PUBC 10-Q
Purebase Corp (PUBC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the Quarterly Period Ended
or
For the transition period from __________________________ to __________________________
Commission
file number
(Exact name of registrant as specified in its charter)
| (State or other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) |
|
| ||
| (Address of principal executive offices) | (Zip Code) |
(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 |
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.
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).
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 | ☐ |
| ☒ | 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 13(a) of the Exchange Act: ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 14, 2025, there were shares of the registrant’s common stock outstanding.
PUREBASE CORPORATION AND SUBSIDIARIES
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2025
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| February 28, 2025 | November 30, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Interest payable, related party | ||||||||
| Line of credit, related party | ||||||||
| Advances, related party | ||||||||
| Note payable, related party | ||||||||
| Convertible notes payable, related parties | ||||||||
| Total Current Liabilities | ||||||||
| Interest payable, related party, net of current portion | ||||||||
| Convertible notes payable; related party, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 9) | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, $ par value; shares authorized; shares issued and outstanding at February 28, 2025 and November 30, 2024 | ||||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding, at February 28, 2025 and November 30, 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the three months ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Revenue, net | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross margin | ||||||||
| Operating expenses | ||||||||
| Selling, general and administrative | ||||||||
| Stock based compensation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Interest expense related party | ( | ) | ( | ) | ||||
| Total other income (expense), net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share – basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of shares of common stock outstanding – basic and diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
| Preferred Stock | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance at November 30, 2023 (audited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock based compensation – options | - | - | ||||||||||||||||||||||||||
| Shares for services | - | |||||||||||||||||||||||||||
| Convertible debt converted into common stock, related party | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at February 29, 2024 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Balance at November 30, 2024 (audited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock based compensation – options | - | - | ||||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
Balance February 28, 2025 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
PUREBASE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months Ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Stock issued for services | ||||||||
| Non-cash director compensation | ||||||||
| Depreciation | ||||||||
| Right of use asset and liability, net | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Settlement liability | ( | ) | ||||||
| Interest payable, related party | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Net Cash Used In Investing Activities | ||||||||
| Cash Flows From Financing Activities: | ||||||||
| Advances from related party | ||||||||
| Advances from related party for convertible note | ||||||||
| Proceeds from line of credit, related party | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Increase (Decrease) In Cash and Cash Equivalents | ( | ) | ||||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents – End of Period | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Noncash operating and financing activities: | ||||||||
| Vendors paid on behalf of the Company by USMC | $ | $ | ||||||
| Convertible debt and accrued interest converted to common stock, related party | $ | $ | ||||||
| Director compensation - accrued as convertible debt converted to common stock | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
PUREBASE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS
Corporate Overview
PureBase
Corporation (“PureBase” or the “Company”) was incorporated in the State of
The Company’s headquarters is in Ione, California.
Agricultural Sector
The Company develops specialized sun protectants. The Company has developed and will seek to develop additional products derived from mineralized materials of kaolin clay.
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 an 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 minerals. 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. In addition, a substantial portion of the minerals used by the Company are obtained from properties owned or controlled by US Mine, LLC. A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also owners of US Mine, LLC.
| 7 |
NOTE 2 – GOING CONCERN AND LIQUIDITY
The
accompanying condensed 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 February 28, 2025,
the Company had a significant accumulated deficit of $
The Company’s plan, through the continued promotion of its products to existing and potential customers, is to generate sufficient revenues to cover its anticipated expenses. The Company is currently exploring several other options to meet its short-term cash requirements, including issuances of equity securities or equity-linked securities to 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 advances, will provide the necessary funding for the Company to continue as a going concern for the next twelve months.
On
March 7, 2024, the Company entered into a $
USMC
has advanced an additional $
| 8 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) including Form 10-Q and Regulation S-X. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments, unless otherwise indicated) which are, in the opinion of management, necessary to fairly state the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. These financial statements and the information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the audited financial statements and notes thereto for the year ended November 30, 2024, in our Annual Report on Form 10-K filed with the SEC on February 28, 2025. The results of the three months ended February 28, 2025 (unaudited), are not necessarily indicative of the results to be expected for the full year ending November 30, 2025.
Principles of Consolidation
These condensed 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 may be affected.
