UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2015
[ ] TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to
[ ]
Commission file number 000-54881
LITHIUM EXPLORATION GROUP,
INC.
(Exact name of registrant as specified in its
charter)
Nevada |
06-1781911 |
(State or other jurisdiction of incorporation or |
(I.R.S. Employer Identification No.) |
organization) |
|
3800 N Central Avenue, Suite 820, Phoenix, AZ 85012
|
85012 |
(Address of principal executive offices) |
(Zip Code) |
|
|
Registrant's telephone number, including area code: |
480.641.4790
|
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Name of Each Exchange On Which Registered
|
N/A |
N/A |
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value
(Title
of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 the Securities Act.
Yes
[ ] No [X]
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act
Yes
[ ] No [X]
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 last 90 days.
Yes
[X] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] |
Accelerated
filer [
] |
Non-accelerated filer [ ] |
Smaller reporting company
[X] |
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No
[X]
The aggregate market value of Common Stock held by non-affiliates of the Registrant on December 31, 2014 was $1,545,198.52 based on a $.02 average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the
registrants classes of common stock as of the latest practicable date.
11,669,869 common shares as of December 2, 2015
DOCUMENTS INCORPORATED BY REFERENCE
None.
Explanatory Note
The registrant’s annual report on Form 10-K for the period ended June 30, 2015 (filed on December 2, 2015) incorrectly indicated on the cover page that the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). This amendment is filed to correctly indicate that the registrant is not a shell company. The amended report does not reflect events occurring after the filing of the Form 10-K on December 2, 2015, nor does it modify or update the disclosures presented therein, except with regard to the modification described in this Explanatory Note. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as a result of this amended report, the certifications filed and furnished as exhibits to the Form 10-K pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 have been re-executed and re-filed as of the date of this amended report and are included as exhibits hereto.
TABLE OF CONTENTS
3
PART I
Item
1.
Business
This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.
In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars and all references to common
shares refer to the common shares in our capital stock.
As used in this annual report, the terms we, us, our
company, mean Lithium Exploration Group, Inc. a Nevada corporation, and our
wholly owned subsidiary, Alta Disposal Ltd., an Alberta, Canada corporation, our
partially owned subsidiary, Alta Disposal Morinville Ltd., an Alberta, Canada
corporation, unless otherwise indicated.
Corporate History
We were incorporated on May 31, 2006 in the State of Nevada
under the name Mariposa Resources, Ltd.. Effective November 30, 2010, we
changed our name to Lithium Exploration Group, Inc., by way of a merger with
our wholly-owned subsidiary Lithium Exploration Group, Inc., which was formed
solely for the change of name.
Our executive offices are located at 3800 N Central Avenue,
Suite 820, Phoenix, AZ 85012, and our telephone number is (480) 641-4790. We
also have an office at 840 6th Ave SW Suite 300, Calgary, Alberta T2P 3E5. The
phone number for our Calgary office is 403-930-1925.
On October 18, 2013, our company, through our then wholly owned
subsidiary, Alta Disposal Ltd. (formerly 1617437 Alberta Ltd.), an Alberta,
Canada corporation, completed the acquisition of 51% of the shares of Blue Tap
Resources Inc. for total payment of CAD$466,547. As of September 30, 2013, CDN
$300,000 (US$294,908) was paid regarding the acquisition. As a result of the
share acquisition, Blue Tap Resources Inc. is now a partially owned subsidiary
of our company through our wholly owned subsidiary, Alta Disposal Ltd. On
January 22, 2014, Blue Tap Resources Inc. changed its name to Alta Disposal
Morinville Ltd.
On August 20, 2013, we entered into a letter of intent with
Tero Oilfield Services Ltd., a private company, pursuant to which Tero agreed to
sell up to 75% of the issued and outstanding common shares of Tero to our
company in exchange for payment in the amount of $1,500,000.
On March 1, 2014, Alta Disposal Ltd., our wholly-owned
subsidiary, entered into a share purchase agreement with Tero and Garry Hofmann,
the sole shareholder of Tero. Pursuant to the agreement, Mr. Hofmann agreed to
sell and we agreed to purchase 50% of the issued and outstanding common shares
of Tero in exchange for an aggregate of CAD$1,000,000. As part of the share
purchase by Alta Disposal, on February 22, 2014, Tero declared a dividend in the
amount of $307,104, payable to Mr. Hofmann by way of a promissory note. As a
result of the share purchase agreement, Tero is now a partially owned (50%)
subsidiary of our company.
4
Additionally, Alta Disposal, Tero and Mr. Hofmann entered into
an option agreement entitling Alta Disposal to purchase up to an additional 25%
of the issued and outstanding common shares of Tero from Mr. Hofmann exercisable
at a price of $500,000 for a period of one year. We have subsequently sold our
interest in Tero on May 1, 2015 as further described below.
On October 17, 2014, we amended our Articles of Incorporation,
which amendment was filed with the Nevada Secretary of State on October 17,
2014, to increase the authorized capital of our common shares from 500,000,000
common shares, par value $0.001 to 2,000,000,000 common shares, par value
$0.001. Our authorized capital consists of 2,000,000,000 common shares and
100,000,000 preferred shares, all with a par value of $0.001.
On January 19, 2015, we received written consent from our
companys board of directors to effect a reverse stock split of our issued and
outstanding shares of common stock on a basis of 20 old shares of common stock
for 1 new share of common stock. Stockholders of our company originally approved
the reverse stock split on October 14, 2014 at a special meeting. The reverse
split became effective with the Over-the-Counter Bulletin Board at the opening
of trading on February 25, 2015. We were assigned CUSIP number 53680P209
effective February 25, 2015. Our authorized capital was not affected by the
reverse stock split.
On May 1, 2015, our company entered into a share purchase
agreement with an individual and disposed of our 50% interest in Tero in
consideration of $300,000.
On June 22, 2015, in accordance with our articles of
incorporation, our board of Directors has designated 250,000 of our 100,000,000
authorized shares of Preferred Stock as Series "A" Preferred Stock. The Series
"A" Preferred Stock, par value $0.001, will rank senior to our common stock,
carrying general voting rights with the common stock at the rate of 62 votes per
share. The Series "A" Preferred Stock will be deemed cancelled within 1 year of
issuance and are not entitled to share in dividends or other distributions. So
long as any shares of Series "A" Preferred Stock are outstanding, the
affirmative vote of not less than 75% of those outstanding shares of Series "A"
Preferred Stock will be required for any change to our Articles of
Incorporation.
On July 9, 2015 our board of directors approved a settlement
agreement dated June 25, 2015 among our company, JDF Capital Inc., and our
wholly owned subsidiary, Alta Disposal Ltd. Previously, pursuant to a General
Security Agreement dated July 22, 2014, JDF Capital Inc. was granted a first
ranking security interest over all current and future assets of Alta Disposal
Ltd. in full guarantee of $708,000 loan to our Company. Pursuant to the
Settlement Agreement, JDF Capital Inc. and its assign, Blue Citi LLC, have
agreed to release and discharge their general security interest in consideration
of the issuance of 130,000 shares of Series "A" Preferred Stock.
Effective September 4, 2015, our company entered into an Asset
Purchase Agreement with Cancen Oil Canada whereby we sold all right, title and
interest of Alta Disposal Morinville Ltd. assets for total purchase price of
CAD$10,000 (approximately USD$7,531.25).
On July 13, 2015 our company's directors approved an increase
to our authorized capital from 2,000,000,000 shares of common stock, par value
$0.001 to 10,000,000,000 shares of common stock, par value of $0.001 per share
and a reverse stock split on a basis of up to 200 old shares of common stock for
one (1) share of common stock. The increase of authorized capital and stock
split was approved by shareholders on July 13, 2015. A Definitive Schedule 14C
was filed with United States Securities and Exchange Commission ("SEC") on
August 6, 2015. On September 9, 2015, we filed with the Nevada Secretary of
State a Certificate of Amendment increasing our authorized capital from from
2,000,000,000 shares of common stock, par value $0.001 to 10,000,000,000 shares
of common stock, par value of $0.001 per share. The reverse split became
effective with the Over-the-Counter Bulletin Board at the opening of trading on
September 30, 2015. Effective September 30, 2015, our new CUSIP number is
53680P308.
Other than as set out herein, we have not been involved in any
bankruptcy, receivership or similar proceedings, nor have we been a party to any
material reclassification, merger, consolidation or purchase or sale of a
significant amount of assets not in the ordinary course of our business.
Our Current Business
We are corporation engaged principally in the acquisition,
exploration, and development of resource properties. Through our subsidiary Alta
Disposal Morinville Ltd., we also operate in the waste water disposal industry.
Disclosure Adjustments for Reverse Stock Split
On January 19, 2015, our board of directors consented to effect
a reverse stock split of our issued and outstanding shares of common stock on a
basis of 20 old shares of common stock for one 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FINRA effective
February 25, 2015. Our authorized capital was not affected by the reverse
stock split.
On July 13, 2015, our board of directors consented to effect a
reverse stock split of our issued and outstanding shares of common stock on a
basis of 200 old shares of common stock for 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FINRA
effective September 30, 2015. Our authorized capital was not affected by the
reverse stock split.
5
In this Annual Report and in the accompanying audited financial
statements and notes, the above described reverse splits are reflected
retrospectively in the descriptions of shares and warrants, and their
corresponding issuance and exercise prices, except where otherwise
indicated.
Assignment Agreement with Lithium Exploration VIII Ltd.
On December 16, 2010, we entered into an assignment agreement
with Lithium Exploration VIII Ltd. (not related to our company) to acquire an
undivided 100% right, title and interest in and to certain mineral permits
located in the Province of Alberta, Canada. Lithium Exploration VIII and Golden
Virtue Resources Inc. (formerly First Lithium Resources Inc.) (not related to
our company) had entered into an underlying option agreement dated October 6,
2010, which option agreement and interest were assigned to our company.
On December 31, 2012, our company entered into an amending
agreement to amend an original payment requirement of the assignment agreement
of CAD$100,000 due on January 1, 2013 to the following payments:
-
CAD$20,000 (USD$20,000) cash payment due on January 1, 2013; and
-
CAD$80,000 (USD$80,000) by a 15% one year promissory note starting January
1, 2013.
The note was interest free until March 31, 2013. After March
31, 2013, interest accrued on the principal balance then in arrears at the rate
of 15% per annum. Payments were due and payable by December 31, 2013. Further,
at any time, Lithium Exploration VIII and Golden Virtue could elect to convert
the remaining balance of the note and accrued interest into common shares of our
company at 75% of the closing market price of our companys common shares on the
election day.
On July 3, 2013, Lithium Exploration VIII and Golden Virtue
elected to convert the note and accrued interest in the combined aggregate
amount of CAD$83,057.53 (USD$78,743) into common shares of our company. Pursuant
to this election, we issued an aggregate of 239 shares ( on a pre-reverse split
basis) of our common stock at the price of USD$330 per share.
Glottech
On November 8, 2011, we entered into a letter agreement with
Glottech-USA. Pursuant to the terms of the agreement, we were granted an
exclusive license to use and distribute the technology within the Swan Hills
region of Alberta as well as a non-exclusive right to distribute the technology
within Canada.
We previously made the following payments in association with
the production of a working unit of Glottech-USAs technology:
-
$25,000 on March 21, 2011 in consideration for entering into the letter
agreement dated March 17, 2011;
-
$75,000 on May 27, 2011 in consideration for continuance of the March 17,
2011 agreement; and
-
$700,000 on May 27, 2011 in consideration for a licensing and technology
payment.
As part of the November 8, 2011 agreement, our officer and
director, Alexander Walsh, agreed to provide Glottech-USA with the option, for a
period of 12 months from delivery of the first unit, to acquire 500 shares (of
our common stock currently held by him , for a total price of $4,000 ($1
pre-reverse splits). Additionally, if, for any reason, Mr. Walsh failed to
deliver the 500shares of our common stock to Glottech-USA, we agreed to issue
the shares from treasury.
On June 12, 2012, we filed a complaint against Glottech-USA in
the Court of Common Pleas of Chester County, Pennsylvania, alleging that
Glottech-USA misused our funds and was in breach of our agreements that called
for Glottech-USA to deliver one initial unit of the mechanical
ultrasound technology. We further alleged that Glottech-USA was financially
insolvent and unable to fulfill its promises to us.
6
On June 12, 2012, we filed a complaint with the Court of Common
Pleas of Chester County, Pennsylvania against Glottech-USA, LLC, Eldredge, Inc.,
and the Eldredge Companies, Inc. Pursuant to an unopposed motion, the Eldredge
parties were dismissed in October of 2012. The complaint initially sought an
order of the Court granting possession of the initial unit.
Effective August 14, 2012, we entered into an option agreement
with GD Glottech International to protect our license and distribution rights in
the event that Glottech-USA became unable to perform and honor its obligations
to us.
Pursuant to the terms of the option agreement, we were required
to provide an initial amount of $150,000 to be held in escrow for the option to
obtain a license on the patent rights, as set forth in the option agreement. On
September 1, 2012, Glottech-USAs license to the technology expired and also on
September 1, 2012, we exercised this option agreement and released the funds to
GD Glottech International.
On October 1, 2012, we entered into a license agreement and a
sales agency agreement with GD Glottech, regarding GD Glottech Internationals
proprietary and patented mechanical ultrasound technology for use in water
purification in the process of separation of salt and other minerals from
lithium bearing brine produced from oil and gas operations. The license
agreement and sales agency agreement expands and replaces all prior agreements
among our company, GD Glottech International and Glottech-USA, LLC regarding our
rights to use and sell the mechanical ultrasound technology, included in our
letter of intent dated November 18, 2011, and our option agreement dated August
14, 2012.
Pursuant to the sales agency agreement we were appointed as
sales agent for the patented mechanical ultrasound technology within Canada. Our
appointment is exclusive within the field of non petro-chemical mining and
non-exclusive in all other fields of use. In consideration of the sales agency
rights, we agreed to issue to GD Glottech International 500 common shares of our
capital stock which obligation has been satisfied through the transfer to GD
Glottech International of 500 shares held by our officer and director, Alexander
Walsh. It was the explicit intention of the parties that this share transfer
fulfills the prior obligations of Alexander Walsh and our company with respect
to the option contemplated in the March and November 2011 agreements with
Glottech-USA.
We will receive a royalty in respect of sales of the technology
secured by us. The term of the initial agreement will be for 5 years with the
possibility of extension if sales targets are achieved.
Pursuant to the license agreement, we obtained the exclusive
right to use the mechanical ultrasound technology within the field of
non-petro-chemical mining within the territory of Canada. We may also sublicense
our rights under the license in respect of one or more units of the technology
to any entity operating within the field of use in which we own or beneficially
own at least a 20% equity interest. GD Glottech International agreed to supply
us with up to 5 technology units per 12-month period from the effective date of
the license term, which will start from the month of delivery of the unit of the
technology. The first unit of the technology provided under the license to be
provided at no additional cost to us and subsequent units shall be subject to a
fee based on the then current retail price of the units. If we sublicense any of
our rights, the term of the applicable license will be for 5 years from the date
the applicable unit is delivered. Pursuant to the license agreement, GD Glottech
International shall provide ongoing technical assistance and training in respect
of our use of the technology at our cost.
In consideration of the license, we will pay to GD Glottech
International a royalty based on the tonnage of water produced by our use of the
technology in accordance with the agreement. A minimum annual royalty will be
applicable. The term of the license agreement shall be for an initial period of
5 years and shall be renewable for additional terms of 5 years provided that we
satisfy the minimum royalty requirements during each period.
GD Glottech Internationals technology is designed to separate
suspended solids from water (brine), which is one step in the process that we
are taking to produce commercially viable minerals. The technology produces
extremely high temperatures, which destroy organic substances such as bacteria
and other toxic agents. We believe that GD Glottech International's technology
can provide lower costs of operation as well as reduced time for site clean-up
than traditional methods of water treatment. We anticipate using this
application to extract dissolved solids like lithium, potassium, and magnesium from oil field brine. The disposal of produced water
(brine) from oil and gas production in Alberta is a significant environmental
issue for the province and presents a considerable economic issue for producers.
We intend to use the technology on our Valleyview Property in Alberta, in
cooperation with oil and gas producers, to treat and dispose of their produced
water while monetizing the minerals that are contained within that produced
water stream that is being brought to the surface during the oil and gas
production process. As we own the MAIM (Metals and Industrial Minerals) claims
to the minerals on the Valleyview Property, the minerals contained in their
produced water stream fall under our rights. While we have had discussions with
oil and gas consultants and oil operators regarding their difficulties in
treating the brine at some of their fields, we have no formal agreements in
place.
7
The technical process is based on the use of mechanical
ultrasound generated through the production of a series of cavitations.
Mechanical ultrasound is a machine-produced sound of a frequency above the upper
limit of the normal range of human hearing. Cavitations are the rapid formation
and collapse of bubbles in liquids, caused by the movement of something such as
a propeller or by waves of high-frequency sound. The production of mechanical
ultrasound allows GD Glottech Internationals technology to distill the fluid
stock. Using mechanical ultrasound for distillation has been attempted before,
but the external energy requirement needed to produce the mechanical ultrasound
was far too expensive to make it commercially viable. GD Glottech
Internationals technology uses the energy released during the cavitations in
order to make it commercially viable from an economic perspective. During these
cavitations, a millisecond of energy is released. During this release,
temperatures can reach 5,000 degrees centigrade.
On August 27, 2012, we filed a motion to amend our complaint to
include claims of breach of trust and fiduciary duty, breach of good faith and
fair dealing, breach of contract, conversion of funds, fraud, and the imposition
of a constructive trust. We believe that this action was necessary to protect
our interests against possible misuse of funds by Glottech-USA, LLC and its
principals. We will also seek damages as appropriate.
On October 19, 2012, GD Glottech International moved to
intervene as an interested party in the litigation pending against Glottech-USA.
GD Glottech International cited its role as owner of the patents as a basis for
intervening in the litigation against Glottech-USA. We believe GD Glottech
Internationals entry into the litigation against Glottech-USA is favorable to
our cause in the litigation.
On October 22, 2012, the Court of Common Pleas in Chester
County, Pennsylvania, granted our motion to amend our complaint against
Glottech-USA to add claims for fraud and damages reflective of the malfeasance
which we allege against Glottech-USA and its officers.
On December 12, 2012, GD Glottech International removed the
management of Glottech-USA and appointed itself as the manager of Glottech-USA.
On the same day, Larry Nesbit, Mark Siegel and Ron Fender filed a motion to
dissolve Glottech-USA in Mississippi on the basis that Glottech-USA was unable
to meet its financial obligations and could not finish or deliver the unit to
us.
On December 19, 2012, an attorney purportedly acting on behalf
of Glottech-USA filed a motion in the lawsuit pending in Chester County,
Pennsylvania, seeking possession of the unit. In addition, Glottech-USA filed a
counterclaim seeking possession of the unit.
GD Glottech International immediately filed a motion to quash
Glottech-USAs motion and for sanctions against the law firm that filed the
motion. We also filed a motion, seeking disqualification of the law firm that
purported to represent Glottech-USA on the basis that the new management for
Glottech-USA had fired the law firm and, as such, the law firm no longer had
authority to represent Glottech-USA.
On April 25, 2013, we attended a hearing on the motions pending
in the lawsuit filed in Chester County, Pennsylvania. The Court did not rule on
any of the motions and, instead, stayed the case as to Glottech-USA until
December of 2013 pending the outcome of the lawsuit seeking dissolution of
Glottech-USA. The matter in Pennsylvania is no longer stayed. An attorney
purporting to represent Glottech-USA and the receiver appointed in Mississippi
has filed motions and other documents that may move the matter forward. We have
pending preliminary objections to the counterclaim, including a request for a
determination of which group is in control of Glottech-USA.
8
Certain members of Glottech-USA continue to pursue dissolution
of the company in Mississippi. The members of Glottech-USA who seek dissolution
have stated in court filings that it is not practicable for Glottech-USA to
continue as an ongoing business. In addition, Sulzer filed suit against
Glottech-USA Texas for unfulfilled obligations.
We do not believe that Glottech-USA has sufficient capital to
continue as an ongoing business. We have provided full consideration to
Glottech-USA and complied with all other agreed upon terms. We believe any
assertions against us to lack merit.
Given pending litigation against Glottech-USA, and the
uncertainties naturally inherent of any litigation (particularly as to outcome
and timing thereof), we have moved to assure continuity of our licensing rights
through entering into, and exercising, the option to contract directly with the
technology inventor and patents owner, GD Glottech International. Thus,
regardless of the outcome of the litigation, or indeed any action or inaction of
Glottech-USA, our interest in the technology is assured.
Alta Disposal Morinville Ltd. Acquisition
On June 11, 2013, we entered into a letter of intent with Alta
Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) pursuant to which we
agreed to acquire not less than 51% of the outstanding securities of Alta
Disposal Morinville in consideration of an aggregate investment of $450,000 in
Alta Disposal Morinvilles waste water disposal facility located in Morinville,
Alberta. The closing of the transaction was subject to a number of conditions
precedent, including but not limited to completion of due diligence and the
negotiation of a definitive long form agreement.
On July 29, 2013, in anticipation of the completion of a formal
agreement with Alta Disposal Morinville embodying the terms of the letter of
intent, we entered into a convertible debenture agreement with Alta Disposal
Morinville pursuant to which we agreed to deliver to Alta Disposal Morinville up
to CAD$300,000 (approximately USD$291,000) payable in two installments of
CAD$150,000 deliverable respectively upon execution of the convertible
debenture, and within 5 business days following receipt of regulatory approval
for the re-activation of Alta Disposal Morinvilles waste water disposal
facility. Delivery of the first and second installments totaling CAD$300,000
have been satisfied and the acquisition was finalized as of October 18, 2013.
The funds advanced are secured against all present and future assets and
undertakings of Alta Disposal Morinville and are convertible at our option into
a number of common shares of Alta Disposal Morinville equal to 51% of its issued
and outstanding voting stock.
Effective August 1, 2013, we entered into a joint venture
agreement with Alta Disposal Morinville pursuant to which our company and Alta
Disposal Morinville will operate certain lands and facilities including a
disposal well in the Morinville area of Alberta.
On October 18, 2013, we completed the acquisition of 51% of the
outstanding securities of Alta Disposal Morinville, pursuant to a letter of
intent with Alta Disposal Morinville dated June 11, 2013. As a result of the
share acquisition, Alta Disposal Morinville is now a partially owned subsidiary
of our company through our wholly owned subsidiary, Alta Disposal Ltd.
In accordance with the letter of intent, we acquired, through
our wholly owned subsidiary, Alta Disposal Ltd., 51% of the outstanding
securities of Alta Disposal Morinville (being 510,000 common shares) in
consideration of an aggregate investment of CDN$466,547 (approximately
USD$453,204) in Alta Disposal Morinvilles waste water disposal facility located
in Morinville, Alberta, where Alta Disposal Morinville holds a 100% working
interest in 17 freehold mineral leases. There are currently two standing natural
gas wells and one disposal well located on the leases, including water disposal
facilities, tanks and equipment. Payment of an initial CDN$300,000 (USD$291,000)
of the CDN$466,547 aggregate investment was made pursuant to a secured
convertible debenture which has been fully converted into common shares of Alta
Disposal Morinville. The Alta Disposal Morinville leases are subject to a 3%
gross overriding royalty held by Mr. Vincent Murphy pursuant to a gross
overriding royalty agreement dated June 30, 2013. The royalty is payable on all
fluids separated, treated, or otherwise enhanced for sale on the lease property.
The acquisition of Alta Disposal Morinville was completed
through our wholly owned subsidiary, Alta Disposal Ltd., which was formed in the
Province of Alberta for the primary purpose of the transaction with Alta
Disposal Morinville. Concurrent with the closing of the acquisition, Alta
Disposal entered into a unanimous shareholders and management agreement (the Shareholders Agreement) dated October 18, 2013
with Excel Petroleum Ltd. (which holds 49% of Alta Disposal Morinville) and Alta
Disposal Morinville itself.
9
Pursuant to the Shareholders Agreement, Alta Disposal may
continue to fund the current capital requirements of Alta Disposal Morinville up
to an aggregate of $420,000 in consideration of additional shares of Alta
Disposal Morinville at the rate of 163,250 shares (equivalent to approximately
5% of Alta Disposal Morinvilles common shares on a diluted basis) for each
$105,000 funded until Alta Disposal holds an aggregate of 70% of Alta Disposal
Morinvilles outstanding common shares. If Alta Disposal elects to fund the
on-going capital requirements of Alta Disposal Morinville beyond the aggregate
of $870,000, any such funds advanced by Alta Disposal will be deemed to be funds
loaned by Alta Disposal to Alta Disposal Morinville on a non-interest bearing,
unsecured bridge loan basis.
Any such funds provided to Alta Disposal Morinville will be
repayable from cash flow generated by Alta Disposal Morinville. Funds loaned
prior to June 30, 2014 will not be due and payable until June 30, 2014 and
thereafter will not be due and payable until at least 6 months following the
date of any such loan.
Other terms of the Shareholders Agreement include:
-
the board of directors of Alta Disposal Morinville will consist of 3
directors including 2 nominees of Alta Disposal and 1 nominee of Excel.
-
Alexander Walsh will serve as chairman of the board of directors, president
and chief executive officer of Alta Disposal Morinville.
-
Approval of the shareholders holding not less than 60% of Alta Disposal
Morinville shares will be required to remove or appoint officers of Alta
Disposal Morinville.
-
Unanimous approval of the shareholders will be required in order to (i)
effect capital alterations; (ii) declare dividends except following the
completion of a fiscal year end and on a pro-rata basis to all shareholders;
or (iii) wind-up; dissolve; or reorganize the corporation or sell or lease
substantially all of its assets.
-
Alta Disposal will otherwise have sole discretion and authority in respect
of any and all management and operational decisions relating to the
corporation.
-
Each shareholder of Alta Disposal Morinville will have a right of first
refusal to purchase all shares sought to be sold by the other shareholder.
-
Customary restrictions on the encumbrance and disposition of shares.
The Shareholders Agreement additionally provides for the
engagement of Valeura Energy Inc. as the operator of Alta Disposal Morinvilles
lands, wells, the facilities, pipelines and disposal wells pursuant to an
operating agreement between Alta Disposal Morinville and Valeura dated July 9,
2013. Valeura was to retain a 10% working interest in Alta Disposal Morinvilles
lands until completion of the initial work on the disposal well project and will
re-convey that interest to Alta Disposal Morinville provided that Alta Disposal
Morinville has paid Valeura a cash payment of $2,500 per month for acting as
operator of the disposal well and the lands and upon payment of an amount of
$10,000 to Valeura upon completion of the project. The disposal well work
program must be mutually approved by Alta Disposal Morinville and Valeura. Alta
Disposal Morinville will be responsible for all costs and expenses relating to
the work program.
Effective September 4, 2015, our company entered into an Asset
Purchase Agreement with Cancen Oil Canada whereby we sold all right, title and
interest of Alta Disposal Morinville Ltd. assets for total purchase price of
CAD$10,000 (approximately USD$7,531.25)..
Tero Oilfield Services Ltd. Acquisition (and Disposition)
On August 20, 2013, we entered into a letter of intent with
Tero Oilfield Services Ltd., a private company, pursuant to which Tero agreed to
sell up to 75% of the issued and outstanding common shares of Tero to our
company in exchange for payment in the amount of $1,500,000.
10
On March 1, 2014, Alta Disposal Ltd., our wholly-owned
subsidiary, entered into a share purchase agreement with Tero and Garry Hofmann,
the sole shareholder of Tero. Pursuant to the agreement, Mr. Hofmann agreed to
sell and we agreed to purchase 50% of the issued and outstanding common shares
of Tero (the Tero Shares) in exchange for an aggregate of CAD$1,000,000. As
part of the share purchase by Alta Disposal, on February 22, 2014, Tero declared
a dividend in the amount of $307,104, payable to Mr. Hofmann by way of a
promissory note.
Additionally, Alta Disposal, Tero and Mr. Hofmann entered into
an option agreement entitling Alta Disposal to purchase up to an additional 25%
of the issued and outstanding common shares of Tero from Mr. Hofmann exercisable
at a price of $500,000 for a period of one year.
