to
continue as an ongoing business. We have provided full consideration to
Glottech-USA and complied with all other agreed upon terms. We believe any
assertions against us to lack merit.
Given pending litigation against Glottech-USA, and the
uncertainties naturally inherent of any litigation (particularly as to outcome
and timing thereof), we have moved to assure continuity of our licensing rights
through entering into, and exercising, the option to contract directly with the
technology inventor and patents owner, GD Glottech International. Thus,
regardless of the outcome of the litigation, or indeed any action or inaction of
Glottech-USA, our interest in the technology is assured.
On December 18, 2015 we withdrew our complaint against
Glottech-USA, LLC filed in the Court of Common Pleas in Chester County,
Pennsylvania. Concurrently, we released Glottech USA, LLC and its former
principals, Mark Seigel, Larry Nesbit and Ron Fender, from any and all claims
related to the complaint.
Alta Disposal Morinville Ltd. Acquisition
On June 11, 2013, we entered into a letter of intent with Alta
Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) pursuant to which we
agreed to acquire not less than 51% of the outstanding securities of Alta
Disposal Morinville in consideration of an aggregate investment of $450,000 in
Alta Disposal Morinvilles waste water disposal facility located in Morinville,
Alberta. The closing of the transaction was subject to a number of conditions
precedent, including but not limited to completion of due diligence and the
negotiation of a definitive long form agreement.
On July 29, 2013, in anticipation of the completion of a formal
agreement with Alta Disposal Morinville embodying the terms of the letter of
intent, we entered into a convertible debenture agreement with Alta Disposal
Morinville pursuant to which we agreed to deliver to Alta Disposal Morinville up
to CAD$300,000 (approximately USD$291,000) payable in two installments of
CAD$150,000 deliverable respectively upon execution of the convertible
debenture, and within 5 business days following receipt of regulatory approval
for the re-activation of Alta Disposal Morinvilles waste water disposal facility. Delivery of the
first and second installments totaling CAD$300,000 have been satisfied and the
acquisition was finalized as of October 18, 2013. The funds advanced are secured
against all present and future assets and undertakings of Alta Disposal
Morinville and are convertible at our option into a number of common shares of
Alta Disposal Morinville equal to 51% of its issued and outstanding voting
stock.
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Effective August 1, 2013, we entered into a joint venture
agreement with Alta Disposal Morinville pursuant to which our company and Alta
Disposal Morinville will operate certain lands and facilities including a
disposal well in the Morinville area of Alberta.
On October 18, 2013, we completed the acquisition of 51% of the
outstanding securities of Alta Disposal Morinville, pursuant to a letter of
intent with Alta Disposal Morinville dated June 11, 2013. As a result of the
share acquisition, Alta Disposal Morinville is now a partially owned subsidiary
of our company through our wholly owned subsidiary, Alta Disposal Ltd.
In accordance with the letter of intent, we acquired, through
our wholly owned subsidiary, Alta Disposal Ltd., 51% of the outstanding
securities of Alta Disposal Morinville (being 510,000 common shares) in
consideration of an aggregate investment of CDN$466,547 (approximately
USD$453,204) in Alta Disposal Morinvilles waste water disposal facility located
in Morinville, Alberta, where Alta Disposal Morinville holds a 100% working
interest in 17 freehold mineral leases. There are currently two standing natural
gas wells and one disposal well located on the leases, including water disposal
facilities, tanks and equipment. Payment of an initial CDN$300,000 (USD$291,000)
of the CDN$466,547 aggregate investment was made pursuant to a secured
convertible debenture which has been fully converted into common shares of Alta
Disposal Morinville. The Alta Disposal Morinville leases are subject to a 3%
gross overriding royalty held by Mr. Vincent Murphy pursuant to a gross
overriding royalty agreement dated June 30, 2013. The royalty is payable on all
fluids separated, treated, or otherwise enhanced for sale on the lease property.
The acquisition of Alta Disposal Morinville was completed
through our wholly owned subsidiary, Alta Disposal Ltd., which was formed in the
Province of Alberta for the primary purpose of the transaction with Alta
Disposal Morinville. Concurrent with the closing of the acquisition, Alta
Disposal entered into a unanimous shareholders and management agreement (the
Shareholders Agreement) dated October 18, 2013 with Excel Petroleum Ltd.
(which holds 49% of Alta Disposal Morinville) and Alta Disposal Morinville
itself.
Pursuant to the Shareholders Agreement, Alta Disposal may
continue to fund the current capital requirements of Alta Disposal Morinville up
to an aggregate of $420,000 in consideration of additional shares of Alta
Disposal Morinville at the rate of 163,250 shares (equivalent to approximately
5% of Alta Disposal Morinvilles common shares on a diluted basis) for each
$105,000 funded until Alta Disposal holds an aggregate of 70% of Alta Disposal
Morinvilles outstanding common shares. If Alta Disposal elects to fund the
on-going capital requirements of Alta Disposal Morinville beyond the aggregate
of $870,000, any such funds advanced by Alta Disposal will be deemed to be funds
loaned by Alta Disposal to Alta Disposal Morinville on a non-interest bearing,
unsecured bridge loan basis.
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Any such funds provided to Alta Disposal Morinville will be
repayable from cash flow generated by Alta Disposal Morinville. Funds loaned
prior to June 30, 2014 will not be due and payable until June 30, 2014 and
thereafter will not be due and payable until at least 6 months following the
date of any such loan.
Other terms of the Shareholders Agreement include:
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the board of directors of Alta Disposal
Morinville will consist of 3 directors including 2 nominees of Alta
Disposal and 1 nominee of Excel.
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Alexander Walsh will serve as chairman of the
board of directors, president and chief executive officer of Alta Disposal
Morinville.
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Approval of the shareholders holding not less than 60% of
Alta Disposal Morinville shares will be required to remove or appoint
officers of Alta Disposal Morinville.
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Unanimous approval of the shareholders will be required
in order to (i) effect capital alterations; (ii) declare dividends except
following the completion of a fiscal year end and on a pro-rata basis to
all shareholders; or (iii) wind-up; dissolve; or reorganize the
corporation or sell or lease substantially all of its assets.
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Alta Disposal will otherwise have sole discretion and
authority in respect of any and all management and operational decisions
relating to the corporation.
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Each shareholder of Alta Disposal Morinville
will have a right of first refusal to purchase all shares sought to be
sold by the other shareholder.
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Customary restrictions on the encumbrance and
disposition of shares.
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The Shareholders Agreement additionally provides for the
engagement of Valeura Energy Inc. as the operator of Alta Disposal Morinvilles
lands, wells, the facilities, pipelines and disposal wells pursuant to an
operating agreement between Alta Disposal Morinville and Valeura dated July 9,
2013. Valeura was to retain a 10% working interest in Alta Disposal Morinvilles
lands until completion of the initial work on the disposal well project and will
re-convey that interest to Alta Disposal Morinville provided that Alta Disposal
Morinville has paid Valeura a cash payment of $2,500 per month for acting as
operator of the disposal well and the lands and upon payment of an amount of
$10,000 to Valeura upon completion of the project. The disposal well work
program must be mutually approved by Alta Disposal Morinville and Valeura. Alta
Disposal Morinville will be responsible for all costs and expenses relating to
the work program. Effective September 4, 2015, our company entered into an Asset
Purchase Agreement with Cancen Oil Canada whereby we sold all right, title and
interest of Alta Disposal Morinville Ltd. assets for total purchase price of
CAD$10,000 (approximately USD$7,531.25) .
Tero Oilfield Services Ltd. Acquisition (and
Disposition)
On August 20, 2013, we entered into a letter of intent with
Tero Oilfield Services Ltd., a private company, pursuant to which Tero agreed to
sell up to 75% of the issued and outstanding common shares of Tero to our
company in exchange for payment in the amount of $1,500,000.
On March 1, 2014, Alta Disposal Ltd., our wholly-owned
subsidiary, entered into a share purchase agreement with Tero and Garry Hofmann,
the sole shareholder of Tero. Pursuant to the agreement, Mr. Hofmann agreed to sell and we agreed to purchase
50% of the issued and outstanding common shares of Tero (the
Tero
Shares
) in exchange for an aggregate of CAD$1,000,000. As part of the share
purchase by Alta Disposal, on February 22, 2014, Tero declared a dividend in the
amount of $307,104, payable to Mr. Hofmann by way of a promissory note.
14
Additionally, Alta Disposal, Tero and Mr. Hofmann entered into
an option agreement entitling Alta Disposal to purchase up to an additional 25%
of the issued and outstanding common shares of Tero from Mr. Hofmann exercisable
at a price of $500,000 for a period of one year.
Lastly, Alta Disposal, Tero and Mr. Hofmann entered into a
shareholders agreement concerning any potential financing by the shareholders
of Tero for the benefit of Teros operations. This agreement provides that the
shareholders of Tero, Alta Disposal and Mr. Hofmann, may by unanimous resolution
advance to Tero, upon demand by Tero, such funds as may be determined specified
by unanimous resolution, subject to the agreement.
Tero was a family owned waste disposal company. The waste
disposal facility had been under the same ownership since it began operations in
1997. In 2002, Tero successfully reclassified the original Class II well to a
Class IB disposal well and expanded the capabilities of the facility to handle
solid waste disposal. The facility is located near Wardlow, Alberta and is right
in the heart of the areas oil and gas producers. The nearest competing
commercial disposal companies are 75 kilometers away which presents Teros
facility with a large geographical advantage.
On May 1, 2015, our former subsidiary Alta Disposal entered
into a share purchase agreement with Natel Hofmann and Tero Oilfield Services
Ltd. for the sale of the Tero Shares by Alta Disposal to Ms. Hofmann in
consideration of an aggregate of $300,000. As at April 29, 2015, the purchase
price was paid in full.
Loans of Our Company
Since March 2014, our company has received various loans from
unrelated third party that are listed below. These loans are convertible into
shares of our company pursuant to the terms of the loan agreements. In the
descriptions below of the loans, the issuance of common shares pursuant to the
conversion of debt pursuant to convertible promissory notes, and the issuance of
common shares pursuant to the exercise of warrants, transactions are a on a post
reverse stock split basis. These adjustments include our first reverse share
split approved on January 19, 2015 (20 old shares of common stock for one (1)
new share of common stock), and our second reverse stock split approved by our
board of directors on July 13, 2015 (200 old shares of common stock for one (1)
new share of common stock). All the loans, convertible promissory notes, and
warrants include terms that make them subject to the share splits.
