UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
August 31, 2016
[ ]
TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to [
]
Commission file number
000-51866
ENERTOPIA CORP.
(Exact name of registrant as specified in its charter)
Nevada
|
20-1970188
|
(State or other jurisdiction of incorporation or
|
(I.R.S. Employer Identification No.)
|
organization)
|
|
#950-1130 WEST PENDER STREET, VANCOUVER,
|
|
BRITISH
|
|
COLUMBIA, CANADA
|
V6E 4A4
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code:
604-602-1675
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
|
Name of Each Exchange On Which Registered
|
N/A
|
N/A
|
Securities registered pursuant to Section 12(g) of the
Act:
N/A
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 the Securities Act.
Yes
[ ] No [X]
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act
Yes
[ ] No [X]
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the last 90 days.
Yes
[X] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company [X]
|
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes
[ ] No [X]
State the aggregate market value of voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and ask price of such common
equity, as of the last business day of the registrants most recently completed
second fiscal quarter.
The aggregate market value of Common Stock held by
non-affiliates of the Registrant on February 28, 2016 was $679,975 based on a
$0.01 closing price for the Common Stock on February 29, 2016. For purposes of
this computation, all executive officers and directors have been deemed to be
affiliates. Such determination should not be deemed to be an admission that such
executive officers and directors are, in fact, affiliates of the Registrant.
Indicate the number of shares outstanding of each of the
registrants classes of common stock as of the latest practicable date.
93,562,031 common shares as of November 1,
2016
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PART I
This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.
In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the common shares in our capital stock.
As used in this annual report and unless otherwise indicated,
the terms "we", "us", "our, our Company, the Company, and "Enertopia" mean
Enertopia Corp.
General Overview
Enertopia Corp. was formed on November 24, 2004 under the laws
of the State of Nevada and commenced operations on November 24, 2004.
From inception until April 2010, we were primarily engaged in
the acquisition and exploration of natural resource properties. Beginning in
April 2010, we began our entry into the renewable energy sector by purchasing an
interest in a solar thermal design and installation company. In late summer
2013, we began our entry into medicinal marijuana business. During our 2014
fiscal year end our activities in the clean energy sector were discontinued.
During fiscal 2015 our activities in the Medicinal Marijuana sector were also
discontinued.
The Company is actively pursuing business opportunities in the
resource sector, whereby we signed a definitive agreement for a Lithium Brine in
May 2016. The Company continued in the health and wellness sector throughout
2015 and 2016, where the Company had launched the product V-Love
TM
.
For strategic reasons the Company had discontinued the manufacturing and retail
distribution of V-Love
TM
at the end of fiscal 2016. The Companys
main focus is in natural resource sector and patent pending technology used for
Lithium extraction through brines.
The address of our principal executive office is Suite 950,
1130 West Pender Street, Vancouver, British Columbia V6E 4A4. Our telephone
number is (604) 602-1675. In addition, we have a second office located in
Kelowna, British Columbia. Our current locations provide adequate office space
for our purposes at this stage of our development.
Summary of Recent Business
Our Company is diverse in its pursuit of business opportunities
in the natural resource sector and technology used in the resource sector.
On
October 23, 2015,
the Companys Board has appointed
Kevin Brown as a Director of the Company and Victor Lebouthillier as an advisor
to the Board of Directors.
On
October 23, 2015
, the Board of Directors accepted the
resignation of Donald Findlay as Director of the Company.
On
October 23, 2015
, we granted 1,850,000 stock options
to Directors, Executives and Consultants of the Company. The exercise price of
the stock options is $0.05, vested immediately, expiring October 23, 2020.
On
December 16, 2015
, we extended two classes of
warrants by two years with all other terms and conditions remaining the same. We
approved the expiry extension from January 31, 2016 till January 31, 2018 on
2,167,160 warrants that remain outstanding from the non-brokered private
placement that closed on January 31, 2014. The Company approved the expiry
extension from February 13, 2016 till February 13, 2018 on 7,227,340 warrants
that remain outstanding from the non-brokered private placement that closed on
February 13, 2014.
On
February 4, 2016,
the Companys Board has appointed
Olivier Vincent as an Advisor the Board of Directors and a consultant for a term
of one year and granted 100,000 stock options to Olivier Vincent. The exercise
price of the stock options is $0.05, vested immediately, expiring February 4,
2021. We issued 100,000 common shares at a price of $0.05 per share on exercise
of these options.
On
March 9, 2016,
we closed a binding Letter Of Intent
to acquire 100% of an established profitable private nutritional
vitamin/supplement company. The private nutritional vitamin/supplement company
has been in business for over 5 years showing good positive cash flows. All
products are manufactured by a GMP, NSF, FDA approved manufacturer in the United
States. Enertopia has agreed subject to further due diligence, review of
financials and financing to a total amount of $350,000 for the acquisition, with
$300,000 due on the signing of the Definitive Purchase Agreement. The Definitive
Purchase Agreement is expected to be completed before the end of April. The
Company did not further pursue this.
On
April 21, 2016,
Enertopia has signed a binding letter
of intent with a to enter into negotiations to effect the optional acquisition
of certain placer mining claims (the
Claims
) in Nevada covering
approximately 2,560 acres from S P W Inc. S P W Inc. holds the Claims directly
(
Underlying Owner
). Upon the closing date of the transaction (the
Effective Date
) S P W Inc. will have the right to transfer, option,
sell or assign the Claims to Enertopia. The Placer mining claims and any
underlying agreements will be acquired by Enertopia through a mineral property
option agreement, an assignment agreement or an asset acquisition (the
Transaction
).
On
May 12, 2016
Enertopia has signed the Definitive
Agreement with the Vendor respecting the option to purchase a 100% interest in
approximately 2,560 acres of placer mining claims in Churchill, Lander and Nye
Counties Nevada, USA. These placer mining claims are subject to a 1.5% NSR from
commercial production with the Company able to buy back the NSR at the rate of
$500,000 per 0.5% NSR.
On
May 20, 2016
, Enertopia closed the first tranche of a
private placement of 6,413,333 units at a price of CAD$0.015 per unit for gross
proceeds of USD$74,074 (CAD$96,200). Each Unit consists of one common share of
the Company and full non-transferable Share purchase warrant (each whole
warrant, a Warrant). Each Warrant will be exercisable into one further Share
(a Warrant Share) at a price of US$0.05 per Warrant Share at any time until
the close of business on the day which is 18
months
from the date of
issue of the Warrant, and thereafter at a price of US$0.10 per Warrant Share at
any time until the close of business on the day which is 36
months
from
the date of issue of the Warrant. A cash finders fee of USD$5,421 (CAD$7,040)
and 469,333 full broker warrants that expire May 20, 2019 was paid to Canaccord
Genuity and Haywood.
On
June 8, 2016
, Enertopia closed its final tranche of a
private placement of 3,016,667 units a price of CAD$0.015 per unit for gross
proceeds of US$34,390 (CAD$45,250). Each Unit consists of one common share of
the Company and full non-transferable Share purchase warrant (each whole
warrant, a Warrant). Each Warrant will be exercisable into one further Share
(a Warrant Share) at a price of US$0.05 per Warrant Share at any time until
the close of business on the day which is 18
months
from the date of
issue of the Warrant, and thereafter at a price of US$0.10 per Warrant Share at any time until the close of
business on the day which is 36
months
from the date of issue of the
Warrant. A cash finders fee of USD$2,508 (CAD$3,300) and 286,666 full broker
warrants that expire June 8, 2019 was paid to Canaccord Genuity, Leede Jones
Gable, PI Financial and Mackie Research.
On
August 9, 2016,
we closed the first tranche of a
private placement of 4,500,000 units at a price of CAD$0.035 per unit for gross
proceeds of USD$120,078 (CAD$157,500). Each unit consists of one common share of
our Company and one non-transferable share purchase warrant, each full warrant
entitling the holder to purchase one additional common share of our Company for
a period of 24 months from the date of issuance, at a purchase price of
USD$0.07.
On
August 10, 2016,
we retained a private consulting
firm to assist with mergers, acquisitions and market awareness for a 12 month
contract. The consulting firm operates a resource holding company that has been
active in acquiring out of favor mining assets over the past several years. It
also provides breaking news, commentary and analysis on listed companies. We
engaged and paid the consulting firm USD$75,000.
On
August 15, 2016
binding Letter of Intent was signed
by us and Genesis Water Technologies, Inc.
("
GWT
") with regard to
the acquisition by Enertopia (the "
Acquisition
") of the exclusive
worldwide licensing rights (the "
Licensing Rights
") of all of the
technology used in the process of recovering and extraction of battery grade
lithium carbonate powder Li2CO3 grading 99.5% or higher purity from brine
solutions (the "
Technology
") and covered under patent pending process
#XXXXXX (the "
Pending Patent
"). On August 15, 2016, we issued 250,000
common shares at an exercise price of $0.05 per share as per the binding LOI
signed with Genesis Water Technologies Inc.
Subsequent to year end, on
September 19, 2016
, we
entered into a one year Investor Relations Consulting agreement with Duncan
McKay. Based on the terms of the agreement, Mr. McKay can earn up to a maximum
of 10% commissions on capital raised. We issued 800,000 stock options with an
exercise price of $0.07.
Subsequent to year end, on
September 23, 2016
, we closed
the final tranche of a private placement of 3,858,571 units at a price of
CAD$0.035 per unit for gross proceeds of CAD$135,050. Each unit consists
of one common share of our Company and one non-transferable share purchase
warrant, each full warrant entitling the holder to purchase one additional
common share of our Company for a period of 24 months from the date of issuance,
at a purchase price of US$0.07. A cash finders fee of CAD$3,300 and 286,666
full broker warrants that expire June 8, 2019 was paid to Canaccord Genuity and
Leede Jones Gable.
Subsequent to year end, on
October 7, 2016
, we issued
175,000 common shares of our Company and paid $5,000 to comply with the
Definitive Agreement signed May 12, 2016.
Chronological Overview of our Business over the Last Five
Years
Upon our inception on November 24, 2004, we were engaged in the
acquisition and exploration of natural resource properties. On April 6, 2005 we
entered into an Exploration Agreement with Options for Joint Venture with
Miranda U.S.A., Inc. We had the option of acquiring an undivided 60% interest in
Mirandas lease in sixty-four mineral claims situated in Eureka County, Nevada.
During the fiscal year ended August 31, 2007, we abandoned our option to acquire
the 60% interest in the Eureka County mineral lease claims.
Our management determined that the mineral exploration business
did not present the best opportunity for our company to realize value for our
shareholders at that time, and therefore investigated opportunities for our
Company to enter the natural gas and oil exploration sector. Accordingly, we
abandoned our previous business plan and focused on the exploration and
development of natural gas and oil properties.
On April 16, 2007, we acquired a 25% (net 15%) before payout
(12.5% (net 7.5%)) after payout interest in Queensdale, Saskatchewan Project
(known as the Queensdale Property) from 0743608 B.C. Ltd., a company controlled
by a Director/CEO of our company, for a total cost of CAD$250,000 and 250,000
shares (post consolidation) of our common stock.
On November 30, 2007, we completed the acquisition of all the
issued and outstanding common stock of Target Energy pursuant to a share
exchange agreement dated October 15, 2007 among our company, as purchaser, and
all of the shareholders of Target Energy, as vendors. In exchange for all of the
issued and outstanding shares of Target Energy, we issued to the shareholders of
Target Energy an aggregate of 6,905,000 shares (post consolidation) of our
common stock. Through our acquisition of Target Energy, we acquired an 8% gross
interest before payout in the Queensdale, Queensdale West HZ 4A9-25/3A15-25-6-2
W2 well (known as the Queensdale West property). We also acquired a 3.75% net
interest in two wells located in Wordsworth, Saskatchewan (known as the
Wordsworth property), which had one well at the time of acquisition and
eventually would see a second well drilled.
On April 21, 2008, we acquired a passive minority interest in
Pro Eco Energy USA Ltd., a private corporation focused on the installation and
integration of alternative energy mainly solar thermal systems in Western
Canada.
On May 14, 2008, we acquired one land parcel of 160 acres in
the Glen Park area of central Alberta, Canada. We subsequently entered into a
50/50 Joint Venture with Vanguard Exploration to explore and develop the joint
lands on Alberta Petroleum and Natural Gas Lease No. 0408050364. The joint
venture owns the Petroleum and Natural Gas rights below the base of the
Mannville GRP to basement.
On June 11, 2008, we acquired two land parcels of 160 acres
each in the Glen Park area of central Alberta, Canada. These 320 acres were
believed to be prospective for reef development and the potential accumulation
of oil deposits. We own the Petroleum and Natural Gas rights below the base of
the Mannville GRP to basement as to 100%.
In November 2008, the Wordsworth property that had the second
well was drilled and completed as a successful oil well in December 2008.
On December 8, 2008, Enertopia and its partner were successful
in acquiring 800 acres of land in the Coteau Lake project area and our company
owned a 50% gross and net interest in a total of 2,080 acres of land in this
area.
On July 31, 2009, we sold all of our interests in the
Queensdale, West Queensdale, and the Wordsworth properties for an aggregate
amount of CAD$453,116.
Effective September 1, 2009, we entered into an assignment
agreement with Cheetah Oil & Gas Ltd. The assignment agreement dated August
28, 2009, provides for the purchase by our company of a revenue interest of
40.432% of an 8% share of Cheetahs net revenue after field operating expenses
from the Belmont Lake PP F-12-4 horizontal well, located in Belmont Lake Field,
Wilkinson County, Mississippi. As consideration, we agreed to pay to Cheetah
57.76% of Cheetahs costs currently budgeted at $77,905.36, subject to revision
and 57.76% of Cheetahs 8% share of PP F-12-4 well costs from time to time for
infrastructure, pipes, tanks, compressors, trucking, etc. On May 31, 2010, this
assigned interest was converted into common shares and warrants of Cheetah Oil
& Gas Ltd, leaving our company with no direct interest in this well. As a
result, we have 375,000 restricted common shares in the capital of Cheetah and
375,000 share purchase warrants which entitled our company to acquire 375,000
restricted common shares in the capital of Cheetah at a purchase price of
US$0.20 per share for a period of two years.
Effective September 1, 2009, we entered into an assignment
agreement with Lexaria Corp. The assignment agreement dated August 28, 2009,
provides for the purchase by our company of a revenue interest of 13.475% of a
32% share of Lexarias net revenue after field operating expenses from the
Belmont Lake PP F-12-4 horizontal well, located in Belmont Lake Field, Wilkinson
County, Mississippi. As consideration, we agreed to pay to Lexaria 19.25% of
Lexarias costs currently budgeted at $311,621.44, subject to revision and
19.25% of Lexarias 32% share of PP F-12-4 well costs from time to time for
infrastructure, pipes, tanks, compressors, trucking, etc. On May 31, 2010, this
assigned interest was converted into common shares and warrants of Lexaria Corp,
leaving our company with no direct interest in this well. As a result, we have
499,893 restricted common shares in the capital of Lexaria and 499,983 share
purchase warrants which entitle our company to acquire 499,983 restricted common
shares in the capital of Lexaria at a purchase price of US$0.20 per share for a
period of two years.
Effective September 25, 2009, we effected a one (1) for two (2)
share consolidation of our authorized and issued and outstanding common stock.
As a result, our authorized capital decreased from 75,000,000 shares of common
stock with a par value of $0.001 to 37,500,000 shares of common stock with a par
value of $0.001 and our issued and outstanding shares decreased from 29,305,480
shares of common stock to 14,652,740 shares of common stock. The consolidation
became effective with the Over-the-Counter Bulletin Board at the opening for
trading on September 25, 2009 under the new stock symbol On October 9, 2009, we
appointed Bal Bhullar as our chief financial officer. Concurrent with the
appointment of Ms. Bhullar, we entered into an initial six-month management
agreement, thereafter month to month, with BKB Management Ltd., a consulting
company controlled by Bal Bhullar.
On October 9, 2009, we entered into a month to month management
agreement with Mark Snyder, whereby Mark Snyder agreed to act as the Chief
Technical Officer of the Company. Mr. Snyders appointment was made in
connection with the transition of our operations away from natural resources
into the renewable energy sector.
On January 31, 2010, we entered into an Independent Sales and
Marketing Representative Agreement with Global Solar Water Power Systems Inc., a
private company beneficially owned by Mark Snyder, the Companys Chief Technical
Officer.
On February 8, 2010, we changed our name from Golden Aria Corp.
to Enertopia Corp. Our CUSIP was changed to
29277Q1047.
On February 22, 2010, we increased our authorized share capital
to 200,000,000 common shares.
On February 28, 2010, we entered into an Asset and Share
Purchase Agreement with Mr. Mark Snyder to acquire up to 20% ownership interest
of Global Solar Water Power Systems Inc. (GSWPS). Effective March 26, 2010,
our stock quotation under the symbol GLCP was deleted from the OTC Bulletin
Board. The symbol was deleted for factors beyond our companys control due to
various market makers electing to shift their orders from the OTCBB to the Pink
OTC Markets Inc. As a result of these market makers not providing a quote on the
OTCBB for four consecutive days our company was deemed to be deficient in
maintaining a listing standard at the OTCBB pursuant to Rule 15c2-11. That
determination was made entirely without our companys knowledge.
On April 7, 2010, FINRA confirmed the name change from Golden
Aria Corp. to Enertopia Corp., and approved our new symbol "ENRT".
On May 31, 2010, we closed a private placement financing of
557,500 units at a price of $0.15 per unit for gross proceeds of $83,625. Each
unit consisted of one share of common stock in the capital of our company and
one non-transferable share purchase warrant, each full warrant entitling the
holder to purchase one additional share of common stock in the capital of our
company until May 31, 2012, at a purchase price of $0.30 per share.
On August 12, 2010, we received approval for listing on the
Canadian National Stock Exchange. Trading date commenced on August 13, 2010
under the symbol "
TOP"
.
During the year ended August 31, 2010, our oil and gas
properties became available for sale as the result of our company shifting its
focus from the non-renewable energy sector to the renewable energy sector.
Pursuant to Accounting Standards Codification 360 Accounting for the Impairment
or Disposal of long-Lived Assets, we reclassified the remaining oil and gas
properties to be sold as assets held for sale and recorded at their recoverable
amount on August 31, 2010. In the year ended August 31, 2011, we received a cash
payment of $100,000 from the sale.
On January 31, 2011, the Company entered into a letter of
intent and paid US$7,500 deposit to Wildhorse Copper Inc. and its wholly owned
subsidiary Wildhorse Copper (AZ) Inc. (collectively, the Optionors). On April
11, 2011, the Company signed a Mineral Purchase Option Agreement with the
Optionors respecting an option to earn a 100% interest, subject to a 1% NSR
capped to a maximum of $2,000,000 in a property known as the Copper Hills
property. The Copper Hills property was comprised of 56 located mining claims
covering a total of 1,150 acres located in New Mexico, USA. The Optionors held
the Copper Hills property directly and indirectly through property purchase agreements between the Optionors and third parties
(collectively, the Indirect Agreements). Pursuant to the Option Agreement the
Optionors assigned the Indirect Agreements to the Company. In order to earn the
interest in the Copper Hills property, the Company was required to make
aggregate cash payments of $591,650 over an eight year period and issue an
aggregate of 1,000,000 shares of its common stock over a three year period. As
at August 31, 2012, the Company issued 500,000 shares at price of $0.15 per
share and 150,000 shares at price of $0.10 per share to the Optionors and made
aggregate cash payment of $106,863 (August 31, 2011-$72,045); the Company has
expensed the exploration costs of $143,680 (August 31, 2011-$14,094).
On March 3, 2011, we closed a private placement of 8,729,000
units at a price of CAD$0.10 per unit for gross proceeds of CAD$872,900,
US$893,993. Each unit consisted of one common share in the capital of our
company and one non-transferable share purchase warrant, each full warrant
entitling the holder to purchase one additional common share in the capital of
our company until March 3, 2013, subject to accelerated expiry as set out in the
warrant certificate, at a purchase price of CAD$0.20. Per the terms of the
Subscription Agreement, our company granted to the Subscribers a participation
right to participate in future offerings of our securities as to their pro rata
shares for a period of 12 months from the closing of the private placement. We
paid broker commissions of $48,930 in cash and issued 489,300 brokers warrants.
Each full warrant entitled the holder to purchase one additional common share in
the capital of our company until March 3, 2013, subject to accelerated expiry as
set out in the warrant certificate, at a purchase price of CAD$0.20.
On March 16, 2011, we entered into a debt settlement agreement
with an officer of our company, whereby we issued 78,125 shares of common stock
in connection with the settlement of $12,500 debt at a deemed price of $0.16 per
share pursuant to a consulting agreement. We recorded $12,422 in additional paid
in capital for the gain on the settlement of the debt.
On April 27, 2011, we entered into a debt settlement agreement
with the President of our Company regarding a related party in the amount of
$46,000, whereby $25,000 was settled by issuing common shares of 100,000, and
$21,000 was forgiven for Nil consideration. In connection with the debt
settlement, we recorded $100 in share capital and $45,900 in additional paid in
capital for the gain on the settlement of the debt.
On May 31, 2011, we settled the amount due to related parties
into two promissory notes of $80,320 (CAD$84,655) and $90,000. Both promissory
notes were unsecured, non-interest bearing and due on May 31, 2012 at an imputed
interest rate of 12% per annum upon the settlement. On April 27, 2011, we
entered into a debt settlement agreement with one of the holders, a company
controlled by the Chairman/CEO of our Company, whereby we issued 360,000 common
shares to the holder, and the holder agreed to accept the shares as full and
final payment of the promissory note of $90,000. On the same day, we entered
into a debt settlement agreement with a company controlled by the Chairman/CEO
of our Company, whereby the holder agreed to forgive the repayment of debt for
Nil consideration. In connection with the settlements and forgiveness of the
above promissory notes, the Company recorded $79,997and $77,415 in additional
paid in capital for the gain on settlement of debt, respectively.
