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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended November 30, 2023

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________________________ to __________________________

 

Commission file number 000-55517

 


 

PUREBASE CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada   27-2060863
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)

 

8631 State Highway, 124

Ione, California

 

 

95640

(Address of Principal Executive Offices)   (Zip Code)

 

(209) 274-9143

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol(s)  

Name of each exchange

on which registered

None   N/A   N/A

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, par value $0.001

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company
       
    Emerging Growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act: ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to 240.10D-1(b). ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, as of May 31, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, was $8,163,891. Solely for purposes of this disclosure, shares of common equity held by officers and directors of the registrant have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any other purposes.

 

As of February 28, 2024, there were 239,740,928 shares of the registrant’s common stock outstanding.

 

 

 

 
 

 

TABLE OF CONTENTS

 

  Page
PART I  
   
ITEM 1. BUSINESS 3
   
ITEM 1A. RISK FACTORS 9
   
ITEM 1B. UNRESOLVED STAFF COMMENTS 17
   
ITEM 1C. CYBERSECURITY 17
   
ITEM 2. PROPERTIES 17
   
ITEM 3. LEGAL PROCEEDINGS 21
   
ITEM 4. MINE SAFETY DISCLOSURES 22
   
PART II  
   
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 22
   
ITEM 6. [RESERVED] 25
   
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 26
   
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 31
   
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 31
   
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 32
   
ITEM 9A. CONTROLS AND PROCEDURES 32
   
ITEM 9B. OTHER INFORMATION 33
   
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 33
   
PART III  
   
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 34
   
ITEM 11. EXECUTIVE COMPENSATION 37
   
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 38
   
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 39
   
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 42
   
PART IV  
   
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 43
   
ITEM 16. FORM 10-K SUMMARY 45
   
SIGNATURES 46

 

2
 

 

PART I

 

ITEM 1. BUSINESS

 

Forward-Looking Statements

 

This Annual Report on Form 10-K includes forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of 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. Those statements include statements regarding the intent, belief or current expectations of our management team, as well as the assumptions on which such statements are based. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” any of which may cause our company’s 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.

 

We undertake no obligation to update or revise forward-looking statements except as required by law.

 

As used in this Annual Report on Form 10-K and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our,” refer to PureBase Corporation and its wholly-owned subsidiaries, PureBase Agricultural, Inc., a Nevada corporation (“PureBase AG”) and U.S. Agricultural Minerals, LLC, a Nevada limited liability company (“Purebase AM”).

 

Corporate History

 

The Company was incorporated in the State of Nevada on March 2, 2010, under the name Port of Call Online, Inc. to create a web-based service that would offer boaters an easy, convenient, fun, easy to use, online resource to help plan and organize their boating trips. Pursuant to a corporate reorganization consummated on December 23, 2014, the Company changed its business focus to the identification, acquisition, development and full-scale exploitation of industrial and natural mineral properties in the United States for the development of products for the construction and agriculture markets. In line with this business focus, the Company changed its name to PureBase Corporation in January 2015.

 

The Company is headquartered in Ione, California.

 

Business Overview

 

We are an industrial mineral and natural resource company that provides solutions to the agriculture and construction materials markets in the United States, through our two subsidiaries, Purebase AG, and Purebase AM, respectively. The Company has not yet commenced mining operations and relies on US Mine LLC. for its raw materials.

 

We utilize the services of US Mine Corporation (“USMC”), a Nevada corporation and a significant shareholder of the Company, for the development and contract mining of industrial mineral and metal projects, exploration drilling, preparation of feasibility studies, mine modeling, on-site construction, production, site reclamation and product fulfillment. Exploration services include securing necessary permits, environmental compliance, and reclamation plans. In addition, a substantial portion of the minerals used by the Company are obtained from properties owned or controlled by USMC. A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also officers, directors and owners of USMC and US Mine LLC.

 

3
 

 

We obtain certain raw clay materials from USMC through a materials extraction agreement with US Mine LLC. US Mine LLC owns the mining property which USMC leases. USMC pays US Mine LLC a royalty, for which the Company reimburses USMC.

 

Agricultural Sector

 

We develop specialized fertilizers, sun protectants, soil amendments and bio-stimulants for organic and non-organic sustainable agriculture. We have developed and will seek to develop additional products derived from mineralized materials of leonardite, kaolin clay, laterite, and other natural minerals. These mineral and soil amendments are used to protect crops, plants and fruits from the sun and winter damage, to provide nutrients to plants, and to improve dormancy and soil ecology to help farmers increase the yields of their harvests. We are building a brand family under the parent trade name “Purebase,” consisting of our Purebase Shade Advantage WP product, a kaolin-clay based sun protectant for crops and Humic Advantage a humic acid product derived from leonardite.

 

PureBase Shade Advantage WP

 

Shade Advantage WP is a natural mineral plant protectant that reduces sunburn damage to plant tissue (including fruits, such as watermelons, citrus, tomatoes, apples and cherries and walnuts) exposed to UV and infrared radiation through the absorption and dissipation of ultraviolet and infrared radiation, which protects and reduces the stress on plants.

 

The anticipated benefits of this product include:

 

  Adherences to plant tissue, fruit, and wood bark without the need for surfactants (stickers)
  Protection against sunburn of plant tissue and sun scalding of fruits, nuts, and vegetables
  Designed for application on organic and sustainable crops
  When sprayed on dormant trees, Shade Advantage WP has the potential of mitigating weather induced dormancy interference.

 

Shade Advantage WP is available in 25 lb. bags.

 

Humic Advantage

 

The Company sold its first batch of humic acid to a produce grower in Arizona in April 2022. Humic Advantage is a humic acid product derived from leonardite, locally sourced in Ione, California. Humic acid is a group of molecules heterogenous in nature, consisting of both aliphatic and aromatic carbons. We believe that humic acids are an important medium for soil health, water retention, and positive interactions with the soil microbiome. Humic acids can act as a chelator, interacting with other molecules in the soil profile, leading to a decrease in the leaching of metals and nutrients in some cases. Furthermore, some scientific publications have shown that the application of humic acid can increase plant dry mass, particularly in forage crops, due to increases in root matter and nodulation.

 

4
 

 

Industry Overview

 

The overview below shows the size and scope of the crops that could potentially use products that we develop:

 

California’s Top 10 Agricultural Commodities in 2022

 

According to the California Department of Food and Agriculture (“CDFA”), California’s agricultural abundance includes more than 400 commodities and over a third of the country’s vegetables and nearly three-quarters of the country’s fruits and nuts are grown in California. California’s top-10 valued commodities for the 2022 crop year are:

 

Dairy Products, Milk — $10.40 billion
Grapes — $5.54 billion
Cattle and Calves — $3.63 billion
Almonds — $3.52 billion
Lettuce — $3.15 billion
Strawberries — $2.68 billion
Pistachios — $1.86 billion
Broilers — $1.59 billion
Tomatoes — $1.46 billion
Carrots — $1.11 billion

 

According to the CDFA, in 2022 California’s farms and ranches received $55.9 billion in cash receipts for their output. This represents an 8.8% increase in cash receipts compared to the previous year.

 

According to the CDFA, California agricultural exports totaled $22.5 billion in 2021, an increase of 7.0% from 2020. Top commodities for export included almonds, dairy and dairy products, pistachios, walnuts and wine. California’s agricultural export statistics are produced by the University of California, Davis, Agricultural Issues Center. California organic product sales totaled $14.0 billion in 2021, an increase of 16.4% from the prior year, according to the CDFA. Organic production encompasses over 2.13 million acres in the state and California is the only state in the U.S. with a United States Department of Agriculture (“USDA”) National Organic Program according to the CDFA.

 

North America humic acid market size was valued at $230 million in 2022 and is expected to grow at a compounded annual growth rate over 13.2% from 2022 to 2032 according to forecast by Spherical Insight, a market research firm.

 

In 2022, as per the USDA, the estimated number of farms in the U.S. were 2,002,700, representing a decline of 9,350 farms from 2021. The total land in farms decreased by 1,900,000 acres in the same period. We believe that this decline will drive farmers to improve crop yields within more limited space. We believe that humic acid can improve yield rates by enhancing soil texture, nutrient buffering capacity, water retention characteristics, and plant growth by enabling efficient uptake of nutrients from soil. We believe that humic acid aids in fighting soil erosion by increasing the ability of soil colloids to combine and by enhancing root system and plant development and can also reduce water salination issues raised in the use of water-soluble mineral fertilizers.

 

According to the latest research report by Global Market Insights Inc., the North America Humic Acid Market was estimated at $250 million in 2020 and is poised to reach around $580 million by 2027, registering with a CAGR of 12.8% from 2021 to 2027. Propelled by widespread application of humic acid as fertilizer in agricultural production, the fertilizer use segment is expected to progress at around 12.5% CAGR over the analysis timeline. The row crops segment is likely to expand at a stable CAGR over the review timespan. Humic acid offers several benefits, including better efficiency, enhanced soil health, and improved crop quality and yields, which is anticipated to fuel segmental progress in the forthcoming years.

 

Distribution

 

We distribute Shade Advantage WP through several large agricultural distribution companies and co-ops including Helena Agri-Enterprises, LLC, Brandt, and Aligned Ag Distributors. Through this network of distribution companies, our products reach farmers and growers in the agricultural industry. We also private label the Crop White II product for Brandt. The Company no longer produces the SulFe Hume Si product.

 

5
 

 

Competition in the Agricultural Sector

 

Major competitors with our agricultural products include:

 

PureShade with Calcium Carbonate: manufactured by Novasource, a division of Tessenderlo Kerley, Inc.
   
Surround: A kaolin-clay-based sun protectant manufactured by Novasource, a division of Tessenderlo Kerley, Inc.
   
BioFlora: a comprehensive agricultural products company based in Arizona.
   
Mesa Verde Humates, a division of Bio Huma Netics, a manufacturer of humate-based products based in New Mexico.
   
The Andersons Humic Solutions: A humic based products mining and manufacturing firm focused in the US Midwest, which produces highly competitive organic products which are sold and distributed throughout the United States.
   

Wilbur Ellis: one of the largest family-owned agricultural companies in the world.

 

Agricultural Products Certifications

 

All sales of agricultural products have to be registered in order to be sold, distributed and/or applied in farming operations. Standards for registration are set and regulated by the USDA at the federal level. All state agencies must also comply with federal guidelines. There are guidelines for the registration and labelling of the products for agriculture use, some of which are federal, others are State. Our organic product, PureBase Shade Advantage WP, must meet several additional qualifications in order to become registered.

 

In California, for example, the task of regulating the registration processes is carried out by the CDFA. There are some activities within the regulatory process that are executed by recognized and licensed private entities such as chemical laboratories and certifying laboratories. In some instances, in accordance with various international treaties, some of bilateral and some by regional structures (European Union, etc.) and some governmental and private organizations are recognized and licensed to play particular roles in certifying and/or in the certifying processes.

 

Currently we have one product fully registered as an organic plant protectant, PureBase Shade Advantage WP. The WP stands for Wettable Powder which means the powder goes into suspension when mixed with water. We have registration certificates for this product in several states including California and Washington. Our product is currently registered in the US and California as an agricultural product.

 

Our newest product, Humic Advantage, has received an Organic Materials Review Institute certification and is currently approved for sale in Arizona and is under review with the CDFA for approval to sell Humic Advantage in California as a soil amendment.

 

Construction Sector

 

We have been developing and testing a kaolin-based product that we believe will help create a lower CO2-emitting concrete through the use of high-quality supplementary cementitious materials (“SCMs”). We are developing SCMs for the construction material markets, particularly the cement markets that we believe can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, we believe there are significant opportunities for high-quality SCM products in the construction-materials sector.

 

Industry Overview

 

Domestic Production and Use

 

Most portland cement is used to make concrete, mortars, or stuccos, and competes in the construction sector with concrete substitutes, such as aluminum, asphalt, clay brick, fiberglass, glass, gypsum (plaster), steel, stone, and wood. Certain materials, especially fly ash and ground granulated blast furnace slag, develop good hydraulic cementitious properties by reacting with lime, such as that released by the hydration of portland cement. Where readily available (including as imports), these SCMs are increasingly being used as partial substitutes for portland cement in many concrete applications and are components of finished blended cements. Clay-based SCM’s may also offer high strength in addition to being able to replace more cement than traditional fly ash.

 

The Portland Cement Association (“PCA”) forecast a 3.5% decrease in cement consumption in 2023 over 2022. However, the PCA forecasts a 4.3% increase in 2024, a 3.6% increase in 2025, and a 3.8% increase in 2026. According to the PCA, the U.S. is also set to spend $1 trillion on new and rehabilitated infrastructure projects which we believe would consume 46 Metric Tons of cement over a five-year program. Over a quarter of this amount would be used on roads, bridges and resiliency structures.

 

We believe that production and use of cement will increase in the upcoming years due to President Biden’s signing a $1.2 trillion infrastructure bill into law in November 2021, which is anticipated to provide $550 billion of new federal investments in America’s infrastructure over five years, including bridges, roads, broadband, water and energy systems. We believe that funds are needed for safe travel, as well as the efficient transport of goods and produce across the country. The nation’s infrastructure system earned a C- score from the American Society of Civil Engineers in 2021.

 

As per the PCA, the current infrastructure legislation provides for a $110 billion investment in roads, bridges and major infrastructure projects. Included is $40 billion for bridge repair, replacement and rehabilitation and $16 billion for major projects that would be too large or complex for traditional funding programs. It is believed that 173,000 miles of the nation’s highways and major roads are in poor condition, as are 45,000 bridges.

 

6
 

 

Competition in the Construction Sector

 

Potential competitors in the SCM space include other kaolin producers that are located in the eastern U.S. (predominantly Georgia), including BASF Corporation, Thiele Kaolin Company, Active Minerals International, LLC, Burgess Pigment Company, IMERYS, and KaMin LLC. Other potential competitors include fly ash distributors, notably Boral Industries, Inc. and Waste Management, Inc., and existing coal burning power plants (which produce fly ash as a byproduct of energy production.)

 

Currently in the western U.S., there are coal burning plants in Nevada, Utah, Oregon, and Washington. There are coal burning plants in Mexico and India from which fly ash can be imported. Other potential competitors are steel mills from which slag is produced as a byproduct of production (which is also a material that can replace fly ash.).

 

Newer technology could produce further competition, such as CO2-entrained concrete products that are produced by companies like Climeworks, a direct air capture company that vacuums carbon out of the air. Carbon entrainment companies include Carbon Engineering Ltd, and Carbon Cure Technologies, which has received significant investments by Bill Gates, Microsoft, Amazon, and others.

 

Many of our competitors have greater exploration, production, and capital resources than we do, and may be able to compete more effectively in any of these areas. For example, these competitors may be able to spend greater amounts on acquisition of desirable mineral properties, on exploration of their mineral properties and on development of their mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance the exploration and development of their mineral properties.

 

Government Controls and Regulations

 

Natural resource exploration, mining and processing operations are subject to various federal, state and local laws and regulations governing prospecting, exploration, development, production, labor standards, occupational health, mine safety, control of toxic substances, and other matters involving environmental protection and employment. United States environmental protection laws address the maintenance of air and water quality standards, the preservation of threatened and endangered species of wildlife and vegetation, the preservation of certain archaeological sites, reclamation, and limitations on the generation, transportation, storage and disposal of solid and hazardous wastes, among other things. There can be no assurance that all the required permits and governmental approvals necessary for any mining project with which we may be associated can be obtained on a timely basis, or maintained in good standing. Delays in obtaining or failure to obtain necessary government permits and approvals may adversely impact our operations. The regulatory environment in which we operate could change in ways that would substantially increase costs to achieve compliance. In addition, significant changes in regulations could have a material adverse effect on our operations and ability to timely and effectively implement our drilling/mapping programs and develop our mining properties.

 

The following governmental controls and regulations materially affect the mining properties we, or our third party mineral suppliers, will seek to explore and develop.

 

Federal Regulation of Mining Activity

 

Mining operations are subject to numerous federal, state and local laws and regulations. At the federal level, mining properties are subject to inspection and regulation by the Division of Mine Safety and Health Administration of the Department of Labor (“MSHA”) under provisions of the Federal Mine Safety and Health Act of 1977. The Occupation and Safety Health Administration (“OSHA”) also has jurisdiction over certain safety and health standards not covered by MSHA. Mining operations and all proposed exploration and development will require a variety of permits. In addition, any mining operations occurring on federal property are subject to regulation and inspection by the Bureau of Land Management (“BLM”). We currently own mining rights in several properties having existing permits in place or properties where existing permitting requirements and other applicable environmental protection laws and regulations would not pose a material hindrance to our ability to explore and develop such properties. As part of our initial evaluation of suitable projects, we ascertain a property’s regulatory compliance status and any issues affecting current or future permitting requirements.

 

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All of our current rights are to mining projects governed by the BLM and the US Forest Service. The Federal Land Policy and Management Act (1976) established the BLM’s multiple-use mandate to manage the public lands “in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archeological values; that, where appropriate, will preserve and protect certain public lands in their natural condition”. The Lands, Minerals & Water Rights branch coordinates with BLM planning and resource specialists to manage surface resources, minerals and water rights to ensure that authorized uses of public lands.

 

Mining Environmental Regulations

 

While we are not at present engaged in mining activities, such activities, including drilling, mapping and development and production activities are subject to environmental laws, policies and regulations. These laws, policies and regulations affect, among other matters, emissions to the air, discharges to water, management of waste, management of hazardous substances, protection of natural resources, protection of endangered species, protection of antiquities and reclamation of mined land. Legislation and implementation of regulations adopted or proposed by the United States Environmental Protection Agency (“EPA”), the BLM and by comparable agencies in various states, directly and indirectly affect the mining industry in the United States. These laws and regulations address the environmental impact of mining and mineral processing, including potential contamination of soil and water from tailings, discharges and other wastes generated by the mining process. In particular, legislation such as the Clean Water Act, the Clean Air Act, the Federal Resource Conservation and Recovery Act (“RCRA”), and the National Environmental Policy Act require analysis and/or impose effluent standards, new source performance standards, air quality standards and other design or operational requirements for various components of mining and mineral processing, including natural resource mining and processing of the type presently or to be conducted by the Company or through USMC. Such statutes also may impose liability on mine developers for remediation of waste they have created.

 

Mining projects also are subject to regulations under (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA” or “Superfund”) which regulates and establishes liability for the release of hazardous substances and (ii) the Endangered Species Act (“ESA”) which identifies endangered species of plants and animals and regulates activities to protect these species and their habitats. Any potential future amendment to CERLA or ESA may impact our business.

 

The Clean Air Act, as amended, mandates the establishment of a federal air permitting program, identifies a list of hazardous air pollutants, including various metals and pollutants, and establishes new EPA enforcement authority. The EPA has published final regulations establishing the minimum elements of state operating permit programs. We will be required to comply with these EPA standards to the extent adopted by the State in which development projects are located.

 

Future regulations are unknown but expected to occur. The new U.S. Administration has rejoined the Paris Climate Accord and placed further restrictions on carbon-emitting activities. Future restrictions and higher standards could negatively impact our ability to bring new products to market, as well as bring new opportunities for products that can reduce CO2 emissions.

 

In addition, developing mining sites requires mitigation of long-term environmental impacts by stabilizing, contouring, re-sloping, and revegetating various portions of a site. While a portion of the required work can be performed concurrently with developing the property, completion of the environmental mitigation occurs once removal of all materials and facilities has been completed. These reclamation efforts are conducted in accordance with detailed plans which have been reviewed and approved by the appropriate regulatory agencies. The mining developer must ensure that all necessary cash deposits and financial resources to cover the estimated costs of such reclamation as required by permit are made.

 

We intend that any exploration and development of mining projects by the Company will be conducted in substantial compliance with federal and state regulations and be consistent with the need to remediate any environmental impact.

 

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Employees

 

The Company currently has seven full-time employees. We currently anticipate hiring additional employees for the Company’s production operations, subject to sufficient funding, if our product development and distribution programs continue to expand.

 

Outside services, relating primarily to agricultural market research and product development, and the development and application of SCMs, as well as other technical matters related to product development and branding activities, will be provided by various independent contractors.

 

ITEM 1A. RISK FACTORS

 

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this report in evaluating our company and its business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. You could lose all or part of your investment due to any of these risks.

 

Risks Related to Our Business

 

We are an early stage company which makes the evaluation of our future business prospects difficult.

 

We changed our business focus to our current business of developing agricultural and natural resources as a result of a reorganization with our wholly owned subsidiary PureBase AG in December 2014, and only commenced selling our agricultural products during 2017 and began developing an SCM for the construction materials market in 2019. We have not yet achieved profitable operations.

 

Our success is dependent upon the successful development of suitable mineral projects, establishing our production capability and establishing a customer base for our agricultural products. Any future success will depend upon many factors, including factors beyond our control which cannot be predicted at this time. These factors may include changes in or increased levels of competition; the availability and cost of bringing mineral projects into production; the amount of agricultural and/or natural resources available and the market price of and the uses for such minerals. These factors may have a material adverse effect upon our business operating results and financial condition.

 

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Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern.

