The accompanying notes are an integral part of these unaudited condensed interim financial statements
The accompanying notes are an integral part of these unaudited condensed interim financial statements
The accompanying notes are an integral part of these unaudited condensed interim financial statements
The accompanying notes are an integral part of these unaudited condensed interim financial statements
NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
February 29, 2020
(Expressed in U.S. Dollars)
1. ORGANIZATION
The unaudited condensed interim financial statements for the period ended February 29, 2020 included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited condensed interim financial statements should be read in conjunction with the August 31, 2019 audited annual financial statements and notes thereto.
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 office is located in Kelowna, B.C., Canada.
2. GOING CONCERN UNCERTAINTY
The accompanying unaudited condensed interim 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 $330,910 as at February 29, 2020 ($455,885 as at August 31, 2019). The Company had income of $96,178 for the six months ended February 29, 2020 (loss of $299,255 for the six months ended February 28, 2019) and as at February 29, 2020 has incurred cumulative losses of $14,217,981 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 Company's shareholders, and ultimately to obtain successful operations. 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. These unaudited condensed interim 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 unaudited condensed interim financial statements.
Since March 2020, several measures have been implemented in Canada, the United States, and the rest of the world in response to the increased impact from the novel coronavirus ("COVID-19"). While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impact on our business operations cannot be reasonably estimated at this time. We anticipate this could have an adverse impact on our exploration plans, results of operations, financial position and cash flows during the current fiscal year.
3. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation
The accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and the instructions to Securities and Exchange Commission ("SEC") Form 10-Q and Article 10 of SEC Regulation S-X. They do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended August 31, 2019.
b) Accounting Estimates
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 expenses during the reporting period. On an ongoing basis, we evaluate our estimates, judgments, and assumptions, including those related to revenue recognition, inventory valuation, and stock based compensation (expense and liability). Our estimates, judgments, and assumptions are based on historical experience, future expectations, and other factors which we believe to be reasonable. Actual results could differ from those estimates and assumptions.
c) Recently Adopted Accounting Pronouncements
In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. The adoption of this ASU did not have any impact on these financial statements.
In February 2016, Topic 842, Leases was issued to replace the leases requirements in Topic 840, Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The adoption of this standard did not have any impact on the Company's results of operations, financial condition, cash flows, and financial statement disclosures, as the Company's leases are all for terms of less than 12 months.
d) New Accounting Pronouncements
In June 2016, the FASB issued a new standard to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard will be adopted upon the effective date for us beginning September 1, 2020. The adoption of the standard is not expected to have a significant impact on the Company's financial statements.
In August 2018, the FASB issued ASU 2018-13, which changes the fair value measurement disclosure requirements of ASC 820. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The adoption of this ASU is not expected to have a significant impact on the Company's financial statements.
4. MINERAL PROPERTY
During the year ended August 30, 2017 the Company staked lode and placer claims on BLM lands in Esmerelda county Nevada covering approximately 160 Acres subject to adjustment. The Company has a 100% interest in the lands and is only responsible for the yearly maintenance fees to keep its 100% interest. The claims are in good standing until August 31, 2020.
On February 11, 2020 the Company signed a 1% Royalty agreement with respect to any future commercial lithium production from the Company's Clayton Valley, Nevada claims in exchange for $200,000. The Company has a right of first refusal to repurchase the royalty upon any proposed sale by the royalty holder to a third party.
5. RELATED PARTIES TRANSACTION
For the six month period ended February 29, 2020, the Company was party to the following related party transactions:
-
Incurred $10,500 (February 28, 2019: $21,000) to the President of the Company in consulting fees. As at February 29, 2020, the accounts payable to the President of the Company was $205,390 (August 31, 2019: $203,221). The President of the Company voluntarily suspended and terminated accrual of consulting fees commencing on December 1, 2019 and continuing until such time as the Company's financial condition permits a resumption of such cost.
-
During the year ended August 31, 2019, the Company received a short-term loan from the President of the Company in the amount of CAD$20,000 ($15,301). The loan accrued interest at 10% per annum and had an original term of 90 days, to be repaid, with interest, on October 19, 2019. The loan and the related interest, together amounting to $15,968, was repaid to the President of the Company on February 15, 2020.
The related party transactions are recorded at the exchange amount established and agreed to between the related parties.