Lastly, Alta Disposal, Tero and Mr. Hofmann entered into a
shareholders agreement concerning any potential financing by the shareholders
of Tero for the benefit of Teros operations. This agreement provides that the
shareholders of Tero, Alta Disposal and Mr. Hofmann, may by unanimous resolution
advance to Tero, upon demand by Tero, such funds as may be determined specified
by unanimous resolution, subject to the agreement.
Tero was a family owned waste disposal company. The waste
disposal facility had been under the same ownership since it began operations in
1997. In 2002, Tero successfully reclassified the original Class II well to a
Class IB disposal well and expanded the capabilities of the facility to handle
solid waste disposal. The facility is located near Wardlow, Alberta and is right
in the heart of the area's oil and gas producers. The nearest competing
commercial disposal companies are 75 kilometers away which presents Teros
facility with a large geographical advantage.
On September 15, 2014, Northern Hunter Energy Inc. entered into
a conveyance agreement with Tero dated June 1, 2014. Pursuant to this agreement,
Northern Hunter Energy will transfer a 10% working interest in certain assets of
the Morinville, Alberta property, which was previously acquired from Valeura, to
Tero effective June 1, 2014 for the sum of $10,000. As of the date of this
report, the transfer has not been completed and the sum of $10,000 has not been
paid.
On May 1, 2015, Alta Disposal entered into a share purchase
agreement with Natel Hofmann and Tero Oilfield Services Ltd. for the sale of the
Tero Shares by Alta Disposal to Ms. Hofmann in consideration of an aggregate of
$300,000. As at April 29, 2015, the purchase price was paid in full.
Loans of Our Company
Since March 2014, our company has received various loans from
unrelated third party that are listed below. These loans are convertible into
shares of our company pursuant to the terms of the loan agreements. In the
descriptions below of the loans, the issuance of common shares pursuant to the
conversion of debt pursuant to convertible promissory notes, and the issuance of
common shares pursuant to the exercise of warrants, transactions are a on a post
reverse stock split basis. These adjustments include our first reverse share
split approved on January 19, 2015 (20 old shares of common stock for one (1)
new share of common stock), and our second reverse stock split approved by our
board of directors on July 13, 2015 (200 old shares of common stock for one (1)
new share of common stock). All the loans, convertible promissory notes, and
warrants include terms that make them subject to the share splits.
Loan Agreements with JDF Capital Inc.
$500,000 Loan
On March 15, 2014, we entered into a securities purchase
agreement with JDF, pursuant to which JDF provided us with an aggregate
investment of $500,000 in consideration of our issuance of convertible
promissory notes and common share purchase warrants. We issued JDF a 10%
original issue discount convertible promissory note of $550,000 due September
15, 2015 and convertible into common shares on a cashless basis at a price per
share of 35% of the lower of lowest closing bid price of our common shares
during the prior 20 trading days prior to 1) the date of the purchase agreement
or 2) the day of the notice for conversion. The note bears interest, in arrears,
at a rate per annum equal to fifteen percent (15%) accruing on a semi-annual
basis commencing March 15, 2014 in cash or restricted shares of our companys
common stock, par value $0.001 per share at the option of the holder. The fair
value of the note at issuance was $846,154. During the year ended June 30, 215
and 2014, an interest expense of $6,279 and $24,063 respectively, was accrued in
respect of the note.
11
In addition on March 15, 2014, we issued an aggregate of 4,583
warrants to JDF in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$240.00 and expire after a term of three years. In the case that after six
months there is no registration statement available for the resale of our common
shares from exercising of these warrants, the warrants may be exercised on a
cashless basis at a price as set out in the warrant.
Pursuant to a partial sale and assignment agreement dated
February 27, 2015 among our company, JDF Capital Inc. and River North Equity,
LLC, JDF Capital assigned $100,000 portion of the March 15, 2014 note to River
North Equity.
On March 30, 2015, our directors approved an amendment to the
note. We amended and restated a $50,000 portion of the $550,000 note, into a new
promissory note to LG Capital Funding LLC, in the amount of $50,000 to provide
conversion features equal to 50% of the lowest closing price of the last 20
trading days prior to conversion, as well as 10% per annum interest and become
due and payable one year after the issuance date.
To date, we have issued the following securities in conversion
of the $400,000 portion of the March 15, 2014 convertible promissory note held
by JDF Capital:
-
On September 23, 2014, we issued 455 common shares at a deemed price of
$13.00 per share for promissory note and interest conversion of $7,692.
-
On October 3, 2014, we issued 2,500 common shares at a deemed price of
$10.00 per share for promissory note and interest conversion of $38,462.
-
On October 6, 2014, we issued 2,500 common shares at a deemed price of
$10.00 per share for promissory note and interest conversion of $38,462.
-
On October 7, 2014, we issued 2,750 common shares at a deemed price of
$8.80 per share for promissory note and interest conversion of $37,231.
-
On October 13, 2014, we issued 3,409 common shares at a deemed price of
$8.80 per share for promissory note and interest conversion of $46,154.
-
On October 21, 2014, we issued 5,000 common shares at a deemed price of
$5.80 per share for promissory note and interest conversion of $44,615.
-
On October 31, 2014, we issued 3,750 common shares at a deemed price of
$04.60 per share for promissory note and interest conversion of $26,538.
-
On November 10, 2014, we issued 4,952 common shares at a deemed price of
$4.20 per share for promissory note and interest conversion of $32,000.
-
On November 13, 2014, we issued 5,000 common shares at a deemed price of
$3.60 per share for promissory note and interest conversion of $27,692.
-
On November 18, 2014, we issued 6,410 common shares at a deemed price of
$3.12 per share for promissory note and interest conversion of $30,769.
-
On December 1, 2014, we issued 7,500 common shares at a deemed price of
$2.80 per share for promissory note and interest conversion of $32,308.
-
On December 5, 2014, we issued 7,500 common shares at a deemed price of
$2.00 per share for promissory note and interest conversion of $23,077.
12
-
On December 8, 2014, we issued 8,750 common shares at a deemed price of
$1.40 per share for promissory note and interest conversion of $18,846.
-
On December 10, 2014, we issued 11,250 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $20,769.
-
On December 15, 2014, we issued 12,500 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $23,077.
-
On December 18, 2014, we issued 15,000 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $27,692.
-
On April 1, 2015, we issued 19,110 common shares at a deemed price of $1.20
per share for promissory note and interest conversion of $35,280.
-
On April 7, 2015, we issued 19,608 common shares at a deemed price of $1.02
per share for promissory note and interest conversion of $30,769.
-
On April 10, 2015, we issued 25,000 common shares at a deemed price of
$0.61 per share for promissory note and interest conversion of $23,462.
-
On April 17, 2015, we issued 25,000 common shares at a deemed price of
$0.48 per share for promissory note and interest conversion of $18,642.
-
On April 17, 2015, we issued 25,000 common shares at a deemed price of
$0.40 per share for promissory note and interest conversion of $15,385.
-
On April 20, 2015, we issued 25,000 common shares at a deemed price of
$0.26 per share for promissory note and interest conversion of $10,000.
-
On April 22, 2015, we issued 30,000 common shares at a deemed price of
$0.24 per share for promissory note and interest conversion of $9,525.
-
On April 28, 2015, we issued 30,000 common shares at a deemed price of
$0.20 per share for promissory note and interest conversion of $6,000.
-
On April 30, 2015, we issued 45,000 common shares at a deemed price of
$0.13 per share for promissory note and interest conversion of $5,850.
-
On May 4, 2015, we issued 50,000 common shares at
a deemed price of $0.13 per share for promissory note and interest conversion
of $6,500.
-
On May 7, 2015, we issued 75,000 common shares at a deemed price of $0.09
per share for promissory note and interest conversion of $6,375.
-
On May 8, 2015, we issued 75,000 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $5,250.
-
On May 13, 2015, we issued 119,900 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $8,393.
13
To date, we have issued the following securities in conversion
of the $100,000 portion of the March 15, 2014 convertible promissory note held
by River North Equity:
-
On April 23, 2015, we issued 32,360 common shares at a deemed price of
$0.24 per share for promissory note and interest conversion of $11,948.
-
On April 28, 2015, we issued issued 39,303 common shares at a deemed price
of $0.20 per share for promissory note and interest conversion of $12,094.
-
On April 30, 2015, we issued 48,584 common shares at a deemed price of
$0.15 per share for promissory note and interest conversion of $11,212.
-
On May 5, 2015, we issued 73,637 common shares at a deemed price of $0.13
per share for promissory note and interest conversion of $14,728.
-
On May 8, 2015, we issued 78,892 common shares at a deemed price of $0.08
per share for promissory note and interest conversion of $9,709.
-
On May 13, 2015, we issued 111,138 common shares at a deemed price of $0.08
per share for promissory note and interest conversion of $13,679.
-
On May 15, 2015, we issued 160,565 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $17,292.
-
On May 22, 2015, we issued 166,802 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $17,963.
-
On September 11, 2015, we issued 434,084 common shares at a deemed price of
$0.03 per share for promissory note conversion of $13,022.
-
On September 18, 2015, we issued 486,623 common shares at a deemed price of
$0.02 per share for promissory note conversion of $9,732.
As at the date of this report $500,000 of the March 15, 2014
note (which amount excludes the restated $50,000 portion) has been converted
into common shares, whereas the full amount of the accompanying warrants remain
unconverted and outstanding.
On March 3, 2015, JDF Capital, LG Capital Funding, LLC and our
company agreed to assign an aggregate of $50,000 from the note of JDF Capital to
LG Capital and to amend the conversion price to equal to 65% of the lowest
closing price of the our common stock for the last 20 trading days prior to
conversion, as well as 10% per annum interest. As at the date of this report, we
have made the following issuances of common stock in conversion of this
convertible note:
-
On April 20, 2015, we issued 25,922 common shares at a deemed price of
$0.39 per share for promissory note and interest conversion of $15,495.
-
On May 27, 2015, we issued 102,839 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $10,995.
-
On June 3, 2015, we issued issued 222,506 common shares at a deemed price
of $0.04 per share for promissory note and interest conversion of $13,585.
-
On June 15, 2015, we issued 218,089 common shares at a deemed price of
$0.04 per share for promissory note and interest conversion of 13,301.
14
-
On May 1, 2015, we issued 53,741 common shares at a deemed price of $0.15
per share for promissory note and interest conversion of $12,342.
-
On July 10, 2015, we issued 201,465 common shares at a deemed price of
$0.04 per share for promissory note conversion of $8,058.60.
As at the date of this report, there remains no balance payable
pursuant to the note.
$600,000 Loan
On August 6, 2014, we entered into a securities purchase
agreement with JDF dated July 22, 2014 pursuant to which we issued to JDF a
convertible promissory note in the aggregate principal amount of $708,000, which
amount includes the purchase price of $600,000 plus 18 months prepaid interest
at the rate of 12% per annum. The convertible note has a maturity date of
January 22, 2016 and is convertible in whole or in part into shares of our
common stock at price per share equal to 65% of the lowest reported sale price
of our common shares during the 20 trading days prior to July 22, 2014 ($160.00)
or prior to the applicable conversion date. Our company will have the option to
prepay the note within 60 days subject to a 10% penalty, within the subsequent
60 days subject to a 20% penalty, or anytime thereafter prior to maturity
subject to a 30% penalty. The purchase price of the promissory note is payable
in six installments beginning upon the effective date of the agreement (which
amount has been paid) and monthly thereafter beginning on August 22, 2014. The
promissory note is secured in first position against all assets of our
subsidiary, Alta Disposal Ltd., pursuant to a general security agreement between
Alta Disposal and JDF.
As additional consideration for the proceeds of the convertible
note, we issued to JDF Capital warrants exercisable for 5 years to purchase up
to 4,200 shares of our common stock at an exercise price of $160.00 per share,
subject to cashless exercise provisions.
To date, we have issued the following securities in conversion
of the August 6, 2014 convertible promissory note:
-
On June 2, 2015, we issued 144,231 common shares at a deemed price of $0.05
per share for promissory note and interest conversion $11,538.
-
On June 5, 2015, we issued 220,000 common shares at a deemed price of $0.05
per share for promissory note and interest conversion $15,400.
-
On June 10, 2015, we issued 275,000 common shares at a deemed price of
$0.05 per share for promissory note and interest conversion $19,251.
-
On July 8, 2015, we issued 125,000 common shares at a deemed price of $0.04
per share for promissory note conversion of $5,000.
-
On July 21, 2015, we issued 250,000 common shares at a deemed price of
$0.04 per share for promissory note conversion of $10,000.
-
On July 29, 2015, we issued 298,269 common shares at a deemed price of
$0.04 per share for promissory note conversion of $11,930.76.
-
On September 18, 2015, we issued 475,000 common shares at a deemed price of
$0.03 per share for promissory note conversion of $14,250.
As at the date of this report, $600,000 has been funded
pursuant to the note of which approximately $532,905.75 remains unconverted and
outstanding.
15
On March 9, 2015, JDF Capital and Blue Citi PR, LLC agreed to
assign an aggregate of $100,000 from the convertible promissory note of JDF
Capital (that was issued from our company) to Blue Citi PR LLC. As at the date
of this report, we have issued the following securities in conversion of the
promissory note:
-
On April 22, 2015, we issued 14,793 common shares at a deemed price of
$0.34 per share for promissory note and interest conversion $7,692.
-
On April 30, 2015, we issued 45,000 common shares at a deemed price of
$0.17 per share for promissory note and interest conversion $11,700.
-
On May 7, 2015, we issued 75,000 common shares at a deemed price of $0.09
per share for promissory note and interest conversion $10,500.
-
On May 12, 2015, we issued 89,011 common shares at a deemed price of $0.09
per share for promissory note and interest conversion $12,462.
-
On May 13, 2015, we issued 125,000 common shares at a deemed price of $0.08
per share for promissory note and interest conversion $15,000
As at the date of this report, there remains a balance
of$62,720 unconverted and payable pursuant to the note.
Loan Agreement with JMJ Financial
On February 13, 2013, we entered into a securities purchase
agreement with JMJ Financial. Pursuant to the terms of the agreement, our
company will also enter into a convertible promissory note in the principal
amount of $1,100,000 (for consideration of up to $1,000,000), of which $100,000
shall be paid to our company upon closing of the convertible promissory note and
a common stock purchase warrant for the purchase of up to 135 shares of our
common stock at an exercise price of $740 for a period of five years. The
convertible promissory note shall have a maturity date of February 13, 2016. The
remainder of the convertible debenture can be drawn down on by mutual agreement
from JMJ Financial and our company. As at the date of this report, we have made
the following issuances of common stock in conversion of the February 13, 2013
note:
-
On August 13, 2013, we issued 396 common shares at a deemed price of
$294.00 per share for promissory note and interest conversion of $163,693.
-
On November 11, 2013, we issued 347 common shares at a deemed price of
$168.00 per share for promissory note and interest conversion of $81,846.
-
On December 4, 2013, we issued 359 common shares at a deemed price of
$162.40 per share for promissory note and interest conversion of $81,846.
-
On January 6, 2014, we issued 638 common shares at a deemed price of $91.28
per share for promissory note conversion of $81,846.
-
On February 14, 2014, we issued 500 common shares at a deemed price of
$89.60 per share for promissory note conversion of $62,921.
-
On March 3, 2014, we issued 475 common shares at a deemed price of $89.60
per share for promissory note conversion of $59,849.
-
On June 10, 2014, we issued 400 common shares at a deemed price of $85.20
per share for promissory note conversion of $47,752.
16
-
On June 27, 2014, we issued 425 common shares at a deemed price of $74.00
per share for promissory note conversion of $44,171.
-
On July 16, 2014, we issued 450 common shares at a deemed price of $74.00
per share for promissory note and interest conversion of $46,769.
-
On August 1, 2014, we issued 266 common shares at a deemed price of $67.00
per share for promissory note and interest conversion of $25,000.
-
On September 3, 2014, we issued 750 common shares at a deemed price of
$40,00 per share for promissory note and interest conversion of $42,135.
-
On September 11, 2014, we issued 1,400 common shares at a deemed price of
$20.20 per share for promissory note and interest conversion of $39,712.
-
On October 22, 2014, we issued 4,750 common shares at a deemed price of
$5.80 per share for promissory note and interest conversion of $38,694.
-
On November 6, 2014, we issued 4,975 common shares at a deemed price of
$4.20 per share for promissory note and interest conversion of $28,578.
-
On November 19, 2014, we issued 8,500 common shares at a deemed price of
$3.20 per share for promissory note and interest conversion of $37,202.
-
On December 10, 2014, we issued 12,075 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $19,818.
-
On December 17, 2014, we issued 15,425 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $25,317.
-
On April 22, 2015, we issued 31,000 common shares at a deemed price of
$0.26 per share for promissory note and interest conversion of $11,024
-
On April 24, 2015, we issued 41,500 common shares at a deemed price of
$0.21 per share for promissory note and interest conversion of $11,920.
-
On May 8, 2015, we issued 92,500 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $8,839.
-
On May 14, 2015, we issued 132,000 common shares at a deemed price of $0.06
per share for promissory note and interest conversion $10,833
-
On May 27, 2015, we issued 194,500 common shares at a deemed price of $0.05
per share for promissory note and interest conversion of $13,301.
-
On June 3, 2015, we issued 225,000 common shares at a deemed price of $0.04
per share for promissory note and interest conversion $12,309
-
On June 11, 2015, we issued 284,000 common shares at a deemed price of
$0.03 per share for promissory note and interest conversion of $11,653.
-
On June 16, 2015, we issued 249,500 common shares at a deemed price of
$0.03 per share for promissory note and interest conversion of $10,237.
-
On September 15, 2015, we issued 438,000 common shares at a deemed
price of $0.03 per share for promissory note conversion of $13,140.
-
On October 28, 2015 we issued 554,000 common shares at a deemed price of
$0.01 per share for promissory note conversion of $5,540.
17
As at the date of this report, there remains a balance of
approximately $39,875 unconverted and payable pursuant to the note.
Together with the promissory note issued on February 13, 2013,
we issued the following warrants:
-
warrants to purchase up to 135 of our common shares at an exercise price of
$740.00 per share expiring February 13, 2018 (exercised);
-
warrants to purchase up to 66 of our common shares at an exercise price of
$760.00 expiring April 24, 2018 (exercised),
-
warrants to purchase up to 74 of our common shares at an exercise price of
$672.00 expiring June 4, 2018 (exercised),
-
warrants to purchase up to 100 of our common shares at an exercise price of
$500.00 expiring June 27, 2018 (exercised),
-
warrants to purchase up to 84 of our common shares at an exercise price of
$896.00 expiring August 14, 2018 (exercised),
-
warrants to purchase up to 417 of our common shares at an exercise price of
$240.00 expiring December 10, 2018 (exercised),
-
warrants to purchase up to 179 shares of our common shares at an exercise
price of $280.00 expiring February 20, 2019 (not exercised);
-
warrants to purchase up to 952 of our common shares at an exercise price of
$210.00 expiring April 16, 2019 (not exercised).
Loan Agreement with JSJ Investments Inc.
On February 23, 2014, we entered into a securities purchase
agreement with JSJ Investments Inc., pursuant to which JSJ Investments provided
our company with an aggregate investment of $100,000 in consideration of our
issuance of convertible promissory notes and common share purchase warrants. We
issued JSJ Investments a convertible promissory note with 12% interest due
August 27, 2014 and convertible into common shares on a cashless basis at a
price of the lower of 50% of the average of the three lowest bids on the 20
trading days before February 27, 2014 or of a notice to convert during the
twenty trading days preceding the delivery of any related conversion notice. The
fair value of the note at issuance was $200,000. On August 28, 2014, we issued
2,598 common shares at a deemed price of $40.80 per share in full conversion of
the promissory note and interest at face value of $205,984.
In addition, we issued warrants to purchase an aggregate of 278
common shares of our company to JSJ Investments in consideration for purchasing
the note. Subject to adjustments, these warrants are convertible into common
shares at a price of approximately $360.00 and expire after a term of five
years. In the case that after six months there is no registration statement
available for the resale of our common shares from exercising of these warrants,
the warrants may be exercised on a cashless basis at a price as set out in the
warrant.
Loan Agreement with Centaurian Fund
On February 28, 2014, we entered into a securities purchase
agreement with Centaurian Fund, pursuant to which Centaurian provided our
company with an aggregate investment of $50,000 in consideration of our issuance
of convertible promissory notes and common share purchase warrants. We issued
Centaurian a convertible promissory note with 15% interest due August 28, 2014
and convertible into common shares on a cashless basis at a price of the lower
of 50% of the average of the three lowest bids on the 20 trading days before
February 28, 2014 or of a notice to convert during the 20 trading days preceding
the delivery of any related conversion notice. The fair value of the note at
issuance was $100,000. In addition, we issued warrants to purchase an aggregate
of 1,289 common shares of our company to Centaurian in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$240.00 and expire after a term of six months. In the case that our common share
closing price is greater than $240.00 per share for two days, the warrants may
be exercised on a cashless basis at a price pursuant to the warrant. The
warrants expired unexercised.
18
On September 4, 2014, JSJ, Centaurian Fund and our company
agreed to assign the note from Centaurian Fund to JSJ Investments and increase
the principal interest of the note to $74,750 with 12% interest.
-
On September 10, 2014, we issued 1,684 common shares at a deemed price of
$22.20 per share for promissory note and interest conversion of $62,375.
-
On September 16, 2014, we issued 953 common shares at a deemed price of
$21.33 per share for promissory note and interest conversion of $40,447.
On April 8, 2015, we issued 21,838 common shares at a market
price of $0.85 per share for promissory note and interest conversion of $23,350.
As at the date of this report, there remains no balance payable pursuant to the
note.
Loan Agreements with LG Capital Funding, LLC
On February 27, 2014, we entered into another securities
purchase agreement with LG Capital Funding, LLC. Pursuant to which LG Capital
provided our company with an aggregate investment of $75,000 in consideration of
a promissory note carrying interest at the rate of 10% per annum and due March
3, 2016. The promissory note is convertible into common shares of our company at
the investors option at any time after 180 days at a price equal to 50% of the
lowest bids price for the 20 days prior to conversion date subject to various
prescribed conditions. During the year ended June 30, 2015, the full face value
of the note including interest (being $155,145 (June 30, 2014 - $Nil) in the
aggregate) was fully converted to 28,087 common shares pursuant to the following
issuances of common stock:
-
On September 29, 2014, we issued 1,512 common shares at a
deemed price of $12.60 per share for promissory note and interest conversion of
$37,050.
-
On October 27, 2014, we issued 5,502 common shares at a deemed
price of $6.20 per share for promissory note and interest conversion of $66,113.
-
On December 11, 2014, we issued 8,473 common shares at a deemed
price of $1.40 per share for promissory note and interest conversion of $22,862.
-
On December 17, 2014, we issued 12,600 common shares at a
deemed price of $1.20 per share for promissory note and interest conversion of
$29,120.
On March 3, 2015, we entered into a securities purchase
agreement with LG Capital Funding, LLC, pursuant to which LG Capital provided
our company with an aggregate investment of $29,000 in consideration of our
issuance of convertible promissory notes. We issued LG Capital a convertible
promissory note with 10% interest due March 3, 2016 and convertible into common
shares on a cashless basis at a price of 65% of the lowest closing bid price of
our common shares during the prior 20 trading days including the delivery of any
related conversion notice.
On September 11, 2015, the Company issued 80,801 common shares
at a deemed price of $0.04 per share for promissory note conversion. During the
year ended June 30, 2015, an interest expense of $967 was accrued in respect of
the note. As at the date of this report, there remains a balance of
approximately $26,735 unconverted and payable pursuant to the note.
Loan Agreement with St. George Investments LLC
On February 28, 2014, we entered into a securities purchase
agreement with St. George Investments LLC, pursuant to which St. George
Investments provided our company with an aggregate investment of $100,000 in
consideration of our issuance of convertible promissory notes and common share
purchase warrants. We issued St. George Investments a convertible promissory
note of $125,500 including 15% prepaid interest due August 28, 2015 and
convertible into common shares on a cashless basis at a price of 50% of the
lower of lowest closing bid price of our common shares during the prior 20
trading days prior to 1) the date of the purchase agreement or 2) the day of the
notice for conversion. The fair value of the note at issuance was $200,000. As
at the date of this report we have made the following issuances of common stock
in conversion of the February 28, 2014 note:
-
On September 10, 2014, we issued 385 common shares at a deemed price of
$26.00 per share for promissory note and interest conversion of $20,000.
-
On September 23, 2014, we issued 962 common shares at a deemed price of
$13.00 per share for promissory note and interest conversion of $25,000.
-
On October 9, 2014, we issued 1,667 common shares at a deemed price of
$9.00 per share for promissory note and interest conversion of $30,000.
-
On October 16, 2014, we issued 1,829 common shares at a deemed price of
$8.20 per share for promissory note and interest conversion of $30,000.
-
On October 24, 2014, we issued 2,206 common shares at a deemed price of
$6.80 per share for promissory note and interest conversion of $30,000.
19
-
On October 31, 2014, we issued 3,125 common shares at a deemed price of
$4.60 per share for promissory note and interest conversion of $30,000.
-
On November 17, 2014, we issued 3,947 common shares at a deemed price of
$3.80 per share for promissory note and interest conversion of $30,000.
-
On December 3, 2014, we issued 5,357 common shares at a deemed price of
$2.80 per share for promissory note and interest conversion of $17,500.
-
On December 16, 2014, we issued 9,286 common shares at a deemed price of
$1.40per share for promissory note and interest conversion of $13,000.
As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition, we issued an aggregate of 370 warrants to St.
George Investments in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$270.00 and expire after a term of five years. As at the date of this report we
have made the following issuances of common stock in full exercise of the
February 28, 2014 warrant:
- On March 16, 2015, 141 warrants were exercised for 36,175 of our common
shares at a deemed price of $0.02 in accordance with the terms of the
agreement. A loss of $644 was recorded when the warrants were valued prior to
exercise. On April 16, 2015, we issued 42,417 common shares at a deemed price
of $0.0043 per share or $182 in the aggregate pursuant to the exercise of 230 warrants.
Loan Agreement with Vista Capital Investments, LLC
On February 28, 2014, we entered into a securities purchase
agreement with Vista Capital Investments, LLC, pursuant to which Vista Capital
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of convertible promissory notes and common share purchase
warrants. We issued Vista Capital a convertible promissory note of $110,000 with
12% interest due September 1, 2014 and convertible into common shares on a
cashless basis at a price of the lesser of $300 or 50% of the lowest bid price
of our common shares during the prior 25 consecutive trading days prior the
delivery of any related conversion notice. The fair value of the note at
issuance was $220,000. As at the date of this report, we have made the following
issuances of common stock in full conversion of the February 28, 2014 note:
-
On September 23, 2014, we issued 2,500 common shares at a deemed price of
$11.00 per share for promissory note and interest conversion of $55,000.
-
On October 27, 2014, we issued 3,750 common shares at a deemed price of
$5.80 per share for promissory note and interest conversion of $43,500.
-
On November 3, 2014, we issued 3,750 common shares at a deemed price of
$4.60 per share for promissory note and interest conversion of $34,500.
-
On December 10, 2014, we issued 8,500 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $20,400.
-
On April 1, 2015, we issued 15,000 common shares at a deemed price of $1.20
per share for promissory note and interest conversion of $36,000.
-
On April 7, 2015, we issued 22,500 common shares at a deemed price of $1.02
per share for promissory note and interest conversion of $38,250.
20
-
On April 14, 2015, we issued 25,000 common shares at a deemed price of
$0.49 per share for promissory note and interest conversion of $12,250.
-
On April 20, 2015, we issued 30,000 common shares at a deemed price of
$0.26 per share for promissory note and interest conversion of $7,800.
-
On April 24, 2015, we issued 37,500 common shares at a deemed price of
$0.21 per share for promissory note and interest conversion of $7,875.
-
On April 29, 2015, we issued 45,000 common shares at a deemed price of
$0.14 per share for promissory note and interest conversion of $6,300.
-
On May 8, 2015, we issued 75,000 common shares at a deemed price of $0.09
per share for promissory note and interest conversion of $7,500.
-
On May 13, 2015, we issued 122,357 common shares at a deemed price of $
0.07 for promissory note and interest conversion of $5,250.