 

Our audited consolidated financial statements as of November 30, 2023, have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued a report that included an explanatory paragraph referring to our recurring losses from operations and generating negative cash flows from operations for the foreseeable future and our significant working capital deficiency, accumulated deficit and net loss for the year ended November 30, 2023, expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. As of November 30, 2023, we had an accumulated deficit of $62,730,978 and a working capital deficit of $1,493,349. For the fiscal year ended November 30, 2023, we had a net loss from operations of $9,087,329 and negative cash flows from operations of $1,124,290. We anticipate that we will continue to incur operating losses and generate negative cash flows from operations for the foreseeable future as we execute our development plans for 2024, as well as other potential strategic and business development initiatives. We have previously funded and plan to continue funding these losses primarily through the sale of equity and debt. Our ability to continue as a going concern is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies, reduce expenditures, and, ultimately, to generate sufficient revenue to fund our operations. There can be no assurance that we will be successful in raising capital and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our plan of operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We will need to raise additional capital for the foreseeable future in order to continue operations and realize our business plans, the failure of which could adversely impact our operations.

 

Although we have started to generate revenue, such revenue is not sufficient to cover our operating expenses and financing costs. As of November 30, 2023, we had liabilities of $3,040,031 and a working capital deficiency of $1,493,349. To stay in business, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. In the past, we have financed our operations by issuing secured and unsecured convertible debt and equity securities in private placements, in some cases with equity incentives for the investor in the form of warrants to purchase our common stock and have borrowed from related parties. During the year ended November 30, 2023, the Company has issued $914,788 of convertible notes to USMC and has used $346,735 of a $1,000,000 line of credit with USMC. There are no other commitments to provide us with financing. If we are unable to obtain additional financing from USMC or other sources, we may have to suspend operations, sell assets and will not be able to execute our plan of operations. Failure to become and remain profitable may adversely affect the market price of our common stock and our ability to raise capital and continue operations. Our inability to secure capital to fund exploration and, if warranted, development costs for our mineral resources would create a competitive cost disadvantage in the marketplace which would have a material adverse effect on our operations and potential profitability.

 

We have been completely dependent on a related party for operating capital and will be for the foreseeable future.

 

Our sales are small and do not provide us with the funds necessary for continuing operations. We have been dependent on USMC to provide funding to us through notes payable and a line of credit, and there is no assurance that they will continue to do so in the future. If USMC decides to no longer fund us or if we are unable to raise funds either through debt through a third party or through an equity raise, then we will not be able to continue operations.

 

External factors, including the complex permitting process may result in delays or not receiving permits at all.

 

While our supplier, USMC, has considerable experience in the mining permitting process, permitting procedures are complex, costly, time consuming and subject to potential regulatory delay. USMC may not be able to obtain permits required for our projects in a timely manner, on reasonable terms, or at all. If we, or our third-party suppliers, cannot obtain or maintain the necessary permits, or if there is a delay in receiving such permits, our timetable and business plan for development and mining of these properties or those of third-party suppliers could be adversely affected.

 

We cannot predict whether we will be able to obtain new permits or whether material changes in permit conditions will be imposed. Obtaining new mining permits or the imposition of additional conditions could have a material adverse effect on our ability to develop the mining properties in which we have an interest or ownership or could increase the costs charged by third party suppliers or decrease the amount of minerals available from third party suppliers.

 

Federal regulation of mining activity may change resulting in additional unforeseen expenses and potential losses.

 

Legislation to make significant revisions to the U.S. General Mining Law of 1872 would affect our potential development of unpatented mining claims on federal lands, including any royalty on mineral production. It cannot be predicted whether any of these proposals will become law. Any levy of the type proposed would only apply to unpatented federal lands and accordingly could adversely affect the profitability of any future mineral production from projects being explored by the Company on federal property.

 

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We cannot be certain that future changes in laws and regulations would not result in significant additional expenses, capital expenditures, restrictions or delays associated with the exploration and development of our current or future projects.

 

We will need to grow the size and capabilities of our company, and we may experience difficulties in managing this growth.

 

If and when the execution of our plan of operations, including marketing plans and business strategies further develop, we may need to recruit additional managerial, operational, sales and marketing, financial, IT and other personnel. If we are not able to effectively expand our company by hiring new employees and expanding our consultants and contractors, we may not be able to successfully implement the tasks necessary to achieve our marketing, research, development, and expansion goals.

 

We depend solely on a single third party for mining services and our operations could be adversely affected if we cannot negotiate further service agreements.

 

We currently rely, and for the foreseeable future will continue to rely, solely on USMC, a company controlled by our Chief Executive Officer and a director, for our mining services under a mining services agreement. There can be no assurance that mining services provided by USMC will continue to be available to us or available to us on favorable terms after the end of the service agreement’s term. If we are unable to extend the mining service agreement or find another mining service provider our business operations may be interrupted.

 

If we lose key employees and consultants or are unable to attract or retain qualified personnel, our business could suffer.

 

Our future success depends, in part, on our ability to attract, retain and motivate highly qualified technical, marketing, engineering, and management personnel. Any inability in hiring and retaining qualified personnel could result in delays in development or fulfillment of any current strategic and operational plans.

 

Our officers and directors are able to control our company and may have different interest than our stockholders.

 

Our officers and directors and their affiliates own approximately 74% of the common stock of our company, not including shares that they may have the rights to acquire pursuant to options or other derivative securities. As a result, they have significant influence over our management and affairs and control over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets. Their interests may differ from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other stockholders. This concentration of ownership and influence in management and board decision-making could also harm the price of our capital stock by, among other things, discouraging a potential acquirer from seeking to acquire shares of our capital stock (whether by making a tender offer or otherwise) or otherwise attempting to obtain control of our company.

 

Raising funds through debt or equity financings in the future, would dilute the ownership of our existing stockholders and possibly subordinate certain of their rights to the rights of new investors or creditors.

 

We currently hope to raise additional funds in debt or equity financings if available to us on terms we believe reasonable to provide for working capital, mining development and production programs, expansion of our marketing efforts or to make acquisitions. Any sales of additional equity or convertible debt securities would result in dilution of the equity interests of our existing stockholders, which could be substantial. Additionally, if we issue shares of preferred stock or convertible debt to raise funds, the holders of those securities might be entitled to various preferential rights over the holders of our common stock and such debt instruments may contain negative covenants restricting corporate actions which could have an adverse effect on the rights and the value of our common stock and our operations.

 

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We currently face larger, better financed and established competition and could face additional competitors in the future which could result in pricing pressures and inability to expand market share.

 

At the present time we are aware of other companies providing similar agricultural and natural resources as ours. In addition, other entities not currently offering the minerals or product uses similar to ours may enter the industrial and agricultural markets. Our natural resources and products will also have to compete with established companies providing minerals (such as fly ash for use in making cement) which are already in commercial and agricultural use. Any such competitors would likely have greater financial, mining production, production facilities, marketing and sales resources than us. Increased competition may result in pricing pressures and the inability to increase market share, which may have an adverse effect on our business, operating results and financial condition.

 

At present, our sales are concentrated within a few customers and the loss of any one customer could result in decreased revenue, increased losses and significant cash flow problems.

 

Our sales are presently concentrated within a few customers. If any of these customers choose to no longer be a customer, in particular, the customers that provide the most significant percentage of revenue, for any reason, and these customers are not replaced, we will sustain additional losses as our fixed cost base will be left uncovered and consume working capital leading to significant cash flow problems.

 

An increase in the price of natural resources will adversely affect our results of operations.

 

Our business plan is based on current development costs and current prices of the natural resources being developed or purchased by us. However, the price of minerals can be very volatile and subject to numerous factors beyond our control including industrial and agricultural demand, inflation, the supply of certain minerals in the market, and the costs of mining, refining and shipping of the minerals. Since we will be obtaining all of its minerals from third party suppliers, any significant increase in the price of these natural resources will have a materially adverse effect on the results of our operations unless we are able to offset such a price increase by implementing other cost cutting measures or passing such increases on to our customers. While we have attempted to secure stable pricing and supply pursuant to our mining agreement with USMC, there is no assurance that we will not incur future price increases or supply shortages of its raw materials.

 

We may lose rights to properties if we fail to meet payment requirements or development and/or production schedules.

 

The Company does not own or operate any mining properties. The rights to our mineral resources derive from leaseholds or purchase mining rights which require the payment of royalties, rent, minimum development expenditures or other installment fees or specified expenditures. If we fail to make these payments/expenditures when they are due, our mineral rights to the property may be terminated. This would be true for any other mineral rights which require payments to be made in order to maintain such rights. Some contracts with respect to mineral rights we may acquire may require development or production schedules. If we are unable to meet any or all of the development or production schedules, we could lose all or a portion of our interests in such properties. Moreover, we may be required in certain instances to pay for government permitting or posting reclamation bonds in order to maintain or utilize our mineral rights in such properties. Because our ability to make some of these payments is likely to depend on our ability to generate internal cash flow or obtain external financing, we may not have the funds necessary to meet these development/production schedules by the required dates which would result in our inability to use the properties.

 

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Management may be unable to implement its business strategy resulting in diminished returns and sustained losses.

 

Our business strategy is to develop and extract or obtain certain minerals which we believe can have significant commercial applications and value. Our business strategy also includes developing new uses and products derived from these mineral resources, such as the use of pozzolan as an ingredient for cement or sulfate and Humate for agricultural uses. There is no assurance that we will be able to identify and/or develop commercially viable uses for the mineral resources we will be mining or obtaining. In addition, even if we identify and/or develop commercial uses and markets for our minerals, the time and cost of mining or otherwise obtaining, refining, blending and distributing such minerals may exceed our expectations or, when developed, the amount of minerals available may fall significantly short of our expectations thus providing a lower return on investment or a loss.

 

We have not yet established sustained and increasing sales from our customer base or distribution system.

 

Despite expanding our established customer base and distribution system for our agricultural products in fiscal 2022, sales decreased in fiscal 2023. We have initiated closer relationships with our Arizona and California distributors in the agricultural sector in an effort to increase sales. We have a presence in digital space through LinkedIn and Facebook. To date, we have one long term supply contract for our minerals and agricultural products with USMC. Our inability to attract additional customers for our agricultural products, to deliver products in a time and cost-effective manner or develop our SCM business would have an adverse effect on our results of operations and the growth of our business.

 

Mineral exploration and mining are highly regulated industries requiring significant compliance requirements.

 

Mining is subject to extensive regulation by state and federal regulatory authorities. State and federal statutes regulate environmental quality, safety, exploration procedures, reclamation, employees’ health and safety, use of explosives, air quality standards, pollution of stream and fresh water sources, noxious odors, noise, dust, and other environmental protection controls as well as the rights of adjoining property owners. We strive to verify that mining projects in which we own rights, are currently operating or can be operated in substantial compliance with all known safety and environmental standards and regulations applicable to such mining properties and activities. We also seek suppliers and service providers, such as USMC, who we believe are operating in substantial compliance with all safety and environmental standards and regulations applicable to such mining properties and activities. However, there can be no assurance that our compliance efforts regarding our own properties would not be challenged or that future changes in federal or state laws, regulations or interpretations thereof will not have a material adverse effect on our ability to establish and sustain mining operations of our own properties or adversely affect the mining properties of our suppliers or service providers.

 

Certain of our current and proposed products will require certifications before being suitable for intended purposes.

 

Some of our agricultural products and our SCM’s will require certain certifications before being suitable for labeling and usage. For example, our SCM must be certified by the California Department of Transportation to meet certain strength standards to be certified for use in large government projects. Similarly, our agricultural products must be certified under USDA and CDFA specifications and properly labeled. While the Company has certified one of its agricultural products under USDA and CDFA specifications and has received Organic Materials Review Institute certification on its newest product, and is currently working with various laboratories and agencies to acquire future certifications, there is no assurance that future certifications will be obtained.

 

We incur increased costs as a result of being a public company.

 

We are a public “reporting company” with the Securities and Exchange Commission (“SEC”). As a public reporting company, we incur significant legal, accounting, reporting and other expenses not generally applicable to a private company. We also incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) as well as other rules implemented by the SEC. These rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly.

 

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Risks Related to Our Common Stock

 

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

Rule 15g-9 under the Securities and Exchange Act of 1934, as amended, establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

  that a broker or dealer approve a person’s account for transactions in penny stocks; and
  the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

 

  obtain financial information and investment experience objectives of the person; and
  make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:

 

  sets forth the basis on which the broker or dealer made the suitability determination; and
  that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

 

Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors” as defined in Rule 501(a) of the Securities Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.

 

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Our securities are quoted on the OTC Pink Tier, which does not provide us as much liquidity for our investors as an exchange, such as the NASDAQ Stock Market or other national or regional exchanges.

 

Our securities are quoted on the OTC Pink Tier, which provides significantly less liquidity than the NASDAQ Stock Market or other national or regional exchanges. Securities quoted on the OTC Pink are usually thinly traded, highly volatile, have fewer market makers and are not followed by analysts. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Pink Tier. Quotes for stocks included on the OTC Pink markets are not widely publicized. Therefore, prices for securities traded solely on the OTC Pink may be more difficult to obtain and holders of our securities may be unable to resell their securities in a timely manner or at stable prices, or at any price. We cannot assure you a liquid public trading market in our common stock will develop.

 

The market price of our common stock may be adversely affected by several factors.

 

The market price of our common stock could fluctuate significantly in response to various factors and events, including:

 

our ability to execute our business plan;
operating results below expectations;
announcements of technological innovations or new products by us or our competitors;
loss of any strategic relationship;
industry developments;
economic and other external factors; and
period-to-period fluctuations in our financial results.

 

In addition, the securities markets have, at times, experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

 

Because we are a smaller reporting company, we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.

 

Sarbanes-Oxley, as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange, the Amex Equities Exchanges and NASDAQ, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the NASDAQ. Because we will not be seeking to be listed on any of the exchanges in the near term, we are not presently required to comply with many of the corporate governance provisions. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.

 

We have never paid cash dividends on our capital stock and do not anticipate paying cash dividends on our capital stock in the foreseeable future. The payment of dividends on our capital stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on any investment in our common stock will only occur if our common stock price appreciates.

 

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A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of our common stock in the public market under Rule 144 or upon the exercise of outstanding convertible debt or equity, it could create a circumstance commonly referred to as an “overhang” and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

We may, in the future, issue additional shares of common stock, which would reduce the percent of ownership held by current stockholders.

 

Our Articles of Incorporation authorizes the issuance of 520,000,000 shares of common stock of which as of February 28, 2024, 239,740,928 shares are issued and outstanding. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services, conversion of debt, equity financing or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors and may have an adverse effect on any trading market of our common stock.

 

Compliance with changing regulations concerning corporate governance and public disclosure may result in additional expenses.

 

In recent years, there have been several changes in laws, rules, regulations, and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Sarbanes-Oxley and various other new regulations promulgated by the SEC and rules promulgated by the national securities exchanges. The Dodd-Frank Act, enacted in July 2010, expands federal regulation of corporate governance matters and imposes requirements on publicly-held companies, including us, to, among other things, provide stockholders with a periodic advisory vote on executive compensation and also adds compensation committee reforms and enhanced pay-for-performance disclosures. Sarbanes-Oxley specifically requires, among other things, that we maintain effective internal control over financial reporting and disclosure of controls and procedures. Compliance may result in higher costs necessitated by required disclosure and governance practices. Our efforts to comply with evolving laws, regulations and standards are likely to continue to result in increased general and administrative expenses and professional services expenses, and a diversion of management time and attention from revenue-generating activities to compliance activities.

 

Compliance with new rules may make it more difficult to attract and retain directors.

 

Compliance with new and existing laws, rules, regulations and standards may make it more difficult and expensive for us to maintain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. Members of our board of directors and our principal executive officer and principal financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may have difficulty attracting and retaining qualified directors and executive officers, which could harm our business. We continually evaluate and monitor regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result.

 

We have reported material weaknesses in internal controls in the past.

 

We have reported material weaknesses in internal controls over financial reporting as of November 30, 2023, and we cannot provide any assurances that additional material weaknesses will not be identified in the future or that we can effectively remediate our reported weaknesses. If our internal controls over financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require a restatement, or our filings may not be timely, and investors may lose confidence in our reported financial information.

 

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Section 404 of Sarbanes-Oxley requires us to evaluate the effectiveness of our internal control over financial reporting every quarter and as of the end of each year, and to include a management report assessing the effectiveness of our internal controls over financial reporting in each Annual Report on Form 10-K. Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Furthermore, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because changes in the conditions or deterioration in the degree of compliance with policies or procedures may occur. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

As a result, we cannot assure you that additional significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future or that we can effectively remediate our reported weaknesses. Any failure to maintain or implement required new or improved controls, or any difficulties we may encounter in their implementation, could result in significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our consolidated financial statements. Any such failure could also adversely affect the results of periodic management evaluations regarding disclosure controls and the effectiveness of our internal control over financial reporting required under Section 404 of Sarbanes-Oxley and the rules promulgated thereunder. The existence of material weaknesses could result in errors in our consolidated financial statements and subsequent restatements of our consolidated financial statements, cause us to fail to timely meet our reporting obligations and cause investors to lose confidence in our reported financial information.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 1C. CYBERSECURITY

 

Not applicable.

 

ITEM 2. PROPERTIES

 

Office Facilities

 

We leased our 1,000 square feet of office space, located in Ione, California from USMC for $1,500 per month through October 2022. Effective November 1, 2022 the lease was amended to extend the term through October 2024, and to add an additional 700 square feet, for $3,500 per month, with automatic one month renewals. A. Scott Dockter, our President and Chief Executive Officer, and John Bremer, a director, each own 33% of USMC.

 

Mineral Properties and Interests

 

Company Right to Acquire Properties

 

Snow White Mine in San Bernardino County, CA

 

On November 28, 2014 US Mining and Minerals Corporation entered into a purchase agreement in which it agreed to sell its fee simple property interest and certain mining claims to USMC. In contemplation of the Company’s Reorganization, on December 23, 2014, USMC, assigned its rights and obligations under the purchase agreement to the Company pursuant to an assignment of purchase agreement. The purchase agreement provides for 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 for the mining of the property and a Plan of Operation and Reclamation Plan has been approved by San Bernardino County and the BLM. An initial deposit of $50,000 was paid to escrow, and the purchase agreement required the payment of an additional $600,000 at the end of the escrow period. There was a delay in the original seller, Joseph Richard Matthewson, 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 an additional $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 the Company, 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, however, the Company is under no obligation to do so. The mining claims require a minimum royalty payment of $3,500 per year to be made by the Company in order to maintain its purchase rights.

 

17
 

 

During the year ended November 30, 2017, USMC, agreed to offset the $75,000 deposit against money owed to USMC. As a result, the purchase price is $650,000 plus expenses. Mr. Bremer has not restricted the Company from continuing its exploration on or access to the Snow White Mine property.

 

The Snow White Mine property is located 17 miles north of Hinkley, California in San Bernardino County. This 280 acre combination of owned property (80 acres) and Non-Patented Placer Claims (200 acres) includes 8.33 acres which are conditionally permitted and ready for further development. The project entry is made on Hinkley Road which is a four mile paved county-maintained road which converts to an existing unpaved road for the remaining 13 miles to the mine site.

 

The fee property comes with clear title to surface and mineral rights. The claims are situated on federal BLM land. These claims are held with annual maintenance payments to the BLM and annual filings of intent to hold and affidavit assessment work. There is no expiration date on ownership of the leases as long as the annual payments are made and the annual filings are completed. They are both current. There is no equipment present at the claims location. No improvements have been made at the claims location. Power when needed, is from portable generators. Processing equipment when onsite is self-powered.

 

On September 5, 2019, our Board approved the discontinuance of all mining and related activities at the Snow White Mine project.

 

On April 1, 2020, the Company entered into a purchase and sale agreement with the Bremer Family 1995 Living Trust, a trust controlled by John Bremer, a director of the Company, pursuant to which the Company agreed to purchase the Snow White Mine for $836,000 plus 5% interest payable at the closing which must occur at any time before April 1, 2022. On April 14, 2022, the agreement was amended to extend the closing date to April 14, 2023. On April 7, 2023, the agreement was further amended to extend the closing date to April 1, 2024.

 

PureBase Ag Properties

 

Federal Mineral Preference Rights Lease in Esmeralda County, Nevada

 

On October 6, 2014, PureBase Ag entered into an Assignment of Lease from USMC pursuant to which PureBase Ag acquired the rights to a Preference Rights Lease granted by the BLM covering approximately 2,500 acres located on the western side of the Weepah Hills in the Mount Diablo Meridian area of Esmeralda County, Nevada (the “Esmeralda Project”). As consideration for the Assignment of Lease, PureBase Ag assumed the obligation to pay all future annual lease payments, currently $7,503 and all other ongoing fees and expenses relating to the development of the Esmeralda Project.

 

Esmeralda Project’s leased property contains mining property known as the “Chimney 1 Potassium/Sulfur Deposit” which consists of 15.5 acres of land fully permitted for mining operation which is situated within 2,500 acres under a Federal Mineral Preference Rights Lease. The project has an approved Reclamation Plan – Nevada Division of Environmental Protection Permit #0192 – and an approved Plan of Operations, BLM Case Number N65-99-001P. There is a reclamation bond in place in the amount of $47,310. The BLM is the bond holder.

