NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY
28, 2019
Note
1. Nature of Business
Business
Overview
Purebase
Corporation (the “Company”), was incorporated in the State of Nevada on March 2, 2010 to create a web-based service
that would offer boaters an easy, convenient, fun, easy to use, online resource to help them plan and organize their boating trips.
Pursuant to a corporate reorganization consummated on December 23, 2014 the Company changed its business focus to an exploration,
mining and product marketing company which will focus on identifying and developing advanced stage natural resource projects which
show potential to achieve full production. The business strategy of the Company is to identify, acquire, define, develop and operate
world-class industrial and natural resource properties and to contract for mine development and operations services to its mining
properties located initially in the Western United States and currently in California and Nevada. The Company intends to engage
in the identification, acquisition, development, mining and full-scale exploitation of industrial and natural mineral properties
in the United States. The Company plans to package and market such industrial and natural minerals to retail and wholesale industrial
and agricultural market sectors. The Company will initially seek to develop deposits of pozzolan and potassium sulfate on its
own properties or acquire such minerals from other sources. These minerals have a wide range of uses including construction, agriculture
additives, animal feedstock, ceramics, synthetics, absorbents and electronics.
The
Company’s activities are subject to significant risks and uncertainties including its ability to secure additional funding
to pursue its operations
The
Company is headquartered in Ione, California. The Company’s business is divided into wholly-owned and majority-owned subsidiaries
which will operate as business divisions whose sole focus is to develop sector related products and to provide for distribution
of those products into primarily the agricultural and construction industry sectors.
Note
2. Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying condensed consolidated financial statements include the accounts of Purebase Corporation and its wholly owned subsidiaries
Purebase Agricultural, Inc. (f.k.a. Purebase, Inc.) and US Agricultural Minerals, LLC (“USAM”), collectively referred
to as the “Company”. All intercompany transactions have been eliminated in consolidation. The condensed consolidated
financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The
condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring entries), which in the
opinion of management, are necessary to present fairly the consolidated financial position at February 28, 2019 and the consolidated
results of operations and cash flows of the Company for the three months ended February 28, 2019 and February 28, 2018. Operating
results for the three months ended February 28, 2019 are not necessarily indicative of the results that may be expected for the
year ending November 30, 2019. The unaudited condensed consolidated financial statements should be read in conjunction with the
Company’s audited financial statements and footnotes thereto for the year ended November 30, 2018 filed on Form 10-K on
March 15, 2019.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
Going
Concern
The
Company incurred a net loss of $337,891 for the fiscal quarter ended February 28, 2019 and generated negative cash flows from
operations. In addition, the Company has generated only limited revenue in conjunction with its business plan. In order to support
its operations, the Company will require additional infusions of cash from the sale of equity instruments or the issuance of debt
instruments, or the commencement of profitable revenue generating activities. If adequate funds are not available or are not available
on acceptable terms, the Company’s ability to fund its operations, take advantage of potential acquisition opportunities,
develop or enhance its properties in the future or respond to competitive pressures would be significantly limited. Such limitations
could require the Company to curtail, suspend or discontinue parts of its business plan.
These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The condensed consolidated financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that could result from the outcome of this uncertainty. The condensed consolidated financial statements
do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
Accounts
Receivable
The
Company uses the specific identification method for recording the provision for doubtful accounts, which was $11,137 at February
28, 2019 and November 30, 2018, respectively. Accounts receivable are written off when all collection attempts have failed.
Revenue
Recognition
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09 and its related amendments
regarding Accounting Standards Codification Topic 606 (ASC Topic 606),
Revenue from Contracts with Customers
. The standard
provides principles for recognizing revenue for transfer of promised goods or services to customers with the consideration to
which the entity expects to be entitled in exchange for those goods or services. The Company adopted ASC Topic 606, effective
December 1, 2018, utilizing the modified retrospective method. This approach was applied to contracts that were in process as
of December 1, 2018. The adoption of ASC Topic 606 did not have an impact on the Company’s reported revenue or contracts
in process at December 1, 2018. The reported results for the fiscal year 2019 reflect the application of ASC Topic 606, while
the reported results for fiscal year 2018 are not adjusted and continue to be reported under ASC Topic 605. The Company now applies
the five-step approach outlined in revenue standard ASC Topic 606:
|
●
|
Step
1: Identify the contract with a customer
|
|
●
|
Step
2: Identify the performance obligations in the contract
|
|
●
|
Step
3: Determine the transaction price
|
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
|
●
|
Step
4: Allocate the transaction price to the performance obligations in the contract
|
|
●
|
Step
5: Recognize revenue when (or as) the performance obligation is satisfied
|
Basic
and Diluted Net Loss Per Share
Basic
loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding warrants and
stock options. The outstanding warrants and stock options have been excluded from the calculation of the diluted loss per share
due to their anti-dilutive effect. For the quarters ended February 28, 2019 and February 28, 2018 warrants and options to purchase
550,000 and 500,000, respectively, have been excluded from the computation of potential dilutive securities.