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the condensed consolidated financial statements. Significant estimates include the useful lives of property and equipment, deferred tax asset and valuation allowance, and assumptions used in the Black-Scholes valuation methods for fair value of options, such as expected volatility, risk-free interest rate, and expected dividend rate.
Revenue
The Company accounts for revenue in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The Company derives revenues from the sale of products from its agricultural sector and construction sector. 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.
| 9 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Practical Expedients
As part of ASC Topic 606, the Company has adopted 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 and Partially Unsatisfied Performance Obligations – for 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 provided 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. |
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
Accounts Receivable
The
Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. If collectability
of an account becomes unlikely, a credit loss is recorded for that doubtful account. As of February 28, 2025 and November 30, 2024, the
Company had
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, except for SCM plants, which lives are estimated at thirty years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated.
| Equipment | |
| Autos and trucks | |
| SCM plants |
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 $
| 10 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. The 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.
Shipping and Handling
The
Company incurs shipping and handling costs which are charged back to the customer. There were
Advertising and Marketing Costs
The
Company expenses advertising and marketing costs as incurred and such costs are recorded in selling, general and administrative expenses
in the accompanying condensed consolidated statements of operations. Advertising and marketing expenses were $
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. |
| 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. |
| 11 |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
The carrying value of cash, accounts payable, and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amount of the notes approximates the estimated fair value for these financial instruments as management believes that such notes constitute all of the Company’s debt and interest payable on the notes based on the Company’s incremental borrowing rate.
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 three months ended February 28, 2025 and February 29, 2024. 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 three months ended February 28, 2025 and February 29, 2024.
| Three Months Ended, | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Convertible Notes | ||||||||
| Stock Options | ||||||||
| Total | ||||||||
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 condensed 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 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 with 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 as 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.
| 12 |
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
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. Effective November 1, 2024, the lease was amended to change the term to a month-to-month lease at $
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the condensed 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 condensed 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 condensed 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 condensed 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. As of February 28, 2025, the Company was not engaged in any mine exploration.
| 13 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In November 2024, FASB issued Accounting Standards Update (ASU) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures and Disaggregation of Income Statement Expenses
The amendments in the Update require disclosure, in the notes to the financial statements, of specific information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity:
| 1 | Disclose the amounts of (a) purchases of inventory, (b) employee compensation (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities ((DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains an of the expense categories listed in (a)-(e). | |
| 2 | Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. | |
| 3 | Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. | |
| 4 | Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. |
The amendments in this Update are effective for annual reporting periods after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company has determined that such disclosures will result in expanded notes to the financial statements. The Company will adopt ASU 2024-03 on or before November 30, 2027.
In December 2023, FASB issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740). The amendment’s main provisions are rate reconciliation, income taxes paid, and other disclosures.
For rate reconciliation, the amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.
Public business entities are required to disclose a tabular reconciliation, using both percentages and reporting currency amounts, according to the following requirements:
| 1 | The following specific categories are required to be disclosed: |
| a | State and local income tax, net of federal income tax effect, | |
| b | Foreign tax effects, | |
| c | Effect of changes in tax laws or rates enacted in the current period, | |
| d | Effect of cross-border tax laws, | |
| e | Tax credits, | |
| f | Changes in valuation allowances, | |
| g | Nontaxable or nondeductible items, | |
| h | Changes in unrecognized tax benefits. |
| 2 | Separate disclosure is required for any reconciling item listed below in which the effect of the reconciling item is equal to or greater than 5 percent of the amount computed by multiplying income (or loss) from continuing operations before income taxes by the applicable statutory income tax rate: |
| a | If the reconciling item is within the effect of cross-border tax laws, tax credits, or nontaxable or nondeductible items categories, it is required to be disaggregated by nature, | |
| b | If the reconciling item is within the foreign tax effects category, it is required to be disaggregated by jurisdiction (country) and by nature, except for reconciling items related to changes in unrecognized tax benefits discussed in (4), | |
| c | If the reconciling item does not fall within any of the categories listed in (1), it is required to be disaggregated by nature. |
| 14 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
| 3 | For the purpose of categorizing reconciling items, except for reconciling items related to changes in unrecognized tax benefits discussed in (4), the state and local income tax category should reflect income taxes imposed at the state or local level within the jurisdiction (country) of domicile, the foreign tax effects category should reflect income taxes imposed by foreign jurisdictions, and the remaining categories listed in (1) should reflect federal (national) income taxes imposed by the jurisdiction (country) of domicile. |
| 4 | For the purpose of presenting reconciling items: |
| a | Reconciling items are required to be presented on a gross basis with two exceptions under which unrecognized tax benefits and the related tax positions and tax effects of certain cross-border tax laws and the related tax credits may be presented on a net basis, | |
| b | Reconciling items presented in the changes in unrecognized tax benefits category may be disclosed on an aggregate basis for all jurisdictions. |
For income taxes paid, the amendments require that all entities disclose on an annual basis the following information about income taxes paid:
| 1 | The amount of income taxes paid (net of funds received) disaggregated by federal (national), state, and foreign taxes, | |
| 2 | The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refund received). |
For other disclosures, the amendments require that all entities disclose the following information:
| 1 | Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, | |
| 2 | Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. |
The amendments in this ASU are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.