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Loan Agreements with JDF Capital Inc.
$500,000 Loan
On March 15, 2014, we entered into a securities purchase
agreement with JDF, pursuant to which JDF provided us with an aggregate
investment of $500,000 in consideration of our issuance of convertible
promissory notes and common share purchase warrants. We issued JDF a 10%
original issue discount convertible promissory note of $550,000 due September
15, 2015 and convertible into common shares on a cashless basis at a price per
share of 35% of the lower of lowest closing bid price of our common shares
during the prior 20 trading days prior to 1) the date of the purchase agreement
or 2) the day of the notice for conversion. The note bears interest, in arrears,
at a rate per annum equal to fifteen percent (15%) accruing on a semi-annual
basis commencing March 15, 2014 in cash or restricted shares of our companys
common stock, par value $0.001 per share at the option of the holder. During the
six months ended December 31, 2015, an interest expense of $8,362 (June 30, 2015
- $6,279) was accrued.
In addition on March 15, 2014, we issued an aggregate of 4,583
warrants to JDF in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$240.00 and expire after a term of three years. In the case that after six
months there is no registration statement available for the resale of our common
shares from exercising of these warrants, the warrants may be exercised on a
cashless basis at a price as set out in the warrant.
Pursuant to a partial sale and assignment agreement dated
February 27, 2015 among our company, JDF Capital Inc. and River North Equity,
LLC, JDF Capital assigned $100,000 portion of the March 15, 2014 note to River
North Equity.
On March 30, 2015, our directors approved an amendment to the
note. We amended and restated a $50,000 portion of the $550,000 note, into a new
promissory note to LG Capital Funding LLC, in the amount of $50,000 to provide
conversion features equal to 50% of the lowest closing price of the last 20
trading days prior to conversion, as well as 10% per annum interest and become
due and payable one year after the issuance date.
To date, we have issued the following securities in conversion
of the $400,000 portion of the March 15, 2014 convertible promissory note held
by JDF Capital:
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On September 23, 2014, we issued 455 common shares at a
deemed price of $10.90 per share for promissory note and interest
conversion of $5000.
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On October 3, 2014, we issued 2,500 common shares at a
deemed price of $10.00 per share for promissory note and interest
conversion of $25,000.
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On October 6, 2014, we issued 2,500 common shares at a
deemed price of $10.00 per share for promissory note and interest
conversion of $25000.00.
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On October 7, 2014, we issued 2,750 common shares at a
deemed price of $8.80 per share for promissory note and interest
conversion of $24,200.
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On October 13, 2014, we issued 3,409 common shares at a
deemed price of $8.80 per share for promissory note and interest
conversion of $30,000.
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On October 21, 2014, we issued 5,000 common shares at a
deemed price of $5.80 per share for promissory note and interest
conversion of $29,000.
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On October 31, 2014, we issued 3,750 common shares at a
deemed price of $04.60 per share for promissory note and interest
conversion of $17,250.
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On November 10, 2014, we issued 4,952 common shares at a
deemed price of $4.20 per share for promissory note and interest
conversion of $20,800.
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On November 13, 2014, we issued 5,000 common shares at a
deemed price of $3.60 per share for promissory note and interest
conversion of $18,000.
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On November 18, 2014, we issued 6,410 common shares at a
deemed price of $3.12 per share for promissory note and interest
conversion of $20,000.
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On December 1, 2014, we issued 7,500 common shares at a
deemed price of $2.80 per share for promissory note and interest
conversion of $21,000.
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On December 5, 2014, we issued 7,500 common shares at a
deemed price of $2.00 per share for promissory note and interest
conversion of $15,000.
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On December 8, 2014, we issued 8,750 common shares at a
deemed price of $1.40 per share for promissory note and interest
conversion of $12,250.
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On December 10, 2014, we issued 11,250 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $13,500.
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On December 15, 2014, we issued 12,500 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $15,000.
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On December 18, 2014, we issued 15,000 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $18,000.
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On April 1, 2015, we issued 19,110 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $22,932.
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On April 7, 2015, we issued 19,608 common shares at a
deemed price of $1.02 per share for promissory note and interest
conversion of $20,000.
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On April 10, 2015, we issued 25,000 common shares at a
deemed price of $0.61 per share for promissory note and interest
conversion of $15,250.
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On April 17, 2015, we issued 25,000 common shares at a
deemed price of $0.48 per share for promissory note and interest
conversion of $12,000.
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On April 17, 2015, we issued 25,000 common shares at a
deemed price of $0.40 per share for promissory note and interest
conversion of $10,000.
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On April 20, 2015, we issued 25,000 common shares at a
deemed price of $0.26 per share for promissory note and interest
conversion of $6,500.
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On April 22, 2015, we issued 30,000 common shares at a
deemed price of $0.24 per share for promissory note and interest
conversion of $7,200.
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On April 28, 2015, we issued 30,000 common shares at a
deemed price of $0.20 per share for promissory note and interest
conversion of $6,000.
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On April 30, 2015, we issued 45,000 common shares at a
deemed price of $0.13 per share for promissory note and interest
conversion of $5,850.
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On May 4, 2015, we issued 50,000 common shares at a
deemed price of $0.13 per share for promissory note and interest
conversion of $6,500.
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On May 7, 2015, we issued 75,000 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion of $6,375.
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On May 8, 2015, we issued 75,000 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $5,250.
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On May 13, 2015, we issued 119,900 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $8,393.
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To date, we have issued the following securities in conversion
of the $100,000 portion of the March 15, 2014 convertible promissory note held
by River North Equity:
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On April 23, 2015, we issued 32,360 common shares at a
deemed price of $0.24 per share for promissory note and interest
conversion of $7,766.
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On April 28, 2015, we issued issued 39,303 common shares
at a deemed price of $0.20 per share for promissory note and interest
conversion of $7,860.
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On April 30, 2015, we issued 48,584 common shares at a
deemed price of $0.15 per share for promissory note and interest
conversion of $7,288.
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On May 5, 2015, we issued 73,637 common shares at a
deemed price of $0.13 per share for promissory note and interest
conversion of $9,573.
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On May 8, 2015, we issued 78,892 common shares at a
deemed price of $0.08 per share for promissory note and interest
conversion of $6,311.
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On May 13, 2015, we issued 111,138 common shares at a
deemed price of $0.08 per share for promissory note and interest
conversion of $8,891.
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On May 15, 2015, we issued 160,565 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $11,239.
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On May 22, 2015, we issued 166,802 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $11,676.
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On September 11, 2015, we issued 434,084 common shares at
a deemed price of $0.03 per share for promissory note conversion of
$13,022.
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On September 18, 2015, we issued 486,623 common shares at
a deemed price of $0.02 per share for promissory note conversion of
$9,732.
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As at December 31, 2015, a balance of $6,639 remains payable or
convertible into common shares pursuant to the March 15, 2014 note (which amount
excludes the restated $50,000 portion), whereas all of the accompanying warrants
remain unconverted and outstanding.
On March 3, 2015, JDF Capital, LG Capital Funding, LLC and our
company agreed to assign an aggregate of $50,000 from the note of JDF Capital to
LG Capital and to amend the conversion price to equal to 65% of the lowest
closing price of the our common stock for the last 20 trading days prior to
conversion, as well as 10% per annum interest. As at the date of this report, we
have made the following issuances of common stock in conversion of this
convertible note:
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On April 20, 2015, we issued 25,922 common shares at a
deemed price of $0.39 per share for promissory note and interest
conversion of $10,109.
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On May 27, 2015, we issued 102,839 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $7,198.
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On June 3, 2015, we issued issued 222,506 common shares
at a deemed price of $0.04 per share for promissory note and interest
conversion of $8,900.
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On June 15, 2015, we issued 218,089 common shares at a
deemed price of $0.04 per share for promissory note and interest
conversion of 8,723.
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On May 1, 2015, we issued 53,741 common shares at a
deemed price of $0.15 per share for promissory note and interest
conversion of $8,061. On July 10, 2015, we issued 201,465 common shares at
a deemed price of $0.04 per share for promissory note and interest
conversion of $7,800.
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18
As at the date of this report, there remains no balance payable
pursuant to the note.
$600,000 Loan
On August 6, 2014, we entered into a securities purchase
agreement with JDF dated July 22, 2014 pursuant to which we issued to JDF a
convertible promissory note in the aggregate principal amount of $708,000, which
amount includes the purchase price of $600,000 plus 18 months prepaid interest
at the rate of 12% per annum. The convertible note has a maturity date of
January 22, 2016 and is convertible in whole or in part into shares of our
common stock at price per share equal to 65% of the lowest reported sale price
of our common shares during the 20 trading days prior to July 22, 2014 ($160.00)
or prior to the applicable conversion date. Our company will have the option to
prepay the note within 60 days subject to a 10% penalty, within the subsequent
60 days subject to a 20% penalty, or anytime thereafter prior to maturity
subject to a 30% penalty. The purchase price of the promissory note is payable
in six installments beginning upon the effective date of the agreement (which
amount has been paid) and monthly thereafter beginning on August 22, 2014. The
promissory note is secured in first position against all assets of our
subsidiary, Alta Disposal Ltd., pursuant to a general security agreement between
Alta Disposal and JDF.
As additional consideration for the proceeds of the convertible
note, we issued to JDF Capital warrants exercisable for 5 years to purchase up
to 4,200 shares of our common stock at an exercise price of $160.00 per share,
subject to cashless exercise provisions.
To date, we have issued the following securities in conversion
of the August 6, 2014 convertible promissory note:
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On June 2, 2015, we issued 144,231 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion $7,500.
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On June 5, 2015, we issued 220,000 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion $10,010.
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On June 10, 2015, we issued 275,000 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion $12,512.
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On July 8, 2015, we issued 125,000 common shares at a
deemed price of $0.04 per share for promissory note conversion of $4,875.