6. COMMON STOCK
On September 21, 2018, the Company closed the final tranche of a private placement of 2,225,000 units at a price of CAD$0.03 per unit for gross proceeds of CAD$66,750 (equivalent of $51,678). 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 $0.05. A cash finders' fee of CAD$6,075 and 202,500 full broker warrants that expire September 21, 2021 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On March 27, 2019, the Company closed a tranche of a private placement of 5,506,769 units at a price of CAD$0.03 per unit for gross proceeds of CAD$143,176 ($106,809). 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 48 months from the date of issuance, at a purchase price of $0.04. A cash finders' fee of CAD$13,068 ($9,748) and 502,600 full broker warrants that expire March 27, 2023 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On October 28, 2019, the Company signed an LOI with Eagle Plains Resources Ltd. ("Eagle Plains"). to earn up to 75% interest in the Pine Channel gold project in Saskatchewan, Canada (the "Pine Channel SK Property"). The terms of the LOI included periodic payments cash payments, exploration expenditures, as well as issuance of common shares of the Company. Upon signing the LOI, the Company issued 1,000,000 of its common shares to Eagle Plains, valued at $11,489.
As at February 29, 2020 the Company had 128,471,700 shares issued and outstanding and as at August 31, 2019, the Company had 127,471,700 shares issued and outstanding.
7. STOCK OPTIONS AND WARRANTS
Stock Options
On July 15, 2014, the shareholders approved and adopted at the Annual General Meeting the Company's 2014 Stock Option Plan. On April 14, 2011, the shareholders approved and adopted at the Annual General Meeting to consolidate the Company's 2007 Equity compensation plan and the Company's 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 February 25th, 2020 the Company granted 2,000,000 stock options with cashless provision to a consultant to serve on the Company's Technology Advisory Board. The incentive stock options are valid for two years and exercisable at a price of $0.02 per share. The fair value of these options was estimated as of the date of the grant to be $0.01 per option by using the Black-Scholes option pricing model with the following assumptions: Expected stock price volatility: 163%; Risk-free interest rate: 1.16%; Expected life: 2 years; Dividend yield: 0%.
For the six-month period ended February 29, 2020, the Company recorded $17,308 (February 28, 2019 - $nil) stock based compensation expenses.
A summary of the changes in stock options for the six months ended February 29, 2020 is presented below:
|
|
|
|
|
Options Outstanding
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Number of Shares
|
|
|
Exercise Price
|
|
Balance, August 31, 2018
|
|
8,570,000
|
|
$
|
0.07
|
|
Expired
|
|
(250,000
|
)
|
|
0.05
|
|
Balance, August 31, 2019
|
|
8,320,000
|
|
$
|
0.07
|
|
Expired
|
|
(1,000,000
|
)
|
|
0.10
|
|
Granted
|
|
2,000,000
|
|
|
0.02
|
|
Balance, February 29, 2020
|
|
9,320,000
|
|
$
|
0.05
|
|
The Company has the following options outstanding and exercisable.
February 29, 2020
|
|
Options outstanding and exercisable
|
|
Number
|
Remaining
|
Exercise prices
|
of shares
|
contractual life
|
$0.05
|
1,100,000
|
0.65 years
|
$0.07
|
800,000
|
1.56 years
|
$0.07
|
1,535,000
|
1.89 years
|
$0.07
|
1,500,000
|
1.92 years
|
$0.02
|
2,000,000
|
1.99 years
|
$0.10
|
500,000
|
2.17 years
|
$0.05
|
800,000
|
2.66 years
|
$0.06
|
535,000
|
3.20 years
|
$0.07
|
550,000
|
3.23 years
|
|
|
|
|
9,320,000
|
1.74 years
|
August 31, 2019
|
|
Options outstanding and exercisable
|
|
Number
|
Remaining
|
Exercise prices
|
of shares
|
contractual life
|
$0.07
|
550,000
|
3.73 years
|
$0.06
|
535,000
|
3.70 years
|
$0.05
|
800,000
|
3.16 years
|
$0.10
|
500,000
|
2.67 years
|
$0.07
|
1,500,000
|
2.42 years
|
$0.07
|
1,535,000
|
2.39 years
|
$0.07
|
800,000
|
2.05 years
|
$0.05
|
1,100,000
|
1.15 years
|
$0.10
|
1,000,000
|
0.18 years
|
|
|
|
|
8,320,000
|
2.38 years
|
*The aggregate intrinsic value for options outstanding and exercisable as at February 29, 2020 was $Nil.