| 15 |
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. On December 1, 2014, USMC 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 provides for the sale of approximately
On
April 1, 2020, the Company entered into a purchase and sale agreement with the Bremer Family 1995 Living Trust (the “Trust”),
pursuant to which the Company will purchase the Snow White Mine for $
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
| February 28, 2025 | November 30, 2024 | |||||||
| Furniture and equipment | $ | $ | ||||||
| Machinery and equipment | ||||||||
| Automobiles and trucks | ||||||||
| Pilot plant | ||||||||
| Construction in process | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
There
was $
| 16 |
NOTE 6 – NOTES PAYABLE
A. Scott Dockter – Chief Executive Officer
On
August 31, 2017, the Company issued a note in the amount of $
Convertible Promissory Notes – USMC
August 30, 2022
On
August 30, 2022, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible
promissory note in the amount of $
November 29, 2022
On
November 29, 2022, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible
promissory note in the amount of $
February 28, 2023
On
February 28, 2023, in connection with the April 7, 2022 securities purchase agreement with USMC (See Note 12), the Company issued a convertible
promissory note in the amount of $
May 31, 2023
On
May 31, 2023, in connection with the March 20, 2023 securities purchase agreement with USMC (See Note 12), the Company issued a convertible
promissory note in the amount of $
| 17 |
NOTE 6 – NOTES PAYABLE (CONTINUED)
June 30, 2023
On
June 30, 2023, in connection with the March 20, 2023 securities purchase agreement with USMC (See Note 12), the Company issued a convertible
promissory note in the amount of $
February 8, 2024
On
February 8, 2024, the Company issued a convertible promissory note in the amount of $
Lines of Credit –USMC
July 10, 2023
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 provided for the issuance of up to an aggregate of $
March 7, 2024
On
March 7, 2024, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The March
7, 2024 line of credit agreement provides for the issuance of up to an aggregate of $
| 18 |
NOTE 6 – NOTES PAYABLE (CONTINUED)
Terms
of a new line of credit and unsecured convertible grid promissory note have not yet been determined. USMC has advanced an additional
$
The
Company issued a $
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
$
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 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 $
On
September 11, 2023, the Company entered into a twelve-month director agreement with Brady Barto (“the Barto Agreement”) pursuant
to which Mr. Barto will serve as a director. Mr. Barto will be notified within 30 days before the end of the twelve months whether his
contract will be renewed under the same terms of compensation. As compensation therefor, Mr. Barto is entitled to a cash fee of $
| 19 |
NOTE 7 – LEASES
The following table presents net lease cost and other supplemental lease information:
Three Months Ended February 29, 2024 | ||||
| Lease cost | ||||
| Operating lease cost (cost resulting from lease payments) | $ | |||
| Short term lease cost | ||||
| Sublease income | ||||
| Net lease cost | $ | |||
| Operating lease – operating cash flows (fixed payments) | $ | |||
| Operating lease – operating cash flows (liability reduction) | $ | |||
| Non-current liabilities – right of use assets | $ | |||
| Current liabilities – operating lease liabilities | $ | |||
| Non-current liabilities – operating lease liabilities | $ | |||
The Company had a month-to-month lease effective November 1, 2024.
NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following amounts as of:
| February 28, 2025 | November 30, 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued compensation | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Office and Rental Property Leases
The Company is leasing office space from USMC, which is owned by the Company’s majority stockholders 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).
| 20 |
NOTE 9 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
Legal Matters
On
July 8, 2020, the Company’s former Chief Financial Officer, Al Calvanico (“Calvanico”), filed a demand for arbitration
alleging retaliation, wrongful termination, and demand for a minimum of $
Contractual Matters
On November 1, 2013, the Company entered into an agreement with USMC, in which USMC provides various technical evaluations and mine development services for the Company regarding 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 Company entered into a material supply agreement with USMC, pursuant to which USMC provides designated natural resources to the Company at predetermined prices (See Note 12).
Note 10 - STOCKHOLDERS’ EQUITY
On
January 31, 2024, the Company issued shares of common stock to USMC in exchange for $
On February 23, 2024, the board of directors authorized the immediate issuance of shares of common stock and the issuance of shares of common stock monthly from March 2024 through January 2025 and shares of common stock in February 2025 pursuant to a consulting agreement. shares of common stock have been issued as of February 28, 2025.
| 21 |
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 million shares of the Company’s common stock to be issued pursuant to options granted under the Option Plan. The Option Plan was subsequently approved by shareholders on September 28, 2018. As of February 28, 2025, options to purchase an aggregate of shares of common stock are outstanding under the Option Plan.
The Company has also granted options to purchase an aggregate of shares of common stock pursuant to employment agreements with certain employees prior to the adoption of the Option Plan.
On December 13, 2023, the Company granted the Chief Financial Officer an option to purchase shares of the Company’s common stock at an exercise price of $ per share and a fair value of $. This option vests in one year. The option was valued using the Black-Scholes option pricing model under the assumption in the table below.
On February 6, 2025, the Company granted the Chief Financial Officer an option to purchase shares of the Company’s common stock at an exercise price of $ per share and a fair value of $. This option vests in one year. The option was valued using the Black-Scholes option pricing model under the assumption in the table below.
On February 6, 2025, the Company granted an employee two options to purchase shares for each option of the Company’s common stock at an exercise price of $ per share and a fair value of $ for each option. These options vest in one year. The option was valued using the Black-Scholes option pricing model under the assumption as found in the table below.
On February 6, 2025, the Company repriced all options outstanding under the 2017 Purebase Corporation Stock Option Plan from exercise prices ranging from $ to $ per share to an exercise price of $ per share. A fair value of $ was recorded for the repricing. All vested options under the 2017 Purebase Corporation Stock Option Plan at February 6, 2025 had their exercise period extended until .
| Grant Date | Number of Options | Stock Price | Exercise Price | Expected Volatility | Risk-free Interest Rate | Dividend Rate | Expected Term | Fair Value | ||||||||||||||||||||||
| $ | $ | % | % | % | years | $ | ||||||||||||||||||||||||
| $ | $ | % | % | % | years | $ | ||||||||||||||||||||||||
| $ | $ | % | % | % | years | $ | ||||||||||||||||||||||||
| $ | $ | % | % | % | years | $ | ||||||||||||||||||||||||
The Company granted options to purchase an aggregate of shares of common stock during the three months ended February 28, 2025, and granted an option to purchase shares of common stock during the three months ended February 29, 2024.
The weighted average grant date fair value of options granted and vested during the three months ended February 28, 2025 was $. The weighted average grant date fair value of options granted and vested during the three months ended February 29, 2024 was $.
| Weighted | ||||||||
| Number of | Average | |||||||
| Shares | Exercise Price | |||||||
| Outstanding at November 30, 2023 | $ | |||||||
| Granted | $ | |||||||
| Exercised | ||||||||
| Expired or cancelled | ||||||||
| Outstanding at February 29, 2024 | $ | |||||||
| Outstanding at November 30, 2024 | $ | |||||||
| Granted | $ | |||||||
| Exercised | ||||||||
| Expired or cancelled | ||||||||
| Outstanding at February 28, 2025 | $ | |||||||
| 22 |
Note 11 – STOCK-BASED COMPENSATION (CONTINUED)
| Weighted- | Weighted- | |||||||||||||||||
| Average | Average | |||||||||||||||||
| Exercise | Outstanding | Remaining Life | Exercise | Number | ||||||||||||||
| Price | Options | In Years | Price | Exercisable | ||||||||||||||
| $ | $ | |||||||||||||||||
| $ | $ | |||||||||||||||||
| $ | $ | |||||||||||||||||
| $ | $ | |||||||||||||||||
| $ | ||||||||||||||||||
The compensation expense attributed to the issuance of the options is recognized as vested options.