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On July 21, 2015, we issued 250,000 common shares at a
deemed price of $0.04 per share for promissory note conversion of $9,750.
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On July 29, 2015, we issued 298,269 common shares at a
deemed price of $0.04 per share for promissory note conversion of $11,633.
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On September 18, 2015, we issued 475,000 common shares at
a deemed price of $0.03 per share for promissory note conversion of
$12,350.
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As at December 31, 2015, $600,000 has been funded pursuant to
the note of which approximately $431,370 remains unconverted and outstanding.
19
On March 9, 2015, JDF Capital and Blue Citi PR, LLC agreed to
assign an aggregate of $100,000 from the convertible promissory note of JDF
Capital (that was issued by our company) to Blue Citi PR LLC. As at the date of this report, we have
issued the following securities in conversion of the promissory note:
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On April 22, 2015, we issued 14,793 common shares at a
deemed price of $0.34 per share for promissory note and interest
conversion $5,000.
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On April 30, 2015, we issued 45,000 common shares at a
deemed price of $0.17 per share for promissory note and interest
conversion $7.605.
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On May 7, 2015, we issued 75,000 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion $6,825.
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On May 12, 2015, we issued 89,011 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion $8,100.
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On May 13, 2015, we issued 125,000 common shares at a
deemed price of $0.08 per share for promissory note and interest
conversion $9,750.
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As at the date of this report, there remains a balance of
$62,720 unconverted and payable pursuant to the note.
Loan Agreement with JMJ Financial
On February 13, 2013, we entered into a securities purchase
agreement with JMJ Financial. Pursuant to the terms of the agreement, our
company will also enter into a convertible promissory note in the principal
amount of $1,100,000 (for consideration of up to $1,000,000), of which $100,000
shall be paid to our company upon closing of the convertible promissory note and
a common stock purchase warrant for the purchase of up to 135 shares of our
common stock at an exercise price of $740 for a period of five years. The
convertible promissory note shall have a maturity date of February 13, 2016. The
remainder of the convertible debenture can be drawn down on by mutual agreement
from JMJ Financial and our company. As at the date of this report, we have made
the following issuances of common stock in conversion of the February 13, 2013
note:
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On August 13, 2013, we issued 396 common shares at a
deemed price of $294.00 per share for promissory note and interest
conversion of $116,550.
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On November 11, 2013, we issued 347 common shares at a
deemed price of $168.00 per share for promissory note and interest
conversion of $58,275.
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On December 4, 2013, we issued 359 common shares at a
deemed price of $162.40 per share for promissory note and interest
conversion of $58,275.
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On January 6, 2014, we issued 638 common shares at a
deemed price of $91.28 per share for promissory note conversion of
$58,275.
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On February 14, 2014, we issued 500 common shares at a
deemed price of $89.60 per share for promissory note conversion of
$44,800.
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On March 3, 2014, we issued 475 common shares at a deemed
price of $89.60 per share for promissory note conversion of $42,613.
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On June 10, 2014, we issued 400 common shares at a deemed
price of $85.20 per share for promissory note conversion of $34,000.
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On June 27, 2014, we issued 425 common shares at a deemed
price of $74.00 per share for promissory note conversion of $31,450.
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20
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On July 16, 2014, we issued 450 common shares at a deemed
price of $74.00 per share for promissory note and interest conversion of
$33,300.
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On August 1, 2014, we issued 266 common shares at a
deemed price of $67.00 per share for promissory note and interest
conversion of $17,800.
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On September 3, 2014, we issued 750 common shares at a
deemed price of $40.00 per share for promissory note and interest
conversion of $30,000.
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On September 11, 2014, we issued 1,400 common shares at a
deemed price of $20.20 per share for promissory note and interest
conversion of $28,275.
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On October 22, 2014, we issued 4,750 common shares at a
deemed price of $5.80 per share for promissory note and interest
conversion of $27,550.
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On November 6, 2014, we issued 4,975 common shares at a
deemed price of $4.20 per share for promissory note and interest
conversion of $20,895.
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On November 19, 2014, we issued 8,500 common shares at a
deemed price of $3.20 per share for promissory note and interest
conversion of $27,200.
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On December 10, 2014, we issued 12,075 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $14,490.
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On December 17, 2014, we issued 15,425 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $18,510.
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On April 22, 2015, we issued 31,000 common shares at a
deemed price of $0.26 per share for promissory note and interest
conversion of $8,060.
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On April 24, 2015, we issued 41,500 common shares at a
deemed price of $0.21 per share for promissory note and interest
conversion of $8,715.
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On May 8, 2015, we issued 92,500 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $6,475.
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On May 14, 2015, we issued 132,000 common shares at a
deemed price of $0.06 per share for promissory note and interest
conversion $7,920
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On May 27, 2015, we issued 194,500 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion of $9,725.
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On June 3, 2015, we issued 225,000 common shares at a
deemed price of $0.04 per share for promissory note and interest
conversion $9,000
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On June 11, 2015, we issued 284,000 common shares at a
deemed price of $0.03 per share for promissory note and interest
conversion of $8,520.
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On June 16, 2015, we issued 249,500 common shares at a
deemed price of $0.03 per share for promissory note and interest
conversion of $7,485.
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On September 15, 2015, we issued 438,000 common shares at
a deemed price of $0.03 per share for promissory note conversion of
$13,140.
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On October 28, 2015 we issued 554,000 common shares at a
deemed price of $0.01 per share for promissory note conversion of $5,540.
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As at December 31, 2015, there remains a balance of
approximately $49,233 unconverted and payable pursuant to the note.
Together with the promissory note issued on February 13, 2013,
we issued the following warrants:
21
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warrants to purchase up to 135 of our common shares at an
exercise price of $740.00 per share expiring February 13, 2018
(exercised);
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warrants to purchase up to 66 of our common shares at an
exercise price of $760.00 expiring April 24, 2018 (exercised),
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warrants to purchase up to 74 of our common shares at an
exercise price of $672.00 expiring June 4, 2018 (exercised),
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warrants to purchase up to 100 of our common shares at an
exercise price of $500.00 expiring June 27, 2018 (exercised),
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warrants to purchase up to 84 of our common shares at an
exercise price of $896.00 expiring August 14, 2018 (exercised),
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warrants to purchase up to 417 of our common shares at an
exercise price of $240.00 expiring December 10, 2018 (exercised),
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warrants to purchase up to 179 shares of our common
shares at an exercise price of $280.00 expiring February 20, 2019 (not
exercised);
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warrants to purchase up to 952 of our common shares at an
exercise price of $210.00 expiring April 16, 2019 (not exercised).
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Loan Agreement with JSJ Investments Inc.
On February 23, 2014, we entered into a securities purchase
agreement with JSJ Investments Inc., pursuant to which JSJ Investments provided
our company with an aggregate investment of $100,000 in consideration of our
issuance of convertible promissory notes and common share purchase warrants. We
issued JSJ Investments a convertible promissory note with 12% interest due
August 27, 2014 and convertible into common shares on a cashless basis at a
price of the lower of 50% of the average of the three lowest bids on the 20
trading days before February 27, 2014 or of a notice to convert during the
twenty trading days preceding the delivery of any related conversion notice. On
August 28, 2014, we issued 2,598 common shares at a deemed price of $40.80 per
share in full conversion of the promissory note and interest at face value of
$105,983.
In addition, we issued warrants to purchase an aggregate of 278
common shares of our company to JSJ Investments in consideration for purchasing
the note. Subject to adjustments, these warrants are convertible into common
shares at a price of approximately $360.00 and expire after a term of five
years. In the case that after six months there is no registration statement
available for the resale of our common shares from exercising of these warrants,
the warrants may be exercised on a cashless basis at a price as set out in the
warrant.
Loan Agreement with Centaurian Fund
On February 28, 2014, we entered into a securities purchase
agreement with Centaurian Fund, pursuant to which Centaurian provided our
company with an aggregate investment of $50,000 in consideration of our issuance
of convertible promissory notes and common share purchase warrants. We issued
Centaurian a convertible promissory note with 15% interest due August 28, 2014
and convertible into common shares on a cashless basis at a price of the lower
of 50% of the average of the three lowest bids on the 20 trading days before
February 28, 2014 or of a notice to convert during the 20 trading days preceding
the delivery of any related conversion notice. In addition, we issued warrants to purchase an
aggregate of 1,289 common shares of our company to Centaurian in consideration
for purchasing the note. Subject to adjustments, these warrants are convertible
into common shares at a price of $240.00 and expire after a term of six months.
In the case that our common share closing price is greater than $240.00 per
share for two days, the warrants may be exercised on a cashless basis at a price
pursuant to the warrant. The warrants expired unexercised.
22
On September 4, 2014, JSJ, Centaurian Fund and our company
agreed to assign the note from Centaurian Fund to JSJ Investments and increase
the principal interest of the note to $74,750 with 12% interest.
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On September 10, 2014, we issued 1,684 common shares at a
deemed price of $22.20 per share for promissory note and interest
conversion of $37,375.
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On September 16, 2014, we issued 953 common shares at a
deemed price of $21.33 per share for promissory note and interest
conversion of $20,322.
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On April 8, 2015, we issued 21,838 common shares at a market
price of $0.85 per share for promissory note and interest conversion of $18,475.
As at the date of this report, there remains no balance payable pursuant to the
note.
Loan Agreements with LG Capital Funding, LLC
On February 27, 2014, we entered into another securities
purchase agreement with LG Capital Funding, LLC. Pursuant to which LG Capital
provided our company with an aggregate investment of $75,000 in consideration of
a promissory note carrying interest at the rate of 10% per annum and due March
3, 2016. The promissory note is convertible into common shares of our company at
the investors option at any time after 180 days at a price equal to 50% of the
lowest bids price for the 20 days prior to conversion date subject to various
prescribed conditions. During the year ended June 30, 2015, the full face value
of the note including interest (being $80,145 (June 30, 2014 - $Nil) in the
aggregate) was fully converted to 28,087 common shares pursuant to the following
issuances of common stock:
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On September 29, 2014, we issued 1,512 common shares at a
deemed price of $12.60 per share for promissory note and interest
conversion of $19,050.
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On October 27, 2014, we issued 5,502 common shares at a
deemed price of $6.20 per share for promissory note and interest
conversion of $34,113.