Warrants
During the year ended August 31, 2019, the Company issued 7,731,769 warrants attached to units in private placements and 705,100 broker warrants in connection with the private placements. The fair value of the brokers warrants was $12,861, recorded as share issuance costs off-setting the gross proceeds of private placements in additional-paid-in-capital, and was calculated using the Black Scholes option pricing model, with the following weighted average assumptions: expected volatility 150%, risk-free interest rate: 2.38%, expected life: 3.71 years, dividend yield: 0.00%.
A summary of warrants as at February 29, 2020 and August 31, 2019 is as follows:
|
|
|
|
|
Warrants Outstanding
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Number of warrants
|
|
|
Exercise Price
|
|
Balance, August 31, 2018
|
|
40,739,060
|
|
$
|
0.06
|
|
Expired
|
|
(23,034,470
|
)
|
|
0.07
|
|
Issued
|
|
8,436,869
|
|
|
0.04
|
|
Balance, August 31, 2019
|
|
26,141,459
|
|
$
|
0.06
|
|
Expired
|
|
(8,473,000
|
)
|
|
0.06
|
|
Balance, February 29, 2020
|
|
17,668,459
|
|
$
|
0.05
|
|
The Company has the following warrants outstanding and exercisable.
Number
Outstanding1
|
Exercise
Price
|
Expiry
Date
|
1,891,590
|
$0.075
|
May 11, 2020
|
2,540,000
|
$0.075
|
May 25, 2020
|
4,800,000
|
$0.050
|
August 31, 2021
|
2,427,500
|
$0.050
|
September 21, 2021
|
6,009,369
|
$0.040
|
March 27, 2023
|
17,668,459
|
|
|
1. Each warrant entitles a holder to purchase one common share.
8. SEGMENTED INFORMATION
As at February 29, 2020 and August 31, 2019, the Company is operating its business in one reportable segment: natural resource acquisitions. All of the Company's material long-lived assets are located in the United States.
(a) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited condensed financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our unaudited condensed financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report, particularly in the section entitled "Risk Factors" of this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "CAD$" refer to Canadian dollars and all references to "common shares" refer to the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our" and "Company" mean Company and/or our subsidiaries, unless otherwise indicated.
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 discontinued. During fiscal 2016 our activities in the Women's personal healthcare sector were discontinued.
The Company is actively pursuing business opportunities in the resource sector, whereby we signed a definitive agreement for a Lithium Brine Project in May 2016. In May 2017 the Company dropped the Lithium Brine Project and subsequently acquired the Clayton Valley, NV Lithium Project announced in August 2017. The Company's main focus is in natural resource sector.
The address of our principal executive office is #22 1873 Spall Road, Kelowna, British Columbia V1Y 4R2. Our telephone number is (250) 870-2219. Our current location provides adequate office space for our purposes at this stage of our development.
Since March 2020, several measures have been implemented in Canada, the United States, and the rest of the world in response to the increased impact from the novel coronavirus ("COVID-19"). While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impact on our business operations cannot be reasonably estimated at this time. We anticipate this could have an adverse impact on our exploration plans, results of operations, financial position and cash flows during the current fiscal year.
Due to the implementation of British Columbia Instrument 51-509 on September 30, 2008 by the British Columbia Securities Commission, we have been deemed to be a British Columbia based reporting issuer. As such, we are required to file certain information and documents at www.sedar.com.
Summary of Recent Business
On October 28, 2019, the Company signed an LOI with Eagle Plains Resources Ltd. ("Eagle Plains"). to earn up to 75% interest in the Pine Channel gold project in Saskatchewan, Canada (the "Pine Channel SK Property"). The terms of the LOI are as follows:
To earn a 60% interest in the Pine Channel SK Property, Enertopia or its assigns will commit to making total exploration expenditures on the property of CAD $2,000,000 over a 4 year period according to the following schedule:
CAD $100,000 on or before December 31, 2020
CAD $300,000 on or before December 3, 2021
CAD $600,000 on or before December 31, 2022
CAD $1,000,000 on or before December 31, 2023
Enertopia or its assigns would pay a total cash consideration of CAD $150,000 according to the following schedule:
CAD $15,000 on signing Definitive Agreement.
CAD $25,000 on or before December 31st, 2020
CAD $35,000 on or before December 31st, 2021
CAD $75,000 on or before December 31st, 2022
And issued 1,000,000 of our common shares to Eagle Plains Ltd.
On December 13th 2019 the Company dropped the LOI with Eagle Plains Resources Ltd.