 

The current operation is an open pit mine site which is fully permitted and partially developed. The total allowed disturbed acreage for the existing and approved reclamation plan is 14.45 acres. The site entrance is located approximately 10 miles south of Highway 95/6 on Highway 265 on the east side of the Highway. The mine site location is 3.4 miles of unpaved road from the Highway. The existing site equipment consists of a 40’ storage container, an 8,000 gallon water tank and portable single axle truck scale. Pit development began in 2013 by USMC and rectified drawings have been recorded to the existing site disturbance. Power when needed, is from portable generators. Processing equipment when onsite is self-powered.

 

18
 

 

We believe that the property is known to contain large amounts of altered volcanic tuff composed of Alunite, K-Alum, Jarosite, Gypsum, Native Sulfur and K-feldspar. The geology of the area around the mine site includes deposits of potassium and sulfur described as being in an elongated dike like or neck like mass of rhyolite having the appearance of being intrusive into gently folded white and red sedimentary rhyolitic tuffs of Tertiary age. Sulfur occurs in this area as irregular seams and blebs in altered Tertiary sedimentary rocks and welded tuffs (Albers and Stewart 1972). The area has been mapped as Tertiary Esperanza Formation. Much of the area is covered with quaternary alluvium partially obscuring the relationships of the underlying rocks. It appears that these fumarolic deposits are related to plutonic outcrops in the area, specifically the Weepah Hills Pluton.

 

 

 

19
 

 

 

 

20
 

 

 

ITEM 3. LEGAL PROCEEDINGS

 

Except as described below, there are no material pending legal proceedings in which we or any of our subsidiaries is a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us.

 

On July 8, 2020, former Chief Financial Officer, Al Calvanico (“Calvanico”), filed a demand for arbitration alleging retaliation, wrongful termination, and demand for a minimum of $600,000 in alleged stock value, plus interest, recovery of past and future wages, attorneys’ fees, and punitive damages (collectively, the “Calvanico Claims”). The Company denied all Calvanico Claims. The Company believes Calvanico is owed nothing because it takes the position that Calvanico was not terminated, but rather, his employment contract expired on September 21, 2019, in accordance with its terms, and was not renewed by Company and because Calvanico never exercised his stock options. On February 14, 2020, the Company requested in writing that Calvanico exercise his stock options within 30 days. Calvanico failed to do so. To date, Calvanico has not exercised his stock options. The Company and Calvanico engaged in binding arbitration which concluded on February 3, 2023. On June 20, 2023, the arbitrator decided in favor of the Company with respect to Calvanico’s breach of contract, fraud and negligent representation and wrongful discharge claims and in favor of Calvanico for asserted attorney fee claims in accordance with Calvanico’s employment agreement with the Company. At a July 18, 2023 teleconference regarding a determination of attorney fees to be paid, the arbitrator established a briefing schedule for the parties to formally present their legal arguments on the issue. Calvanico’s brief in support of attorney fees was due and timely filed on August 15, 2023. The Company’s brief in opposition was due and timely filed on September 19, 2023. Calvanico’s reply brief was filed on October 4, 2023. On February 6, 2024, the Company agreed to pay $618,000 to be paid in six equal monthly payments of $103,000 each with the first payment on February 8, 2024.

 

21
 

 

ITEM 4. MINE SAFETY DISCLOSURES

 

The exploration and development of mining projects is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA’s activities include the inspection of mining operations on a regular basis and the issuance of various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of the Mine Improvement and New Emergency Response Act of 2006, MSHA has significantly increased its inspection and enforcement programs.

 

The Company and its mining service provider, USMC, as natural resource mining operators, are required to report certain mine safety violations or other regulatory matters as mandated by Section 1503(a) of the Dodd-Frank Act and Item 104 of Regulation S-K. Currently, the Company does not engage in any mining activities and all mining properties are inactive. There are currently no such violations or regulatory matters to report.

 

Since the Company has only conducted limited mining operations, only the Chimney 1 sulfate mineral project is MSHA approved for operation. The Company’s remaining mining projects have not been inspected by MSHA. The Company or its project operators have not received any citations or orders pertaining to any violation of the Mine Act or any other federal or state regulation relating to its mining activities during the year ended November 30, 2023.

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our common stock is quoted on the OTC Pink Tier under the symbol “PUBC.” On February 27, 2024, the closing price of our common stock reported by the OTC Pink Tier was $0.07 per share.

 

Holders of Common Stock

 

As of February 27, 2024, there were 99 shareholders of record of our common stock.

 

Dividends

 

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, for working capital purposes and do not anticipate paying any cash dividends in the foreseeable future.

 

22
 

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

The following table provides information regarding our equity compensation plans as of November 30, 2023:

 

Equity Compensation Plan Information

 

Plan category 

Number

of

securities to

be issued

upon

exercise of

outstanding

options,

warrants

and rights

  

Weighted-average

Exercise

price of

outstanding

options,

warrants

and rights

  

Number

of

securities

remaining

available

for future

issuance

under equity

compensation

plans

 
Equity compensation plans approved by security holders (1)   4,268,787   $0.12    5,731,213 
Equity compensation plans not approved by security holders (2)   125,169,400   $0.53    - 

 

(1) Represents options to purchase (i) 50,000 shares of common stock granted to a consultant for services provided under the 2017 Stock Option Plan and (ii) options to purchase 4,218,787 shares of common stock granted to employees and directors under the 2017 Stock Option Plan
   
(2) Represents options to purchase (i) 300,000 shares of common stock granted to our former Chief Financial Officer for services provided to the Company prior to implementation of the 2017 Stock Option Plan, (ii) 200,000 shares of common stock granted to a former employee for services provided to the Company prior to implementation of the 2017 Stock Option Plan, (iii) 116,000,000 shares of common stock issued to USMC as compensation under the Materials Extraction Agreement, and (iv) 8,669,400 shares of common stock issued to James Todd Gauer as part of a legal settlement.

 

2017 Stock Option Plan

 

The Board of Directors approved the Company’s 2017 Stock Option Plan (the “2017 Plan”) on November 10, 2017, and the Company’s stockholders approved the 2017 Plan on November 10, 2017. The 2017 Plan provides for stock-based and other awards to the Company’s employees, consultants and directors.

 

The maximum number of shares of our common stock that may be issued under the 2017 Plan is 10,000,000 shares, which may be replenished and will automatically increase on January 1st of each year for a period of nine years commencing on January 1, 2018, and ending on (and including) January 1, 2026, in an amount equal to the greater of (i) 10% of the total number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year, or (ii) 10,000,000 shares. As of the date of this Report, 5,731,213 shares of the Company’s common stock are available for issuance under the 2017 Plan.

 

Shares subject to stock awards granted under the 2017 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the 2017 Plan.

 

The maximum number of shares of common stock that may be subject to awards granted under the 2017 Plan to any one individual during any calendar year may not exceed 1% of the total number of shares of common stock issued and outstanding as of the award grant date (as adjusted from time to time in accordance with the provisions of the 2017 Plan).

 

Plan Administration. Our Board of Directors, or a duly authorized committee of our Board of Directors, will administer the 2017 Plan. Our Board of Directors may also delegate to one or more of our officers the authority to designate employees (other than officers) to receive specified stock awards and determine the number of shares subject to such stock awards. Under the 2017 Plan, the Board has the authority to determine and amend the terms of awards and underlying agreements, including:

 

  whether each option granted will be an incentive stock option or a non-statutory stock option;
  the fair market value of the common stock;
  recipients;
  whether and to what extent 2017 Plan awards are granted;
  the exercise and purchase price of stock awards, if any;
  the number of shares subject to each stock award;
  the form of agreement(s) used under the 2017 Plan;
  the vesting schedule applicable to the awards, together with any vesting acceleration, pro rata adjustments to vesting;
  any waiver of forfeiture restrictions; and
  the form of consideration, if any, payable on exercise or settlement of the award.

 

Under the 2017 Plan, the Board also generally has the authority to effect, with the consent of any adversely affected participant:

 

  the reduction of the exercise, purchase, or strike price of any outstanding award;
  the cancellation of any outstanding award and the grant in substitution therefore of other awards, cash, or other consideration; or
  any other action that is treated as a repricing under generally accepted accounting principle.

 

23
 

 

Stock Options. Incentive stock options may only be granted to employees and non-statutory stock options may be granted to employees and consultants under stock option agreements subject to the terms of the 2017 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value (110% of the fair market value to an employee who is also a 10% stockholder) of our common stock on the date of grant. Options granted under the 2017 Plan vest at the rate specified in the stock option agreement. The term of an option shall be no more than ten years from the date of grant and, in the case of an incentive stock option granted to a person who at the time of such grant is a 10% stockholder, the term shall be no more than five years from the date of grant.

 

Termination. An optionee shall have 30 days to exercise an option, to the extent vested upon termination for service, unless such termination is for cause in which case such option shall terminate immediately. An option to the extent vested shall terminate 6 months after termination for disability and 12 months after death of the optionee that occurs within 30 days of termination of service.

 

Stock Purchase Right. Restricted stock awards may also be granted under the 2017 Plan and are granted under restricted stock purchase agreements. If a participant’s service relationship with us ends for any reason, we may receive any or all of the shares of common stock held by the participant that have not vested as of the date the participant terminates service with us through a forfeiture condition or a repurchase right.

 

Changes to Capital Structure. Subject to any action required under applicable laws by the stockholders of the Company, the number of shares of common stock covered by each outstanding award, and the number of shares of common stock that have been authorized for issuance under the 2017 Plan but as to which no awards have yet been granted or that have been returned to the 2017 Plan upon cancellation or expiration of an award, as well as the price per share of common stock covered by each such outstanding award, shall be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from a stock split, reverse stock split, stock dividend, combination, recapitalization or reclassification of the common stock, or any other increase or decrease in the number of issued shares of common stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of common stock subject to an award.

 

Corporate Transactions. Our 2017 Plan provides that in the event of certain specified significant corporate transactions, including: (1) a sale of all or substantially all of our assets, (2) the consummation of a merger, consolidation or other capital reorganization, or business combination transaction where we do not survive the transaction each outstanding option or stock purchase right shall be assumed or an equivalent option or right shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”), unless the Successor Corporation does not agree to assume the award or to substitute an equivalent option or right, in which case the vesting of each option or stock purchase right shall fully and immediately accelerate or the repurchase rights of the Company shall fully and immediately terminate, as the case may be, immediately prior to the consummation of the transaction.

 

For purposes of a corporate transaction, an option or a stock purchase right shall be considered assumed, without limitation, if, at the time of issuance of the stock or other consideration upon a corporate transaction or a change of control, as the case may be, each holder of an option or stock purchase right would be entitled to receive upon exercise of the award the same number and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been, immediately prior to such transaction, the holder of the number of shares of common stock covered by the award at such time (after giving effect to any adjustments in the number of shares covered by the option or stock purchase right as provided for); provided that if such consideration received in the transaction is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the consideration to be received upon exercise of the award to be solely common stock of the Successor Corporation equal to the fair market value of the per share consideration received by holders of common stock in the transaction.

 

24
 

 

Transferability. A participant may not transfer stock awards under our 2017 Plan other than by will, the laws of descent and distribution, or as otherwise provided under our 2017 Plan.

 

Term. The term of the 2017 Plan is 10 years.

 

Plan Amendment or Termination. Our Board of Directors has the authority to amend, alter, suspend, or terminate our 2017 Plan, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require the approval of our stockholders. No incentive stock options may be granted after the tenth anniversary of the date our Board of Directors adopted our 2017 Plan.

 

Recent Sales of Unregistered Securities

 

Except as set forth below, there were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.

 

On April 8, 2023, the Company granted an immediately exercisable five-year options to purchase 350,000 shares of common stock with an exercise price of $0.10 per share to a director.

 

On August 10, 2023, the Company granted an immediately exercisable five-year options to purchase 200,000 shares of common stock with an exercise price of $0.15 per share to a director.

 

On September 13, 2023, the Company granted an immediately exercisable five-year options to purchase 200,000 shares of common stock with an exercise price of $0.15 per share to a director.

 

On January 31, 2024, the Company issued an aggregate of 8,877,923 shares of common stock upon the conversion of five promissory notes by USMC for an aggregate principal amount of $1,525,676 and aggregate interest of $87,211.

 

The above issuances did not involve any underwriters, underwriting discounts or commissions, or any public offering and we believe are exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(2) thereof.

 

ITEM 6. [RESERVED]

 

25
 

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Our Management’s Discussion and Analysis contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intends”, “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 which may cause our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance 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 or performance. You should not place undue reliance on these statements, which speak only as of the date of this Annual Report. These cautionary statements should be considered with any written or oral forward-looking statements that we may issue in the future. You should read this Annual Report on Form 10-K with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by applicable law.

 

Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, the audited consolidated financial statements and related notes elsewhere in this Annual Report on Form 10-K.

 

Business Overview

 

We are an industrial mineral and natural resource company that provides solutions to the agriculture and construction materials markets in the United States, through our two subsidiaries, Purebase AG, and Purebase AM, respectively. The Company has not yet commenced mining operations and relies on USMC for its mineral resources extracted from mineral sites owned by US Mine LLC.

 

We obtain certain raw clay materials from USMC through a materials extraction agreement with US Mine LLC. US Mine LLC owns the mining property which USMC leases. USMC pays US Mine LLC a royalty, for which the Company reimburses USMC.

 

Agricultural Sector

 

We develop specialized fertilizers, sun protectants, soil amendments and bio-stimulants for organic and non-organic sustainable agriculture. We have developed and will seek to develop additional products derived from mineralized materials of leonardite, kaolin clay, laterite, and other natural minerals. These mineral and soil amendments are used to protect crops, plants and fruits from the sun and winter damage, to provide nutrients to plants, and to improve dormancy and soil ecology to help farmers increase the yields of their harvests. We are building a brand family under the parent trade name “Purebase,” consisting of its Purebase Shade Advantage WP product, a kaolin-clay based sun protectant for crops and Humic Advantage a humic acid product derived from leonardite.

 

Construction Sector

 

We are developing and testing a kaolin-based product that it believes will help create a lower CO2-emitting concrete through the use of high-quality supplementary cementitious materials (“SCMs”). We are developing SCMs for the construction material markets, particularly the cement markets that we believe can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, we believe there are significant opportunities for high-quality SCM products in the construction-materials sector.

 

We utilize the services of USMC for the development and contract mining of industrial mineral and metal projects, exploration drilling, preparation of feasibility studies, mine modeling, on-site construction, production, site reclamation and product fulfillment. Exploration services include securing necessary permits, environmental compliance, and reclamation plans. In addition, a substantial portion of the minerals used by the Company are obtained from properties owned or controlled by USMC. A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also officers, directors and owners of USMC.

 

26
 

 

Results of Operations

 

Comparison of the Year Ended November 30, 2023 to the Year Ended November 30, 2022

 

   November 30,   November 30,     
   2023   2022   Variance 
Revenue, net  $325,875   $471,608   $(145,733)
Cost of goods sold   96,148    132,247    (36,099)
Operating income   229,727    339,361    (109,634)
Operating Expenses:               
Selling, general and administrative   1,541,238    1,261,494    279,744 
Stock based compensation   7,391,278    31,622,179    (24,230,901)
Loss from operations   (8,702,789)   (32,544,312)   23,841,523 
Other income   310,401    2,007    308,394 
Other expense   (618,000)   -    (618,000)
Interest expense   (76,941)   (40,120)   (36,821)
Net Loss  $(9,087,329)  $(32,582,425)  $23,495,096 

 

Revenues

 

Revenues decreased by $145,733, or 31%, for the year ended November 30, 2023, as compared to the year ended November 30, 2022. The decrease is primarily attributable to two customers purchasing less of the Company’s Crop White II product for the year ended November 30, 2023.

 

Cost of Goods Sold

 

Cost of goods sold decreased by $36,099 or 27% for the year ended November 30, 2023, as compared to the year ended November 30, 2022. The decrease is primarily attributable to the decrease in revenues.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses increased by $279,744, or 22%, for the year ended November 30, 2023, as compared to the year ended November 30, 2022 due to an increase in professional services of $228,690, general and administrative wages of $29,135, selling and marketing expenses of $13,769, and other general and administrative expenses of $8,150.

 

Stock Based Compensation

 

Stock-based compensation decreased by $24,230,901, or 77%, for the year ended November 30, 2023, as compared to the year ended November 30, 2022 primarily due to an option to purchase 116,000,000 shares of common stock granted to USMC, on October 6, 2021. USMC stock-based compensation expense was $29,114,201 for the year ended November 30, 2022 compared to $7,313,350 for the year ended November 30, 2023. USMC stock compensation expense was completed in March 2023. Employee, consultants and directors’ stock-based compensation was $2,507,978 for the year ended November 30, 2022 compared to $77,927 for the year ended November 30, 2023.

 

Other Income (Expenses)

 

Other income increased significantly to $310,401 for the year ended November 30, 2023, as compared to the year ended November 30, 2022, primarily due to the settlement of a March 29, 2019 claim by Superior Soils of $400,000 for $125,000.

 

Other expense increased by $618,000 for the year ended November 30, 2023, as compared to no other expense for the year ended November 30, 2022. $618,000 was accrued per agreed upon legal fees to be paid by the Company in connection with the Calvanico settlement. See Note 9 to the financial statements.

 

Interest expense increased $36,821, or 92%, for the year ended November 30, 2023, as compared to the year ended November 30, 2022 primarily as a result of increased notes payable and line of credit with USMC.

 

Liquidity and Capital Resources

 

As of November 30, 2023, we had cash on hand of $5,572 and a working capital deficiency of $1,493,349, as compared to cash on hand of $19,055 and a working capital deficiency of $620,290 as of November 30, 2022. The increase in working capital deficiency is primarily a result of the increase in accounts payable and accrued expenses and the addition of a line of credit with USMC, offset by the resolution of a settlement liability.

 

The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2024, as well as other potential strategic and business development initiatives. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses with cash advances from USMC and the sale of equity and convertible notes. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

27
 

 

Although no assurances can be given as to the Company’s ability to deliver on its revenue plans or that unforeseen expenses may arise, management currently believes that the revenue to be generated from operations together with equity and debt financing, including funding from USMC in the form of notes payable and a line of credit, will provide the necessary funding for the Company to continue as a going concern for the next twelve months. For the year ended November 30, 2023, the Company received $914,788 from USMC in the form of three notes payable (see Note 12, Tranches #9, #10, #11). Tranche #9 was for $308,320, bears interest at 5% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.39 per share. Tranche #10 was for $412,533, bears interest at 8% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.10 per share. Tranche #11 was for $193,935, bears interest at 8% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.10 per share. On January 31, 2024, the three promissory notes above from the year ended November 30, 2023 and two promissory notes (Tranche #7 for $470,862 and Tranche #8 for $140,027) from the year ended November 30, 2022 and accrued interest were converted into a total of 8,877,923 common stock that were issued to USMC.

 

On July 10, 2023, the Company entered into a line of credit agreement with USMC that provides for the issuance of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (“Grid Note” until July 10, 2024 (see Note 12). The note bears interest at 8% per annum and any outstanding principal and accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. Any amount of principal not paid when due will bear interest at a default rate of 13% per annum. The Company may prepay the principal amount of the Grid Note together with any accrued and unpaid interest thereon, at any time without penalty. On the Maturity Date, USMC may in its sole discretion, chose to convert all or part of the outstanding principal amount of the Grid Note, together with accrued and unpaid interest due thereon, into shares of the Company’s common stock. The conversion price and number of shares of the Company’s common stock issuable upon conversion are subject to adjustment from time to time for any subdivision or consolidation of the Company’s shares and standard dilutive events. Upon the Company’s voluntary or involuntary bankruptcy, the full principal amount of the Grid Note, together with any other amounts owing in respect thereof, will automatically become immediately due and payable. Upon the occurrence of any other events of default, as specified in the Grid Note, the full principal amount of the Grid Note, together with any other amounts owing in respect thereof, may become immediately due and payable at USMC’s election. As of the date hereof, there have been $919,135 in advances from USMC under the July 10, 2023 line of credit agreement.

 

Currently there are no other arrangements or agreements for financing, and management cannot guarantee any other potential debt or equity financing will be available, or if available, on favorable terms. As such, these matters raise substantial doubt by our independent registered public accounting firm about the Company’s ability to continue as a going concern for the twelve months from the issue date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

 

Going Concern

 

The consolidated financial statements contained in this Annual Report on Form 10-K have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses from inception through November 30, 2023 of $62,730,978, as well as negative cash flows from operating activities and a working capital deficiency. During the year ended November 30, 2023, the Company received net cash proceeds of $1,261,523 from USMC from three notes payable issued and the line of credit. The Company does not have sufficient cash to meet its obligations in the twelve months following the date of this Annual Report if it does not generate additional revenue and continue to obtain additional financing from USMC. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in order to finance the capital requirements of the Company. There can be no assurance that the Company will be successful with its fund-raising initiatives.