On June 22, 2011, Chang Lee LLP (Chang Lee) resigned as our
independent registered public accounting firm because Chang Lee was merged with
another company: MNP LLP (MNP). Most of the professional staff of Chang Lee
continued with MNP either as employees or partners of MNP and continued their
practice with MNP. On June 22, 2011, we engaged MNP as our independent
registered public accounting firm.
On July 19, 2011, we entered into a letter of intent and paid
US$15,000 deposit to Altar Resources. Subsequent to August 31, 2011, on October
11, 2011, we signed a Mineral Purchase Option Agreement with Altar Resources
with respect to an option to earn 100% interest, subject to a 2.5% NSR in a
property known as Mildred Peak. The mining claims were located in Arizona, and
covered approximately 6,220 acres controlled by Altar Resources directly and
indirectly through federal mining claims and state mineral exploration leases.
The Company was required to make aggregate cash payments of $881,000 over a five
year period and issue an aggregate of 1,000,000 shares of its common stock over
a four year period. As at August 31, 2012, Enertopia had made aggregate cash
payments of $84,980 and issued 100,000 shares at price of $0.10 per share to
Altar Resources, and expensed the exploration costs of $31,423 in relation to
the property.
On January 6, 2012, we entered into a share purchase agreement
with a third party. The Company agreed to sell to the Purchaser 250,000 units of
Lexaria Corp. at a purchase price of US$0.15 per unit, for a total of US$37,500,
by the effective closing date of January 6, 2012. In addition, pursuant to the
terms of the Agreement, the purchaser had an option, at its sole discretion, to
pay US$0.25 per unit or approximately US$62,500 to purchase the remaining
249,893 units on or before March 2, 2012. The Purchaser did not exercise the
option to purchase the remaining 249,893 units.
On February 9, 2012, the Company signed a Loan Agreement with
Robert McAllister, director of the Company to borrow $50,000 (CAD$50,000). The
loan was unsecured, due on May 9, 2012 and subject to an interest rate of 10%
per annum. This loan was repaid in full in 2014.
On March 19, 2012, the Companys Board appointed Dr. John
Thomas as Director and Mr. Tony Gilman and Dr. Stefan Kruse as Advisors of the
Company. The Company concurrently granted an additional 450,000 stock options to
Directors and Advisors of the Company. The exercise price of the stock options
was $0.15, of which 225,000 options vested immediately and 225,000 options
vested on August 15, 2012. The options expire March 19, 2017. On March 27, 2012,
the Company granted 250,000 stock options to an Investor Relations company with
an exercise price of $0.15, of which 125,000 vested immediately and 125,000
vested on June 27, 2012, all of which expire on March 27, 2017.
On April 10, 2012, the Company granted 25,000 stock options to
a consultant of the Company with an exercise price of $0.15, which vested
immediately and expire on April 10, 2017.
All proposals were approved by the shareholders. The proposals
are described in detail in the Companys definitive proxy statement filed with
the Securities and Exchange Commission on March 13, 2012.
On April 10, 2012, the Company issued 93,750 common shares in
connection with the settlement of debt of $9,375 at a price of $0.10 per common
share pursuant to a consulting agreement (See Note 11(h)).
On April 13, 2012, the Company closed an offering memorandum
placement of 2,080,000 units at a price of CAD$0.10 per unit for gross proceeds
of CAD$208,000, US$208,000. Each Unit consisted of one common share of the
Issuer and one common share purchase warrant. Each warrant was exercisable into
one further common share at a price of US$0.15 per warrant share for a period of
twelve months following closing; or at a price of US$0.20 per warrant for the
period that was twelve months plus one day to twenty-four months following
closing. The Company paid broker commissions of $14,420 in cash and issued
144,200 brokers warrants in connection with the private placement.
On July 27, 2012, the Company closed the first tranche of an
offering memorandum placement of 600,000 units at a price of CAD$0.05 per unit
for gross proceeds of CAD$30,000 or US$30,000. Each Warrant was exercisable into
one further share at a price of US$0.10 per warrant share for a period of twelve
months following closing; or at a price of US$0.20 per warrant share for a
period that is twelve months and one day to thirty-six months following closing.
The Companys President and CEO participated in the private placement for
$10,000.00 and $5,000.00 dollars respectively. The Company issued 60,000 brokers
warrants in connection with the private placement.
On July 30, 2012, the Company entered into a share purchase
agreement with the President of the Company, Robert McAllister. The Company sold
to Mr. McAllister 249,893 shares of Lexaria Corp. at a purchase price of
US$0.075 per share, for a total of US$18,741. As at August 31, 2012, the
difference of the purchase price of $0.075 per share and the stock market price
of $0.11 per share, in the amount of $8,746, was recorded as stock based
compensation.
On August 24, 2012, the Company closed the second tranche of an
offering memorandum placement of 160,000 units at a price of CAD$0.05 per unit
for gross proceeds of CAD$8,000 or US$8,000. Each warrant was exercisable into
one further share at a price of US$0.10 per warrant share for the period of
twelve months following closing; or at a price of US$0.20 per warrant share for
the period of twelve months and one day to thirty-six months following closing. The Companys President participated in the private
placement for $4,000.00 dollars. The Company issued 16,000 brokers warrants in
connection with the private placement for broker commissions.
On September 28, 2012, the Company closed an offering
memorandum placement of 995,000 units at a price of CAD$0.05 per unit for gross
proceeds of CAD$49,750 or US$49,750. Each Unit consisted of one common share of
the Issuer and one common share purchase warrant. Each warrant was exercisable
into one further common share at a price of US$0.15 per warrant share for a
period of twelve months following closing; or at a price of US$0.20 per warrant
for the period of twelve months plus one day to twenty-four months following
closing. The Company issued 79,500 shares, 79,500 warrants and 79,500 broker
warrants in connection with the private placement.
On October 24, 2012, the Company issued 100,000 common shares
to Altar Resources at the price of $0.06. per share ($6,000 in the aggregate)
pursuant to its option agreement for Mildred Peak property
On November 15, 2012, the Company closed an offering memorandum
placement of 1,013,000 units at a price of CAD$0.05 per unit for gross proceeds
of CAD$50,650 or US$50,650. Each Unit consisted of one common share of the
Issuer and one common share purchase warrant. Each warrant was exercisable into
one further common share at a price of US$0.10 per warrant share for a period of
twelve months following closing; or at a price of US$0.20 per warrant for the
period of twelve months plus one day to twenty-four months following closing.
The Company issued 38,000 common shares, 101,300 units, and 101,300 broker
warrants in connection with the private placement.
As at August 31, 2012, we had acquired a 9.82% (August 31, 2011
8.14%) ownership interest in Global Solar Water Power Systems Inc. (GSWPS)
pursuant to our February 28, 2010 Asset and Share Purchase Agreement with Mr.
Mark Snyder. The aggregate purchase cost was $145,500 and an issuance of 500,000
shares of the Company at $0.25 per share for a combined value of $270,500. In
November 2012, we obtained a valuation report from RwE Growth Partners Inc.
regarding our investment in GSWPS. As a result of the report, the Companys
long-term investment in GSWPS was written down to $68,500 during fiscal 2012.
On March 1, 2013, we settled accrued consulting fees of $42,000
payable to Mr. Mark Snyder by transferring 1.68% of our ownership interest in
GSWPS back to Mr. Snyder, thereby reducing the our interest in GSWPS from 9.82%
to 8.14% . During the year ended August 31, 2013, based on our managements
assessment of GSWPSs current operations, we wrote down our long-term investment
in GSWPS to $1.
On March 1, 2013, the Company settled a debt of $16,000
incurred from September 1, 2011 to February 28, 2013 for consulting fees paid to
Mr. Mark Snyder by issuing 160,000 restricted common shares of the Company at a
price of $0.10 per share.
On May 30, 2013, the Company terminated its Option Agreement
with Altar Resources with respect to the Mildred Peak property.
On June 26, 2013, the Company terminated its Option Agreement
with Wildhorse Copper Inc. with respect to the Copper Hills property.
On September 17, 2013 we entered into an AMI Participation
Agreement with Downhole Energy LLC to participate in 100% gross interest and 75%
net revenue interest for drilling, completion and production of up to 100 oil
wells on certain oil and gas leases covering 2,924 in the historic field located
in Forest and Venango counties, Pennsylvania. On execution of this agreement we
issued 100,000 of our common shares to Downhole Energy LLC. The Company decided
not to continue with the agreement and wrote off the asset.
On October 4, 2013 we entered into a consulting agreement with
Olibri Acquisitions and issued 750,000 of our common shares to Olibri.
On November 1, 2013 we entered into a Letter of Intent
Agreement (LOI) with 0786521 BC Ltd. (also known as World of Marijuana
Productions Ltd. or WOM) to acquire 51% of the issued and outstanding capital
stock of WOM. WOM was the owner and operator of a Medical Marihuana operation
located in Mission, British Columbia, Canada. The LOI was not comprehensive and
subject to the negotiation of a definitive agreement. Upon execution of the LOI,
we issued 10,000,000 of our common shares to WOM. The LOI was superseded by our
joint venture agreement with WOM dated January 16, 2014, described below.
On November 5, 2013 we granted 675,000 stock options to
directors, officers, and consultant of our Company with an exercise price of
$0.06 vested immediately, expiring November 5, 2018.
On November 18, 2013, we granted 25,000 stock options to
consultant of our with an exercise price of $0.09 vested immediately, expiring
November 18, 2018.
On November 18, 2013, we entered into an investor relations
contract with Coal Harbour Communications Inc. The initial term of this
agreement began on the date of execution of the agreement and continue for
two months
. Thereafter the agreement continues on a month-by-month basis
subject to cancelation by 30 days written notice. In consideration for the
services the Company paid the designees of Coal Harbour Communications a
one-time payment of two hundred thousand shares (200,000) of our restricted
common stock. We also agree to pay to Coal Harbour Communications a monthly fee
of $5,000 payable on the 1st day of each monthly period starting 60 days from
the signing of the agreement and $500 per month to cover expenses incurred on
our Companys behalf. Any expenses above $500 per month must be pre-approved.
On November 26, 2013, our Company closed the first tranche of a
private placement of 2,720,000 units at a price of CAD$0.05 per unit for gross
proceeds of CAD$136,000 ($136,000). Each warrant is exercisable into one further
share at a price of US$0.10 per warrant share for a period of thirty-six month
following the close.
On November 29, 2013, our wholly-owned subsidiary, Target
Energy, Inc. was discontinued and dissolved.
On December 23, 2013, we closed the final tranche of a private
placement of 2,528,000 units at a price of CAD$0.05 per unit for gross proceeds
of CAD$126,400 ($126,400). Each warrant is exercisable into one further share at
a price of $0.10 per warrant share for a period of thirty-six months following
closing. We also paid a cash finders fee of $10,140 and 202,800 broker warrants
to Canaccord Genuity and Wolverton Securities that are exercisable into one
common share per warrant at a price of $0.10 that expire on December 23, 2016.
On January 1, 2014, we entered into a Social Media/Web
Marketing Agreement with Stuart Gray. The initial term of the agreement began on
the date of execution and continued for three
months. In consideration
for the services we paid Stuart Gray a monthly fee of $5,000. As additional
compensation we issued 200,000 stock options to Mr. Gray. The exercise price of
the stock options is $0.075, with 100,000 stock options vested immediately,
50,000 stock options vested 30 days after the grant, and 50,000 stock options
vested 60 days after the grant, expiring January 1, 2019.
On January 13, 2014, we entered into a corporate development
agreement with Don Shaxon for an initial term of twelve months. Thereafter the
agreement continued on a month-by-month basis subject to cancelation by 30 days
written notice. In consideration for the services we paid to Mr. Shaxon a
signing stock bonus of 250,000 of our common shares, a one-time cash bonus of
$40,000, and a monthly fee of $3,500 plus $500 in monthly expenses. Upon
execution of the Agreement we also granted 250,000 stock options to Mr. Shaxon
with an exercise price of $0.16, vesting immediately and expiring January 13,
2019.
On January 16, 2014 we entered into a Joint Venture Agreement
with WOM to acquire up to a 51% ownership interest in a prospective medical
marijuana production facility to be located at WOMs establishment in Mission,
British Columbia. WOM was to hold a 49% interest in the joint venture and was
responsible to acquire a medical marijuana production licence from Health
Canada. The Joint Venture Agreement superseded the Letter of Intent between our
company and WOM dated November 1, 2013 (the "LOI"). As at March 11, 2014 our
Company had earned a 31% interest in the World of Marijuana Joint Venture by
paying and advancing $375,000 and issuing 16,000,000 million shares of our
common stock. The $375,000 was intended to fund the joint venture through
completion of facility upgrades and completion of the licensing process.
Pursuant to the terms of the Joint Venture Agreement, our company could purchase up to a 51% interest in
the joint venture in consideration of an additional 4,000,000 shares and
$1,000,000 in the aggregate. On January 31, 2014, we accepted and received gross
proceeds of CAD$40,500 (US$37,500), for the exercise of 350,000 stock options;
100,000 at $0.075 each, 150,000 stock options at $0.10 each, and 100,000 stock
options at $0.15 each; into 350,000 common shares of our Company.
On January 31, 2014, we closed the first tranche of a private
placement of 4,292,000 units at a price of US$0.10 per unit for gross proceeds
of US$429,200. Each Unit consists of one share of our common stock and one half
(1/2) of one non-transferable common share purchase warrant Each whole warrant
is exercisable to purchase one common share at a price of US$0.15 per share for
a period of twenty four (24) months following closing. A cash finders fee
consisting of $29,616 and 296,160 full broker warrants that expire on January
31, 2016 with an exercise price of $0.15 was paid to Canaccord Genuity, Leede
Financial and Wolverton Securities.
On February 5, 2014, Ryan Foster joined our Company as an
advisor. We granted 50,000 stock options to Mr. Foster with an exercise price of
$0.35 per common share expiring February 5, 2019. 25,000 of the stock options
vested immediately and 25,000 vested on July 1, 2014.
On February 13, 2014, we closed the final tranche of a private
placement by issuing 12,938,000 units at a price of US$0.10 per unit for gross
proceeds of US$1,293,800. Each unit consists of one common share and one half
(1/2) of one non-transferable share purchase warrant with each whole warrant
exercisable into one common share at a price of US$0.15 per share for a period
of twenty four (24) months following closing. One director and one officer of
our Company participated in the final tranche for $30,000. A cash finders fee
consisting of $98,784; 8,000 common shares in lieu of $800 and 995,840 full
broker warrants that expire on February 13, 2016 with an exercise price of $0.15
was paid to Canaccord Genuity, Global Market Development LLC and Wolverton
Securities.
On February 13, 2014, 50,000 stock options were exercised at a
price of $0.06 by a Director and 50,000 stock options were exercised at a price
of $0.075 by a Consultant for net proceeds to our Company of CAD$7,050
(US$6,750) into 100,000 common shares of the Company.
On February 13, 2014, 541,500 warrants from previous private
placements were exercised into 541,500 common shares of our Company for net
proceeds of $101,100.
On February 27, 2014, 585,000 warrants from previous private
placements were exercised into 585,000 common shares of our Company for net
proceeds of $115,000.
On February 27, 2014, we signed a $50,000 12 month marketing
agreement with Agoracom payable in shares of our common stock. The first quarter
payment of $12,500 was paid with the issuance of 54,347 common shares of our
Company at a market price of $0.23 per share.
On February 28, 2014, we entered into a Joint Venture Agreement
with The Green Canvas Ltd.
("
GCL
") pursuant to which we could
acquire up to a 75% interest in the business of GCL, being the business of
legally producing, manufacturing, propagating, importing/exporting, testing,
researching and developing, and selling marijuana for medical purposes. We paid
$100,000 to the GCL upon execution of the agreement. Subsequently, we issued to
GCL an aggregate of 10,000,000 of our common shares at a price of $0.235 per
share; and paid to GCL the aggregate sum of $500,000, to earn a 49% interest in
GCLs business by February 28, 2015. With the exception of $113,400 payable to
Wolverton Securities, the full amount of the $500,000 was to be used by GCL to
upgrade the GCLs existing medical marijuana production facility to meet the
standards introduced by the Marihuana for Medical Purposes Regulations (MMPR)
administered by Health Canada.
On March 5, 2014, our Company and our CEO and Director, Robert
McAllister, entered into a Joint Venture Agreement with Lexaria Corp. to jointly
source and develop business opportunities in the medical marijuana industry.
Pursuant to the terms of the agreement, Lexaria Corp. issued to our Company 1
million restricted common shares and issued 500,000 common shares to Mr.
McAllister for his participation as a key representative for the joint venture.
Additionally Lexaria agreed to issue to Mr. McAllister options to purchase
500,000 common shares of Lexaria in consideration for Mr. McAllisters
participation on the Lexaria Advisory Board.
On March 10, 2014, our Companys Board appointed Mathew
Chadwick as Senior Vice President of Marijuana Operations and entered into a
Management Agreement with Mr. Chadwick for his services. The initial term of the
agreement began on the date of execution of this agreement and continued for six
months. Thereafter the agreement continued on a month-by-month basis until it
was terminated on October 16, 2014 pursuant to a termination and settlement
agreement, dated effective October 14, 2014, with World of Marijuana Productions
Ltd. and Mr. Chadwick. We paid in total $125,000 to Mr. Chadwick pursuant to the
Management Agreement. Mr. Chadwick resigned as a director and officer of our
Company on October 16, 2014.
On March 11, 2014, Robert Chadwick and Clayton Newbury joined
the Company as advisors and were each paid a $1,000 honorarium. Robert Chadwick
was issued a one-time 100,000 common shares of our Company. On March 11, 2014,
we granted 100,000 stock options to Robert Chadwick with an exercise price of
$0.68 per share expiring March 11, 2019. 50,000 of the stock options vested
immediately, and 50,000 vested on September 11, 2014. We also granted 100,000
options to Clayton Newbury on the same terms. Robert Chadwick and Clayton
Newbury stepped down as advisors on October 17, 2014.
On March 14, 2014, we signed a six month contract for $21,735
with The Money Channel to provide services for national television, internet and
radio media campaign.
On March 14, 2014, 815,310 warrants from previous private
placements were exercised into 815,310 common shares of our Company for net
proceeds of $163,062.
On March 14, 2014, we accepted and received gross proceeds from
a director of our Company of CAD$8,250 (US$7,500), for the exercise of 50,000
stock options at an exercise price of $0.15, into 50,000 common shares of our
Company.
On March 17, 2014, 1,548,000 warrants from previous private
placements were exercised into 1,548,000 common shares of our Company for net
proceeds of US$289,475.
On March 25, 2014, we accepted and received gross proceeds of
$67,750, for the exercise of 325,000 stock options at $0.06 to $0.25 each, into
325,000 common shares of our Company.
On March 25, 2014, 1,095,000 warrants from previous private
placements were exercised into 1,095,000 common shares of our Company for net
proceeds of US$114,250.
On March 26, 2014, our Board appointed Dr. Robert Melamede as
an Advisor to the Board of Directors. We paid to Dr. Melamede, an honorarium of
$2,500 for the first year of participation on our Advisory Board and issued
250,000 shares of our common stock. On March 26, 2014 we granted to Dr. Melamede
500,000 stock options with an exercise price of $0.70 and expiring March 26,
2019. 250,000 of the stock options vested immediately and the remaining 250,000
stock options vested on September 26, 2014, Dr. Melamede stepped down as an
advisor on June 16, 2015.
On April 1, 2014, we entered into a one year consulting
agreement with Kristian Dagsaan to provide controller services for CAD$3,000
(plus goods and services tax) per month. We also granted 100,000 fully vested
stock options with an exercise price of $0.86, expiring April 1, 2019. The
agreement was cancelled effective August 31, 2014.
On April 1, 2014, we entered into a 90 day investor relations
contract for CAD $9,000 with Ken Faulkner. We also granted 100,000 fully vested
stock options to Mr. Faulkner with an exercise price of $0.86, expiring April 1,
2019.
On April 3, 2014, we entered into another 3 month Social
Media/Web Marketing Agreement with Stuart Gray. In consideration for the
services the Company we agreed to pay Mr. Gray a monthly fee of $5,000. Upon
execution of the Agreement, we issued 100,000 stock options to Mr. Gray with an
exercise price of $0.72, expiring on April 3, 2019. The agreement was terminated
on July 31, 2014.
On April 3, 2014, 1,293,500 warrants from previous private
placements were exercised into 1,293,500 common shares of our Company for net
proceeds of US$177,950.
On April 3, 2014, we accepted and received gross proceeds from
past consultant of our Company of US$1,500 for the exercise of 25,000 stock
options at an exercise price of $0.06, into 25,000 common shares of our Company.
On April 8, 2014, we granted 50,000 fully vested stock options
to a consultant of our Company, Taven White. The stock options are exercisable
at $0.50 per share and expire on April 8, 2019.
On April 10, 2014, we entered into a Letter of Intent ("LOI")
with Lexaria Corp regarding the establishment of a joint venture to establish a
medical marijuana production facility in Burlington, Ontario under the MMPR
regulations. Pursuant to the LOI Lexaria issued 500,000 of its common shares to
our company to be held in escrow subject to receipt of an MMPR production
license by our joint venture. Lexaria also contributed $55,000 to acquire a 49%
interest in the joint venture and the responsibility to pay 55% of all joint
venture expenses. We contributed $45,000 for a 51% interest and the
responsibility to pay 45% of all expenses. We were to be responsible for
management of the joint venture for as long as we maintained majority ownership.