On December 31st 2019 the Company dropped its Canadian Securities Listing (CSE).
On December 31st 2019 the Company accepted the resignation of directors Kristian Ross and Kevin Brown.
On February 12th 2020 the Company signed a 1% Royalty agreement with respect to any future commercial lithium production from the Company's Clayton Valley, Nevada claims in exchange for $200,000. The Company has a right of first refusal to repurchase the royalty upon any proposed sale by the royalty holder to a third party.
On February 25th 2020 the Company signed Mark Snyder to a one year Technology Advisory Board. Monthly contract rate of $1,000 per month and this issuance of 2,000,000 stock options valid for two years at a strike price of $0.02 per share.
Chronological Overview of our Business over the Last Five Years
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, WOM's 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 (WOM's 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 (WOM's 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 Company's 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 women's 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-LoveTM 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-LoveTM became available at London Drugs Limited stores. V-LoveTM 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-LoveTM. As at August 31, 2016, with the Company's 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.
On October 23, 2015, the Company's 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, 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 Company's 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 US$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.
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 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 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 US$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.
On August 31, 2016, with the Company's 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.
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.
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.
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.
On December 6, 2016, we signed a Definitive Commercial Agreement with Genesis Water Technologies with regard to the acquisition of exclusive licensing rights of the technology as outlined in the agreement.
On January 20, 2017, the Company closed the first tranche of a private placement of 1,000,000 units at a price of CAD$0.04 per unit for gross proceeds of CAD $40,000. Each unit consists of one common share of the Company and one-nontransferable 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 $0.06. A cash finders' fee of CAD$800 and 20,000 full broker warrants that expire January 20, 2019 was paid to Leede Jones Gable Inc.
On January 20, 2017, the Company granted 1,535,000 stock options to directors, officers and consultant of the Company with an exercise price of $0.07 which vested immediately, expiring January 20, 2022.
On January 31, 2017, the Company granted 1,500,000 stock options to consultant of the Company with an exercise price of $0.07 vested immediately, expiring January 31, 2022.
On February 28, 2017, the Company closed the first tranche of a private placement of 4,250,000 units at a price of CAD$0.04 per unit for gross proceeds of CAD $170,000. Each unit consists of one common share of the Company and one-nontransferable 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 $0.06. A cash finders' fee of CAD$11,100 and 227,500 full broker warrants that expire February 28, 2019 was paid to Leede Jones Gable Inc., Canaccord Genuity and Duncan McKay.
On February 28, 2017, the Company signed a Letter of Engagement with Adam Mogil and issued 1,000,000 warrant options to convert to 1,000,000 common shares to Adam Mogil to provide corporate services. The warrants have an exercise price of $0.09 and expire August 28, 2017. These warrant options expired without being exercised.
On April 21, 2017, the Company issued 95,500 shares for gross proceeds of $5,685 from the exercise of warrants of previous financings at $0.05 and $0.07.
On April 30, 2017 the Company issued 166,500 shares for gross proceeds of $11,655 from the exercise of warrants from a previous financing at $0.07.
On April 30, 2017, the Company closed the first and final tranche of a private placement of 3,224,000 units at a price of CAD$0.09 per unit for gross proceeds of CAD $290,160. Each unit consists of one common share of the Company and one-nontransferable 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 $0.12. A cash finders' fee of CAD$20,736 and 230,400 full broker warrants that expire April 28, 2019 was paid to Leede Jones Gable and Canaccord Genuity.
On May 5, 2017, the Company granted 500,000 stock options to consultant of the Company with an exercise price of $0.10 vested immediately, expiring May 5, 2022.
On May 5, 2017, the Company terminated the Definitive Agreement dated May 12, 2016 with the Vendor on the Nevada Lithium brine properties.
On July 31, 2017, the Company announced the resignation of CFO and Director Bal Bhullar, the appointment of Kristian Ross as director and president Robert McAllister assuming the interim duties of CFO.
On August 14, 2017 the Company announced the appointment of Davidson and Company, LLP, Chartered Professional Accountants as its new independent registered auditing firm which replaced MNP LLP independent registered auditing firm.
On August 30, 2017 the Company announced the Staking of lode and placer claims covering approximately 160 acres for Lithium in Clayton Valley, NV.