Use
of Estimates and Assumptions
The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on
current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially
and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual
results, future results of operations will be affected.
Property
and Equipment
Property
and equipment are carried at cost. Depreciation is computed using straight line depreciation methods over the estimated useful
lives as follows:
Property
and Equipment
|
3-5
years
|
Autos
and trucks
|
5
years
|
Major
additions and improvements are capitalized. Costs of maintenance and repairs which do not improve or extend the life of the associated
assets are expensed in the period in which they are incurred
.
When there is a disposition of property and equipment,
the cost and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in net income.
Cash
and Cash Equivalents
The
Company considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of
three months or less to be cash and cash equivalents. The Company’s accounts are insured by the FDIC but, at times, may
exceed federally insured limits. At February 28, 2019 no accounts exceeded FDIC limits.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
Exploration
Stage
In
accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while
exploration and pre-extraction expenditures are expensed as incurred until
such
time the Company exits the Exploration Stage by establishing proven or probable reserves. Expenditures relating to exploration
activities such as drill programs to establish mineralized materials are expensed as incurred. Expenditures relating to pre-extraction
activities are expensed as incurred until such time proven or probable reserves are established for that project, after which
expenditures relating to mine development activities for that particular project are capitalized as incurred.
Mineral
Rights
Acquisition
costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred
until such time the Company exits the Exploration Stage by establishing proven or probable reserves, as defined by the SEC under
Industry Guide 7, through the completion of a “final” or “bankable” feasibility study. Expenditures relating
to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred
until such time proven or probable reserves are established for that project, after which subsequent expenditures relating to
development activities for that particular project are capitalized as incurred.
Where
proven and probable reserves have been established, the project’s capitalized expenditures are depleted over proven and
probable reserves upon commencement of production using the units-of-production method. Where proven and probable reserves have
not been established, such capitalized
expenditures
are depleted over the estimated production life upon commencement of extraction using the straight-line method.
The
carrying values of the mineral rights are assessed for impairment by management on a quarterly basis or when indicators of impairment
exist. Should management determine that these carrying values cannot be recovered, the unrecoverable amounts are written off against
earnings.
Shipping
and Handling
The
Company incurs shipping and handling costs which are charged back to the customer. The net amounts incurred were $1,900 and $237
included in general administrative expenses for the three months ended February 28, 2019 and February 28, 2018, respectively.
Fair
Value of Financial Instruments
Financial
assets and liabilities recorded at fair value in the Company’s condensed consolidated balance sheet are categorized based
upon the level of judgment associated with the inputs used to measure their fair value.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
The
categories, as defined by the standard, are as follows:
Level
Input:
|
|
Input
Definition:
|
Level
I
|
|
Inputs
are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
|
Level
II
|
|
Inputs,
other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market
data at the measurement date.
|
Level
III
|
|
Unobservable
inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability
at the measurement date.
|
For
certain of our financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts
approximate fair value due to their short-term nature. The carrying amount of the Company’s notes payable approximates fair
value based on prevailing interest rates.
Income
Taxes
The
Company is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the
future. The Company is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income.
The resulting deferred tax assets will be offset by a valuation allowance due to the uncertainty of its realization. The primary
difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result
from applying domestic federal statutory rates to income before income taxes relates to the recognition of a valuation allowance
for deferred income tax assets.
The
Company has adopted FASB ASC 740-10, “
Income Taxes”
which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely
than not as a measurement process for financial statement recognition and
measurement of a tax position taken or
expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not
that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume
that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties
related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the three months ended
February 28, 2019 and February 28, 2018. The Company’s net operating loss carryforwards are subject to IRS examination
until they are fully utilized, and such tax years are closed.