The stock options granted are exercisable over various terms from three to from the grant date and vest over various terms from the grant date to .
Total compensation expense related to the options was $ and $ for the three months ended February 28, 2025 and February 29, 2024, respectively. As of February 28, 2025, there was $ compensation cost related to non-vested stock options.
As of February 28, 2025, the aggregate intrinsic value of the total outstanding and exercisable options was $, which was based on an estimated fair value of the Company’s common stock of $ as of such date and which represents 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.
| 23 |
NOTE 12 – RELATED PARTY TRANSACTIONS
US Mine Corporation
On
December 1, 2013,
During
the three months ended February 28, 2025 and February 29, 2024, USMC paid $
USMC Notes
On
February 8, 2024, the Company issued a convertible promissory note in the amount of $
The
outstanding balance due on the above notes to USMC was $
USMC Lines of Credit
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 $
On
March 7, 2024, the Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. The March
7, 2024 line of credit agreement provides for the issuance of up to an aggregate of $
USMC
has advanced an additional $
A
related party advanced the Company $
| 24 |
NOTE 12 – RELATED PARTY TRANSACTIONS (CONTINUED)
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 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 $
US Mine LLC
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, as further amended on June 17, 2022, the US Mine Note was retroactively rescinded, ab initio and an option to purchase an aggregate of shares of the Company’s common stock at an exercise price of $ per share until April 6, 2028, was issued to US Mine, LLC as compensation. Shares subject to the option vested as to shares on April 6, 2022, shares on October 6, 2022, and shares on April 6, 2023.
Transactions with Officers
On
August 31, 2017, the Company issued a note in the amount of $
| 25 |
NOTE 12 – RELATED PARTY TRANSACTIONS (CONTINUED)
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 $
On
August 13, 2021, the Company entered into the Kurtis Director Agreement (See Note 6) pursuant to which Dr. Kurtis will serve as a director
and provide 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 $
On
September 11, 2023, the Company entered into the Barto Agreement (see Note 6) pursuant to which Mr. Barto agreed to devote as much time
as is necessary to perform completely the duties as a director. Mr. Barto was to be notified within 30 days before the end of the twelve
months whether his contract would be renewed under the same terms of compensation. As compensation therefor, Mr. Barto was entitled to
a cash fee of $
On February 16, 2024, the Company entered into a one-year consulting agreement with Magmatics, Inc. (“Magmatics”) pursuant to which Joe Thomas, an advisory board member, will assist in the design, production, testing, and certification of metakaolin and an HP-SCM. Magmatics was issued shares of the Company’s common stock upon entering into the agreement and will be issued shares of the Company’s common stock for each thirty-day period completed for eleven months and shares of the Company’s common stock for the twelfth month. shares have been issued as of February 28, 2025 under such agreement.
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 $
| 26 |
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 $
Revenues
The Company had revenues for the three months ended February 28, 2025 and February 29, 2024.
Accounts Receivable
The
Company had
Vendors
The
Company had
NOTE 14 – 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 February 28, 2025 through the date the condensed consolidated financial statements were filed. During this period the Company did not have any material reportable subsequent events.
| 27 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q includes forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are statements 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. These 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. Prospective 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 set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025, 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 in our forward-looking statements. These risks and factors include, by way of example and without limitation:
| ● | absence of contracts with customers or suppliers; |
| ● | our ability to maintain and develop relationships with customers and suppliers; |
| ● | the impact of competitive products and pricing; |
| ● | supply constraints or difficulties; |
| ● | the retention and availability of key personnel; |
| ● | general economic and business conditions; |
| ● | substantial doubt about our ability to continue as a going concern; |
| ● | our ability to successfully implement our business plan; |
| ● | our need to raise additional funds in the future; |
| ● | our ability to successfully recruit and retain qualified personnel in order to continue our operations; |
| ● | our ability to successfully acquire, develop or commercialize new products; |
| ● | the commercial success of our products; |
| ● | the impact of any industry regulation; |
| ● | our ability to develop existing mining projects or establish proven or probable reserves; |
| ● | our dependence on one vendor for our minerals for our products; |
| ● | the impact of potentially losing the rights to properties; and |
| ● | the impact of the increase in the price of natural resources. |
We undertake no obligation to update or revise forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report, except as required by law.