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On December 11, 2014, we issued 8,473 common shares at a
deemed price of $1.40 per share for promissory note and interest
conversion of $11,862.
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On December 17, 2014, we issued 12,600 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $15,120.
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On March 3, 2015, we entered into a securities purchase
agreement with LG Capital Funding, LLC, pursuant to which LG Capital provided
our company with an aggregate investment of $29,000 in consideration of our
issuance of convertible promissory notes. We issued LG Capital a convertible
promissory note with 10% interest due March 3, 2016 and convertible into common
shares on a cashless basis at a price of 65% of the lowest closing bid price of
our common shares during the prior 20 trading days including the
delivery of any related conversion notice.
23
On September 11, 2015, the Company issued 80,801 common shares
at a deemed price of $0.04 per share for partial conversion of the March 3, 2015
promissory note. During the year ended June 30, 2015, an interest expense of
$967 was accrued in respect of the note. As at the date of this report, there
remains a balance of approximately $26,000 unconverted and payable pursuant to
the note.
On September 30, 2015, we entered into a securities purchase
agreement with LG Capital Funding, LLC. Pursuant to the terms of the agreement,
JDF Capital acquired a convertible redeemable promissory note with an aggregate
principal amount $27,000 due on September 30, 2016 which amount includes an
issuance discount of 10% and carries interest at the rate of 10% per annum after
12 months. The note is convertible at the lower of 65% discount of the lowest
trading price for the 20 days prior to conversion date subject to various
prescribed conditions.
Loan Agreement with St. George Investments LLC
On February 28, 2014, we entered into a securities purchase
agreement with St. George Investments LLC, pursuant to which St. George
Investments provided our company with an aggregate investment of $100,000 in
consideration of our issuance of convertible promissory notes and common share
purchase warrants. We issued St. George Investments a convertible promissory
note of $125,500 including 15% prepaid interest due August 28, 2015 and
convertible into common shares on a cashless basis at a price of 50% of the
lower of lowest closing bid price of our common shares during the prior 20
trading days prior to 1) the date of the purchase agreement or 2) the day of the
notice for conversion. As at the date of this report we have made the following
issuances of common stock in conversion of the February 28, 2014 note:
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On September 10, 2014, we issued 385 common shares at a
deemed price of $26.00 per share for promissory note and interest
conversion of $10,000.
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On September 23, 2014, we issued 962 common shares at a
deemed price of $13.00 per share for promissory note and interest
conversion of $12,500.
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On October 9, 2014, we issued 1,667 common shares at a
deemed price of $9.00 per share for promissory note and interest
conversion of $15,000.
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On October 16, 2014, we issued 1,829 common shares at a
deemed price of $8.20 per share for promissory note and interest
conversion of $15,000.
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On October 24, 2014, we issued 2,206 common shares at a
deemed price of $6.80 per share for promissory note and interest
conversion of $15,000.
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On October 31, 2014, we issued 3,125 common shares at a
deemed price of $4.60 per share for promissory note and interest
conversion of $15,000.
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On November 17, 2014, we issued 3,947 common shares at a
deemed price of $3.80 per share for promissory note and interest
conversion of $15,000.
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On December 3, 2014, we issued 5,357 common shares at a
deemed price of $2.80 per share for promissory note and interest
conversion of $15000.
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24
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On December 16, 2014, we issued 9,286 common
shares at a deemed price of $1.40per share for promissory note and
interest conversion of $13,000.
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As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition, we issued an aggregate of 370 warrants to St.
George Investments in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$270.00 and expire after a term of five years. As at the date of this report we
have made the following issuances of common stock in full exercise of the
February 28, 2014 warrant:
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On March 16, 2015, 141 warrants were exercised for 36,175
of our common shares at a deemed price of $0.64 in accordance with the
terms of the agreement. On April 16, 2015, we issued 42,417 common shares
at a deemed price of $3.14 per share in the aggregate pursuant to the
exercise of 230 warrants.
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Loan Agreement with Vista Capital Investments, LLC
On February 28, 2014, we entered into a securities purchase
agreement with Vista Capital Investments, LLC, pursuant to which Vista Capital
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of convertible promissory notes and common share purchase
warrants. We issued Vista Capital a convertible promissory note of $110,000 with
12% interest due September 1, 2014 and convertible into common shares on a
cashless basis at a price of the lesser of $300 or 50% of the lowest bid price
of our common shares during the prior 25 consecutive trading days prior the
delivery of any related conversion notice. As at the date of this report, we
have made the following issuances of common stock in full conversion of the
February 28, 2014 note:
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On September 23, 2014, we issued 2,500 common shares at a
deemed price of $11.00 per share for promissory note and interest
conversion of $27,520.
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On October 27, 2014, we issued 3,750 common shares at a
deemed price of $5.80 per share for promissory note and interest
conversion of $21,520.
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On November 3, 2014, we issued 3,750 common shares at a
deemed price of $4.60 per share for promissory note and interest
conversion of $17,250.
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On December 10, 2014, we issued 8,500 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $10,200.
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On April 1, 2015, we issued 15,000 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $18,000.
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On April 7, 2015, we issued 22,500 common shares at a
deemed price of $1.02 per share for promissory note and interest
conversion of $22,950.
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On April 14, 2015, we issued 25,000 common shares at a
deemed price of $0.49 per share for promissory note and interest
conversion of $12,250.
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On April 20, 2015, we issued 30,000 common shares at a
deemed price of $0.26 per share for promissory note and interest
conversion of $7,800.
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25
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On April 24, 2015, we issued 37,500 common shares at a
deemed price of $0.21 per share for promissory note and interest
conversion of $7,875.
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On April 29, 2015, we issued 45,000 common shares at a
deemed price of $0.14 per share for promissory note and interest
conversion of $6,300. On May 5, 2015 we issued 75,000 common shares at a
deemed price of $0.01 per share for promissory note and interest
conversion of $7,500.
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On May 8, 2015, we issued 75,000 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion of $5,250.
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On May 13, 2015, we issued 122,357 common shares at a
deemed price of $ 0.07 for promissory note and interest conversion of
$8,565.
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In addition, we issued warrants to purchase an aggregate of
2,578 common shares of our company to Vista Capital in consideration for
purchasing the note. Subject to adjustments, these warrants are convertible into
common shares at a price of $240.00 during the period beginning August 28, 2014
and ending August 28, 2019. In the case that our common share closing price is
greater than $240.00 per share for two days, the warrants may be exercised on a
cashless basis at a price pursuant to the warrant.
On August 20, 2014, we issued an aggregate of 4,528 common
shares at a deemed price of $203.13 per share for the cashless conversion of
warrants issued on February 28, 2014.
Loan Agreement with Union Capital, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Union Capital, LLC, pursuant to which Union provided our company
with an aggregate investment of $50,000 in consideration of our issuance of
convertible promissory notes and common share purchase warrants. We issued Union
a convertible promissory note of $50,000 with 10% interest due March 5, 2015 and
convertible into common shares on a cashless basis at a price per share of 50%
of the lowest closing bid price of our common shares during the prior 20 trading
days including the delivery of any related conversion notice. As at the date of
this report, we have made the following issuances of common stock in conversion
of the March 3, 2014 note:
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On September 8, 2014, we issued 277 common shares at a
deemed price of $38.00 per share for promissory note and interest
conversion of $10,510.
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On September 11, 2014, we issued 652 common shares at a
deemed price of $24.20 per share for promissory note and interest
conversion of $15,777.
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On September 12, 2014, we issued 717 common shares at a
deemed price of $22.00 per share for promissory note and interest
conversion of $15,781.
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On September 15, 2014, we issued 479 common shares at a
deemed price of $22.00 per share for promissory note and interest
conversion of $10,529.
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As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition, we issued warrants to purchase an aggregate of 235
common shares of our company to Union in consideration for purchasing the note.
Subject to adjustments, these warrants are convertible into common shares at a price of $212.00 and expire
after a term of five years. In the case that after six months there is no
registration statement available for the resale of our common shares from
exercising of these warrants, the warrants may be exercised on a cashless basis
at a price as set out in the warrant.
26
Loan Agreement with Iconic Holdings, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Iconic Holdings, LLC, pursuant to which Iconic provides our
company with an aggregate investment of $100,000 in consideration of our
issuance of convertible promissory notes and common share purchase warrants. We
issued Iconic a convertible promissory note of $100,000 with 12% interest due
September 3, 2014 and convertible into common shares on a cashless basis at a
price of 50% of the lower of lowest closing bid price of our common shares
during the prior 20 trading days prior to 1) the date of the purchase agreement
or 2) the day of the notice for conversion. As at the date of this report, we
have made the following issuances of common stock in conversion of the March 3,
2014 note:
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On September 12, 2014, we issued 2,475 common shares at a
deemed price of $20.20 per share for promissory note and interest
conversion of $50,000.
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On October 23, 2014, we issued 1,471 common shares at a
deemed price of $6.80 per share for promissory note and interest
conversion of $10,000.
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On November 14, 2014, we issued 5,263 common shares at a
deemed price of $3.80 per share for promissory note and interest
conversion of $20,000.
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On November 18, 2014, we issued 7,193 common shares at a
deemed price of $3.80 per share for promissory note and interest
conversion of $27,335.
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As at the date of this report, all interest and principal of
the note has been fully converted.
In addition, we issued an aggregate of 500 warrants to Iconic
in consideration for purchasing the note. Subject to adjustments, these warrants
are convertible into common shares at a price of $200 and expire after a term of
three years. As at the date of this report, we have made the following issuances
of common stock in cashless exercise of the March 3, 2014 warrants:
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On April 14, 2015, we issued 5,385 common
shares at a deemed price of $23.74 per share in full exercise of the
warrants.
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Loan Agreement with Adar Bays, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Adar Bays, LLC, pursuant to which Adar provided our company with
an aggregate investment of $50,000 in consideration of our issuance of
convertible promissory notes and common share purchase warrants. We issued Adar
a convertible promissory note of $50,000 with 10% interest due March 4, 2015 and
convertible into common shares on a cashless basis at a price per share of 50%
of the lowest closing bid price of our common shares during the prior 20 trading
days including the delivery of any related conversion notice. As at the date of
this report, we have made the following issuances of common stock in conversion
of the March 3, 2014 note:
27
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On September 4, 2014, we issued 227 common shares at a
deemed price of $44.00 per share for promissory note and interest
conversion of $10,000.
