Our unaudited interim financial statements for the three and six month period ended May 31, 2020 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
The accompanying notes are an integral part of these financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2020
NOTE 1 – NATURE OF OPERATIONS
Century Cobalt Corp. (formerly First American Silver Corp.) was incorporated in the state of Nevada on April 29, 2008. The Company’s principal office is located at 10100 Santa Monica Boulevard, Suite 300, Century City, California 90067. The Company’s principal business activity is the identification and exploration of mineral properties for the purposes of discovering economical cobalt assets.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited consolidated financial statements have been prepared on an accrual basis of accounting, in conformity with accounting principles generally accepted in the United States of America (US GAAP) for interim financial information applicable for a going concern, which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of the business, and in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Exchange Act of 1934, as amended. Certain information and disclosures included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations.
In the opinion of management, the consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
The results for the three and six months ended May 31, 2020 are not necessarily indicative of the results of operations for the full year. These unaudited financial statements and related footnotes should be read in conjunction with the amended consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended November 30, 2019 filed with the Securities and Exchange Commission on May 13, 2021.
These consolidated financial statements comprise the accounts of the Company and its wholly owned subsidiary Emperium 1 Holdings Corp. Emperium 1 Holdings Corp. was incorporated as a wholly owned subsidiary on October 8, 2018 by the Company through the issuance of 100 common shares at $0.01 per share for proceeds of $1. As Emperium 1 Holdings Corp. is a holding company and, as such, has no accounts or activity. The Company owns 100% of the issued and outstanding shares of Emperium 1 Holdings Corp.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“US GAAP” accounting). The Company has adopted a November 30 fiscal year end.
Risks and Uncertainties
The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, and regulatory risks including the potential risk of business failure. See Note 3 regarding going concern matters.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At May 31, 2020 and November 30, 2019, respectively, the Company had $196 and $4,076 of unrestricted cash to be used for future business operations.
The Company's bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At times, the Company's bank deposits may exceed the insured amount. Management believes it has little risk related to the excess deposits.
Prepaid Expenses
The Company considers all items incurred for future services to be prepaid expenses.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued expenses, notes payable, and note payable-related party. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Valuation of Long-Lived and Intangible Assets
We assess the impairment of long-lived assets periodically, or at least annually, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered important, which could trigger an impairment review, include the following: significant underperformance relative to historical or projected future cash flows; significant changes in the manner of use of the assets or the strategy of the overall business; and significant negative industry trends. When management determines that the carrying value of long-lived and intangible assets may not be recoverable, impairment is measured as the excess of the assets’ carrying value over the estimated fair value. Management is not aware of any impairment changes that may currently be required; however, we cannot predict the occurrence of events that might adversely affect the reported values in the future.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
Stock-Based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718 and No. 505. After December 15, 2018, the scope of Topic 718, Compensation—Stock Compensation, was expanded to include share-based payments issued to nonemployees for goods and services. The Company issues restricted stock to employees and consultants for their services. Cost for these transactions are measured at the fair value of the equity instruments issued at the date of grant. These shares are considered fully vested and the fair market value is recognized as expense in the period granted. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period.
Total stock-based compensation amounted to $-0- and $28,311 for the three months ended May 31, 2020 and 2019, respectively, and $3,721 and $32,768 for the six months ended May 31, 2020 and 2019, respectively.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of May 31, 2020, there have been no interest or penalties incurred on income taxes.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. The convertible debt to common shares and unissued stock earned could potentially amount to approximately 12,198,000 additional shares issued by the Company. The Company's convertible notes and unissued shares are excluded from the computation of diluted earnings per share as they are anti-dilutive due to the Company's losses for the three and six months ended May 31, 2020 and 2019.
Foreign Currency Translation
The functional and presentation currency of the Company is the U.S. dollar. Transactions denominated in a currency other than the functional currency are recorded on the initial recognition at the exchange rate at the date of the transaction. Assets and liabilities that are not denominated in the functional currency are remeasured into the functional currency with any related gain or loss recorded in earnings. The Company translates assets and liabilities of its non-U.S. dollar functional currency foreign transactions into the U.S. dollar reporting currency at exchange rates in effect at the balance sheet date. The Company translates income and expense items of such foreign transactions into the U.S. dollar reporting currency at the exchange rate on the date of the transaction. Accumulated translation adjustments are reported in stockholders’ equity, as a component of accumulated other comprehensive income (loss).
