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Item
1.01
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Entry
into a Material Definitive Agreement.
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Between
February 19, 2016 and July 31, 2019, US Mine Corp. (“USMC”), an affiliate of PureBase Corporation, a Nevada corporation
(the “Company”), made loans to the Company in the aggregate amount of $4,264,789 (the “USMC Loan Amount”).
In addition, as of July 31, 2019, Craig Barto, an affiliate of USMC, assigned $1,234,247 of principal and accrued and unpaid interest
due to him by the Company to USMC. Following such assignment, the total amount due to USMC by the Company was $5,499,036 (the
“USMC Debt”). As of July 31, 2019, the Company and USMC agreed to convert the entire USMC Debt into shares of common
stock of the Company, $0.001 par value per share (“Common Stock”), at a conversion price of $0.09 per share (the “Conversion
Price”). The Conversion Price was negotiated in an arm’s-length transaction between the Company and USMC, and the
Company’s board of directors (“Board”) determined that, since there was a limited market for the Company’s
shares, such Conversion Price represented the fair market value of the Company’s stock as of July 31, 2019.
As
previously reported, on September 5, 2019 (the “Conversion Date”), the Company converted $5,442,363 of the USMC Debt
into 60,248,484 shares of the Company’s Common Stock (the “Initial Conversion Shares”), pursuant to the terms
and conditions of an agreement by and between the Company and USMC (the “Debt Conversion Agreement”). Subsequently,
it came to the attention of the Board that the Company mistakenly converted only $5,442,363 of the USMC Debt (rather than the
full $5,499,036 USMC Debt) into only the 60,248,484 Initial Conversion Shares (rather than the full 60,470,698 shares of the Company’s
Common Stock that USMC should have received upon conversion of the $5,442,363). Therefore, the Board determined to (a) issue to
USMC the additional 222,216 shares of the Company’s Common Stock that USMC should have received upon the conversion of $5,442,363
of the USMC Debt, and convert the remaining $56,673 of the USMC Debt (at the Conversion Price of $0.09 per share) into 629,700
additional shares of the Company’s Common Stock (collectively, the “Additional Conversion Shares”).
Further,
in consideration for USMC’s agreement to convert the USMC Loan Amount, and as an inducement therefor, the Board deemed it
fair and equitable to pay to USMC a payable conversion fee on the amount of the USMC Loan Amount, calculated at a rate of 6% per
annum through July 31, 2019 (the “Payable Conversion Fee”). The Company and USMC agreed that the resulting $489,436
Payable Conversion Fee would be paid to USMC by the issuance to USMC of 5,438,178 additional shares of the Company’s Common
Stock (the “Payable Conversion Fee Shares”), calculated at the Conversion Price of $0.09 per share. The Payable Conversion
Fee was negotiated in an arms-length transaction, based on the market rate that would have been charged by an unrelated third
party.
On
February 7, 2020, the Company and USMC entered into an amendment to the Debt Conversion Agreement (the “Amendment to Debt
Conversion Agreement”), pursuant to which to the Company agreed to issue to USMC the 851,916 Additional Conversion Shares
and 5,438,178 Payable Conversion Fee Shares. The USMC Debt has been deemed paid-in-full and cancelled as a result of the issuances
of the Initial Conversion Shares, the Additional Conversion Shares and the Payable Conversion Fee Shares.
The
Company utilizes the services of its affiliate, USMC, for exploration and other services. A. Scott Dockter, the principal executive
officer and a director of the Company, and John Bremer, a director of the Company, are also officers, directors and shareholders
of USMC.
The
foregoing summary of the Amendment to Debt Conversion Agreement does not purport to be complete and is qualified in its entirety
by reference to the complete text of the Amendment to Debt Conversion Agreement, a copy of which is filed as Exhibits 10.1 to
this Current Report on Form 8-K, and incorporated herein by reference.