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On September 11, 2014, we issued 413common shares at a
deemed price of $24.20 per share for promissory note and interest
conversion of $10,000.
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On September 17, 2014, we issued 354 common shares at a
deemed price of $19.80 per share for promissory note and interest
conversion of $7,000.
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On September 23, 2014, we issued 369 common shares at a
deemed price of $12.60 per share for promissory note and interest
conversion of $4,655.
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On September 29, 2014, we issued 1,250 common shares at a
deemed price of $12.60 per share for promissory note and interest
conversion of $15,750.
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On October 27, 2014, we issued 836 common shares at a
deemed price of $6.40 per share for promissory note and interest
conversion of $5,353.
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As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition on March 4, 2014, we issued an aggregate of 235
warrants to Adar in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$212.00 and expire after a term of five years.
Loan Agreement with Black Mountain Equities, Inc.
On March 3, 2014, we entered into a securities purchase
agreement with Black Mountain Equities, Inc., pursuant to which Black Mountain
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of original issue discount convertible promissory notes and
common share purchase warrants. We issued Black Mountain a convertible
promissory note of $115,000 with 15% prepaid interest due April 1, 2015 and
convertible into common shares on a cashless basis at the lesser price per share
of $240.00 or 50% of the lowest trade price of our common shares during the
prior 20 trading days immediately preceding the delivery of any related
conversion notice.
As at the date of this report, we have made the following
issuances of common stock in conversion of the March 3, 2014 note:
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On October 27, 2014, we issued 5,678 common shares at a
deemed price of 5.80 per share for promissory note and interest conversion
of $32,934.
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On December 12, 2014, we issued 18,612 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $22,334.
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On March 31, 2015, we issued 20,834 common shares at a
deemed price of $1.20 per share for promissory note and interest
conversion of $25,000.
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On May 1, 2015, we issued 105,315 common shares at a
deemed price of $0.16 per share for promissory note and interest
conversion of $16,850.
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On May 7, 2015, we issued 90,775 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion of $6,354.
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On May 12, 2015, we issued 90,775 common shares at a
deemed price of $0.07 per share promissory note and interest conversion of
$6,354.
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28
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On June 4, 2015, we issued 222,791 common shares at a
deemed price of $0.04 per share for promissory note and interest
conversion of $8,911.
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On June 11, 2015, we issued 428,933 common shares at a
deemed price of $0.03 per share for promissory note and interest
conversion $12,868.
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As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition on March 3, 2014, we issued an aggregate of 417
warrants to Black Mountain in consideration for purchasing the note. Subject to
adjustments, each warrant is convertible into common shares at a price of
$240.00 per share and expire after a term of five years. In the case that our
common share closing price is greater than $240.00 per share for two days, the
warrants may be exercised on a cashless basis at a price pursuant to the
warrant. As at the date of this report, we have made the following issuances of
common stock in full exercise of the March 3, 2014 warrants:
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On August 5, 2014, we issued 5,161 common shares pursuant
to the exercise of warrants at a deemed price of $33.59 per share or
$173,367 in the aggregate
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On September 15, 2014, we issued 2,737 common shares
pursuant to the exercise of warrants at a deemed price of $34.12 per share
or $93,401 in the aggregate.
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As at the date of this report, there remain no warrants
remaining pursuant to the securities purchase agreement.
Loan Agreement with Blue Citi, LLC
Effective March 3, 2014, we entered into another securities
purchase agreement with Blue Citi LLC. Pursuant to the terms of the agreement,
Blue Citi acquired a convertible promissory note with an aggregate face value of
$220,000, at an issuance discount of $20,000; resulting in $200,000 net proceeds
to our company. The note was due on September 3, 2014 and carries an interest
rate of 12% per annum over the term of the note, with an effective interest rate
of 1220.64% . The note is convertible at a 50% discount of the lowest closing
price for the 20 trading days immediately prior to (i) date of the purchase
agreement, or (ii) the voluntary conversion of the note.
During the year ended June 30, 2015, $453,200 (June 30, 2014 -
$Nil) in face value of the note including interest was fully converted to 49,640
(June 30, 2014 - Nil) common shares pursuant to the following issuances of
common shares:
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On September 3, 2014, we issued 125 common shares at a
deemed price of $40.00 per share for promissory note and interest
conversion of $5,000.
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On September 15, 2014, we issued 1,396 common shares at a
deemed price of $20.20 per share for promissory note and interest
conversion of $28,200.
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On September 24, 2014, we issued 2,273 common shares at a
deemed price of $11.00 per share for promissory note and interest
conversion of $25,000.
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29
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On October 2, 2014, we issued 1,136 common shares at a
deemed price of $11.00 per share for promissory note and interest
conversion of $12,500.
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On October 13, 2014, we issued 2,670 common shares at a
deemed price of $8.80 per share for promissory note and interest
conversion of $23,500.
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On October 20, 2014, we issued 2,778 common shares at a
deemed price of $7.20 per share for promissory note and interest
conversion of $20,000.
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On October 21, 2014, we issued 2,500 common shares at a
deemed price of $6.00 per share for promissory note and interest
conversion of $15,000.
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On October 27, 2014, we issued 5,000 common shares at a
deemed price of $6.00 per share for promissory note and interest
conversion of $30,000
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On November 4, 2014, we issued 4,348 common shares at a
deemed price of $4.60 per share for promissory note and interest
conversion of $20,000.
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On December 4, 2014, we issued 7,500 common shares at a
deemed price of $2.40 per share for promissory note and interest
conversion of $18,000.
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On December 5, 2014, we issued 6,818 common shares at a
deemed price of $2.20 per share for promissory note and interest
conversion of $15,000.
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On December 8, 2014, we issued 6,667 common shares at a
deemed price of $1.80 per share for promissory note and interest
conversion of $12,000.
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On December 9, 2014, we issued 6,429 common shares at a
deemed price of $1.40 per share for promissory note and interest
conversion of $9,000.
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There is no outstanding balance payable in respect of the note
as of the date of this report. Along with the promissory note entered on March 3, 2014, we issued warrants to acquire a
total of 1,000 shares of the company for a period of three years at an exercise
price of $200.00. On September 4, 2014, 25 warrants were exercised for 146 of
our common shares at a deemed price of $456 in accordance with the terms of the
agreement.
Loan Agreement with 514742 B.C. Ltd.
On March 3, 2014, we entered into a securities purchase
agreement with Alta Disposal Ltd., our wholly-owned subsidiary, and 514742 B.C.
Ltd., pursuant to which 514742 B.C. provided Alta Disposal with an aggregate
investment of CAD$330,000 (US$298,518) in consideration of our issuance of
secured promissory notes and common share purchase warrants.
On March 3, 2014, 514742 B.C. funded an aggregate investment of
CAD$333,000 to Alta Disposal. Therefore, Alta Disposal issued 514742 B.C. a
secured promissory note of Alta Disposal CAD$333,000 with 20% interest due June
1, 2014. The note is secured by all present and after acquired property of Alta
Disposal. Effective April 14, 2014, the company paid a total of CAD$346,274
(US$316,355) in principle and interest to settle this debt.
In addition on March 3, 2014, we issued an aggregate 550
warrants to 514742 B.C. in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares
at a price of $200.00 and expire after a term of three years. In the case that
after six months there is no registration statement available for the resale of
our common shares from exercising of these warrants, the warrants may be
exercised on a cashless basis at a price as set out in the warrant.
30
Loan Agreement with Cardinal Capital Group, Inc.
On October 31, 2014, we entered into a securities purchase
agreement with Cardinal Capital Group, Inc., pursuant to which Cardinal Capital
provided our company with an aggregate investment of $50,000 in consideration of
our issuance of a convertible promissory note. We issued Cardinal Capital a
convertible promissory note of $59,500 comprised of $6,000 in interest and
$3,500 in legal fees and due in two years. The note is convertible into shares
of our common stock at the lesser of $20.00 or 65% of the lowest trade price of
our common stock during the 20 trading days immediately preceding a conversion
date. As at the date of this report, we have made the following issuances of
common stock in conversion of the October 31, 2014 note:
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On April 30, 2015, we issued 49,000 common shares at a
deemed price of $0.20 per share for promissory note and interest
conversion of $9,800.
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On May 1, 2015, we issued 49,000 common shares at a
deemed price of $0.20 per share for promissory note and interest
conversion $9,800.
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On May 7, 2015, we issued 49,000 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion $4,459.
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On May 11, 2015, we issued 110,000 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion $10,010.
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On May 14, 2015, we issued 110,000 common shares at a
deemed price of $0.08 per share for promissory note and interest
conversion $8,580.
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On May 27, 2015, we issued 150,000 common shares at a
deemed price of $0.07 per share for promissory note and interest
conversion $9,750.
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On June 2, 2015, we issued 150,000 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion $7,800.
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On June 15, 2015, we issued 165,154 common shares at a
deemed price of $0.04 per share for promissory note and interest
conversion $6,441.
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As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
Loan Agreement with InLight Capital Partners, LLC.
On August 22, 2014, we entered into a securities purchase
agreement with InLight Capital Partners, LLC, pursuant to which InLight Capital
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of a convertible promissory note and warrants to purchase common
shares of our company with an aggregate exercise price of $120,500. The note was
funded by InLight Capital in the amount of $100,000 and shall include $20,500 in
respect of pre-paid interest calculated in advance at the rate of 12% per annum
for 18 months plus expenses of the Purchaser. InLight Capital delivered to us
funds in the amount of $50,000 on the effective date and $50,000 on September
19, 2014.
31
As at the date of this report, we have made the following
issuances of common stock in conversion of the March 3, 2014 note:
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On April 13, 2015, we issued 26,250 common shares at a
deemed price of $0.64 per share for promissory note and interest
conversion of$16,721.
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On April 27, 2015, we issued issued 26,250 common shares
at a deemed price of $0.22 per share for promissory note and interest
conversion of $5,801.