In addition, we issued warrants to purchase an aggregate of
2,578 common shares of our company to Vista Capital in consideration for
purchasing the note. Subject to adjustments, these warrants are convertible into
common shares at a price of $240.00 during the period beginning August 28, 2014
and ending August 28, 2019. In the case that our common share closing price is
greater than $240.00 per share for two days, the warrants may be exercised on a
cashless basis at a price pursuant to the warrant.
On August 20, 2014, we issued an aggregate of 4,528 common
shares at a deemed price of $85.34 for the cashless conversion of warrants
issued on February 28, 2014. A gain of $108,275 was recorded when the warrants
were valued prior to exercise.
Loan Agreement with Union Capital, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Union Capital, LLC, pursuant to which Union provided our company
with an aggregate investment of $50,000 in consideration of our issuance of
convertible promissory notes and common share purchase warrants. We issued Union
a convertible promissory note of $50,000 with 10% interest due March 5, 2015 and
convertible into common shares on a cashless basis at a price per share of 50%
of the lowest closing bid price of our common shares during the prior 20 trading
days including the delivery of any related conversion notice. The fair value of
the note at issuance was $100,000. As at the date of this report, we have made
the following issuances of common stock in conversion of the February 28, 2014
note:
-
On September 8, 2014, we issued 277 common shares at a deemed price of
$38.00 per share for promissory note and interest conversion of $20,510.
-
On September 11, 2014, we issued 652 common shares at a deemed price of
$24.20 per share for promissory note and interest conversion of $30,777.
-
On September 12, 2014, we issued 717 common shares at a deemed price of
$22.00 per share for promissory note and interest conversion of $30,781.
-
On September 15, 2014, we issued 479 common shares at a deemed price of
$22.00 per share for promissory note and interest conversion of $20,529.
As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition, we issued warrants to purchase an aggregate of 235
common shares of our company to Union in consideration for purchasing the note.
Subject to adjustments, these warrants are convertible into common shares at a
price of $212.00 and expire after a term of five years. In the case that after
six months there is no registration statement available for the resale of our common shares from exercising of these warrants,
the warrants may be exercised on a cashless basis at a price as set out in the
warrant.
21
Loan Agreement with Iconic Holdings, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Iconic Holdings, LLC, pursuant to which Iconic provides our
company with an aggregate investment of $100,000 in consideration of our
issuance of convertible promissory notes and common share purchase warrants. We
issued Iconic a convertible promissory note of $100,000 with 12% interest due
September 3, 2014 and convertible into common shares on a cashless basis at a
price of 50% of the lower of lowest closing bid price of our common shares
during the prior 20 trading days prior to 1) the date of the purchase agreement
or 2) the day of the notice for conversion. The fair value of the note at
issuance was $200,000. As at the date of this report, we have made the following
issuances of common stock in conversion of the March 3, 2014 note:
-
On September 12, 2014, we issued 2,475 common shares at a deemed price of
$20.20 per share for promissory note and interest conversion of $100,000.
-
On October 23, 2014, we issued 1,471 common shares at a deemed price of
$6.80 per share for promissory note and interest conversion of $20,000.
-
On November 14, 2014, we issued 5,263 common shares at a deemed price of
$3.80 per share for promissory note and interest conversion of $40,000.
-
On November 18, 2014, we issued 7,193 common shares at a deemed price of
$3.80 per share for promissory note and interest conversion of $47,335.
As at the date of this report, all interest and principal of
the note has been fully converted.
In addition, we issued an aggregate of 500 warrants to Iconic
in consideration for purchasing the note. Subject to adjustments, these warrants
are convertible into common shares at a price of $200. and expire after a term
of three years. As at the date of this report, we have made the following
issuances of common stock in cashless exercise of the March 3, 2014 warrants:
- On April 14, 2015, we issued 5,385 common shares at a deemed price of
$0.09 per share in full exercise of the warrants. A gain of $94,809 was
recorded when the warrants were valued prior to exercise.
Loan Agreement with Adar Bays, LLC
On March 3, 2014, we entered into a securities purchase
agreement with Adar Bays, LLC, pursuant to which Adar provided our company with
an aggregate investment of $50,000 in consideration of our issuance of
convertible promissory notes and common share purchase warrants. We issued Adar
a convertible promissory note of $50,000 with 10% interest due March 4, 2015 and
convertible into common shares on a cashless basis at a price per share of 50%
of the lowest closing bid price of our common shares during the prior 20 trading
days including the delivery of any related conversion notice. The fair value of
the note at issuance was $100,000. As at the date of this report, we have made
the following issuances of common stock in conversion of the March 3, 2014 note:
-
On September 4, 2014, we issued 227 common shares at a deemed price of
$44.00 per share for promissory note and interest conversion of $20,000.
-
On September 11, 2014, we issued 413common shares at a deemed price of
$24.20 per share for promissory note and interest conversion of $20,000.
-
On September 17, 2014, we issued 354 common shares at a deemed price of
$19.80 per share for promissory note and interest conversion of $14,000.
22
-
On September 23, 2014, we issued 369 common shares at a deemed price of
$12.60 per share for promissory note and interest conversion of $9,311.
-
On September 29, 2014, we issued 1,250 common shares at a deemed price of
$12.60 per share for promissory note and interest conversion of $31,500.
-
On October 27, 2014, we issued 836 common shares at a deemed price of $6.40
per share for promissory note and interest conversion of $7,948.
As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition on March 4, 2014, we issued an aggregate of 235
warrants to Adar in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$212.00 and expire after a term of five years.
Loan Agreement with Black Mountain Equities, Inc.
On March 3, 2014, we entered into a securities purchase
agreement with Black Mountain Equities, Inc., pursuant to which Black Mountain
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of original issue discount convertible promissory notes and
common share purchase warrants. We issued Black Mountain a convertible
promissory note of $115,000 with 15% prepaid interest due April 1, 2015 and
convertible into common shares on a cashless basis at the lesser price per share
of $240.00 or 50% of the lowest trade price of our common shares during the
prior 20 trading days immediately preceding the delivery of any related
conversion notice. The fair value of the note at issuance was $230,000.
As at the date of this report, we have made the following
issuances of common stock in conversion of the March 3, 2014 note:
-
On October 27, 2014, we issued 5,678 common shares at a deemed price of
5.80 per share for promissory note and interest conversion of $62,934.
-
On December 12, 2014, we issued 18,612 common shares at a deemed price of
$1.20 per share for promissory note and interest conversion of $42,334.
-
On March 31, 2015, we issued 20,834 common shares at a deemed price of
$1.20 per share the for promissory note and interest conversion of $46,524.
-
On May 1, 2015, we issued 105,315 common shares at a deemed price of $0.16
per share for promissory note and interest conversion of $31,200.
-
On May 7, 2015, we issued 90,775 common shares at a deemed price of $0.07
per share for promissory note and interest conversion of $11,754.
-
On May 12, 2015, we issued 90,775 common shares at a deemed price of $0.07
per share promissory note and interest conversion of $11,754.
-
On June 4, 2015, we issued 222,791 common shares at a deemed price of $0.04
per share for promissory note and interest conversion of $16,411.
-
On June 11, 2015, we issued 428,933 common shares at a deemed price of
$0.03 per share for promissory note and interest conversion $23,694.
As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
In addition on March 3, 2014, we issued an aggregate of 417
warrants to Black Mountain in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$240.00 and expire after a term of five years. In the case that our common share closing
price is greater than $240.00 per share for two days, the warrants may be
exercised on a cashless basis at a price pursuant to the warrant. As at the date
of this report, we have made the following issuances of common stock in full
exercise of the March 3, 2014 warrants:
23
-
On August 5, 2014, we issued 5,161 common shares at a deemed price of $7.99
per share for warrants exercise of $41,244. A gain of $10,725 was recorded
when the warrants were valued prior to exercise.
-
On September 15, 2014, we issued 2,737 at a deemed price of $8.11 per share
for warrants exercise of $22,207. A gain of $5,777 was recorded when the
warrants were valued prior to exercise.
As at the date of this report, there remain no warrants
remaining pursuant to the securities purchase agreement.
Loan Agreement with Blue Citi, LLC
Effective March 3, 2014, we entered into another securities
purchase agreement with Blue Citi LLC. Pursuant to the terms of the agreement,
Blue Citi acquired a convertible promissory note with an aggregate face value of
$220,000, at an issuance discount of $20,000; resulting in $200,000 net proceeds
to our company. The note was due on September 3, 2014 and carries an interest
rate of 12% per annum over the term of the note, with an effective interest rate
of 1220.64% . The note is convertible at a 50% discount of the lowest closing
price for the 20 trading days immediately prior to (i) date of the purchase
agreement, or (ii) the voluntary conversion of the note. The fair value at
issuance was $440,000.
During the year ended June 30, 2015, $453,200 (June 30, 2014 -
$Nil) in face value of the note including interest was fully converted to 49,640
(June 30, 2014 - Nil) common shares pursuant to the following issuances of
common shares:
-
On September 3, 2014, we issued 125 common shares at a deemed price of
$40.00 per share for promissory note and interest conversion of $9,717.
-
On September 15, 2014, we issued 1,396 common shares at a deemed price of
$20.20 per share for promissory note and interest conversion of $54,804.
-
On September 24, 2014, we issued 2,273 common shares at a deemed price of
$11.00 per share for promissory note and interest conversion of $48,585.
-
On October 2, 2014, we issued 1,136 common shares at a deemed price of
$11.00 per share for promissory note and interest conversion of $24,292.
-
On October 13, 2014, we issued 2,670 common shares at a deemed price of
$8.80 per share for promissory note and interest conversion of $45,669.
-
On October 20, 2014, we issued 2,778 common shares at a deemed price of
$7.20 per share for promissory note and interest conversion of $38,867.
-
On October 21, 2014, we issued 2,500 common shares at a deemed price of
$6.00 per share for promissory note and interest conversion of $29,150.
-
On October 27, 2014, we issued 5,000 common shares at a deemed price of
$6.00 per share for promissory note and interest conversion of $58,301
-
On November 4, 2014, we issued 4,348 common shares at a deemed price of
$4.60 per share for promissory note and interest conversion of $38,867.
-
On December 4, 2014, we issued 7,500 common shares at a deemed price of
$2.40 per share for promissory note and interest conversion of $34,980.
-
On December 5, 2014, we issued 6,818 common shares at a deemed price of
$2.20 per share for promissory note and interest conversion of $29,150.
-
On December 8, 2014, we issued 6,667 common shares at a deemed price of
$1.80 per share for promissory note and interest conversion of $23,320.
24
- On December 9, 2014, we issued 6,429 common shares at a deemed price of
$1.40 per share for promissory note and interest conversion of $17,498.
There is no outstanding balance payable in respect of the note
as of the date of this report. Along with the promissory note entered on March
3, 2014, we issued warrants to acquire a total of 1,000 shares of the company
for a period of three years at an exercise price of $200.00. On September 4,
2014, 25 warrants were exercised for 146 of our common shares at a deemed price
of $15.92 in accordance with the terms of the agreement. A gain of $1,490 was
recorded when the warrants were valued prior to the warrants exercise.
Loan Agreement with 514742 B.C. Ltd.
On March 3, 2014, we entered into a securities purchase
agreement with Alta Disposal Ltd., our wholly-owned subsidiary, and 514742 B.C.
Ltd., pursuant to which 514742 B.C. provided Alta Disposal with an aggregate
investment of CAD$330,000 (US$298,518) in consideration of our issuance of
secured promissory notes and common share purchase warrants.
On March 3, 2014, 514742 B.C. funded an aggregate investment of
CAD$333,000 to Alta Disposal. Therefore, Alta Disposal issued 514742 B.C. a
secured promissory note of Alta Disposal CAD$333,000 with 20% interest due June
1, 2014. The note is secured by all present and after acquired property of Alta
Disposal. Effective April 14, 2014, the company paid a total of CAD$346,274
(US$316,355) in principle and interest to settle this debt.
In addition on March 3, 2014, we issued an aggregate 550
warrants to 514742 B.C. in consideration for purchasing the note. Subject to
adjustments, these warrants are convertible into common shares at a price of
$200.00 and expire after a term of three years. In the case that after six
months there is no registration statement available for the resale of our common
shares from exercising of these warrants, the warrants may be exercised on a
cashless basis at a price as set out in the warrant.
Loan Agreement with Cardinal Capital Group, Inc.
On October 31, 2014, we entered into a securities purchase
agreement with Cardinal Capital Group, Inc., pursuant to which Cardinal Capital
provided our company with an aggregate investment of $50,000 in consideration of
our issuance of a convertible promissory note. We issued Cardinal Capital a
convertible promissory note of $59,500 comprised of $6,000 in interest and
$3,500 in legal fees and due in two years. The note is convertible into shares
of our common stock at the lesser of $20.00 or 65% of the lowest trade price of
our common stock during the 20 trading days immediately preceding a conversion
date. As at the date of this report, we have made the following issuances of
common stock in conversion of the October 31, 2014 note:
-
On April 30, 2015, we issued 49,000 common shares at a deemed price of $0.20
per share for promissory note and interest conversion of $15,077.
-
On May 1, 2015, we issued 49,000 common shares at a deemed price of $0.20
per share for promissory note and interest conversion $15,077.
-
On May 7, 2015, we issued 49,000 common shares at a deemed price of $0.09
per share for promissory note and interest conversion $6,860.
-
On May 11, 2015, we issued 110,000 common shares at a deemed price of $0.09
per share for promissory note and interest conversion $15,400.
-
On May 14, 2015,
we issued 110,000 common shares at a deemed price of $0.08 per share for
promissory note and interest conversion $13,200.
-
On May 27, 2015, we issued 150,000 common shares at a deemed price of $0.07
per share for promissory note and interest conversion $15,000.
-
On June 2, 2015, we issued 150,000 common shares at a deemed price of $0.05
per share for promissory note and interest conversion $11,624.
-
On June 15, 2015, we issued 165,154 common shares at a deemed price of
$0.04 per share for promissory note and interest conversion $6,441.
25
As at the date of this report, there remains no balance
unconverted and payable pursuant to the note.
Loan Agreement with InLight Capital Partners, LLC.
On August 22, 2014, we entered into a securities purchase
agreement with InLight Capital Partners, LLC, pursuant to which InLight Capital
provided our company with an aggregate investment of $100,000 in consideration
of our issuance of a convertible promissory note and warrants to purchase common
shares of our company with an aggregate exercise price of $120,500. The note was
funded by InLight Capital in the amount of $100,000 and shall include $20,500 in
respect of pre-paid interest calculated in advance at the rate of 12% per annum
for 18 months plus expenses of the Purchaser. InLight Capital delivered to us
funds in the amount of $50,000 on the effective date and $50,000 on September
19, 2014.
As at the date of this report, we have made the following
issuances of common stock in conversion of the March 3, 2014 note:
-
On April 13, 2015, we issued 26,250 common shares at a deemed price of $0.64 per
share for promissory note and interest conversion of$24,193.
-
On April 27, 2015, we issued issued 26,250 common shares at a deemed price
of $0.22 per share for promissory note and interest conversion of $8,393.
-
On April 30, 2015, we issued 54,200 common shares at a deemed price of
$0.15 per share for promissory note and interest conversion of $13,253.
-
On May 5, 2015, we issued 78,892 common shares at a deemed price of $0.12
per share for promissory note and interest conversion of $13,355.
-
On May 11, 2015, we issued 92,741 common shares at a deemed price of $0.09
per share for promissory note and interest conversion of $12,210.
-
On May 19, 2015, we issued 166,802 common shares at a deemed price of $0.08
per share for promissory note and interest conversion of $18,825.
-
On June 9, 2015, we issued 255,000 common shares at a deemed price of $0.05
per share for promissory note and interest conversion of $19,185.
There remains a principal balance of $37,243 unconverted and
payable pursuant to the note. In addition on August 22, 2014 and September 19,
2014, we issued an
aggregate of 538 warrants to InLight Capital Partners, LLC in consideration for
purchasing the note. Subject to adjustments, these warrants are convertible into
common shares at a price of $112.00and expire after a term of five years. In the
case that after six months there is no registration statement available for the
resale of our common shares from exercising of these warrants, the warrants may
be exercised on a cashless basis at a price as set out in the warrant.
Loan Agreement with Louis Feld
On February 6, 2015, Louis Feld provided our company with an
aggregate investment of $88,500 in consideration of our issuance of a $88,500
convertible promissory note and warrants to acquire 13,828 common shareswith an
aggregate exercise price of $88,500. We issued Mr. Feld a convertible promissory
note with 12% interest due August 6, 2016 and convertible into common shares on
a cashless basis at a price of 65% of the lowest closing bid price of our common
shares during the prior 20 trading days. During the year ended June 30, 2015, an
interest expense of $3,750 was accrued. On August 17, 2015, we issued 250,000
common shares at a deemed price of $0.04 per share for promissory note and
interest conversion of $10,000.
Loan Agreement with River North Equity LLC
On February 24, 2015, River North provided our company with an
aggregate investment of $100,000 in consideration of our issuance of convertible
promissory notes. We issued River North a convertible promissory note with 12%
interest due August 24, 2016 and convertible into common shares on a
cashless basis at a price of 65% of the lowest closing bid price of our common
shares during the prior 25 trading days including the delivery of any related
conversion notice. During the year ended June 30, 2015, an interest expense of
$4,500 was accrued and no principal has been converted.
26
Bridge Loan Agreement with JDF Capital Inc.
On April 15, 2015, JDF Capital provided our company with a
$50,000 loan with 10% interest per annum due April 15, 2015. On or about May 22,
2015 we prepaid the aggregate of $50,493.15, in full repayment of the loan, and
aggregate accrued interest of $493.15.
New Loan Agreements with JDF Capital Inc.
On August 3, 2015, we entered into a securities purchase agreement with JDF Capital Inc. . Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $36,000 due on February 3, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 9, 2015, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $30,000 due on September 9, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 30, 2015, we entered into a securities purchase agreement with JDF Capital Inc. . Pursuant to the terms of the agreement, JDF Capital acquired a convertible redeemable promissory note with an aggregate principal amount $27,000 due on September 30, 2016 which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at the lower of 65% discount of the lowest trading price for the 20 days prior to conversion date subject to various prescribed conditions.
On November 6, 2015, we entered into another securities purchase agreement with JDF Capital Inc.. Pursuant to the terms of the agreement, JDF Capital acquired a convertible promissory note with an aggregate face value of $12,000 due on November 6, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
Other Business Matters
Regardless of their date, the transactions described below are
adjusted on a post reverse stock split basis. The adjustments included our first
reverse share split approved by our board of directors on January 19, 2015 (on
the basis of 20 old shares of common stock for one (1) new share of common
stock), and our second reverse stock split, approved by our board of directors
on July 13, 2015 (on the basis of 200 old shares of common stock for one (1) new
share of common stock).
On October 24, 2012, we entered into a share exchange agreement
dated October 18, 2012, with Alexander Walsh, our president and director.
Pursuant to the agreement, on October 25, 2012 we issued to Mr. Walsh 5,000
Series A Convertible Preferred shares in our capital stock in consideration of
the cancellation and return to treasury of 5,000 shares of our common stock held
by Mr. Walsh. The Series A Convertible Preferred Shares have a par value of
$0.001 per share and are convertible on a one for one basis into shares of our
common stock after a one year hold period. There are no other preferential
rights attached to the Series A Convertible Preferred Shares. Mr. Walsh
established a series of a 10b5-1 Sales Plans in connection with an overall asset
diversification strategy. Sales transactions occurring under Mr. Walshs 10b5-1
Plans were disclosed publicly through Form 4 filings with the SEC and are
subject to the restrictions and filing requirements of Rule 144.
On July 25, 2013, we entered into a consulting agreement with
Advanced Capital Trading, LLC, pursuant to which Advanced Capital performed
financial consulting services for our company for a period of three months with
an extension of an additional three months based on performance, such services
commenced effective August 1, 2013. Compensation payable to Advanced Capital of
$10,000 was paid upon execution of the consulting agreement.
Effective January 1, 2014, we entered into a consulting
agreement for a term of 12 months with International Compass, LLC for the
services of Bryan Kleinlein as chief financial officer of our company. As
compensation, we agreed to pay to International Compass $12,000 per month during
the term of the agreement payable in cash and/or common shares of our company
that were previously registered on Form S-8 at our sole discretion. The value of
the shares of our company issued as compensation, if any, shall be based on the
volume weighted average trading closing price of the shares of our company in
the five (5) trading days immediately preceding the date(s) which the shares are
due. Mr. Kleinlein was first appointed as our chief financial officer on May 15,
2012. Effective October 22, 2014, we entered into an amending agreement with
International Compass. Pursuant to this amending agreement, the term of the
agreement dated January 1, 2014 with International Compass was reduced from 12
months to 10 months. As consideration to International Compass for agreeing to
enter into the amending agreement, we agreed to pay Mr. Kleinlein an aggregate
of $30,000, payable in our S-8 shares with a deemed price per share equal to the
volume weighted average trading close price of the shares in the five trading
days immediately preceding the amending agreement. As a result, we issued Mr.
Kleinlein an aggregate of 1,908 S-8 shares on October 22, 2014 Mr. Kleinlein
resigned as our chief financial officer as of November 1, 2014.
Effective January 12, 2014, we entered into an employment
agreement with Alexander Walsh for provision of services as our president and
chief executive officer. The employment agreement will terminate on January 12,
2016. Pursuant to the terms of the employment agreement, Mr. Walsh will receive
an annual salary of $120,000 payable in monthly cash installments or, in the
event cash is unavailable, in shares of our companys common stock. The
employment agreement also provides for liability insurance and any travel and
out-of-pocket expenses incurred and approved by our company.
On April 28, 2014, we entered into a consulting agreement, with
our director, Brandon Colker, to provide services on behalf of our company.
Pursuant to the terms of the consulting agreement, Mr. Colker was to receivem my
May 15, 2014, compensation of $12,000 payable in unregistered restricted
common shares of our company's common stock at a deemed value of $200 per share
(Subsequent to the agreement, on February 12, 2015, Mr. Colker resigned as a director and consultant of
the company and, accordingly, the common shares were not issued.
27
Effective May 30, 2014, we entered into a consulting agreement
with Robert Gomer. Pursuant to this agreement, Mr. Gomer is to assist us with
the current business of testing ultrasonic generator technology and performing
services customary expected of a consultant for a term of six months. In
exchange for these services that are to be provided to us, we agreed to issue an
aggregate of $10,000 per month, payable in two sums of $30,000 and in our S-8
shares with a deemed price per share equal to the volume weighted average
trading close price of the shares in the five trading days immediately preceding
the amending agreement. As a result, we issued Mr. Gomer an aggregate of 292 S-8
shares on September 1, 2014. The agreement expired and was not subsequently
renewed.
Effective August 1, 2014, we entered into a consultant
agreement with TEN Associates LLC. Pursuant to this agreement, TEN Associates is
to provide advice relative to corporate and business services and to perform
other related activities as directed by us. In exchange for these services that
are to be provided to us, we agreed to issue 500 common shares of our company to
TEN Associates.
Our company was made aware that a shareholder, who is also a
director and officer of our company, had sold an aggregate amount of shares that
would cause the shareholder to be required to pay our company with respect to a
short swing profit. Our company informed the shareholder that the shareholder
was liable to our company for an aggregate short swing profit of $80,523.58
under Section 16(b) of the Securities Exchange Act of 1934, as amended, for the
profit realized from transactions in our companys common stock. Our company and
the shareholder entered into a settlement agreement dated December 31, 2014
wherein, in exchange for the forbearance of legal action by our company pursuant
to Section 16(b) of the Act, the shareholder agreed to disgorge the short swing
profit to our company as of the effective date of the short swing settlement
agreement. Payment of the short swing profit from the shareholder was received
by our company on December 31, 2014.
On December 15, 2010, Alexander Walsh, a director and officer
of our company, entered into an assignment of debt agreement with Nanuk Warman,
which was also acknowledged by our company, whereby the debt of $47,537 advanced
by Mr. Warman to our company and outstanding as of December 6, 2010, was
assigned to Mr. Walsh.
On December 23, 2014, Mr. Walsh made demand for repayment of
the debt by our company. In connection with the assignment of debt agreement and
the demand, Mr. Walsh and our company entered into a settlement agreement dated
December 23, 2014 wherein our company is to repay the debt to Mr. Walsh in full.
Our company also agreed to pay an aggregate of $150,000 to Mr. Walsh as a
performance bonus for the services provided by Mr. Walsh for the period from
August 2013 to March 2014 as related to the acquisition of Tero Oilfield
Services Ltd. due on the following terms:
1. |
an aggregate of $50,000 due immediately; and |
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|
|
2. |
an aggregate of $100,000 bearing no interest and due on
the earlier of: |
|
|
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a. |
at the sole discretion of our company; or |
|
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|
b. |
the date of the sale, merger, amalgamation or other
business combination or reorganization of our
company. |
Competition
The mineral exploration industry is highly competitive. We are
a new exploration-stage company and have a weak competitive position in the
industry. We compete with junior and senior mineral exploration companies,
independent producers and institutional and individual investors who are
actively seeking to acquire mineral exploration properties throughout the world
together with the equipment, labor and materials required to operate on those
properties. Competition for the acquisition of mineral exploration interests is
intense with many mineral exploration leases or concessions available in a competitive bidding process in which
we may lack the technological information or expertise available to other
bidders.
28
Many of the mineral exploration companies with which we compete
for financing and for the acquisition of mineral exploration properties have
greater financial and technical resources than those available to us.
Accordingly, these competitors may be able to spend greater amounts on acquiring
mineral exploration interests of merit or on exploring or developing their
mineral exploration properties. This advantage could enable our competitors to
acquire mineral exploration properties of greater quality and interest to
prospective investors who may choose to finance their additional exploration and
development. Such competition could adversely impact our ability to attain the
financing necessary for us to acquire further mineral exploration interests or
explore and develop our current or future mineral exploration properties.
We also compete with other junior mineral exploration companies
for financing from a limited number of investors that are prepared to invest in
such companies. The presence of competing junior mineral exploration companies
may impact our ability to raise additional capital in order to fund our
acquisition or exploration programs if investors perceive that investments in
our competitors are more attractive based on the merit of their mineral
exploration properties or the price of the investment opportunity. In addition,
we compete with both junior and senior mineral exploration companies for
available resources, including, but not limited to, professional geologists,
land specialists, engineers, camp staff, helicopters, float planes, mineral
exploration supplies and drill rigs.
General competitive conditions may be substantially affected by
various forms of energy legislation and/or regulation introduced from time to
time by the governments of the United States and other countries, as well as
factors beyond our control, including international political conditions,
overall levels of supply and demand for mineral exploration.
In the face of competition, we may not be successful in
acquiring, exploring or developing profitable mineral properties or interests,
and we cannot give any assurance that suitable oil and gas properties or
interests will be available for our acquisition, exploration or development.
Despite this, we hope to compete successfully in the mineral exploration
industry by:
- keeping our costs low;
- relying on the strength of our managements contacts; and
- using our size and experience to our advantage by adapting quickly to
changing market conditions or responding swiftly to potential opportunities.
Intellectual Property
We have the trademark Lithium Exploration Group for the use
of mining exploration, namely, lithium exploration services, in class 42 (U.S.
CLS. 100 and 101). The registration number is 4,075,565 and was registered on
December 20, 2011. We do not have any other intellectual property
Government Regulation
Any operations at our Lithium properties will be subject to
various federal and state laws and regulations in Canada which govern
prospecting, development, mining, production, exports, taxes, labor standards,
occupational health, waste disposal, protection of the environment, mine safety,
hazardous substances and other matters. We will be required to obtain those
licenses, permits or other authorizations currently required to conduct
exploration and other programs. There are no current orders or directions
relating to us or to our lithium properties with respect to the foregoing laws
and regulations. Such compliance may include feasibility studies on the surface
impact of our proposed operations, costs associated with minimizing surface
impact, water treatment and protection, reclamation activities, including
rehabilitation of various sites, on-going efforts at alleviating the mining
impact on wildlife and permits or bonds as may be required to ensure our
compliance with applicable regulations. It is possible that the costs and delays
associated with such compliance could become so prohibitive that we may decide
to not proceed with exploration, development, or mining operations on any of our
mineral properties. We are not presently aware of any specific material
environmental constraints affecting our properties that would preclude the
economic development or operation of property in Canada.