 

Working Capital Deficiency

 

   November 30,   November 30, 
   2023   2022 
Current assets  $21,006   $23,786 
Current liabilities   1,514,355    644,076 
Working capital deficiency  $(1,493,349)  $(620,290)

 

The increase in current liabilities is primarily a result of the increase in accounts payable and accrued expenses and the addition of a line of credit with USMC, offset by the resolution of a settlement liability.

 

Cash Flows

 

  

Year Ended

November 30,

 
   2023   2022 
Net cash used in operating activities  $(1,124,290)  $(838,254)
Net cash used in investing activities   (130,716)   - 
Net cash provided by financing activities   1,241,523    725,000 
Decrease in cash  $(13,483)  $(113,254)

 

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Operating Activities

 

Net cash used in operating activities was $1,124,290 for the year ended November 30, 2023 and was due to the net loss of $9,087,329 which was offset by non-cash expenses of $7,100,797 and net changes in operating assets and liabilities of $862,242.

 

Net cash used in operating activities was $838,254 for the year ended November 30, 2022 and was due to the net loss of $32,582,425 which was offset by non-cash expenses of $31,663,214 and net changes in operating assets and liabilities of $80,957.

 

Investing Activities

 

Net cash used in investing activities was $130,716 for the year ended November 30, 2023 and was due to the purchase of property and equipment.

 

There were no investing activities for the year ended November 30, 2022.

 

Financing Activities

 

For the year ended November 30, 2023, net cash provided by financing activities was $1,241,523, of which $914,788 was advances from USMC through notes payable and $346,735 was a line of credit with USMC, which were offset by $20,000 in payments to A. Scott Dockter in connection with an outstanding note payable.

 

For the year ended November 30, 2022, net cash provided by financing activities was $725,000, of which $755,000 was advances from USMC which was offset by $30,000 in payments to A. Scott Dockter in connection with an outstanding note payable.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Effects of Inflation

 

Inflationary factors such as increases in the costs to purchase products, acquire mineral rights and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a continued high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of revenues if the selling prices of our services do not increase with these increased costs.

 

Critical Accounting Policies and Estimates

 

Our significant accounting policies are more fully described in Note 3 to our consolidated financial statements included in this Annual Report for the fiscal year ended November 30, 2023. We believe that the accounting policies below are critical to fully understand and evaluate our financial condition and results of operations.

 

Fair Value Measurement

 

As defined in ASC 820, “Fair Value Measurements and Disclosures,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

 

Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
   
Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
   
Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

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Impairment of Long-lived Assets

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets.

 

Income Taxes

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

The Company utilizes ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations.

 

Revenue Recognition

 

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. The Company derives revenues from the sale of its agricultural products. The Company’s contracted transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts have a single performance obligation which are not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company’s performance obligation is satisfied upon the transfer of risk of loss to the customer.

 

Exploration Stage

 

In accordance with 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 as 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.

 

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Mineral Rights

 

Acquisition costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time as 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.

 

Stock-Based Compensation

 

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in its statements of operations.

 

For stock options issued to employees and members of the Company’s board of directors for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

 

Pursuant to ASU 2018-07 Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

 

Recently Adopted Accounting Pronouncements

 

Any new and recently adopted accounting pronouncements are more fully described in Note 3 to our consolidated financial statements included in this Annual Report for the year ended November 30, 2023.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

The information called for by Item 8 is included following the “Index to Financial Statements” on page F-1 contained in this Annual Report on Form 10-K.

 

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, our disclosure controls and procedures were not effective as of November 30, 2023 due to the material weaknesses in internal control over financial reporting described below.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of its principal executive and principal financial officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements in accordance with GAAP.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

Material Weaknesses in Internal Control over Financial Reporting

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of November 30, 2023 based on the framework established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of November 30, 2023 was not effective.

 

A material weakness, as defined in the standards established by Sarbanes-Oxley is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

 

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The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses:

 

Inadequate segregation of duties consistent with control objectives;
Lack of formal policies and procedures to ensure timely closing of the Company’s books and records and that material transactions are timely communicated;
Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner; and
Lack of personnel with GAAP experience and sufficient knowledge to oversee its financial reporting function, including a chief financial officer.

 

Management’s Plan to Remediate the Material Weakness

 

Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:

 

Continuing to search for and evaluate qualified independent outside directors;
Hiring a qualified chief financial officer on December 13, 2023;
Identifying gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company; and
Continuing to develop policies and procedures on internal control over financial reporting and monitoring the effectiveness of existing controls and procedures.

 

We engaged a third-party financial operations consulting firm to assist with the preparation of SEC reporting through the period ended August 31, 2023.

 

Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that exempt smaller reporting companies from this requirement.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during our fourth quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

None.

 

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 

Not applicable.

 

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PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Set forth below are the present directors and executive officers of the Company.

 

Name   Age   Position
A. Scott Dockter   67   Chief Executive Officer, President and Director
Stephen Gillings   74   Chief Financial Officer
Kimberly Kurtis   51   Director
John Bremer   74   Director
Jeffrey Guzy   72   Director
Brady Barto   42   Director

 

Our directors are elected for a term of one year and serve until such director’s successor is duly elected and qualified. Each executive officer serves at the pleasure of the Board.

 

A. Scott Dockter – Chief Executive Officer, President and Director

 

A Scott Dockter has been Chief Executive Officer, President and a director of the Company since September 24, 2014, Chief Financial Officer from May 24, 2019 to January 21, 2021, and from March 25, 2021 to December 12, 2023, and President and a director of PureBase AG since January 22, 2014. Mr. Dockter has also served as the chief executive officer and a director of USMC since 2012. Mr. Dockter was a manager-member of US Agricultural Minerals, LLC (“USAM”) from its inception in June 2013 until its acquisition by PureBase AG on November 24, 2014. Mr. Dockter is a manager-member of US Mine, LLC, a Nevada limited liability company, which owns a 3,306 acre mining property located in Ione, California. From July 2010 to June 2012, Mr. Dockter served as Chief Executive Officer, President and Chairman of Steele Resources Corp., a public company and its subsidiary Steele Resources, Inc. which were involved in the property evaluation and exploration for gold. Over the course of his 30-year career, Mr. Dockter has been responsible for the development of several large open pit and underground mines in the United States, having worked extensively in the states of Nevada, California, Idaho, and Montana. Mr. Dockter has a comprehensive involvement in the mining business, including exploration, permitting, mine development, construction, financing, operations, asset acquisitions, and marketing and sales, with a wide range of commodities including industrial minerals, gold, silver, copper and other precious metals.

 

Mr. Dockter’s significant experience relating to operational management, industry expertise and as Chief Executive Officer of the Company led to his appointment as a director of our company.

 

Stephen Gillings – Chief Financial Officer

 

Stephen Gillings has been Chief Executive Officer of the Company since December 13, 2023. Mr. Gillings has been a controller/consultant with Now CFO of Newport Beach, California, a consulting firm, for the past six years. As a consultant, Mr. Gillings assisted various business clients with the preparation of quarterly financial statements and notes and annual financial statements for year-end audits. Mr. Gillings also prepared and filed Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K for SEC reporting companies. Prior to joining Now CFO, Mr. Gillings served for four years as chief financial officer for QuantumSphere, Inc. (“QuantumSphere”) of Santa Ana, California, a manufacturer of nanometals, where his responsibilities included preparing public company SEC filings, developing policies and procedures and preparing monthly financial reports and analysis. Prior thereto, Mr. Gillings served for seven years as vice president finance at QuantumSphere. Prior to joining QuantumSphere, Mr. Gillings served as controller for AllDigital of Irvine, California, which provides digital broadcasting solutions and chief financial officer of I/OMagic of Irvine, California, a distributor of computer peripherals. Mr. Gillings has a Bachelor of Science in Accounting degree from the University of California, Berkeley and a Master of Business Administration degree from California State University, Fullerton.

 

Dr. Kimberly Kurtis – Director

 

Dr. Kimberly Kurtis has been a director of the Company since August 10, 2021. Dr. Kurtis has been Associate Dean and a professor in the School of Civil and Environmental Engineering at Georgia Institute of Technology (“Georgia Tech”) since 2014. Dr. Kurtis joined Georgia Tech’s faculty in January 1999. Dr. Kurtis has served as Georgie Tech’s ADVANCE Professor from 2012 to 2014, and she holds a courtesy appointment in the School of Materials Science and Engineering. Dr. Kurtis earned a BSE in Civil Engineering in 1994 from Tulane University under a Dean’s Honor Scholarship, and a M.S. in 1995 and PhD in 1998 in Civil Engineering from the University of California at Berkeley, where Dr. Kurtis was a Henry Hilp Fellow and a National Science Foundation Fellow. Dr. Kurtis’s research on the multi-scale structure and performance of cement-based materials has resulted in more than 200 technical publications and three U.S. patents.

 

Dr. Kurtis was appointed to the Board because of her expertise in the development of supplementary cementitious materials.

 

John Bremer – Director

 

John Bremer has been a director of the Company since December 24, 2014 and a director of PureBase Ag since February 5, 2015. Mr. Bremer has served as a director and President of USMC since February 2014. Mr. Bremer was also a manager-member of USAM from its inception in June 2013 until its acquisition by PureBase AG on November 24, 2014. Mr. Bremer is also a manager-member of US Mine, LLC which owns a 3,306 acre mining property located in Ione, California. For the past 21 years Mr. Bremer has been the chief executive officer of GroWest, Inc. a holding company with subsidiary companies in the heavy equipment rental and property development business in California. Mr. Bremer started his career teaching college level horticulture and soil science classes, opened and managed large mining operations for Riverside Cement and California Portland Cement Company and has worked with cement producers including to help design material input methodologies to reduce nitrogen oxide emissions from calcining cement. Mr. Bremer developed a large organic composting operation in Riverside County, California which he sold to Synagro Technologies, Inc., currently part of The Carlyle Group. Mr. Bremer has been involved in property development in Riverside County and Napa Valley in California including permitting processes. Mr. Bremer earned his Bachelor’s degree in Agri-Business from California State Polytechnic University, Pomona, California.

 

Mr. Bremer was appointed to the Board because of his industry experience.

 

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Jeffrey Guzy – Director

 

Jeffrey Guzy has been a director since April 8, 2020. Mr. Guzy has served as a director of Leatt Corporation (OTC:LEAT) since May 2007 and Capstone Companies (OTC:CAPC) since May 2007. Mr. Guzy has served as a director of Brownie’s Marine Group Inc. (OTC:BWMG) and Life on Earth, Inc. (OTC:LFER) since 2019. Mr. Guzy held executive positions at several large international companies, including Loral Space, Sprint International, Verizon and IBM. Mr. Guzy founded and has served as executive chairman, president and chief executive officer at CoJax Oil & Gas Corporation (OTC:CJAX) since 2017. Mr. Guzy served as chief executive officer for Central Oil & Gas Corp. of America from 2013 through 2020. Mr. Guzy founded Facilicom International, Inc., an international telephone company is 1994. Mr. Guzy has also served as an executive manager of business development to several telecom companies including Bell Atlantic Corp. Mr. Guzy received an MBA from the Wharton School of Business at the University of Pennsylvania, an MS in Systems Engineering from the University of Pennsylvania, and a BS in Electrical Engineering from Pennsylvania State University.

 

Mr. Guzy was appointed to the Board because of his business acumen as well as his business development experience.

 

Brady Barto – Director

 

Brady Barto has been a director since September 11, 2023. Mr. Barto has worked for Signal Hill Petroleum, Inc. for the past 18 years and has been the Exploration Manager for the past 12 years. Prior to becoming the Exploration Manager, Mr. Barto served as the Land Manager and Manager-Real Estate Projects for Signal Hill Petroleum. Mr. Barto has also served as a Commissioner on the Planning Commission for the City of Newport Beach, California. Mr. Barto earned a Bachelor of Business Administration degree from Chapman College in 2005.

 

Mr. Barto was appointed to the Board because of his expertise in the financing and development of natural resources.

 

Stephen Gillings Employment Agreement

 

The Company entered into an employment agreement with Mr. Gillings dated December 13, 2023, pursuant to which Mr. Gillings will be paid a base salary of $100,000 per year to serve as the Company’s Chief Financial Officer. The agreement may be terminated by Mr. Gillings at any time upon 90 days prior notice and by the Company, at any time, with or without “cause.” If the agreement is terminated by the Company without cause, so long as Mr. Gillings is employed six months, Mr. Gillings will be entitled to three months’ salary plus one additional month for every year of employment as a severance payment.

 

In addition, the agreement provides for the grant to Mr. Gillings of an option to purchase 200,000 shares of common stock on each of December 31, 2023 and the first and second anniversaries thereof, at a purchase price per share equal to the fair market value of the Company’s publicly traded common stock on the date of grant. Each option vests one year from the date of grant, and is exercisable for three years, provided that Mr. Gillings is then employed by the Company. Upon termination of Mr. Gillings’ employment, other than for cause, any vested option will remain exercisable for 30 days after such termination. Mr. Gillings will also be eligible for discretionary annual bonuses based on performance. The agreement also contains customary confidentiality, non-competition, non-solicitation and non-disparagement provisions.

 

Family Relationships

 

There are no arrangements or understandings between our directors and any other person pursuant to which they were appointed as an officer and director of the Company. There are no family relationships between any of our directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

 

Committees of the Board of Directors

 

We have established two committees under the Board of Directors, an audit committee and a compensation committee.

 

The Company does not have a nominating committee. The full Board of Directors considers nominations for new members to the Board.

 

Compensation Committee

 

The Compensation Committee currently has two members, Jeffrey Guzy, Chairman, and A. Scott Dockter. The Compensation Committee initially determines matters relating to executive officer compensation, including the issuances of stock options and other compensatory matters. The Compensation Committee then makes recommendations to the Board of Directors, concerning such executive officer compensation.

 

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Audit Committee

 

The Audit Committee currently has two members Jeffrey Guzy, Chairman, and John Bremer. The Audit Committee is responsible for: (i) selection and oversight of our independent accountants; (ii) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls, and auditing matters; (iii) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (iv) engaging outside advisors; and (v) funding for the outside auditor and any outside advisors engagement by the audit committee.

 

Our board has determined that Mr. Guzy qualifies as an “audit committee financial expert” as such term is defined in Item 407(d) of Regulation S-K promulgated by the SEC.

 

Director Compensation

 

The following table sets forth certain information concerning compensation earned by the Company’s non-employee directors for services rendered as a director during the year ended November 30, 2023:

 

Director Compensation Table

 

Name  Fees Earned or Paid in Cash   Stock Awards   Option Awards(1)   Non-Equity Incentive Plan Compensation    Nonqualified Deferred Compensation Earnings   All Other Compensation   Total 
                             
Jeffrey Guzy  $17,500   $-   $ 26,623(2)        -          -        -   $44,123 
Brady Barto  $3,000   $-   $16,267(3)   -    -    -   $19,267 
Kimberly Kurtis  $12,000   $-   $17,987(4)   -    -    -   $29,987 

 

  (1) The aggregate grant date fair value is computed in accordance with FASB ASC Topic 718.
  (2) Represents an immediately exercisable option to purchase 350,000 shares of the Company’s common stock at an exercise price of $0.10 per share.
  (3)

Represents an immediately exercisable option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

  (4) Represents an immediately exercisable option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.15 per share.

 

On April 8, 2021, the Company entered into a twelve month director agreement with Jeffrey Guzy, as amended on August 26, 2022 (the “Guzy Director Agreement”) pursuant to which Mr. Guzy will serve as a director of the Company, which agreement will automatically renew (the “Renewal Date”) for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Mr. Guzy is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Guzy at the Renewal Date or upon Mr. Guzy’ resignation or removal (the “Termination Date”) will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the volume-weighted average price (“VWAP”) of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Mr. Guzy was also issued a five-year stock option to purchase 250,000 shares of common stock at an exercise price of $0.24. The Agreement also includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

 

On August 13, 2021, the Company entered into a twelve month director agreement with Dr. Kurtis, as amended on August 26, 2022 (the “Kurtis Director Agreement”) pursuant to which Dr. Kurtis will provide up to five hours per month of board services, which agreement will automatically renew (the “Renewal Date”) for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Dr. Kurtis is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Dr. Kurtis at the Renewal Date or upon Dr. Kurtis’ resignation or removal (the “Termination Date”) will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the volume-weighted average price (“VWAP”) of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Dr. Kurtis was also issued a five-year stock option to purchase 200,000 shares of common stock at $0.15. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

 

On September 13, 2023, the Company entered into a twelve month director agreement with Brady Barto (the “Barto Director Agreement”), pursuant to which Mr. Barto agrees to devote as much time as is necessary to perform completely his duties as a Director of the Board. Mr. Barto shall be notified within 30 days before the end of the Term whether his contract shall be renewed under the same terms of Compensation. As compensation therefor, Mr. Barto is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Barto at the Renewal Date or upon Mr. Barto’s resignation or removal (the “Termination Date”) will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the volume-weighted average price (“VWAP”) of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Mr. Barto was also issued a five-year stock option to purchase 200,000 shares of common stock at $0.15. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

 

36
 

 

Code of Ethics

 

Our Board of Directors has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to the directors, officers and employees of the Company. We have filed a copy of our Code as an exhibit to our Annual Report on Form 10-K filed with the SEC on February 28, 2018. Our Code may be reviewed by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code will be provided without charge upon request from us.

 

Delinquent Section 16(a) Reports

 

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities (“Reporting Persons”), to file reports ownership and changes in ownership with the SEC.

 

Based solely on our review of copies of such reports and representations from Reporting Persons, we believe that during the fiscal year ended November 30, 2023, the Reporting Persons timely filed all such reports except that Brady Barto, a director, failed to file timely a Form 4 reporting the granting of 200,000 common stock options; Kimberly Kurtis, a director, failed to file timely a Form 4 reporting the granting of 642,424 common stock options and the conversion of 80,000 common stock options into 80,000 shares of common stock; Jeffrey Guzy, a director, failed to file timely a Form 4 reporting the granting of 600,000 common stock options, the conversion of 230,000 common stock options into 230,000 shares of common stock, and the acquisition of 80,000 shares of common stock.

 

Changes in Nominating Process

 

There are no material changes to the procedures by which security holders may recommend nominees to our Board.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table shows the compensation awarded to, earned by or paid to our Chief Executive Officer (the “Named Executive Officer”). No other executive officer received compensation in excess of $100,000 during the years ended November 30, 2023 and November 30, 2022.

 

Name and

Principal

Position

  Year  

Salary

($)

  

Bonus

($)

  

Stock

Awards

($)

  

Option

Awards

($)

  

Non-Equity

Incentive

Plan

Compensa-

tion

($ )

  

Non-qualified

Deferred

Compensation

Earnings

($)

  

All Other

Compensa-

tion

($)

   Total ($) 
A. Scott Dockter,   2023    120,000(1)   -    -    -    -    -    -    120,000 
Chief Executive Officer,
Chief Financial
Officer,
President and Director
   2022    120,000(2)   -    -    -    -    -    -    120,000 

 

(1) Does not include $6,644 of accrued salary.
   
(2) Does not include $2,308 of accrued salary.

 

Employment Agreements

 

Except for Mr. Gillings employment agreement described above, the Company does not have any employment agreements with its executive officers.

 

Change-in-Control Agreements

 

The Company does not have any change-in-control agreements with its executive officers.

 

Outstanding Equity Awards

 

There were no outstanding equity awards made to our Named Executive Officer as of November 30, 2023.

 

37
 

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table lists, as of February 28, 2024, the number shares of common stock beneficially owned by (i) each person or entity known to the Company to be the beneficial owner of more than 5% of the Company’s outstanding common stock; (ii) the Named Executive Officer; and (iii) all officers and directors as a group. Information relating to beneficial ownership of Common Stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned. Unless otherwise indicated, the business address of each such person is c/o PureBase Corporation, 8625 Highway 124, Ione, California 95640. The percentages below are calculated based on 239,740,928 shares of common stock issued and outstanding as of February 28, 2024.

 

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Name and Address of

Beneficial Owner

 

Amount and Nature of

Beneficial Ownership

   Percent 
5% Stockholders          

US Mine Corporation (1)

8625 Highway 124

Ione, California 95640

   99,158,155(2)   41.4%

Bremer Family 1995 Living Family Trust (3)

1660 Chicago Avenue

Riverside, California 92506

   40,163,000    16.8%

US Mine LLC(4)

8625 Highway 124

Ione, California 95640

   116,000,000(4)   32.6%
James Todd Gauer
401 Bay Street, Suite 2410
Toronto, ON M5H2Y4
Canada
   17,338,800(5)(6)   7.0%
Directors and Executive Officers          
A. Scott Dockter   36,643,795(7)   15.3%
John Bremer   40,163,000(8)(9)   16.8%
Dr. Kimberly Kurtis   1,129,091(10)   * 
Jeffrey Guzy   1,410,000(11)   * 
Brady Barto   220,000(12)   * 
Stephen Gillings   200,000(13)   * 
Directors and officers as a group (6 persons)   79,765,886(7)(9)(14)   32.9%

 

*Represents less than 1%

 

(1) A. Scott Dockter, Chief Executive Officer and a director of USMC, John Bremer, President and a director of USMC, and Craig Barto, are each 33% owners of USMC and share voting and dispositive power over the shares held by USMC.
   