Also effective April 10, 2014 the Burlington Joint Venture
entered into a letter of intent with Mr. Jeff Paikin on behalf of 1475714
ONTARIO INC. to secured a future lease for a 30,000 ft² medical marijuana
production space in Burlington, Ontario. We also acquired a right of first
refusal for another 45,000 ft² to accommodate future growth. We issued 38,297
common shares to Mr. Paikin at a deemed price of $0.47 to secure our interest in
the lease. The production target for the facility based on 30,000 ft² (with
approximately 50% devoted to production space) was approximately 10,000
kilograms per year production.
On April 14, 2014, the Company appointed Mr. Jeff Paikin to its
Advisory Board for a period of not less than one year, but to be determined by
certain performance thresholds described in the letter. Upon signing of the
letter of acceptance the Company issued 90,000 common shares at a deemed price
of $0.34. Based on the milestones listed in the letter, Mr. Paikin can be
eligible to receive up to a total of 472,500 common shares of the Company.
Consulting agreement amended on June 18, 2014, Mr. Paikin can be eligible to
receive up to a total of 1,350,000 common shares of the Company. Based on the
milestones listed in the amended contract, the Company issued Mr. Paikin 135,000
common shares at a deemed price of $0.14 on July 14, 2014.
On April 17, 2014, our Company accepted and received gross
proceeds from a director of CAD$8,475 (US$7,500), for the exercise of 50,000
stock options at $0.15 into 50,000 common shares of our Company.
On April 17, 2014, 651,045 warrants from previous private
placements were exercised into 651,045 common shares of our Company for net
proceeds of $110,209.
On April 24, 2014 our Company entered into a one year
consulting contract with Clark Kent as Media Coordinator for a monthly fee of
CAD$2,250 plus GST. We issued 90,000 common shares to the consultant at a deemed
price of $0.34. Based on the milestones listed in the contract, Mr. Kent can be
eligible to receive up to a total of 472,500 common shares of our Company. On
June 18, 2014, the consulting agreement was amended so that Mr. Kent can be
eligible to receive up to a total of 1,350,000 common shares of our Company.
Based on achievement of the milestones listed in the amended contract, we issued
to Mr. Kent 135,000 common shares at a deemed price of $0.14 on July 14, 2014.
This agreement was terminated on February 4, 2015.
On April 24, 2014 we entered into a one year consulting
contract with Don Shaxon as Ontario Operations Manager for a monthly fee of
CAD$3,375 plus GST. Upon signing of the contract we issued to Mr. Shaxon 90,000
common shares at a deemed price of $0.34. Based on the milestones listed in the
contract, Mr. Shaxon can be eligible to receive up to a total of 472,500 common
shares of our Company. We amended the consulting agreement on June 18, 2014,
following which Mr. Shaxon became eligible to receive up to a total of 1,350,000
common shares of our Company. Based on achievement of the milestones listed in
the amended contract, we issued to Mr. Shaxon 135,000 common shares at a deemed
price of $0.14 on July 14, 2014. The agreement was terminated on June 16, 2015.
On April 24, 2014 we entered into a one year consulting
contract with 490072 Ontario Ltd. operating as HEC Group, for the services of
Greg Boone as Human Resources Manager. Upon signing of the contract we issued
90,000 common shares at a deemed price of $0.34. Based on the milestones listed
in the contract, Mr. Boone or his company can be eligible to receive up to a
total of 472,500 common shares of our Company. We amended the agreement on June
18, 2014, further to which Mr. Boone became eligible to receive up to a total of
1,350,000 common shares of our Company. Based on achievement of the milestones
listed in the amended contract, the Company issued Mr. Boone 135,000 common
shares at a deemed price of $0.14 on July 14, 2014. This agreement was
terminated on February 4, 2015.
On April 24, 2014 we entered into a one year consulting
contract with Jason Springett as Master Grower for Ontario Operations for a
monthly fee of $3,375 plus GST. Upon signing of the contract we issued 90,000
common shares at a deemed price of $0.34. Based on the milestones listed in the
contract, Mr. Springett was eligible to receive up to a total of 472,500 common
shares of the Company. We amended the agreement on June 18, 2014 further to
which Mr. Springett became eligible to receive up to a total of 1,350,000 common
shares of our Company. Based on achievement of the milestones listed in the
amended contract, we issued Mr. Springett 135,000 common shares at a deemed
price of $0.14 on July 14, 2014. This agreement was terminated on June 16, 2015.
On April 24, 2014 we entered into a one year consulting
contract with 2342878 Ontario Inc. for the services of Chris Hornung as
Assistant Operations Manager. Upon signing of the contract we issued 90,000
common shares to the consultant at a deemed price of $0.34. Subject to
achievement of the milestones listed in the contract, Mr. Hornung or his company
were eligible to receive up to a total of 472,500 common shares of our Company.
Mr. Hornung resigned on July 14, 2014 prior to the accrual of additional
compensation. The 90,000 common shares of the Company that were issued have been
returned back to treasury on September 24, 2014.
On April 30, 2014, 200,000 warrants from previous private
placements were exercised into 200,000 common shares of our Company for net
proceeds of $40,000.
On May 3, 2014 we entered into a one year consulting contract
with B. Mullan and Associates for the services of Brian Mullan as Security
Consultant. Upon signing of the contract we issued to the consultant 45,000
common shares at a deemed price of $0.28. Subject to achievement of the
milestones listed in the contract, Mr. Mullan or his company are be eligible to
receive up to a total of 225,000 common shares of our Company. Subsequently, we
issued an additional 45,000 common shares to the consultant at a deemed price of
$0.14 on July 14, 2014. This agreement was terminated on February 4, 2015.
On May 28, 2014, our LOI with Lexaria was replaced by a
definitive joint venture agreement (the Burlington Joint Venture) to establish
a medical marijuana production facility under the MMPR at our planned
Burlington, Ontario location. We received municipal zoning approval for the
proposed site in July, 2014. Design and construction of the proposed facility
was anticipated to cost approximately $3,000,000, and we would be responsible
for $1,350,000 of this cost. Unable to estimate when a production license might
be granted by Health Canada, the joint venture sought assurances from Health
Canada prior to commencement of construction. In the event that Health Canada
did not grant a production license by May 27, 2015, the Burlington Joint Venture
was to terminate.
On May 29, 2014, we accepted and received gross proceeds of
$20,000 for the exercise of 200,000 warrants at $0.10 each into 200,000 common
shares of our Company.
On June 2, 2014, we signed a 30 day contract for $10,000 with
TDM Financial to provide services for original video production, original
coverage, network placement of video and article, article and video syndication,
email distribution, and reporting.
On June 9. 2014, Pursuant to our 12 month marketing agreement
with Agoracom dated February 27, 2014, we made a second quarter payment to
Agoracom of $12,500 plus GST paid by the issuance of 72,917 common shares of the
Company at a market price of $0.18 per share.
On July 1, 2014, we entered into a one year services agreement
with TDM Financial for $120,000 payable in common shares of our Company. TDM
Financial will provide marketing solutions and strategies to our Company. Upon
the signing of the contract with TDM Financial, we issued 750,000 common stock
of our Company at a deemed price of $0.16.
On July 23, 2014, 252,000 warrants from previous private
placements were exercised into 252,000 common shares of our Company for net
proceeds of $25,200.
On August 1, 2014 we entered into a three month Investor
Relations and Marketing Agreement with Neil Blake with a monthly fee of
CAD$2,500.
On August 1, 2014, through our wholly owned subsidiary Thor
Pharma Corp. we signed an extension to the letter of intent with 1475714 ONTARIO
INC. and Lexaria Canpharm Corp. (a subsidiary of Lexaria) to secure a 5 year
lease on the Burlington, Ontario facility for our Burlington Joint Venture. In
consideration of the extension, on August 5, 2014, we issued 118,416 of our
common shares of to the lessor at a deemed price of $0.19 per share.
On September 16, 2014, our joint venture with the Green Canvas
Ltd. made an application to Health Canada under the Marihuana for Medical
Purposes Regulations (MMPR) to obtain a medical marijuana production license for
a proposed facility located near Regina, Saskatchewan. Pursuant to the joint
venture agreement, if a Heath Canada production license was not received by the
first anniversary date of the agreement (February 28, 2015) our company would
have no further obligations under the joint venture. If a license was obtained
by February 28, 2015, we would be responsible to pay to the GCL $250,000 and
3,000,000 common shares in consideration of an additional 2% interest in the
joint venture.
On September 18, 2014 we announced that we had provided notice
to WOM alleging default under the terms of the joint venture agreement for,
among other things, WOMs failure to provide an accounting and financial
information for the use of proceeds paid into the joint venture. On October 16,
2014 we entered into a termination and settlement agreement, dated effective
October 14, 2014, with WOM and Mathew Chadwick (WOMs representative and our
former director), pursuant to which we relinquished our 31% interest in the
joint venture and exchanged mutual releases with WOM and Mr. Chadwick. Mr.
Chadwick resigned from our board of directors and as an officer of our company,
and WOM returned for cancellation 15,127,287 of our common shares that had been
issued to it. Given the foregoing, all relationships between the parties,
including but not limited to the joint venture, have been terminated. No
production license under the MMPR had been awarded or was forthcoming at the
time of termination.
On October 16, 2014, we entered into a termination and
settlement agreement, dated effective October 14, 2014, with World of Marihuana
Productions Ltd. ()WOM and Mathew Chadwick (WOMs representative and our
former director), pursuant to which we relinquished our 31% interest in the
joint venture and exchanged mutual releases with WOM and Mr. Chadwick. Mr.
Chadwick resigned from our board of directors and as an officer of our company,
and WOM returned for cancellation 15,127,287 of our common shares that had been
issued to it. Given the foregoing, all relationships between the parties,
including but not limited to the joint venture, have been terminated. No
production license under the MMPR had been awarded or was forthcoming at the
time of termination.
On November 3, 2014, the Company granted 2,100,000 stock
options to directors, officers and consultants of the Company, vesting
immediately with an exercise price of $0.10, expiring November 3, 2019.
On November 18, 2014, the Company granted 100,000 stock options
to a consultant of the Company, vesting immediately with an exercise price of
$0.10, expiring November 18, 2019.
On January 30, 2015, we closed the first tranche of a private
placement of 1,665,000 units at a price of CAD$0.06 per unit for gross proceeds
of US$79,920, CAD$99,900. Each Unit consists of one common share of the Company
and full non-transferable Share purchase warrant. Each Warrant will be
exercisable into one further Share at a price of US$0.10 per Warrant Share at
any time until the close of business on the day which is 24 months from the date
of issue of the Warrant, and thereafter at a price of US$0.15 per
Warrant Share at any time until the close of business on the day which is 36
months from the date of issue of the Warrant.
On February 6, 2015, the Companys Board has appointed Bal
Bhullar as a Director of the Company. Ms. Bhullar has been and continues to be
the Chief Financial Officer of the Company since October 9, 2009.
February 6, 2015, the Board of Directors accepted the
resignation of John Thomas as Director of the Company.
On February 9, 2015, Enertopia announced the launch of a new
product line V-Love
TM
for womens sexual pleasure. V-Love
TM
is a brand new water based, silky smooth fragrance free personal
lubricant and intimate gel especially designed for women.
On March 12, 2015, the Company closed its final tranche of a
private placement of 590,000 units at a price of CAD$0.06 per unit for gross
proceeds of CAD$35,400. Each unit consists
of one common share of the
Company and one non-transferable share purchase warrant, each full warrant
entitling the holder to purchase one additional common share of the Company for
a period of 36 months from the date of issuance, at a purchase price of US$0.10
during the first 24 months and at US$0.15 after 24 months. A cash finders fee
of CAD$2,832 and 47,200 full broker warrants that expire on March 12, 2018 was
paid to Canaccord Genuity.
In May, 2015, V-Love
TM
was available to the retail
market for purchase in stores and at various events.
On June 11, 2015, we entered into a mutual Termination
Agreement with The Green Canvas Ltd. pursuant to which we terminated our
relationship and relinquished our 49% interest in the joint venture to establish
a medical marijuana production facility near Regina, Saskatchewan. In
consideration of the termination, The Green Canvas returned for cancellation
6,400,000 shares of our common stock previously issued to GCL.
On June 11, 2015, we entered into a Letter of Intent dated June
10, 2015 with Shaxon Enterprises Ltd. to sell our 51% interest in our Burlington
Joint Venture with Lexaria Corp., including our interest in MMPR application
number 10QMM0610 for the proposed Burlington, Ontario production facility. The
sale would be completed by the sale of our wholly owned subsidiary, Thor Pharma
Corp.
Subsequent to the LOI with Shaxon Enterprises Ltd., the
Burlington Joint Venture between Enertopia and Lexaria which was entered into on
May 28, 2014 was terminated due to the pending sale of the project. As a result
of the termination, 500,000 restricted and escrowed common shares of Lexaria
issued to our Company at a deemed price of $0.40 will be returned to treasury
and cancelled. The Enertopia and Lexaria Master Joint Venture Agreement entered
into on March 5, 2014 is still effective and governs the relationship between
the parties.
On June 26, 2015, we signed a Definitive agreement to sell our
wholly owned subsidiary, Thor Pharma Corp along with the MMPR application number
10MMPR0610. The Burlington MMPR license application will continue in the
application process under new ownership. Pursuant to the agreement, we received
a non-refundable $10,000 deposit and are entitled to receive up to $1,500,000 in
milestone payments upon the Burlington facility becoming licensed under the
MMPR. These monies would be split equally with Lexaria Corp. Notwithstanding the
foregoing, we can neither guarantee nor provide a meaningful time estimate
regarding the potential grant of a production license for the Burlington
facility.
On June 29, 2015, we that announced V-Love
TM
became
available at London Drugs Limited stores. V-Love
TM
is currently
available at London Drugs stores across Western Canada in the provinces of
British Columbia, Alberta, Saskatchewan and Manitoba.
On July 7, 2015 we announced that V-Love
TM
became
available for purchase online in Canada at Amazon.ca.
On July 30, 2015 we announced the launch of V-Love.co, our
product website for V-Love
TM
. As at August 31, 2016, with the
Companys strategic direction mostly being focused on natural resources and
technology relating to the resource sector, the health and wellness portion of
the business is discontinued.
Our Current Business
We are a development stage company pursuing business
opportunities in diverse sectors natural resource and technology used in the
resource sector:.
Mineral Property
Lithium Property
Enertopia has signed the Definitive Agreement on May 12,
2016 with the Vendor respecting the option to purchase a 100% interest in
approximately 2,560 acres of placer mining claims in Churchill, Lander and Nye
Counties Nevada, USA. These placer mining claims are subject to a 1.5% NSR from
commercial production with the Company able to buy back the NSR at the rate of
$500,000 per 0.5% NSR.
Purchase Price for the Claims
The consideration payable by Enertopia to the Optionor.
pursuant to this Offer shall consist of:
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(a)
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paying $7,000 on signing the Offer; (paid)
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(b)
|
paying $12,000 on signing of the definitive agreement
(the Agreement) and issuing 3,500,000 common shares in the capital stock
of Enertopia as soon as practicable following the execution of the
Agreement, (paid)
|
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(c)
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paying an optional $12,000 on or before the six month
anniversary of the definitive agreement (the Agreement),
(paid)
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(a)
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paying an optional $22,500 on or before the one year
anniversary of the definitive agreement (the Agreement),
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(d)
|
issuing additional common shares in the capital of the
Optionee, as constituted on the date hereof, to be issued to the Optionor
pursuant to the discovery of a Lithium enriched brine with an average
300ppm Li over 100 foot vertical interval in the enriched lithium brine in
the Central Nevada Brine Project. 1,000,000 Bonus Shares will be issued
per each successful property discovery meeting the foregoing criteria up
to a maximum 3,000,000 Bonus Shares.
|
NSR
There is a 1.5% Net Smelter Return
(NSR) payable on all Placer mining claims from commercial production to be
paid according to the terms and conditions as set forth in the Transaction
Documents. The NSR can be re purchased for $500,000 per every 0.5% .
Central Nevada Lithium Brine Project
Concessions
BIG SMOKY VALLEY, NYE COUNTY NEVADA
CLAIM
NUMBER
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STAKING DATE
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BSV1
|
April 23, 2016
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BSV2
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April 23, 2016
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BSV3
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April 23, 2016
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BSV4
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April 23, 2016
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BSV5
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April 23, 2016
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BSV6
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April 23, 2016
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BSV7
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April 23, 2016
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BSV8
|
April 23, 2016
|
BSV9
|
April 23, 2016
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BSV10
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April 23, 2016
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BSV11
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April 23, 2016
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BSV12
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April 23, 2016
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BSV13
|
April 23, 2016
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BSV14
|
April 23, 2016
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BSV15
|
April 23, 2016
|
BSV16
|
April 23, 2016
|
BSV17
|
April 24,2016
|
BSV18
|
April 24,2016
|
BSV19
|
April 24,2016
|
BSV20
|
24 April 2016
|
BSV21
|
April 24,2016
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BSV22
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April 24,2016
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BSV23
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April 24,2016
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BSV24
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April 24, 2016
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BSV25
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April 24,2016
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BSV26
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April 24, 2016
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BSV27
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April 24, 2016
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BSV28
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April 24, 2016
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BSV29
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April 24, 2016
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BSV30
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April 24, 2016
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BSV31
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April 24, 2016
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BSV32
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April 24, 2016
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BSV33
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April 24, 2016
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BSV34
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April 24, 2016
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BSV35
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April 24, 2016
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BSV36
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April 24, 2016
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BSV37
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April 24, 2016
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BSV38
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April 24, 2016
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BSV39
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April 24, 2016
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BSV40
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April 24, 2016
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BSV41
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April 24, 2016
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BSV42
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April 24, 2016
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BSV43
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April 24, 2016
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BSV44
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April 24, 2016
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BSV45
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April 24, 2016
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BSV46
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April 24, 2016
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BSV47
|
April 24, 2016
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BSV48
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April 24, 2016
|
BSV49
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April 24, 2016
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BSV50
|
April 24, 2016
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BSV51
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April 24, 2016
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BSV52
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April 24, 2016
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BSV53
|
April 24, 2016
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BSV54
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April 24, 2016
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BSV55
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April 24, 2016
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BSV56
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April 24, 2016
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BSV57
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April 24, 2016
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BSV58
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April 24, 2016
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BSV59
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April 24, 2016
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BSV60
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April 24, 2016
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BSV61
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April 24, 2016
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BSV62
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April 24, 2016
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BSV63
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April 24, 2016
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BSV64
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April 24, 2016
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EDWARDS CREEK VALLEY, CHURCHILL COUNTY NEVADA
CLAIM
NUMBER
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STAKING DATE
|
ECV1
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April 24, 2016
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ECV2
|
April 24, 2016
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ECV3
|
April 24, 2016
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ECV4
|
April 24, 2016
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SMITH CREEK VALLEY, LANDER COUNTY NEVADA
CLAIM
NUMBER
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STAKING DATE
|
SCV1
|
April 24, 2016
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SCV2
|
April 24, 2016
|
SCV3
|
April 24, 2016
|
SCV4
|
April 24, 2016
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LITHIUM TECHNOLOGY
On August 15, 2016, a binding Letter of Intent was signed by
Enertopia and Genesis Water Technologies, Inc.
("
GWT
") with regard
to the acquisition by Enertopia (the "
Acquisition
") of the exclusive
worldwide licensing rights (the "
Licensing Rights
") by Enertopia of all
of the technology used in the process of recovering and extraction of battery
grade lithium carbonate powder Li2CO3 grading 99.5% or higher purity from brine
solutions (the "
Technology
") and covered under patent pending process
#XXXXXX (the "
Pending Patent
").
Exclusive Licensing Structure.
In accordance with the
terms of a formal and Definitive Agreement (the
Definitive Agreement
)
to be entered into between Enertopia and GWT, Enertopia shall acquire 100% of
the Licensing Rights for the Technology in accordance with the exclusive
licensing structure set forth below (the "
Licensing Structure
"). The
terms of the Exclusive Licensing Structure shall be as follows:
|
a.
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Upon the execution of this LOI, Enertopia shall issue to
GWT 250,000 common shares. (Completed)
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b.
|
Within 30 days of closing of the Definitive Agreement,
which is to occur on or before September 15, 2016 or such other date as
the Parties may agree, acting reasonably (the "
Closing
"), Enertopia
shall pay to GWT, the sum of $10,000 for bench testing brine or synthetic
brine samples enriched in lithium.
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c.
|
Upon the successful bench scale testing of recovering
battery grade Lithium carbonate Li2CO3 from brine or synthetic brine
samples, as audited by a 3
rd
party lab, that verifies the
results of the June 6/17/2016 feasibility report commissioned by
Enertopia, Enertopia shall issue to GWT 250,000 common shares.
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d.
|
Upon the Pending Patent #XXXXXX having been approved by
the U.S. Patent and Trademark Office and evidence thereof having been
provided to Enertopia, Enertopia shall issue 250,000 common shares to
GWT.
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e.
|
Enertopia shall pay the costs for the test pilot plant
and associated facilities with a capacity of 50 gallons per minute, such
costs estimated to be US$2,150,000 and not to exceed US$ 2,500,000
including building envelope and such testing to be completed by 6 months
after final start up.
|
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f.
|
Enertopia shall also make the following anniversary
payments following Closing.
|
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g.
|
For 2017, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $50,000, such first anniversary
payment becoming due on or before the one year anniversary of
the signing of the definitive agreement, provided however that
Enertopia shall have the option to satisfy this payment through the issuance of
treasury units (each, "
Unit
"), with each Unit consisting of one common
share of Enertopia and one common share purchase warrant of Enertopia (each,
"
Warrant
"), with each Warrant being exercisable for a period of 36 months
from issuance at a price 1.5 times above the minimum unit pricing allowed by
applicable stock exchange policies at such time and based on the previous 10 day
volume weighted average pricing on the Canadian Stock Exchange ("
CSE
");
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h.
|
For 2018, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $150,000, such second
anniversary payment becoming due on or before the second anniversary of
the signing of the definitive agreement; and
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i.
|
For 2019, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $200,000 per annum, each such
anniversary payment becoming due on or before the respective anniversary
of the signing of the definitive agreement; and
|
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j.