29
Environmental Regulations
We are not aware of any material violations of environmental
permits, licenses or approvals that have been issued with respect to our
operations. We expect to comply with all applicable laws, rules and regulations
relating to our business, and at this time, we do not anticipate incurring any
material capital expenditures to comply with any environmental regulations or
other requirements.
While our intended projects and business activities do not
currently violate any laws, any regulatory changes that impose additional
restrictions or requirements on us or on our potential customers could adversely
affect us by increasing our operating costs or decreasing demand for our
products or services, which could have a material adverse effect on our results
of operations.
Employees
We currently employ two individuals: Alexander Walsh as chief
executive officer, and Shanon Chilson as an administrative assistant and
controller. Outside consultants have been engaged for administrative duties and
industry specialties.
Research and Development
We have not spent any amounts which have been classified as
research and development activities in our financial statements during the last
two fiscal years.
Going Concern
We anticipate that additional funding will be required in the
form of equity financing from the sale of our common stock. At this time, we
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the sale of our common stock or through a loan from our
directors to exit the exploration phase of our company and reach development and
revenue. We do not have enough cash on hand to meet our obligations over the
next twelve months. We do not have any arrangements in place for any future
equity financing.
Subsidiaries
We have one wholly-owned subsidiary, Alta Disposal Ltd., a
company incorporated in the province of Alberta, Canada on July 8, 2011. This
subsidiary was formed to stake MAIM (Metallic and Industrial Mineral) rights in
Alberta directly from the government. Alta Disposal Ltd. presently holds
approximately 550,000 acres of MAIM rights in Alberta that were staked between
July and December of 2011.
REPORTS TO SECURITY HOLDERS
We are not required to deliver an annual report to our
stockholders but will voluntarily send an annual report, together with our
annual audited financial statements upon request. We are required to file
annual, quarterly and current reports, proxy statements, and other information
with the Securities and Exchange Commission. Our Securities and Exchange
Commission filings are available to the public over the Internet at the SEC's
website at http://www.sec.gov.
The public may read and copy any materials filed by us with the
SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. We are an electronic filer. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The Internet address of the site is http://www.sec.gov.
30
Item
1A. Risk Factors
Much of the information included in this annual report includes
or is based upon estimates, projections or other forward-looking statements.
Such forward-looking statements include any projections and estimates made by us
and by our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward-looking statements.
Risks Related to Our Business
We have a limited operating history and as a result there is
no assurance we can operate on a profitable basis.
We have a limited operating history. Our company's operations
will be subject to all the uncertainties arising from the absence of a
significant operating history. Potential investors should be aware of the
difficulties normally encountered by resource exploration companies and the high
rate of failure of such enterprises. The likelihood of success must be
considered in light of the problems, expenses, difficulties, complications and
delays encountered in connection with the exploration of the properties that we
plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of our properties may not result in the discovery of reserves.
Problems such as unusual or unexpected formations of rock or land and other
conditions are involved in resource exploration and often result in unsuccessful
exploration efforts. If the results of our exploration do not reveal viable
commercial reserves, we may decide to abandon our claims and acquire new claims
for new exploration or cease operations. The acquisition of additional claims
will be dependent upon us possessing capital resources at the time in order to
purchase such claims. If no funding is available, we may be forced to abandon
our operations. There can be no assurance that we will be able to operate on a
profitable basis.
If we do not obtain additional financing, our business will
fail and our investors could lose their investment.
We had cash in the amount of $64,099 and working capital
deficiency (current liabilities exceeding current assets) of $436,680 as of the
year ended June 30, 2015. We currently do not generate much revenue from our
operations. Any direct acquisition of a claim under lease or option is subject
to our ability to obtain the financing necessary for us to fund and carry out
exploration programs on potential properties. The requirements are substantial.
Obtaining additional financing would be subject to a number of factors,
including market prices for resources, investor acceptance of our properties and
investor sentiment. These factors may negatively affect the timing, amount,
terms or conditions of any additional financing available to us. The most likely
source of future funds presently available to us is through the sale of equity
capital and loans. Any sale of share capital will result in dilution to existing
shareholders.
Because of the speculative nature of exploration of mineral
properties, we may never discover a commercially exploitable quantity of
minerals, our business may fail and investors may lose their entire
investment.
We are in the very early exploration stage and cannot guarantee
that our exploration work will be successful, or that any minerals will be
found, or that any production of minerals will be realized. The search for
valuable minerals as a business is extremely risky. Substantial investment will
be required to move our company toward the production of minerals. This may
require bringing in a partner to make the necessary investment, but there are no
plans at this time for any form of partnership or merger. We can provide
investors with no assurance that exploration on our properties will establish
that commercially exploitable reserves of minerals exist on our property.
Additional potential problems that may prevent us from discovering any reserves
of minerals on our property include, but are not limited to, unanticipated
problems relating to exploration and additional costs and expenses that may
exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on
our property, our ability to fund future exploration activities will be impeded,
we will not be able to operate profitably and investors may lose all of their
investment in our company.
31
We have no known mineral reserves and we may not find any
lithium and, even if we find lithium, it may not be in economic quantities. If
we fail to find any lithium or if we are unable to find lithium in economic
quantities, we will have to suspend operations.
We have no known mineral reserves. Additionally, even if we
find lithium in sufficient quantity to warrant recovery, it ultimately may not
be recoverable. Finally, even if any lithium is recoverable, we do not know that
this can be done at a profit. Failure to locate lithium in economically
recoverable quantities will cause us to suspend operations.
Supplies needed for exploration may not always be available.
If we are unable to secure exploration supplies we may have to delay our
anticipated business operations.
Competition and unforeseen limited sources of supplies needed
for our proposed exploration work could result in occasional spot shortages of
supplies of certain products, equipment or materials. There is no guarantee we
will be able to obtain certain products, equipment and/or materials as and when
needed, without interruption, or on favorable terms. Such delays could affect
our anticipated business operations and increase our expenses.
Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.
Potential investors should be aware of the difficulties
normally encountered by new mineral exploration companies and the high rate of
failure of such enterprises. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral properties that we
plan to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of the mineral claim may not result in the discovery of mineral
deposits. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. If the results of our exploration do not reveal viable commercial
mineralization, we may decide to abandon our claims. If this happens, our
business will likely fail.
The marketability of natural resources will be affected by
numerous factors beyond our control, which may result in us not receiving an
adequate return on invested capital to be profitable or viable.
The marketability of natural resources, which may be acquired
or discovered by us, will be affected by numerous factors beyond our control.
These factors include market fluctuations in lithium pricing and demand, the
proximity and capacity of natural resource markets and processing equipment,
governmental regulations, land tenure, land use, regulation concerning the
importing and exporting of mineral resources and environmental protection
regulations. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may result in us not receiving an adequate
return on invested capital to be profitable or viable.
Exploration and production activities are subject to certain
environmental regulations, which may prevent or delay the commencement or
continuation of our operations.
In general, our exploration and production activities are
subject to certain federal, state and local laws and regulations relating to
environmental quality and pollution control. Such laws and regulations increase
the costs of these activities and may prevent or delay the commencement or
continuation of a given operation. Specifically, we may be subject to
legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. In addition, legislation has been
enacted which requires well and facility sites to be abandoned and reclaimed to
the satisfaction of state authorities. However, such laws and regulations are
frequently changed and we are unable to predict the ultimate cost of compliance.
Generally, environmental requirements do not appear to affect us any differently
or to any greater or lesser extent than other companies in the industry.
32
Any change to government regulation/administrative practices
may have a negative impact on our ability to operate and our profitability.
The business of mineral exploration and development is subject
to substantial regulation under various countries laws relating to the
exploration for, and the development, upgrading, marketing, pricing, taxation,
and transportation of mineral resources and related products and other matters.
Amendments to current laws and regulations governing operations and activities
of mineral exploration and development operations could have a material adverse
impact on our business. In addition, there can be no assurance that income tax
laws, royalty regulations and government incentive programs related to the
properties and the mineral exploration industry generally will not be changed in
a manner which may adversely affect our progress and cause delays, inability to
explore and develop or abandonment of these interests.
Permits, leases, licenses, and approvals are required from a
variety of regulatory authorities at various stages of exploration and
development. There can be no assurance that the various government permits,
leases, licenses and approvals sought will be granted in respect of our
activities or, if granted, will not be cancelled or will be renewed upon expiry.
There is no assurance that such permits, leases, licenses, and approvals will
not contain terms and provisions, which may adversely affect our exploration and
development activities.
If we are unable to hire and retain key personnel, we may
not be able to implement our business plan.
Our success is largely dependent on our ability to hire highly
qualified personnel. This is particularly true in highly technical businesses
such as resource exploration. These individuals are in high demand and we may
not be able to attract the personnel we need. In addition, we may not be able to
afford the high salaries and fees demanded by qualified personnel, or may lose
such employees after they are hired. Failure to hire key personnel when needed,
or on acceptable terms, would have a significant negative effect on our
business.
Our independent certified public accounting firm, in their
report on the audited financial statements for the year ended June 30, 2015,
states that there is a substantial doubt that we will be able to continue as a
going concern.
As of June 30, 2015, we have experienced significant losses
since inception. Failure to arrange adequate financing on acceptable terms and
to achieve profitability would have an adverse effect on our financial position,
results of operations, cash flows and prospects. Accordingly, there is
substantial doubt that we will be able to continue as a going concern.
Risks Relating to the Industry in General
Planned exploration, and if warranted, development and
mining activities involve a high degree of risk.
We cannot assure you of the success of our planned operations.
Exploration costs are not fixed, and resources cannot be reliably identified
until substantial development has taken place, which entails high exploration
and development costs. The costs of mining, processing, development and
exploitation activities are subject to numerous variables, which could result in
substantial cost overruns. Mining for base or precious metals may involve
unprofitable efforts, not only from dry properties, but from properties that are
productive but do not produce sufficient net revenues to return a profit after
accounting for mining, operating and other costs.
Our operations may be curtailed, delayed or cancelled as a
result of numerous factors, many of which are beyond our control, including
economic conditions, mechanical problems, title problems, weather conditions,
compliance with governmental requirements and shortages or delays of equipment
and services.
We do not insure against all risks associated with our business
because insurance is either unavailable or its cost of coverage is prohibitive.
The occurrence of an event that is not covered by insurance could have a
material adverse effect on our financial condition.
33
The impact of government regulation could adversely affect
our business.
Our business is subject to applicable domestic and foreign laws
and regulations, including laws and regulations on taxation, exploration, and
environmental and safety matters. Many laws and regulations govern the spacing
of mines, rates of production, prevention of waste and other matters. These laws
and regulations may increase the costs and timing of planning, designing,
drilling, installing, operating and abandoning our mines and other facilities.
In addition, our operations are subject to complex environmental laws and
regulations adopted by domestic and foreign jurisdictions where we operate. We
could incur liability to governments or third parties for any unlawful discharge
of pollutants into the air, soil or water, including responsibility for remedial
costs.
The submission and approval of environmental impact
assessments may be required.
Environmental legislation is evolving in a manner which means
stricter standards; enforcement, fines and penalties for noncompliance are more
stringent. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and directors, officers and employees.
The cost of compliance with changes in governmental regulations has a potential
to reduce the profitability of operations.
Because the requirements imposed by these laws and regulations
frequently change, we cannot assure you that laws and regulations enacted in the
future, including changes to existing laws and regulations, will not adversely
affect our business.
Decline in mineral prices may make it commercially
infeasible for us to develop our property and may cause our stock price to
decline.
The value and price of your investment in our common shares,
our financial results, and our exploration, development and mining activities
may be significantly adversely affected by declines in the price of minerals and
other precious metals. Mineral prices fluctuate widely and are affected by
numerous factors beyond our control, such as interest rates, exchange rates,
inflation or deflation, fluctuation in the value of the United States dollar and
foreign currencies, global and regional supply and demand, and the political and
economic conditions of mineral-producing countries throughout the world. The
price of minerals fluctuates in response to many factors, which are beyond
anyones prediction abilities. The prices used in making the estimates in our
plans differ from daily prices quoted in the news media. Because mining occurs
over a number of years, it may be prudent to continue mining for some periods
during which cash flows are temporarily negative for a variety of reasons. Such
reasons include a belief that the low price is temporary, and/or the expense
incurred is greater when permanently closing a mine.
We may not have access to all of the supplies and materials
we need to begin exploration, which could cause us to delay or suspend
operations.
Competition and unforeseen limited sources of supplies in the
industry could result in occasional spot shortages of supplies such as dynamite
as well as certain equipment like bulldozers and excavators that we might need
to conduct exploration. If we cannot obtain the necessary supplies, we will have
to suspend our exploration plans until we do obtain such supplies.
Risks Associated with Our Common Stock
Trading on the OTC Bulletin Board may be volatile and
sporadic, which could depress the market price of our common stock and make it
difficult for our stockholders to resell their shares.
Our common stock is quoted on the OTC Bulletin Board service of
the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices, due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin
Board is not a stock exchange, and trading of securities on the OTC Bulletin
Board is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange
like NYSE or Amex. Accordingly, shareholders may have difficulty reselling any
of the shares.
34
Penny stock rules will limit the ability of our stockholders
to sell their stock.
The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a shareholder's ability
to buy and sell our stock.
In addition to the penny stock rules described above, FINRA has
adopted rules that require that, in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative, low-priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that
speculative, low-priced securities will not be suitable for at least some
customers. FINRA requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may limit your
ability to buy and sell our stock and have an adverse effect on the market for
its shares.
We do not intend to pay dividends and there will thus be
fewer ways in which you are able to make a gain on your investment.
We have never paid dividends and do not intend to pay any
dividends for the foreseeable future. To the extent that we may require
additional funding currently not provided for in our financing plan, our funding
sources may prohibit the declaration of dividends. Because we do not intend to
pay dividends, any gain on your investment will need to result from an
appreciation in the price of our common stock. There will therefore be fewer
ways in which you are able to make a gain on your investment.
Because the SEC imposes additional sales practice
requirements on brokers who deal in shares of penny stocks, some brokers may be
unwilling to trade our securities. This means that you may have difficulty
reselling your shares, which may cause the value of your investment to
decline.
Our shares are classified as penny stocks and are covered by
Section 15(g) of the Securities Exchange Act of 1934 (the Exchange Act) which
imposes additional sales practice requirements on brokers-dealers who sell our
securities in this offering or in the aftermarket. For sales of our securities,
broker-dealers must make a special suitability determination and receive a written agreement from you prior to making a sale on
your behalf. Because of the imposition of the foregoing additional sales
practices, it is possible that broker-dealers will not want to make a market in
our common stock. This could prevent you from reselling your shares and may
cause the value of your investment to decline.
35
Other Risks
Trends, Risks and Uncertainties
We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common stock.
Item
1B. Unresolved Staff
Comments
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item
2.
Properties
We currently lease an office totaling approximately 1,400
square feet located at 3800 North Central Avenue, No. 820, Phoenix, AZ 85012 for
$2,904.42 a month. The lease expires May 31, 2016. We also currently rent an
office at a business center at 840 6th Avenue SW, Suite 300, Calgary, AB T2P 3E5
for $998 a month on a month to month basis. Our telephone number in Scottsdale
is (480) 641-4790. Our telephone number in Calgary is (403) 930-1925.
Item
3.
Legal Proceedings
Other than as set out below, we know of no material, existing
or pending legal proceedings against us, nor are we involved as a plaintiff in
any material proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
company.
On June 12, 2012, we filed a complaint against Glottech-USA in
the Court of Common Pleas of Chester County, Pennsylvania, alleging that
Glottech-USA misused our funds and was in breach of our agreements that called
for Glottech-USA to deliver one initial unit of the mechanical ultrasound
technology. We further alleged that Glottech-USA was financially insolvent and
unable to fulfill its promises to us.
On June 12, 2012, we filed a complaint with the Court of Common
Pleas of Chester County, Pennsylvania against Glottech-USA, LLC, Eldredge, Inc.,
and the Eldredge Companies, Inc. Pursuant to an unopposed motion, the Eldredge
parties were dismissed in October of 2012. The complaint initially sought an
order of the Court granting possession of the initial unit.
Effective August 14, 2012, we entered into an option agreement
with GD Glottech International to protect our license and distribution rights in
the event that Glottech-USA became unable to perform and honor its obligations
to us.
Pursuant to the terms of the option agreement, we were required
to provide an initial amount of $150,000 to be held in escrow for the option to
obtain a license on the patent rights, as set forth in the option agreement. On
September 1, 2012, Glottech-USAs license to the technology expired and also on
September 1, 2012, we exercised this option agreement and released the funds to
GD Glottech International.
On October 1, 2012, we entered into a license agreement and a
sales agency agreement with GD Glottech, regarding GD Glottech Internationals
proprietary and patented mechanical ultrasound technology for use in water
purification in the process of separation of salt and other minerals from
lithium bearing brine produced from oil and gas operations. The license agreement and sales agency agreement expands and
replaces all prior agreements among our company, GD Glottech International and
Glottech-USA, LLC regarding our rights to use and sell the mechanical ultrasound
technology, included in our letter of intent dated November 18, 2011, and our
option agreement dated August 14, 2012.
36
Pursuant to the sales agency agreement we were appointed as
sales agent for the patented mechanical ultrasound technology within Canada. Our
appointment is exclusive within the field of non petro-chemical mining and
non-exclusive in all other fields of use. In consideration of the sales agency
rights, we agreed to issue to GD Glottech International 500 (adjusted for
subsequent reverse stock splits) common shares of our capital stock, which
obligation has been satisfied through the transfer to GD Glottech International
of 500 (adjusted for subsequent reverse stock splits) shares held by our officer
and director, Alexander Walsh. It was the explicit intention of the parties that
this share transfer fulfills the prior obligations of Alexander Walsh and our
company with respect to the option contemplated in the March and November 2011
agreements with Glottech-USA. We will receive a royalty in respect of sales of
the technology secured by us. The term of the initial agreement will be for 5
years with the possibility of extension if sales targets are achieved.
Pursuant to the license agreement, we obtained the exclusive
right to use the mechanical ultrasound technology within the field of
non-petro-chemical mining within the territory of Canada. We may also sublicense
our rights under the license in respect of one or more units of the technology
to any entity operating within the field of use in which we own or beneficially
own at least a 20% equity interest. GD Glottech International agreed to supply
us with up to 5 technology units per 12-month period from the effective date of
the license term, which will start from the month of delivery of the unit of the
technology. The first unit of the technology provided under the license to be
provided at no additional cost to us and subsequent units shall be subject to a
fee based on the then current retail price of the units. If we sublicense any of
our rights, the term of the applicable license will be for 5 years from the date
the applicable unit is delivered. Pursuant to the license agreement, GD Glottech
International shall provide ongoing technical assistance and training in respect
of our use of the technology at our cost.
In consideration of the license, we will pay to GD Glottech
International a royalty based on the tonnage of water produced by our use of the
technology in accordance with the agreement. A minimum annual royalty will be
applicable. The term of the license agreement shall be for an initial period of
5 years and shall be renewable for additional terms of 5 years provided that we
satisfy the minimum royalty requirements during each period.
GD Glottech Internationals technology is designed to separate
suspended solids from water (brine), which is one step in the process that we
are taking to produce commercially viable minerals. The technology produces
extremely high temperatures, which destroy organic substances such as bacteria
and other toxic agents. We believe that GD Glottech International's technology
can provide lower costs of operation as well as reduced time for site clean-up
than traditional methods of water treatment. We anticipate using this
application to extract dissolved solids like lithium, potassium, and magnesium
from oil field brine. The disposal of produced water (brine) from oil and gas
production in Alberta is a significant environmental issue for the province and
presents a considerable economic issue for producers. We intend to use the
technology on our Valleyview Property in Alberta, in cooperation with oil and
gas producers, to treat and dispose of their produced water while monetizing the
minerals that are contained within that produced water stream that is being
brought to the surface during the oil and gas production process. As we own the
MAIM (Metals and Industrial Minerals) claims to the minerals on the Valleyview
Property, the minerals contained in their produced water stream fall under our
rights. While we have had discussions with oil and gas consultants and oil
operators regarding their difficulties in treating the brine at some of their
fields, we have no formal agreements in place.
The technical process is based on the use of mechanical
ultrasound generated through the production of a series of cavitations.
Mechanical ultrasound is a machine-produced sound of a frequency above the upper
limit of the normal range of human hearing. Cavitations are the rapid formation
and collapse of bubbles in liquids, caused by the movement of something such as
a propeller or by waves of high-frequency sound. The production of mechanical
ultrasound allows GD Glottech Internationals technology to distill the fluid
stock. Using mechanical ultrasound for distillation has been attempted before,
but the external energy requirement needed to produce the mechanical ultrasound
was far too expensive to make it commercially viable. GD Glottech
Internationals technology uses the energy released during the cavitations in
order to make it commercially viable from an economic perspective. During these
cavitations, a millisecond of energy is released. During this release,
temperatures can reach 5,000 degrees centigrade.
37
On August 27, 2012, we filed a motion to amend our complaint to
include claims of breach of trust and fiduciary duty, breach of good faith and
fair dealing, breach of contract, conversion of funds, fraud, and the imposition
of a constructive trust. We believe that this action was necessary to protect
our interests against possible misuse of funds by Glottech-USA, LLC and its
principals. We will also seek damages as appropriate.
On October 19, 2012, GD Glottech International moved to
intervene as an interested party in the litigation pending against Glottech-USA.
GD Glottech International cited its role as owner of the patents as a basis for
intervening in the litigation against Glottech-USA. We believe GD Glottech
Internationals entry into the litigation against Glottech-USA is favorable to
our cause in the litigation.
On October 22, 2012, the Court of Common Pleas in Chester
County, Pennsylvania, granted our motion to amend our complaint against
Glottech-USA to add claims for fraud and damages reflective of the malfeasance
which we allege against Glottech-USA and its officers.
On December 12, 2012, GD Glottech International removed the
management of Glottech-USA and appointed itself as the manager of Glottech-USA.
On the same day, Larry Nesbit, Mark Siegel and Ron Fender filed a motion to
dissolve Glottech-USA in Mississippi on the basis that Glottech-USA was unable
to meet its financial obligations and could not finish or deliver the unit to
us.
On December 19, 2012, an attorney purportedly acting on behalf
of Glottech-USA filed a motion in the lawsuit pending in Chester County,
Pennsylvania, seeking possession of the unit. In addition, Glottech-USA filed a
counterclaim seeking possession of the unit.
GD Glottech International immediately filed a motion to quash
Glottech-USAs motion and for sanctions against the law firm that filed the
motion. We also filed a motion, seeking disqualification of the law firm that
purported to represent Glottech-USA on the basis that the new management for
Glottech-USA had fired the law firm and, as such, the law firm no longer had
authority to represent Glottech-USA.
On April 25, 2013, we attended a hearing on the motions pending
in the lawsuit filed in Chester County, Pennsylvania. The Court did not rule on
any of the motions and, instead, stayed the case as to Glottech-USA until
December of 2013 pending the outcome of the lawsuit seeking dissolution of
Glottech-USA. The matter in Pennsylvania is no longer stayed. An attorney
purporting to represent Glottech-USA and the receiver appointed in Mississippi
has filed motions and other documents that may move the matter forward. We have
pending preliminary objections to the counterclaim, including a request for a
determination of which group is in control of Glottech-USA.
Certain members of Glottech-USA continue to pursue dissolution
of the company in Mississippi. The members of Glottech-USA who seek dissolution
have stated in court filings that it is not practicable for Glottech-USA to
continue as an ongoing business. In addition, Sulzer filed suit against
Glottech-USA Texas for unfulfilled obligations.
We do not believe that Glottech-USA has sufficient capital to
continue as an ongoing business. We have provided full consideration to
Glottech-USA and complied with all other agreed upon terms. We believe any
assertions against us to lack merit.
Given pending litigation against Glottech-USA, and the
uncertainties naturally inherent of any litigation (particularly as to outcome
and timing thereof), we have moved to assure continuity of our licensing rights
through entering into, and exercising, the option to contract directly with the
technology inventor and patents owner, GD Glottech International. Thus,
regardless of the outcome of the litigation, or indeed any action or inaction of
Glottech-USA, our interest in the technology is assured.
Item
4.
Mine Safety Disclosures
Not applicable.
38
PART II
Item
5.
Market for Registrant's Common Equity and Related Stockholder Matters
and Issuer Purchases of Equity Securities
Our common stock is quoted on the OTC Bulletin Board under the
Symbol "LEXG".
The high and low bid prices of our common stock for the periods
indicated below are as follows:
OTC Bulletin Board |
Quarter Ended |
High* |
Low* |
September 30, 2015 |
$0.15 |
$0.00 |
June 30, 2015 |
$0.0095 |
$0.0003 |
March 31, 2015 |
$0.045 |
$0.0006 |
December 30, 2014 |
$0.0079 |
$0.0005 |
September 30, 2014 |
$0.0499 |
$0.0055 |
June 30, 2014 |
$0.762 |
$0.04 |
March 31, 2014 |
$0.192 |
$0.032 |
December 31, 2013 |
$0.1245 |
$0.0326 |
September 30, 2013 |
$0.26 |
$0.0901 |
June 30, 2013 |
$0.2275 |
$0.12 |
-
Prices reflect actual prices as quoted on the OTC Bulletin Board and are not adjusted retroactively for our 20 for 1 and 200 for 1 reverse stock splits which became effective on February 25, 2015 and September 30, 2015, respectively. Prices quoted for the quarters ended prior to March 31, 2015 do not reflect our 20 old for 1 new common share reverse stock split which became effective on February 25, 2015. Prices quoted for the quarters ended prior to September 30, 2015 do not reflect our 200 old for 1 new common share reverse stock split which became effective on September 30, 2015
Our common shares are issued in registered form. VStock
Transfer, 77 Spruce St, Suite 201, Cedarhurst, New York 11516 (Telephone:
(212)-828-8436; Facsimile: (646) 536-3179) is the registrar and transfer agent
for our common shares.
On November 12, 2015, the list of stockholders for our shares
of common stock showed 16 registered stockholders and 11,669,869 shares of
common stock outstanding.
Dividends
We have not declared any dividends on our common stock since
the inception of our company on March 8, 2006. There is no restriction in our
Articles of Incorporation and Bylaws that will limit our ability to pay
dividends on our common stock. However, we do not anticipate declaring and
paying dividends to our shareholders in the near future.
Equity Compensation Plan Information
As of June 30, 2015, we have not adopted an equity compensation
plan under which our common stock is authorized for issuance.
Purchase of Equity Securities by the Issuer and Affiliated
Purchasers
We did not purchase any of our shares of common stock or other
securities during the year ended June 30, 2015.
39
Recent Sales of Unregistered Securities
We did not sell any equity securities which were not registered
under the Securities Act during the year ended June 30, 2015 that were not
otherwise disclosed on our quarterly reports on Form 10-Q or our current reports
on Form 8-K filed during the year ended June 30, 2015.
Item
6.
Selected Financial Data
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item
7.
Managements Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with our
audited financial statements and the related notes for the years ended June 30,
2015 and June 30, 2014 that appear elsewhere in this annual report. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" beginning on page 31 of this annual report.
Our audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
Plan of Operation
Capital Expenditures
We do not intend to invest in capital expenditures during the
twelve-month period ending June 30, 2016.
General and Administrative Expenses
We expect that we will require $650,000 during the twelve-month
period ending June 30, 2016 on general and administrative expenses including
legal and auditing fees, rent, office equipment, consulting fees, salaries, and
other administrative related expenses.
Product Research and Development
We do not anticipate expending any funds on research and
development, manufacturing and engineering over the twelve months ending June
30, 2016.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the
twelve months ending June 30, 2016.
Results of Operations for the Years Ended June 30, 2015 and
2014
The following summary of our results of operations should be
read in conjunction with our audited financial statements for the years ended
June 30, 2015 and 2014.