(2) John Bremer, as trustee of the Bremer Family 1995 Living Family Trust (“Bremer Trust”), has voting and dispositive power over the shares held by the Bremer Trust.
   
(3) A. Scott Dockter, Chief Executive Officer and a director, John Bremer, President and a director, and Craig Barto are each 33% owners of US Mine LLC and share voting and dispositive power over the shares held by US Mine LLC.
   
(4) Represents currently exercisable options.
   
(5) Includes a currently exercisable option to purchase 8,669,400 shares.
   
(6) Includes 8,501,400 shares and 168,000 shares owned by Baystreet Capital Management Corp and Bayshore Capital, LLC., respectively, over which James Todd Gauer has sole voting and dispositive power.
   
(7) Excludes 33,052,718 shares held by USMC and options to purchase 38,666,667 shares held by US Mine LLC over which Mr. Dockter has voting and dispositive power.
   
(8) Represents 40,163,000 shares owned by the Bremer Trust of which Mr. Bremer, as trustee has sole voting and dispositive power.
   
(9) Excludes 33,052,718 shares held by USMC and options to purchase 38,666,667 shares held by US Mine LLC over which Mr. Bremer has voting and dispositive power.
   
(10) Includes currently exercisable options to purchase 942,424 shares and 106,667 shares which are issuable in lieu of director’s fees pursuant to the Kurtis Director Agreement.
   
(11) Includes currently exercisable options to purchase 1,100,000 shares.
   
(12) Includes currently exercisable options to purchase 200,000 shares and 20,000 shares which are issuable in lieu of director's fees pursuant to the Barto Director Agreement.
   
(13) Represents options that vest December 11, 2024.
   
(14) Includes options to purchase an aggregate of 2,442,424 shares and an aggregate of 126,667 shares issuable in lieu of directors’ fees.

 

Changes in Control Agreements.

 

The Company does not have any change-in-control agreements with any of its executive officers.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Transactions with Related Persons

 

Except as set forth below, since December 1, 2021, there have been no transactions, or currently proposed transactions, in which we were or are to be a participant and the amount involved exceeds $120,000, and in which any of the following persons had or will have a direct or indirect material interest:

 

any director or executive officer of our company;

 

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any person who beneficially owns, directly or indirectly, more than 5% of our outstanding shares of common stock;
any promoters and control persons; and
any member of the immediate family (including spouse, parents, children, siblings and in laws) of any of the foregoing persons.

 

A.Scott Dockter, Chief Executive Officer, President, and a director, and John Bremer, a director, are also officers, directors and owners of USMC and US Mine LLC.

 

The following tables outline the related parties associated with the Company and amounts due for each period indicated:

 

  

During the year ended

November 30, 2023

  

During the year ended

November 30, 2022

 
US Mine Corporation – Convertible Notes and Accrued Interest, Expenses Paid, and Cash Advances  $1,950,357   $2,300,112 
A. Scott Dockter – Promissory Note, Principal and Interest  $50,780   $69,882 
Kimberly Kurtis – Convertible Note, Board Member  $16,000   $- 
Bayshore Capital Advisors, LLC – Promissory Note, Principal and Interest  $-   $1,500 

 

US Mine Corporation

 

On December 1, 2013, the Company entered into a contract mining agreement with USMC, a 5% shareholder and a company owned by A. Scott Dockter, our President and Chief Executive Officer, and a director, and John Bremer, a director, pursuant to which USMC will provide various technical evaluations and mine development services to the Company. Services totaling $0 were rendered by USMC for the fiscal years ended November 30, 2023 and 2022, respectively. To date the Company has paid USMC an aggregate of $270,402 since December 1, 2020, under the mining agreement.

 

During the fiscal years ended November 30, 2023 and 2022, USMC paid $0 and $11,323, respectively, of expenses to the Company’s vendors and creditors on behalf of the Company and also made cash advances to the Company of $914,788 and $755,000, respectively. USMC has paid an aggregate of $35,373 of expenses to the Company’s vendors and made cash advances to the Company in the aggregate amount of $1,669,788 since December 1, 2021.

 

On September 26, 2019, the Company entered into a Securities Purchase Agreement with USMC pursuant to which USMC may purchase up to $1,000,000 of the Company’s 5% unsecured two-year promissory notes which are convertible into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16 per share. USMC purchased notes in the principal amounts of $20,000, $86,000, and $72,000 on December 1, 2019, January 1, 2019, and February 1, 2020, respectively. On April 7, 2022, USMC converted the aggregate outstanding principal balance of $1,000,000 of the December 1, 2019, January 1, 2020, February 1, 2020 and December 1, 2020 notes, plus accrued interest totaling $75,346 through such date, into 6,720,906 shares of the Company’s common stock.

 

40
 

 

On November 25, 2020, the Company entered into a Securities Purchase Agreement with USMC pursuant to which USMC may purchase up to $2,000,000 of the Company’s 5% unsecured two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.088 per share. USMC purchased notes in the principal amounts of $822,000, and $579,796 on December 1, 2020 and March 17, 2021, respectively. On March 14, 2022, in connection with the November 25, 2020, Securities Purchase Agreement, USMC purchased a convertible note in the amount of $884,429. On April 7, 2022, USMC converted the aggregate outstanding principal balance of $2,286,261of the November 25, 2020 note and March 14, 2022 note, plus accrued interest totaling $88,965 through such date, into 22,864,502 shares of the Company’s common stock.

 

On April 7, 2022, the Company entered into a Securities Purchase Agreement with USMC pursuant to which USMC may purchase up to $1,000,000 of the Company’s 5% unsecured two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.39 per share. USMC purchased notes in the principal amounts of $470,862, $140,027, and $308,320 on August 30, 2022, November 29, 2022, and February 28, 2023, respectively. On January 31, 2024, USMC converted the outstanding principal of the three notes and accrued interest of $33,476, $8,210, and $14,233 on the August 30, 2022, the November 29, 2022, and the February 28, 2023 notes, respectively, into a total of 2,500,330 shares of the Company’s common stock.

 

On March 20, 2023, the Company entered into a Securities Purchase Agreement with USMC pursuant to which USMC may purchase up to $1,000,000 of the Company’s 5% unsecured two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.10 per share. USMC purchased notes in the principal amounts of $412,533 and $193,935 on May 31, 2023 and June 30, 2023. On January 31, 2024, USMC converted the outstanding principal of both notes and accrued interest of $22,152 and $9,139 on the May 31, 2023 and the June 30, 2023 notes, respectively, into a total of 6,377,593 Shares of the Company’s common stock.

 

In connection with the Snow White Mine property, owned by John Bremer, a director of the Company, the Company is required to make minimum royalty payments of $3,500 per year. The Company has not made royalty payments to Mr. Bremer since December 31, 2018.

 

US Mine LLC

 

On May 27, 2021, the Company entered into the Materials Extraction Agreement with US Mine, LLC, (the “Material Extraction Agreement”) pursuant to which the Company acquired the right to extract up to 100,000,000 tons of certain raw clay materials. A. Scott Dockter and John Bremer, each own 33% of US Mine LLC. The Materials Extraction Agreement is effective until 100,000,000 tons of material are extracted. As compensation for such right, the Company issued a ten-year convertible promissory note in the principal amount of $50,000,000 to US Mine, LLC (the “US Mine Note”). The US Mine Note bears interest at the rate of 2.5% per annum which is payable upon maturity. Amounts due under the US Mine Note may be converted into shares of the Company’s common stock at the option of the noteholder, at a conversion price of $0.43 per share. The noteholder may convert (i) up to 50% of the outstanding balance on or after such date as the Company’s common stock is listed for trading on any national securities exchange, (ii) up to an additional 25% of the outstanding balance on or after the six-month anniversary of such initial trading date, and (iii) the remaining 25% on or after the twelve-month anniversary of such initial trading date. In addition, the Company will pay US Mine, LLC a royalty fee of $5.00 per ton of materials extracted and any royalty not paid in a timely manner with be subject to 15% interest per annum and compounded monthly.

 

On October 6, 2021, and prior to consummation of activities under the Materials Extraction Agreement, the Company and US Mine, LLC executed an amendment to the Materials Extraction Agreement was amended, pursuant to which the US Mine Note was terminated and of no further force and an option to purchase an aggregate of 116,000,000 shares of the Company’s common stock at an exercise price of $0.38 per share until April 6, 2028, was issued to US Mine, LLC as compensation. Shares subject to the option vested as to 58,000,000 shares on April 6, 2022, 29,000,000 shares on October 6, 2022, and 29,000,000 shares on April 6, 2023. This agreement was further amended and restated in June 2022 to state that the Note was retroactively rescinded ab initio.

 

Line of Credit – USMC

 

On July 10, 2023, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12) until July 2024. The note bears interest at 8% per annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of the date of this filing, there have been $919,135 total advances from USMC under the July 10, 2023 line of credit agreement. As of February 28, 2024, the accrued interest on the July 10, 2023 line of credit was $18,629.

 

Board of Directors

 

On August 26, 2022, the Company issued an immediately exercisable five-year option to Jeffrey Guzy, a director, to purchase 250,000 shares of common stock with an exercise price of $0.24 per share for board services.

 

41
 

 

On August 26, 2022, the Company issued an immediately exercisable five-year option and four-year option to Dr. Kimberly Kurtis, a director, to purchase 200,000 shares of common stock and 242,424 shares of common stock, for board services and for science advisory regarding performance of SCM testing, respectively, of common stock with an exercise price of $0.24 per share.

 

On April 8, 2023, the Company issued an immediately exercisable five-year option to Jeffrey Guzy, a director, to purchase 350,000 shares of common stock with an exercise price of $0.10 per share for board services.

 

On August 10, 2023, the Company issued an immediately exercisable five-year option to Dr. Kimberly Kurtis, a director, to purchase 200,000 shares of common stock with an exercise price of $0.15 per share for board services.

 

On September 13, 2023, the Company issued an immediately exercisable five-year option to Brady Barto, a director, to purchase 200,000 shares of common stock with an exercise price of $0.15 per share for board services.

 

Executive Officer

 

In connection with Michael Fay’s appointment as Chief Financial Officer of the Company, on January 21, 2021, the Company granted Mr. Fay a five-year stock option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.67 per share. The shares subject to the option became exercisable on January 21, 2022. On March 25, 2021, Mr. Fay resigned as Chief Financial Officer of the Company and his option terminated unexercised.

 

On August 31, 2017, the Company issued a promissory note in the principal amount of $197,096 to A. Scott Dockter, President, Chief Executive Officer and a director of the Company to consolidate total amounts of indebtedness due to Mr. Dockter. The note bears interest at 6% and is due upon demand. Since December 1, 2020, the Company has repaid $99,100 towards the balance of the note. As of February 28, 2024 the outstanding principal balance due on this note is $8,716.

 

Bayshore Capital Advisors, LLC

 

On February 26, 2016, the Company issued a 6% promissory note in the principal amount of $25,000 to Bayshore Capital Advisors, LLC (“Bayshore Capital”), a former 5% shareholder of the Company. The note was payable upon the earlier of August 26, 2016 or the closing of a bridge financing by the Company. As of November 30, 2022, the Company was in default on this note. On February 4, 2023, Bayshore Capital agreed to cancel the $25,000 debt, plus $10,146 of accrued and unpaid interest.

 

5% Shareholder

 

On June 3, 2022, in conjunction with a settlement agreement with Agregen, Robert Hurtado, James Todd Gauer and John Gingerich, the Company granted James Todd Gauer, a 5% stockholder, an option to purchase 8,669,400 shares of common stock at an exercise price of $2.50.

 

Director Independence

 

We believe that Jeffrey Guzy and Kimberly Kurtis would be deemed “independent” under the applicable NASDAQ definition.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit and Accounting Fees

 

The following table sets forth the aggregate fees billed to the Company for professional services rendered by our principal accountants, Turner, Stone & Company, LLP (“TSC”) for the years ended November 30, 2023 and 2022:

 

  

Years Ended

November 30,

 
Services  2023   2022 
Audit fees  $60,800   $65,300 
Audit related fees   -    - 
Tax fees   -    - 
All other fees   -    - 
Total fees  $60,800   $65,300 

 

Audit Fees

 

Audit fees consist of fees incurred for professional services rendered for the audit of our annual consolidated financial statements, the review of our interim consolidated financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.

 

42
 

 

Audit-Related Fees

 

Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements but are not reported under “Audit fees.”

 

Tax Fees

 

Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice. including the preparation of our corporate tax returns.

 

All Other Fees

 

All other fees consist of fees billed for services not associated with audit or tax.

 

Audit Committee’s Pre-Approval Practice

 

Prior to the engagement of our independent auditor, such engagement was approved by our audit committee. The services provided under this engagement may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to report to our audit committee at least quarterly regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. Our audit committee may also pre-approve particular services on a case-by-case basis. All audit-related fees, tax fees and other fees incurred by us were approved by our audit committee.

 

Pre-Approval of Audit and Permissible Non-Audit Services

 

The percentage of hours expended TSC’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

The following exhibits are included as part of this Annual Report:

 

        Incorporated by Reference

Exhibit

Number

  Exhibit Description   Form   Exhibit   Filing Date
2.1   Plan and Agreement of Reorganization among Port of Call Online, Inc., PureBase, Inc. and certain stockholders of PureBase, Inc., dated December 23, 2014   8-K   2.1   12/24/2014
2.2   Plan and Agreement of Reorganization among PureBase, Inc., US Agricultural Minerals, LLC and the members of US Agricultural Minerals, LLC, dated November 24, 2014   8-K   10.4   12/24/2014
3.1   Articles of Incorporation   S-1   3.1   05/13/2013
3.2   Certificate of Change to Articles of Incorporation (stock split), effective November 7, 2014   10-K   3.1.2   03/16/2015
3.3   Amendment to the Articles of Incorporation (stock split), effective January 12, 2015   10-K   3.1.3   03/16/2015
3.4   Certificate of Change to Articles of Incorporation (stock split), effective June 15, 2015   8-K   3.1.4   06/16/2015
3.5   Bylaws   S-1   3.2   05/13/2013
4.1   Description of Securities   10-K   4.1   03/16/2021
4.2   Form of 5% Unsecured Convertible Promissory Note   8-K   4.1   04/14/2022

 

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4.3   5% Convertible Note between the Company and US Mine Corp., dated March 14, 2022   8-K   4.2   04/14/2022
4.4   8% Unsecured Convertible Grid Note issued to US Mine Corp. on July 10, 2023   8-K   4.1   07/13/2023
10.1   Distribution Agreement between the Company and New Ag Technologies, Inc., dated September 5, 2019   10-Q   10.1   10/18/2019
10.2   Debt Exchange Agreement between the Company and US Mine Corp, dated September 5, 2019   8-K   10.10   09/10/2019
10.3   Securities Purchase Agreement between the Company and US Mine Corp, dated September 26, 2019   10-Q   4.1   10/18/2019
10.4   Securities Purchase Agreement between the Company and US Mine Corp, dated March 17, 2021   8-K   10.1   03/23/2021
10.5   Amendment to Debt Exchange Agreement, dated February 7, 2020, between the Company and US Mine Corp.   8-K   10.1   02/13/2020
10.6   Investment Banking Agreement, dated October 23, 2018 between the Company and Newbridge Securities Corporation   10-K   10.11   02/28/2020
10.7   Compensation Committee Charter   10-K   10.12   02/28/2020
10.8   Purchase and Sale Agreement between the Company and Bremer Family 1995 Living Family Trust, dated April 1, 2020   8-K   10.13   04/03/2020
10.9   Director Agreement dated as of April 8, 2020, between the Company and Jeffrey Guzy   8-K   10.14   04/09/2020
10.10   Materials and Supply Agreement between the Company and US Mine Corp, dated April 22, 2020   8-K   10.1   04/28/2020
10.11   Asset Purchase Agreement by and between the Company and Quove Corporation, dated May 1, 2020   8-K   10.1   05/07/2020
10.12   5% Convertible Note between the Company and US Mine Corp, dated December 1, 2019   10-K   10.11   03/16/2021
10.13   5% Convertible Note between the Company and US Mine Corp, dated January 1, 2020   10-K   10.12   03/16/2021
10.14   5% Convertible Note between the Company and US Mine Corp, dated February 1, 2020   10-K   10.13   03/16/2021
10.15   5% Convertible Note between the Company and US Mine Corp, effective December 1, 2020   10-K   10.15   03/15/2022
10.16   5% Convertible Note between the Company and US Mine Corp, dated March 17, 2021   8-K   4.1   03/23/2021
10.17   Materials Extraction Agreement, dated May 27, 2021, by and between the Company and US Mine, LLC   8-K   10.14   05/27/2021
10.18   2.5% Convertible Note between the Company and US Mine, LLC, dated May 27, 2021   8-K   4.2   05/27/2021
10.19   Director Agreement, dated as of August 13, 2021, between the Company and Kimberly Kurtis   8-K   10.15   08/17/2021
10.20   Option Agreement, dated August 13, 2021, between the Company and Kimberly Kurtis   8-K   10.16   08/17/2021
10.21   Amendment to Materials Extraction Agreement, dated October 6, 2021, between the Company and US Mine, LLC   8-K   10.17   10/06/2021
10.22   Stock Option Agreement, dated October 6, 2021, between the Company to US Mine, LLC   8-K   10.18   10/06/2021
10.23   5% Convertible Note between the Company and US Mine Corp, dated March 14, 2022   10-K   10.23   02/28/2023
10.24   5% Convertible Note between the Company and US Mine Corp, dated August 30, 2022   10-K   10.24   02/28/2023
10.25   5% Convertible Note between the Company and US Mine Corp, dated November 29, 2022   10-K   10.25   02/28/2023
10.26   Investment Banking Agreement, dated May 19, 2022 between the Company and Newbridge Securities Corporation   10-K   10.26   02/28/2023

 

44
 

 

10.27   Amendment No. 1 to Director Agreement, dated August 26, 2022, between the Company and Jeffrey Guzy   10-K   10.27   02/28/2023
10.28   Amendment No. 1 to Director Agreement, dated August 26, 2022, between the Company and Dr. Kimberly Kurtis   10-K   10.28   02/28/2023
10.29   First Amendment to Promissory Notes, dated April 7, 2022, by and between the Company and U.S. Mine Corp.   8-K   10.1   04/14/2022
10.30   Securities Purchase Agreement, dated April 7, 2022, effective as of March 23, 2022, between the Company and US Mine Corp.   8-K   10.2   04/14/2022
10.31   First Amendment to Purchase and Sale Agreement, dated April 14, 2022, between the Company and Bremer Family 1995 Living Family Trust   8-K   10.3   04/14/2022
10.32   Amended and Restated Amendment to Materials Extraction Agreement, dated June 17, 2022, by and between the Company and US Mine, LLC   8-K/A   10.22   06/21/2022
10.33   Settlement Agreement, dated June 2, 2022, among the Company, Agregen International Corporation, Robert Hurtado, James Todd Gauer and John Gingerich.   8-K/A   10.1   09/30/2022
10.34   Option Agreement, dated June 3, 2022.   8-K/A   10.2   09/30/2022
10.35   Ione Lease Amendment, dated 11/1/2022   10-K   10.35   02/28/2023
10.36   2017 Stock Option Plan   10-K   10.36   02/28/2023
10.37   Amended and Restated Amendment to Materials Extraction Agreement, dated June 17, 2022, by and between Purebase Corporation and US Mine, LLC   8-K/A   10.22   06/21/2022
10.38   Line of Credit Agreement, dated July 10, 2023 between the Company and US Mine Corp   8-K   10.1   07/13/2023
10.39   Director Agreement, dated September 11, 2023, between the Company and Brady Barto   8-K   10.38   09/15/2023
10.40   Option Agreement, dated September 11, 2023, between the Company and Brady Barto   8-K   10.39   09/15/2023
10.41   Second Amendment to Materials Extraction Agreement, dated November 1, 2023   8-K   10.1   11/07/2023
10.42   Employment Agreement, date December 13, 2023, between the Company and Stephen Gillings   8-K   10.1   12/15/2023
10.43*   Advisory Service Agreement, dated June 9, 2023, between the Company and Karen Scrivener            
14.1   Code of Business Conduct and Ethics   10-K   14   2/28/2018
21.1   Subsidiaries of the Registrant   10-K   21.1   02/28/2020
31.1*   Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer            
31.2*   Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer            
32.1**   Section 1350 Certification of Chief Executive Officer            
32.2**   Section 1350 Certification of Chief Financial Officer            
101.INS   Inline XBRL Instance Document*            
101.SCH   Inline XBRL Taxonomy Extension Schema*            
101.CAL   Inline XBRL Taxonomy Calculation Linkbase*            
101.LAB   Inline XBRL Taxonomy Label Linkbase*            
101.PRE   Inline XBRL Definition Linkbase Document*            
101.DEF   Inline XBRL Definition Linkbase Document*            

 

* Filed herewith

** Furnished herewith

 

ITEM 16. FORM 10-K SUMMARY

 

None

 

45
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

PUREBASE CORPORATION

 

By: /s/ A. Scott Dockter  
A. Scott Dockter  
Chief Executive Officer and President (Principal Executive Officer)  
Date: February 28, 2024  
     
By: /s/ Stephen Gillings  
Stephen Gillings  
Chief Financial Officer (Principal Financial and Accounting Officer)  
Date: February 28, 2024  

 

46
 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By: /s/ A. Scott Dockter  
A. Scott Dockter  
Chief Executive Officer, President and Director  
Date: February 28, 2024  
     
By: /s/ Jeffrey Guzy  
Jeffrey Guzy  
Director  
Date: February 28, 2024  
     
By: /s/ John Bremer  
John Bremer  
Director  
Date: February 28, 2024  
     
By:

/s/ Kimberly Kurtis

 
Kimberly Kurtis  
Director  
Date: February 28, 2024  
     
By: /s/ Brady Barto  
Brady Barto  
Director  
Date: February 28, 2024  

 

47
 

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 2022 AND 2021

 

TABLE OF CONTENTS

 

  Page
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PCAOB ID No. #76 F-2
   
CONSOLIDATED FINANCIAL STATEMENTS:
   
Consolidated Balance Sheets as of November 30, 2023 and November 30, 2022 F-4
   
Consolidated Statements of Operations For the Years Ended November 30, 2023 and November 30, 2022 F-5
   
Consolidated Statements of Stockholders’ Deficit For the Years Ended November 30, 2023 and November 30, 2022 F-6
   
Consolidated Statements of Cash Flows For the Years Ended November 30, 2023 and November 30, 2022 F-7
   
Notes to Consolidated Financial Statements For the Years Ended November 30, 2023 and November 30, 2022 F-8

 

F-1
 

 

Your Vision Our Focus

 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors and Shareholders of

Purebase Corporation

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Purebase Corporation and its subsidiaries (the “Company”) as of November 30, 2023 and 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2023 and 2022, and the results of its operations and its cash flows for for each of the two years in the period ended November 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph - Going Concern

 

The accompanying financial statements have been prepared assuming that the entity will continue as a going concern. As discussed in Note 2 to the financial statements, the Company had a significant accumulated deficit, working capital deficit, net loss from operations and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to Purebase Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Purebase Corporation is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion.