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For 2020, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $200,000 per annum, each such
anniversary payment becoming due on or before the respective anniversary
of the signing of the definitive agreement; and
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k.
|
For 2021, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $200,000 per annum, each such
anniversary payment becoming due on or before the respective anniversary
of the signing of the definitive agreement; and
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l.
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For 2022, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $200,000 per annum, each such
anniversary payment becoming due on or before the respective anniversary
of the signing of the definitive agreement; and
|
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m.
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For 2023, the greater of 10% of Enertopia net sales of
battery grade Li2CO3 from brine sources or $200,000 per annum, each such
anniversary payment becoming due on or before the respective anniversary
of the signing of the definitive agreement.
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n.
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Note net sales noted above in f.(i) to (vii) to be
defined in the definitive agreement.
|
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o.
|
Licensee life of seven (7) years from signing on the
definitive agreement with first right of refusal.
|
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p.
|
Upon proven commercial viability of test plant Enertopia
will source location and capital for commercial production plant with a
minimum capacity of 250 gallons per minute.
|
Definitive Agreement and Closing.
Acceptance of this LOI
shall be followed by the negotiation and acceptance of the Definitive Agreement
which shall incorporate the terms and conditions of this LOI and such other
terms, conditions, representations and warranties as are customary for
transactions of this nature or as may be reasonably requested by the Parties.
This LOI does not set forth all of the matters upon which agreement must be
reached in order for the proposed acquisition to be consummated. Completion of
the Definitive Agreement shall be followed with Closing of the Acquisition.
Summary
The continuation of our business is dependent upon obtaining
further financing, a successful programs of development, and, finally, achieving
a profitable level of operations. The issuance of additional equity securities
by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations. There is significant uncertainty as to whether we can obtain
additional financing.
Alternative Health and Wellness
Products-Discontinued
On February 9, 2015, we announced the launch of a new product
line V-Love
TM
for womens sexual pleasure. V-Love
TM
a
brand new water based, silky smooth fragrance free personal lubricant and
intimate gel especially designed for women. V-Love
TM
is a personal
lubricant and sexual desire gel to embrace the essence of what a female is
sexy,
confident, playful, loving, and unique. V-Love
TM
is carefully
designed to enhance/enrich each and every intimate experience to be the most
pleasurable and fulfilling it can be.
The Company used the feedback and life experience of women in
its formulation of V-Love
TM
. V-Love
TM
was developed and
designed to offer a unique personal lubricant and sexual desire gel that could
be used safely and effectively by women who desired added lubrication.
V-Love
TM
is designed to be used with, toys and foreplay, for
increasing sexual experience by lubricating so women feel confident with
intimacy with their partners or for their own personal pleasure.
The V-Love
TM
gel finished its production run in
April, 2015. In May 2015, V-Love
TM
first became available for retail
sale at Loblaws City Market store in North Vancouver, British Columbia.
Enertopia owns 100% of the product and its formulation. Enertopia engaged a GMP
compliant facility reputed to produce high quality cosmetic products for many
well-known brands. They are a Vancouver based manufacturer with over 150 years
of experience. They manufactured and formulated the final ingredients for V-Love
TM
and handled all the production.
The Company held an initial launch on February 13, 2015 by
showcasing samples of V-Love
TM
at the Vancouver Health and Wellness
Show and providing educational information on the gel. In May, 2015,
V-Love
TM
was available to the retail market for purchase in stores
and at various events.
During the month of July, 2015 V-Love
TM
became
available for retail purchase at all London Drugs Limited stores across Western
Canada and online through Amazon.ca.
As at August 31, 2016, with the Companys strategic direction
mostly being focused on natural resources and technology relating to the
resource sector, the health and wellness portion of the business is
discontinued.
Alternative Health Operations Discontinued
Since June 12, 2015, the Company has had no direct involvement
or ownership interest in any active or prospective operations or permit
applications under the MMPR.
On June 26, 2015, we signed a Definitive agreement to sell our
wholly owned subsidiary, Thor Pharma Corp along with the MMPR application (no.
10MMPR0610) for our proposed production facility located in Burlington, Ontario.
The Burlington MMPR license application will continue in the application process
under new ownership. Pursuant to the agreement, we received a non-refundable
$10,000 deposit and are entitled to receive up to $1,500,000 in milestone
payments upon the Burlington facility becoming licensed under the MMPR. These
monies would be split equally with our joint venture partner, Lexaria Corp.
Notwithstanding the foregoing, we can neither guarantee nor provide a meaningful
time estimate regarding the potential grant of a production license for the
Burlington facility.
Investments
We currently hold the following investment interests:
Equity Investment in Pro Eco Energy,
Inc.
On April 21, 2008, we announced that we had made a $45,000
investment to acquire 8.25% of the equity of Pro Eco Energy USA Ltd., a clean
tech energy company involved in designing, developing and installing solar
energy solutions for commercial and residential customers. During fiscal year
2014, we entered into an agreement to sell our 8.25% ownership in Pro Eco Energy
for $40,000 to Western Standard Energy Corp. (now Dominovas Energy) The purchase
price was to be payable as follows: a) $10,000 on December 02, 2013; b) $10,000
on or before December 31, 2013; c) $10,000 on or before January 31, 2014; d)
$10,000 on or before February 28, 2014. As at August 31, 2015, we had collected
$10,000 of the $40,000 purchase price. As at August 31, 2015, we have received
back 600,000 of the 900,000 Pro Eco Energy shares from Western Standard Energy
Corp. and the accounts receivable has been settled upon the return of the shares. The
Company has no significant influence in Pro Eco Energy.
The value of Pro Eco Energys shares have been written to $1 by
management during the year ended August 31, 2016 due to management has assessed
the value of shares by reviewing Pro Eco Energys operation and cash flows
situation and concluded it is unlikely to sell Pro Eco Energys share in the
market.
Employees
We primarily used the services of sub-contractors and
consultants for our intended business operations. Our technical consultant is
Mr. McAllister, our president and a director.
We entered into a consulting agreement with Mr. Robert
McAllister on December 1, 2007. During the term of this agreement, Mr.
McAllister is to provide corporate administration and consulting services, such
duties and responsibilities to include provision of oil and gas industry
consulting services, strategic corporate and financial planning, management of
the overall business operations of the Company, and supervising office staff and
exploration and oil & gas consultants. Mr. McAllister is reimbursed at the
rate of $2,000 per month. On December 1, 2008, the consulting fee was increased
to $5,000 per month. We may terminate this agreement without prior notice based
on a number of conditions. Mr. McAllister may terminate the agreement at any
time by giving 30 days written notice of his intention to do so. Effective March
1, 2014, the Company entered into a new Management Consulting Agreement
replacing the original agreement with a consulting fee of $6,500 plus GST per
month.
On October 9, 2009, the Company entered into a consulting
agreement with BKB Management Ltd, a corporation organized under the laws of the
Province of British Columbia. BKB Management controlled by the chief financial
officer of the Company, Bal Bhullar. A fee of CAD$4,675 including GST was paid
per month. We may terminate this agreement without prior notice based on a
number of conditions. BKB Management Ltd. may terminate the agreement at any
time by giving 30 days written notice of his intention to do so. Effective April
1, 2011, the fee is CAD$5,500 plus GST. Effective March 1, 2014, the Company
entered into a new Management Consulting Agreement replacing the original
agreement with a consulting fee of CAD$7,500 plus GST per month. On February 6,
2015, Ms. Bhullar was appointed as a director by the Board.
We do not expect any material changes in the number of
employees over the next 12 month period. We do and will continue to outsource
contract employment as needed.
Research and Development
We have incurred $13,067 in research and development
expenditures over the last two fiscal years.
Our business operations are subject to a number of risks and
uncertainties, including, but not limited to those set forth below:
Risks Associated with Our Business
Our company has no operating history and an evolving
business model,which raises doubt about our ability to achieve profitability or
obtain financing.
Our Company has no operating history. Moreover, our business
model is still evolving, subject to change, and will rely on the cooperation and
participation of our joint venture partners. Our Company's ability to continue
as a going concern is dependent upon our ability to obtain adequate financing
and to reach profitable levels of operations has and we no proven history of
performance, earnings or success. There can be no assurance that we will achieve
profitability or obtain future financing.
Uncertain demand for mineral resources sector may cause our
business plan to be unprofitable.
Demand for mineral resources is based on the world economy and
new technologies. Current lithium demand exceeds available supply due to the
rapid increase in lithium batteries in portable electronics and the growing
electric vehicle markets. There can be no assurance that current supply and
demand factors will remain the same or that projected supply and demand factors
will actually come to pass from 3
rd
party projections that are
currently believed to be true and accurate. There can be no assurance that new
disruptive technologies will replace lithium as a significant component in
battery storage over time.
Conflicts of interest between our company and our directors
and officers may result in a loss of business opportunity.
Our directors and officers are not obligated to commit their
full time and attention to our business and, accordingly, they may encounter a
conflict of interest in allocating their time between our future operations and
those of other businesses. In the course of their other business activities,
they may become aware of investment and business opportunities which may be
appropriate for presentation to us as well as other entities to which they owe a
fiduciary duty. As a result, they may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. They may
also in the future become affiliated with entities, engaged in business
activities similar to those we intend to conduct.
In general, officers and directors of a corporation are
required to present business opportunities to a corporation if:
|
the corporation could financially undertake the
opportunity;
|
|
|
|
the opportunity is within the corporations
line of business; and
|
|
|
|
it would be unfair to the corporation and its
stockholders not to bring the opportunity to the attention of the
corporation.
|
We plan to adopt a code of ethics that obligates our directors,
officers and employees to disclose potential conflicts of interest and prohibits
those persons from engaging in such transactions without our consent. Despite
our intentions, conflicts of interest may nevertheless arise which may deprive
our company of a business opportunity, which may impede the successful
development of our business and negatively impact the value of an investment in
our company.
The speculative nature of our business plan may result in
the loss of your investment.
Our operations are in the start-up or stage only, and are
unproven. We may not be successful in implementing our business plan to become
profitable. There may be less demand for our services than we anticipate. There
is no assurance that our business will succeed and you may lose your entire
investment.
Changing consumer preferences may cause our planned products
to be unsuccessful in the marketplace.
The decision of a potential client to undergo an environmental
audit or review may be based on ethical or commercial reasons. In some
instances, or with certain businesses, there may be no assurance that an
environmental review will result in any cost savings or increased revenues. As
such, unless the ethical consideration is also a material factor, there may be
no incentive for such businesses to undertake an environmental review. Changes
in consumer and commercial preferences, or trends, toward or away from
environmental issues may impact on businesses decisions to undergo
environmental reviews.
General economic factors may negatively impact the market
for our planned products.
The willingness of businesses to spend time and money on energy
efficiency may be dependent upon general economic conditions; and any material
downturn may reduce the likelihood of businesses incurring costs toward what
some businesses may consider a discretionary expense item.
A wide range of economic and logistical factors may
negatively impact our operating results.
Our operating results will be affected by a wide variety of
factors that could materially affect revenues and profitability, including the
timing and cancellation of customer orders and projects, competitive pressures
on pricing, availability of personnel, and market acceptance of our services. As
a result, we may experience material fluctuations in future operating results on
a quarterly and annual basis which could materially affect our business,
financial condition and operating results.
Changes In Environmental Regulations May Have An Impact On
Our Operations
We believe that we currently comply with existing environmental
laws and regulations affecting our proposed operations. While there are no
currently known proposed changes in these laws or regulations, significant
changes have affected the industry in the past and additional changes may occur
in the future. The company is subject to the Bureau of Land Management (BLM),
State and potentially other government agencies with respect to its lithium
brine business.
Our operations may be subject to environmental laws,
regulations and rules promulgated from time to time by government. In addition,
certain types of operations require the submission and approval of environmental
impact assessments. Environmental legislation is evolving in a manner that means
stricter standards and enforcement. Fines and penalties for non-compliance are
more stringent. Environmental assessments of proposed projects carry a
heightened degree of responsibility for companies, directors, officers and
employees. The cost of compliance with changes in governmental regulations has
potential to reduce the profitability of operations. We intend to comply with
all environmental regulations in the United States and Canada.
Loss of consumer confidence in our company or in our
industry may harm our business.
Demand for our services may be adversely affected if consumers
lose confidence in the quality of our services or the industrys practices.
Adverse publicity may discourage businesses from buying our services and could
have a material adverse effect on our financial condition and results of
operations. Various factors may adversely impact our reputation, including
product quality inconsistencies or contamination resulting in product recalls.
Reputational risks may also arise from our third parties labour standards,
health, safety and environmental standards, raw material sourcing, and ethical
standards. We may also be the victim of product tampering or counterfeiting or
grey imports. Any litigation, disputes on tax matters and pay structures may
subject us to negative attention in the press, which can damage reputation.
The failure to secure customers may cause our operations to
fail.
We currently have no long-term agreements with any customers.
Many of our sales may be on a onetime basis. Accordingly, we will require new
customers on a continuous basis to sustain our operations. Risk of material
impact on Group growth and profit of consumer led slowdown in key developing
markets, exacerbated by increasing currency volatility. A variety of factors may
adversely affect our results of operations and financial condition during
periods of economic uncertainty or instability, social or labour unrest or
political upheaval in the markets in which we operate. Such periods may also
lead to government actions, such as imposition of martial law, trade
restrictions, foreign ownership restrictions, capital, price or currency
controls, nationalization or expropriation of property or other resources, or
changes in legal and regulatory requirements and taxation regimes.
If we fail to effectively and efficiently advertise, the
growth of our business may be compromised.
The future growth and profitability of our business will be
dependent in part on the effectiveness and efficiency of our advertising and
promotional expenditures, including our ability to (i) create greater awareness
of our products, (ii) determine the appropriate creative message and media mix
for future advertising expenditures, and (iii) effectively manage advertising
and promotional costs in order to maintain acceptable operating margins. There
can be no assurance that we will experience benefits from advertising and
promotional expenditures in the future. In addition, no assurance can be given
that our planned advertising and promotional expenditures will result in
increased revenues, will generate levels of service and name awareness or that
we will be able to manage such advertising and promotional expenditures on a
cost-effective basis.
Our success is dependent on our unproven ability to attract
qualified personnel.
We depend on our ability to attract, retain and motivate our
management team, consultants and advisors. There is strong competition for
qualified technical and management personnel in the business sector, and it is
expected that such competition will increase. Our planned growth will place
increased demands on our existing resources and will likely require the addition
of technical personnel and the development of additional expertise by existing
personnel. There can be no assurance that our compensation packages will be
sufficient to ensure the continued availability of qualified personnel who are
necessary for the development of our business.
We have a limited operating history with losses and we
expect the losses to continue, which raises concerns about our ability to
continue as a going concern.
We have generated minimal revenues since our inception and
will, in all likelihood, continue to incur operating expenses with minimal
revenues until we are able to successfully develop our business. Our business
plan will require us to incur further expenses. We may not be able to ever
become profitable. These circumstances raise concerns about our ability to
continue as a going concern. We have a limited operating history and must be
considered in the start-up stage.
There is an explanatory paragraph to their audit opinion issued
in connection with the financial statements for the year ended August 31, 2016
with respect to their doubt about our ability to continue as a going concern. As
discussed in Note 2 to our financial statements for the year ended August 31,
2016, we have incurred a net loss of $525,501 for the year ended August 31, 2016
(net loss $1,149,433 for the year ended August 31, 2015) and as at August 31,
2016 has incurred cumulative losses of $12,440,597 that raises substantial doubt
about its ability to continue as a going concern. Our management has been able,
thus far, to finance the operations through equity financing and cash on hand.
There is no assurance that our company will be able to continue to finance our
company on this basis
Without additional financing to develop our business plan,
our business may fail.
Because we have generated only minimal revenue from our
business and cannot anticipate when we will be able to generate meaningful
revenue from our business, we will need to raise additional funds to conduct and
grow our business. We do not currently have sufficient financial resources to
completely fund the development of our business plan. We anticipate that we will
need to raise further financing. We do not currently have any arrangements for
financing and we can provide no assurance to investors that we will be able to
find such financing if required. The most likely source of future funds
presently available to us is through the sale of equity capital. Any sale of
share capital will result in dilution to existing security-holders.
We may not be able to obtain all of the licenses necessary
to operate our business, which would cause our business to fail.
Our operations require licenses and permits from various
governmental authorities related to the establishment of our planned facilities,
to the production, storage and distribution of our products, and to the disposal
of waste. We believe that we will be able to obtain all necessary licenses and
permits under applicable laws and regulations for our operations and believe we
will be able to comply in all material respects with the terms of such licenses
and permits. However, such licenses and permits are subject to
change in various circumstances. There can be no guarantee that we will be able
to obtain or maintain all necessary licenses and permits.
Changes in health and safety regulation may result in
increased or insupportable financial burden on our company.
We believe that we currently comply with existing laws and
regulations affecting our product and operations. While there are no currently
known proposed changes in these laws or regulations, significant changes have
affected the industry in the past and additional changes may occur in the
future.
Our products and operations may be subject to unanticipated
regulations and rules promulgated from time to time by government, namely those
related to consumer health and safety which may render certain production
methods, ingredients, products or practices obsolete. The cost of compliance
with changes in governmental regulations has potential to reduce the viability
or profitability of our products or operations.
If we are unable to recruit or retain qualified personnel,
it could have a material adverse effect on our operating results and stock
price.
Our success depends in large part on the continued services of
our executive officers and third party relationships. We currently do not have
key person insurance on these individuals. The loss of these people, especially
without advance notice, could have a material adverse impact on our results of
operations and our stock price. It is also very important that we be able to
attract and retain highly skilled personnel, including technical personnel, to
accommodate our exploration plans and to replace personnel who leave.
Competition for qualified personnel can be intense, and there are a limited
number of people with the requisite knowledge and experience. Under these
conditions, we could be unable to recruit, train, and retain employees. If we
cannot attract and retain qualified personnel, it could have a material adverse
impact on our operating results and stock price.
If we fail to effectively manage our growth our future
business results could be harmed and our managerial and operational resources
may be strained.
As we proceed with our business plan, we expect to experience
significant and rapid growth in the scope and complexity of our business. We
will need to add staff to market our services, manage operations, handle sales
and marketing efforts and perform finance and accounting functions. We will be
required to hire a broad range of additional personnel in order to successfully
advance our operations. This growth is likely to place a strain on our
management and operational resources. The failure to develop and implement
effective systems, or to hire and retain sufficient personnel for the
performance of all of the functions necessary to effectively service and manage
our potential business, or the failure to manage growth effectively, could have
a materially adverse effect on our business and financial condition.
Risks Associated with the Shares of Our Company
Because we do not intend to pay any dividends on our shares,
investors seeking dividend income or liquidity should not purchase our
shares.
We have not declared or paid any dividends on our shares since
inception, and do not anticipate paying any such dividends for the foreseeable
future. We presently do not anticipate that we will pay dividends on any of our
common stock in the foreseeable future. If payment of dividends does occur at
some point in the future, it would be contingent upon our revenues and earnings,
if any, capital requirements, and general financial condition. The payment of
any common stock dividends will be within the discretion of our Board of
Directors. We presently intend to retain all earnings to implement our business
plan; accordingly, we do not anticipate the declaration of any dividends for
common stock in the foreseeable future.
Investors seeking dividend income or liquidity should not
invest in our shares.
Because we can issue additional shares, purchasers of our
shares may incur immediate dilution and may experience further dilution.
We are authorized to issue up to 200,000,000 shares. The board
of directors of our company has the authority to cause us to issue additional
shares, and to determine the rights, preferences and privileges of such shares,
without consent of any of our stockholders. Consequently, our stockholders may
experience more dilution in their ownership of our company in the future.
Other Risks
Trading on the OCTQB and CSE may be volatile and sporadic,
which could depress the market price of our common stock and make it difficult
for our stockholders to resell their shares.
Our common stock is quoted on the OTCQB electronic quotation
service operated by OTC Markets Group Inc.. Trading in stock quoted on the OTCQB
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTCQB is not a
stock exchange, and trading of securities on the OTCQB is often more sporadic
than the trading of securities listed on a quotation system like Nasdaq or a
stock exchange like Amex. Accordingly, shareholders may have difficulty
reselling any of the shares.
Our stock is a penny stock. Trading of our stock may be
restricted by the Securities and Exchange Commissions penny stock regulations
which may limit a stockholders ability to buy and sell our stock.
Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the Securities and Exchange Commission which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customers
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customers confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a stockholders ability
to buy and sell our stock.
In addition to the penny stock rules described above, FINRA
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy
our common stock, which may limit your ability to buy and sell our stock and
have an adverse effect on the market for our shares.
We believe that our operations comply, in all material
respects, with all applicable environmental regulations.
Our operating partners maintain insurance coverage customary to
the industry; however, we are not fully insured against all possible
environmental risks.
Any change to government regulation/administrative practices
may have a negative impact on our ability to operate and our
profitability.
The laws, regulations, policies or current administrative
practices of any government body, organization or regulatory agency in the
United States, Canada, or any other jurisdiction, may be changed, applied or
interpreted in a manner which will fundamentally alter the ability of our
company to carry on our business.
The actions, policies or regulations, or changes thereto, of
any government body or regulatory agency, or other special interest groups, may
have a detrimental effect on us. Any or all of these situations may have a
negative impact on our ability to operate and/or our profitably.