As used in this Quarterly Report 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”).
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.
| 28 |
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.
Results of Operations
Comparison of the Three Months Ended February 28, 2025 to the Three Months Ended February 29, 2024
| February 28, 2025 | February 29, 2024 | Variance | ||||||||||
| Revenue, net | $ | - | $ | - | $ | - | ||||||
| Cost of goods sold | - | - | - | |||||||||
| Operating income | - | - | - | |||||||||
| Operating Expenses: | ||||||||||||
| Selling, general and administrative | 385,069 | 453,565 | (68,496 | ) | ||||||||
| Stock based compensation | 33,147 | 8,191 | 24,956 | |||||||||
| Total operating expenses | 418,216 | 461,756 | (43,540 | ) | ||||||||
| Loss from operations | (418,216 | ) | (461,756 | ) | (43,540 | ) | ||||||
| Interest expense, related parties | (34,472 | ) | (29,216 | ) | (5,256 | ) | ||||||
| Loss before provision for income taxes | (452,688 | ) | (490,972 | ) | 38,284 | |||||||
| Provision for income tases | - | - | - | |||||||||
| Net Loss | $ | (452,688 | ) | $ | (490,972 | ) | $ | 38,284 | ||||
Revenues
There was no revenue in the three months ended February 28, 2025 and February 29, 2024. Customer purchases of agricultural products is seasonal and usually does not begin until the Company’s second quarter.
Cost of Goods Sold
There was no cost of goods sold for the three months ended February 28, 2025 and February 29, 2024 as there was no revenue during those periods.
| 29 |
Operating Expenses
Total operating expenses decreased by $43,540, or 9%, for the three months ended February 28, 2025, as compared to the three months ended February 29, 2024. The decrease in operating expenses was primarily due to a decrease in selling and general and administrative expenses of $68,703 for the three months ended February 28, 2025, as compared to the three months ended February 29, 2024, primarily due to a decrease in professional services, offset by an increase in wages and related expenses and stock-based compensation.
Interest Expense, Related Parties
Interest expense increased by $5,256 for the three months ended February 28, 2025, as compared to the three months ended February 29, 2024, primarily due to increased borrowings on the lines of credit, advances from USMC, and a new convertible note payable, partially offset by conversion of five notes payable to common stock in January 2024.
Liquidity and Capital Resources
As of February 28, 2025, we had cash on hand of $19,990 and a working capital deficiency of $1,494,421, as compared to cash on hand of $28,100 and a working capital deficiency of $1,093,058 as of November 30, 2024. The increase in working capital deficiency is primarily a result of an increase in advances from USMC of $238,449, an increase in the line of credit with USMC of $101,551, an increase of accounts payable and accrued expenses of $50,798, an increase in interest payable related parties of $21,753, an increase in convertible notes payable related parties of $5,500, a decrease in cash of $8,110, offset by an increase in prepaid expenses of $24,798.
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 2025, 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.
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 a line of credit, will provide the necessary funding for the Company to continue as a going concern for the next twelve months.