Our operating results for the years ended June 30, 2015 and
2014 are summarized as follows:
40
|
|
|
Year Ended |
|
|
|
|
June 30, |
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
- |
|
$ |
- |
|
|
Operating Expenses |
$ |
1,853,632 |
|
$ |
1,873,519 |
|
|
Interest Expense |
$ |
3,301,291 |
|
$ |
5,320,995 |
|
|
Other recovery |
$ |
93,944 |
|
|
- |
|
|
Gain on change in the fair
value of derivative liability |
$ |
3,710,345 |
|
$ |
2,650,532 |
|
|
Fair value of warrants issued |
$ |
(873,471 |
) |
$ |
(3,193,462 |
) |
|
Gain on change in the fair
value of convertible preferred stock |
$ |
- |
|
$ |
331,127 |
|
|
Loss on sale of investment held for sale |
|
(488 |
) |
|
- |
|
|
Equity in income of
unconsolidated affiliate |
$ |
104 |
|
$ |
18,053 |
|
|
Net Loss |
$ |
(2,657,243 |
) |
$ |
(7,701,164 |
) |
Revenues
We have not earned revenues since our inception.
Operating Expenses
Our operating expenses for the years ended June 30, 2015 and
June 30, 2014 are outlined in the table below:
|
|
|
Year Ended |
|
|
|
|
June 30, |
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
Mining expenses |
$ |
37,033 |
|
$ |
67,653 |
|
|
Selling, general and administrative |
$ |
1,192,170 |
|
$ |
1,770,813 |
|
|
Impairment loss |
$ |
624,429 |
|
$ |
383,238 |
|
|
Total operating expenses |
$ |
1,853,632 |
|
$ |
1,873,519 |
|
The nominal decrease of $19,887 in operating expenses for the
year ended June 30, 2015, compared to the same period in fiscal 2014, was mainly
due to to a decrease in mining and administrative expenses, offset by an
increase in impairment loss.
Liquidity and Financial Condition
Working Capital
|
|
|
As at |
|
|
As at |
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
2015 |
|
|
2014 |
|
|
Total current assets |
$ |
115,021 |
|
$ |
138,013 |
|
|
Total current liabilities |
$ |
551,701 |
|
$ |
3,417,902 |
|
|
Working capital (deficit) |
$ |
(436,680 |
) |
$ |
(3,279,889 |
)
|
As of June 30, 2015, our total current assets were $115,021,
our total current liabilities were $551,701 and we had a working capital deficit
of $436,680 (June 30, 2014 - $3,279,889). Our financial statements report a net
loss of $2,657,243 for the year ended June 30, 2015 and an accumulated
deficit of $43,267,064 for the period from May 31, 2006 (date of inception) to
June 30, 2015 (June 30, 2014 - $40,821,871).
41
We have suffered recurring losses from operations. The
continuation of our company is dependent upon our company attaining and
maintaining profitable operations and raising additional capital as needed. In
this regard we have raised additional capital through equity offerings and loan
transactions.
Cash Flows
|
|
|
At |
|
|
At |
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
2015 |
|
|
2014 |
|
|
Net Cash (Used in) Operations
|
$ |
(1,178,426 |
) |
$ |
(1,575,433 |
) |
|
Net Cash Provided by (Used In) Investing
Activities |
$ |
299,940 |
|
$ |
(1,038,217 |
) |
|
Net Cash Provided by
Financing Activities |
$ |
908,668 |
|
$ |
2,450,000 |
|
|
Cash (decrease) increase during the
year |
$ |
6,467 |
|
$ |
(190,992 |
) |
We had cash and cash equivalents in the amount of $64,099 as of
June 30, 2015 as compared to $57,632 as of June 30, 2014. We had a working
capital deficit of $436,680 as of June 30, 2015 compared to working capital
deficit of $3,279,889 as of June 30, 2014.
Our principal sources of funds have been from sales of our
common stock and the issuance of convertible debentures.
Anticipated Cash Requirements
We estimate that our expenses over the next 12 months will be
approximately $1,550,000 as described in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from shareholders or other sources.
Description |
|
Estimated |
|
|
Estimated |
|
|
|
Completion |
|
|
Expenses |
|
|
|
Date |
|
|
($) |
|
General and administrative
|
|
12 months |
|
$ |
300,000 |
|
Mining expenses (mainly technology related)
|
|
12 months |
|
$ |
150,000 |
|
Legal and accounting |
|
12 months |
|
$ |
200,000 |
|
Total |
|
|
|
$ |
650,000 |
|
We intend to meet our cash requirements for the next 12 months
through the use of the cash we have on hand and through equity financing, debt
financing, or other sources, which may result in further dilution in the equity
ownership of our shares. We currently do not have any other arrangements in
place to complete any private placement financings and there is no assurance
that we will be successful in completing any such financings on terms that will
be acceptable to us.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Going Concern
The audited financial statements included with this annual
report have been prepared on the going concern basis which assumes that adequate
sources of financing will be obtained as required and that our assets will be
realized and liabilities settled in the ordinary course of business.
Accordingly, the audited financial statements do not include any adjustments
related to the recoverability of assets and classification of assets and
liabilities that might be necessary should we be unable to continue as a going
concern.
42
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.
Critical Accounting Policies
Our audited financial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles used in the
United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
Principal of Consolidation
The consolidated financial statements include the accounts of
our company, its wholly-owned subsidiary Alta Disposal Ltd. and its 51% owned
subsidiary Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.).
Intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in
conformity with United States generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Our companys periodic filings with the Securities and Exchange
Commission include, where applicable, disclosures of estimates, assumptions,
uncertainties and markets that could affect the financial statements and future
operations of our company. Significant estimates that may materially change in
the near term include the valuation of derivative liabilities and the underlying
warrants, as well as fair value of investments.
43
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market
funds, and certificates of term deposits with original maturities of less than
three months, which are readily convertible to known amounts of cash and which,
in the opinion of management, are subject to an insignificant risk of loss in
value. The Company had $64,099 and $57,632 in cash and cash equivalents at June
30, 2015 and 2014, respectively.
Concentration of Risk
The Company maintains cash balances at a financial institution
which, from time to time, may exceed Federal Deposit Insurance Corporation
insured limits for banks located in the US. As of June 30, 2015 and 2014, the
Company had $Nil and $Nil, respectively, in deposits in excess of federally
insured limits in its US bank. The Company has not experienced any losses with
regard to its bank accounts and believes it is not exposed to any risk of loss
on its cash in bank accounts.
Prepaid Expenses
Prepaid expenses consist of security deposit for office lease
which will be expensed or refunded at the end of the lease period.
Start-Up Costs
In accordance with FASC 720-15-20 Start-Up Costs, our
company expenses all costs incurred in connection with the start-up and
organization of our company.
Mineral Acquisition and Exploration Costs
Our company has been in the exploration stage since its
formation on May 31, 2006 and has not yet realized any revenue from our planned
operations. We are primarily engaged in the acquisition, exploration, and
development of mining properties. Mineral property acquisition and exploration
costs are expensed as incurred. When it has been determined that a mineral
property can be economically developed as a result of establishing proven and
probable reserves, the costs incurred to develop such property are capitalized.
Such costs will be amortized using the units-of-production method over the
estimated life of the probable reserves.
Concentrations of Credit Risk
Our companys financial instruments that are exposed to
concentrations of credit risk primarily consist of our cash and cash equivalents
and related party payables we will likely incur in the near future. Our company
places our cash and cash equivalents with financial institutions of high credit
worthiness. At times, our cash and cash equivalents with a particular financial
institution may exceed any applicable government insurance limits. Our companys
management plans to assess the financial strength and credit worthiness of any
parties to which we extend funds, and as such, we believe that any associated
credit risk exposures are limited.
Net Income or (Loss) per Share of Common Stock
Our company has adopted FASC Topic No. 260, Earnings Per
Share, (EPS) which requires presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. In
the accompanying financial statements, basic earnings (loss) per share is
computed by dividing net income/(loss) by the weighted average number of shares
of common stock outstanding during the period.
Potentially dilutive securities are not presented in the
computation of EPS since their effects are anti-dilutive.
44
Foreign Currency Translations
Our companys functional and reporting currency is the US
dollar. All transactions initiated in other currencies are translated into US
dollars using the exchange rate prevailing on the date of transaction. Monetary
assets and liabilities denominated in foreign currencies are translated into the
US dollar at the rate of exchange in effect at the balance sheet date.
Unrealized exchange gains and losses arising from such transactions are deferred
until realization and are included as a separate component of stockholders
equity (deficit) as a component of comprehensive income or loss. Upon
realization, the amount deferred is recognized in income in the period when it
is realized.
No significant realized exchange gain or losses were recorded
from as of June 30, 2014 and 2013.
Translation of Foreign Operations
The financial results and position of foreign operations whose
functional currency is different from our companys presentation currency are
translated as follows:
- assets and liabilities are translated at
period-end exchange rates prevailing at that reporting date;
and
- income and expenses are translated at average
exchange rates for the period.
Exchange differences arising on translation of foreign
operations are transferred directly to our companys accumulated other
comprehensive loss in the consolidated balance sheets. Transaction gains and
losses arising from exchange rate fluctuation on transactions denominated in a
currency other than the functional currency are included in the consolidated
statements of operations.
The relevant translation rates are as follows: For the year
ended June 30, 2015 closing rate at 0.8017 CND$:US$, average rate at 0.8518
CND$: US$ and for year ended June 30, 2014 closing rate at 0.9367 CND$: US$
average rate at 0.9341 CND$: US$
Comprehensive Income (Loss)
FASC Topic No. 220, Comprehensive Income, establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. As at June 30, 2015 and
2014, the Company had no material items of other comprehensive income except for
the foreign currency translation adjustment.
Risks and Uncertainties
Our company operates in the resource exploration industry that
is subject to significant risks and uncertainties, including financial,
operational, technological, and other risks associated with operating a resource
exploration business, including the potential risk of business failure.
Environmental Expenditures
The operations of our company have been, and may in the future
be, affected from time to time in varying degree by changes in environmental
regulations, including those for future reclamation and site restoration costs.
Both the likelihood of new regulations and their overall effect upon our company
vary greatly and are not predictable. Our company's policy is to meet or, if
possible, surpass standards set by relevant legislation by application of
technically proven and economically feasible measures.
Environmental expenditures that relate to ongoing environmental
and reclamation programs are charged against earnings as incurred or capitalized
and amortized depending on their future economic benefits. All of these types of
expenditures incurred since inception have been charged against earnings due to
the uncertainty of their future recoverability. Estimated future reclamation and
site restoration costs, when the ultimate liability is reasonably determinable,
are charged against earnings over the estimated remaining life of the related
business operation, net of expected recoveries.
45
Warrants
We value our warrants with provisions resulting in derivative
liabilities at fair value using the lattice model according to ASC-815-10-55. We
revalue our warrants at the end of every period at fair value and record the
difference in other income (expense) in the consolidated statement of
operations.
Convertible Debentures and Convertible Promissory Notes
We value our convertible debentures and convertible promissory
notes with provisions resulting in beneficial conversion features from the
embedded derivative at fair value according to ASC-480-10-25-14, rather than
have its conversion feature bifurcated and reported separately due to
ASC-815-15-25-1b. Because the value of the derivative related to the warrant
exceeds the proceeds of the loan, our company allocated 100% of the proceeds to
the warrant derivative and took a day one loss for the difference between the
proceeds and the fair value of the warrants, resulting in a debt discount on the
full fair value of the debenture because no proceeds were available to be
allocated to the debt or its beneficial conversion feature. That debt discount
is accreted to interest expense over the stated life of the note using the
interest method in accordance with ASC 470-20-35-7a and ASC 835-30-35-2.
Unaccreted debt discount on the date of conversion is accreted to interest
expense on that date.
Fair Value of Financial Instruments
ASC 820, Fair Value Measurements and Disclosures
requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. ASC 820 establishes a fair
value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial instruments
categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. ASC 820 prioritizes the
inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets
or liabilities;
Level 2 - Inputs other than quoted prices included within Level
1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or
no market activity, therefore requiring an entity to develop its own assumptions
about the assumptions that market participants would use in pricing.
The carrying amounts of our companys financial assets and
liabilities, such as cash and cash equivalents, prepaid expenses, deposit,
accounts payable and accrued liabilities, and due to a related party approximate
their fair values because of the short maturity of these instruments.
Our companys Level 3 financial liabilities consist of the
derivative liability of our companys secured convertible promissory notes and
debentures issued to investors, and the derivative warrants issued in connection
with these convertible promissory notes and debentures. There is no current
market for these securities such that the determination of fair value requires
significant judgment or estimation. Our company used a lattice model which
incorporates transaction details such as company stock price, contractual terms,
maturity, risk free rates, as well as assumptions about future financings,
volatility, and holder behavior as of the date of issuance and each balance
sheet date.
Revenue Recognition
Our company has generated little revenues to date. It is our
companys policy that revenue from product sales or services will be recognized
in accordance with ASC 605 Revenue Recognition. Four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectability is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectability of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. Our company will defer any revenue for
which the product/services was not delivered or is subject to refund
until such time that our company and the customer jointly determine that the
product/service has been delivered or no refund will be required.
46
Sales comprise the fair value of the consideration received or
receivable for the sale of goods and rendering of services in the ordinary
course of our companys activities. Sales are presented, net of tax, rebates and
discounts, and after eliminating intercompany sales. Our company recognizes
revenue when the amount of revenue and related cost can be reliably measured and
it is probable that the collectability of the related receivables is reasonably
assured.
Receivables
Trade and other receivables are customer obligations due under
normal trade terms and are recorded at face value less any provisions for
uncollectible amounts considered necessary. The Company includes any balances
that are determined to be uncollectible in its overall allowance for doubtful
accounts. The Company recorded $18,984 (June 30, 2014 - $Nil) in allowance for
doubtful accounts.
Investments in unconsolidated affiliates
Investments in affiliates that are not controlled by our
company, but over which it has significant influence, are accounted for using
the equity method. Our companys share of net income from its unconsolidated
affiliate is reflected in the Consolidated Statements of Operations and
Comprehensive Loss as Equity in Income of Unconsolidated Affiliate.
Recent Accounting Pronouncements
In April 2014, the FASB issued ASU 2014-08, Presentation of
Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360):
Reporting Discontinued Operations and Disclosures of Disposals of Components of
an Entity. The amendments in the ASU change the criteria for reporting
discontinued operations while enhancing disclosures in this area. It also
addresses sources of confusion and inconsistent application related to financial
reporting of discontinued operations guidance in U.S. GAAP. Under the new
guidance, only disposals representing a strategic shift in operations should be
presented as discontinued operations. In addition, the new guidance requires
expanded disclosures about discontinued operations that will provide financial
statement users with more information about the assets, liabilities, income, and
expenses of discontinued operations. The amendments in the ASU were effective in
the first quarter of 2015 for public organizations with calendar year ends.
Early adoption is permitted. The adoption of ASU 2014-08 did not have a material
impact on the Companys consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from
contracts with Customers (Topic 606). This ASU affects any entity that either
enters into contracts with customers to transfer goods or services or enters
into contracts for the transfer of non-financial assets. This ASU will supersede
the revenue recognition requirements in Topic 605, Revenue Recognition, and most
industry-specific guidance. The ASU also supersedes some cost guidance included
in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type
Contracts. The core principle of the guidance is that an entity should recognize
revenue to depict the transfer of promised goods or services to customers in an
amount that reflects the consideration to which the entity expects to be
entitled in exchanged for those goods or services. The standard is effective for
annual reporting periods beginning after December 15, 2016, including interim
periods within that reporting period. The adoption of ASU 2014-98 is not
expected to have a material impact on the Companys consolidated financial
statements.
In July 2015, The FASB has issued Accounting Standards Update
(ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of
Inventory. Topic 330, Inventory, currently requires an entity to measure
inventory at the lower of cost or market. Market could be replacement cost, net
realizable value, or net realizable value less an approximately normal profit
margin. The amendments do not apply to inventory that is measured using last-in,
first-out (LIFO) or the retail inventory method. The amendments apply to all
other inventory, which includes inventory that is measured using first-in,
first-out (FIFO) or average cost. An entity should measure in scope inventory at
the lower of cost and net realizable value. Net realizable value is the
estimated selling prices in the ordinary course of business, less reasonably
predictable costs of completion, disposal, and transportation. Subsequent
measurement is unchanged for inventory measured using LIFO or the retail
inventory method. The amendments in this Update more closely align the measurement of inventory in GAAP with the measurement of
inventory in International Financial Reporting Standards. For public business
entities, the amendments are effective for fiscal years beginning after December
15, 2016, including interim periods within those fiscal years. For all other
entities, the amendments are effective for fiscal years beginning after December
15, 2016, and interim periods within fiscal years beginning after December 15,
2017. The amendments should be applied prospectively with earlier application
permitted as of the beginning of an interim or annual reporting period. The
adoption of ASU 2015-11 is not expected to have a material impact on the
Companys consolidated financial statements.
47
A variety of proposed or otherwise potential accounting
standards are currently under study by standard setting organizations and
various regulatory agencies. Due to the tentative and preliminary nature of
those proposed standards, we have not determined whether implementation of such
proposed standards would be material to our consolidated financial statements.
Item
7A. Quantitative
and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item
8.
Financial Statements and Supplementary Data
Our audited financial statements are stated in United States
dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
48
LITHIUM EXPLORATION GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Lithium Exploration Group, Inc.
We have audited the accompanying consolidated balance sheets of Lithium Exploration Group, Inc. (the “Company”), as of June 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, deficit and cash flows for each of the two years in the period ended June 30, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to the above present fairly, in all material respects, the consolidated financial position of Lithium Exploration Group, Inc. as of June 30, 2015 and 2014, and the consolidated results of operations, deficit and cash flows for each of the two years in the period ended June 30, 2015 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 8 to the accompanying consolidated financial statements, the Company and has not commenced its planned principal operations, has suffered recurring losses since inception and is experiencing difficulty in generating sufficient cash flow to sustain its operations without securing additional financing, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM LLP
New York, New York
December 3, 2015
Lithium Exploration Group, Inc.
Consolidated
Balance Sheets
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
64,099 |
|
$ |
57,632 |
|
Other receivable |
|
13,421 |
|
|
- |
|
Loan receivable |
|
20,000 |
|
|
20,000 |
|
Prepaid expenses |
|
2,788 |
|
|
19,398 |
|
Current assets held for sale (Note 12) |
|
14,713 |
|
|
40,983 |
|
Total current assets |
|
115,021 |
|
|
138,013 |
|
|
|
|
|
|
|
|
Investment Held for Sale (Note 11) |
|
- |
|
|
924,753 |
|
|
|
|
|
|
|
|
Total Assets |
$ |
115,021 |
|
$ |
1,062,766 |
|
|
|
|
|
|
|
|
LIABILITIES AND DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and accrued
liabilities (Note 9) |
$ |
65,962 |
|
$ |
13,725 |
|
Derivative
liability convertible promissory notes (Note 6) |
|
3,134 |
|
|
2,832,989 |
|
Due to related party (Note 7 and
9) |
|
115,000 |
|
|
45,332 |
|
Convertible promissory
notes |
|
|
|
|
|
|
(net of discount of $1,044,031 and
$2,797,850) (Note 6) |
|
300,887 |
|
|
450,057 |
|
Accrued interest
convertible promissory notes (Note 6) |
|
60,022 |
|
|
75,004 |
|
Current liabilities held for sale (Note 12) |
|
6,696 |
|
|
795 |
|
|
|
|
|
|
|
|
Total Current
Liabilities |
|
551,701 |
|
|
3,417,902 |
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFICIT |
|
|
|
|
|
|
Lithium Explorations Group, Inc.
Stockholders Deficit |
|
|
|
|
|
|
Capital stock (Note 3) |
|
|
|
|
|
|
Authorized:
100,000,000
preferred shares, $0.001 par
value
2,000,000,000
(June 30, 2014 500,000,000) common
shares,
$0.001 par
value
Issued and
outstanding:
Nil
preferred shares (June 30, 2014 Nil) |
|
- |
|
|
- |
|
7,574,353 common shares (June
30, 2014 47,990) |
|
7,575 |
|
|
48 |
|
Additional paid-in capital |
|
43,165,743 |
|
|
38,573,856 |
|
Accumulated other comprehensive loss |
|
(29,484 |
) |
|
(5,769 |
) |
Accumulated deficit |
|
(43,267,064 |
) |
|
(40,821,871 |
) |
Total Lithium
Exploration Group, Inc. Stockholders Deficit |
|
(123,230 |
) |
|
(2,253,736 |
) |
Non-controlling interest |
|
(313,450 |
) |
|
(101,400 |
) |
Total Deficit |
|
(436,680 |
) |
|
(2,355,136 |
) |
|
|
|
|
|
|
|
Total
Liabilities and Stockholders Deficit |
$ |
115,021 |
|
$ |
1,062,766 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Lithium Exploration Group, Inc. |
Consolidated
Statements of Operations And Comprehensive Loss |
|
|
June 30, 2015 |
|
|
June
30, 2014 |
|
|
|
|
|
|
|
|
Revenue |
$ |
- |
|
$ |
- |
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
Mining (Notes 3 & 5) |
|
37,033 |
|
|
67,653 |
|
Selling, general and administrative (Notes
3 & 5) |
|
1,192,170 |
|
|
1,422,628 |
|
Impairment loss |
|
624,429 |
|
|
383,238 |
|
Total operating expenses |
|
1,853,632 |
|
|
1,873,519 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(1,853,632 |
) |
|
(1,873,519 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
Interest expense (Note 6) |
|
(3,301,291 |
) |
|
(5,320,995 |
) |
Other recovery (Note 7) |
|
93,944 |
|
|
- |
|
Gain (loss) on change in the fair value of
derivative liability (Note 6) |
|
3,710,345 |
|
|
2,650,532 |
|
Fair value of warrants issued |
|
(873,471 |
) |
|
(3,193,462 |
) |
Gain on change in fair value of convertible preferred stock |
|
- |
|
|
331,127 |
|
Loss on sale of investment held for sale (Note 11) |
|
(488 |
) |
|
|
|
Equity in income of investment held for
sale |
|
104 |
|
|
18,053 |
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(2,224,489 |
) |
|
(7,388,264 |
) |
|
|
|
|
|
|
|
Provision for Income Taxes (Note 4) |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
(2,224,489 |
) |
|
(7,388,264 |
) |
|
|
|
|
|
|
|
Loss from discontinued operations (Note 12) |
|
(372,576 |
) |
|
(312,900 |
) |
Impairment loss on discontinued operations (Note 12) |
|
(60,178 |
) |
|
- |
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(432,754 |
) |
|
(312,900 |
) |
|
|
|
|
|
|
|
Provision for Income Taxes (Note 4) |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Loss on discontinued operations |
|
(432,754 |
) |
|
(312,900 |
) |
|
|
|
|
|
|
|
Net loss |
|
(2,657,243 |
) |
|
(7,701,164 |
) |
|
|
|
|
|
|
|
Less: Net loss attributable to the non-controlling interest |
|
(212,050 |
) |
|
(336,533 |
) |
|
|
|
|
|
|
|
Net loss attributable to Lithium Exploration Group, Inc. Common shareholders |
|
(2,445,193 |
) |
|
(7,364,631 |
) |
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
$ |
(2.34 |
) |
$ |
(260.70 |
) |
|
|
|
|
|
|
|
Basic and Diluted Weighted Average Number of Common Shares Outstanding |
|
1,045,061 |
|
|
28,249 |
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
Net loss |
|
(2,657,243 |
) |
|
(7,701,164 |
) |
Foreign currency translation adjustment |
|
(23,715 |
) |
|
(12,187 |
) |
Comprehensive loss |
|
(2,680,958 |
) |
|
(7,713,351 |
) |
Comprehensive loss attributable to non-controlling interest |
|
(212,050 |
) |
|
(336,533 |
) |
Comprehensive loss attributable to Lithium
Exploration Group, Inc. |
|
(2,468,908 |
) |
|
(7,376,818 |
) |
The accompanying notes are an integral part of these
consolidated financial statements.
Lithium Exploration Group, Inc. |
Consolidated
Statements of Changes in Stockholders Deficit |
|
|
Preferred Shares |
|
|
Common Shares |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
Non- |
|
|
Stockholders |
|
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
controlling |
|
|
Equity |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
interest |
|
|
(Deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2013 |
|
20,000,000 |
|
$ |
20,000 |
|
|
13,721 |
|
$ |
14 |
|
$ |
31,971,372 |
|
$ |
- |
|
$ |
(33,457,240 |
) |
$ |
- |
|
$ |
(1,465,854 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares issued for
debt settlement |
|
1,134,500 |
|
|
1,135 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
consulting fees |
|
- |
|
|
- |
|
|
799 |
|
|
1 |
|
|
252,166 |
|
|
- |
|
|
- |
|
|
- |
|
|
252,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt
conversion |
|
- |
|
|
- |
|
|
11,259 |
|
|
11 |
|
|
2,092,401 |
|
|
- |
|
|
- |
|
|
- |
|
|
2,092,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
exercise of warrants |
|
- |
|
|
- |
|
|
2,300 |
|
|
2 |
|
|
598,314 |
|
|
- |
|
|
- |
|
|
- |
|
|
598,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
preferred shares converted |
|
(21,134,500 |
) |
|
(21,135 |
) |
|
19,911 |
|
|
20 |
|
|
3,659,603 |
|
|
- |
|
|
- |
|
|
- |
|
|
3,638,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
6,418 |
|
|
- |
|
|
235,133 |
|
|
241,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(12,187 |
) |
|
- |
|
|
- |
|
|
(12,187 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(7,364,631 |
) |
|
(336,533 |
) |
|
(7,701,164 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30, 2014 |
|
- |
|
|
- |
|
|
47,990 |
|
|
48 |
|
|
38,573,856 |
|
|
(5,769 |
) |
|
(40,821,871 |
) |
|
(101,400 |
) |
|
(2,355,136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
consulting fees |
|
- |
|
|
- |
|
|
2,594 |
|
|
3 |
|
|
118,987 |
|
|
- |
|
|
- |
|
|
- |
|
|
118,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
investor relations |
|
- |
|
|
- |
|
|
500 |
|
|
1 |
|
|
67,999 |
|
|
- |
|
|
- |
|
|
- |
|
|
68,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt
conversion |
|
- |
|
|
- |
|
|
7,421,245 |
|
|
7,421 |
|
|
3,636,984 |
|
|
- |
|
|
- |
|
|
- |
|
|
3,644,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to
depository trust |
|
- |
|
|
- |
|
|
20 |
|
|
- |
|
|
38 |
|
|
- |
|
|
- |
|
|
- |
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for
exercise of warrants |
|
- |
|
|
- |
|
|
102,004 |
|
|
102 |
|
|
767,879 |
|
|
- |
|
|
- |
|
|
- |
|
|
767,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(23,715 |
) |
|
- |
|
|
- |
|
|
(23,715 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(2,445,193 |
) |
|
(212,050 |
) |
|
(2,657,243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance June 30,
2015 |
|
- |
|
$ |
- |
|
|
7,574,353 |
|
$ |
7,575 |
|
$ |
43,165,743 |
|
$ |
(29,484 |
) |
$ |
(43,267,064 |
) |
$ |
(313,450 |
) |
$ |
(436,680 |
) |
The accompanying notes are an integral part of these
consolidated financial statements.