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On April 30, 2015, we issued 54,200 common shares at a
deemed price of $0.15 per share for promissory note and interest
conversion of $9,160.
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On May 5, 2015, we issued 78,892 common shares at a
deemed price of $0.12 per share for promissory note and interest
conversion of $9,230.
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On May 11, 2015, we issued 92,741 common shares at a
deemed price of $0.09 per share for promissory note and interest
conversion of $8,439.
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On May 19, 2015, we issued 166,802 common shares at a
deemed price of $0.08 per share for promissory note and interest
conversion of $13,091.
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On June 9, 2015, we issued 255,000 common shares at a
deemed price of $0.05 per share for promissory note and interest
conversion of $13,260.
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On July 22, 2015, we issued 100,000 common shares at a
deemed price of $0.05 per share for promissory note conversion of $5,200.
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There remains a principal balance of $32,043 unconverted and
payable pursuant to the note as at December 31, 2015. In addition on August 22,
2014 and September 19, 2014, we issued an aggregate of 538 warrants to InLight
Capital Partners, LLC in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$112.00 and expire after a term of five years. In the case that after six months
there is no registration statement available for the resale of our common shares
from exercising of these warrants, the warrants may be exercised on a cashless
basis at a price as set out in the warrant.
Loan Agreement with Louis Feld
On February 6, 2015, Louis Feld provided our company with an
aggregate investment of $88,500 in consideration of our issuance of a $88,500
convertible promissory note and warrants to acquire 13,828 common shares with an
aggregate exercise price of $88,500. We issued Mr. Feld a convertible promissory
note with 12% interest due August 6, 2016 and convertible into common shares on
a cashless basis at a price of 65% of the lowest closing bid price of our common
shares during the prior 20 trading days. During the period ended December 31,
2015, an interest expense of $7,650 was accrued. As at the date of this report,
we have made the following issuances of common stock in conversion of promissory
note:
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On August 17, 2015, we issued 250,000 common
shares at a deemed price of $0.04 per share for promissory note and
interest conversion of $9,750.
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On September 18, 2015, we issued 394,231 common
shares at a deemed price of $0.03 per share for promissory note conversion
of $10,250.
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32
Loan Agreement with River North Equity LLC
On February 24, 2015, River North provided our company with an aggregate investment of $100,000 in consideration of our issuance of a convertible promissory note with a face value of $118,000. The face value of the note includes minimum
interest for 18 months at the rate of 12% per annum, calculated monthly. The promissory note, which is due August 24, 2016, is convertible into common shares on a cashless basis at a price of 65% of the lowest closing bid price of our common shares
during the prior 25 trading days including the delivery of any related conversion notice.
Bridge Loan Agreement with JDF Capital Inc.
On April 15, 2015, JDF Capital provided our company with a $50,000 loan with 10% interest per annum due April 15, 2015. On or about May 22, 2015 we prepaid the aggregate of $50,493.15, in full repayment of the loan, and aggregate accrued
interest of $493.15.
Recent Loan Agreements
On August 3, 2015, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $36,000 due on February 3, 2016,
which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of
the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 9, 2015, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $30,000 due on September 9,
2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the
date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 30, 2015, we entered into a securities purchase agreement with LG Capital Funding, LLC. Pursuant to the terms of the agreement, JDF Capital acquired a convertible redeemable promissory note with an aggregate principal amount $27,000
due on September 30, 2016 which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at the lower of 65% discount of the lowest trading price for the 20 days prior to
conversion date subject to various prescribed conditions.
On November 6, 2015, we entered into another securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $12,000 due on November
6, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i)
the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
33
On December 1, 2015, we entered into a securities purchase
agreement with JDF Capital Inc. dated December 1, 2015 pursuant to which we
issued to JDF a convertible promissory note in the aggregate principal amount of
$18,000, which amount includes the purchase price of $15,000, 10% pre-paid
interest (per annum, for 12 months) of $1,500, and $1,500 in respect of legal
fees incurred by JDF. The convertible note has a maturity date of December 1,
2016 and is convertible in whole or in part into shares of our common stock at
price per share equal to 65% of the lowest reported sale price of our common
shares during the 20 trading days prior to December 1, 2015 or prior to the
applicable conversion date.
On December 1, 2015, we entered into a securities purchase
agreement with VES Investment Trust dated December 1, 2015 pursuant to which we
issued to VES Investment Trust a convertible promissory note in the aggregate
principal amount of $18,000, which amount includes the purchase price of
$15,000, 10% pre-paid interest (per annum, for 12 months) of $1,500, and $1,500
in respect of legal fees incurred by VES Investment Trust. The convertible note
has a maturity date of December 1, 2016 and is convertible in whole or in part
into shares of our common stock at price per share equal to 65% of the lowest
reported sale price of our common shares during the 20 trading days prior to
December 1, 2015 or prior to the applicable conversion date.
On December 3, 2015, we entered into a securities purchase
agreement with LG Capital Funding pursuant to which we issued to LG Capital a
convertible redeemable note with an aggregate face value of $17,000 due December
3, 2016 and bearing interest form issuance at the rate of 10% per annum payable
on maturity. The holder of the note is entitled, at its option, before or after
maturity, to convert all or a part of the principal or interest outstanding into
shares of our common stock at a price equal to 65% of lowest trading price
during the 20 trading days on the date the notice of conversion is delivered. In
the event that we experience a DTC Chill on our shares, the conversion price
shall be decreased to 55% instead of 65% while that Chill is in effect.
On January 27, 2016, we entered into a securities purchase
agreement with VES Investment Trust. Pursuant to the terms of the agreement, VES
Investment acquired a 10% convertible note with an aggregate face value of
$5,500, with an issuance discount of $500 and maturity of one year. The holder
of this note is entitled, at its option, to convert all or a part of the
principal outstanding at the date into shares of our companys common stock.
On January 27, 2016, we entered into a securities purchase
agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF
Capital acquired a 10% convertible note with an aggregate face value of $24,750,
with an issuance discount of $2,250 and legal fees of $2,500. The note matures
in one year. The holder of this note is entitled, at its option, to convert all
or a part of the principal outstanding at the date into shares of our companys
common stock.
On March 1, 2016, we entered into a securities purchase
agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF
Capital acquired a 10% convertible note with an aggregate face value of $13,200,
with an issuance discount of $1,200 and $2,000 of legal fees. The note matures
in one year. The holder of this note is entitled, at its option, to convert all
or a part of the principal outstanding at the date into shares of our companys
common stock.
34
Agreements with Executive Officers, Directors and
Consultants
Regardless of their date, the transactions described below are
adjusted on a post reverse stock split basis. The adjustments included our first
reverse share split approved by our board of directors on January 19, 2015 (on
the basis of 20 old shares of common stock for one (1) new share of common
stock), and our second reverse stock split, approved by our board of directors
on July 13, 2015 (on the basis of 200 old shares of common stock for one (1) new
share of common stock).
On October 24, 2012, we entered into a share exchange agreement
dated October 18, 2012, with Alexander Walsh, our president and director.
Pursuant to the agreement, on October 25, 2012 we issued to Mr. Walsh 5,000
Series A Convertible Preferred shares in our capital stock in consideration of
the cancellation and return to treasury of 5,000 shares of our common stock held
by Mr. Walsh. The Series A Convertible Preferred Shares have a par value of
$0.001 per share and are convertible on a one for one basis into shares of our
common stock after a one year hold period. There are no other preferential
rights attached to the Series A Convertible Preferred Shares. Mr. Walsh
established a series of a 10b5-1 Sales Plans in connection with an overall asset
diversification strategy. Sales transactions occurring under Mr. Walshs 10b5-1
Plans were disclosed publicly through Form 4 filings with the SEC and are
subject to the restrictions and filing requirements of Rule 144.
On July 25, 2013, we entered into a consulting agreement with
Advanced Capital Trading, LLC, pursuant to which Advanced Capital performed
financial consulting services for our company for a period of three months with
an extension of an additional three months based on performance, such services
commenced effective August 1, 2013. Compensation payable to Advanced Capital of
$10,000 was paid upon execution of the consulting agreement.
Effective January 1, 2014, we entered into a consulting
agreement for a term of 12 months with International Compass, LLC for the
services of Bryan Kleinlein as chief financial officer of our company. As
compensation, we agreed to pay to International Compass $12,000 per month during
the term of the agreement payable in cash and/or common shares of our company
that were previously registered on Form S-8 at our sole discretion. The value of
the shares of our company issued as compensation, if any, shall be based on the
volume weighted average trading closing price of the shares of our company in
the five (5) trading days immediately preceding the date(s) which the shares are
due. Mr. Kleinlein was first appointed as our chief financial officer on May 15,
2012. Effective October 22, 2014, we entered into an amending agreement with
International Compass. Pursuant to this amending agreement, the term of the
agreement dated January 1, 2014 with International Compass was reduced from 12
months to 10 months. As consideration to International Compass for agreeing to
enter into the amending agreement, we agreed to pay Mr. Kleinlein an aggregate
of $30,000, payable in our S-8 shares with a deemed price per share equal to the
volume weighted average trading close price of the shares in the five trading
days immediately preceding the amending agreement. As a result, we issued Mr.
Kleinlein an aggregate of 1,908 S-8 shares on October 22, 2014 Mr. Kleinlein
resigned as our chief financial officer as of November 1, 2014.
35
Effective January 12, 2014, we entered into an employment
agreement with Alexander Walsh for provision of services as our president and
chief executive officer. The employment agreement will terminate on January 12,
2016. Pursuant to the terms of the employment agreement, Mr. Walsh will receive
an annual salary of $120,000 payable in monthly cash installments or, in the
event cash is unavailable, in shares of our companys common stock. The
employment agreement also provides for liability insurance and any travel and
out-of-pocket expenses incurred and approved by our company.
On April 28, 2014, we entered into a consulting agreement, with
our director, Brandon Colker, to provide services on behalf of our company.
Pursuant to the terms of the consulting agreement, Mr. Colker was to receivem my
May 15, 2014, compensation of $12,000 payable in unregistered restricted common
shares of our company's common stock at a deemed value of $200 per share
(Subsequent to the agreement, on February 12, 2015, Mr. Colker resigned as a
director and consultant of the company and, accordingly, the common shares were
not issued.