Recent Accounting Pronouncements
In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. This analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective as of November 5, 2018. The adoption of this final rule did not have a material impact on the financial statements.
In February 2018, the FASB issued Accounting Standards Update (ASU) 2018-02, Income Statement Reporting, Comprehensive Income (Topic 220). Effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company has adopted 2018-02 and determined there was no material impact on the financial statements.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of US GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effect ASU 2019-12 will have on the consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluation the impact this ASU will have on its consolidated financial statements.
Management believes recently issued accounting pronouncements will have no impact on the financial statements of the Company.
Mineral Properties
Costs of exploration are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
Mineral properties are analyzed for impairment on an annual basis, or more often if warranted by circumstances. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present.
Capitalization
Only assets with a cost of $5,000 and a useful life of over 1 year are capitalized. All other costs are expensed in the period incurred.
Reclassifications
Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations. In addition, certain prior year amounts from the restated amounts have been reclassified for consistency with the current period presentation.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that Century Cobalt Corp., Inc. will continue as a going concern. The Company has a working capital deficit, has not yet received revenue from sales of products or services, and has incurred losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Without realization of additional debt or capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
The Company’s activities to date have been supported by debt and equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $3,517,717 as of May 31, 2020. Management continues to seek funding from its shareholders and other qualified investors.
NOTE 4 – PREPAID EXPENSES
Prepaid expenses include the prepayment of the annual mining claims renewal fees and the OTCBB prepaid listing fees.
Prepaid expenses are as follows:
|
|
|
May 31,
2020
|
|
|
November 30,
2019
|
|
|
Annual mining claims renewal fees
|
|
$
|
33,228
|
|
|
$
|
99,683
|
|
|
Listing Fees
|
|
|
2,166
|
|
|
|
2,166
|
|
|
Total
|
|
$
|
35,394
|
|
|
$
|
101,849
|
|
NOTE 5 – RESOURCE PROPERTY
On August 7, 2018, we entered into an assignment agreement with Oriental Rainbow Group Ltd., in regards to the acquisition of certain mineral claims in Lemhi County, Idaho known as the “Idaho Cobalt Belt”.
Oriental Rainbow and Plateau Ventures LLC had entered into a purchase agreement dated September 4, 2017, wherein Oriental Rainbow had acquired from Plateau a 100% interest in the property, subject to certain subsequent payments and conditions. The claims comprising the property (649 claims) initially totaled approximately 12,980 acres, subject to an option under the purchase agreement for the acquisition of additional claims by issuing a further 500,000 common shares valued at $20,000 to Plateau Ventures LLC. Such option had been exercised with additional claims acquired, resulting in a total of 695 claims comprising approximately 13,900 acres. The value of the claims was $248,000 at May 31, 2020 and November 30, 2019 and recorded at resource property in the accompanying consolidated balance sheets. The Company perform an annual impairment test at November 30, 2019 and determined an impairment charge was not necessary.
Oriental Rainbow has assigned its interest in the property to us in consideration for 2,500,000 restricted shares (issued) of common stock valued at $100,000 (the “Consideration Shares”). The Company has assumed all of Oriental Rainbow’s obligations under the purchase agreement, which material obligations include: the issuance of up to 500,000 restricted shares of common stock, valued at $20,000, to Plateau upon listing on a recognized stock exchange (issued) and paying Plateau $1,000,000 in four equal staged payments upon completion of a positive feasibility study on the property. The vendor retains a 1% royalty on revenue derived from the sale of cobalt concentrate and other ore extracts from the property. The Company has the option to purchase this 1% royalty at any time for $1,000,000 in cash or common shares. As of May 31, 2020 and November 30, 2019, respectively, the Company has invested $248,000 into the above-mentioned mineral claims. These amounts are reported in the accompanying consolidated balance sheet.