Because we can issue additional shares, purchasers of our
shares may incur immediate dilution and may experience further dilution.
We are authorized to issue up to 200,000,000 shares. The board
of directors of our company has the authority to cause us to issue additional
shares, and to determine the rights, preferences and privileges of such shares,
without consent of any of our stockholders. Consequently, our stockholders may
experience more dilution in their ownership of our company in the future.
Our by-laws contain provisions indemnifying our officers and
directors against all costs, charges and expenses incurred by them.
Our by-laws contain provisions with respect to the
indemnification of our officers and directors against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him, including an amount paid to settle an
action or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is made a party by reason of his being or having been one
of our directors or officers.
Investors interests in our company will be diluted and
investors may suffer dilution in their net book value per share if we issue
additional shares or raise funds through the sale of equity securities.
Our constating documents authorize the issuance of 200,000,000
shares of common stock with a par value of $0.001. In the event that we are
required to issue any additional shares or enter into private placements to
raise financing through the sale of equity securities, investors interests in
our company will be diluted and investors may suffer dilution in their net book
value per share depending on the price at which such securities are sold. If we
issue any such additional shares, such issuances also will cause a reduction in
the proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.
Our by-laws do not contain anti-takeover provisions, which
could result in a change of our management and directors if there is a take-over
of our company.
We do not currently have a shareholder rights plan or any
anti-takeover provisions in our By-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors.
As a result of a majority of our directors and officers are
residents of other countries other than the United States, investors may find it
difficult to enforce, within the United States, any judgments obtained against
our company or our directors and officers.
Other than our operations offices in Vancouver and Kelowna,
British Columbia, we do not currently maintain a permanent place of business
within the United States. In addition, a majority of our directors and officers
are nationals and/or residents of countries other than the United States, and
all or a substantial portion of such persons assets are located outside the
United States. As a result, it may be difficult for investors to enforce within
the United States any judgments obtained against our company or our officers or
directors, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.
Trends, risks and uncertainties.
We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise such as a black swan event. An
absolute worst case scenario with sufficient potential impact to risk the future
of the company as an independent business operating in its chosen markets.
Significant reputational impact as a result of a major issue resulting in
multiple fatalities, possibly compounded by apparently negligent management
behavior; extreme adverse press coverage and viral social media linking the
Company name to consumer brands, leads to a catastrophic share price fall, very
significant loss of consumer confidence and inability to retain and recruit
quality people. Investors should carefully consider all of such risk factors
before making an investment decision with respect to our common shares.
Item 1B.
|
Unresolved Staff Comments
|
As a smaller reporting company, we are not required to
provide the information required by this Item.
Executive Offices
The address of our principal executive office is Suite 950,
1130 West Pender Street, Vancouver, British Columbia V6E 4A4. This space is
leased at CAD$1,230 per month. Our main telephone number is (604) 602-1675. We
have a second office located in Kelowna, British Columbia, which is leased for
CAD$826 per month. Our current locations provide adequate office space for our
purposes at this stage of our development.
Item 3.
|
Legal Proceedings
|
We know of no material, existing or pending legal proceedings
against us, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our Company.
Item 4.
|
(Removed and Reserved).
|
PART II
Item 5.
|
Market for Registrants Common Equity,
Related Stockholder Matters and Issuer Purchases of
Equity Securities
|
Our common shares are quoted on the Over-the-Counter Bulletin
Board and the OTCQB quotation service under the symbol ENRT. Our CUSIP number
is 29277Q1047. Since August 13, 2010, our common shares have also been listed on
the Canadian Securities Exchange (formerly known as the Canadian National Stock
Exchange) under the symbol "
TOP"
.
The following quotations reflect the high and low bids for our
common shares based on inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
The high and low bid prices of our common stock on the OTCQB
quotation service and Over-the-Counter Bulletin Board for the periods indicated
below are as follows:
Quarter
Ended
(1)
|
High
|
Low
|
August 2016
|
$0.044
|
$0.014
|
May 2016
|
$0.023
|
$0.008
|
February 2016
|
$0.023
|
$0.007
|
November 2015
|
$0.03
|
$0.02
|
August 2015
|
$0.03
|
$0.02
|
May 2015
|
$0.06
|
$0.03
|
February 2015
|
$0.07
|
$0.05
|
November 2014
|
$0.12
|
$0.07
|
August 2014
|
$0.12
|
$0.10
|
(1)
The quotations above were obtained from Yahoo Finance,
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
On October 10, 2016, the last closing price for one share of
our common stock as reported by the OTC Bulletin Board was $0.032. This closing
price reflects an inter-dealer price, without retail mark-up, mark-down or
commission, and may not represent an actual transaction.
The high and low bid prices (given in Canadian Dollars) of our
common stock on the Canadian Securities Exchange for the periods indicated below
are as follows:
Quarter Ended
(1)
|
High
|
Low
|
August 2016
|
$0.06
|
$0.02
|
May 2016
|
$0.04
|
$0.01
|
February 2016
|
$0.03
|
$0.01
|
November 2015
|
$0.04
|
$0.02
|
August 2015
|
$0.04
|
$0.03
|
May 2015
|
$0.06
|
$0.04
|
February 2015
|
$0.10
|
$0.07
|
November 2014
|
$0.13
|
$0.06
|
August 2014
|
$0.24
|
$0.11
|
(1)
The quotations above were obtained from TD Waterhouse
Investor Services, reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
As of October 12, 2016, there were 580 holders of record of our
common stock. As of October 12, 2016, 93,562,031 common shares were issued and
outstanding3
Our common shares are issued in registered form. Computershare,
2nd Floor, 510 Burrard Street, Vancouver, BC V6C 3B9 (Telephone: 604-661-9400;
Facsimile: 604-661-9549) is the transfer agent for our common shares.
Nevada Agency and Trust Company, is the agent for service in
Nevada, 50 West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone:
775.322.0626; Facsimile: 775.322.5623) is the registrar agent.
Dividend Policy
We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.
Recent Sales of Unregistered Securities
On October 23, 2015, the Company granted 1,850,000 stock
options to directors, officers and consultant of the Company with an exercise
price of $0.05 vested immediately, expiring October 23, 2020. 50,000 stock
options were cancelled.
On February 4, 2016, the Company granted 100,000 stock options
to Advisor of the Board of the Company with an exercise price of $0.05 vested
immediately, expiring February 4, 2021. On February 4, 2016, the Companys Board
has appointed Olivier Vincent as an Advisor the Board of Directors and a
consultant for a term of one year. The Company issued 100,000 common shares at
an exercise price of $0.05 per share. This position was terminated in June
2016.
On May 12, 2016, the Company issued 3,500,000 shares upon
execution of the definitive agreement to purchase a 100% interest in
approximately 2,560 acres of placer mining claims in Churchill, Lander and Nye
Counties Nevada, USA.
On May 12, 2016, an officer of the Company, Robert McAllister,
exercised 240,000 stock options at $0.05 exercise price with net proceeds of
$12,000.
On May 20, 2016, the Company closed the first tranche of a
private placement of 6,413,333 units at a price of CAD$0.015 per unit for gross
proceeds of CAD$96,200. Each unit consists of one common share of the Company
and one non-transferable share purchase warrant, each full warrant entitling the
holder to purchase one additional common share of the Company for a period of 36
months from the date of issuance, at a purchase price $0.05 during the first 18
months and US$0.10 after eighteen months. A cash finders fee of CAD$7,040 and
469,333 full broker warrants that expire May 20, 2019 was paid to Canaccord
Genuity and Haywood.
On June 8, 2016, the Company closed the final tranche of a
private placement of 3,016,667 units at a price of CAD$0.015 per unit for gross
proceeds of CAD$45,250. Each unit consists of one common share of the Company
and one non-transferable share purchase warrant, each full warrant entitling the
holder to purchase one additional common share of the Company for a period of 36
months from the date of issuance, at a purchase price $0.05 during the first 18
months and US$0.10 after eighteen months. A cash finders fee of CAD$3,300 and
286,666 full broker warrants that expire June 8, 2019 was paid to Canaccord
Genuity, Leede Jones Gable, PI Financial and Mackie Research.
On August 9, 2016, the Company closed the first tranche of a
private placement of 4,500,000 units at a price of CAD$0.035 per unit for gross
proceeds of CAD$157,500. Each unit consists
of one common share of the
Company and one non-transferable share purchase warrant, each full warrant
entitling the holder to purchase one additional common share of the Company for
a period of 24 months from the date of issuance, at a purchase price of US$0.07.
On August 15, 2016, the Company issued 250,000 common shares at
an exercise price of $0.05 per share as per the binding LOI signed with Gensis
Water Technologies Inc.
Subsequent to year end, on September 23, 2016, we closed the
final tranche of a private placement of 3,858,571 units at a price of CAD$0.035
per unit for gross proceeds of CAD$135,050. Each unit consists of one common
share of our Company and one non-transferable share purchase warrant, each full
warrant entitling the holder to purchase one additional common share of our
Company for a period of 24 months from the date of issuance, at a purchase price
of US$0.07. A cash finders fee of CAD$3,300 and 286,666 full broker warrants
that expire June 8, 2019 was paid to Canaccord Genuity and Leede Jones Gable.
Subsequent to year end, on October 7, 2016, we issued 175,000
common shares of our Company and paid $5,000 to comply with the Definitive
Agreement signed May 12, 2016.
Equity Compensation Plan Information
We have no long-term incentive plans other than the stock
option plan described below:
2007 Equity Compensation Plan
On April 25, 2007, our shareholders approved and adopted the
2007 equity incentive plan. The purpose of the Plan is to secure for our company
and our shareholders the benefits of incentive inherent in share ownership by
the directors and employees of our company and our Affiliates who, in the
judgment of our board, will be largely responsible for our companys future
growth and success. It is generally recognized that equity incentive plans of
the nature provided for herein aid in retaining and encouraging directors and
employees of exceptional ability because of the opportunity offered them to
acquire a proprietary interest in our company.
The maximum number of Options available under the Plan, are for
the issuance of up to 1,000,000 shares of common stock of our company.
On December 14, 2007, we granted 892,500 post share
consolidation stock options to directors, officers, and consultants of our
company exercisable at a price of $0.70 per share for a period of 5 years. On
October 22, 2009, we modified the exercise price of these stock options to $0.20
per share. The vesting dates of the options are as below:
Vesting Dates
|
Percentage of options granted
|
December 14, 2007
|
25%
|
December 14, 2008
|
25%
|
December 14, 2009
|
25%
|
December 14, 2010
|
25%
|
On October 22, 2009, we granted an additional 500,000 stock
options to our directors and consultants. The exercise price of the stock
options is $0.10 per share, which are vested immediately and expire October 22,
2014. This plan was rolled into the 2011 Stock Option Plan as approved by our
shareholders on April 14, 2011.
2010 Equity Compensation Plan
On February 5, 2010, our shareholders approved and adopted the
2010 equity incentive plan. The purpose of the 2010 Plan is to enhance the
long-term stockholder value of our company by offering opportunities to our
directors, officers, employees and eligible consultants to acquire and maintain
stock ownership in our company in order to give these persons the opportunity to
participate in our growth and success, and to encourage them to remain in our
service.
Options that are eligible for grant under the 2010 Plan to
Participants include: (a) incentive stock options, whereby we will grant options
to purchase shares of our common stock to Participants with the intention that
the options qualify as "incentive stock options" as that term is defined in
Section 422 of the Internal Revenue Code; (b) non-incentive stock options,
whereby we will grant options to purchase shares of our common stock to
Participants that do not qualify as "incentive stock options" under the Internal
Revenue Code; (c) stock appreciation rights; and (d) restricted shares. The 2010
Plan provides that a maximum of Two Million (2,000,000) shares of common stock
are available for granting of awards under the 2010 Plan.
This plan was rolled into the 2011 Stock Option Plan as
approved by our shareholders on April 14, 2011.
2011 Stock Option Plan
On April 14, 2011, our shareholders approved and adopted at the
Annual General Meeting to roll our 2007 Equity compensation plan and our 2010
Equity Compensation Plan into a new 2011 Stock Option Plan. The purpose of this
Plan is to advance the interests of our company, through the grant of Options,
by providing an incentive mechanism to foster the interest of eligible persons
in the success of our company and our affiliates; encouraging eligible persons
to remain with our company or our affiliates; and attracting new directors,
officers, employees and consultants.
This Plan shall be administered by our board. Subject to the
provisions of this Plan, our board shall have the authority: to determine the
Eligible Persons to whom Options are granted, to grant such Options, and to
determine any terms and conditions, limitations and restrictions in respect of
any particular Option grant, including but not limited to the nature and
duration of the restrictions, if any, to be imposed upon the acquisition, sale
or other disposition of shares of common stock acquired upon exercise of the
Option, and the nature of the events and the duration of the period, if any, in
which any Participant's rights in respect of an Option or shares of common stock
acquired upon exercise of an Option may be forfeited; to interpret the terms of
this Plan, to make all such determinations and take all such other actions in
connection with the implementation, operation and administration of this Plan,
and to adopt, amend and rescind such administrative guidelines and other rules
and regulations relating to this Plan, as it shall from time to time deem
advisable, including without limitation for the purpose of ensuring compliance
with Section legislation hereof. Our board's interpretations, determinations,
guidelines, rules and regulations shall be conclusive and binding upon our
company, Eligible Persons, Participants and all other persons.
The aggregate number of Common Shares that may be reserved,
allotted and issued pursuant to Options shall not exceed 4,720,348 shares of
common stock, less the aggregate number of shares of common stock then reserved
for issuance pursuant to any other share compensation arrangement. For greater
certainty, if an Option is surrendered, terminated or expires without being
exercised, the Common Shares reserved for issuance pursuant to such Option shall
be available for new Options granted under this Plan.
2014 Stock Option Plan
On July 15, 2014, the shareholders approved and adopted at the
Annual General Meeting the Companys 2014 Stock Option Plan. The purpose of
these Plan is to advance the interests of the Corporation, through the grant of
Options, by providing an incentive mechanism to foster the interest of eligible
persons in the success of the Corporation and its affiliates; encouraging
eligible persons to remain with the Corporation or its affiliates; and
attracting new Directors, Officers, Employees and Consultants.
This Plan shall be administered by our board. Subject to the
provisions of this Plan, our board shall have the authority: to determine the
Eligible Persons to whom Options are granted, to grant such Options, and to
determine any terms and conditions, limitations and restrictions in
respect of any particular Option grant, including but not limited to the nature
and duration of the restrictions, if any, to be imposed upon the acquisition,
sale or other disposition of shares of common stock acquired upon exercise of
the Option, and the nature of the events and the duration of the period, if any,
in which any Participant's rights in respect of an Option or shares of common
stock acquired upon exercise of an Option may be forfeited; to interpret the
terms of this Plan, to make all such determinations and take all such other
actions in connection with the implementation, operation and administration of
this Plan, and to adopt, amend and rescind such administrative guidelines and
other rules and regulations relating to this Plan, as it shall from time to time
deem advisable, including without limitation for the purpose of ensuring
compliance with Section legislation hereof. Our board's interpretations,
determinations, guidelines, rules and regulations shall be conclusive and
binding upon our company, Eligible Persons, Participants and all other persons.
The aggregate number of Common Shares that may be reserved,
allotted and issued pursuant to Options shall not exceed 17,400,000 shares of
common stock, less the aggregate number of shares of common stock then reserved
for issuance pursuant to any other share compensation arrangement. For greater
certainty, if an Option is surrendered, terminated or expires without being
exercised, the Common Shares reserved for issuance pursuant to such Option shall
be available for new Options granted under this Plan.
The Board may amend, subject to the approval of any regulatory
authority whose approval is required, suspend or terminate this Plan or any
portion thereof. No such amendment, suspension or termination shall alter or
impair any outstanding unexercised Options or any rights without the consent of
such Participant. If this Plan is suspended or terminated, the provisions of
this Plan and any administrative guidelines, rules and regulations relating to
this Plan shall continue in effect for the duration of such time as any Option
remains outstanding.
As at the date of the annual report, there was nil stock
options exercised except for those disclosed in the regulatory filings and in
the notes to the financial statements.
Equity
Compensation Plan Information
|
Plan category
|
Number of
securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of
securities
remaining available
for future
issuance
under equity
compensation plans
(excluding securities
reflected in column
(a))
|
Equity compensation plans
approved by security
holders
|
Nil
|
Nil
|
Nil
|
2011Stock Option Plan
approved by security
holders
|
500,000
|
$0.06
|
4,220,348
|
2014 Stock Option Plan
approved by security
holders
|
2,710,000
|
$0.06
|
14,690,000
|
Total
|
3,210,000
|
$0.06
|
18,910,348
|
Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
We did not purchase any of our shares of common stock or other
securities during our fiscal year ended August 31, 2016.
Item 6.
|
Selected Financial Data
|
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item 7.
|
Managements Discussion and Analysis of
Financial Condition and Results of Operations
|
The following discussion should be read in conjunction with our
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to;
those discussed below and elsewhere in this annual report, particularly in the
section entitled Risk Factors beginning on page 10 of this annual report.
Our audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
Plan of Operation
During the next twelve month period (beginning September 1,
2016), we intend to:
|
|
identify and secure sources of equity and/or
debt financing for property payments;
|
|
|
identify and secure sources of equity and/or
debt financing for resource acquisitions;
|
|
|
identify and secure sources of equity and/or
debt financing for pilot testing for Lithium technology
|
We anticipate that we will incur the following operating
expenses during this period:
Estimated Funding Required During the 12 Months beginning
September 1, 2016
|
Expense
|
Amount ($)
|
Mineral Costs
|
70,000
|
Bench Tests for
Lithium Technology
|
15,000
|
Resource
Acquisitions
|
50,000
|
Management
Consulting Fees
|
175,000
|
Professional fees
|
100,000
|
Rent
|
24,000
|
Other general
administrative expenses
|
75,000
|
Total
|
$ 509,000
|
As at the date of this annual report, we do not have sufficient
cash on hand to finance our entire potential and estimated $509,000 cash
obligation to the proposed spending for the 12 months beginning September 1,
2016. Based on our current cash position of $31,034, we anticipate that we will
require $480,000 in additional cash to execute our business plan. In the event
that we are unable raise sufficient cash we intend to reduce our planned
expenditures to accommodate our means with a view toward prioritizing revenue
generating activity and fulfilling our public reporting obligations. As at the
date of this registration statement we have no financing arrangements in
place.
Results of Operations for our Years Ended August 31, 2016
and 2015
Our net loss and comprehensive loss for our year ended August
31, 2016, for our year ended August 31, 2015 and the changes between those
periods for the respective items are summarized as follows:
|
|
|
|
|
|
|
|
Change Between
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
August 31, 2016
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
and Year Ended
|
|
|
|
2016
|
|
|
2015
|
|
|
August 31, 2015
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Revenue
|
$
|
(14,315)
|
|
$
|
(8,632)
|
|
$
|
(5,683)
|
|
Cost of Goods Sold
|
|
8,335
|
|
|
3,796
|
|
|
4,539
|
|
Other (income)expenses
|
|
52,992
|
|
|
(94,947)
|
|
|
147,939
|
|
General and administrative
|
|
478,489
|
|
|
1,249,216
|
|
|
(770,727)
|
|
Bank charges and interest
|
|
6,780
|
|
|
2,108
|
|
|
4,672
|
|
Exploration Costs
|
|
11,437
|
|
|
Nil
|
|
|
11,437
|
|
Impairment of long- term
investments
|
|
22,181
|
|
|
6,270
|
|
|
15,911
|
|
Consulting fees
|
|
234,011
|
|
|
752,319
|
|
|
(518,308)
|
|
Professional Fees
|
|
76,869
|
|
|
90,612
|
|
|
(13,743)
|
|
Net Income (loss)
|
|
(525,501)
|
|
|
(1,149,433)
|
|
|
623,932
|
|
Other Income and Revenue
The increase in revenue for year ended August 31, 2016, relates
to the sales for the new product V-Love that entered the retail market in May
2015. Other income is consistent with prior year. The decrease in other (income)
expenses of $52,992 relates to the write down of the V-Love inventory, losses
from sale of Lexaria shares and the decrease in market value of Pro Eco shares
compared to the other income of $94,947 for year ended August 31, 2015, relates
to the cancellation of The Green Canvas Joint Venture with common shares of the
Company being returned back to treasury and cancelled.
General and Administrative
Our general and administrative expenses were lower by $770,727
for our year ended August 31, 2016 compared to August 31, 2015. The decrease in
costs were largely due non-renewal of consulting contracts by $518,308. In
addition the Company decreased costs of $167,360 for advertising, $24,786 for
investor relations, $49,999 for rent, $13,209 for travel and $13,743 in professional fees for the
year ended August 31, 2016. These decreased costs are due to the Companys
termination of the joint ventures and the Companys efforts in reducing costs.
Professional Fees
There was a decrease in accounting and legal fees for our year
ended August 31, 2016 by $13,743 compared to the prior year due to financings,
registration statements and additional legal advice.
Interest Expense
There was a slight increase in interest expense for our year
ended August 31, 2016 by $4,672 compared to the prior year. This amount includes
foreign exchange differences which is the reason for the slight increase in this
amount.
Exploration Costs
There were exploration costs of $11,437 for our year ended
August 31, 2016 compared to prior year. This is from the Nevada Lithium
properties that the Company has acquired.
Consulting Fees
There was a decrease in consulting fees for the year ended
August 31, 2016 compared to August 31, 2015 by $518,308. This was largely due to
non-renewal of consulting agreements and the termination of various joint
ventures. The Company has entered into various joint venture agreements, advisor
and consulting agreements which led to the increased costs in 2015.