Lithium Exploration Group, Inc. |
Consolidated
Statements of Cash Flows |
|
|
Year Ended |
|
|
Year Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Cash Flows from Operating
Activities |
|
|
|
|
|
|
Net loss from
continuing operations |
$ |
(2,224,489 |
) |
$ |
(7,388,264 |
) |
Loss from discontinued operations |
|
(432,754 |
) |
|
(312,900 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Equity in income of investment held for sale |
|
(104 |
) |
|
(18,053 |
) |
Loss on sale of unconsolidated affiliate |
|
488 |
|
|
- |
|
Common shares issued for investor relations |
|
68,000 |
|
|
- |
|
Common shares issued for consulting fees |
|
118,990 |
|
|
252,167 |
|
Goodwill impairment |
|
- |
|
|
383,238 |
|
Investment impairment |
|
624,429 |
|
|
- |
|
Common shares issued for interest expenses |
|
259,139 |
|
|
24,967 |
|
Interest expense |
|
3,057,135 |
|
|
5,207,155 |
|
(Gain) loss on change in the fair value of
derivative liability |
|
(3,710,345 |
) |
|
(2,650,532 |
) |
Gain on change in fair value of convertible preferred stock |
|
- |
|
|
(331,127 |
) |
Fair value of warrants issued |
|
873,471 |
|
|
3,193,462 |
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivable, net |
|
(13,421 |
) |
|
- |
|
Other assets |
|
- |
|
|
6,268 |
|
Loan receivable |
|
- |
|
|
(20,000 |
) |
Prepaid expenses |
|
16,610 |
|
|
24,624 |
|
Accrued interest |
|
(14,982 |
) |
|
74,066 |
|
Accrued expenses related party |
|
115,000 |
|
|
- |
|
Accounts payable and accrued liabilities |
|
52,237 |
|
|
10,797 |
|
Net cash used in operating
activities from continuing operations |
|
(1,210,596 |
) |
|
(1,544,132 |
) |
Net
cash provided by (used in) operating activities from discontinued
operations |
|
32,170 |
|
|
(31,301 |
) |
Net cash used in operating activities |
|
(1,178,426 |
) |
|
(1,575,433 |
) |
|
|
|
|
|
|
|
Cash Flows from Investing
Activities |
|
|
|
|
|
|
Investment |
|
- |
|
|
(906,700 |
) |
Proceed
from disposal of investment |
|
299,940 |
|
|
|
|
Deposit applied for
acquisition of subsidiary |
|
- |
|
|
(141,687 |
) |
Deposit |
|
- |
|
|
10,170 |
|
Net cash provided by (used in) investing
activities from continuing operations |
|
299,940 |
|
|
(1,038,217 |
) |
Net cash provided by investing activities from discontinued
operations |
|
- |
|
|
- |
|
Net cash provided by (used in) investing activities |
|
299,940 |
|
|
(1,038,217 |
) |
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
Repayment to related party |
|
(45,332 |
) |
|
- |
|
Repayment of
convertible promissory note |
|
- |
|
|
(68,000 |
) |
Proceed from issuance of
convertible promissory notes |
|
954,000 |
|
|
2,518,000 |
|
Net cash provided by
financing activities from continuing operations |
|
908,668 |
|
|
2,450,000 |
|
Net
cash provided by financing activities from discontinued operations |
|
- |
|
|
- |
|
Net cash provided by financing activities |
|
908,668 |
|
|
2,450,000 |
|
|
|
|
|
|
|
|
Effect of foreign exchange |
|
(23,715 |
) |
|
(27,342 |
) |
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents |
|
6,467 |
|
|
(190,992 |
) |
Cash and cash equivalents - beginning of period |
|
57,632 |
|
|
248,624 |
|
Cash and cash equivalents - end of period |
$ |
64,099 |
|
$ |
57,632 |
|
|
|
|
|
|
|
|
Supplementary disclosure
of cash flow information: |
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
Interest |
$ |
2,698 |
|
$ |
29,675 |
|
Income taxes |
$ |
- |
|
$ |
- |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Lithium Exploration Group, Inc. |
Consolidated
Statements of Cash Flows |
Supplementary non- cash
Investing and Financing Activities: |
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
Common stock issued for debt
conversion |
$ |
3,385,302 |
|
$ |
4,111,447 |
|
Common stock issued for preferred stock
conversion |
$ |
- |
|
$ |
20,000 |
|
Deposit applied to acquisition of
subsidiary |
$ |
- |
|
$ |
10,170 |
|
Transfer of beneficial conversion feature to
fair value of note |
$ |
518,808 |
|
$ |
2,146,510 |
|
Common stock issued on cashless
exercise of warrants |
$ |
767,982 |
|
$ |
598,316 |
|
|
|
|
|
|
|
|
Assets and liabilities
acquired in acquisition of subsidiary: |
|
|
|
|
|
|
Asset acquired |
$ |
- |
|
$ |
305,922 |
|
Less: Liabilities acquired |
$ |
- |
|
$ |
825 |
|
Net Asset acquired |
$ |
- |
|
$ |
305,097 |
|
Less: Non-controlling interest |
$ |
- |
|
$ |
235,133 |
|
Less: Fair value of consideration paid |
$ |
- |
|
$ |
453,204 |
|
Goodwill |
$ |
- |
|
$ |
383,238 |
|
The accompanying notes are an integral part of these
consolidated financial statements.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
1. Organization
Lithium Exploration Group, Inc. (formerly Mariposa Resources, Ltd.) (the “Company”) was incorporated on May 31, 2006 in the State of Nevada, U.S.A. It is based in Phoenix, Arizona, USA. The accounting and reporting policies of the
Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is June 30.
Effective November 30, 2010, the Company changed its name to “Lithium Exploration Group, Inc.,” by way of a merger with its wholly-owned subsidiary Lithium Exploration Group, Inc., which was formed solely for the change of name.
A wholly owned subsidiary, 1617437 Alberta Ltd. was incorporated in the province of Alberta, Canada on July 8, 2011. Effective October 2, 2013, the subsidiary changed its name to Alta Disposal Ltd.
On October 18, 2013, the Company acquired 51% interest in Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.).
On March 1, 2014, the Company through its 100% subsidiary Alta Disposal Ltd. acquired 50% interest in Tero Oilfield Services Ltd. (the “Tero”) On May 1, 2015, the Company entered into a Share Purchase Agreement with an individual and
disposed its 50% interest in Tero.
The Company is engaged principally in the acquisition, exploration, and development of resource properties. Prior to June 25, 2009, the Company had the right to conduct exploration work on 20 mineral mining claims in Esmeralda County, Nevada, U.S.A.
On July 31, 2009, the Company acquired an option to enter into a joint venture for the management and ownership of the Jack Creek Project, a mining project located in Elko County, Nevada. On September 25, 2009, the joint venture was terminated and
the Company entered into an agreement with Beeston Enterprises Ltd., under which the Company was granted an option to acquire an undivided 50% interest in eight mineral claims located in the Clinton Mining District of British Columbia, Canada. On
December 16, 2010, the Company entered into an Assignment Agreement to acquire an undivided 100% right, title and interest in and to certain mineral permits located in the Province of Alberta, Canada (see Note 5). On November 8, 2011, the Company
entered into a letter agreement with Glottech-USA. Pursuant to the terms of the agreement, the Company was granted an exclusive license to use and distribute the technology within the Swan Hills region of Alberta as well as a non-exclusive right to
distribute the technology within Canada. The Company also operates in the waste water disposal industry through its subsidiary Alta Disposal Morinville Ltd. Subsequent to the year ended June 30, 2015, the Company sold its 51% interest in Alta
Disposal Morinville Ltd.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies
Basis of presentation and consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Principal of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary Alta Disposal Ltd. and its 51% owned subsidiary Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.). Intercompany accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic
filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company. Significant estimates
that may materially change in the near term include the valuation of derivative liabilities and the underlying warrants, as well as fair value of investments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with original maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of
management, are subject to an insignificant risk of loss in value. The Company had $64,099 and $57,632 in cash and cash equivalents at June 30, 2015 and 2014, respectively.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies - Continued
Concentration of Risk
The Company maintains cash balances at a financial institution which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for banks located in the US. As of June 30, 2015 and 2014, the Company had $Nil and
$Nil, respectively, in deposits in excess of federally insured limits in its US bank. The Company has not experienced any losses with regard to its bank accounts and believes it is not exposed to any risk of loss on its cash in bank accounts.
Prepaid expenses
Prepaid expenses consist of security deposit for office lease which will be expensed or refunded at the end of the lease period.
Start-Up Costs
In accordance with FASC 720-15-20 “Start-Up Costs,” the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Mineral Acquisition and Exploration Costs
The Company has been in the exploration stage since its formation on May 31, 2006. It is primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and exploration costs are expensed as
incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserves.
Concentrations of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. The Company places its cash and cash
equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to
assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Net Income or (Loss) per Share of Common Stock
The Company has adopted FASC Topic No. 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
Potentially dilutive securities are not presented in the computation of EPS since their effects are anti-dilutive.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies - Continued
Foreign Currency Translations
The Company’s functional and reporting currency is the US dollar. All transactions initiated in other currencies are translated into US dollars using the exchange rate prevailing on the date of transaction. Monetary assets and liabilities
denominated in foreign currencies are translated into the US dollar at the rate of exchange in effect at the balance sheet date. Unrealized exchange gains and losses arising from such transactions are deferred until realization and are included as a
separate component of stockholders’ equity (deficit) as a component of comprehensive income or loss. Upon realization, the amount deferred is recognized in income in the period when it is realized.
No significant realized exchange gain or losses were recorded as June 30, 2015 and 2014.
Translation of Foreign Operations
The financial results and position of foreign operations whose functional currency is different from the Company’s presentation currency are translated as follows: - assets and liabilities are translated at period-end exchange rates prevailing
at that reporting date; and - income and expenses are translated at average exchange rates for the period.
Exchange differences arising on translation of foreign operations are transferred directly to the Company’s accumulated other comprehensive loss in the consolidated balance sheets. Transaction gains and losses arising from exchange rate
fluctuation on transactions denominated in a currency other than the functional currency are included in the consolidated statements of operations.
The relevant translation rates are as follows: For the year ended June 30, 2015 closing rate at 0.8017 CND$:US$, average rate at 0.8518 CND$: US$ and for year ended June 30, 2014 closing rate at 0.9367 CND$: US$ average rate
at 0.9341 CND$: US$
Comprehensive Income (Loss)
FASC Topic No. 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. As at June 30, 2015 and 2014, the
Company had no material items of other comprehensive income except for the foreign currency translation adjustment.
Risks and Uncertainties
The Company operates in the resource exploration industry that is subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating a resource exploration business, including
the potential risk of business failure.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies - Continued
Environmental Expenditures
The operations of the Company have been, and may in the future be, affected from time to time in varying degree by changes in environmental regulations, including those for future reclamation and site restoration costs. Both the likelihood of new
regulations and their overall effect upon the Company vary greatly and are not predictable. The Company's policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible
measures.
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. All of these types of expenditures incurred
since inception have been charged against earnings due to the uncertainty of their future recoverability. Estimated future reclamation and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings
over the estimated remaining life of the related business operation, net of expected recoveries.
Warrants
The Company value its warrants with provisions resulting in derivative liabilities at fair value using the lattice model according to ASC-815-10-55. The Company revalue its warrants at the end of every period at fair value and record the difference
in other income (expense) in the consolidated statements of operations.
Convertible Debentures and Convertible Promissory Notes
The Company value its convertible debentures and convertible promissory notes with provisions resulting in beneficial conversion features from the embedded derivative at fair value according to ASC-480-10-25-14, rather than have its conversion
feature bifurcated and reported separately due to ASC-815-15-25-1b. Because the value of the derivative related to the warrant exceeds the proceeds of the loan, the Company allocated 100% of the proceeds to the warrant derivative and took a day one
loss for the difference between the proceeds and the fair value of the warrants, resulting in a debt discount on the full fair value of the debenture because no proceeds were available to be allocated to the debt or its beneficial conversion
feature. That debt discount is accreted to interest expense over the stated life of the note using the interest method in accordance with ASC 470-20-35-7a and ASC 835-30-35-2. Unaccreted debt discount on the date of conversion is accreted to
interest expense on that date.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies - Continued
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based
on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair
value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.
The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaid expenses, deposit, accounts payable and accrued liabilities, and due to a related party approximate their fair values because of
the short maturity of these instruments.
The Company’s Level 3 financial liabilities consist of the liability of the Company’s secured convertible promissory notes and debentures issued to investors, and the derivative warrants issued in connection with these convertible
promissory notes and debentures. There is no current market for these securities such that the determination of fair value requires significant judgment or estimation. The Company used a fair value model which incorporates transaction details such
as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of the date of issuance and each balance sheet date.
Revenue Recognition
The Company has generated little revenues to date. It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 “Revenue Recognition”. Four basic criteria must be met before
revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on
management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are
provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product/services was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the
product/service has been delivered or no refund will be required.
Sales comprise the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the Company’s activities. Sales are presented, net of tax, rebates and discounts, and after
eliminating intercompany sales. The Company recognizes revenue when the amount of revenue and related cost can be reliably measured and it is probable that the collectability of the related receivables is reasonably assured.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
2. Significant Accounting Policies - Continued
Income Taxes
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under
FASC 740-20-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future
years.
Receivables
Trade and other receivables are customer obligations due under normal trade terms and are recorded at face value less any provisions for uncollectible amounts considered necessary. The Company includes any balances that are determined to be
uncollectible in its overall allowance for doubtful accounts. The Company recorded $18,984 (June 30, 2014 - $Nil) in allowance for doubtful accounts.
Investment in Unconsolidated Affiliate
Investments in affiliates that are not controlled by the Company, but over which it has significant influence, are accounted for using the equity method. The Company’s share of net income from its unconsolidated affiliate is reflected in the
Consolidated Statements of Operations and Comprehensive Loss as Equity in Income of Unconsolidated Affiliate.
Recent Accounting Pronouncements
In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The
amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations
guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations that
will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU were effective in the first quarter of 2015 for public organizations with calendar
year ends. Early adoption is permitted. The adoption of ASU 2014-08 did not have a material impact on the Company’s consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from contracts with Customers (Topic 606)”. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the
transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue
Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The adoption of
ASU 2014-98 is not expected to have a material impact on the Company’s consolidated financial statements.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
In July 2015, The FASB has issued Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market.
Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes
inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments in this Update more closely align the
measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2016, including interim
periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied
prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of ASU 2015-11 is not expected to have a material impact on the Company’s consolidated financial statements.
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, we have not
determined whether implementation of such proposed standards would be material to our consolidated financial statements.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock
On January 19, 2015, the Company's board of directors consented to effect a reverse stock split of the Company’s issued and outstanding shares of common stock on a basis of 20 old shares of common stock for one 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FNRA effective February 25, 2015.
On July 13, 2015, the Company's board of directors consented to effect a reverse stock split of the Company’s issued and outstanding shares of common stock on a basis of 200 old shares of common stock for one 1 new share of common stock. The
reverse stock split was reviewed and approved for filing by the FNRA effective September 30, 2015. The Company’s authorized capital will not be affected by the reverse stock split. The split is reflected retrospectively in the accompanying
financial statements.
Authorized Stock
At inception, the Company authorized 100,000,000 common shares and 100,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of
the stockholders of the corporation is sought.
On April 8, 2009, the Company increased the number of authorized shares to 600,000,000 shares, of which 500,000,000 shares are designated as common stock par value $0.001 per share, and 100,000,000 shares are designated as preferred stock, par
value $0.001 per share.
On October 25, 2012, the Company designated 20,000,000 Series A convertible preferred stock with a par value of $0.001 per share and stated value of $100 per share. The designated preferred stock is convertible at the option of the holder,
at any time beginning one year from the date such shares are issued, into common stock of the Company with a par value of $0.001. All shares of common stock of the Company, shall be of junior rank to all series A preferred stock in respect to
the preferences as to distributions and payments upon the liquidation, dissolution and winding up of the Company. All other shares of preferred stock shall be of junior rank to all series A preferred shares in respect to the preferences as to
distributions and payments upon the liquidation, dissolution and winding up of the Company.
On January 3, 2014, the Company designated 2,000,000 series B convertible preferred stock with a par value $0.001 per share, issuable only in consideration of the extinguishment of existing debt convertible in to the Company’s common stock
with a par value of $0.001. The designated preferred stock shall be issued on the basis of 1 preferred stock for each $1 of convertible debt. The series B convertible preferred stock shall be subordinate to and rank junior to all
indebtedness of the Company now or hereafter outstanding.
On October 17, 2014, the Company amended its Articles of Incorporation, which amendment was filed with the Nevada Secretary of State on October 17, 2014, to increase the authorized capital of its common shares from 500,000,000 common shares, par
value $0.001 to 2,000,000,000 common shares, par value $0.001. The Company's authorized capital consists of 2,000,000,000 common shares and 100,000,000 preferred shares, all with a par value of $0.001.
Effective September 9, 2015, the Company increase the authorized capital of its common shares from 2,000,000,000 common shares, par value $0.001 to 10,000,000,000 common shares, par value $0.001.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Effective June 22, 2015, the Company designated 50,000,000 of
its 100,000,000 authorized shares of preferred stock as series A preferred
stock. The series A preferred stock, par value $0.001, will rank senior to the
Companys common stock, carrying general voting rights with the common stock at
the rate of 62 votes per share. The series A preferred stock will be deemed
cancelled within 1 year of issuance and are not entitled to share in dividends
or other distributions. So long as any shares of series A preferred stock are
outstanding, the affirmative vote of not less than 75% of those outstanding
shares of series A preferred stock will be required for any change to the
Companys Articles of Incorporation.
Share Issuances
Common Stock Issuance
For the year ended June 30, 2015:
On July 1, 2014, the Company issued 50 common shares at a
market price of $180.40 per share for consulting fees.
On July 4, 2014, the Company issued 135 common shares at a
market price of $221.60 per share for consulting fees.
On July 9, 2014, the Company issued 2,428 common shares at a
deemed price of $48.57 per share for warrants exercise of $117,962 (Note 6).
On July 16, 2014, the Company issued 450 common shares at a
deemed price of $74.00 per share for promissory note and interest conversion of
$46,769 (Note 6).
On July 30, 2014, the Company issued 4,528 common shares at a
deemed price of $85.34 per share for warrants exercise of $386,433 (Note 6).
On August 1, 2014, the Company issued 266 common shares at a
deemed price of $67.00 per share for promissory note and interest conversion of
$25,000 (Note 6).
On August 1, 2014, the Company issued 61 common shares at a
market price of $146.80 per share for consulting fees.
On August 5, 2014, the Company issued 5,161 common shares at a
deemed price of $7.99 per share for warrants exercise of $41,244 (Note 6).
On August 8, 2014, the Company issued 2,226 common shares at a
deemed price of $61.34 per share for warrants exercise of $136,555 (Note 6).
On August 12, 2014, the Company issued 800 common shares at a
deemed price of $74.94 per share for warrants exercise of $59,953 (Note 6).
On August 28, 2014, the Company issued 2,598 common shares at a
deemed price of $40.80 per share for promissory note and interest conversion of
$205,984 (Note 6).
On September 1, 2014, the Company issued 88 common shares at a
market price of $102.80 per share for consulting fees.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On September 1, 2014, the Company issued 292 common shares at a
market price of $102.80 per share for consulting fees.
On September 3, 2014, the Company issued 750 common shares at a
deemed price of $40.00 per share for promissory note and interest conversion of
$42,135 (Note 6).
On September 3, 2014, the Company issued 125 common shares at a
deemed price of $40.00 per share for promissory note and interest conversion of
$9,717 (Note 6).
On September 4, 2014, the Company issued 227 common shares at a
deemed price of $44.00 per share for promissory note and interest conversion of
$20,000 (Note 6).
On September 4, 2014, the Company issued 146 common shares at a
deemed price of $15.92 per share for warrants exercise of $2,322 (Note 6).
On September 8, 2014, the Company issued 277 common shares at a
deemed price of $38.00 per share for promissory note and interest conversion of
$20,510 (Note 6).
On September 10, 2014, the Company issued 1,684 common shares
at a deemed price of $22.20 per share for promissory note and interest
conversion of $62,375 (Note 6).
On September 10, 2014, the Company issued 385 common shares at
a deemed price of $26.00 per share for promissory note and interest conversion
of $20,000 (Note 6).
On September 11, 2014, the Company issued 652 common shares at
a deemed price of $24.20 per share for promissory note and interest conversion
of $30,777 (Note 6).
On September 11, 2014, the Company issued 1,400 common shares
at a deemed price of $20.20 per share for promissory note and interest
conversion of $39,712 (Note 6).
On September 11, 2014, the Company issued 413 common shares at
a deemed price of $24.20 per share for promissory note and interest conversion
of $20,000 (Note 6).
On September 12, 2014, the Company issued 2,475 common shares
at a deemed price of $20.20 per share for promissory note and interest
conversion of $100,000 (Note 6).
On September 12, 2014, the Company issued 717 common shares at
a deemed price of $22.00 per share for promissory note and interest conversion
of $30,781(Note 6).
On September 15, 2014, the Company issued 1,396 common shares
at a deemed price of $20.20 per share for promissory note and interest
conversion of $54,804 (Note 6).
On September 15, 2014, the Company issued 479 common shares at
a deemed price of $22.00 per share for promissory note and interest conversion
of $20,529 (Note 6).
On September 15, 2014, the Company issued 2,737 common shares
at a deemed price of $8.11 per share for warrants exercise of $22,207 (Note 6).
On September 16, 2014, the Company issued 953 common shares at
a deemed price of $21.33 per share for promissory note and interest conversion
of $40,447 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On September 17, 2014, the Company issued 354 common shares at
a deemed price of $19.80 per share for promissory note and interest conversion
of $14,000 (Note 6).
On September 23, 2014, the Company issued 369 common shares at
a deemed price of $12.60 per share for promissory note and interest conversion
of $9,311 (Note 6).
On September 23, 2014, the Company issued 962 common shares at
a deemed price of $13.00 per share for promissory note and interest conversion
of $25,000 (Note 6).
On September 23, 2014, the Company issued 455 common shares at
a deemed price of $11.00 per share for promissory note and interest conversion
of $7,692 (Note 6).
On September 23, 2014, the Company issued 2,500 common shares
at a deemed price of $11.00 per share for promissory note and interest
conversion of $55,000 (Note 6).
On September 24, 2014, the Company issued 2,273 common shares
at a deemed price of $11.00 per share for promissory note and interest
conversion of $48,585 (Note 6).
On September 29, 2014, the Company issued 1,512 common shares
at a deemed price of $12.60 per share for promissory note and interest
conversion of $37,050 (Note 6).
On September 29, 2014, the Company issued 1,250 common shares
at a deemed price of $12.60 per share for promissory note and interest
conversion of $31,500 (Note 6).
On October 1, 2014, the Company issued 60 common shares at a
market price of $33.20 per share for consulting fees.
On October 2, 2014, the Company issued 1,136 common shares at a
deemed price of $11.00 per share for promissory note and interest conversion of
$24,292 (Note 6).
On October 3, 2014, the Company issued 2,500 common shares at a
deemed price of $10.00 per share for promissory note and interest conversion of
$38,462 (Note 6).
On October 6, 2014, the Company issued 2,500 common shares at a
deemed price of $10.00 per share for promissory note and interest conversion of
$38,462 (Note 6).
On October 7, 2014, the Company issued 2,750 common shares at a
deemed price of $8.80 per share for promissory note and interest conversion of
$37,231 (Note 6).
On October 9, 2014, the Company issued 1,667 common shares at a
deemed price of $9.00 per share for promissory note and interest conversion of
$30,000 (Note 6).
On October 13, 2014, the Company issued 3,409 common shares at
a deemed price of $8.80 per share for promissory note and interest conversion of
$46,154 (Note 6).
On October 13, 2014, the Company issued 2,670 common shares at
a deemed price of $8.80 per share for promissory note and interest conversion of
$45,669 (Note 6).
On October 16, 2014, the Company issued 1,829 common shares at
a deemed price of $8.20 per share for promissory note and interest conversion of
$30,000 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On October 20, 2014, the Company issued 2,778 common shares at
a deemed price of $7.20 per share for promissory note and interest conversion of
$38,867 (Note 6).
On October 21, 2014, the Company issued 2,500 common shares at
a deemed price of $6.00 per share for promissory note and interest conversion of
$29,150 (Note 6).
On October 21, 2014, the Company issued 5,000 common shares at
a deemed price of $5.80 per share for promissory note and interest conversion of
$44,615 (Note 6).
On October 22, 2014, the Company issued 1,908 common shares at
a market price of $15.72 per share for consulting fees.
On October 22, 2014, the Company issued 4,750 common shares at
a deemed price of $5.80 per share for promissory note and interest conversion of
$38,694 (Note 6).
On October 22, 2014, the Company issued 500 common shares at a
market price of $136.00 per share for investor relations fees.
On October 23, 2014, the Company issued 1,471 common shares at
a deemed price of $6.80 per share for promissory note and interest conversion of
$20,000 (Note 6).
On October 24, 2014, the Company issued 2,206 common shares at
a deemed price of $6.80 per share for promissory note and interest conversion of
$30,000 (Note 6).
On October 27, 2014, the Company issued 5,502 common shares at
a deemed price of $6.20 per share for promissory note and interest conversion of
$66,113 (Note 6).
On October 27, 2014, the Company issued 5,000 common shares at
a deemed price of $6.00 per share for promissory note and interest conversion of
$58,301 (Note 6).
On October 27, 2014, the Company issued 3,750 common shares at
a deemed price of $5.80 per share for promissory note and interest conversion of
$43,500 (Note 6).
On October 27, 2014, the Company issued 836 common shares at a
deemed price of $6.40 per share for promissory note and interest conversion of
$7,948 (Note 6).
On October 27, 2014, the Company issued 5,678 common shares at
a deemed price of $5.80 per share for promissory note and interest conversion of
$62,934 (Note 6).
On October 31, 2014, the Company issued 3,750 common shares at
a deemed price of $4.60 per share for promissory note and interest conversion of
$26,538 (Note 6).
On October 31, 2014, the Company issued 3,125 common shares at
a deemed price of $4.80 per share for promissory note and interest conversion of
$30,000 (Note 6).
On November 3, 2014, the Company issued 3,750 common shares at
a deemed price of $4.60 per share for promissory note and interest conversion of
$34,500 (Note 6).
On November 4, 2014, the Company issued 4,348 common shares at
a deemed price of $4.60 per share for promissory note and interest conversion of
$38,867 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On November 6, 2014, the Company issued 4,975 common shares at
a deemed price of $4.20 per share for promissory note and interest conversion of
$28,578 (Note 6).
On November 10, 2014, the Company issued 4,952 common shares at
a deemed price of $4.20 per share for promissory note and interest conversion of
$32,000 (Note 6).
On November 13, 2014, the Company issued 5,000 common shares at
a deemed price of $3.60 per share for promissory note and interest conversion of
$27,692 (Note 6).
On November 14, 2014, the Company issued 5,263 common shares at
a deemed price of $3.80 per share for promissory note and interest conversion of
$40,000 (Note 6).
On November 17, 2014, the Company issued 3,947 common shares at
a deemed price of $3.80 per share for promissory note and interest conversion of
$30,000 (Note 6).
On November 18, 2014, the Company issued 6,410 common shares at
a deemed price of $3.12 per share for promissory note and interest conversion of
$30,769 (Note 6).
On November 18, 2014, the Company issued 7,193 common shares at
a deemed price of $3.80 per share for promissory note and interest conversion of
$47,335 (Note 6).
On November 19, 2014, the Company issued 8,500 common shares at
a deemed price of $3.20 per share for promissory note and interest conversion of
$37,202 (Note 6).
On December 1, 2014, the Company issued 7,500 common shares at
a deemed price of $2.80 per share for promissory note and interest conversion of
$32,308 (Note 6).
On December 3, 2014, the Company issued 5,357 common shares at
a deemed price of $2.80 per share for promissory note and interest conversion of
$17,500 (Note 6).
On December 4, 2014, the Company issued 7,500 common shares at
a deemed price of $2.40 per share for promissory note and interest conversion of
$34,980 (Note 6).
On December 5, 2014, the Company issued 6,818 common shares at
a deemed price of $2.20 per share for promissory note and interest conversion of
$29,150 (Note 6).
On December 5, 2014, the Company issued 7,500 common shares at
a deemed price of $2.00 per share for promissory note and interest conversion of
$23,077 (Note 6).
On December 8, 2014, the Company issued 6,667 common shares at
a deemed price of $1.80 per share for promissory note and interest conversion of
$23,320 (Note 6).
On December 8, 2014, the Company issued 8,750 common shares at
a deemed price of $1.40 per share for promissory note and interest conversion of
$18,846 (Note 6).
On December 9, 2014, the Company issued 6,429 common shares at
a deemed price of $1.40 per share for promissory note and interest conversion of
$17,498 (Note 6).
On December 10, 2014, the Company issued 11,250 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $20,769 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On December 10, 2014, the Company issued 12,075 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $19,818 (Note 6).
On December 10, 2014, the Company issued 8,500 common shares at
a deemed price of $1.20 per share for promissory note and interest conversion of
$20,400 (Note 6).