Going Concern
The unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. The Company has accumulated losses from inception through February 28, 2025 of $64,661,211, negative cash flows from operating activities of $348,110 for the three months ended February 28, 2025 and a working capital deficiency of $1,494,421 as of February 28, 2025. During the three months ended February 28, 2025, the Company received net cash proceeds of $340,000 from USMC through a line of credit and additional advances. If the Company does not generate additional revenue and obtain equity and debt financing from USMC or other third parties, it will not have sufficient cash to meet its obligations for the next nine months, following the date of this Quarterly Report on Form 10-Q. There currently are no other arrangements or agreements for financing, and there can be no assurances that 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 date of this Quarterly Report on Form 10-Q. The condensed consolidated financial statements in this Quarterly Report on Form 10-Q do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
| 30 |
Working Capital Deficiency
| February 28, 2025 | November 30, 2024 | |||||||
| Current assets | $ | 64,300 | $ | 47,612 | ||||
| Current liabilities | 1,558,721 | 1,140,670 | ||||||
| Working capital deficiency | $ | (1,494,421 | ) | $ | (1,093,058 | ) | ||
The increase in current assets as of February 28, 2025, is primarily due to the increase in prepaid expenses of $24,798, offset by a decrease in cash of $8,110. The increase in current liabilities is primarily a result of an increase in advances from USMC of $238,449, an increase in the line of credit with USMC of $101,551, an increase of accounts payable and accrued expenses of $50,798, an increase in interest payable related parties of $21,753, and an increase in convertible notes payable related parties of $5,500.
Cash Flows
| Three Months Ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Net cash used in operating activities | $ | (348,110 | ) | $ | (675,212 | ) | ||
| Net cash used in investing activities | - | - | ||||||
| Net cash provided by financing activities | 340,000 | 675,400 | ||||||
| Increase in cash | $ | 8,110 | $ | 188 | ||||
Operating Activities
Net cash used in operating activities was $348,110 for the three months ended February 28, 2025, primarily due to a net loss of $452,688 and an increase in prepaid expenses and other current assets of $24,798, partially offset by an increase in accounts payable and accrued expenses of $50,797, an increase in interest payable related parties of $34,113, an increase in stock-based compensation of $33,147, an increase in non-cash board of directors compensation of $5,500, an increase in common stock issued for services of $4,000, and an increase in depreciation of $1,819. Net cash used in operating activities was $675,212 for the three months ended February 29, 2024, due to a net loss of $490,972, a decrease in accounts payable and accrued expenses of $136,311, a decrease in settlement liability of $103,000, a decrease in prepaid expenses and other current assets of $11,258, and a decrease in right of use asset and liability of $80, offset by an increase in interest payable related parties of $28,218, an increase in common stock issued for services of $24,000,an increase in stock-based compensation of $8,191, and an increase in non-cash board of directors compensation of $6,000.
Investing Activities
There were no investing activities in the three months ended February 28, 2025 and February 29, 2024.
Financing Activities
For the three months ended February 28, 2025, net cash provided by financing activities was $340,000, consisting of advances from USMC of $238,449 and increases in the line of credit from USMC of $101,551. For the three months ended February 29, 2024, net cash provided by financing activities was $675,400, consisting advances in the line of credit from USMC of $572,400 and advances from USMC on a convertible note of $103,000.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies and Procedures
Our significant accounting policies are more fully described in Note 1 to our condensed consolidated financial statements included in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024, as filed with the SEC on February 28, 2025.
| 31 |
Recently Adopted Accounting Pronouncements
Our recently adopted accounting pronouncements are more fully described in Note 3 to our unaudited condensed consolidated financial statements included in this Quarterly Report.
ITEM 3. 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 4. 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 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 February 28, 2025 due to the material weaknesses in internal control over financial reporting described below.
Material Weaknesses in Internal Control over Financial Reporting
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.
The Company has determined that its internal control over financial reporting was ineffective due to the following material weaknesses:
| ● | Inadequate segregation of duties consistent with control objectives; and |
| ● | Lack of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner. |
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 weaknesses are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:
| ● | Continue to establish appropriate segregation of duties to achieve internal control objectives; and |
| ● | Continue to develop risk assessment policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing controls and procedures. |
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.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2025, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY 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 December 20, 2024, January 21, 2025, and February 18, 2025, the Company issued 16,667, 16,667, and 16,663 shares of common stock, respectively, to a consultant for services provided to the Company.
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 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During
the quarter ended February 28, 2025, no director, officer or Section 16 officer
ITEM 6. EXHIBITS
Exhibit Number |
Description | |
| 31.1* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer | |
| 31.2* | Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer | |
| 32.1* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Executive Officer | |
| 32.2* | Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Chief Financial Officer | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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SIGNATURES
Pursuant to the requirements 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 | ||
| (Principal Executive Officer) | ||
| Date: | April 14, 2025 |
| By: | /s/ Stephen Gillings | |
| Stephen Gillings | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
| Date: | April 14, 2025 |
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