Liquidity and Financial Condition
Working Capital
|
|
At
|
|
|
At
|
|
|
|
August 31,
|
|
|
August 31,
|
|
|
|
2016
|
|
|
2015
|
|
Current assets
|
$
|
144,112
|
|
$
|
343,927
|
|
Current liabilities
|
|
376,499
|
|
|
325,037
|
|
|
|
|
|
|
|
|
Working capital surplus/(deficit)
|
$
|
(232,387
|
)
|
$
|
18,890
|
|
Cash Flows
|
|
Year Ended
|
|
|
|
August 31,
|
|
|
August 31
|
|
|
|
2015
|
|
|
2015
|
|
Cash flows (used in)
operating activities
|
$
|
(384,327
|
)
|
|
(905,202
|
)
|
Cash flows from investing activities
|
|
98,601
|
|
|
3,000
|
|
Cash flows from financing
activities
|
|
232,603
|
|
|
98,237
|
|
Net increase (decrease) in cash during year
|
$
|
( 53,123
|
)
|
|
(803,965
|
)
|
Operating Activities
Net cash used in operating activities was $384,327 for our year
ended August 31, 2016 compared with cash used in operating activities of
$905,202 in 2015. The decrease in net cash used in operating activities is due
to our Company decrease in prepaid expenses and joint venture agreement
terminations compared to August 31, 2015.
Investing Activities
Net cash provided from investing activities was $98,601 for our
year ended August 31, 2016 compared to net cash provided in investing activities
of $3,000 in the same period in 2015. The increase is from the sale of
marketable securities.
Financing Activities
Net cash provided by financing activities was $232,603 for our
year ended August 31, 2016 compared to $98,237 in the same period in 2015. This
increase is primarily due to increased financings compared to the prior year
end.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Going Concern
Our financial statements have been prepared in accordance with
accounting principles generally accepted in the United States applicable to a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. We have a net
loss of $525,501 for the year ended August 31, 2016 [2015 net loss of
$1,149,433] and at August 31, 2016 had a deficit accumulated during the
exploration stage of $12,440,597 [2015 $11,915,096]. We generated revenue of
$14,315 for the year ended August 31, 2016 [2015 - $8,632]. We have working
capital deficit of $232,387 as at August 31, 2016 [2015 working capital
surplus $18,890]. We require additional funds to maintain our existing
operations and to acquire new business assets. These conditions raise
substantial doubt about our Companys ability to continue as a going concern.
Managements plans in this regard are to raise equity and debt financing as
required, but there is no certainty that such financing will be available or
that it will be available at acceptable terms. The outcome of these matters
cannot be predicted at this time and the financing environment is exceptionally
difficult.
These financial statements do not include any adjustments to
reflect the future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that might result from the outcome
of this uncertainty.
At this time, we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock or through a loan from our directors to meet our obligations over the next
twelve months. We do not have any arrangements in place for any future debt or
equity financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that are
material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and
results of operations are based upon our financial statements, which have been
prepared in accordance with the accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by managements application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
Recent Accounting Pronouncements
In March 2016, the FASB issued guidance which simplifies
several aspects of accounting for share-based payment award transactions
including income tax consequences, classification of awards as either equity or
liabilities and classification on the statement of cash flows. The guidance is
effective for the Company in the first quarter of fiscal 2018 and earlier
adoption is permitted. The Company is evaluating the impact of adopting this new
accounting guidance on its financial statements.
In June 2016, the Financial Accounting Standards Board (FASB)
issued guidance that changes the accounting for recognizing impairments of
financial assets. Under the new guidance, credit losses for certain types of
financial instruments will be estimated based on expected losses. The new
guidance also modifies the impairment models for available for-sale debt
securities and for purchased financial assets with credit deterioration since
their origination. The guidance is effective for the Company in the first
quarter of fiscal 2021 and earlier adoption is permitted. The Company is
evaluating the impact of adopting this new accounting guidance on its financial
statements.
In May 2015, the FASB issued guidance to remove the requirement
to categorize within the fair value hierarchy all investments for which fair
value is measured using net asset value per share practical expedient. The
guidance is effective for the Company in the first quarter of fiscal 2017 and
early adoption is permitted. The guidance will have no impact on the Companys
balance sheets or statements of operations or cash flows.
Item 7A.
|
Quantitative and Qualitative Disclosures
About Market Risk
|
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item 8.
|
Financial Statements and Supplementary
Data
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Enertopia Corp.
We have audited the balance sheets of Enertopia Corp. (the
Company) (formerly Golden Aria Corp.) as at August 31, 2016 and 2015 and the
related statements of stockholders equity, operations and cash flows for the
years then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstance, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as at August 31, 2016 and 2015 and the results of their operations and their
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements referred to above have
been prepared assuming the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company incurred losses
from operations since inception, has not attained profitable operations and is
dependent upon obtaining adequate financing to fulfill its operating activities.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
|
|
Vancouver, Canada
November 21, 2016
|
Chartered Professional Accountants
|
Enertopia Corp.
BALANCE SHEETS
(Expressed in U.S. Dollars)
|
|
August 31
|
|
|
August 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
31,034
|
|
$
|
84,157
|
|
Owned
securities (Note 4)
|
|
18,780
|
|
|
181,950
|
|
GST receivable
|
|
11,012
|
|
|
23,653
|
|
Prepaid
expenses and deposit
|
|
83,286
|
|
|
15,832
|
|
Inventory (Note 6)
|
|
-
|
|
|
38,335
|
|
Total current assets
|
|
144,112
|
|
|
343,927
|
|
|
|
|
|
|
|
|
Non-Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term
investments in affiliated company (Note 5)
|
|
1
|
|
|
22,183
|
|
Mineral properties (Note 7)
|
|
83,750
|
|
|
-
|
|
Long term
investments (Note 5)
|
|
1
|
|
|
-
|
|
Prepaid for Lithium technology (Note 8)
|
|
12,500
|
|
|
-
|
|
Total Assets
|
$
|
240,364
|
|
$
|
366,110
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts payable
|
$
|
236,242
|
|
$
|
208,749
|
|
Deferred
revenues
|
|
-
|
|
|
40,000
|
|
Shares subscription received
|
|
1,334
|
|
|
-
|
|
Due to
related parties (Note 9)
|
|
138,923
|
|
|
76,288
|
|
Total Current
Liabilities
|
|
376,499
|
|
|
325,037
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
|
|
|
Authorized:
200,000,000
common shares with a par value of $0.001 per
share
Issued
and
outstanding:
89,528,460
common shares at August 31, 2016 and August 31,2015: 71,508,460
|
|
89,528
|
|
|
71,508
|
|
Additional paid-in
capital
|
|
12,214,934
|
|
|
11,884,661
|
|
Shares to be returned
|
|
-
|
|
|
-
|
|
Deficit accumulated during
the exploration stage
|
|
(12,440,597
|
)
|
|
(11,915,096
|
)
|
Total Stockholders' Equity
|
|
(136,135
|
)
|
|
41,073
|
|
Total Liabilities and
Stockholders' Equity
|
$
|
240,364
|
|
$
|
366,110
|
|
The accompanying notes are an integral part of these financial
statements
Enertopia Corp.
STATEMENTS OF
OPERATIONS
(Expressed in U.S. Dollars)
|
|
Year
Ended
|
|
|
|
August 31
|
|
|
August 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
Net Sales
|
|
14,315
|
|
|
8,632
|
|
Cost of Product Sales
|
|
(8,335
|
)
|
|
(3,796
|
)
|
|
|
|
|
|
|
|
Gross Profit
|
|
5,980
|
|
|
4,836
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
Accounting and
audit
|
|
40,993
|
|
|
52,757
|
|
Sales & Marketing
|
|
1,887
|
|
|
3,514
|
|
Advertising &
Promotions
|
|
42,134
|
|
|
209,494
|
|
Bank charges and interest expense
|
|
6,780
|
|
|
2,108
|
|
Consulting/Stock
Based Compensation
|
|
234,011
|
|
|
752,319
|
|
Mineral exploration costs
|
|
11,437
|
|
|
-
|
|
Fees and dues
|
|
31,920
|
|
|
33,653
|
|
Insurance
|
|
16,192
|
|
|
11,565
|
|
Investor relations
|
|
10,479
|
|
|
35,265
|
|
Legal and professional
|
|
35,876
|
|
|
37,855
|
|
Office and
miscellaneous
|
|
12,582
|
|
|
9,523
|
|
Research and Development
|
|
4,608
|
|
|
8,459
|
|
Rent
|
|
22,285
|
|
|
72,284
|
|
Telephone
|
|
3,266
|
|
|
3,444
|
|
Training &
Conferences
|
|
666
|
|
|
394
|
|
Travel
|
|
3,373
|
|
|
16,582
|
|
|
|
|
|
|
|
|
Total expenses
|
|
478,489
|
|
|
1,249,216
|
|
(Loss) for the year before other
items
|
|
(472,509
|
)
|
|
(1,244,380
|
)
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
Other income
|
|
40,000
|
|
|
43,017
|
|
Impairment of long
term investments
|
|
-
|
|
|
(6,270
|
)
|
Loss on owned securities (Note 4)
|
|
(39,966
|
)
|
|
58,200
|
|
Write down of
assets (Note 6)
|
|
(30,845
|
)
|
|
-
|
|
Write down of long term investments (Note 5)
|
|
(22,181
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss and comprehensive loss for the
year
|
$
|
(525,501
|
)
|
$
|
(1,149,433
|
)
|
|
|
|
|
|
|
|
Basic and diluted (loss) per share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
Weighted average number of common
shares
outstanding - basic and diluted
|
|
81,096,334
|
|
|
77,119,448
|
|
The accompanying notes are an integral part of these financial
statements
ENERTOPIA CORP.
STATEMENTS OF STOCKHOLDERS'
EQUITY
(Expressed in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCK
|
|
|
ADDITIONAL
|
|
|
STOCK
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
PAID-IN
|
|
|
TO BE
|
|
|
DEFICIT
|
|
|
STOCKHOLDERS'
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
CAPITAL
|
|
|
RETURNED
|
|
|
ACCUMULATED
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2014
|
|
90,870,747
|
|
|
90,871
|
|
|
14,070,611
|
|
|
(1,713,145
|
)
|
|
(10,765,663
|
)
|
|
1,682,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WOM JV Termination, shares
back to Treasury
|
|
(15,127,287
|
)
|
|
(15,127
|
)
|
|
(1,667,418
|
)
|
|
1,682,545
|
|
|
|
|
|
(0
|
)
|
Shares returned for contract cancellation C.
Hornung
|
|
(90,000
|
)
|
|
(90
|
)
|
|
(30,510
|
)
|
|
30,600
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
177,596
|
|
|
|
|
|
|
|
|
177,596
|
|
Shares issued for PP on
January 30
|
|
1,665,000
|
|
|
1,665
|
|
|
70,400
|
|
|
|
|
|
|
|
|
72,065
|
|
Shares issued for PP on March 12
|
|
590,000
|
|
|
590
|
|
|
25,582
|
|
|
|
|
|
|
|
|
26,172
|
|
Shares to be returned for JV
termination
|
|
(6,400,000
|
)
|
|
(6,400
|
)
|
|
(761,600
|
)
|
|
|
|
|
|
|
|
(768,000
|
)
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,149,433
|
)
|
|
(1,149,433
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2015
|
|
71,508,460
|
|
|
71,508
|
|
|
11,884,661
|
|
|
-
|
|
|
(11,915,096
|
)
|
|
41,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Based Compensation
|
|
|
|
|
|
|
|
37,107
|
|
|
|
|
|
|
|
|
37,107
|
|
Stock issued for Consulting Agreement
|
|
100,000
|
|
|
100
|
|
|
900
|
|
|
|
|
|
|
|
|
1,000
|
|
Shares issued for Definitive
Agreement May 12
|
|
3,500,000
|
|
|
3,500
|
|
|
61,250
|
|
|
|
|
|
|
|
|
64,750
|
|
Shares issued for Stock Option exercise May
12
|
|
240,000
|
|
|
240
|
|
|
11,760
|
|
|
|
|
|
|
|
|
12,000
|
|
Shares issued for PP on May
20
|
|
6,413,333
|
|
|
6,413
|
|
|
66,824
|
|
|
|
|
|
|
|
|
73,237
|
|
Share issuance cost for PP on May 20
|
|
|
|
|
|
|
|
(5,360
|
)
|
|
|
|
|
|
|
|
(5,360
|
)
|
Shares issued for PP on June
8
|
|
3,016,667
|
|
|
3,017
|
|
|
32,627
|
|
|
|
|
|
|
|
|
35,643
|
|
Share issuance cost for PP on June 8
|
|
|
|
|
|
|
|
(2,599
|
)
|
|
|
|
|
|
|
|
(2,599
|
)
|
Shares issued for PP on
August 9
|
|
4,500,000
|
|
|
4,500
|
|
|
115,515
|
|
|
|
|
|
|
|
|
120,015
|
|
Shares issued per LOI dated August 16
|
|
250,000
|
|
|
250
|
|
|
12,250
|
|
|
|
|
|
|
|
|
12,500
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(525,501
|
)
|
|
(525,501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, August 31, 2016
|
|
89,528,460
|
|
|
89,528
|
|
|
12,214,934
|
|
|
-
|
|
|
(12,440,597
|
)
|
|
(136,135
|
)
|
The accompanying notes are an integral part of these financial
statements
ENERTOPIA CORP.
STATEMENTS OF CASH
FLOWS
(Expressed in U.S. Dollars)
|
|
Year
Ended
|
|
|
|
August 31
|
|
|
August 31
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Cash flows used in
operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income (loss)
|
$
|
(525,501
|
)
|
$
|
(1,149,433
|
)
|
|
|
|
|
|
|
|
Changes to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
Consulting - Stock based compensation
|
|
37,107
|
|
|
177,596
|
|
Write down of inventory
|
|
30,845
|
|
|
-
|
|
Write down of long term investments
|
|
22,181
|
|
|
-
|
|
Loss from sale of owned
securities
|
|
40,865
|
|
|
(58,200
|
)
|
Impairment of owned securities
|
|
4,704
|
|
|
6,270
|
|
Other non-cash activities
|
|
-
|
|
|
3,226
|
|
Change in non-cash
working capital items:
|
|
|
|
|
|
|
Accounts receivable
|
|
12,641
|
|
|
(2,855
|
)
|
Prepaid expenses and deposit
|
|
(67,454
|
)
|
|
218,258
|
|
Inventory
|
|
7,489
|
|
|
(38,336
|
)
|
Deferred charges
|
|
(40,000
|
)
|
|
(46,226
|
)
|
Accounts payable and accrued
liabilities
|
|
30,160
|
|
|
(21,116
|
)
|
Due to related parties
|
|
62,637
|
|
|
5,614
|
|
Net cash (used in)
operating activities
|
|
(384,326
|
)
|
|
(905,202
|
)
|
|
|
|
|
|
|
|
Cash flows from (used in)
investing activities
|
|
|
|
|
|
|
Proceeds from sale of
marketable securities
|
|
117,601
|
|
|
3,000
|
|
Mineral
resource properties acquisition
|
|
(19,000
|
)
|
|
-
|
|
Net cash from (used in) investing
activities
|
|
98,601
|
|
|
3,000
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Net
Proceeds from options exercised
|
|
12,000
|
|
|
-
|
|
Net proceeds from
subscriptions received
|
|
220,602
|
|
|
98,237
|
|
Net cash from financing
activities
|
|
232,602
|
|
|
98,237
|
|
|
|
|
|
|
|
|
(Decrease) in cash and
cash equivalents
|
|
(53,123
|
)
|
|
(803,965
|
)
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of year
|
|
84,157
|
|
|
888,122
|
|
|
|
|
|
|
|
|
Cash and cash equivalents,
end of year
|
$
|
31,034
|
|
$
|
84,157
|
|
|
|
|
|
|
|
|
Supplemental information of
cash flows
|
|
|
|
|
|
|
Interest paid in cash
|
$
|
-
|
|
$
|
-
|
|
Income
taxes paid in cash
|
$
|
-
|
|
$
|
-
|
|
The accompanying notes are an integral part of these financial
statements
ENERTOPIA CORP.
|
(A Development Stage Company)
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
August 31, 2016
|
(Expressed in U.S. Dollars)
|
|
The Company was formed on November 24,
2004 under the laws of the State of Nevada and commenced operations on November
24, 2004. The Company was an independent natural resource company engaged in the
exploration, development and acquisition of natural resources in the United
States and Canada. In the fiscal year 2010, the Company shifted its strategic
plan from its non-renewal energy operations to its planned renewal energy
operations and natural resource acquisition and development. In late summer of
2013, the Company had another business sector in alternative health and
wellness. During spring of 2016, the Company shifted its strategic plan to
natural resource acquisitions and Lithium brine extraction technology. The
Company has offices in Vancouver and Kelowna, B.C., Canada.
2.
|
GOING CONCERN UNCERTAINTY
|
The accompanying financial statements
have been prepared on a going concern basis which contemplates the realization
of assets and the satisfaction of liabilities and commitments in the normal
course of business for the foreseeable future. The Company had a working capital
deficit of $232,387 for the year ended August 31, 2016 [surplus of $18,890 for
year ended August 31, 2015]. The Company incurred a net loss of $525,501 for the
year ended August 31, 2016 [net loss $1,149,433 for the year ended August 31,
2015] and as at August 31, 2016 has incurred cumulative losses of $12,440,597
that raises substantial doubt about its ability to continue as a going concern.
Management has been able, thus far, to finance the operations through equity
financing and cash on hand. There is no assurance that the Company will be able
to continue to finance the Company on this basis.
In view of these conditions, the
ability of the Company to continue as a going concern is in substantial doubt
and dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis, to obtain additional financing as may be
required, to receive the continued support of the Companys shareholders, and
ultimately to obtain successful operations. There are no assurances that the
Company will be able to obtain further funds required for its continued
operations. As noted herein, the Company is pursuing various financing
alternatives to meet its immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to the Company
when needed or, if available, that it can be obtained on commercially reasonable
terms. If the Company is not able to obtain the additional financing on a timely
basis, it will be unable to conduct its operations as planned, and it will not
be able to meet its other obligations as they become due. In such event, the
Company will be forced to scale down or perhaps even cease its operations. There
is significant uncertainty as to whether the Company can obtain additional
financing. These financial statements do not give effect to any adjustments
which would be necessary should the Company be unable to continue as a going
concern and therefore be required to realize its assets and discharge its
liabilities in other than the normal course of business and at amounts different
from those reflected in the accompanying financial statements.
3.
|
SIGNIFICANT ACCOUNTING
POLICIES
|
The accompanying financial statements
have been prepared in accordance with U.S. generally accepted accounting
principles.
The Company recognizes revenue from
product sales when persuasive evidence of an arrangement exists, title to
product and associated risk of loss has passed to the customer, the price is
fixed or determinable, collection from the customer is reasonably assured, the
Company has no further performance obligation, and returns can be reasonably
estimated.
|
c)
|
Cash and Cash Equivalents
|
Cash equivalents comprise certain
highly liquid instruments with a maturity of three months or less when
purchased. As of August 31, 2016 and 2015, cash and cash equivalents consist of
cash only.
Marketable securities are classified
at fair value through profit (loss). They consist of equities which are all
traded in the public markets. Marketable securities are recorded at fair value,
with changes to fair value recorded in profit or loss.
|
e)
|
Inventories and Cost of
Sales
|
The Company has two major classes of
inventory: finished goods and raw materials. In both classes, inventory is
valued at the lower of cost or market. Cost is determined on a first-in,
first-out basis. Cost of sales includes all expenditures incurred in bringing
the goods to the point of sale. Inventory costs and costs of sales include
direct costs of the raw material, inbound freight charges, warehousing costs,
handling costs (receiving and purchasing) and utilities and processing costs
charged by third parties.
|
f)
|
Investments in Affiliated Companies Accounted for
Using the Equity Method
|
Investments in equity method investees
are accounted for using the equity method based upon the level of ownership
and/or the Companys ability to exercise significant influence over the
operating and financial policies of the investee. Investments of this nature are
recorded at original cost and adjusted periodically to recognize the Companys
proportionate share of the investees net income or losses after the date of
investment. When net losses from and investment accounted for under the equity
method exceeds its carrying amount, the investment balance is reduced to zero.
The Company resumes accounting for the investment under the equity method if the
entity subsequently reports net income and the Companys share of that net
income exceed the share of the net losses not recognized during the period the
equity method was suspended. Investments are written down only when there is
clear evidence that a decline in value that is other than temporary has
occurred. When an investment accounted for using the equity method issues its
own shares, the subsequent reduction in the Companys proportionate interest in
the investee is reflected in income as a deemed dilution gain or loss on
disposition. The Company evaluates its investments in companies accounted for
the equity or cost method for impairment when there is evidence or indicators
that a decrease in value may be other than temporary.
Other long term investments for which
the Company has not have the ability to exercise significant influence and for
which there is not a readily determinable market value are accounted for under
the cost method of accounting, such that they are recorded at the lower of cost
or estimated net realizable value. Management periodically reviews the cost
method investments for instances where fair value is less than the carrying
amount and the decline in value is determined to be other than temporary. If the
decline in value is judged to be other than temporary, the carrying amount of
the security is written down to fair value and the resulting loss is charged to
operations.
Acquisition costs of mineral rights
are initially capitalized as incurred while exploration and pre-extraction
expenditures are expensed as incurred until such time proven or probable
reservesare established for that project. Acquisition costs include cash
consideration and the fair market value of shares issued on the acquisition of
mineral properties.
Expenditures relating to exploration
activities are expensed as incurred and expenditures relating to pre-extraction
activities are expensed as incurred until such time proven or probable reserves
are established for that project, after which subsequent expenditures relating
to development activities for that particular project are capitalized as
incurred.