On December 11, 2014, the Company issued 8,473 common shares at
a deemed price of $1.40 per share for promissory note and interest conversion of
$22,862 (Note 6).
On December 12, 2014, the Company issued 18,612 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $42,334 (Note 6).
On December 15, 2014, the Company issued 12,500 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $23,077 (Note 6).
On December 16, 2014, the Company issued 9,286 common shares at
a deemed price of $1.40 per share for promissory note and interest conversion of
$13,000 (Note 6).
On December 17, 2014, the Company issued 15,425 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $25,317 (Note 6).
On December 17, 2014, the Company issued 12,600 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $29,120 (Note 6).
On December 18, 2014, the Company issued 15,000 common shares
at a deemed price of $1.20 per share for promissory note and interest conversion
of $27,692 (Note 6).
On March 11, 2015, the Company issued 21 common shares at a
deemed price of $4.00 per share to the depository trust as a result of the
reverse stock split.
On March 16, 2015, the Company issued 36,175 common shares at a
deemed price of $0.02 per share for warrants exercise of $643 (Note 6).
On March 31, 2015, the Company issued 20,834 common shares at a
deemed price of $1.20 per share for promissory note and interest conversion of
$46,524 (Note 6).
On April 1, 2015, the Company issued 15,000 common shares at a
deemed price of $1.20 per share for promissory note and interest conversion of
$36,000 (Note 6).
On April 1, 2015, the Company issued 19,110 common shares at a
deemed price of $1.20 per share for promissory note and interest conversion
$35,280 (Note 6).
On April 7, 2015, the Company issued 19,608 common shares at a
deemed price of $1.02 per share for promissory note and interest conversion
$30,769 (Note 6).
On April 7, 2015, the Company issued 22,500 common shares at a
deemed price of $1.02 per share for promissory note and interest conversion
$38,250 (Note 6).
On April 8, 2015, the Company issued 21,838 common shares at a
market price of $0.85 per share for promissory note and interest conversion
$23,350 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On April 10, 2015, the Company issued 25,000 common shares at a
deemed price of $0.61 per share for promissory note and interest conversion
$23,462 (Note 6).
On April 13, 2015, the Company issued 26,250 common shares at a
deemed price of $0.64 per share for promissory note and interest conversion
$24,193 (Note 6).
On April 14, 2015, the Company issued 25,000 common shares at a
deemed price of $0.49 per share for promissory note and interest conversion
$12,250 (Note 6).
On April 14, 2015, the Company issued 25,000 common shares at a
deemed price of $0.48 per share for promissory note and interest conversion
$18,462 (Note 6).
On April 14, 2015, the Company issued 5,385 common shares at a
deemed price of $0.089 per share for warrants exercise $480 (Note 6).
On April 16, 2015, the Company issued 42,417 common shares at a
deemed price of $0.0043 per share for warrants exercise $182 (Note 6).
On April 17, 2015, the Company issued 25,000 common shares at a
deemed price of $0.40 per share for promissory note and interest conversion
$15,385 (Note 6).
On April 20, 2015, the Company issued 25,000 common shares at a
deemed price of $0.26 per share for promissory note and interest conversion
$10,000 (Note 6).
On April 20, 2015, the Company issued 25,922 common shares at a
deemed price of $0.39 per share for promissory note and interest conversion
$15,495 (Note 6).
On April 20, 2015, the Company issued 30,000 common shares at a
deemed price of $0.26 per share for promissory note and interest conversion
$7,800 (Note 6).
On April 20, 2015, the Company issued 31,000 common shares at a
deemed price of $0.26 per share for promissory note and interest conversion
$11,024 (Note 6).
On April 22, 2015, the Company issued 30,000 common shares at a
deemed price of $0.24 per share for promissory note and interest conversion
$9,525 (Note 6).
On April 22, 2015, the Company issued 14,793 common shares at a
deemed price of $0.34 per share for promissory note and interest conversion
$7,692 (Note 6).
On April 24, 2015, the Company issued 37,500 common shares at a
deemed price of $0.21 per share for promissory note and interest conversion
$7,875 (Note 6).
On April 23, 2015, the Company issued 32,360 common shares at a
deemed price of $0.24 per share for promissory note and interest conversion
$11,948 (Note 6).
On April 24, 2015, the Company issued 41,500 common shares at a
deemed price of $0.21 per share for promissory note and interest conversion
$11,920 (Note 6).
On April 27, 2015, the Company issued 26,250 common shares at a
deemed price of $0.22 per share for promissory note and interest conversion
$8,393 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On April 28, 2015, the Company issued 30,000 common shares at a
deemed price of $0.20 per share for promissory note and interest conversion
$6,000 (Note 6).
On April 28, 2015, the Company issued 39,303 common shares at a
deemed price of $0.20 per share for promissory note and interest conversion
$12,094 (Note 6).
On April 29, 2015, the Company issued 45,000 common shares at a
deemed price of $0.14 per share for promissory note and interest conversion
$6,300 (Note 6).
On April 30, 2015, the Company issued 49,000 common shares at a
deemed price of $0.20 per share for promissory note and interest conversion
$15,077 (Note 6).
On April 30, 2015, the Company issued 45,000 common shares at a
deemed price of $0.17 per share for promissory note and interest conversion
$11,700 (Note 6).
On April 30, 2015, the Company issued 45,000 common shares at a
deemed price of $0.13 per share for promissory note and interest conversion
$5,850 (Note 6).
On April 30, 2015, the Company issued 54,200 common shares at a
deemed price of $0.17 per share for promissory note and interest conversion
$13,253 (Note 6).
On April 30, 2015, the Company issued 48,584 common shares at a
deemed price of $0.15 per share for promissory note and interest conversion
$11,212 (Note 6).
On May 1, 2015, the Company issued 53,741 common shares at a
deemed price of $0.15 per share for promissory note and interest conversion
$12,342 (Note 6).
On May 1, 2015, the Company issued 49,000 common shares at a
deemed price of $0.20 per share for promissory note and interest conversion
$15,077 (Note 6).
On May 1, 2015, the Company issued 105,315 common shares at a
deemed price of $0.16 per share for promissory note and interest conversion
$31,200 (Note 6).
On May 4, 2015, the Company issued 50,000 common shares at a
deemed price of $0.13 per share for promissory note and interest conversion
$6,500 (Note 6).
On May 5, 2015, the Company issued 73,637 common shares at a
deemed price of $0.13 per share for promissory note and interest conversion
$14,728 (Note 6).
On May 5, 2015, the Company issued 78,892 common shares at a
deemed price of $0.12 per share for promissory note and interest conversion
$13,355 (Note 6).
On May 5, 2015, the Company issued 75,000 common shares at a
deemed price of $0.10 per share for promissory note and interest conversion
$7,500 (Note 6).
On May 7, 2015, the Company issued 90,775 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$11,754 (Note 6).
On May 7, 2015, the Company issued 75,000 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$10,500 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On May 7, 2015, the Company issued 49,000 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$6,860 (Note 6).
On May 7, 2015, the Company issued 75,000 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$6,375 (Note 6).
On May 8, 2015, the Company issued 78,892 common shares at a
deemed price of $0.08 per share for promissory note and interest conversion
$9,709 (Note 6).
On May 8, 2015, the Company issued 75,000 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$5,250 (Note 6).
On May 8, 2015, the Company issued 92,500 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$8,839 (Note 6).
On May 8, 2015, the Company issued 75,000 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$5,250 (Note 6).
On May 11, 2015, the Company issued 92,741 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$12,210 (Note 6).
On May 12, 2015, the Company issued 90,775 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$11,754 (Note 6).
On May 12, 2015, the Company issued 89,011 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$12,462 (Note 6).
On May 11, 2015, the Company issued 110,000 common shares at a
deemed price of $0.09 per share for promissory note and interest conversion
$15,400 (Note 6).
On May 13, 2015, the Company issued 111,138 common shares at a
deemed price of $0.08 per share for promissory note and interest conversion
$13,679 (Note 6).
On May 13, 2015, the Company issued 122,357 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$8,565 (Note 6).
On May 13, 2015, the Company issued 125,000 common shares at a
deemed price of $0.08 per share for promissory note and interest conversion
$15,000 (Note 6).
On May 13, 2015, the Company issued 119,900 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$8,393 (Note 6).
On May 14, 2015, the Company issued 132,000 common shares at a
deemed price of $0.06 per share for promissory note and interest conversion
$10,833 (Note 6).
On May 14, 2015, the Company issued 110,000 common shares at a
deemed price of $0.08 per share for promissory note and interest conversion
$13,200 (Note 6).
On May 15, 2015, the Company issued 160,565 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$17,292 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On May 19, 2015, the Company issued 166,802 common shares at a
deemed price of $0.08 per share for promissory note and interest conversion
$18,825 (Note 6).
On May 22, 2015, the Company issued 166,802 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$17,963 (Note 6).
On May 27, 2015, the Company issued 194,500 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$13,301 (Note 6).
On May 27, 2015, the Company issued 102,839 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$10,995 (Note 6).
On May 27, 2015, the Company issued 150,000 common shares at a
deemed price of $0.07 per share for promissory note and interest conversion
$15,000 (Note 6).
On June 2, 2015, the Company issued 144,231 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$11,538 (Note 6).
On June 2, 2015, the Company issued 150,000 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$11,624 (Note 6).
On June 3, 2015, the Company issued 225,000 common shares at a
deemed price of $0.04 per share for promissory note and interest conversion
$12,309 (Note 6).
On June 3, 2015, the Company issued 222,506 common shares at a
deemed price of $0.04 per share for promissory note and interest conversion
$13,585 (Note 6).
On June 4, 2015, the Company issued 222,791 common shares at a
deemed price of $0.04 per share for promissory note and interest conversion
$16,411 (Note 6).
On June 5, 2015, the Company issued 220,000 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$15,400 (Note 6).
On June 9, 2015, the Company issued 255,000 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$19,185 (Note 6).
On June 10, 2015, the Company issued 275,000 common shares at a
deemed price of $0.05 per share for promissory note and interest conversion
$19,251 (Note 6).
On June 11, 2015, the Company issued 284,000 common shares at a
deemed price of $0.03 per share for promissory note and interest conversion
$11,653 (Note 6).
On June 11, 2015, the Company issued 428,933 common shares at a
deemed price of $0.03 per share for promissory note and interest conversion
$23,694 (Note 6).
On June 15, 2015, the Company issued 218,089 common shares at a
deemed price of $0.04 per share for promissory note and interest conversion
$13,301 (Note 6).
On June 15, 2015, the Company issued 165,154 common shares at a
deemed price of $0.04 per share for promissory note and interest conversion
$6,441 (Note 6).
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
3. Capital Stock Continued
Share Issuances Continued
On June 16, 2015, the Company issued 249,500 common shares at a
deemed price of $0.03 per share for promissory note and interest conversion
$10,237 (Note 6).
As at June 30, 2015, 5,983 (June 30, 2014 - 3,389) were issued
to directors and officers of the Company. 4,629 (June 30, 2014 - 4,629) were
issued to independent investors. 218 (June 30, 2014 - 218) were issued for
mining expenses. 192 (June 30, 2014 192) were issued for related party
consulting expenses. 737 (June 30, 2014 237) were issued for investor relation
expenses. 50 (June 30, 2014 - 50) were issued for debt settlement. 10,750 (June
30, 2014 10,750) were issued for debenture and interest conversion. 257 (June
30, 2014 257) were issued for exercise of warrants attached to convertible
debentures. 7,426,562 (June 30, 2014 5,316) were issued for promissory note
and interest conversions. 104,304 (June 30, 2014 2,300) were issued for
exercise of warrants attached to convertible promissory notes. 239 (June 30,
2014 239) were issued for note payable conversion. 500 (June 30, 2014 - 500)
were issued for a mining option settlement. 5,000 (June 30, 2014 - 5,000) were
issued for the conversion of Series A Convertible Preferred shares. 14,911 (June
30, 2014 14,911) were issued for the conversion of Series B Convertible
Preferred shares. 21 (June 30, 2014 Nil) were issued to depository trust as a
result of the reverse stock split. The Company has no stock option plan,
warrants or other dilutive securities, other than warrants issued to acquire
9,490 shares of the Company regarding convertible promissory notes (Note 6).
On January 3, 2014, the Company entered into a convertible debt
settlement agreement with one investor. Pursuant to the terms of the agreement,
the investor acquired 1,134,500 convertible Series B Preferred Shares to
extinguish the balance of convertible debts with an aggregate principal amount
of $1,134,500. The conversion price of the Series B Preferred Shares shall be
the lower of 50% of the lowest reported sale price of the common stock for the
20 trading days immediately prior to (i) the closing date of the applicable
convertible debt instrument of the Corporation from which the applicable Series
B Preferred Shares were converted, or (ii) 50 % of the lowest reported sale
price for the 20 days prior to the conversion date of the Series B Preferred
Shares.
As at June 30, 2014, all of the Series B Preferred Shares
issued on the January 3, 2014 debt settlement agreement were converted into
14,911 common shares of the Company for a total fair value of $3,639,623 of
which a gain of $331,127 was recorded.
4. Provision for Income Taxes
The Company recognizes the tax effects of transactions in the
year in which such transactions enter into the determination of net income,
regardless of when reported for tax purposes. Deferred taxes are provided in the
financial statements under FASC 740-20-20 to give effect to the resulting
temporary differences which may arise from differences in the bases of fixed
assets, depreciation methods, allowances, and start-up costs based on the income
taxes expected to be payable in future years.
Exploration stage deferred tax assets arising as a result of
net operating loss carryforwards have been offset completely by a valuation
allowance due to the uncertainty of their utilization in future periods.
Operating loss carryforwards generated during the period from May 31, 2006 (date
of inception) through June 30, 2015 of approximately $12,600,000 will begin to
expire in 2026. Accordingly, deferred tax assets were offset by the valuation
allowance that increased by approximately $458,936 and $536,536 during the
periods ended June 30, 2015 and 2014, respectively.
The Company follows the provisions of uncertain tax positions
as addressed in FASC 740-10-65-1. The Company recognized approximately no
increase in the liability for unrecognized tax benefits.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
4. Provision for Income Taxes - Continued
The Company has no tax position at June 30, 2015 for which the
ultimate deductibility is highly certain but for which there is uncertainty
about the timing of such deductibility. The Company recognizes interest accrued
related to unrecognized tax benefits in interest expense and penalties in
operating expenses. No such interest or penalties were recognized during the
periods presented. The Company had no accruals for interest and penalties at
June 30, 2015. The Companys utilization of any net operating loss carry forward
may be unlikely as a result of its intended exploration stage activities. The
tax years for June 30, 2015, June 30, 2014, June 30, 2013 and June 30, 2012 are
still open for examination by the Internal Revenue Service (IRS).
|
|
2015 |
|
|
|
Amount |
|
|
Tax
Effect (35%) |
|
|
|
|
|
|
|
|
Net loss |
$ |
2,657,243 |
|
$ |
930,035 |
|
|
|
|
|
|
|
|
Shares issued for consulting fees, mining
expenses, investor relation and director fees |
|
(441,129 |
) |
|
(154,395 |
) |
Accretion of beneficial conversion feature |
|
(3,057,134 |
) |
|
(1,069,997 |
) |
Gain on change in the fair value of derivative liability
and fair value of warrant issued |
|
2,836,874 |
|
|
992,906 |
|
Impairment |
|
(684,607 |
) |
|
(239,612 |
) |
|
|
|
|
|
|
|
Total |
|
1,311,247 |
|
|
458,936 |
|
|
|
|
|
|
|
|
Valuation allowance |
|
(1,311,247 |
) |
|
(458,936 |
) |
|
|
|
|
|
|
|
Net deferred tax asset (liability) |
$ |
- |
|
$ |
- |
|
|
|
2014 |
|
|
|
Amount |
|
|
Tax
Effect (35%) |
|
|
|
|
|
|
|
|
Net loss |
$ |
7,701,164 |
|
$ |
2,693,810 |
|
|
|
|
|
|
|
|
Shares issued for consulting fees, mining
expenses, investor relation and director fees |
|
(252,167 |
) |
|
(88,258 |
) |
Accretion of beneficial conversion feature |
|
(5,320,995 |
) |
|
(1,862,348 |
) |
Gain on derivative liability |
|
(542,930 |
) |
|
(190,026 |
) |
Gain on change in the fair value of
convertible preferred stock |
|
331,127 |
|
|
115,894 |
|
Goodwill impairment |
|
(383,238 |
) |
|
(134,133 |
) |
|
|
|
|
|
|
|
Total |
|
1,532,961 |
|
|
536,536 |
|
|
|
|
|
|
|
|
Valuation allowance |
|
(1,532,961 |
) |
|
(536,536 |
) |
|
|
|
|
|
|
|
Net deferred tax asset (liability) |
$ |
- |
|
$ |
- |
|
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
5. Mineral Property Costs
Mineral Permit (Assignment Agreement with Lithium
Exploration VIII Ltd.)
On December 16, 2010, the Company entered into an Assignment
Agreement to acquire the following:
|
a. ) |
An undivided 100% right, title and interest in and to
certain mineral permits located in the Province of Alberta,
Canada. |
|
b. ) |
All of the assignors right, title and interest in and to
the Option Agreement. |
In consideration for the Assignment, the Company agreed to pay
US$90,000 by way of cash or stock of equal value (consisting of amounts
previously paid by the Assignor pursuant to the Option Agreement). The full
$90,000 (consisting of option payments i and v below) was expensed and
included in the December 31, 2011 accounts payable balance. The Option shall be
in good standing and exercisable by the Company by paying the following amounts
on or before the dates specified in the following schedule:
|
i. ) |
CDN $40,000 (paid) upon execution of the
agreement; |
|
ii. ) |
CDN $60,000 (paid) on or before January 1,
2012; |
|
iii. ) |
CDN $100,000 on or before January 1, 2013 (amended and
paid); |
|
iv. ) |
CDN $300,000 on or before January 1, 2014 (not paid);
and |
|
v. ) |
Paying all such property payments as may be required to
maintain the mineral permits in good standing. |
The Optionee shall provide a refundable amount of CDN$50,000
(paid) to the Optionor by November 2, 2010, which shall be applied by the
Optionor towards work assessment expenses acceptable to the Government of
Alberta, with any unused portion to be applied against payments required to
maintain the permits underlying the property in good standing.
On December 31, 2012, the Company entered into an agreement to
amend the original payment requirement of CDN$100,000 due on January 1, 2013 to
the following payments: CDN $20,000 (paid) cash payment due on January 1, 2013
and CDN $80,000 by a 15% one year promissory note starting January 1, 2013. The
promissory note is interest free until March 31, 2013. After then, interest will
accrue on the principal balance then in arrears at the rate of 15% per annum. No
payments shall be payable until December 31, 2013. At any time, the Optionor may
elect to convert the remaining balance of CDN $80,000 plus accrued interest into
common shares of the Company at 75% of the closing market price of the Companys
common shares on the election day. The full CDN$100,000 (US$95,008) (consisting
of cash payment of CDN$20,000 (US$19,164) and note payable of CDN$80,000
(US$75,844) was expensed. The note is subject to be measured at its fair value
in accordance with ASC 480-10-25-14. The fair value at issuance was CDN$106,667
(US$101,125) as of June 30, 2013. An additional $26,667 was charged to mining
expense during the year June 30, 2013. An interest expense of CDN$3,058
(US$2,899) was accrued as at June 30, 2013. On July 3, 2013, the Optionor
elected to convert the promissory note of CDN $80,000 (US$75,844) plus accrued
interest of CDN$3,058 (US$2,899) for the total amount of CDN $83,058 (US$78,743)
into 239 common shares of the Company at a price of US$330 per share. The
January 1, 2014 payment was not paid by the Company, and subsequent to the
schedule payment date, the agreement was terminated.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
5. Mineral Property Costs - Continued
Glottech Technology
On March 17, 2011 and subsequently amended on November 18,
2011, the Company entered into a letter agreement to acquire one initial unit of
proprietary and patented mechanical ultrasound technology for use in water
purification, inclusive of its process of separating from water, as the primary
fluid stock, the salt and other minerals and by products contained therein,
with Glottech USA.
To acquire the unit, the Company must make the following
payments:
|
a) |
US$25,000 upon execution of the agreement
(paid); |
|
b) |
US$75,000 within 180 days of execution of the agreement
(paid); |
|
c) |
US$700,000 within 10 days of receipt of invoice from
Glottech USA LLC if the payment in b) is made (paid). |
|
d) |
The Company also granted an option to acquire 500 shares
for $1.00 to Glottech USA upon receipt of the operational ultrasonic
generator that they are building for Lithium Exploration Group. The 500
shares are to be paid from outstanding shares owned by Alex Walsh, company
CEO. During the year ended June 30, 2011, the option resulting in
additional mining expenses of $4,940,000 was valued using the fair market
value of the shares to be issued. On October 1, 2012, Alex Walsh and GD
International entered into an agreement to transfer 500 common shares
owned by Alex Walsh to GD International. The shares were received by GD
International on October 29, 2012. |
Commencing as of the end of an initial sixty day testing and
training period following satisfactory delivery and physical setup of the
technology, and continuing thereafter for as long as the technology remains in
the possession of the Company, the Company shall pay continuing monthly
royalties in an amount equal to $2.00 per physical ton of water processed
pursuant to the usage of the technology.
On June 12, 2012, the Company filed a complaint with the court
of common pleas of Chester County, Pennsylvania against Glottech USA, LLC,
Eldredge, Inc., and the Eldredge Companies, Inc. The complaint seeks an order of
the court granting possession of the unit, in its current state, to the
Company.
Effective August 14, 2012, the Company entered into an option
agreement with GD Glottech-International, Limited (GD International) to
protect our license and distribution rights in the event that GD-Glottech-USA,
LLC (GD USA) is unable to perform and honor the obligations contingent to a
letter agreement dated November 8, 2011.
Pursuant to the terms of the option agreement, we are required
to provide an initial deposit of $150,000 to be held in escrow for the option to
obtain a license on the patent rights, as set forth in the option agreement. A
further $15,000 was required for exercising the option agreement and it will be
credited to future fees when patents rights are exercised. We exerised this
option agreement on September 1, 2012 and released the funds to GD
International.
On October 1, 2012, the Company entered into a sales agency
agreement with GD International. The agreement shall replace all agreements
entered previously. Pursuant to the agreement, the Company is appointed as GD
Internationals sales agent for the technology within the territory. As a
consideration, 10,000 common shares of the Company shall be issued to GD
International (issued: see d) above). GD International retains all right, title
and interest in the technology. The term of this agreement will be an initial
period of five years. The term shall be automatically renewable thereafter for
successive five year periods provided that the Company has sold not less than 25
or more technology units during each applicable five year period.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
5. Mineral Property Costs - Continued
On May 2, 2013, the Company entered into an agreement to retain
the future use of the unit. Pursuant to the agreement, the Company must make the
following payments:
|
a) |
US$20,000 within three days of execution of the agreement
(paid); |
|
b) |
US$30,000 within three days upon the testing of the unit
has been successfully completed. |
6. Convertible Promissory Notes
Summary of convertible promissory note at June 31, 2015 and
2014 is as follows:
|
|
June
30, |
|
|
Fair
value |
|
|
Fair
value |
|
|
Fair
value |
|
|
June
30, |
|
|
|
2014 |
|
|
issued |
|
|
converted |
|
|
repaid |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 13, 2013 |
$ |
461,754 |
|
$ |
- |
|
$ |
(364,736 |
) |
$ |
- |
|
$ |
97,109 |
|
February 27, 2014 |
|
200,000 |
|
|
- |
|
|
(200,000 |
) |
|
- |
|
|
- |
|
February 27, 2014 |
|
150,000 |
|
|
- |
|
|
(150,000 |
) |
|
- |
|
|
- |
|
February 28, 2014 |
|
100,000 |
|
|
- |
|
|
(100,000 |
) |
|
- |
|
|
- |
|
February 28, 2014 |
|
200,000 |
|
|
- |
|
|
(200,000 |
) |
|
- |
|
|
- |
|
February 28, 2014 |
|
220,000 |
|
|
- |
|
|
(220,000 |
) |
|
- |
|
|
- |
|
March 3, 2014 |
|
100,000 |
|
|
- |
|
|
(100,000 |
) |
|
- |
|
|
- |
|
March 3, 2014 |
|
200,000 |
|
|
- |
|
|
(200,000 |
) |
|
- |
|
|
- |
|
March 3, 2014 |
|
100,000 |
|
|
- |
|
|
(100,000 |
) |
|
- |
|
|
- |
|
March 3, 2014 |
|
230,000 |
|
|
- |
|
|
(230,000 |
) |
|
- |
|
|
- |
|
March 3, 2014 |
|
440,000 |
|
|
- |
|
|
(440,000 |
) |
|
- |
|
|
- |
|
March 15, 2014 |
|
846,154 |
|
|
- |
|
|
(788,932 |
) |
|
- |
|
|
57,222 |
|
July 22, 2014 |
|
- |
|
|
923,077 |
|
|
(103,542 |
) |
|
- |
|
|
819,535 |
|
August 22, 2014 |
|
- |
|
|
153,846 |
|
|
(96,549 |
) |
|
- |
|
|
57,297 |
|
October 31, 2014 |
|
- |
|
|
91,538 |
|
|
(91,538 |
) |
|
- |
|
|
- |
|
February 6, 2015 |
|
- |
|
|
115,385 |
|
|
- |
|
|
- |
|
|
115,385 |
|
February 24, 2015 |
|
- |
|
|
153,846 |
|
|
- |
|
|
- |
|
|
153,846 |
|
March 3, 2015 |
|
- |
|
|
44,615 |
|
|
- |
|
|
- |
|
|
44,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,247,908 |
|
$ |
1,482,307 |
|
$ |
(3,385,297 |
) |
$ |
- |
|
$ |
1,344,918 |
|
Less: Debt discount |
|
2,797,850 |
|
|
|
|
|
|
|
|
|
|
|
1,044,031 |
|
Net
Convertible promissory Note |
|
450,058 |
|
|
|
|
|
|
|
|
|
|
|
300,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion |
$ |
450,058 |
|
|
|
|
|
|
|
|
|
|
$ |
300,887 |
|
Long term portion |
$ |
- |
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
On February 13, 2013, the Company entered into a securities
purchase agreement with one investor. Pursuant to the terms of the agreement,
the investor acquired a convertible promissory note with an aggregate face value
of $1,100,000, at an issuance discount of $100,000; resulting in $1,000,000 net
proceeds to the Company.
As of June 30, 2015, total net proceeds of $675,000 (June 30,
2014 - $675,000) were received with an issuance discount of $67,500 (June 30,
2014 - $67,500) for an aggregate face value of $742,500 (June 30, 2014 -
$742,500). During the year ended June 30, 2015, $393,341 (June 30, 2014 -
$419,272) in face value of the note including interest was converted to
1,298,590 (June 30, 2014 3,541) common shares in accordance with the terms of
the agreement.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
There is no guarantee the investor will make additional payments. The face value of $67,913 is due on February 13, 2016 and carries a one-time interest rate of 5% over the term of note, with an effective interest rate of 171.61% . The note is
convertible at the lower of $1,000.00 and 50% (70% at issuance) of the lowest reported sales price of the common stock for the 20 days immediately prior to conversion date subject to various prescribed conditions. The convertible note has a
fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in
accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $1,060,714. During the year ended June 30, 2015, an interest expense of $(9,358) (June 30, 2014 -
$7,409) was accrued.
Effective February 27, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000
due on August 27, 2014 and carries an interest rate of 12% per annum over the term of note, with an effective interest rate of 1220.64% . The note is convertible at the lower of 50% discount to the average of the three lowest bids on the 20 days
before the date this note executed and 50% discount to the average of the three lowest bids during the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not
convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than
have its conversion feature bifurcated and reported separately. The fair value at issuance was $200,000. During the year ended June 30, 2015, $205,984 (June 30, 2014 - $Nil) in face value of the note including interest was converted to
2,598 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the year.
Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000
due on August 28, 2015 and carries a one-time interest rate of 15% over the term of note, with an effective interest rate of 268.24% . The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so
the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and
reported separately. The fair value at issuance was $100,000. On September 4, 2014, the note was transferred to another investor for additional cost of $17,250, changing the note maturity to on-demand and interest rate of 12% per annum.