On October 27, 2017 we entered into a one year Investor Relations Consulting agreement with FronTier Merchant Capital Group. Terms of the agreement, FronTier Capital Group has been retained for a 12-month period at $87,000 (plus applicable sales tax) per annum plus direct expenses. The company will also grant 300,000 stock options to FronTier at an exercise price of 0.05 per share expiring 5 years from the date of grant.
On November 1, 2017, we closed the first tranche of a private placement of 2,600,000 units at a price of CAD$0.05 per unit for gross proceeds of CAD$130,000. 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 $0.06.
On November 1, 2017, we granted 500,000 stock options to a director of the company at an exercise price of 0.05 per share expiring 5 years from the date of grant.
On December 8, 2017, we closed the second tranche of a private placement of 3,954,000 units at a price of CAD$0.05 per unit for gross proceeds of CAD $197,700. 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 $0.06. A cash finder's fee for CAD $12,770 and 230,400 full broker warrants was paid to third parties. Each full broker 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 $0.06.
On December 8, 2017 we issued 240,000 common shares of our Company on the exercise of 240,000 stock options that were exercised by a director of the Company at $0.05 for $12,000 for net proceeds to the company.
On December 15, 2017 we paid Genesis Water Technologies (GWT) $96,465 for the second and final payment for the Second phase of the second bench test and $8,998 for the bill of materials for the bench test.
On January 12, 2018, we closed the final tranche of a private placement of 1,611,000 units at a price of CAD$0.05 per unit for gross proceeds of CAD$80,550. 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 $0.06. A cash finder's fee of CAD$3,880 and 77,600 broker warrants was paid to a third party. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On February 2, 2018 we issued 50,000 common shares of our Company on the exercise of 50,000 warrants that were exercised at $0.07 for $3,500 for net proceeds to the company.
On May 11, 2018, we issued 200,000 shares for gross proceeds of $12,000 from the exercise of stock options at $0.06.
On May 11, 2018, we closed the first tranche of a private placement of 1,746,900 units at a price of CAD$0.06 per unit for gross proceeds of CAD$104,814. 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 $0.075. A cash finders' fee of CAD$9,281 and 144,690 full broker warrants that expire May 11, 2020 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On May 22, 2018, we entered into an Investor Relations Consulting agreement with FronTier Flex Marketing. Terms of the agreement, FronTier Flex Marketing has been retained for a 9-month period at $66,000 (plus applicable sales taxes) plus direct expenses. The Company will also grant 300,000 stock options at an exercise price of $0.07 per share expiring 5 years from the date of grant.
On May 25, 2018, we closed the final tranche of a private placement of 2,470,000 units at a price of CAD$0.06 per unit for gross proceeds of CAD$148,200. 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 24 months from the date of issuance, at a purchase price of $0.075. A cash finders' fee of CAD$5,820 and 70,000 full broker warrants that expire May 25, 2020 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On July 4, 2018, the Company, after receiving 3rd party lab results that reported impurities above allowable limits for battery-grade Li2CO3, provided formal notice of termination to GWT of the commercialization agreement dated December 6, 2016 and as amended on October 9, 2017.
On August 31, 2018, we closed the first tranche of a private placement of 4,400,000 units at a price of CAD$0.03 per unit for gross proceeds of CAD$132,000. 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 $0.05. A cash finders' fee of CAD$12,000 and 400,000 full broker warrants that expire August 31, 2021 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On August 31, 2018, we issued 170,000 shares for gross proceeds of $9,000 from the exercise of 50,000 stock options at $0.06 and 120,000 stock options at $0.05 respectively.
On September 21, 2018, the Company closed a private placement of 2,225,000 units at a price of CAD$0.03 per unit for gross proceeds of CAD$66,750 (equivalent to $51,678). 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 $0.05. A cash finders' fee of CAD$6,075 ($4,703) and 202,500 full broker warrants that expire September 21, 2021 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On November 5, 2018, the Company received an Area of Disturbance permit from the Bureau of Land Management, Nevada, allowing the Company access for a series of diamond drill holes. The diamond drill program was completed in December 2018 and consisted of 5 diamond drill holes totaling approximately 2,000 feet. Four drill holes were for resource definition drilling to allow the Company to provide an inaugural 43-101 project wide lithium resource. A fifth diamond drill hole drilled to an estimated depth of approximately 265 feet with the recovered lithium enriched material being used for metallurgical and pH solution testing.