Where proven and probable reserves
have been established, the projects capitalized expenditures are depleted over
proven and probable reserves using the units-of-production method upon
commencement of production. Where proven and probable reserves have not been
established, the projects capitalized expenditures are depleted over the
estimated extraction life using the straight-line method upon commencement of
extraction. The Company has not established proven or probable reserves for any
of its projects.
The carrying values of the mineral
rights are assessed for impairment by management on a quarterly basis and as
required whenever indicators of impairment exist. An impairment loss is
recognized if it is determined that the carrying value is not recoverable and
exceeds fair value.
|
i)
|
Stock-Based Compensation
|
The Company followed Accounting
Standards Codification (ASC) 718,
Compensation Stock Compensation
,
to account for its stock options and similar equity instruments issued.
Accordingly, compensation costs attributable to stock options or similar equity
instruments granted are measured at the fair value at the grant date, and
expensed over the expected vesting period. ASC 718 requires excess tax benefits
be reported as a financing cash inflow rather than as a reduction of taxes paid.
The preparation of financial
statements in conformity with 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 amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates and assumptions.
Loss per share is computed using the
weighted average number of shares outstanding during the period. The Company has
adopted ASC 220
Earnings Per Share
. Diluted loss per share is
equivalent to basic loss per share because the potential exercise of the
equity-based financial instruments was anti-dilutive.
|
m)
|
Foreign Currency
Translations
|
The Companys operations are located
in the United States of America and it has offices in Canada. The Company
maintains its accounting records in U.S. Dollars, as follows:
At the transaction date, each asset,
liability, revenue and expense that was acquired or incurred in a foreign
currency is translated into U.S. dollars by the using of the exchange rate in
effect at that date. At the year end, monetary assets and liabilities are
translated at the exchange rate in effect at that date. The resulting foreign
exchange gains and losses are included in operations.
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 Companys financial instruments
consist primarily of cash and cash equivalents, marketable securities, accounts
receivable, accounts payable and due to related parties. With the exception of
marketable securities, the carrying amounts of these financial instruments
approximate their fair values due to their short maturities. The fair value of
marketable securities are measured based on quoted prices in active markets.
Cash and cash equivalents and marketable securities were in level 1 within the
fair value hierarchy.
The Companys operations are in United
States of America and Canada, which results in exposure to market risks from
changes in foreign currency rates. The financial risk is the risk to the
Companys operations that arise from fluctuations in foreign exchange rates and
the degree of volatility of these rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency risk.
The Company has adopted ASC 740,
Income Taxes
, which requires the Company to recognize deferred tax
liabilities and assets for the expected future tax consequences of events that
have been recognized in the Companys financial statements or tax returns using
the liability method. Under this method, deferred tax liabilities and assets are
determined based on the temporary differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect in the
year in which the differences are expected to reverse. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the period
that includes the enactment date. In addition, a valuation allowance is
established to reduce any deferred tax asset for which it is determined that it is more
likely than not that some portion of the deferred tax asset will not be
realized.
|
p)
|
Long-Lived Assets
Impairment
|
In accordance with ASC 360,
Accounting for Impairment or Disposal of Long Lived Assets, the carrying value
of long lived assets are tested for recoverability whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. The
Company recognizes impairment when the sum of the expected undiscounted future
cash flows is less than the carrying amount of the asset. Impairment losses, if
any, are measured as the excess of the carrying amount of the asset over its
estimated fair value.
|
q)
|
Asset Retirement
Obligations
|
The Company accounts for asset
retirement obligations in accordance with the provisions of
ASC 410, Asset
Retirement and Environmental Obligations
. ASC 410 requires the Company to
record the fair value of an asset retirement obligation as a liability in the
period in which it incurs a legal obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction,
development and/or normal use of the assets. The management of the Company had
estimated the asset retirement obligation to be immaterial and therefore was not
reflected on the financial statements as of August 31, 2016 and 2015.
The Company has adopted ASC 220,
Comprehensive Income
, which establishes standards for reporting and
display of comprehensive income, its components and accumulated balances. The
Company is disclosing this information on its Statement of Stockholders Equity.
Comprehensive income comprises equity except those transactions resulting from
investments by owners and distributions to owners.
|
s)
|
Concentration of credit
risk
|
The Company places its cash and cash
equivalent with high credit quality financial institution. As of August 31,
2016, the Company had $218 in a bank beyond insured limit (August 31, 2015:
$65,132).
|
t)
|
Recently Adopted Accounting
Pronouncements
|
In June 2014, ASU guidance was issued
to resolve the diversity of practice relating to the accounting for stock-based
performance awards for which the performance target could be achieved after the
employee completes the required service period. Adoption of the new guidance,
effective for the fiscal year beginning September 1, 2015, had no impact on the
Companys balance sheets or statements of operations or cash flows.
|
u)
|
New Accounting
Pronouncements
|
In March 2016, the FASB issued
guidance which simplifies several aspects of accounting for share-based payment
award transactions including income tax consequences, classification of awards
as either equity or liabilities and classification on the statement of cash
flows. The guidance is effective for the Company in the first quarter of fiscal
2018 and earlier adoption is permitted. The Company is evaluating the impact of
adopting this new accounting guidance on its financial statements.
In June 2016, the FASB issued guidance
that changes the accounting for recognizing impairments of financial assets.
Under the new guidance, credit losses for certain types of financial instruments
will be estimated based on expected losses. The new guidance also modifies the
impairment models for available for-sale debt securities and for purchased
financial assets with credit deterioration since their origination.
The guidance is effective for the
Company in the first quarter of fiscal 2021 and earlier adoption is permitted.
The Company is evaluating the impact of adopting this new accounting guidance on
its financial statements.
In May 2015, the FASB issued guidance
to remove the requirement to categorize within the fair value hierarchy all
investments for which fair value is measured using net asset value per share
practical expedient. The guidance is effective for the Company in the first
quarter of fiscal 2017 and early adoption is permitted. The guidance will have
no impact on the Companys balance sheets or statements of operations or cash
flows.
In August 2014, the FASB issued
guidance on how to account for and disclose going concern risk. The guidance is
effective for the Company in the second quarter of fiscal 2017 and earlier
adoption is permitted. The Company is evaluating the impact of adopting this new
accounting guidance on its financial statements.
As at August 31, 2016 marketable
securities consist of 156,500 common shares of Lexaria Corp. obtained through
Definitive Agreements as that was signed on March 5, 2014. The Company
classified the securities owned as held-for-trade and recorded at fair value.
The fair value of the common shares of
Lexaria Corp. was $0.12 per share as at August 31, 2016 (2015: $0.18 per share).
During the year ended August 31, 2016,
the Company disposed of 833,500 (2015: 10,000) common shares of Lexaria Corp.
with a cost basis of $153,815 (2015: $1,200). The proceeds from the sales of
shares were $117,601 (2015: $2,167). Accordingly, a realized loss of $36,216
(2015: realized gain of $967) was recognized in profit or loss. Another
impairment charge of $3,750 (2015: $nil) was recorded for the year ended August
31, 2016 for the remaining of 375,000 common shares of Cheetah Oil & Gas
Ltd., with a cost basis of $3,750.
Global Solar Water Power Systems
Inc.
On February 28, 2010, the Company
entered into an Asset and Share Purchase Agreement with the Companys former
chief technical officer - Mr. Mark Snyder to acquire up to 20% ownership
interest of GSWPS.
During the year ended August 31, 2013,
based on the managements assessment of GSWPSs current operations, the Company
decided to write down long-term investment in GSWPS to $1.
Pro Eco Energy USA Ltd.
During the year ended August 31, 2008,
the Company purchased 900,000 shares in Pro Eco Energy USA Ltd. (Pro Eco
Energy) for $45,000. During the year ended August 31, 2014, the Company sold
its investment in Pro Eco Energy to Western Standard Energy Corp. for $40,000.
During the year ended August 31, 2015, 600,000 shares of Pro Eco Energy were
returned to the Company and the receivable from Western Standard Energy Corp.
was settled. The Company has no significant influence in Pro Eco Energy.
The value of Pro Eco Energys shares
have been written down to $1 by management during the year ended August 31, 2016
due to management has assessed the value of shares by reviewing Pro Eco Energys
operation and cash flows situation and concluded it is unlikely to sell Pro Eco
Energys share in the market.
During the year ended August 31, 2015,
the Company launched a new product line V-Love
TM
. As at August 31,
2016, the Company has written off the inventory and is no longer selling
V-Love
TM
products. As at August 31, 2016, the Company owns the
formulation, but is no longer selling in the retail markets.
Enertopia has signed the Definitive
Agreement (the Agreement) on May 12,
2016 with Brandon Wilson
Association respecting the option to purchase a 100% interest in approximately
2,560 acres of placer mining claims in Churchill, Lander and Nye Counties
Nevada, USA. These placer mining claims are subject to a 1.5% NSR from
commercial production with the Company able to buy back the NSR at the rate of
$500,000 per 0.5% NSR.
The consideration payable by Enertopia
to Brandon Wilson Association consist of:
|
(a)
|
paying $7,000 on signing the Offer; (paid)
|
|
|
|
|
(b)
|
paying $12,000 on signing of the Agreement and issuing
3,500,000 common shares in the capital stock of Enertopia as soon as
practicable following the execution of the Agreement, (paid and
issued)
|
|
|
|
|
(c)
|
paying an optional $12,000 on or before the six month
anniversary of the Agreement; (paid subsequently. Refer to Note 15
(c))
|
|
|
|
|
(b)
|
paying an optional $22,500 on or before the one year
anniversary of the Agreement.
|
The Company is also required to issue
additional common shares upon the discovery of a Lithium enriched brine with an
average 300ppm Li over 100 foot vertical interval in the enriched lithium brine
in the Central Nevada Brine Project. Further, 1,000,000 Bonus Shares will be
issued per each successful property discovery meeting the foregoing criteria up
to a maximum 3,000,000 Bonus Shares.
8.
|
PREPAID FOR LITHIUM
TECHNOLOGY
|
On August 15, 2016 a binding Letter of
Intent (LOI) was signed by Enertopia and Genesis Water Technologies, Inc.
("GWT") with regard to the acquisition by Enertopia of the exclusive worldwide
licensing rights (the "Licensing Rights") by Enertopia of all of the technology
used in the process of recovering and extraction of battery grade lithium
carbonate powder Li2CO3 grading 99.5% or higher purity from brine solutions.
Upon the execution of this LOI,
Enertopia issued 250,000 common shares valued at $12,500 to GWT. As at November
23, 2016, final terms of definitive agreement are still under negotiations.
9.
|
RELATED PARTIES
TRANSACTION
|
For the year ended August 31, 2016, the
Company was party to the following related party transactions:
|
|
Incurred $100,303 (August 31, 2015: $78,000) in
consulting fees to the President of the Company. The accounts payable to
the President of the Company was $103,774 at the end of the year (August
31, 2015: $53,775);
|
|
|
Incurred $68,390 (August 31, 2013: $75,049) in consulting
fees to a company controlled by the CFO of the Company. The accounts
payable to the CFO of the Company was $35,109 at the end of the year
(August 31, 2015: $24,013);
|
|
|
Incurred share based compensation expenses of
$33,206 in relation to stock options issued to President, CFO and
directors (2015: $137,481).
|
The related party transactions are
recorded at the exchange amount established and agreed to between the related
parties.
On February 4, 2016, the Companys
Board has appointed Olivier Vincent as an Advisor to the Board of Directors and
a consultant for a term of one year. The Company issued 100,000 common shares
valued at $1,000. The shares were issued at an exercise price of $0.05 per
share.
On May 12, 2016, the Company issued
3,500,000 shares valued at $64,750 upon execution of the definitive agreement to
purchase a 100% interest in approximately 2,560 acres of placer mining claims in
Churchill, Lander and Nye Counties Nevada, USA. Also see Note 7.
On May 12, 2016, an officer of the
Company, Robert McAllister, exercised 240,000 stock options at $0.05 exercise
price with proceeds of $12,000.
On May 20, 2016, the Company closed the
first tranche of a private placement of 6,413,333 units at a price of CAD$0.015
per unit for gross proceeds of CAD$96,200. Each unit consists of one common
share of the Company and one non-transferable share purchase warrant, each full
warrant entitling the holder to purchase one additional common share of the
Company for a period of 36 months from the date of issuance, at a purchase price
$0.05 during the first 18 months and $0.10 after eighteen months. A cash
finders fee of CAD$7,040 and 469,333 full broker warrants that expire May 20,
2019 was paid to Canaccord Genuity and Haywood.
On June 8, 2016, the Company closed the
final tranche of a private placement of 3,016,667 units at a price of CAD$0.015
per unit for gross proceeds of CAD$45,250. Each unit consists of one common
share of the Company and one non-transferable share purchase warrant, each full
warrant entitling the holder to purchase one additional common share of the
Company for a period of 36 months from the date of issuance, at a purchase price
$0.05 during the first 18 months and $0.10 after eighteen months. A cash
finders fee of CAD$3,300 and 286,666 full broker warrants that expire June 8,
2019 was paid to Canaccord Genuity, Leede Jones Gable, PI Financial and Mackie
Research.
On August 9, 2016, the Company closed
the first tranche of a private placement of 4,500,000 units at a price of
CAD$0.035 per unit for gross proceeds of CAD$157,500. Each unit consists
of one common share of the Company and one non-transferable share purchase
warrant, each full warrant entitling the holder to purchase one additional
common share of the Company for a period of 24 months from the date of issuance,
at a purchase price of $0.07.
On August 15, 2016, the Company issued
250,000 common shares valued at $12,500 as per the binding LOI signed with
Genesis Water Technologies Inc. The shares were issued at an exercise price of
$0.05 per share Also see Note 8.
As at August 31, 2016, the Company had
89,528,460 shares issued and outstanding.
11.
|
STOCK OPTIONS AND WARRANTS
|
Stock Options
On July 15, 2014, the shareholders
approved and adopted at the Annual General Meeting the Companys 2014 Stock
Option Plan. On April 14, 2011, the shareholders approved and adopted at the
Annual General Meeting to consolidate the Companys 2007 Equity compensation
plan and the Companys 2010 Equity Compensation Plan into a new Company 2011
Stock Option Plan. The purpose of these Plans is to advance the interests of the
Corporation, through the grant of Options, by providing an incentive mechanism
to foster the interest of eligible persons in the success of the Corporation and
its affiliates; encouraging eligible persons to remain with the Corporation or
its affiliates; and attracting new Directors, Officers, Employees and
Consultants.
On October 23, 2015, the Company
granted 1,850,000 stock options to directors, officers and consultant of the
Company with an exercise price of $0.05 vested immediately, expiring October 23,
2020. 50,000 stock options were cancelled.
On February 4, 2016, the Company
granted 100,000 stock options to Advisor of the Board of the Company with an
exercise price of $0.05 vested immediately, expiring February 4, 2021.
For the year ended August 31, 2016, the
Company recorded $37,107 (August 31, 2015 $177,595) stock based compensation
expenses which has been included in consulting fees.
A summary of the changes in stock
options for the years ended August 31, 2016 and 2015 are presented below:
|
|
|
|
|
|
Options Outstanding
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
Number of Shares
|
|
|
Exercise Price
|
|
|
Balance, August 31, 2015
|
|
3,955,000
|
|
$
|
0.20
|
|
|
Cancelled
|
|
(1,650,000
|
)
|
|
0.16-0.70
|
|
|
Expired
|
|
(805,000
|
)
|
|
0.15-0.20
|
|
|
Exercised
|
|
(240,000
|
)
|
|
0.05
|
|
|
Granted
|
|
1,950,000
|
|
|
0.05
|
|
|
Balance, August 31, 2016
|
|
3,210,000
|
|
$
|
0.07
|
|
The fair value of options granted has
been estimated as of the date of the grant by using the Black-Scholes option
pricing model with the following assumptions:
|
|
|
August 31, 2016
|
|
|
August 31, 2015
|
|
|
Expected volatility
|
|
220%-217%
|
|
|
216%-219%
|
|
|
Risk-free interest rate
|
|
1.25%-1.43%
|
|
|
1.63%-1.79%
|
|
|
Expected life
|
|
5.00 years
|
|
|
5.00 years
|
|
|
Dividend yield
|
|
0.00%
|
|
|
0.00%
|
|
|
Estimated fair value per option
|
$
|
0.01-$0.05
|
|
$
|
0.06-$0.07
|
|
|
|
|
|
|
|
|
|
The Company has the following options
outstanding and exercisable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2016
|
|
Options
outstanding
|
|
|
|
|
|
Options
exercisable
|
|
|
|
|
Number
|
|
|
Remaining
|
|
|
Exercise
|
|
|
Number
|
|
|
Exercise
|
|
|
Exercise prices
|
|
of shares
|
|
|
contractual
|
|
|
Price
|
|
|
of shares
|
|
|
Price
|
|
|
|
|
|
|
|
life
|
|
|
|
|
|
exercisable
|
|
|
|
|
|
$0.05
|
|
100,000*
|
|
|
4.43 years
|
|
$
|
0.05
|
|
|
100,000
|
|
$
|
0.05
|
|
|
$0.05
|
|
1,560,000
|
|
|
4.14 years
|
|
$
|
0.05
|
|
|
1,560,000
|
|
$
|
0.05
|
|
|
$0.10
|
|
1,050,000
|
|
|
3.17 years
|
|
$
|
0.10
|
|
|
1,050,000
|
|
$
|
0.10
|
|
|
$0.06
|
|
500,000
|
|
|
2.18 years
|
|
$
|
0.06
|
|
|
500,000
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,210,000
|
|
|
3.53 years
|
|
$
|
0.07
|
|
|
3,210,000
|
|
$
|
0.07
|
|
|
August 31, 2015
|
|
Options
outstanding
|
|
|
|
|
|
Options
exercisable
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
Number
|
|
|
contractual
|
|
|
Exercise
|
|
|
of shares
|
|
|
Exercise
|
|
|
Exercise prices
|
|
of shares
|
|
|
life
|
|
|
price
|
|
|
exercisable
|
|
|
Price
|
|
|
$0.10
|
|
100,000
|
|
|
4.22 years
|
|
$
|
0.10
|
|
|
100,000
|
|
$
|
0.10
|
|
|
$0.10
|
|
1,600,000
|
|
|
4.18 years
|
|
$
|
0.10
|
|
|
1,600,000
|
|
$
|
0.10
|
|
|
$0.50
|
|
50,000
|
|
|
3.60 years
|
|
$
|
0.50
|
|
|
50,000
|
|
$
|
0.50
|
|
|
$0.70
|
|
500,000
|
|
|
3.57 years
|
|
$
|
0.70
|
|
|
500,000
|
|
$
|
0.70
|
|
|
$0.35
|
|
50,000
|
|
|
3.43 years
|
|
$
|
0.35
|
|
|
50,000
|
|
$
|
0.35
|
|
|
$0.16
|
|
250,000
|
|
|
3.37 years
|
|
$
|
0.16
|
|
|
250,000
|
|
$
|
0.16
|
|
|
$0.06
|
|
550,000
|
|
|
3.18 years
|
|
$
|
0.06
|
|
|
550,000
|
|
$
|
0.06
|
|
|
$0.15
|
|
555,000
|
|
|
0.45 years
|
|
$
|
0.15
|
|
|
555,000
|
|
$
|
0.15
|
|
|
$0.15
|
|
150,000
|
|
|
0.52 years
|
|
$
|
0.15
|
|
|
150,000
|
|
$
|
0.15
|
|
|
$0.20
|
|
100,000
|
|
|
0.19 years
|
|
$
|
0.20
|
|
|
100,000*
|
|
$
|
0.20
|
|
|
$0.25
|
|
50,000
|
|
|
0.75 years
|
|
$
|
0.25
|
|
|
50,000
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,955,000
|
|
|
3.09 years
|
|
$
|
0.20
|
|
|
3,955,000
|
|
$
|
0.20
|
|
*These options are cancelled subsequent
to year end
Warrants
On December 16, 2015, the Company
submitted to the CSE the Form 13 for extending two classes of warrants by two
years with all other terms and conditions remaining the same. The Company
approved the expiry extension from January 31, 2016 till January 31, 2018 on
2,167,160 warrants that remain outstanding as of August 31, 2016 from the
non-brokered private placement that closed on January 31, 2014. The Company
approved the expiry extension from February 13, 2016 till February 13, 2018 on
7,227,340 warrants that remain outstanding as of August 31, 2016 from the
non-brokered private placement that closed on February 13, 2014. The warrants
were evaluated against ASC 815 Derivatives and Hedging, and determined to be
equity instrument at initial recognition.
On May 20, 2016, the Company closed the
first tranche of a private placement of 6,413,333 units at a price of CAD$0.015
per unit for gross proceeds of CAD$96,200 and Broker warrants of 469,333. Each
unit consists of one common share of the Company and one non-transferable share
purchase warrant, each full warrant entitling the holder to purchase one
additional common share of the Company for a period of 36 months from the date
of issuance, at a purchase price $0.05 during the first 18 months and US$0.10
after eighteen months.