Effective May 30, 2014, we entered into a consulting agreement
with Robert Gomer. Pursuant to this agreement, Mr. Gomer is to assist us with
the current business of testing ultrasonic generator technology and performing
services customary expected of a consultant for a term of six months. In
exchange for these services that are to be provided to us, we agreed to issue an
aggregate of $10,000 per month, payable in two sums of $30,000 and in our S-8
shares with a deemed price per share equal to the volume weighted average
trading close price of the shares in the five trading days immediately preceding
the amending agreement. As a result, we issued Mr. Gomer an aggregate of 292 S-8
shares on September 1, 2014. The agreement expired and was not subsequently
renewed.
Effective August 1, 2014, we entered into a consultant
agreement with TEN Associates LLC. Pursuant to this agreement, TEN Associates is
to provide advice relative to corporate and business services and to perform
other related activities as directed by us. In exchange for these services that
are to be provided to us, we agreed to issue 500 common shares of our company to
TEN Associates.
Our company was made aware that a shareholder, who is also a
director and officer of our company, had sold an aggregate amount of shares that
would cause the shareholder to be required to pay our company with respect to a
short swing profit. Our company informed the shareholder that the shareholder
was liable to our company for an aggregate short swing profit of $80,523.58
under Section 16(b) of the Securities Exchange Act of 1934, as amended, for the
profit realized from transactions in our companys common stock. Our company and
the shareholder entered into a settlement agreement dated December 31, 2014
wherein, in exchange for the forbearance of legal action by our company pursuant
to Section 16(b) of the Act, the shareholder agreed to disgorge the short swing
profit to our company as of the effective date of the short swing settlement
agreement. Payment of the short swing profit from the shareholder was received
by our company on December 31, 2014.
On December 15, 2010, Alexander Walsh, a director and officer
of our company, entered into an assignment of debt agreement with Nanuk Warman,
which was also acknowledged by our company, whereby the debt of $47,537 advanced by Mr. Warman to
our company and outstanding as of December 6, 2010, was assigned to Mr. Walsh.
36
On December 23, 2014, Mr. Walsh made demand for repayment of
the debt by our company. In connection with the assignment of debt agreement and
the demand, Mr. Walsh and our company entered into a settlement agreement dated
December 23, 2014 wherein our company is to repay the debt to Mr. Walsh in full.
Our company also agreed to pay an aggregate of $150,000 to Mr. Walsh as a
performance bonus for the services provided by Mr. Walsh for the period from
August 2013 to March 2014 as related to the acquisition of Tero Oilfield
Services Ltd. due on the following terms:
1.
|
an aggregate of $50,000 due immediately; and
|
|
|
2.
|
an aggregate of $100,000 bearing no interest and due on
the earlier of:
|
|
a.
|
at the sole discretion of our company; or
|
|
|
|
|
b.
|
the date of the sale, merger, amalgamation or other
business combination or reorganization of our
company.
|
Results of Operations
We have generated minimal revenues since inception and have
incurred $167,606 and $247,737, respectively, in operating expenses for the
three and six month periods ended December 31, 2015 and 2014.
The following provides selected financial data about our
company for the three and six month periods ended December 31, 2015 and 2014.
Three months ended December 31, 2015 and 2014.
|
|
Three
months
|
|
|
Three
months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating expenses
|
$
|
(167,606
|
)
|
$
|
(247,737
|
)
|
Other income (expenses):
|
|
|
|
|
|
|
Interest expense
|
$
|
(255,178
|
)
|
$
|
(311,832
|
)
|
Gain (loss) on change in fair
value of derivative liability
|
$
|
8,906,059
|
|
$
|
(305,132
|
)
|
amortization of debt discount
|
$
|
(149,379
|
)
|
$
|
(875,252
|
)
|
Gain (loss) on disposal of
business operations
|
$
|
(72
|
)
|
$
|
Nil
|
|
Equity in income (loss) of unconsolidated
affiliate
|
$
|
Nil
|
|
$
|
(42,278
|
)
|
Net loss
|
$
|
8,333,823
|
|
$
|
(1,782,231
|
)
|
37
Operating expenses for the three months ended December 31, 2015
decreased as a result of decreases in selling, general and administrative
expenses.
Six months ended December 31, 2015 and 2014.
|
|
Six
months
|
|
|
Six
months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Revenue
|
$
|
Nil
|
|
$
|
Nil
|
|
Operating expenses
|
$
|
(314,415
|
)
|
$
|
(600,728
|
)
|
Other income (expenses):
|
|
|
|
|
|
|
Interest expense
|
$
|
(601,960
|
)
|
$
|
(1,035,903
|
)
|
Gain (loss) on change in fair
value of derivative liability
|
$
|
464,286
|
|
$
|
2,918,297
|
|
Amortization of debt discount
|
$
|
(320,332
|
)
|
$
|
(1,584,896
|
)
|
Bad-debt write off
|
$
|
(20,000
|
)
|
$
|
Nil
|
|
Gain (loss) on disposal of business
operations
|
$
|
7,565
|
|
|
Nil
|
|
Equity in income (loss) of
unconsolidated affiliate
|
$
|
Nil
|
|
|
6,145
|
|
Net loss
|
$
|
(784,846
|
)
|
$
|
(297,085
|
)
|
Operating expenses for the six months ended December 31, 2015
decreased as a primary result of decreases in selling, general and
administrative expenses.
Liquidity and Capital Resources
The following table provides selected financial data about our
company as of December 31, 2015, and June 30, 2015, respectively.
Working Capital
|
|
As at
|
|
|
As at
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2015
|
|
|
2015
|
|
Total current assets
|
$
|
39,720
|
|
$
|
115,020
|
|
Total current liabilities
|
$
|
2,930,274
|
|
$
|
2,571,497
|
|
Working capital (deficit)
|
$
|
(2,890,554
|
)
|
$
|
(2,456,477
|
)
|
Cash Flows
|
|
Six Months
|
|
|
Six Months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
Net cash used in operating
activities
|
$
|
(200,080
|
)
|
$
|
(697,552
|
)
|
Net cash used in investing activities
|
$
|
Nil
|
|
$
|
Nil
|
|
Net cash provided by
financing activities
|
$
|
158,000
|
|
$
|
704,668
|
|
Effect of foreign exchange on cash
|
$
|
(8,222
|
)
|
$
|
(7,834
|
)
|
Increase (Decrease) in cash
|
$
|
(50,302
|
)
|
$
|
(718
|
)
|
38
We had cash and cash equivalents of $13,796 as of December 31,
2015 compared to cash and cash equivalents of $56,914 as of June 30, 2015. We
had a working capital deficit of $2,890,554 as of December 31, 2015 compared to
a working capital deficit of $2,456,477 as of June 30, 2015.
The report of our auditors on our audited consolidated
financial statements for the fiscal year ended June 30, 2015, contains a going
concern qualification as we have suffered losses since our inception. We have
minimal assets and have achieved no operating revenues since our inception. We
have depended on loans and sales of equity securities to conduct operations.
Unless and until we commence material operations and achieve material revenues,
we will remain dependent on financings to continue our operations.
Anticipated Cash Requirements
We estimate that our expenses over the next 12 months will be
approximately $1,550,000 as described in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from shareholders or other sources.
Description
|
|
Estimated
|
|
|
Estimated
|
|
|
|
Completion
|
|
|
Expenses
|
|
|
|
Date
|
|
|
($)
|
|
General and administrative
|
|
12 months
|
|
$
|
300,000
|
|
Mining expenses (mainly technology related)
|
|
12 months
|
|
$
|
150,000
|
|
Tero acquisition expenses
|
|
12 months
|
|
$
|
500,000
|
|
Morinville expansion
|
|
12 months
|
|
$
|
400,000
|
|
Legal and accounting
|
|
12 months
|
|
$
|
200,000
|
|
Total
|
|
|
|
$
|
1,550,000
|
|
We intend to meet our cash requirements for the next 12 months
through the use of the cash we have on hand and through equity financing, debt
financing, or other sources, which may result in further dilution in the equity
ownership of our shares. We currently do not have any other arrangements in
place to complete any private placement financings and there is no assurance
that we will be successful in completing any such financings on terms that will
be acceptable to us.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
39
Inflation
The amounts presented in our financial statements do not
provide for the effect of inflation on our operations or financial position. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation adjustments.
Critical Accounting Policies and Estimates
Basis of presentation and consolidation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America.
These interim financial statements as of and for the six months
ended December 31, 2015 and 2014 are unaudited; however, in the opinion of
management, such statements include all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position, results
of operations and cash flows of our company for the periods presented. The
results for the six months ended December 31, 2015 are not necessarily
indicative of the results to be expected for the year ending June 30, 2016 or
for any future period. All references to December 31, 2015 and 2014 in these
footnotes are unaudited.
These unaudited condensed consolidated financial statements
should be read in conjunction with the audited financial statements and the
notes thereto for the year ended June 30, 2015, included in our companys annual
report on Form 10-K filed with the SEC on December 3, 2015.
The condensed balance sheet as of June 30, 2015 was restated
during the period ending December 31, 2015 and has been carried forward for the
period ending December 31, 2015, and do not include all disclosures required by
the accounting principles generally accepted in the United States of America.
Principal of Consolidation
The consolidated financial statements include the accounts of
our company, its wholly-owned subsidiary Alta Disposal Ltd. and its 51% owned
subsidiary Alta Disposal Morinville Ltd. (formerly Bluetap Resources Ltd.).
Intercompany accounts and transactions have been eliminated in consolidation in
conformity with the applicable accounting framework.
Use of Estimates
The preparation of consolidated financial statements in
conformity with United States generally accepted accounting principles 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 amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Our companys periodic filings with the Securities and Exchange
Commission include, where applicable, disclosures of estimates, assumptions,
uncertainties and markets that could affect the financial statements and future
operations of our company. Significant estimates that may materially change in
the near term include the valuation of derivative liabilities and the underlying
warrants, as well as fair value of investments.
40
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with original maturities of less than
three months, which are readily convertible to known amounts of cash and which,
in the opinion of management, are subject to an insignificant risk of loss in
value. Our company had $13,796 and $64,098 in cash and cash equivalents at
December 31, 2015 and June 30, 2015, respectively.