On March 27, 2019, the Company closed a tranche of a private placement of 5,506,769 units at a price of CAD$0.03 per unit for gross proceeds of CAD$143,176 ($106,809). 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 48 months from the date of issuance, at a purchase price of $0.04. A cash finders' fee of CAD$13,068 ($9,748) and 502,600 full broker warrants that expire March 27, 2023 was paid to third parties. The broker warrants have the same terms as the warrants issued as part of the unit offering.
On July 19, 2019, the President of the Company provided a short term loan to the Company for the amount of CAD$20,000 ($15,301). The loan provides for a 10% annual interest rate and was repayable on October 19, 2019. The loan remains outstanding as of the date of this filing.
Our Current Business
We are a development stage company pursuing business opportunities in diverse sectors natural resource and technology used in the resource sector currently specific to the extraction, recovery and concentration of Lithium.
Mineral Property
On August 30, 2017, the Company announced the staking of Lode and Placer claims of BLM lands in Esmeralda county Nevada covering approximately 160 Acres subject to adjustment. The Company has a 100% interest in the lands and is only responsible for the yearly maintenance fees to the BLM (estimated to be $2,635) and County (estimated to be $212) to keep its 100% interest. The claims are in good standing until August 31, 2020.
Access to the property can be achieved by paved Hwy 265 to Silver Springs, NV or paved Hwy from north of Goldfields, NV. Access is then by graded gravel road. The last 1.8 miles to the property is by trail road using 4x4 vehicle. The property is covered with extensive outcroppings of the Esmeralda Formation. Power transmission line is within ½ mile of the northern property boundary. Water would have to be trucked in or by pipe line if a processing facility was built onsite. Of particular interest is a section of green, volcanoclastic, evaporate-rich mudstone strata known as the Frontera Verde zone that host lithium of potential economic significance. The Frontera Verde Zone is exposed over approximately 100 acres of the northern two thirds of the property, and underlies the rest of the property at shallow depths. Third party drilling adjacent to the west and eastern boundaries of the property supports this analysis. The property is without known reserves and the current work programs are exploratory in nature.
The Company has signed a 1% Royalty agreement with respect to any future commercial lithium production from the Company's Clayton Valley, Nevada claims in exchange for $200,000. These funds are going to assist with the Company's exploration plans. The Company has a right of first refusal to repurchase the royalty upon any proposed sale by the royalty holder to a third party.
Property Map
Esmeralda County Lode and Placer Claims:
Claim Name
|
Claim Type
|
BLM Serial #
|
STEVE 1
|
PLACER
|
NMC 1148769
|
STEVE 2
|
PLACER
|
NMC 1148770
|
STEVE 3
|
PLACER
|
NMC 1148771
|
STEVE 4
|
PLACER
|
NMC 1148772
|
STEVE 5
|
PLACER
|
NMC 1148773
|
STEVE 6
|
PLACER
|
NMC 1148774
|
STEVE 7
|
PLACER
|
NMC 1148775
|
STEVE 8
|
PLACER
|
NMC 1148776
|
DAN 1
|
LODE
|
NMC 1148760
|
DAN 2
|
LODE
|
NMC 1148761
|
DAN 3
|
LODE
|
NMC 1148762
|
DAN 4
|
LODE
|
NMC 1148763
|
DAN 5
|
LODE
|
NMC 1148764
|
DAN 6
|
LODE
|
NMC 1148765
|
DAN 7
|
LODE
|
NMC 1148766
|
DAN 8
|
LODE
|
NMC 1148767
|
DAN 9
|
LODE
|
NMC 1148768
|
On November 5, 2018, the Company received an Area of Disturbance permit from the Bureau of Land Management, Nevada, allowing the Company access for a series of diamond drill holes. The diamond drill program consists of 5 diamond drill holes totaling approximately 2,000 feet. The Company expects to use the recovered lithium enriched material for metallurgical and pH solution testing.
The diamond drill program was completed during fiscal 2019. The Company will undertake systematic and thorough solution testing of the drilled lithium enriched horizons. This will enable the Company to map the subsurface horizons as per oxide and reduced horizons and further differentiate the grade of Lithium in solution that can be potentially recovered in a low CAPEX and low-cost extraction methods.
Summary
The continuation of our business is dependent upon obtaining further financing, a successful program 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.
Competition
There is strong competition relating to all aspects of the resource sector. We actively compete for capital, skilled personnel, market share, and in all other aspects of our operations with a substantial number of other organizations. These organizations include small development stage companies like our own, and large, established companies, many of which have greater technical and financial resources than our company.