Impairment
of Long-lived Assets
The
Company accounts for the impairment and disposition of long-lived assets in accordance with ASC 350,
“Intangibles –
Goodwill and Other
” and ASC 360,
“Property and Equipment”
. Long-lived assets to be held and used
are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. We measure
recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the
asset. If we determine that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future
undiscounted cash flows, we recognize an impairment charge to the extent of the difference between the fair value and the asset’s
carrying amount. No impairment losses were recorded during the quarters ended February 28, 2019 and February 28, 2018.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
, which supersedes existing guidance on accounting for leases
in “Leases (Topic 840)” and generally requires all leases to be recognized in the consolidated balance sheet. ASU
2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018; early adoption is permitted.
The provisions of ASU 2016-02 are to be applied using a modified retrospective approach. The Company is currently evaluating the
impact of the adoption of this standard on its consolidated financial statements.
Note
3. Properties
Placer
Mining Claims Lassen County, CA
Placer
Mining Claim Notices have been filed and recorded with the US Bureau of Land Management (the “BLM”) relating to 50
Placer mining claims identified as “USMC 1” thru “USMC 50” covering 1,145 acres of mining property located
in Lassen County, California and known as the “Long Valley Pozzolan Deposit”. The Long Valley Pozzolan Deposit is
a placer claims resource in which the Company holds non-patented mining rights to 1,145acres of contiguous placer claims within
the boundaries of a known and qualified Pozzolan deposit. These claims were assigned to Purebase by one of its founders at his
original cost basis of $0. These claims require a payment of $30,000 per year to the BLM.
Federal
Preference Rights Lease in Esmeralda County NV
This
Preference Rights Lease is granted by the BLM covering approximately 2,500 acres of land located in the Mount Diablo Meridian
area of Nevada. Contained in the leased property is the Chimney 1 Potassium/Sulfur Deposit which consists of 15.5 acres of land
fully permitted for mining operation which is situated within the 2,500 acres held by Purebase. All rights and obligations under
the Preference Rights lease have been assigned to the Company by US Mine Corp. These rights are presented at their cost of $200,000.
This lease requires a minimum payment of $7,503 per year to the BLM.
Snow
White Mine located in San Bernardino County, CA – Deposit
On
November 28, 2014 US Mining and Minerals Corporation entered into a Purchase Agreement in which US Mining and Minerals Corp. agreed
to sell its fee simple property interest and certain mining claims to US Mine Corp. In contemplation of the Plan and Agreement
of Reorganization, on December 1, 2014, US Mine Corp assigned its rights and obligations under the Purchase Agreement to the Company
pursuant to an Assignment of Purchase Agreement. As a result of the Assignment, the Company assumed the purchaser position under
the Purchase Agreement. The Purchase Agreement involves the sale of approximately 280 acres of mining property containing 5 placer
mining claims known as the Snow White Mine located near Barstow, California in San Bernardino County. The property is covered
by a Conditional Use Permit allowing the mining of the property and a Plan of Operation and Reclamation Plan has been approved
by San Bernardino County and the US Bureau of Land Management (“BLM”). An initial deposit of $50,000 was paid to escrow,
and the agreement required the payment of an additional $600,000 at the end of the escrow period. There was a delay in the seller
receiving a clear title to the property and a fully permitted project, both of which were conditions to closing. In light of the
foregoing, and the payment of another $25,000, the parties agreed to extend the closing. Due to delays in the Company securing
the necessary funding to close the purchase of the Snow White Mine property, John Bremer,
a shareholder and a director of Purebase, paid $575,000 to acquire the property on or about October 15, 2015. Mr. Bremer will
transfer title to the Company when the Company pays Mr. Bremer $575,000 plus expenses. The mining claims require a minimum royalty
payment of $3,500 per year.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
During
the fiscal year ended November 30, assurance 2017, US Mine Corp agreed to offset the $75,000 deposit against money owed to
US Mine Corp. As a result the purchase price is currently back to $650,000 plus expenses.