On April 1, 2019, the Company signed a six-month Option Agreement for sole and exclusive right and option to explore and evaluate the battery material (manganese + nickel + copper + cobalt) potential for property in the Chamberlain area of South Dakota, USA. The optionor provides the property free and clear of all liens, charges, encumbrances, claims, rights, or interest of any person subject to incurring or funding expenditures up to an aggregate of $10,000 within six months of signing this agreement. On April 1, 2019, the Company granted to the optionor 163,132 unregistered shares of the Company stock worth $20,000 or $0.1226 per shares (based on the 30-day average closing price as of April 1, 2019). At the end of the six-month period, the Company has the right to extend the option period for 3 months by issuing the optionor an additional $20,000 of unregistered shares of the Company’s common based on the 30 days average closing price on the date of the extension. At any time during the option periods, both parties agree to work towards signing a binding Exploration and Development Agreement in the event the initial exploration results on the subject properly prove encouraging. The Company may terminate the agreement with 30 days written notice to the optionor. The options expired in October 2019 and was not renewed.
NOTE 6 – NOTES PAYABLE
Notes payable consisted of the following at May 31, 2020:
|
Date of Note
|
|
Principal Amount at Issuance ($)
|
|
|
Interest Rate
|
|
|
Maturity Date
|
|
Interest
Accrued ($)
|
|
|
May 1, 2016 (1)
|
|
|
-
|
|
|
|
8
|
%
|
|
May 1, 2017
|
|
|
-
|
|
|
October 20, 2016 (2)
|
|
|
5,000
|
|
|
|
8
|
%
|
|
October 20, 2017
|
|
|
1,446
|
|
|
January 9, 2017 (2)
|
|
|
9,000
|
|
|
|
8
|
%
|
|
January 9, 2018
|
|
|
2,442
|
|
|
April 24, 2017 (2)
|
|
|
10,000
|
|
|
|
8
|
%
|
|
April 24, 2018
|
|
|
2,483
|
|
|
June 19, 2017 (2)
|
|
|
7,000
|
|
|
|
8
|
%
|
|
June 19, 2018
|
|
|
1,653
|
|
|
September 18, 2017 (2)
|
|
|
6,000
|
|
|
|
8
|
%
|
|
September 18, 2018
|
|
|
1,297
|
|
|
January 5, 2018 (2)
|
|
|
10,000
|
|
|
|
8
|
%
|
|
January 5, 2019
|
|
|
1,922
|
|
|
April 17, 2018 (2)
|
|
|
30,000
|
|
|
|
8
|
%
|
|
April 17, 2019
|
|
|
5,096
|
|
|
July 27, 2018 (2)
|
|
|
31,700
|
|
|
|
12
|
%
|
|
July 27, 2019
|
|
|
7,024
|
|
|
August 15, 2018 (2)
|
|
|
108,000
|
|
|
|
12
|
%
|
|
August 15, 2019
|
|
|
23,257
|
|
|
September 7, 2018 (2)
|
|
|
15,000
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
3,116
|
|
|
September 12, 2018
|
|
|
20,500
|
|
|
|
12
|
%
|
|
August 15, 2020
|
|
|
4,225
|
|
|
September 27, 2018
|
|
|
10,000
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
2,012
|
|
|
October 10, 2018
|
|
|
42,000
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
8,271
|
|
|
November 20, 2018
|
|
|
7,905
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
1,451
|
|
|
November 20, 2018
|
|
|
7,970
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
1,462
|
|
|
December 18, 2018
|
|
|
25,000
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
4,356
|
|
|
January 24, 2019
|
|
|
42,000
|
|
|
|
12
|
%
|
|
August 15, 2020
|
|
|
6,808
|
|
|
February 18, 2019 -2
|
|
|
20,000
|
|
|
|
12
|
%
|
|
February 18, 2020
|
|
|
3,077
|
|
|
March 6, 2019
|
|
|
10,000
|
|
|
|
12
|
%
|
|
August 15, 2020
|
|
|
1,486
|
|
|
May 3, 2019
|
|
|
25,000
|
|
|
|
12
|
%
|
|
July 31, 2020
|
|
|
3,238
|
|
|
July 1, 2019
|
|
|
30,860
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
4,375
|
|
|
July 15, 2019
|
|
|
30,860
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
4,256
|
|
|
July 31, 2019
|
|
|
30,860
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
4,122
|
|
|
August 30, 2019 (3)
|
|
|
98,752
|
|
|
|
10
|
%
|
|
April 16, 2021
|
|
|
9,409
|
|
|
September 3, 2019
|
|
|
18,516
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
2,301
|
|
|
September 4, 2019 (3)
|
|
|
24,688
|
|
|
|
10
|
%
|
|
April 16, 2021
|
|
|
2,319
|
|
|
October 8, 2019
|
|
|
9,875
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
1,132
|
|
|
November 6, 2019
|
|
|
3,703
|
|
|
|
10
|
%
|
|
September 30, 2020
|
|
|
395
|
|
|
March 3, 2020
|
|
|
1,975
|
|
|
|
10
|
%
|
|
April 16, 2021
|
|
|
147
|
|
|