Compliance with Government Regulation
The exploration and development of mineral properties is subject to various United States federal, state and local and foreign governmental regulations. We may from time to time, be required to obtain licenses and permits from various governmental authorities in regards to the exploration of our property interests.
Purchase of Significant Acquisition
Not applicable
Corporate Offices
The address of our principal executive office is #22-1873 Spall Road, Kelowna, British Columbia V1Y 4R2. Our telephone number is (250) 870-2219. Our current location provides adequate office space for our purposes at this stage of our development.
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. Effective July 1, 2017, the Company entered into a new Management Consulting Agreement replacing the March 1, 2014 agreement with a consulting fee of $3,500 plus GST per month. On July 31, 2017 Mr. McAllister agreed to be intern CFO until such time as a replacement could be sourced. Mr. McAllister voluntarily suspended and terminated accrual of these consulting fees commencing on December 1, 2019 and continuing until such time as the Company's financial condition permits a resumption of such cost.
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.
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
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used 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 management's 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 financials.
Mineral Properties
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 reserves are 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 project's 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 project's 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.
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.
Going Concern
We have suffered recurring losses from operations. The continuation of our Company as a going concern is dependent upon our Company attaining and maintaining profitable operations and/or raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations.
The continuation of our business is dependent upon us raising additional financial support and/or attaining and maintaining profitable levels of internally generated revenue. 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.
Results of Operations - Three Months Ended February 29, 2020 and February 28, 2019
The following summary of our results of operations should be read in conjunction with our financial statements for the six month period ended February 29, 2020, which are included herein.
Our operating results for the three months ended February 29, 2020, for the three months ended February 28, 2019 and the changes between those periods for the respective items are summarized as follows:
|
|
Three Months
Ended
February 29,
2020
|
|
|
Three Months
Ended
February 28,
2019
|
|
|
Change Between
Three Month Periods
Ended
February 29, 2020 and
February 28, 2019
|
|
Revenue (cost recovery)
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Cost of product sales
|
|
-
|
|
|
-
|
|
|
-
|
|
Other expenses (income)
|
|
(1,434
|
)
|
|
817
|
|
|
(2,251
|
)
|
Income from royalty granted
|
|
(200,000
|
)
|
|
-
|
|
|
(200,000
|
)
|
General and administrative
|
|
1,015
|
|
|
14,117
|
|
|
(13,102
|
)
|
Investor relations
|
|
5,754
|
|
|
34,173
|
|
|
(28,419
|
)
|
Consulting fees
|
|
-
|
|
|
10,500
|
|
|
(10,500
|
)
|
Fees and dues
|
|
10,029
|
|
|
7,317
|
|
|
2,712
|
|
Exploration expenses
|
|
1,047
|
|
|
115,360
|
|
|
(114,313
|
)
|
Research and development
|
|
-
|
|
|
4,423
|
|
|
(4,423
|
)
|
Stock based compensation
|
|
17,308
|
|
|
-
|
|
|
17,308
|
|
Professional fees
|
|
20,496
|
|
|
17,749
|
|
|
2,747
|
|
Net (income) loss
|
$
|
(145,785
|
)
|
$
|
204,456
|
|
$
|
(350,241
|
)
|
Our financial statements report revenue of $Nil for the three months ended February 29, 2020 and February 28, 2019. During the three months ended February 29, 2020, we signed a 1% Royalty agreement with respect to any future commercial lithium production from our Clayton Valley, Nevada claims in exchange for $200,000. This $200,000 will assist the Company with its future exploration plans and was recognized as income. As a result, our financial statements report a net income of $145,785 for the three-month period ended February 29, 2020. This is comparison to a net loss of $204,456 for the three-month period ended February 28, 2019. Our operating costs however during the three months ended February 29, 2020 were $55,649 compared to $203,639 during the three months ended February 28, 2019. The decrease was largely due to exploration and investor relations costs as a result of the Company's reduced activity during fiscal 2020 so far.
Results of Operations - Six Months Ended February 29, 2020 and February 28, 2019
The following summary of our results of operations should be read in conjunction with our financial statements for the six-month period ended February 29, 2020, which are included herein.