Concentration of Risk
Our company maintains cash balances at a financial institution
which, from time to time, may exceed Federal Deposit Insurance Corporation
insured limits for banks located in the US. As of December 31, 2015 and June 30,
2015, our company had $Nil and $Nil, respectively, in deposits in excess of
federally insured limits in its US bank. Our company has not experienced any
losses with regard to its bank accounts and believes it is not exposed to any
risk of loss on its cash in bank accounts.
Prepaid expenses
Prepaid expenses consist of security deposit for office lease
which will be expensed or refunded at the end of the lease period.
Start-Up Costs
In accordance with FASC 720-15-20
Start-Up Costs,
our
company expenses all costs incurred in connection with the start-up and
organization of our company.
Mineral Acquisition and Exploration Costs
Our company has been in the exploration stage since its
formation on May 31, 2006. It is primarily engaged in the acquisition,
exploration, and development of mining properties. Mineral property acquisition
and exploration costs are expensed as incurred. When it has been determined that
a mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs incurred to develop such property are
capitalized. Such costs will be amortized using the units-of-production method
over the estimated life of the probable reserves.
Concentrations of Credit Risk
Our companys financial instruments that are exposed to
concentrations of credit risk primarily consist of its cash and cash equivalents
and related party payables it will likely incur in the near future. Our company places its cash and cash equivalents with
financial institutions of high credit worthiness. At times, its cash and cash
equivalents with a particular financial institution may exceed any applicable
government insurance limits. Our companys management plans to assess the
financial strength and credit worthiness of any parties to which it extends
funds, and as such, it believes that any associated credit risk exposures are
limited.
41
Net Income or (Loss) per Share of Common Stock
Our company has adopted FASC Topic No. 260,
Earnings Per
Share
, (EPS) which requires presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. In
the accompanying financial statements, basic earnings (loss) per share is
computed by dividing net income (loss) by the weighted average number of shares
of common stock outstanding during the period.
Potentially dilutive securities are not presented in the
computation of EPS since their effects are anti-dilutive.
Foreign Currency Translations
Our companys functional and reporting currency is the US
dollar. All transactions initiated in other currencies are translated into US
dollars using the exchange rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies are translated into the
US dollar at the rate of exchange in effect at the balance sheet date.
Unrealized exchange gains and losses arising from such transactions are deferred
until realization and are included as a separate component of stockholders
equity (deficit) as a component of comprehensive income or loss. Upon
realization, the amount deferred is recognized in income in the period when it
is realized.
Translation of Foreign Operations
The financial results and position of foreign operations whose
functional currency is different from our companys presentation currency are
translated as follows:
- assets and liabilities are translated at period-end exchange
rates prevailing at that reporting date; and
- income and expenses are
translated at average exchange rates for the period.
Exchange differences arising on translation of foreign
operations are transferred directly to our companys accumulated other
comprehensive loss in the consolidated balance sheets. Transaction gains and
losses arising from exchange rate fluctuation on transactions denominated in a
currency other than the functional currency are included in the consolidated
statements of operations.
42
The relevant translation rates are as follows: For the period
ending December 31, 2015 closing rate at 0.7225 CDN$: US$, average rate at
0.7565 CDN$: US$ and for the year ended June 30, 2015 closing rate at 0.8017
CDN$: US$, average rate at 0.8518 CDN$: US$.
Comprehensive Income (Loss)
FASC Topic No. 220,
Comprehensive Income,
establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. As at December 31, 2015
and June 30, 2015, our company had no material items of other
comprehensive income except for the foreign currency translation
adjustment.
Risks and Uncertainties
Our company operates in the resource exploration industry that
is subject to significant risks and uncertainties, including financial,
operational, technological, and other risks associated with operating a resource
exploration business, including the potential risk of business failure.
Environmental Expenditures
The operations of our company have been, and may in the future
be, affected from time to time in varying degree by changes in environmental
regulations, including those for future reclamation and site restoration costs.
Both the likelihood of new regulations and their overall effect upon our company
vary greatly and are not predictable. Our company's policy is to meet or, if
possible, surpass standards set by relevant legislation by application of
technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental
and reclamation programs are charged against earnings as incurred or capitalized
and amortized depending on their future economic benefits. All of these types of
expenditures incurred since inception have been charged against earnings due to
the uncertainty of their future recoverability. Estimated future reclamation and
site restoration costs, when the ultimate liability is reasonably determinable,
are charged against earnings over the estimated remaining life of the related
business operation, net of expected recoveries.
Warrants
Our company accounts for currently outstanding detachable
warrants to purchase common stock as derivative liabilities as they are
freestanding derivative financial instruments. The warrants are recorded as
derivative liabilities at fair value, estimated using a Black-Scholes option
pricing model, and marked to market at each balance sheet date, with changes in
the fair value of the derivative liabilities recorded in the condensed
consolidated statements of operations and comprehensive Income (Loss).
Convertible Instruments
Our company evaluates and accounts for conversion options
embedded in its convertible instruments in accordance with ASC 815 Derivatives
and Hedging. It provide three criteria that, if met, require companies to bifurcate conversion options
from their host instruments and account for them as free standing derivative
financial instruments. These three criteria include circumstances in which (a)
the economic characteristics and risks of the embedded derivative instrument are
not clearly and closely related to the economic characteristics and risks of the
host contract, (b) the hybrid instrument that embodies both the embedded
derivative instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles with changes
in fair value reported in earnings as they occur and (c) a separate instrument
with the same terms as the embedded derivative instrument would be considered a
derivative instrument. Our company records, when necessary, discounts to
convertible notes for the intrinsic value of conversion options embedded in debt
instruments based upon the differences between the fair value of the underlying
common stock at the commitment date of the note transaction and the effective
conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their earliest date of notes
redemption.
43
Fair Value of Financial Instruments
ASC 820,
Fair Value Measurements and Disclosures
requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. ASC 820 establishes a fair
value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial instruments
categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. ASC 820 prioritizes the
inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets
or liabilities;
Level 2 - Inputs other than quoted prices included within Level
1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or
no market activity, therefore requiring an entity to develop its own assumptions
about the assumptions that market participants would use in pricing.
The carrying amounts of our companys financial assets and
liabilities, such as cash and cash equivalents, prepaid expenses, deposit,
accounts payable and accrued liabilities, and due to a related party approximate
their fair values because of the short maturity of these instruments.
Our companys Level 3 financial liabilities consist of the
liability of our companys secured convertible promissory notes and debentures
issued to investors, and the derivative warrants issued in connection with these
convertible promissory notes and debentures. There is no current market for
these securities such that the determination of fair value requires significant
judgment or estimation. Our company used a fair value model which incorporates
transaction details such as Company stock price, contractual terms, maturity,
risk free rates, as well as assumptions about future financings, volatility, and
holder behavior as of the date of issuance and each balance sheet date.
44
Revenue Recognition
Our company has generated little revenues to date. It is our
companys policy that revenue from product sales or services will be recognized
in accordance with ASC 605 Revenue Recognition. Four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. Our company will defer any revenue for
which the product/services was not delivered or is subject to refund until such
time that our company and the customer jointly determine that the
product/service has been delivered or no refund will be required.
Sales comprise the fair value of the consideration received or
receivable for the sale of goods and rendering of services in the ordinary
course of our companys activities. Sales are presented, net of tax, rebates and
discounts, and after eliminating intercompany sales. Our company recognizes
revenue when the amount of revenue and related cost can be reliably measured and
it is probable that the collectability of the related receivables is reasonably
assured.
Income Taxes
Our company recognizes the tax effects of transactions in the
year in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under FASC 740-20-20 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years.
Receivables
Trade and other receivables are customer obligations due under
normal trade terms and are recorded at face value less any provisions for
uncollectible amounts considered necessary. Our company includes any balances
that are determined to be uncollectible in its overall allowance for doubtful
accounts. Our company recorded $Nil (June 30, 2015 - $18,984) in allowance for
doubtful accounts.
FASB Statements:
In June 2009 the FASB established the Accounting Standards
Codification ("Codification" or "ASC") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in accordance with generally accepted
accounting principles in the United States ("GAAP"). Rules and interpretive
releases of the Securities and Exchange Commission ("SEC") issued under
authority of federal securities laws are also sources of GAAP for SEC registrants.
Existing GAAP was not intended to be changed as a result of the Codification,
and accordingly the change did not impact our financial statements. The ASC does
change the way the guidance is organized and presented.
45
Accounting Standards Updates ("ASUs") through ASU No. 2014-08
which contain technical corrections to existing guidance or affect guidance to
specialized industries or entities were recently issued. These updates have no
current applicability to our company or their effect on the financial statements
would not have been significant.
Recent Accounting Pronouncements
In August 2015, the FASB issued ASU 2015-15 Interest
Imputation of Interest (Subtopic 835-30) Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
(Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015
EITF Meeting). The guidance issued previously in ASU 2015-03 did not address
presentation or subsequent measurement of debt issuance costs related to
line-of-credit arrangements. Given the absence of authoritative guidance within
ASU 2015-03, the SEC staff stated that they would not object to an entity
deferring and presenting debt issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs ratably over the term of the
line-of-credit arrangement, regardless of whether there are any outstanding
borrowings on the line-of-credit arrangement. Our company does not anticipate a
material impact to our companys financial statements as a result of the
amendments.
In September 2015, the FASB issued ASU 2015-16 an update to its
guidance on business combinations. The new guidance requires that an acquirer
recognize adjustments to provisional amounts that are identified during the
measurement period in the reporting period in which the measurement amounts are
determined. The new guidance also requires that the acquirer records, in the
same periods financial statements, the effect on earnings of changes in
depreciation, amortization, or other income effects, if any, as a result of the
change to the provisional amounts, calculated as if the accounting had been
completed as of the acquisition date. The new guidance also requires an entity
to present separately on the face of the income statement, or disclose in the
notes, the portion of the amount recorded in current-period earnings by line
item that would have been recorded in previous reporting periods if the
adjustment to the provisional amounts had been recognized as of the acquisition
date. Our company does not anticipate a material impact to our companys
financial statements as a result of the amendments.