Note
4. Notes Payable
Purebase
assumed a $1,000,000 promissory note on November 24, 2014 in connection with the acquisition of USAM by Purebase. The note bears
simple interest at an annual rate of 5% and the principal and accrued interest were payable on May 1, 2016. Upon the occurrence
of an event of default, which includes voluntary or involuntary bankruptcy, all unpaid principal, accrued interest and other amounts
owing are immediately due, payable and collectible by the lender pursuant to applicable law. The balance of the note was $1,000,000
at February 28, 2019 and November 30, 2018. The Note is in default, however the Company continues to have discussions with the
Note Holder to extend the Note under the same terms and conditions but no assurances can be provided that the Note Holder will
agree to such terms.
On
February 26, 2016, Bayshore Capital, a major shareholder, advanced $25,000 to Purebase Corp for working capital at 6% per annum.
The note was payable August 26, 2016, or when the Company closes its bridge financing, whichever occurs first. As of February
28, 2019, this note had not been repaid and is currently in default.
On
August 31, 2017, the Company issued a Note in the amount of $197,096 to Arthur Scott Dockter, President, CEO and a Director of
the Company to consolidate the total amounts due to and assumed by Mr. Dockter. The Note to Mr. Dockter bears interest at 6% and
is payable on demand. The balance on the Note was $177,096 as of February 28, 2019 and November 30, 2018.
Note
5. Commitments and Contingencies
Office
and Rental Property Leases
Purebase
is using office space provided by U S Mine Corporation, a company that is owned by the Company’s Majority Shareholders and
Directors A. Scott Dockter and John Bremer. There is currently no lease between the two Companies for Purebase’s use of
the office space provided.
Mineral
Properties
Our
mineral rights require various annual lease payments. See Note 3.
Legal
Matters
On
September 21, 2016 the Company’s President, David Vickers, left the Company. Subsequent to his departure, Mr. Vickers has
retained legal counsel and is now alleging claims of age discrimination, fraud in the inducement, violation of California Labor
Code §970 and breach of contract against the Company.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
On
April 14, 2017, the Company was served by Mr. Vickers’ attorney with a demand for arbitration of the above referenced claims.
It is too early to estimate the likelihood of the outcome, however Mr. Vickers’ demand for arbitration stated a claim of
over $850,000. On June 5, 2018 the parties participated in a voluntary mediation however the parties were unable to reach a resolution.
The Company plans to vigorously defend these claims in arbitration which is currently scheduled for May 7, 2019.
On
August 30, 2018 the Company was named as a Defendant in a Complaint filed by Tessenderlo Kerley, Inc. alleging trademark infringement
relating to the Plaintiff’s trademark PURSHADE and the Company’s product Purebase Shade Advantage. The Company filed
its Answer on September 21, 2018 denying the allegations set forth in the Complaint. The lawsuit is in its early stages of discovery.
The Company intends to vigorously defend this lawsuit.
Subsequent
to the end of the first quarter, on March 29, 2019 the Company was served with a Complaint filed by Superior Soils Supplements
LLC (“Superior Soils”) relating to 64 truckloads of soil amendments delivered to a customer by Purebase on behalf
of Superior Soils. The soil amendments were not labeled correctly requiring the entire shipment of product to be returned to Purebase.
The letter makes a demand for approximately $300,000 and threatens litigation if such amount is not paid. The Company does not
believe it was responsible for the mis-labelling and, therefore, does intend to pay any claims by Superior Soils and has not reserved
any amounts to pay any claims Superior Soil may pursue.
Contractual
Matters
On
November 1, 2013, Purebase entered into an agreement with US Mine Corp, which performs services relating to various technical
evaluations and mine development services to Purebase with regard to the various mining properties/rights owned by Purebase. Terms
of services and compensation will be determined for each project undertaken by US Mine Corp.
On
October 12, 2018 the Purebase Board approved a Material Supply Agreement with US Mine Corp pursuant to which USMC will provide
designated natural resources to Purebase at predetermined prices.
Snow
White Mine
The
Company will need to pay Mr. Bremer, a director of both US Mine Corp and Purebase, the sum of $650,000 plus expenses, in order
to obtain title to the Snow White Mine property.
Concentration
of Credit Risk
The
Company maintains cash accounts at financial institutions. The accounts are insured by the Federal Deposit Insurance Corporation
(“FDIC”). The cash accounts, at times, may exceed federally insured limits. At February 28, 2019 there were no accounts
which exceeded FDIC insurance limits.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
Note
6. Stockholder’s Equity
Authorized
Shares
The
Company’s amended Articles of Incorporation authorize the issuance of up to 520,000,000 shares of $0.001 par value common
stock and up to 10,000,000 shares of $0.001 par value preferred shares. No preferred stock was outstanding at February 28, 2019
and November 30, 2018.