Grand Total
|
|
|
692,164
|
|
|
|
|
|
|
|
|
|
114,579
|
|
|
(1)
|
On January 8, 2019, the Company agreed to convert principal and interest of $341,650 into 3,105,909 unregistered shares of the Company’s common stock to fully satisfy the obligation. The common stock was valued at $0.11 per share. In-addition, the Company recognized $14,251 income from debt forgiveness for the portion of the Promissory note accrued interest not converted to the Company’s common stock. The Company calculated the fair value of the beneficial conversion feature on the debt modification as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of modification. The fair value of the conversion provision in connection with the note on the date of modification was $-0-.
|
|
(2)
|
The Company is not compliant with the repayment terms of the notes payable.
|
|
(3)
|
Interest partially paid by Company prior to November 30, 2019 for $3,883.
|
Convertible notes payable consisted of the following at May 31, 2020:
On July 30, 2019, the Company entered into a convertible unsecured term loan facility of £200,000 ($253,900) for funding working capital requirements. The promissory note has a maturity date of October 30, 2020, an interest rate of 10% and a conversion rate of $0.08 per share. After maturity, the interest rate increases to 8% above the Bank of England Base Rate. In addition, a 5% facility fee is added to the loan. The Company may draw the loan in installments of £25,000 ($31,735) at any time on or after the date of this agreement. During the year ended November 30, 2019, the Company has drawn six installments against the loan facility for an aggregate of $130,633. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $12,654, and was recorded as debt discount. The debt discount was amortized through the term of the note. The unpaid balance including accrued interest was $141,255 and $141,458 at May 31, 2020 and November 30, 2019, respectively.
On August 14, 2019, the Company entered into a convertible unsecured term loan facility of £200,000 ($241,220) for funding working capital requirements. The promissory note has a maturity date of April 30, 2021, an interest rate of 10% and a conversion rate of $0.03 per share. After maturity, the interest rate increases to 8% above the Bank of England Base Rate. In addition, a 5% facility fee is added to the loan. The Company may draw the loan in installments at any time on or after the date of this agreement. During the year ended November 30, 2019, the Company has drawn two installments against the loan facility for an aggregate of $129,340. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance aggregated $34,853, and was recorded as debt discount. The debt discount was amortized through the term of the note. During the three months ended May 31, 2020, the Company received a third installment for $2,050. The Company calculated the fair value of the beneficial conversion feature as the difference between the conversion price and the fair market value of the Company’s common stock into on the date of issuance. The fair value of the conversion option in connection with the note on the date of issuance was $-0-. The unpaid balance including accrued interest was $137,290 and $135,144 at May 31, 2020 and November 30, 2019, respectively.
As of May 31, 2020, the total short-term loans - convertible amounted to $278,545 which includes $28,456 of accrued interest. The conversion price of the note was fixed and determinable on the date of issuance and as such in accordance with ASC Topic 815 “Derivatives and Hedging” (“ASC 815”), the embedded conversion option of the note was not considered a derivative liability. The beneficial conversion features of certain convertible notes are at a price below fair market value. The Company recorded interest expense on the debt discount of $7,994 and -0- for the three months ended May 31, 2020 and 2019, respectively, $15,988 and -0- for the six months ended May 31, 2020 and 2019, respectively, in the accompanying consolidated statements of operations. The unamortized debt discount was $22,377 and $38,365 at May 31, 2020 and November 30, 2019, respectively.