Our operating results for the six-month period ended February 29, 2020, for the six month period ended February 28, 2019 and the changes between those periods for the respective items are summarized as follows:
|
|
Six Months Ended
February 29, 2020
|
|
|
Six Months Ended
February 28, 2019
|
|
|
Change Between
Six Month Periods
Ended
February 29, 2020 and
February 28, 2019
|
|
Revenue (cost recovery)
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Cost of product sales
|
|
-
|
|
|
-
|
|
|
-
|
|
Other expenses (income)
|
|
(1,334
|
)
|
|
1,552
|
|
|
(2,886
|
)
|
Income from royalty granted
|
|
(200,000
|
)
|
|
-
|
|
|
(200,000
|
)
|
General and administrative
|
|
6,766
|
|
|
23,148
|
|
|
(16,382
|
)
|
Investor relations
|
|
11,489
|
|
|
70,382
|
|
|
(58,893
|
)
|
Consulting fees
|
|
10,500
|
|
|
22,950
|
|
|
(12,450
|
)
|
Fees and dues
|
|
15,739
|
|
|
21,475
|
|
|
(5,736
|
)
|
Exploration expenses
|
|
13,625
|
|
|
124,532
|
|
|
(110,907
|
)
|
Research and development
|
|
494
|
|
|
4,423
|
|
|
(3,929
|
)
|
Stock based compensation
|
|
17,308
|
|
|
-
|
|
|
17,308
|
|
Professional fees
|
|
29,235
|
|
|
30,793
|
|
|
(1,558
|
)
|
Net (income) loss
|
$
|
(96,178
|
)
|
$
|
299,255
|
|
$
|
(395,433
|
)
|
Our accumulated losses were $14,217,981 as at February 29, 2020. Our financial statements report revenue of $Nil for the six months ended February 29, 2020 and February 28, 2019. During 2020, we signed a 1% Royalty agreement with respect to any future commercial lithium production from our Clayton Valley, Nevada claims in exchange for $200,000. This $200,000 will assist the Company with its future exploration plans and was recognized as income. As a result, our financial statements report a net income of $96,178 for the six-month period ended February 29, 2020. This is comparison to a net loss of $299,255 for the six-month period ended February 28, 2019. Our operating costs however during 2020 were $105,156 compared to $297,703 during 2019. The decrease was largely due to exploration and investor relations costs as a result of the Company's reduced activity during fiscal 2020 so far.
As at February 29, 2020, we had $482,374 in current liabilities, which is comparable to current liabilities as at August 31, 2019 ($502,130), with certain liabilities, including the short-term loan to the President of the Company settled during the six months ended February 29, 2020. Our net cash from operating activities for the six months ended February 29, 2020 was $138,287, primarily as a result of $200,000 received from the royalty agreement with respect to the future commercial lithium production from the Clayton Valley, Nevada claims. During the six months ended February 28, 2019, our cash flow used in operating activities was $211,907.
Liquidity and Financial Condition
Working Capital
|
|
At
|
|
|
At
|
|
|
|
February 29,
|
|
|
August 31,
|
|
|
|
2020
|
|
|
2019
|
|
Current assets
|
$
|
151,464
|
|
$
|
46,245
|
|
Current liabilities
|
|
482,374
|
|
|
449,270
|
|
|
|
|
|
|
|
|
Working capital surplus/(deficit)
|
$
|
(330,910
|
)
|
$
|
(455,885
|
)
|
Cash Flows
|
|
Six Months Ended
February 29,
|
|
|
Six Months Ended
February 28,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows (used in) operating activities
|
$
|
138,287
|
|
$
|
(211,907
|
)
|
Cash flows from investing activities
|
|
-
|
|
|
-
|
|
Cash flows from financing activities
|
|
(15,968
|
)
|
|
46,975
|
|
Net increase (decrease) in cash
|
$
|
122,319
|
|
$
|
(164,932
|
)
|
Operating Activities
Net cash from operating activities was $138,287 in the six-month period ended February 29, 2020. The net cash inflow was primarily the result of the Company's 1% Royalty agreement with respect to any future commercial lithium production from our Clayton Valley, Nevada claims in exchange for $200,000. The cash used in operating activities otherwise was $61,713 compared with net cash used in operating activities of $211,907 in the same period in 2019. The Company lower expenditures were a concerted effort to conserve its cash resources until financing could be arranged.
Financing Activities
Net cash used in financing activities during the six months ended February 29, 2020 was $15,968, representing the repayment of the short-term loan from the Company's President. During the six months ended February 28, 2019, the cash from financing activities was $46,975 from issuance of 2,225,000 common shares in private placements.
Investing Activities
Net cash provided in investing activities was $Nil in the six month period ended February 29, 2020 compared to $Nil in the same period in 2019.