A summary of warrants as at August 31,
2016 and August 31, 2015 is as follows:
|
|
|
Warrant Outstanding
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
Number of warrant
|
|
|
Exercise Price
|
|
|
Balance, August 31, 2015
|
|
15,435,085
|
|
$
|
0.14
|
|
|
Expired
|
|
(708,945
|
)
|
|
0.20
|
|
|
Issued
|
|
14,685,139
|
|
|
0.06
|
|
|
Balance, August 31, 2016
|
|
29,412,139
|
|
$
|
0.09
|
|
|
Number
|
|
Exercise
|
|
|
Expiry
|
|
|
Outstanding
1
|
|
Price
|
|
|
Date
|
|
|
1,468,000
|
$
|
0.10
|
|
|
November 26,
2016
|
|
|
1,438,800
|
$
|
0.10
|
|
|
December 23, 2016
|
|
|
2,167,160
|
$
|
0.15
|
|
|
January 31, 2018
|
|
|
7,227,340
|
$
|
0.15
|
|
|
February 13, 2018
|
|
|
1,787,640
|
$
|
0.10 and $0.15
after 24 months
|
|
|
January 30, 2018
|
|
|
637,200
|
$
|
0.10 and $0.15 after 24 months
|
|
|
March 12, 2018
|
|
|
6,882,666
|
$
|
0.05 and $0.10
after 18 months
|
|
|
May 20, 2019
|
|
|
3,3033,333
|
$
|
0.05 and $0.10 after 18 months
|
|
|
June 8, 2019
|
|
|
4,500,000
|
$
|
0.07
|
|
|
August 9, 2018
|
|
|
29,412,139
|
|
|
|
|
|
|
|
1.
|
Each warrant entitles a holder to purchase one common
share.
|
|
(a)
|
The Company has a consulting agreement with the President
of the Company for corporate administration and consulting services for
$5,000 per month plus HST/GST on a continuing basis. Effective March 1,
2014, the Company entered into a new consulting contract with the
consulting services at $6,500 per month plus GST.
|
|
|
|
|
(b)
|
On October 9, 2009, the Company entered into consulting
agreement with BKB Management Ltd., a corporation organized under the laws
of the Province of British Columbia. BKB Management Ltd. is a consulting
company controlled by the chief financial officer of the Company. BKB
Management provides management consulting services for CAD$4,500 per month
plus HST/GST. Effective April 1, 2011, the consulting services are
CAD$5,500 per month plus HST/GST. Effective March 1, 2014, the Company
entered into a new consulting agreement with the consulting services at
CAD$7,500 per month plus GST.
|
The following table reconciles the
income tax benefit at the U.S. Federal statutory income tax rates to income tax
benefit at the Companys effective tax rates at August 31, 2016 and 2015:
|
|
|
August 30,
|
|
|
August 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Taxes
|
$
|
(525,501
|
)
|
$
|
(1,149,433
|
)
|
|
Statutory tax rate
|
|
34%
|
|
|
34%
|
|
|
Expected income tax
(recovery)
|
|
(178,670
|
)
|
|
(390,807
|
)
|
|
Non-deductible items
|
|
12,616
|
|
|
60,383
|
|
|
Change in estimates
|
|
(63,512
|
)
|
|
7,314
|
|
|
Share issuance costs
|
|
(2,706
|
)
|
|
|
|
|
Change in valuation allowance
|
|
232,271
|
|
|
323,110
|
|
|
Income tax expense (recovery)
|
$
|
-
|
|
$
|
-
|
|
Deferred taxes reflect the tax effects
of temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes. Deferred tax assets (liabilities) at August
31, 2016 and 2015 are comprised of the following:
|
|
|
August 30,
|
|
|
August 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Net operating loss carry
forwards
|
$
|
3,903,237
|
|
$
|
3,704,394
|
|
|
Marketable securities
|
|
9,225
|
|
|
(19,788
|
)
|
|
Deferred revenue
|
|
-
|
|
|
(17,000
|
)
|
|
Financing Costs
|
|
2,165
|
|
|
-
|
|
|
Capital loss carry forwards
|
|
8,313
|
|
|
8,313
|
|
|
|
|
3,922,940
|
|
|
3,675,919
|
|
|
Valuation Allowance
|
|
3,922,940
|
|
|
3,675,919
|
|
|
Deferred Tax Assets (Liabilities)
|
$
|
-
|
|
$
|
-
|
|
The Company has net operating loss
carry forwards of approximately $11,480,109 which may be carried forward to
apply against future taxable income for US tax purposes, subject to the final
determination by the taxation authority, expiring in the following years. Future
tax assets have not been recognized because it is not probable that future
taxable profit will be available against which the Company can utilize the
benefits therefrom.
Expiry
|
|
Enertopia
|
|
2025
|
|
83,396
|
|
2026
|
|
-
|
|
2027
|
|
615,341
|
|
2028
|
|
350,002
|
|
2029
|
|
113,828
|
|
2030
|
|
3,073,726
|
|
2031
|
|
-
|
|
2032
|
|
611,284
|
|
2033
|
|
379,241
|
|
2034
|
|
4,641,005
|
|
2035
|
|
1,207,633
|
|
2036
|
|
404,653
|
|
Total
|
|
11,480,109
|
|
14.
|
SEGMENTED INFORMATION
|
The Company conducted the operation in
the health and wellness segment throughout 2015 and 2016, where the Company had
launched the product V-Love
TM
. For strategic reasons the Company
had discontinued the manufacturing and retail distribution of V-Love
TM
at the end of fiscal 2016. The Companys main focus is in the
acquisition of natural resources. Accordingly, the Company is operating its
business in two reportable segments: alternative health and wellness and natural
resource acquisitions, for the year ended August 31, 2016.
The following is a summary of financial
information about the Companys business segments for the years ended August 31,
2016 and 2015:
|
2016
|
|
Alternative Health and
|
|
|
Natural resource
|
|
|
|
|
Wellness
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers
|
$
|
14,315
|
|
$
|
-
|
|
|
Operating costs
|
|
8,335
|
|
|
11,437
|
|
|
Segment operating (loss)
|
|
5,980
|
|
|
11,437
|
|
|
Total assets
|
|
144,114
|
|
|
96,250
|
|
|
|
|
Alternative Health and
|
|
|
Natural resource
|
|
|
2015
|
|
Wellness
|
|
|
Acquisition
|
|
|
|
|
|
|
|
|
|
|
Sales to external customers
|
$
|
8,632
|
|
$
|
-
|
|
|
Cost of sales
|
|
3,796
|
|
|
-
|
|
|
Segment operating loss
|
|
(4,836
|
)
|
|
-
|
|
|
Total assets
|
|
366,110
|
|
|
-
|
|
Total sales for the years ended August
31, 2016 and 2015, $14,315 and $8,632, respectively, were all derived from
Canadian-based customers.
All of the Companys long-lived assets,
which includes mineral properties and other assets are located in Canada and the
United States as follows:
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
United States
|
$
|
96,250
|
|
$
|
-
|
|
|
Canada
|
|
2
|
|
|
22,183
|
|
|
|
$
|
96,252
|
|
$
|
22,183
|
|
|
a)
|
On September 19, 2016, the Company entered into a one
year Investor Relations Consulting agreement with Duncan McKay. Based on
the terms of the agreement, Mr. McKay can earn up to a maximum of 10%
commissions on capital raised. The Company issued 800,000 stock options
with an exercise price of $0.07.
|
|
|
|
|
b)
|
On September 23, 2016, the Company closed the final
tranche of a private placement of 3,858,571 units at a price of CAD$0.035
per unit for gross proceeds of CAD$135,050. Each unit consists of one
common share of the Company and one non-transferable share purchase
warrant, each full warrant entitling the holder to purchase one additional
common share of the Company for a period of 24 months from the date of
issuance, at a purchase price of US$0.07. A cash finders fee of CAD$3,300
and 286,666 full broker warrants that expire June 8, 2019 was paid to
Canacorrd Genuity and Leede Jones Gable.
|
|
|
|
|
c)
|
On October 7, 2016, the Company issued 175,000 shares of
the Company and made cash payments of $5,000 to Foster Wilson as part of
the compensation as per Definitive Agreement signed on May 12, 2016. Also
see note 7.
|
Item 9.
|
Changes in and Disagreements With
Accountants on Accounting and Financial Disclosure
|
There were no disagreements related to
accounting principles or practices, financial statement disclosure, internal
controls or auditing scope or procedure during the two fiscal years and interim
periods, including the interim period up through the date the relationship
ended.
Item 9A.
|
Controls and Procedures
|
Managements Report on Disclosure Controls and
Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the
Securities Exchange Act of 1934
, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president and
chief executive officer (also our principal executive officer) and our chief
financial officer (also our principal financial and accounting officer) to allow
for timely decisions regarding required disclosure.
As of August 31, 2016, the end of our fiscal year covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our president and chief executive officer (also our principal
executive officer) and our chief financial officer (also our principal financial
and accounting officer), of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president and
chief executive officer (also our principal executive officer) and our chief
financial officer (also our principal financial and accounting officer)
concluded that our disclosure controls and procedures were effective as of the
end of the period covered by this annual report.
Managements Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of control procedures. The objectives of internal control include
providing management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with managements authorization and
recorded properly to permit the preparation of financial statements in
conformity with accounting principles generally accepted in the United States.
Our management assessed the effectiveness of our internal control over financial
reporting as of August 31, 2016. In making this assessment, our management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in
Internal Control-Integrated Framework
.
Our management has concluded that, as of August 31, 2016, our internal control
over financial reporting is effective in providing reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with US generally
accepted accounting principles. Our management reviewed the results of their
assessment with our Board of Directors.
This annual report does not include an attestation report of
our Companys registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by our
Companys registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit our Company to provide only
managements report in this annual report.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent
limitations which include but is not limited to the use of independent
professionals for advice and guidance, interpretation of existing and/or
changing rules and principles, segregation of management duties, scale of
organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Changes in Internal Control over Financial
Reporting
There have been no changes in our internal controls over
financial reporting that occurred during the year ended August 31, 2016 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.
Item 9B.
|
Other Information
|
None.
PART III
Item 10.
|
Directors, Executive Officers and Corporate
Governance
|
All directors of our company hold office until the next annual
meeting of the security holders or until their successors have been elected and
qualified. The officers of our company are appointed by our board of directors
and hold office until their death, resignation or removal from office. Our
directors and executive officers, their ages, positions held, and duration as
such, are as follows:
Name
|
Position Held with our
Company
|
Age
|
Date First Elected
Or
Appointed
|
Robert McAllister
|
President and Director
|
56
|
November 2007
April 14, 2008
|
Donald Findlay
|
Director
|
70
|
June 2, 2011
Resigned October 23, 2015
|
Kevin Brown
|
Director
|
54
|
October 23, 2015
|
Bal Bhullar
|
Chief Financial Officer and Director
|
47
|
October 9, 2009,
February 6, 2015
|
Business Experience
The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he was employed.
Robert McAllister, President, Director
Mr. McAllister was appointed as president in November 2007 and
director in April 2008.
Mr. McAllister has devoted approximately 90% of his
professional time to the business and intends to continue to devote this amount
of time in the future, or more as required.
Mr. McAllister has been a corporate consultant since 2004. He
has also provided and written business and investment articles from 1996 to 2006
in various North American publications. Mr. McAllister is a resource investment
entrepreneur with over 20 years of experience in resource sector evaluations and
commodity cycle analysis.
Kevin Brown, Director
With an investment and business background, Mr. Kevin Brown
leads his organization: Character Counts Coaching and Consulting. Mr. Brown
works with business owners and executives in creating unity and strategy and
overcoming the roadblocks towards achieving short and long term goals.
Currently, Mr. Brown is an asset to many organizations, being directly involved
in mediation, negotiations, and consulting leaders and their teams in developing
strategy and execution.
Donald Findlay, Director resigned October 23,
2015
Mr. Don Findlay has worked in the resource exploration business
since 1980. He has worked in different capacities from consultant to the
positions of Senior Exploration Geologist and Exploration Manager. Mr. Findlay
completed his MSc in geology in 1978 with his thesis on copper molybdenum
porphyry deposits.
Bal Bhullar, Chief Financial Officer and Director
Ms. Bhullar brings over 23 years of diversified
entrepreneurial, financial and risk management experience in both private and
public companies, in the industries of technology, film, mining, marine, oil
& gas, energy, transport, and health and wellness industries. Among some of
the areas of experience, Ms. Bhullar brings expertise in entrepreneurial,
financial & strategic planning, operational & risk management,
regulatory compliance reporting, business expansion, start-up operations,
financial modeling, program development, corporate financing, and corporate
governance/internal controls. Previously, Ms. Bhullar has held various positions
as President of BC Risk Management Association of BC, and has served and
currently serves as Director and CFO of private and public companies.
Ms. Bhullar is a Chartered Professional Accountant, Certified
General Accountant and as well holds a CRM designation from Simon Fraser
University and a diploma in Financial Management from British Columbia Institute
of Technology.
Family Relationships
There are no family relationships between any of our directors,
executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
None of our directors, executive officers, promoters or control
persons has been involved in any of the following events during the past five
years:
1. A petition under the Federal
bankruptcy laws or any state insolvency law was filed by or against, or a
receiver, fiscal agent or similar officer was appointed by a court for the
business or property of such person, or any partnership in which he was a
general partner at or within two years before the time of such filing, or any
corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
2. Such person was
convicted in a criminal proceeding or is a named subject of a pending criminal
proceeding (excluding traffic violations and other minor offenses);
3. Such person was the
subject of any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining him from, or otherwise limiting, the following activities:
|
i.
|
Acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with such activity
|
|
|
|
|
ii.
|
Engaging in any type of business practice; or
|
|
|
|
|
iii.
|
Engaging in any activity in connection with the purchase
or sale of any security or commodity or in connection with any violation
of Federal or State securities laws or Federal commodities
laws;
|
4. Such person was the
subject of any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any Federal or State authority barring, suspending or otherwise
limiting for more than 60 days the right of such person to engage in any
activity described in paragraph (f)(3)(i) of this section, or to be associated
with persons engaged in any such activity;
5. Such person was found by
a court of competent jurisdiction in a civil action or by the Commission to have
violated any Federal or State securities law, and the judgment in such civil
action or finding by the Commission has not been subsequently reversed,
suspended, or vacated;
6. Such person was found by
a court of competent jurisdiction in a civil action or by the Commodity Futures
Trading Commission to have violated any Federal commodities law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the
subject of, or a party to, any Federal or State judicial or administrative
order, judgment, decree, or finding, not subsequently reversed, suspended or
vacated, relating to an alleged violation of:
|
i.
|
Any Federal or State securities or commodities law or
regulation; or
|
|
|
|
|
ii.
|
Any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or removal or
prohibition order; or
|
|
|
|
|
iii.
|
Any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or
|
8. Such person was the
subject of, or a party to, any sanction or order, not subsequently reversed,
suspended or vacated, of any self-regulatory organization (as defined in Section
3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))),
or any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a member.
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors and persons who own more than 10% of our
common stock to file with the Securities and Exchange Commission initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our common stock and other equity
securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and
greater than 10% shareholders are required by the SEC regulations to furnish us
with copies of all Section 16(a) reports that they file.
Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended August 31, 2016, all filing requirements
applicable to our officers, directors and greater than 10% percent beneficial
owners were complied with, with the exception of the following:
Name
|
Number of
Late
Reports
|
Number
of
Transactions Not
Reported on a Timely
Basis
|
Failure to
File
Requested Forms
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
(1)
|
The director / officer was late filing a Form 4, Change
of Beneficial Ownership.
|
(2)
|
The director / officer was late filing a Form 3, Initial
Statement of Beneficial Ownership.
|
Code of Ethics
We adopted a Code of Ethics applicable to our senior financial
officers and certain other finance executives, which is a "code of ethics" as
defined by applicable rules of the SEC. Our Code of Ethics is attached as an
exhibit to our Annual Report on Form 10-KSB filed on November 29, 2007. If we
make any amendments to our Code of Ethics other than technical, administrative,
or other non-substantive amendments, or grant any waivers, including implicit
waivers, from a provision of our Code of Ethics to our chief executive officer,
chief financial officer, or certain other finance executives, we will disclose
the nature of the amendment or waiver, its effective date and to whom it applies
in a Current Report on Form 8-K filed with the SEC.
Board and Committee Meetings
Our board of directors held no formal meetings during the year
ended August 31, 2016. All proceedings of the board of directors were conducted
by resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the Nevada General Corporate Law and our Bylaws, as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.
Nomination Process
As of August 31, 2016, we did not affect any material changes
to the procedures by which our shareholders may recommend nominees to our board
of directors. Our board of directors does not have a policy with regards to the
consideration of any director candidates recommended by our shareholders. Our
board of directors has determined that it is in the best position to evaluate
our Companys requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board
of directors. If shareholders wish to recommend candidates directly to our
board, they may do so by sending communications to the president of our Company
at the address on the cover of this annual report.
Audit Committee and Audit Committee Financial Expert
Currently our audit committee consists of our entire board of
directors. We currently do not have nominating, compensation committees or
committees performing similar functions. There has not been any defined policy
or procedure requirements for shareholders to submit recommendations or
nomination for directors.
Our board of directors has determined that it does not have a
member of its board of directors (audit committee) that qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K,
and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Securities Exchange Act of 1934, as amended.
We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.
Item 11.
|
Executive Compensation
|
The particulars of the compensation paid to the following
persons:
|
(a)
|
our principal executive officer;
|
|
|
|
|
(b)
|
each of our two most highly compensated executive
officers who were serving as executive officers at the end of the years
ended August 31, 2016 and 2015; and
|
|
|
|
|
(c)
|
up to two additional individuals for whom disclosure
would have been provided under (b) but for the fact that the individual
was not serving as our executive officer at the end of the years ended
August 31, 2016 and 2015,
|
who we will collectively refer to as the named executive
officers of our Company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:
SUMMARY COMPENSATION
TABLE
|
Name
and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Award
s
($)
|
Option
Awards
(#)
|
Non-
Equity
Incentive
Plan
Compensa
tion
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compens
a
tion
($)
|
Total
($)
|
Robert McAllister
(1)
President
and
Director
|
2016
2015
|
$78,000
$78,000
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
$9,767
$34,370
|
Nil
Nil
|
Nil
Nil
|
$87,767
$112,370
|
Donald Findlay
Director
|
2016
2015
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
$34,370
|
Nil
Nil
|
Nil
Nil
|
Nil
$34,370
|
Kevin Brown
Director
|
2016
2015
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
$9,767
Nil
|
Nil
Nil
|
Nil
Nil
|
$9.767 Nil
|
Bal Bhullar
(2)
Chief
Financial Officer
and Director
|
2016
2015
|
$71,440
$75049
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
$11,720
$34,370
|
Nil
Nil
|
Nil
Nil
|
$83,160
$109,419
|
|
|
|
|
|
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We entered into a consulting agreement with Mr. Robert
McAllister on December 1, 2007. During the term of this agreement, Mr.
McAllister is to provide corporate administration and oil & gas exploration
and production consulting services, such duties and responsibilities to include
provision of oil and gas industry consulting services, strategic corporate and
financial planning, management of the overall business operations of our
company, and supervising office staff and exploration and oil & gas
consultants. Mr. McAllister is reimbursed at the rate of $2,000 per month. On
December 1, 2008, the consulting fee was increased to $5,000 per month. We may
terminate this agreement without prior notice based on a number of conditions.
Mr. McAllister may terminate the agreement at any time by giving 30 days written
notice of his intention to do so. Effective March 1, 2014, the Company entered
into a new consulting contract with the consulting services at $6,500 per month
plus GST.
On October 9, 2009, we entered into a consulting agreement with
BKB Management Ltd, a corporation organized under the laws of the Province of
British Columbia. BKB Management controlled by the chief financial officer of
the Company. A fee of CAD$4,675 including HST is paid per month. We may
terminate this agreement without prior notice based on a number of conditions.
BKB Management Ltd. may terminate the agreement at any time by giving 30 days
written notice of his intention to do so. Effective April 1, 2011, the
consulting services are CAD$5,500 per month plus HST. Effective March 1, 2014,
the Company entered into a new consulting agreement with the consulting services
at CAD$7,500 per month plus GST.
Other than as set out in this annual report on Form 10-K we
have not entered into any employment or consulting agreements with any of our
current officers, directors or employees.
On April 14, 2011, the shareholders approved and adopted at the
Annual General Meeting to consolidate the Companys 2007 Equity compensation
plan and the Companys 2010 Equity Compensation Plan into a new Company 2011
Stock Option Plan. The purpose of this Plan is to advance the interests of the
Corporation, through the grant of Options, by providing an incentive mechanism
to foster the interest of eligible persons in the success of the Corporation and
its affiliates; encouraging eligible persons to remain with the Corporation or
its affiliates; and attracting new Directors, Officers, Employees and
Consultants.
On November 5, 2013 the Company granted 675,000 stock options
to directors, officers, and consultant of the Company with an exercise price of
$0.06 vested immediately, expiring November 5, 2018. 125,000 stock options were
exercised. 50,000 stock options were cancelled.
On November 3, 2014 the Company granted 2,100,000 stock options
to directors, officers, and consultant of the Company with an exercise price of
$0.10 vested immediately, expiring November 3, 2019. 1,050,000 stock options
were cancelled.
On October 23, 2015, the Company granted 1,850,000 stock
options to directors, officers and consultant of the Company with an exercise
price of $0.05 vested immediately, expiring October 23, 2020. 50,000 stock
options were cancelled.
On February 4, 2016, the Company granted 100,000 stock options
to Advisor of the Board of the Company with an exercise price of $0.05 vested
immediately, expiring February 4, 2021.
The particulars of unexercised options, stock that has not
vested and equity incentive plan awards for our named executive officers are set
out in the following table:
During our fiscal year ended August 31, 2016, 240,000 stock
options were exercised by the CEO of the Company.
Except as otherwise disclosed, we do not have any agreements
for compensating our directors for their services in their capacity as
directors, although such directors are expected in the future to receive stock
options to purchase shares of our common stock as awarded by our board of
directors.
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.
None of our directors or executive officers or any associate or
affiliate of our Company during the last two fiscal years is or has been
indebted to our Company by way of guarantee, support agreement, letter of credit
or other similar agreement or understanding currently outstanding.