Notes payable and convertible notes payable transactions during the six months ended May 31, 2020 consisted of the following:
|
Balance, November 30, 2019
|
|
$
|
699,757
|
|
|
Borrowings
|
|
|
1,975
|
|
|
Less foreign exchange adjustment
|
|
|
9,568
|
|
|
Balance, May 31, 2020
|
|
$
|
692,164
|
|
Notes payable and convertible notes payable transactions principal repayment schedule consisted of the following:
|
Fiscal year ended November 30, 2020
|
|
$
|
566,749
|
|
|
Fiscal year ended November 30, 2021
|
|
|
125,415
|
|
|
Total
|
|
$
|
692,164
|
|
NOTE 7 – RELATED PARTY TRANSACTIONS
On May 31, 2020, notes payable owing to related parties was $267,500 (November 30, 2019: $267,500) and accrued interest owing to related parties was $53,270 (November 30, 2019: $38,519).
As at May 31, 2020, accounts payable and compensation owing to stockholders and officers of the Company were $130,917 (November 30, 2019: $97,195).
As at May 31, 2020, the Company owed $60,823 to its President and Director (November 30, 2019: $60,823).
On September 11, 2018, the Company signed a Consulting Agreement for the Company’s Chief Operating Officer (COO) beginning August 1, 2018 through December 31, 2020. Effective April 1, 2018, the COO is compensated £200 (approximately $250) for each day performing services to the Company (approximately one day per week). Effective August 1, 2018, the COO was compensated with 250,000 unregistered shares of the Company’s common stock valued at $10,000 or $0.04 per share. On February 1, 2019 the CCO was compensated with 250,000 unregistered shares of the Company’s common stock valued at $36,750 or $0.147 share. On August 1, 2019 the CCO was compensated with 250,000 unregistered shares of the Company’s common stock valued at $24,375 or $0.0975 share. The cash compensation amounted to $-0- and $1,955 for the three months ended May 31, 2020 and 2019, respectively, and $4,578 and $7,722 for the six months ended May 31, 2020 and 2019, respectively.
On September 17, 2018, the Company signed a three-year Consulting Agreement for the Company’s President. Effective June 1, 2018, the President is compensated $8,500 per month for an aggregate of $102,000 per year. Effective August 1, 2018, the President was compensated with 5,000,000 unregistered shares of the Company’s common stock valued at $200,000 or $0.04 per share. In addition, on August 1 of each year for this agreement, the President will be compensated with 1,000,000 unregistered shares of the Company’s common stock. On August 1, 2018, 1,000,000 unregistered shares of the Company’s common stock were earned by the Company’s President. The shares were valued at $40,000 or $0.04 share. On August 1, 2019, 1,000,000 unregistered shares of the Company’s common stock were earned by the Company’s President. The shares were valued at $97,500 or $0.975 share. Effective August 1, 2019, the President compensation was increased to $15,000 per month for an aggregate of $180,000 per year. The compensation amounted to $45,000 and $25,500 for the three months ended May 31, 2020 and 2019, respectively, and $90,000 and $51,000 for the six months ended May 31, 2020 and 2019, respectively.
NOTE 8 – CAPITAL STOCK
The Company has 20,000,000 preferred shares authorized at a par value of $0.001 per share. As of May 31, 2020, no rights have been assigned to the preferred shares and the rights will be established upon issuance.
As at May 31, 2020, the Company has 3,500,000,000 common shares authorized at a par value of $0.001 per share.
On January 8, 2019, the Company agreed to convert principal and interest of $341,650 from a Related Party Promissory Note Payable into 3,105,909 unregistered shares of the Company’s common stock to fully satisfy the obligation. The common stock was valued at $0.11 per share. The Company recognized a gain of $14,251 for debt forgiveness on the notes payable in the accompanying consolidated statements of operations.
On February 1, 2019, the Company granted 250,000 at $0.147 per share, valued at $36,750, unregistered common shares pursuant to a consulting agreement for the Company’s Chief Operating Officer (COO). As of August 31, 2020, the shares have not been issued to the COO.