 

 

F-2
 

 

Critical Audit Matters

 

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 

Fair Value of Stock Options

 

Critical Audit Matter Description:

 

As discussed in Note 11 to the financial statements, the Company uses the Black-Scholes option pricing model to estimate the fair value of its stock options issued for goods and services. The Black-Scholes option pricing model involves the use of several significant estimates such as the expected life of the award, expected share price volatility, dividend yield, and risk-free interest rate.

 

Given the significant estimates involved in estimating the fair value of stock options granted, the related audit effort in evaluating management’s estimates required a high degree of auditor judgment.

 

How the Critical Audit Matter was Addressed in the Audit:

 

We obtained an understanding over the Company’s process to estimate the fair value of stock options, including how the Company develops each of the estimates required to utilize the Black-Scholes option pricing model. We applied the following audit procedures related to testing the Company’s estimates utilized in Black-Scholes option-pricing model:

 

-We reviewed the Company’s dividend history, noting the Company has not issued dividends historically and management has indicated that no future dividends were currently anticipated.
   
-We compared the Company’s risk-free interest rate used to the comparable United States treasury yield for a term comparable to the stock options’ expected term.
   
-We recalculated the Company’s historic share price volatility for a term comparable to the stock options’ expected term.
   
 -We recalculated the expected term of the stock options using the simplified method.

 

/s/ Turner, Stone & Company, L.L.P.

 

Dallas, Texas

February 28, 2024

 

We have served as Purebase Corporations auditor since 2019.

 

F-3
 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   November 30,   November 30, 
   2023   2022 
         
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $5,572   $19,055 
Prepaid expenses and other assets   15,434    4,731 
Total Current Assets   21,006    23,786 
           
Property and equipment, net   750,716    620,000 
Right of use asset   39,799    79,599 
           
Total Assets  $811,521   $723,385 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities:          
Accounts payable and accrued expenses  $481,024   $115,478 
Settlement liability   618,000    400,000 
Line of credit, current   346,735    - 
Lease liability, current   40,880    38,882 
Note payable to officer   8,716    28,716 
Convertible notes payable, related party   19,000    36,000 
Notes payable, related party   -    25,000 
Total Current Liabilities   1,514,355    644,076 
           
Lease liability, net of current portion   -    40,880 
Convertible notes payable; related party, net of current portion   1,525,676    610,889 
           
Total Liabilities   3,040,031    1,295,845 
           
Commitments and Contingencies (Note 9)   -    - 
           
Stockholders’ Deficit:          
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding, at November 30, 2023 and November 30, 2022, respectively   -    - 
Common stock, $0.001 par value; 520,000,000 shares authorized; 230,863,005 and 230,753,005 shares issued and outstanding, at November 30, 2023 and November 30, 2022, respectively   230,863    160,350 
Additional paid in capital   60,271,605    52,910,839 
Accumulated deficit   (62,730,978)   (53,643,649)
Total Stockholders’ Deficit   (2,228,510)   (572,460)
           
Total Liabilities and Stockholders’ Deficit  $811,521   $723,385 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-4
 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   November 30, 2023   November 30, 2022 
   For the Year Ended 
   November 30, 2023   November 30, 2022 
         
Revenue, net  $325,875   $471,608 
           
Cost of goods sold   96,148    132,247 
           
Gross margin   229,727    339,361 
           
Operating Expenses:          
Selling, general and administrative   1,541,238    1,261,495 
Stock based compensation   7,391,278    31,622,178 
Total Operating Expenses   8,932,516    32,883,673 
           
Loss From Operations   (8,702,789)   (32,544,312)
           
Other Income (Expense):          
Other income   310,401    2,007 
Other expense   (618,000)   - 
Interest expense   (76,941)   (40,120)
Total Other Income (Expense)   (384,540)   (38,113)
           
Net Loss  $(9,087,329)  $(32,582,425)
           
Loss per Common Share - Basic and Diluted  $(0.04)  $(0.14)
           
Weighted Average Shares Outstanding - Basic and Diluted   230,731,334    228,296,555 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-5
 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

 

   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
   Preferred Stock   Common Stock  

Additional

Paid-in

   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
Balance at November 30, 2021   -   $-    215,380,751   $215,380   $18,660,460   $(21,061,224)  $(2,185,384)
                                    
Stock based compensation – shares   -    -    300,000    300    31,621,878    -    31,622,178 
                                    
Convertible debt converted into common stock   -    -    23,741,654    23,742    2,549,429    -    2,573,171 
                                        
Settlement shares surrendered   -    -    (8,669,400)   (8,669)   8,669    -    - 
                                    
Net loss   -    -    -    -    -    (32,582,425)   (32,582,425)
                                    
Balance at November 30, 2022   -   $-    230,753,005   $230,753   $52,840,436   $(53,643,649)  $(572,460)
                                    
Stock based compensation – options   -    -    -    -    7,387,279    -    7,387,279 
                                    
Stock based compensation – shares   -    -    100,000    100    7,900    -    8,000 
                                    
Settlement share surrendered   -    -    (300,000)   (300)   300    -    - 
                                    
Conversion of board of director accrued debt   -    -    310,000    310    35,690    -    36,000 
                                    
Net loss   -    -    -    -    -    (9,087,329)   (9,087,329)
                                    
Balance at November 30, 2023   -   $-    230,863,005   $230,863   $60,271,605   $(62,730,978)  $(2,228,510)

 

Note: $70,403 was reclassified from additional paid-in capital to common stock to tie common stock dollars to $0.001 par value of 215,380,751 common shares outstanding at November 30, 2021.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-6
 

 

PUREBASE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   November 30, 2023   November 30, 2022 
   For the Year Ended 
   November 30, 2023   November 30, 2022 
Cash Flows From Operating Activities:          
Net loss  $(9,087,329)  $(32,582,425)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock based compensation   7,391,278    31,622,178 
Amortization of debt discount   -    5,329 
Non-cash board of director compensation   19,000    36,000 
Gain on debt forgiveness   (35,401)   - 
Gain on settlement   (275,000)   - 
Right of use asset and liability, net   918    (293)
Changes in operating assets and liabilities:          
Accounts receivable   -    2,000 
Prepaid expenses and other current assets   (6,703)   (137)
Accounts payable and accrued expenses   375,947    79,094 
Settlement liability   493,000    - 
           
Net Cash Used In Operating Activities   (1,124,290)   (838,254)
           
Cash Flows From Investing Activities:          
Purchase of property and equipment   (130,716)   - 
           
Net Cash Used In Investing Activities   (130,716)   - 
           
Cash Flows From Financing Activities:          
Advances from related parties, convertible notes payable   914,788    755,000 
Proceeds from related party, line of credit   346,735    - 
Payments on notes payable to officer   (20,000)   (30,000)
           
Net Cash Provided By Financing Activities   1,241,523    725,000 
           
Net Decrease In Cash and Cash Equivalents   (13,483)   (113,254)
           
Cash and Cash Equivalents - Beginning of Year   19,055    132,309 
           
Cash and Cash Equivalents - End of Year  $5,572   $19,055 
           
Supplemental Cash Flow Information:          
Cash paid for:          
Interest paid  $-   $- 
Income taxes paid  $-   $- 
           
Noncash operating and financing activities:          
Due to affiliates exchanged for convertible debt  $-   $1,495,382 
Convertible debt converted to common stock  $-   $2,464,262 
Board of director compensation - accrued as convertible debt  $19,000   $36,000 
Vendors paid for on behalf of the company by USMC  $15,853   $11,323 
Expenses paid for on behalf of the company by USMC  $23,029   $- 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

F-7
 

 

PUREBASE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

 

Corporate Overview

 

Purebase Corporation (“Purebase” or the “Company”) was incorporated in the State of Nevada on March 2, 2010. The Company is an industrial mineral and natural resource company that provides solutions to the agriculture and construction materials markets in the United States through its two subsidiaries, Purebase Agricultural, Inc., a Nevada corporation (“Purebase AG”), and U.S. Agricultural Minerals, LLC, a Nevada limited liability company (“Purebase AM”), respectively.

 

The Company is headquartered in Ione, California.

 

Agricultural Sector

 

The Company develops specialized fertilizers, sun protectants, soil amendments and bio-stimulants for organic and non-organic sustainable agriculture. The Company has developed and will seek to develop additional products derived from mineralized materials of leonardite, kaolin clay, laterite, and other natural minerals. These mineral and soil amendments are used to protect crops, plants and fruits from the sun and winter damage, to provide nutrients to plants, and to improve dormancy and soil ecology to help farmers increase the yields of their harvests. The Company is building a brand family under the parent trade name “Purebase,” consisting of its Purebase Shade Advantage (WP) product, a kaolin-clay based sun protectant for crops and Humic Advantage a humic acid product derived from leonardite. We also private label the Crop White II product for an end user.

 

Construction Sector

 

The Company has been developing and testing a kaolin-based product that it believes will help create a lower CO2-emitting concrete through the use of high-quality supplementary cementitious materials (“SCMs”). The Company is developing a SCM that it believes can potentially replace up to 40% of cement, the most polluting part of concrete. As government agencies continue to enact stricter requirements for less-polluting forms of concrete, the Company believes there are significant opportunities for high-quality SCM products in the construction-materials sector.

 

The Company utilizes the services of US Mine Corporation (“USMC”), a Nevada corporation and a significant shareholder of the Company, for the development and contract mining of industrial mineral and metal projects, exploration drilling, preparation of feasibility studies, mine modeling, on-site construction, production, site reclamation and for product fulfillment. Exploration services include securing necessary permits, environmental compliance, and reclamation plans. In addition, a substantial portion of the minerals used by the Company are obtained from properties owned or controlled by USMC. A. Scott Dockter, the Company’s Principal Executive Officer and a director, and John Bremer, a director, are also officers, directors and owners of USMC.

 

NOTE 2 – GOING CONCERN AND LIQUIDITY

 

The accompanying consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of November 30, 2023, the Company had a significant accumulated deficit of $62,730,978 and working capital deficit of $1,493,349. For the year ended November 30, 2023, the Company had a net loss from operations of $9,087,329 and negative cash flows from operations of $1,124,290. The Company’s operating activities consume the majority of its cash resources. The Company anticipates that it will continue to incur operating losses as it executes its development plans for 2024. In addition, the Company has had and expects to have negative cash flows from operations, at least into the near future. The Company has previously funded, and plans to continue funding, these losses primarily with additional infusions of cash from advances from USMC and the sale of equity and convertible notes. The accompanying consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

F-8
 

 

The Company’s plan, through the continued promotion of its services to existing and potential customers, is to generate sufficient revenues to cover its anticipated expenses. The Company is currently exploring several options to meet its short-term cash requirements, including issuances of equity securities or equity-linked securities from USMC and other third parties.

 

Although no assurances can be given as to the Company’s ability to deliver on its revenue plans or that unforeseen expenses may arise, management currently believes that the revenue to be generated from operations together with equity and debt financing, including funding from USMC in the form of notes payable and a line of credit, will provide the necessary funding for the Company to continue as a going concern for the next twelve months. For the year ended November 30, 2023, the Company received $914,788 from USMC in the form of three notes payable (see Notes 6 and 12, Tranches #9, #10, #11). Tranche #9 was for $308,320, bears interest at 5% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.39 per share. Tranche #10 was for $412,533, bears interest at 8% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.10 per share. Tranche #11 was for $193,935, bears interest at 8% per annum, and amounts due may be converted into shares of the Company’s common stock at any time at the option of the note holder at a conversion price of $0.10 per share. A July 10, 2023 line of credit agreement provides for the issuance of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note until July 10, 2024 (see Note 12). The line of credit bears interest at 8% per annum and any outstanding principal or accrued interest under the line of credit is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of the date hereof, there have been $919,135 in advances from USMC under the July 10, 2023 line of credit agreement. Currently are no other arrangements or agreements for financing, and management cannot guarantee any other potential debt or equity financing will be available, or if available, on favorable terms. As such, these matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

 

Currently are no other arrangements or agreements for financing, and management cannot guarantee any other potential debt or equity financing will be available, or if available, on favorable terms. As such, these matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issue date of this report. If adequate funds are not available on acceptable terms, or at all, the Company will need to curtail operations, or cease operations completely.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such consolidated financial statements and accompanying notes are the representation of the Company’s management, who is responsible for their integrity and objectivity.

 

Principles of Consolidation

 

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries PureBase AG and Purebase AM. Intercompany accounts and transactions have been eliminated upon consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and equity-based transactions at the date of the financial statements and the 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.

 

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the consolidated financial statements. Significant estimates include the allowance for doubtful accounts, useful lives of property and equipment, deferred tax asset and valuation allowance, and assumptions used in the Black-Scholes valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

 

F-9
 

 

Revenue

 

The Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company derives revenues from the sale of its agricultural products. The Company’s contracted transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s contracts have a single performance obligation which are not separately identifiable from other promises in the contracts and is, therefore, not distinct. The Company’s performance obligation is satisfied upon the transfer of control to the customer.

 

Practical Expedients

 

As part of ASC Topic 606, the Company has adopted several practical expedients including:

 

  Significant Financing Component – the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.
  Unsatisfied Performance Obligations – all performance obligations related to contracts with a duration for less than one year, the Company has elected to apply the optional exemption provided in ASC Topic 606 and therefore is not required to disclose the aggregate amount of transaction price allocated to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period.
  Shipping and Handling Activities – the Company elected to account for shipping and handling activities as a fulfillment cost rather than as a separate performance obligation.
  Right to Invoice – the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date the Company may recognize revenue in the amount to which the entity has a right to invoice.

 

Disaggregated Revenue

 

Revenue consists of the following by product offering for the year ended November 30, 2023:

 

CROP WHITE II    

SHADE

ADVANTAGE (WP)

    SulFe Hume Si ADVANTAGE     Total  
                     
$ 66,825     $ 207,570     $ 51,480     $ 325,875  

 

Revenue consists of the following by product offering for the year ended November 30, 2022:

 

CROP WHITE II    

SHADE

ADVANTAGE (WP)

    SulFe Hume Si ADVANTAGE     Total  
                     
$ 192,780     $ 227,368     $ 51,460     $ 471,608  

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents as of November 30, 2023 or 2022.

 

Account Receivable

 

The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. If collectability of an account becomes unlikely, an allowance is recorded for that doubtful account. As of November 30, 2023 and 2022, the Company has determined that no allowance for doubtful accounts was necessary for either year.

 

F-10
 

 

Property and Equipment

 

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally three to five years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated.

 

Equipment 3-5 years
Autos and trucks 5 years

 

Maintenance and repairs are charged to expense as incurred. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations. The Company currently has $620,000 in property and equipment that it acquired on May 1, 2020. As of November 30, 2023, the Company has not put the acquired property and equipment to use. As such, the Company has not recorded depreciation related to these assets. The Company has $130,716 in costs for its pilot plant which is not yet operational, and the Company expects to incur more costs before the pilot plant becomes operational. As such, the Company has not recorded depreciation related to the pilot plant. The Company also has $67,165 in other fixed assets which are fully depreciated.

 

Impairment of Long-Lived Assets

 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. No impairment losses were recorded during the years ended November 30, 2023 or 2022.

 

Shipping and Handling

 

The Company incurs shipping and handling costs which are charged back to the customer. There were no net amounts incurred or included in general administrative expenses for the years ended November 30, 2023 and 2022.

 

Advertising and Marketing Costs

 

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $3,543 and $15,040 for the years ended November 30, 2023 and 2022, respectively, and are recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations.

 

Fair Value Measurements

 

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement.

 

Level 1: Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

F-11
 

 

Level 2: Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
   
Level 3: Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

Fair Value of Financial Instruments

 

The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of notes approximates the estimated fair value for these financial instruments as management believes that such notes constitute substantially all of the Company’s debt and interest payable on the notes approximates the Company’s incremental borrowing rate.

 

Loss Per Common Share

 

Net loss per share of common stock is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the year. All outstanding options are considered potential common stock. The dilutive effect, if any, of stock options are calculated using the treasury stock method. All outstanding convertible notes are considered common stock at the beginning of the period or at the time of issuance, if later, pursuant to the if-converted method. Since the effect of common stock equivalents is anti-dilutive with respect to losses, outstanding options have been excluded from the Company’s computation of net loss per share of common stock for the years ended November 30, 2023 and 2022.

 

The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common stock:

 

   Year Ended November 30, 
   2023   2022 
         
Convertible Notes   8,882,155    1,790,787 
Stock Options   129,438,187    128,688,187 
Total   138,320,342    130,478,974 

 

Stock-Based Compensation

 

The Company applies the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the accompanying consolidated statements of operations.

 

For stock options issued to employees and members of the Company’s Board of Directors (the “Board”) for their services, the Company estimates the grant date fair value of each option using the Black-Scholes option pricing model. The use of the Black-Scholes option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

 

F-12
 

 

Pursuant to ASU 2018-07 Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

 

Leases

 

With the adoption of ASC 842, Leases operating lease agreements are required to be recognized on the balance sheet as Right-of-Use (“ROU”) assets and corresponding lease liabilities. ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

 

The Company leases its corporate offices. All of the leases are classified as operating leases. The Company is a party to a two-year lease, with USMC, a related party, for 1,000 square feet of office space located in Ione, California (the “Ione Lease”) with respect to its corporate operations (See Note 12). Effective November 1, 2022, the Ione Lease was amended to extend the lease through October 2024 and to add an additional 700 square feet of office space for a total monthly rental price of $3,500 per month, with automatic one-month renewals. The remaining weighted average term is 0.8 years. The Company discounted lease payments using its estimated incremental borrowing rate at December 1, 2020. The weighted average incremental borrowing rate applied was 5%.

 

In accordance with ASC 842, the Company recognized a ROU asset and corresponding lease liability on the consolidated balance sheet for long-term office leases. See Note 7 – Leases for further discussion, including the impact in the accompanying consolidated financial statements and related disclosures.

 

Income Taxes

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations.

 

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 as 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.

 

F-13
 

 

Mineral Rights

 

Acquisition costs of mineral rights are capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time as 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.

 

Recent Accounting Pronouncements

 

In November 2023, FASB issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280). The amendments require:

 

1That a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principal”).
2That a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segments category is the difference between segment revenue less the segment expenses disclosed under the significant expense principal and each reported measure of segment profit or loss.
3That a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods.
4Clarification that if a CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements. In other words, in addition to the measure that is most consistent with the measurement principles under GAAP, a public entity is not precluded from reporting additional measures of a segment’s profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources.
5That a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
6That a public entity that has a single reportable segment provide all the disclosures required by the amendments in this Update and all existing disclosures in Topic 280.

 

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company has determined that, since it currently does not report segments, ASU 2023-07 is not applicable. However, should the Company begin segment reporting in the future, the Company will adopt ASU 2023-07.