Warrants
and Option Awarded
Warrants
Outstanding
There
were no warrants issued or outstanding as of February 28, 2019.
Stock
Options
On
November 10, 2017 the Company’s Board of Directors approved the 2017 Purebase Corporation Stock Option Plan which is intended
to be a qualified stock option plan (the “Option Plan”). The Board allocated up to 10,000,000 shares of Purebase common
stock to be issued pursuant to options granted under the Option Plan. The Option Plan was subsequently approved by shareholders
on September 28, 2018. As of February 28, 2019, 50,000 options had been granted under the Option Plan.
The
Company has also granted 500,000 options pursuant to employment contracts entered into by the Company and the respective employee.
There
were no stock options granted during the three months ended February 28, 2019 or February 28, 2018.
Employee
stock-based options compensation expenses for the three-month period ended February 28, 2019 and 2018 included in general and
administrative expense totaled $51,279 and $49,909, respectively.
Common
stock, stock options or other equity instruments issued to non-employees (including consultants) as consideration for goods or
services received by the Company are accounted for based on the fair value of the equity instruments issued (unless the fair value
of the consideration received can be more reliably measured). The fair value of stock options is determined using the Black-Scholes
option-pricing model and is periodically re-measured as the underlying options vest.
PUREBASE
CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FEBRUARY 28, 2019
The
following is a schedule summarizing employee and non-employee stock option activity for the three months ended February 28, 2019:
|
|
Number of
Options
|
|
|
Weighted Average Exercise Price
|
|
|
Aggregate Intrinsic Value
|
|
|
Weighted Average
Contractual terms
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 1, 2018
|
|
|
550,000
|
|
|
$
|
2.74
|
|
|
$
|
0
|
|
|
|
Granted
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
Exercised
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
Expired/Cancelled
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
|
Outstanding 2/28/19
|
|
|
550,000
|
|
|
$
|
2.74
|
|
|
$
|
0
|
|
|
7.25 years
|
Exercisable 2/28/19
|
|
|
400,000
|
|
|
$
|
3.00
|
|
|
$
|
0
|
|
|
7.01 years
|
Expected to vest 2/28/19
|
|
|
150,000
|
|
|
$
|
2.04
|
|
|
$
|
0
|
|
|
|
The
aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of
the Company’s common stock for each of the respective periods.
As
of February 28, 2019, the total unrecognized fair value compensation cost related to non-vested stock options to employees was
approximately $10,945 which is expected to be recognized over approximately 7 months.
Note
7. Related Party Transactions
On
February 26, 2016, Bayshore Capital, a major shareholder of the Company, advanced $25,000 to the Company for working capital at
6% per annum. The note was payable August 26, 2016, or when the Company closes a bridge financing, whichever occurs first. The
Company is in default on this note at February 28, 2019.
The
Company entered into a Contract Mining Agreement with USMC, a company owned by the majority stockholders of the Company, A. Scott
Dockter and John Bremer, pursuant to which USMC will provide
Product
fulfillment and various technical evaluations and mine development services to the Company. Services totaling $38,116 and $104,091
were rendered by USMC for the three-month period ended February 28, 2019 and 2018, respectively.
During
the three-month period ended February 28, 2019, USMC paid $12,433 of expenses to the Company’s vendors and creditors on
behalf of the Company and also made cash advances to the
Company
of $212,000. The balance due to USMC is $3,931,824 and $3,669,275 at February 28, 2019 and November 30, 2018, respectively.
On
August 31, 2017, the Company issued a Note in the amount of $197,096 to Arthur Scott Dockter, President, CEO and a Director of
the Company to consolidate the total amounts due to and assumed by Mr. Dockter. The Note to Mr. Dockter bears interest at 6% and
is due on demand. In 2018, the Company paid Mr. Docker $20,000 against his Note. As of February 28, 2019 the principal balance
due on this Note of $177,096 had not been paid.
Purebase
is using office space provided by U S Mine Corp, a company that is owned by the Company’s majority stockholders and Directors,
A. Scott Dockter and John Bremer. There is currently no lease between the two Companies and US Mine Corp does not charge rent
for the use of the office space provided.