On April 1, 2019, the Company granted 163,132 at $0.1226 per share, valued at $20,000, unregistered common shares as per an option agreement to explore and evaluate the battery materials in South Dakota. See Note 5. As of May 31, 2020, the shares have not been issued to the individual.
On June 5, 2019, the Company entered into an agreement with a consultant to provide finance and accounting services to the Company. The Consultant is compensated with a combination of cash and unregistered shares of the Company’s common stock. In addition, the consultant was granted 50,000 shares of the Company’s common stock valued at $4,990 or .0998 per share. The consultant has earned 25,699 shares valued at $735 or $0.0286 per share for the six months ended May 31, 2020 and 80,052 shares valued at $7,633 or $0.0953 per share at November 30, 2019, for an aggregate of 105,751 shares valued at $8,368 or $0.0791 per share. As of May 31, 2020, the shares have not been issued to the consultant.
On August 1, 2019, the Company granted 1,000,000 unregistered common shares, at $0.0975 per share, valued at $97,500, to the Company’s president pursuant to a consulting agreement for annual share compensation. As of May 31, 2020, the shares have not been issued to the Company’s president.
On August 1, 2019, the Company granted 250,000 at $0.0975 per share, valued at $24,375, unregistered common shares for services to the Company for the Company’s Chief Operating Officer (COO). As of May 31, 2020, the shares have not been issued to the Company’s COO.
On October 8, 2019, the Company issued a stock subscription for 120,000 unregistered shares of the Company’s common stock to an investor. The shares were valued at $5,980 or $0.05 per share. The subscription amount was funded on October 9, 2019. On April 27, 2020, the Company issued 120,000 unregistered shares of the Company’s common stock to the investor. The Company used the proceeds for working capital.
On November 13, 2019, the Company issued a stock subscription for 1,693,809 unregistered shares of the Company’s common stock to an investor. The shares were valued at $40,652 or $0.024 per share. The subscription amount was funded on November 13, 2019. The shares were issued to the investor on November 26, 2019. The Company used the proceeds for working capital.
On December 23, 2019, the Company issued a stock subscription for 912,310 unregistered shares of the Company’s common stock to an investor. The shares were valued at $45,616 or $0.05 per share. The subscription amount was funded on December 24, 2019. As of May 31, 2020, the shares have not been issued to the investor. The Company used the proceeds for working capital.
On February 3, 2020, the Company issued a stock subscription for 2,174,545 unregistered shares of the Company’s common stock to an investor. The shares were valued at $59,800 or $0.0275 per share. The subscription amount was funded on February 7, 2020. As of May 31, 2020, the shares have not been issued to the investor. The Company used the proceeds for working capital.
As of May 31, 2020, the Company had 79,061,929 (November 30, 2019: 78,941,929) common shares issued and outstanding.
NOTE 9 – MATERIAL CONTRACTS
On January 9, 2019, the Company entered an agreement with a consultant to head the Company’s Advisory Board to provide essential prospective on technology and public policy developments that are shaping the cobalt markets. In addition, the consultant will provide press releases, additional messaging and focus on exploring potential relationships with major cobalt users. The agreement terminates on December 31, 2019. After December 31, 2019, the agreement automatically renews unless the Company or consultant provide 30 days written notice. The consultant is compensated with a $5,000 retainer which commences the first of the month following the completion of the Company’s next capital raise. In addition, the Company granted the consultant a three-year option to purchase 250,000 shares of the Company’s unregistered common stock at $0.10 per share. The option vested as to 100,000 shares on the grant date, vests 100,000 shares on August 9, 2019 and 50,000 on January 9, 2020. The fair value of the option was $23,891. The Company uses a Black-Scholes-Merton option pricing model to estimate the fair value option with the following assumptions:
|
Risk-free interest rate
|
|
|
2.54
|
%
|
|
Expected life (in years)
|
|
|
3
|
|
|
Expected volatility
|
|
|
310.6
|
%
|
|
Grant date fair value
|
|
$
|
.097
|
|
On March 11, 2019, the Company signed a twelve-month lease agreement for a four-bedroom living unit. The lease starts on April 1, 2019 and ends on March 31, 2020. The monthly rental is $1,200 and an aggregate of $14,400 over the term of the lease. The lease terminated on March 31, 2020 and was not renewed.