 

In October 2023, FASB issued ASU 2023-06, Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. Codification subtopic 260-10, Earnings per Share – Overall, requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods. The following disclosures are required:

 

1A reconciliation of the numerators and denominators of the basic and diluted per-share computations for income from continuing operations.
2The effect that has been given to preferred dividends in arriving at income available to common shareholders in computing basic EPS.
3Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS because to do so would have been antidilutive for the period(s) presented.
4The methods used in the diluted EPS computation for each type of dilutive instrument (for example, treasury stock method, if-converted method, two-class method, or reverse treasury stock method).

 

The Company adopted the amendment as of November 30, 2023.

 

NOTE 4 – MINING RIGHTS

 

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 it agreed to sell its fee simple property interest and certain mining claims to USMC. In contemplation of the Plan and Agreement of Reorganization, on December 1, 2014, USMC, a related party, 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 BLM. An initial deposit of $50,000 was paid to escrow, and the Purchase Agreement required the payment of an additional $600,000 at the end of the escrow period. There was a delay in the original seller, Joseph Richard Matthewson, 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 an additional $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 the Company, 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, however, the Company is under no obligation to do so. The mining claims require a minimum royalty payment of $3,500 per year to be made by the Company.

 

F-14
 

 

On April 1, 2020, the Company entered into a purchase and sale agreement with the Bremer Family 1995 Living Trust, a related party of the Company, pursuant to which the Company will purchase the Snow White Mine for $836,000 (the “Purchase Price”). The Purchase Price plus 5% interest is payable in full in cash at the closing which must occur at any time before April 1, 2022 (the “Closing Date”). On April 14, 2022, the agreement was amended to extend the Closing Date to April 14, 2023. On April 7, 2023, the agreement was amended to extend the closing date to April 1, 2024.

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following at:

 

   November 30, 2023   November 30, 2022 
         
Furniture and equipment  $6,952   $6,952 
Machinery and equipment   35,151    35,151 
Automobiles and trucks   25,061    25,061 
Pilot plant   130,716    - 
Construction in process   620,000    620,000 
Property and equipment, gross   817,880    687,164 
Less: accumulated depreciation   (67,164)   (67,164)
Property and equipment, net  $750,716   $620,000 

 

There was no depreciation expense for the years ended November 30, 2023 and 2022.

 

NOTE 6 – NOTES PAYABLE

 

Bayshore Capital Advisors, LLC

 

On February 26, 2016, the Company issued a promissory note to Bayshore Capital Advisors, LLC (“Bayshore Capital”), an affiliate through common ownership of a 10% major stockholder of the Company, for $25,000 for working capital at an interest rate of 6% per annum. The note was payable August 26, 2016, or when the Company closes a bridge financing, whichever occurs first. As of November 30, 2022, the Company was in default on this note. On February 4, 2023, Bayshore Capital agreed to cancel the $25,000 debt, plus $10,146 of accrued and unpaid interest. During the years ended November 30, 2023 and 2022 the Company did not make repayments towards the outstanding balance of the note. There is no balance on the note as of November 30, 2023. The balance on the note was $25,000 on November 30, 2022 (see Note 12). Total interest expense on the note was $255 and $1,500 for the years ended November 30, 2023 and 2022, respectively.

 

A. Scott Dockter – President and Chief Executive Officer

 

On August 31, 2017, the Company issued a note in the amount of $197,096 to A. Scott Dockter, President, Chief Executive Officer and a director of the Company, to consolidate the total amounts due to Mr. Dockter. The note bears interest at 6% and is due upon demand. During the year ended November 30, 2023, the Company paid $20,000 towards the outstanding balance of the note. The balance on the note was $8,716 and $28,716 as of November 30, 2023 and 2022, respectively (See Note 12). Total interest expense on the note was $899 and $2,770 for the years ended November 30, 2023 and 2022, respectively. There was $42,065 and $41,166 of accrued interest as of November 30, 2023 and 2022, respectively.

 

F-15
 

 

Convertible Promissory Notes – USMC

 

December 1, 2019

 

On December 1, 2019, in connection with the September 26, 2019, securities purchase agreement with USMC, a related party, (See Note 12), the Company issued a convertible promissory note in the amount of $20,000 to USMC, with a maturity date of December 31, 2021 (“Tranche #1”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16 per share. On April 7, 2022, the December 1, 2019 note was amended to extend the maturity date to April 30, 2022 and USMC gave notice of conversion of the outstanding principal balance of $20,000 plus accrued interest totaling $2,351 through such date, into 139,692 shares of the Company’s common stock.

 

The issuance of Tranche #1 resulted in a discount from the beneficial conversion feature totaling $20,000. Total straight-line amortization of this discount totaled $0 and $815 during the years ended November 30, 2023 and 2022, respectively. Total interest expense on Tranche #1 was approximately $0 and $350 for the years ended November 30, 2023 and 2022, respectively.

 

January 1, 2020

 

On January 1, 2020, in connection with the September 26, 2019, securities purchase agreement with USMC, a related party, (See Note 12), the Company issued a convertible promissory note in the amount of $86,000 to USMC, with a maturity date of January 1, 2022 (“Tranche #2”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16 per share. On April 7, 2022, the January 1, 2020 note was amended to extend the maturity date to April 30, 2022 and USMC gave notice of conversion of the outstanding principal balance of $86,000 plus accrued interest totaling $9,743 through such date, into 598,392 shares of the Company’s common stock.

 

The issuance of Tranche #2 resulted in a discount from the beneficial conversion feature totaling $32,250. Total straight-line amortization of this discount totaled $0 and $1,412 for the years ended November 30, 2023 and 2022, respectively. Total interest expense on Tranche #2 was approximately $0 and $1,500 for the years ended November 30, 2023 and 2022, respectively.

 

February 1, 2020

 

On February 1, 2020, in connection with the September 26, 2019, securities purchase agreement with USMC, a related party, (See Note 12), the Company issued a convertible promissory note in the amount of $72,000 to USMC, with a maturity date of February 1, 2022 (“Tranche #3”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the holder, at a conversion price of $0.16 per share. On April 7, 2022, the February 1, 2020 note was amended to extend the maturity date to April 30, 2022 and USMC gave notice of conversion of the outstanding principal balance of $72,000 plus accrued interest totaling $7,851 through such date, into 499,068 shares of the Company’s common stock.

 

The issuance of Tranche #3 resulted in a discount from the beneficial conversion feature totaling $36,000. Total straight-line amortization of this discount totaled $0 and $3,103 for the years ended November 30, 2023 and 2022, respectively. Total interest expense on Tranche #3 was approximately $0 and $1,260 for the years ended November 30, 2023 and 2022, respectively.

 

December 1, 2020

 

On December 1, 2020, in connection with the September 26, 2019 securities purchase agreement with USMC, a related party, (See Note 12), the Company issued a convertible promissory note in the amount of $822,000 to USMC, with a maturity date of November 25, 2022 (“Tranche 4”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.16 per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $822,000 of the December 1, 2020 note, plus accrued interest totaling $55,401 through such date, into 5,483,753 shares of the Company’s common stock. Total interest expense on Tranche #4 was approximately $0 and $17,700 for the years ended November 30, 2023 and 2022, respectively.

 

F-16
 

 

March 17, 2021

 

On March 17, 2021, in connection with the March 11, 2021, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $579,769 to USMC, with a maturity date of March 17, 2023 (“Tranche #5”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.088 per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $579,769.39 of the March 17, 2021 note, plus accrued interest totaling $30,656 through such date, into 6,936,656 shares of the Company’s common stock. Total interest expense on Tranche #5 was approximately $0 and $8,800 for the years ended November 30, 2023 and 2022, respectively.

 

March 14, 2022

 

On March 14, 2022, in connection with the November 25, 2020, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $884,429 to USMC, with a maturity date of March 14, 2024 (“Tranche #6”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.088 per share. On April 7, 2022 USMC gave notice of conversion of the outstanding principal balance of $884,492 of the March 14, 2022 note, plus accrued interest totaling $2,908 through such date, into 10,084,093 shares of the Company’s common stock. Total interest expense on Tranche #6 was approximately $0 and $2,908 for the years ended November 30, 2023 and 2022, respectively.

 

August 30, 2022

 

On August 30, 2022, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $470,862 to USMC, with a maturity date of August 30, 2024 (“Tranche #7”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #7 was approximately $23,543 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $470,862 and accrued interest as of January 31, 2024 of $33,476 into 1,293,175 shares of the Company’s common stock.

 

November 29, 2022

 

On November 29, 2022, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $140,027 to USMC, with a maturity date of November 29, 2024 (“Tranche #8”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #8 was approximately $7,001 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $140,027 and accrued interest as of January 31, 2024 of $8,210 into 380,095 shares of the Company’s common stock.

 

February 28, 2023

 

On February 28, 2023, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $308,320 to USMC, with a maturity date of February 28, 2025 (“Tranche #9”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #9 was approximately $11,615 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $308,320 and accrued interest as of January 31, 2024 of $14,233 into 827,059 shares of the Company’s common stock.

 

F-17
 

 

May 31, 2023

 

On May 31, 2023, in connection with the March 20, 2023, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $412,533 to USMC, with a maturity date of May 31, 2025 (“Tranche #10”). The note bears interest at 8% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share. Total interest expense on Tranche #10 was approximately $16,547 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $412,533 and accrued interest as of January 31, 2024 of $22,152 into 4,346,855 shares of the Company’s common stock.

 

June 30, 2023

 

On June 30, 2023, in connection with the March 20, 2023, securities purchase agreement with USMC, a related party (see Note 12), the Company issued a convertible promissory note in the amount of $193,935 to USMC, with a maturity date of June 30, 2025 (“Tranche #11”). The note bears interest at 8% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share. Total interest expense on Tranche #11 was approximately $6,503 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $193,935 and accrued interest as of January 31, 2024 of $9,139 into 2,030,738 shares of the Company’s common stock.

 

Line of Credit – USMC

 

On July 10, 2023, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 12) until July 2024. The note bears interest at 8% per annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of November 30, 2023, there have been $346,735 advances from USMC under the July 10, 2023 line of credit agreement. As of November 30, 2023, the accrued interest on the July 10, 2023 line of credit was $6,784.

 

Convertible Debt – Board of Directors

 

On April 8, 2021, the Company entered into a twelve month director agreement with Jeffrey Guzy, as amended on August 26, 2022 (the “Guzy Director Agreement”) pursuant to which Mr. Guzy will serve as a director of the Company, which agreement will automatically renew (the “Renewal Date”) for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Mr. Guzy is entitled to a cash fee of $1,000 per month which accrues as 0% debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Guzy at the Renewal Date or upon Mr. Guzy’ resignation or removal (the “Termination Date”) will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the volume-weighted average price (“VWAP”) of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. As of November 30, 2023, the Company has no debt owed to Mr. Guzy.

 

F-18
 

 

On August 13, 2021, the Company entered into a twelve month director agreement with Dr. Kimberly Kurtis, as amended on August 26, 2022 (the “Kurtis Director Agreement”) pursuant to which Dr. Kurtis will provide up to five hours per month of board services, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Dr. Kurtis is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Dr. Kurtis at the Renewal Date or the Termination Date will be converted into common stock at the lower price of $0.15 per share or the market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. As of November 30, 2023, the Company has debt in the amount of $16,000 owed to Dr. Kurtis.

 

On September 11, 2023, the Company entered into a twelve month director agreement with Brady Barto (the “Barto Director Agreement”) pursuant to which Mr. Barto agrees to devote as much time as is necessary to perform completely the duties as a Director. Mr. Barto shall be notified within 30 days before the end of the twelve months whether his contract shall be renewed under the same terms of compensation. As compensation therefor, Mr. Barto is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Barto at the Renewal Date or the Termination Date will be converted into common stock at the lower price of $0.15 per share or the market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Mr. Barto was also issued a five-year stock option to purchase 200,000 shares of common stock at $0.15. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter. As of November 30, 2023, the Company has debt in the amount of $3,000 owed to Mr. Barto.

 

NOTE 7 – LEASES

 

The following table presents net lease cost and other supplemental lease information:

 

  

Year Ended

November 30, 2023

 
Lease cost     
Operating lease cost (cost resulting from lease payments)  $42,000 
Short term lease cost   - 
Sublease income   - 
Net lease cost  $42,000 
      
Operating lease – operating cash flows (fixed payments)  $42,000 
Operating lease – operating cash flows (liability reduction)  $38,882 
Non-current leases – right of use assets  $39,799 
Current liabilities – operating lease liabilities  $40,880 
Non-current liabilities – operating lease liabilities  $- 

 

  

Year Ended

November 30, 2022

 
Lease cost     
Operating lease cost (cost resulting from lease payments)  $20,000 
Short term lease cost   - 
Sublease income   - 
Net lease cost  $20,000 
      
Operating lease – operating cash flows (fixed payments)  $20,000 
Operating lease – operating cash flows (liability reduction)  $19,248 
Non-current leases – right of use assets  $79,599 
Current liabilities – operating lease liabilities  $38,882 
Non-current liabilities – operating lease liabilities  $40,880 

 

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the year ended November 30, 2023:

 

Fiscal Year  Operating Leases 
2024  $ 42,000 
Total future minimum lease payments    42,000 
Amount representing interest    (1,120)
Present value of net future minimum lease payments  $ 40,880 

 

F-19
 

 

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses consist of the following amounts as of:

 

   November 30, 2023   November 30, 2022 
         
Accounts payable  $314,502   $30,078 
Accrued interest – related parties   120,011    57,266 
Accrued compensation   39,080    28,134 
Accrued consultants   7,431    - 
Accounts payable and accrued expenses  $481,024   $115,478 

 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

Office and Rental Property Leases

 

The Company is leasing office space from USMC, a related party that is owned by the Company’s majority shareholders and directors, A. Scott Dockter and John Bremer (See Note 12).

 

Mineral Properties

 

The Company’s mineral rights require various annual lease payments (See Note 4).

 

Legal Matters

 

On July 8, 2020, former Chief Financial Officer, Al Calvanico (“Calvanico”), filed a demand for arbitration alleging retaliation, wrongful termination, and demand for a minimum of $600,000 in alleged stock value, plus interest, recovery of past and future wages, attorneys’ fees, and punitive damages (collectively, the “Calvanico Claims”). The Company denied all Calvanico Claims. The Company believes Calvanico is owed nothing because it takes the position that Calvanico was not terminated, but rather, his employment contract expired on September 21, 2019, in accordance with its terms, and was not renewed by Company and because Calvanico never exercised his stock options. The Company and Calvanico engaged in binding arbitration which concluded on February 3, 2023. On June 20, 2023, the arbitrator decided in favor of the Company with respect to Calvanico’s breach of contract, fraud and negligent representation and wrongful discharge claims and in favor of Calvanico for asserted attorney fee claims in accordance with Calvanico’s employment agreement with the Company. At a July 18, 2023 teleconference regarding a determination of attorney fees to be paid, the arbitrator established a briefing schedule for the parties to formally present their legal arguments on the issue. Calvanico’s brief in support of attorney fees was due and timely filed on August 15, 2023. The Company’s brief in opposition was due and timely filed on September 19, 2023. Calvanico’s reply brief was filed on October 4, 2023. On February 6, 2024, the Company agreed to pay $618,000 to be paid in six equal monthly payments of $103,000 each with the first payment on February 8, 2024.

 

On January 11, 2019, the Company filed a complaint in the Second Judicial District Court in the State of Nevada, Washoe County (Case # CV19-00097) against Agregen International Corp (“Agregen”) and Robert Hurtado alleging the misuse of proprietary and confidential information acquired by Mr. Hurtado while employed by the Company as Vice President of Agricultural Research and Development. Mr. Hurtado was terminated in March 2018 and since that time the Company alleges that he conspired with Agregen to improperly use proprietary and confidential information to compete with the Company which constitute breaches of the non-compete and confidentiality provisions of his employment agreement with the Company. On March 14, 2019, Agregen and Mr. Hurtado filed an answer to the Company’s Complaint that the allegations were false. On March 13, 2020, the Company filed a First Amended Complaint, adding James Todd Gauer and John Gingerich as additional defendants. A settlement agreement was entered into between the parties, effective June 3, 2022 and a Notice of Settlement was filed in the District Court pursuant to which, 8,669,000 shares of the Company’s common stock beneficially owned by the defendants were surrendered to the Company and the Company granted Mr. Gauer an immediately exercisable option to purchase 8,669,400 shares of common stock, the equivalent number of common shares surrendered to the Company, at an exercise price of $2.50. The lawsuit was fully settled and dismissed on August 9, 2022.

 

F-20
 

 

On March 29, 2019, the Company was served with a complaint filed by Superior Soils Supplements LLC (“Superior Soils”) in the Superior Court of the State of California in and for the County of Kings (Case #19C-0124) relating to 64 truckloads of soil amendments delivered to a customer by the Company on behalf of Superior Soils. Superior Soils alleged that the soil amendments were not labeled correctly requiring the entire shipment of product to be returned to the Company. The complaint alleges breach of contract, misrepresentations, fraudulent concealment and unfair competition. The complaint seeks damages of approximately $400,000 and, although the Company is vigorously defending such claims and believes that there is little to no risk of liability, it has accrued $400,000 for such risk. The Company filed its answer on May 6, 2019, denying responsibility for the mislabeling and denying any liability for damages therefrom. The matter was fully settled and was thus dismissed by the Court on May 2, 2023, and the Company paid Superior Soils $125,000. The settlement resulted in $275,000 other income as $400,000 had been accrued.

 

Contractual Matters

 

On November 1, 2013, we entered into an agreement with USMC, a related party, in which USMC provides various technical evaluations and mine development services for the Company with regard to the various mining properties/rights owned by the Company. Terms of services and compensation will be determined for each project undertaken by USMC.

 

On October 12, 2018, the Board approved a material supply agreement with USMC, a related party, pursuant to which USMC will provide designated natural resources to the Company at predetermined prices (see Note 12).

 

Note 10 - STOCKHOLDERS’ EQUITY

 

On May 19, 2022, the Company entered into an agreement with Newbridge Securities Corporation (“Newbridge”), pursuant to which Newbridge will provide investment banking and corporate advisory services to the Company. As consideration therefor, the Company issued Newbridge 300,000 shares of common stock on June 17, 2022 which shares are subject to a 12-month lockup from the date of issuance. The shares were issued at a fair value of $0.35 per share.

 

On July 7, 2022, $2,464,261 in principal and $108,910 in accrued interest of related party debt were converted into 23,741,654 shares.

 

On August 11, 2022, 8,669,400 shares were surrendered back to the Company in a settlement agreement.

 

On February 27, 2023, 300,000 were surrendered back to the Company in a settlement agreement.

 

On May 25, 2023, the Company issued 80,000 shares of common stock to Dr. Kimberly Kurtis, a board member, in exchange for $12,000 in accrued board compensation.

 

On May 25, 2023, the Company issued 230,000 shares of common stock to Jeffrey Guzy, a board member, in exchange for $24,000 in accrued board compensation.

 

On June 9, 2023, effective April 8, 2023, the Company entered into a one-year advisory agreement with Dr. Karen Scrivener (“Scrivener Agreement”) pursuant to which Dr. Scrivener will provide certain strategic advisory services to the Company. As compensation therefor, on June 9, 2023, Dr. Scrivener was issued 100,000 shares of the Company’s common stock at a fair value of $0.08 per share.

 

Note 11 – STOCK-BASED COMPENSATION

 

The Company accounted for its stock-based compensation in accordance with the fair value recognition provisions of FASB ASC Topic 718.

 

2017 Equity Incentive Plan

 

On November 10, 2017 the Board approved the 2017 PureBase Corporation Stock Option Plan which is intended to be a qualified stock option plan (the “Option Plan”). The Board reserved 10,000,000 shares of the Company’s common stock to be issued to employees and board members pursuant to options granted under the Option Plan. The Option Plan was subsequently approved by shareholders on September 28, 2018. As of November 30, 2023, options to purchase an aggregate of 4,268,787 shares of common stock have been granted to employees and board members under the Option Plan.

 

The Company has also granted options to purchase an aggregate of 500,000 shares of common stock pursuant to employment contracts with certain employees prior to the adoption of the Option Plan.

 

F-21
 

 

On June 3, 2022, in conjunction with the settlement agreement with Agregen, Robert Hurtado, James Todd Gauer and John Gingerich (see Note 8), the Company granted James Todd Gauer the option to purchase 8,669,400 shares of common stock, the equivalent number of common shares surrendered to the Company, at an exercise price of $2.50 and a fair value of $1,856,151. The options vest immediately. The options were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below.

 

On August 26, 2022, the Company granted options to purchase an aggregate of 2,223,787 shares of common stock to members of the Board, consultants and employees for services to be performed. The options were issued at an exercise price of $0.24 and a total fair value of $522,411. The options vest immediately. The options were valued using the Black-Scholes option pricing model under the following assumptions as found in the table below.

 

On April 8, 2023, the Company granted a director an option to purchase 350,000 shares of the Company’s common stock at an exercise price of $0.10 per share and a fair value of $26,623. These options vest immediately. The option was valued using the Black-Scholes option pricing model under the following assumption as found in the table below.