On April 2, 2019, the Company signed a twelve-month lease agreement for office space. The lease starts on 1 July, 2019 and ends on 30 June, 2020. The monthly rental is $730 and an aggregate of $8,761 over the term of the lease.
The rent expense recognized was $1,539 and $4,933 for three months ended May 31, 2020 and 2019, respectively, and $8,223 and $11,780 for the six months ended May 31, 2020 and 2019, respectively.
On September 14, 2019, the Company entered an agreement with a consultant as the Company's Business Development Director including such other management advisory services as may be reasonably requested by the Company. The agreement terminates on August 31, 2021. The consultant is compensated with $4,000 a month beginning September 1, 2019. For three months ended May 31, 2020, the Consultant has earned $12,000 and for six months ended May 31, 2020, the Consultant has earned $24,000.
NOTE 10 – SUBSEQUENT EVENTS
On June 18, 2020, the Company signed a loan agreement for £150,000 (approximately $200,000), with a related party. The loan bears interest at 5% and has a maturity date of June 18, 2021. As of June 8, 2021, the Company has drawn seven (7) installments under the agreement for an aggregate of $168,456.
On December 1, 2020, Lester Kemp resigned as COO of the Company. Mr. Kemp will continue to the support the Company in other capacities.
On January 11, 2021, the Company issued a stock subscription for 176,966 unregistered shares of the Company’s common stock to pay a past due balance from one of the Company’s vendors. The shares were valued at $5,309 or $0.03 per share. The shares were issued to the vendor on April 19, 2021.
On March 17, 2021 the Company signed an option agreement together with Block Commodities Limited to acquire a 70 percent interest in a Medicinal Cannabis license granted to Magnus Cannabis Group Limited (“Magnus”) by the government of Zimbabwe. Block Commodities Ltd. is listed on the Aquis Stock Exchange, trading with ticker code BLCC.PL (“BLCC”).
The acquiring parties will each hold 35 percent. The stake in the Magnus license, will secure supply of medicinal grade cannabis for the production of Nutraceuticals.
The option is for an exclusivity period of 90 days to complete the Acquisition. The proposed terms of the Acquisition are as follows:
|
|
·
|
Payment of an Option fee of £50,000 (approximately $69,000), to be apportioned equally between the acquiring parties, and
|
|
|
|
|
|
|
·
|
Payment by BLCC of £1,500,000 (approximately $2,095,000) through the issue of 2,142,857,142 fully paid ordinary shares in BLCC (valued at 0.07p, per share) upon exercise of the option, and contemporaneously the payment by CCOB of £1.5m of CCOB fully paid ordinary shares, price based on a 30-day VWAP (using the US$/GB£ closing middle market exchange rate published by Bloomberg on the day immediately prior to completion).
|
On March 18, 2021, the Company issued 2,000,000 unregistered shares of the Company’s common stock to the Company’s CEO. The shares were earned on August 1, 2018 and August 1, 2019 from a consulting agreement with the Company’s CEO. The shares were valued at $137,500 or $0.0688 per share.
On May 21, 2021, the Company issued 1,750,000 unregistered shares of the Company’s common stock to the Company’s COO. The shares were earned on May 21, 2021 from a consulting agreement with the Company’s COO. The shares were valued at $40,425 or $0.0231 per share.
On December 23, 2019, the Company issued a stock subscription for 912,310 unregistered shares of the Company’s common stock to an investor. The shares were valued at $45,616 or $0.05 per share. The subscription amount was funded on December 24, 2019. The shares were issued on May 21, 2021.
On February 3, 2020, the Company issued a stock subscription for 2,174,545 unregistered shares of the Company’s common stock to an investor. The shares were valued at $59,800 or $0.0275 per share. The subscription amount was funded on February 7, 2020. The shares were issued on May 21, 2021.
On May 21, 2021, the Company issued 1,000,000 unregistered shares of the Company’s common stock to the Company’s CEO. The shares were earned on August 1, 2020 from a consulting agreement with the Company’s CEO. The shares were valued at $18,600 or $0.0186 per share.
The Company has evaluated all events occurring subsequently to these financial statements through June 8, 2021 and determined there were no other items to disclose.