 

On August 10, 2023, the Company granted a director an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.15 per share and a fair value of $17,987. These options vest immediately. the option was valued using the Black-Scholes option pricing model under the following assumption as found in the table below.

 

On September 13, 2023, the Company granted a director an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $0.15 per share and a fair value of $16,267. These options vest immediately. The option was valued using the Black-Scholes option pricing model under the following assumptions:

 

Date  Number of Options   Stock Price   Strike Price   Expected Volatility   Risk-free Interest Rate   Dividend Rate  

Expected

Term

  Fair Value 
06/03/2022   8,669,400   $0.22   $2.50    274.50%   2.95%   0.00%  3.5 years  $1,856,151 
08/26/2022   1,734,615   $0.24   $0.24    269.24%   3.20%   0.00%  3.5 years  $411,668 
08/26/2022   242,424   $0.24   $0.24    276.76%   3.20%   0.00%  3.0 years  $57,264 
08/26/2022   246,748   $0.24   $0.24    207.37%   3.20%   0.00%  2.5 years  $53,479 
04/08/2023   350,000   $0.08   $0.10    202.26%   3.72%   0.00%  3.5 years  $26,623 
08/10/2023   200,000   $0.10   $0.15    201.69%   4.47%   0.00%  3.5 years  $17,987 
09/13/2023   200,000   $0.10   $0.15    198.67%   4.64%   0.00%  3.5 years  $16,267 

 

The Company granted options to purchase an aggregate of 750,000 and 10,893,187 shares of common stock during the fiscal years ended November 30, 2023 and 2022, respectively.

 

The weighted average grant date fair value of options granted and vested during the year ended November 30, 2023 was $60,877 and $10,982,523, respectively. The weighted average grant date fair value of options granted and vested during the year ended November 30, 2022 was $1,477,537 and $30,525,346, respectively. The weighted average non-vested grant date fair value of non-vested options was $0 and $10,917,826 at November 30, 2023 and November 30, 2022, respectively.

 

Compensation based stock option activity for qualified and unqualified stock options are summarized as follows:

 

       Weighted 
       Average 
   Shares   Exercise Price 
Outstanding at November 30, 2021   117,795,000   $0.39 
Granted   10,893,187    2.04 
Exercised   -    - 
Expired or cancelled   -    - 
Outstanding at November 30, 2022   128,688,187    0.53 
Granted   750,000    0.13 
Exercised   -    - 
Expired or cancelled   -    - 
Outstanding at November 30, 2023   129,438,187   $0.53 

 

F-22
 

 

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at November 30, 2023:

 

        Weighted-   Weighted-     
        Average   Average     
Range of   Outstanding   Remaining Life   Exercise   Number 
exercise prices   Options   In Years   Price   Exercisable 
                  
$0.099    400,000    0.64   $0.099    400,000 
 0.10    995,000    2.69    0.10    995,000 
 0.12    50,000    4.82    0.12    50,000 
 0.15    400,000    4.75    0.15    400,000 
 0.24    2,223,787    3.41    0.24    2,223,787 
 0.36    200,000    2.70    0.36    200,000 
 0.38    116,000,000    4.84    0.38    116,000,000 
 2.50    8,669,400    3.51    2.50    8,669,400 
 3.00    500,000    2.25    3.00    500,000 
      129,438,187    4.68   $0.53    129,438,187 

 

The compensation expense attributed to the issuance of the options is recognized as they are vested.

 

The stock options granted are exercisable over various terms from thee to ten years from the grant date and vest over various terms from the grant date to five years.

 

Total compensation expense related to the options was $7,391,278 and $31,622,179 for the years ended November 30, 2023 and 2022, respectively. As of November 30, 2023, there was no future compensation cost related to non-vested stock options.

 

The aggregate intrinsic value is $0 for total outstanding and exercisable options, which was based on our estimated fair value of the common stock of $0.10 as of November 30, 2023, which is the aggregate fair value of the common stock that would have been received by the option holders had all option holders exercised their options as of that date, net of the aggregate exercise price.

 

NOTE 12 – RELATED PARTY TRANSACTIONS

 

Bayshore Capital Advisors, LLC

 

On February 26, 2016, the Company issued a promissory note in the principal amount of $25,000 with an interest rate of 6% per annum to Bayshore Capital, an affiliate through common ownership of a 10% shareholder of the Company for working capital purposes. The note was payable August 26, 2016, or when the Company closes a bridge financing, whichever occurs first. As of November 30, 2022, the Company was in default on this note. On February 4, 2023, Bayshore Capital agreed to cancel the $25,000 debt, plus $10,146 of accrued and unpaid interest.

 

US Mine Corporation

 

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 provides various technical evaluations and mine development services to the Company. During the years ended November 30, 2023 and 2022, the Company made purchases of $84,502 and $136,759, respectively, from USMC. No services were rendered by USMC for the three months and years ended November 30, 2023 and 2022. In addition, during the years ended November 30, 2023 and 2022, USMC paid $15,853 and $11,323 respectively, of expenses to the Company’s vendors and creditors on behalf of the Company. During the years ended November 30, 2023 and 2022 USMC made cash advances to the Company of $914,788 and $755,000, respectively, which are recorded as part of due to affiliates on the Company’s consolidated balance sheets. All amounts owed for services rendered, expenses paid on behalf of the Company, and cash advances were converted into the Company’s common stock pursuant to the September 5, 2019, Debt Exchange Agreement (See Note 6), the November 25, 2020, Securities Purchase Agreement (See Note 6) and the April 7, 2022, Securities Purchase Agreement (See Note 6). The balance due to USMC was $0 and $0 at November 30, 2023 and 2022, respectively.

 

F-23
 

 

USMC Notes

 

On September 26, 2019, the Company entered into a securities purchase agreement with USMC pursuant to which USMC may purchase up to $1,000,000 of the Company’s 5% unsecured convertible two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.16 per share. As of April 7, 2022, USMC had purchased notes totaling $1,000,000 with maturity dates ranging from December 1, 2021, through November 25, 2022 (see Note 6). Interest expense on these notes totaled $20,756 and $50,000 for the years ended November 30, 2022 and 2021, respectively. On April 7, 2022, the December 1, 2019, January 1, 2020 and February 1, 2020 notes were amended to extend the maturity dates to April 30, 2022. On April 7, 2022, USMC converted the aggregate outstanding principal balance of $1,000,000 of the December 1, 2019, January 1, 2020, February 1, 2020 and December 1, 2020 notes, plus accrued interest totaling $75,346 through such date, into 6,720,906 shares of the Company’s common stock.

 

On November 25, 2020, the Company entered a securities purchase agreement with USMC pursuant to which USMC may purchase up to $2,000,000 of the Company’s 5% unsecured two-year promissory notes in one or more closings. The notes are convertible into the Company’s common stock at a conversion price of $0.088 per share. As of April 7, 2022, USMC has purchased notes totaling $1,579,769 with a maturity date of March 17, 2023 (see Note 6). Interest expense on these notes totaled $8,800 and $20,490 for the years ended November 30, 2022 and 2021, respectively. On March 14, 2022, in connection with the November 25, 2020, securities purchase agreement with USMC, a related party, the Company issued a convertible promissory note in the amount of $884,492 to USMC, with a maturity date of March 14, 2024. The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock, at any time at the option of the note holder, at a conversion price of $0.088 per share. Interest expense on this note totaled $2,908 for the year ended November 30, 2022. On April 7, 2022, USMC converted the aggregate outstanding principal balance of $1,464,337 of the November 25, 2020 note and March 14, 2022 note, plus accrued interest totaling $33,488 through such date, into 17,020,748 shares of the Company’s common stock.

 

On August 30, 2022, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 6), the Company issued a convertible promissory note in the amount of $470,862 to USMC, with a maturity date of August 30, 2024 (“Tranche #7”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #7 was approximately $23,543 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $470,862 and accrued interest as of January 31, 2024 of $33,476 into 1,293,175 shares of the Company’s common stock.

 

On November 29, 2022, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 6), the Company issued a convertible promissory note in the amount of $140,027 to USMC, with a maturity date of November 29, 2024 (“Tranche #8”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #8 was approximately $7,001 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $140,027 and accrued interest as of January 31, 2024 of $8,210 into 380,095 shares of the Company’s common stock.

 

On February 28, 2023, in connection with the April 7, 2022, securities purchase agreement with USMC, a related party (see Note 6), the Company issued a convertible promissory note in the amount of $308,320 to USMC, with a maturity date of February 28, 2025 (“Tranche #9”). The note bears interest at 5% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.39 per share. Total interest expense on Tranche #9 was approximately $11,615 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $308,320 and accrued interest as of January 31, 2024 of $14,233 into 827,059 shares of the Company’s common stock.

 

On May 31, 2023, in connection with the March 20, 2023, securities purchase agreement with USMC, a related party (see Note 6), the Company issued a convertible promissory note in the amount of $412,533 to USMC, with a maturity date of May 31, 2025 (“Tranche #10”). The note bears interest at 8% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share. Total interest expense on Tranche #10 was approximately $16,547 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $412,533 and accrued interest as of January 31, 2024 of $22,152 into 4,346,855 shares of the Company’s common stock.

 

On June 30, 2023, in connection with the March 20, 2023, securities purchase agreement with USMC, a related party (see Note 6), the Company issued a convertible promissory note in the amount of $193,935 to USMC, with a maturity date of June 30, 2025 (“Tranche #11”). The note bears interest at 8% per annum which is payable on maturity. Amounts due under the note may be converted into shares of the Company’s common stock at any time at the option of the noteholder, at a conversion price of $0.10 per share. Total interest expense on Tranche #11 was approximately $6,503 for the year ended November 30, 2023. On January 31, 2024, USMC converted the outstanding principal of $193,935 and accrued interest as of January 31, 2024 of $9,139 into 2,030,738 shares of the Company’s common stock.

 

The outstanding balance due on the above notes to USMC was $1,525,676 and $610,889 at November 30, 2023 and 2022, respectively.

 

Line of Credit – USMC

 

On July 10, 2023, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The July 10, 2023 line of credit agreement provides for the issuance of up to an aggregate of $1,000,000 of advances from USMC under an unsecured convertible grid promissory note (See Note 6) until July 2024. The note bears interest at 8% per annum and any outstanding principal or accrued interest under the note is convertible into shares of the Company’s common stock at a conversion price of $0.10 per share on the maturity date. As of November 30, 2023, there have been $346,735 advances from USMC under the July 10, 2023 line of credit agreement. As of November 30, 2023, the accrued interest on the July 10, 2023 line of credit was $6,784.

 

F-24
 

 

USMC Mining Agreements

 

On April 22, 2020, the Company entered into a Material Supply Agreement (the “Supply Agreement”) with USMC which amended the prior Materials Supply Agreement entered into on October 12, 2018. Under the terms of the Supply Agreement, all kaolin clay purchased by the Company from USMC under the Supply Agreement must be used exclusively for agricultural products and supplementary cementitious materials. The Company will pay $25 per ton for the kaolin clay for supplementary cementitious materials and $145 per ton for bagged products for clay for agriculture (in each case plus an additional $5 royalty fee per ton). The Supply Agreement also provides that if USMC provides pricing to any other customer which is more favorable than that provided to the Company, USMC will adjust the cost to the Company to conform to the more favorable terms. The initial term of the Supply Agreement is three years, which automatically renews for three successive one-year terms, unless either party provides notice of termination at least sixty days prior to the end of the then current term. Either party has the right to terminate the Supply Agreement for a material breach which is not cured within 90 days. For the years ended November 30, 2023 and 2022, the Company purchased $80,601 and $108,686, respectively, under the Supply Agreement. Since April 22, 2020, the Company has purchased $501,262 of materials under the Supply Agreement.

 

US Mine LLC

 

On May 27, 2021, the Company entered into the Materials Extraction Agreement with US Mine, LLC, pursuant to which the Company acquired the right to extract up to 100,000,000 of certain raw clay materials. The Materials Extraction Agreement is effective until 100,000,000 tons of material are extracted. As compensation for such right, the Company issued a ten-year convertible promissory note in the principal amount of $50,000,000 to US Mine, LLC (the “US Mine Note”). The US Mine Note bears interest at the rate of 2.5% per annum which is payable upon maturity. Amounts due under the US Mine Note may be converted into shares of the Company’s common stock at the option of the noteholder, at a conversion price of $0.43 per share. The noteholder may convert (i) up to 50% of the outstanding balance on or after such date as the Company’s common stock is listed for trading on any national securities exchange, (ii) up to an additional 25% of the outstanding balance on or after the six-month anniversary of such initial trading date, and (iii) the remaining 25% on or after the twelve-month anniversary of such initial trading date. In addition, the Company will pay US Mine, LLC a royalty fee of $5.00 per ton of materials extracted and any royalty not paid in a timely manner with be subject to 15% interest per annum and compounded monthly.

 

On October 6, 2021, and prior to consummation of activities under the Materials Extraction Agreement, the Company and US Mine, LLC executed an amendment to the Materials Extraction Agreement (the “Amendment”). Pursuant to the Amendment, the US Mine Note was retroactively rescinded, ab initio and an option to purchase an aggregate of 116,000,000 shares of the Company’s common stock at an exercise price of $0.38 per share until April 6, 2028, was issued to US Mine, LLC as compensation. Shares subject to the option vested as to 58,000,000 shares on April 6, 2022, 29,000,000 shares on October 6, 2022, and 29,000,000 shares will vest on April 6, 2023. This agreement was further amended and restated in June 2022, with the same option purchase, vesting and exercise schedule. For the year ended November 30, 2023, the Company expensed $7,278,550 in stock-based compensation expense related to the issuance of the 116,000,000 options issued to USMC.

 

Transactions with Officers

 

On August 31, 2017, the Company issued a note in the amount of $197,096 to A. Scott Dockter, President, Chief Executive Officer and a director of the Company, to consolidate the total amounts due to Mr. Dockter. The note bears interest at 6% and is due upon demand. During the years ended November 30, 2023 and 2022, the Company paid $20,000 and $30,000, respectively, towards the outstanding balance of the note. The balance on the note was $8,716 and $28,716 as of November 30, 2023 and 2022, respectively. Total interest expense on the note was $899 and $2,770 for the years ended November 30, 2023 and 2022, respectively.

 

F-25
 

 

Convertible Debt – Board of Directors

 

On April 8, 2021, the Company entered into the Guzy Director Agreement (see Note 6) pursuant to which Mr. Guzy will serve as a director of the Company, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Mr. Guzy is entitled to a cash fee of $1,000 per month which accrues as 0% debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Guzy at the Renewal Date or upon Mr. Guzy’ resignation or removal will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Mr. Guzy was also issued a five-year stock option to purchase 250,000 shares of common stock at an exercise price of $0.24. The Agreement also includes a non-competition provision during the term of the Agreement and for twelve months thereafter.

 

On August 13, 2021, the Company entered into the Kurtis Director Agreement (see Note 6) pursuant to which Dr. Kurtis will provide up to five hours per month of board services, which agreement will automatically renew for successive one-year terms unless either party notifies the other of its desire not to renew the Agreement within 30 days of the expiration of the then current term. As compensation therefor, Dr. Kurtis is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Dr. Kurtis at the Renewal Date or upon Dr. Kurtis’ resignation or removal will be converted into common stock at a price per share equal to market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Dr. Kurtis was also issued a five-year stock option to purchase 200,000 shares of common stock at $0.15. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter. As of November 30, 2023, the Company has debt in the amount of $16,000 owed to Dr. Kurtis.

 

On September 11, 2023, the Company entered into the Barto Agreement (see Note 6) pursuant to which Mr. Barto agrees to devote as much time as is necessary to perform completely the duties as a Director. Mr. Barto shall be notified within 30 days before the end of the twelve months whether his contract shall be renewed under the same terms of compensation. As compensation therefor, Mr. Barto is entitled to a cash fee of $1,000 per month which accrues as debt to the Company until the Company has its first cash-flow positive month. Any amounts owed to Mr. Barto at the Renewal Date or the Termination Date will be converted into common stock at the lower price of $0.15 per share or the market price on the exchange or trading market where such stock is then traded or quoted or the VWAP of the common stock for the 20-days immediately preceding the Renewal Date or the Termination Date, as the case may be. Mr. Barto was also issued a five-year stock option to purchase 200,000 shares of common stock at $0.15. The Agreement includes a non-competition provision during the term of the Agreement and for twelve months thereafter. As of November 30, 2023, the Company has debt in the amount of $3,000 owed to Mr. Barto.

 

On June 9, 2023, effective April 8, 2023, the Company entered into the Scrivener Agreement pursuant to which Dr. Scrivener will provide certain strategic advisory services to the Company. As compensation therefor, Dr. Scrivener was issued 100,000 shares of the Company’s common stock on June 9, 2023, at a fair value of $0.08 per share.

 

Leases

 

On October 1, 2020, the Company entered into a two-year lease agreement for its office space with USMC with a monthly rent of $1,500 (See Note 7). The lease was amended to extend the lease for an additional two-year term effective November 1, 2022 and to add an additional 700 square feet of office space for a total monthly rental price of $3,500 per month.

 

NOTE 13 – CONCENTRATION OF CREDIT RISK

 

Cash Deposits

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of November 30, 2023 and 2022, the Company had no deposits in excess of the FDIC insured limit.

 

Revenues

 

Four customers accounted for 99% of total revenue for the fiscal year ended November 30, 2023, as set forth below:

 

Customer A   45%
Customer B   21%
Customer C   17%
Customer D   16%

 

Four customers accounted for 99% of total revenue for the year ended November 30, 2022, as set forth below:

 

Customer A   40%
Customer B   28%
Customer C   19%
Customer D   12%

 

F-26
 

 

Accounts Receivable

 

The Company did not have any accounts receivable as of November 30, 2023 and November 30, 2022.

 

Vendors

 

One supplier, a related party, accounted for 100% of purchases as of November 30, 2023.

 

One supplier, a related party, accounted for 100% of purchases as of November 30, 2022.

 

NOTE 14 – INCOME TAXES

 

The Company identified its federal and California state tax returns as its “major” tax jurisdictions. The periods the Company’s income tax returns are subject to examination for these jurisdictions are calendar year 2018 through 2023. The Company believe its income tax filing positions and deductions will be sustained on audit, and the Company does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain tax positions have been recorded.

 

At November 30, 2023, the Company had available net operating loss carry-forwards for federal income tax reporting purposes of $12,933,849 which are available to offset future taxable income. As a result of the Tax Cuts Job Act 2017, certain of these carry-forwards do not expire. The Company has not performed a formal analysis, but it believes its ability to use such net operating losses and tax credit carry-forwards is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, which significantly impacts its ability to realize these deferred tax assets.

 

The Company’s net deferred tax assets, liabilities and valuation allowance as of November 30, 2023 and 2022 are summarized as follows:

 

   2023   2022 
   Year Ended November 30, 
   2023   2022 
Deferred tax assets:          
Net operating loss carryforwards  $3,260,600   $2,692,900 
Total deferred tax assets   3,260,600    2,692,900 
Valuation allowance   (3,260,600)   (2,692,900)
Net deferred tax assets  $-   $- 

 

The Company records a valuation allowance in the full amount of its net deferred tax assets since realization of such tax benefits has been determined by management to be less likely than not. The valuation allowance increased $567,700 during the year ended November 30, 2023. The valuation allowance decreased $2,266,900 during the year ended November 30, 2022.

 

A reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended November 30, 2023 and 2022, is as follows:

 

   2023   2022 
Federal statutory blended income tax rates   (21)%   (21)%
State statutory income tax rate, net of federal benefit   (7)   (7)
Change in valuation allowance   21    8 
Other   7    20 
Effective tax rate   -%   -%

 

To date, the Company has not filed its 2023 federal and state corporate income tax returns. The Company expects to make these filings as soon as practicable.

 

NOTE 15 – SUBSEQUENT EVENTS

 

In accordance with ASC 855, Subsequent Events, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events and transactions that occurred after November 30, 2023 through the date the consolidated financial statements were available for issuance. During this period the Company did not have any material reportable subsequent events other than those reported below.

 

On January 31, 2024, USMC converted the outstanding principal and accrued interest of notes payable into shares of the Company’s common stock as follows:

 

  The August 30, 2022 note (Tranche #7) principal of $470,862 and accrued interest through January 31, 2024 of $33,476 into 1,293,175 shares
  The November 29, 2022 note (Tranche #8) principal of $140,027 and accrued interest through January 31, 2024 of $8,210 into 380,095 shares
  The February 28, 2023 note (Tranche #9) principal of $308,320 and accrued interest through January 31, 2024 of $14,233 into 827,060 shares
  The May 31, 2023 note (Tranche #10) principal of $412,533 and accrued interest through January 31, 2024 of $22,152 into 4,346,855 shares
  The June 30, 2023 note (Tranche #11) principal of $193,935 and accrued interest through January 31, 2024 of $9,139 into 2,030,738 shares.

 

On February 6, 2024, the Company agreed to pay $618,000 in six equal monthly payments of $103,000 each with the first payment on February 8, 2024 in regards to the Calvanico Claim (see Note 9).

 

F-27