During the year ended June 30, 2015, $126,172 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 24,474 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully
converted during the year.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Effective February 27, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $75,000
due on February 27, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible at the investor’s option at any time after 180 days at a price
equal to 50% of the lowest bids price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion
feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported
separately. The fair value at issuance was $150,000. During the year ended June 30, 2015, $155,145 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 28,087 (June 30, 2014 - Nil) common shares in
accordance with the terms of the agreement. The note was fully converted during the year.
Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $125,500
with 15% prepaid interest per annum, resulting in $100,000 net proceeds to the Company due on August 28, 2015, with an effective interest rate of 227.33% . The note is convertible at the lower of 50% discount of the lowest closing price for the
20 days prior to date of the purchase agreement or the voluntary conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the
conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported
separately. The fair value at issuance was $200,000. During the year ended June 30, 2015, $225,500 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 28,763 (June 30, 2014 - Nil) common shares in
accordance with the terms of the agreement. The note was fully converted during the year.
Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $110,000,
at an issuance discount of $10,000; resulting in $100,000 net proceeds to the Company. The note is due on September 1, 2014 and carries a one-time interest rate of 12% over the term of the note, with an effective interest rate of 781.10% .
The note is convertible at the lower of $300 or 50% of the lowest trade during the 25 consecutive trading days immediately prior to the conversion date of the Note. The convertible note has a fixed stated principal amount but is not convertible
into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its
conversion feature bifurcated and reported separately. The fair value at issuance was $220,000. On September 1, 2014, maturity default interest of $28,865 was accrued on the outstanding balance of the note pursuant to the terms of the
agreement. During the year ended June 30, 2015, $283,190 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 465,857 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note
was fully converted during the year.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000 due on
March 5, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible at the investor’s option at any time after 180 days at a price equal to
50% of the lowest closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion
feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported
separately. The fair value at issuance was $100,000. During the year ended June 30, 2015, $102,596 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 2,124 (June 30, 2014 - Nil) common shares in
accordance with the terms of the agreement. The note was fully converted during the year.
Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due
on September 3, 2014 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 1220.64% . The note is convertible at a 50% discount of the lowest closing price for the 20 days prior to date of the
purchase agreement or the voluntary conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an
imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at
issuance was $200,000. During the year ended June 30, 2015, $207,335 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 16,402 (June 30, 2014 - Nil) common shares in accordance with the terms of the
agreement. The note was fully converted during the year.
Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000 due on
March 4, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible at the investor’s option at any time after 180 days at a price equal to
50% of the lowest closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion
feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported
separately. The fair value at issuance was $100,000. During the year ended June 30, 2015, $102,759 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 3,450 (June 30, 2014 - Nil) common shares in
accordance with the terms of the agreement. The note was fully converted during the year.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $115,000, at
an issuance discount of $15,000; resulting in $100,000 net proceeds to the Company. The note is due on April 1, 2015 and carries an interest rate of 15% per annum over the term of the note, with an effective interest rate of 361.67% . The
note is convertible at the lower of $240 or 50% of the lowest trade during the 20 consecutive trading days immediately prior to the conversion date of the Note. The convertible note has a fixed stated principal amount but is not convertible into
a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its
conversion feature bifurcated and reported separately. The fair value at issuance was $230,000. During the year ended June 30, 2015, $246,605 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 983,713
(June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the year.
Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $220,000, at
an issuance discount of $20,000; resulting in $200,000 net proceeds to the Company. The note is due on September 3, 2014 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 1220.64% .
The note is convertible at a 50% discount of the lowest closing price for the 20 trading days immediately prior to (i) date of the purchase agreement, or (ii) the voluntary conversion of the Note. The convertible note has a fixed stated principal
amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC
480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $440,000. During the year ended June 30, 2015, $453,200 (June 30, 2014 - $Nil) in face value of the note including
interest was converted to 49,640 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the year.
Effective March 15, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $550,000, at
an issuance discount of $50,000; resulting in $500,000 net proceeds to the Company. The note is due on September 15, 2015 and carries an interest rate of 15% per annum over the term of the note, with an effective interest rate of 207.18% .
The note is convertible at a 50% (35% at issuance) discount of the lowest closing price for the 20 trading days immediately prior to (i) date of the purchase agreement, or (ii) the voluntary conversion of the Note. The convertible note has a fixed
stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance
with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $846,154. During the year ended June 30, 2015, $830,977 (June 30, 2014 - $Nil) in face value of the note
including interest was converted to 1,997,222 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the year ended June 30, 2015, an interest expense of $6,279 (June 30, 2014 - $24,063) was accrued.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Effective July 22, 2014, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $600,000 due on
January 22, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% .
As of December 31, 2014, total net proceeds of $600,000 were received. The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately prior to (i) the closing date on July 22, 2014 or (ii) 65%
of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion
feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported
separately. The fair value at issuance was $923,077. During the year ended June 30, 2015, $103,543 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 988,035 (June 30, 2014 - Nil) common shares in
accordance with the terms of the agreement. During the year ended June 30, 2015, an interest expense of $54,990 (June 30, 2014 - $Nil) was accrued.
Effective August 22, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due
on February 23, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 219.75% . The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days
immediately prior to (i) the closing date on July 22, 2014 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but
is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather
than have its conversion feature bifurcated and reported separately. The fair value at issuance was $153,846. During the year ended June 30, 2015, $109,414 (June 30, 2014 - $Nil) in face value of the note including interest was converted
to 700,136 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the year ended June 30, 2015, an interest expense of $(1,106) (June 30, 2014 - $Nil) was accrued.
Effective October 31, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $59,500 due
on October 31, 2016 and carries a one-time interest rate of 12% over the term of the note, with an effective interest rate of 202.17% . The note is convertible at the lower of (i) $20 or (ii) 65% of the lowest reported sale price for the 20 days
prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative.
However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $91,538.
During the year ended June 30, 2015, $98,679 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 832,154 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully
converted during the year.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Effective February 6, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $75,000 due
on August 6, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% . The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately
prior to (i) the closing date on February 3, 2015 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not
convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than
have its conversion feature bifurcated and reported separately. The fair value at issuance was $115,385. During the year ended June 30, 2015, an interest expense of $3,750 was accrued.
Effective February 24, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000
due on August 24, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% . The note is convertible at the lower of 65% of the lowest reported sale price for the 25 trading days
immediately prior to (i) the closing date on February 24, 2015 or (ii) 65% of the lowest reported sale price for the 25 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount
but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14
rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $153,846. During the year ended June 30, 2015, an interest expense of $4,500 was accrued.
Effective March 3, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $29,000 due on
March 3, 2016 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 445.74% . The convertible note is convertible at the investor’s option at any time at a price equal to 65% of the lowest
closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is
considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair
value at issuance was $44,615. During the year ended June 30, 2015, an interest expense of $967 was accrued.
Warrants issued along with Convertible Promissory Notes
Along with the promissory note issued on February 13, 2013, the Company issued warrants for 135 shares of the Company at an exercise price of $740.00 expiring February 13, 2018 (exercised), 66 shares of the Company at an exercise price of
$760.00 expiring April 24, 2018 (exercised), 74 shares of the Company at an exercise price of $672.00 expiring June 4, 2018 (exercised), 100 shares of the Company at an exercise price of $500.00 expiring June 27, 2018 (exercised), 84
shares of the Company at an exercise price of $896.00 expiring August 14, 2018 (exercised), 417 shares of the Company at an exercise price of $240.00 expiring December 10, 2018 (exercised), 179 shares of the Company at an exercise price of
$280.00 expiring February 20, 2019 and 952 shares of the Company at an exercise price of $210.00 expiring April 16, 2019 respectively.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Along with the promissory note entered on September 16, 2013, the Company issued warrants for 694 shares of the Company at an exercise price of $360.00 and warrants for 926 shares of the Company at an exercise price of $272.00 for a period
of five years. The warrant was fully exercised during the year.
Along with the promissory note entered on February 27, 2014, the Company issued warrants to acquire a total of 278 shares of the Company for a period of five years at an exercise price of $360.00.
Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 1,289 shares of the Company for a period of 180 days at an exercise price of $240. The warrant expired during the year.
Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 370 shares of the Company for a period of five years at an exercise price of $270.00. The warrant was fully exercised during the year.
Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 2,578 shares of the Company for a period of five years at an exercise price of $240.00. The warrant was fully exercised during the
year.
Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 235 shares of the Company for a period of five years at an exercise price of $212.00.
Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 500 shares of the Company for a period of three years at an exercise price of $200.00. The warrant was fully exercised during the year.
Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 235 shares of the Company for a period of five years at an exercise price of $212.00.
Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 417 shares of the Company for a period of five years at an exercise price of $240.00. The warrant was fully exercised during the year.
Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 1,000 shares of the Company for a period of three years at an exercise price of $200.00. The warrant was partially exercised during the
year.
Along with the promissory note entered on March 15, 2014, the Company issued warrants to acquire a total of 4,583 shares of the Company for a period of three years at an exercise price of $240.00.
Along with the promissory note entered on July 22, 2014, the Company issued warrants to acquire a total of 4,200 shares of the Company for a period of five years at an exercise price of $160.00.
Along with the promissory note entered on August 22, 2014, the Company issued warrants to acquire a total of 538 shares of the Company for a period of five years at an exercise price of $112.00.
Along with the promissory note entered on September 19, 2014, the Company issued warrants to acquire a total of 538 shares of the Company for a period of five years at an exercise price of $112.00.
Along with the promissory note entered on February 6, 2015, the Company issued warrants to acquire a total of 13,828 shares of the Company for a period of five years at an exercise price of $6.40.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
Derivative Liability
The warrants bear a cashless exercise provision. The warrants also include anti-dilution protection with respect to lower priced issuances of common stock or securities convertible or exchangeable into common stock, which provision resulted in
derivative liability treatment under ASC topic 815-10-55. Fair values at issuance totaled $669,682, $1,126,054, $709,074 for warrants issued along with the promissory note on February 28, 2013, March 1, 2013, and September 16, 2013
respectively. Fair values at issuance for warrants issued on February 27, 2014, February 28, 2014, March 3, 2014, March 15, 2014, April 16, 2014, July 22, 2014, August 22, 2014, February 6, 2015 totaled $58,966, $938,833, $1,732,432,
$1,267,156, $199,917, $634,669, $162,588, and $940,054 respectively.
On July 9, 2014, 694 warrants were exercised for 2,429 common shares of the Company at a deemed price of $48.57 in accordance with the terms of the agreement. A gain of $15,276 was recorded when the warrants were valued prior to the warrants
exercise.
On July 30, 2014, 2,578 warrants were exercised for 4,528 common shares of the Company at a deemed price of $85.34 in accordance with the term of the agreement. A gain of $108,275 was recorded when the warrants were valued prior to the
warrants exercise.
On August 5, 2014, 271 warrants were exercised for 5,161 common shares of the Company at a deemed price of $7.99 in accordance with the term of the agreement. A gain of $10,725 was recorded when the warrants were valued prior to the warrants
exercise.
On August 8, 2014, 926 warrants were exercised for 2,226 common shares of the Company at a deemed price of $61.34 in accordance with the term of the agreement. A gain of $41,112 was recorded when the warrants were valued prior to the
warrants exercise.
On August 12, 2014, 417 warrants were exercised for 800 common shares of the Company at a deemed price of $74.94 in accordance with the terms of the agreement. A gain of $20,000 was recorded when the warrants were valued prior to the
warrants exercise.
On August 27, 2014, 1,289 warrants expired in accordance with the terms of the agreement.
On September 4, 2014, 25 warrants were exercised for 146 common shares of the Company at a deemed price of $15.92 in accordance with the terms of the agreement. A gain of $1,490 was recorded when the warrants were valued prior to the
warrants exercise.
On September 15, 2014, 146 warrants were exercised for 2,737 common shares of the Company at a deemed price of $8.11 in accordance with the terms of the agreement. A gain of $5,777 was recorded when the warrants were valued prior to the
warrants exercise.
On March 16, 2015, 141 warrants were exercised for 36,175 common shares of the Company at a deemed price of $0.02 in accordance with the terms of the agreement. A loss of $644 was recorded when the warrants were valued prior to the warrants
exercise.
On April 14, 2015, 500 warrants were exercised for 5,385 common shares of the Company at a deemed price of $0.09 in accordance with the terms of the agreement. A gain of $94,809 was recorded when the warrants were valued prior to the
warrants exercise.
On April 16, 2015, 230 warrants were exercised for 42,417 common shares of the Company at a deemed price of $0.004 in accordance with the terms of the agreement. A gain of $70,885 was recorded when the warrants were valued prior to the
warrants exercise.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
The Company used the Lattice Model for valuing warrants using
the following assumptions:
|
June
30, 2015 |
June
30, 2014 |
|
|
|
Risk-free interest rates |
1.55% - 1.85% |
1.39% - 1.77% |
Term |
180 days 5 years |
180 days 5 years |
Dividend yield |
0% |
0% |
Underlying stock prices |
$0.12 - $151 |
$0.42 |
Volatilities |
294% - 315% |
278% - 489% |
At June 30, 2015, the warrants were valued at $3,134 (June 30,
2014 - $2,832,988) resulting in a gain of $3,259,362 (June 30, 2014 -
$2,650,532). The corresponding debt discount of the promissory notes was
accreted to interest expense over the terms of notes of 3 years, 1 year, 18
months and 6 months respectively. During the year ended June 30, 2015, an
accretion of $149,170 (June 30, 2014 - $412,447) was recognized as interest
expense.
|
|
Warrants |
|
|
Weighted |
|
|
Weighted |
|
|
|
Outstanding |
|
|
Average |
|
|
Average |
|
|
|
|
|
|
Exercise |
|
|
Remaining |
|
|
|
|
|
|
Price |
|
|
life |
|
Balance, June 30, 2013 |
|
1,283 |
|
$ |
718.38 |
|
|
4.71 years |
|
Warrants issued |
|
15,288 |
|
|
234.85 |
|
|
2.63 years |
|
Exercised |
|
(1,367 |
) |
|
729.26 |
|
|
- |
|
Cancelled |
|
- |
|
|
- |
|
|
- |
|
Expired |
|
- |
|
|
- |
|
|
- |
|
Balance, June 30, 2014 |
|
15,204 |
|
$ |
242.57 |
|
|
2.62 years |
|
Warrants issued |
|
19,104 |
|
|
236.92 |
|
|
4.46 years |
|
Exercised |
|
(5,927 |
) |
|
257.08 |
|
|
- |
|
Cancelled |
|
- |
|
|
- |
|
|
- |
|
Expired |
|
(1,289 |
) |
|
240.00 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30,
2015 |
|
27,092 |
|
$ |
100.98 |
|
|
3.79
years |
|
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
6. Convertible Promissory Notes - Continued
The following table provides a summary of changes in fair value
of the Companys Level 3 financial liabilities as of June 30, 2015 and 2014:
|
|
Derivative |
|
|
|
Liability |
|
Balance, June 30, 2013 |
$ |
513,375 |
|
Initial fair value of warrant derivatives at note issuances |
|
5,558,520 |
|
Fair value of warrant exercised |
|
(588,375 |
) |
Mark-to-market at
June 30, 2014 - Embedded debt derivatives |
|
(2,650,532 |
) |
Balance, June 30, 2014 |
$ |
2,832,988 |
|
Initial fair value of warrant derivatives at note issuances |
|
1,737,309 |
|
Fair value of warrant exercised |
|
(767,982 |
) |
Mark-to-market at
June 30, 2015 - Embedded debt derivatives |
|
(3,799,183 |
) |
Balance, June 30, 2015 |
$ |
3,134 |
|
|
|
|
|
Net gain for the period included in earnings relating to
the liabilities held at June 30, 2015 |
$ |
3,799,183 |
|
7. Related Party Transactions
During the year ended June 30, 2015, the Company incurred
consulting fees of $157,086 (June 30, 2014 - $348,550) with directors and
officers out of which $58,990 were paid by issuance of 2,167 shares of the
Company common stock.
On December 22, 2014, the Company entered into an short swing
settlement agreement with a director wherein in exchange for forbearance of
legal action by the Company, the director agreed to disgorge the short swing
profit of the Company as of the effective date of the agreement. As of June 30,
2015, an aggregate amount of $80,523 was paid in settlement for this agreement.
As of June 30, 2015, the Company repaid to a director for a
non-interest bearing demand loan of $47,537 (Note 9) (June 30, 2014 payable
$45,332).
These transactions are in the normal course of operations and
are measured at the exchange amount of consideration established and agreed to
by the related parties.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
8. Going Concern and Liquidity Considerations
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course
of business. As at June 30, 2015, the Company had a working capital deficiency of $436,680 (June 30, 2014 - $3,279,889) and an accumulated deficit of $43,267,064 (June 30, 2014 - $40,821,871). The Company intends to fund operations
through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.
The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development and sale of ore
reserves.
In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
9. Commitments and Contingencies
Employment Agreements
On January 12, 2014, the Company entered into an employment agreement with a director and officer. Commencing on January 12, 2014, the director and officer will be employed for 24 months ending on January 12, 2016. Pursuant to the agreement, annual
salary of US$120,000 is payable monthly in cash or if the Company does not have available cash, in shares of the Company’s common stock.
Consulting Agreements
On January 1, 2014, the Company entered in a consulting agreement with a consultants to provide services as members of the Board of Directors in regards to the Company’s management and operations. The compensation for the services to be
provided will be $12,000 payable monthly in cash or if the Company does not have available cash, in shares of the Company’s common stock. The consulting agreement was amended on October 22, 2014 to include an additional aggregate of
$30,000 payable as of October 22, 2014 in cash or in shares of the Company’s common stock, and changed the term of agreement from 12 months to 10 months. Effective November 1, 2014, the consultant resigned as member of the Board of
Directors.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
9. Commitments and Contingencies - Continued
On April 28, 2014, the Company entered into a consulting agreement with a consultant to provide services as members of the Board of Directors in regards to the Company’s management and operations. Pursuant to the terms of the agreement, the
consultant will receive compensation of $12,000 in unregistered restricted common shares of the Company's common stock at a deemed value of $200.0 per share, issuable on May 15, 2014, effective April 28, 2014 to April 27, 2015. The
consultant resigned as member of the Board of Directors and these shares were not issued.
On May 30, 2014, the Company entered into a consulting agreement with a consultant to provide services as member of the Board of Directors in regards to the Company’s management and operation. The compensation for the services to be provided
will be $10,000 per month payable in common stock of the Company from a period of six months from the effective date of May 30, 2014.
On August 1, 2014, the Company entered into a consulting agreement with a consultant to provide advice relative to corporate and business services and to perform other related activities. Pursuant to the terms of the agreement, the Company will
issue 500 common shares of the Company valued at $5,000. These shares were issued in full effective October 22, 2014.
Lease Commitment
On May 15, 2014, the Company entered into a sublease agreement for a term of twenty four and one half months and expiring on May 31, 2016. Future minimum rental payments required under operating lease (exclusive of other additional rent payments)
are $30,044.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
9. Commitments and Contingencies - Continued
Litigation
The Company filed a complaint against Glottech-USA involving a
dispute over a contract for the assembly and delivery of certain equipment
contractually promised by Glottech-USA, but not timely delivered in a manner
required under the relevant contract(s). Although the Company previously sought
equitable relief, the Company amended its Complaint to assert claims for damages
against Glottech-USA. After a hearing in April of 2013, the Court of Common
Pleas stayed all activity in the lawsuit against Glottech-USA pending
clarification of the dissolution action in Mississippi. The lawsuit was stayed
until December of 2013 and there has been no substantial activity in the case
since that time. There are no claims for damages pending against the Company.
In April 2014, the Company signed a release and settlement
agreement with OHare Energy Services Inc. (OHare) regarding unpaid fees and
termination of a Non-Circumvention, Non-Disclosure and Fee Agreement dated April
19, 2013. Pursuant to the release and settlement agreement, the Company will pay
to OHare:
|
i. |
$100,000 for acquisition severance payment |
|
ii. |
$35,000 within 60 days of the date the option to purchase
additional 25% of Tero Oilfield Services Ltd. (Tero) is
exercised |
As of June 30, 2015, the Company paid $75,000 (June 30, 2014 -
$50,000) of the $100,000 acquisition severance payment and has not exercise the
option to purchase additional investment in Tero.
On December 23, 2014, a member of the Board of Directors made
demand for repayment of the debt by the company. In connection with the
assignment of debt agreement and the demand, Mr. Walsh and the Company entered
into a settlement agreement dated December 23, 2014 wherein the Company is to
repay the debt to Mr. Walsh in full (Note 7). The Company also agreed to pay an
aggregate of $150,000 to Mr. Walsh as a performance bonus for the services
provided by Mr. Walsh for the period from August 2013 to March 2014 as related
to the acquisition of Tero Oilfield Services Ltd. due on the following terms:
|
i. |
an aggregate of $50,000 due immediately; and (paid
$35,000) |
|
ii. |
an aggregate of $100,000 bearing no interest and due on
the earlier of: |
|
a. |
at the sole discretion of our company; or |
|
b. |
the date of the sale, merger, amalgamation or other
business combination or reorganization of our
company. |
On January 29, 2015, a lawsuit was filed against the Company
for reimbursement of costs and disbursements including reasonable attorneys,
accountants and expert witness fees, in relations to the complaint for recovery
of short-swing profits. On March 26, 2015, agreement was reached by all parties
involved that upon payment $15,400, all outstanding claims will be settled and
forever discharged.
From time to time we may be a defendant and plaintiff in
various other legal proceedings arising in the normal course of our business.
Except as disclosed above, we are currently not a party to any material legal
proceedings or government actions, including any bankruptcy, receivership, or
similar proceedings. In addition, we are not aware of any known litigation or
liabilities involving the operators of our properties that could affect our
operations. Furthermore, as of the date of this Annual Report, our management is
not aware of any proceedings to which any of our directors, officers, or
affiliates, or any associate of any such director, officer, affiliate, or
security holder is a party adverse to our company or has a material interest
adverse to us.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
10. Loan Receivable
Secured Bridge Loan Agreement
On December 18, 2013, the Company entered into an agreement with GD Glottech International Ltd (“GDGI”) whereby the Company loaned to GDGI the sum of $20,000. GDGI will repay the total amount of the loan plus interest in the amount
of $333.34 (representing a 10% annual interest rate), within sixty (60) days from the receipt of the loan funds or within five (5) days of Sonic Cavitation, LLC receiving a 5% Capital Contribution.
On April 21, 2014, the Company entered into an amended agreement with Sonic Cavitation, whereby Sonic Cavitation agreed to facilitate the construction of one sonic cavitation generator. The Company agreed to pay Sonic Cavitation a consulting fee of
$20,000 upon execution of the agreement and forgive the sum of $20,000 debt upon delivery of the prototype by Sonic Cavitation. The agreement has been executed, however the delivery of the prototype has not yet fulfilled.
11. Investment Held for Sale
Tero Oilfield Services Ltd (“Tero”)
On March 1, 2014, the Company acquired a 50% interest in Tero Oilfield Services Ltd. (“Tero”), a private company, in exchange for an aggregate of CDN$1,000,680 (US$906,700).
The Company has been granted an option to acquire an additional 25% of the shares in Tero for $500,000 by February 28, 2015.
Based on evaluation of the fair value of the investment less costs to sell, the fair value was less than the carrying value. The Company’s evaluation of the investment resulted in a total impairment charge of US$624,429 for the year ended
June 30, 2015.
On May 1, 2015, the Company entered into a Share Purchase Agreement with an individual to dispose the 50% interest in Tero for the purchase price of US$300,000. The purchase price shall be paid in two installments, with one installment of
US$100,000 paid on the closing date of May 15, 2015 and the balance US$200,000 on or before June 1, 2015. As at June 30, 2015, the Company recognized a loss on sale of investment held for sale of $488.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
12. Discontinued Operations
Subsequent to the year ended June 30, 2015 on September 4,
2015, the Company entered into an Asset Purchase agreement whereby the Company
sells the net assets of Alta Disposal Morinville Ltd. (of which the Company had
acquired 51% interest on October 18, 2013) for total purchase price of
$10,000CDN.
Operating results for the year ended June 30, 2015 for Alta
Disposal Morinville Ltd. are presented as discontinued operations and the assets
and liabilities classified as held for sale are presented separately in the
consolidated balance sheet. An impairment of $60,178 has been accounted for
under discontinued operations in order to reduce the carrying amount of the net
assets to their fair value less costs to sell.
A breakdown of the discontinued operations is presented as
follow:
Consolidated Statements of Operations and Comprehensive Loss
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
Revenue |
$ |
72,577 |
|
$ |
35,285 |
|
Selling, general and administrative |
|
(445,153 |
) |
|
(348,185 |
) |
Impairment of net assets |
|
(60,178 |
) |
|
- |
|
|
|
|
|
|
|
|
Loss from discontinued
operations |
$ |
(432,754 |
) |
$ |
(312,900 |
) |
|
|
|
|
|
|
|
Consolidated Balance
Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
46,731 |
|
$ |
12,100 |
|
Receivable, net |
|
28,160 |
|
|
26,419 |
|
Prepaid expenses |
|
- |
|
|
2,464 |
|
Impairment of net assets |
|
(60,178 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
14,713 |
|
|
40,983 |
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
6,696 |
|
$ |
795 |
|
13. Subsequent Events
Issuances of Common Shares
On July 8, 2015, the Company issued 125,000 common shares at a
deemed price of $0.04 per share for promissory note conversion.
On July 10, 2015, the Company issued 201,465 common shares at a
deemed price of $0.04 per share for promissory note conversion.
On July 21, 2015, the Company issued 250,000 common shares at a
deemed price of $0.04 per share for promissory note conversion.
On July 22, 2015, the Company issued 100,000 common shares at a
deemed price of $0.05 per share for promissory note conversion.
On July 29, 2015, the Company issued 298,269 common shares at a
deemed price of $0.04 per share for promissory note conversion.
Lithium Exploration Group, Inc. |
Notes to Consolidated Financial Statements |
June 30, 2015 and 2014 |
13. Subsequent Events (continued)
On August 17, 2015, the Company issued 250,000 common shares at a deemed price of $0.04 per share for promissory note conversion.
On September 11, 2015, the Company issued 80,801 common shares at a deemed price of $0.04 per share for promissory note conversion.
On September 11, 2015, the Company issued 434,084 common shares at a deemed price of $0.03 per share for promissory note conversion.
On September 15, 2015, the Company issued 438,000 common shares at a deemed price of $0.03 per share for promissory note conversion.
On September 18, 2015, the Company issued 486,623 common shares at a deemed price of $0.02 per share for promissory note conversion.
On September 18, 2015, the Company issued 475,000 common shares at a deemed price of $0.03 per share for promissory note conversion.
On September 18, 2015, the Company issued 394,231 common shares at a deemed price of $0.03 per share for promissory note conversion.
On October 8, 2015, the Company issued 8,044 common shares at a deemed price of $0.0001 per share to the depository trust as a result of the reverse stock split.
On October 28, 2015 the Company issued 554,000 common shares
at a deemed price of $0.01 per share for promissory note conversion.
Issuances of Preferred Shares
On June 22, 2015, the Company designated 250,000 of its 100,000,000 authorized shares of Preferred Stock as Series “A” Preferred Stock. The Series “A’ Preferred Stock, par value $0.001, ranks senior to the common stock and carries general voting rights with the common stock at the rate of 62 votes per share. The Series “A” Preferred Stock will be deemed cancelled within 1 year of issuance and is not entitled to share in dividends or other distributions. So long as any shares of Series “A” Preferred Stock are outstanding, the affirmative vote of not less than 75% of those outstanding shares of Series “A” Preferred Stock will be required for any change to articles of incorporation. On July 6, 2015, the Company issued 130,000 Series “A” preferred shares in consideration of the release and discharge of a first ranking general security interest over all current and future assets of Alta Disposal Ltd. that was granted to secure to the promissory note entered into on July 22, 2014.
Capital Stock
Effective September 9, 2015, the Company increase the authorized capital of its common shares from 2,000,000,000 common shares, par value $0.001 to 10,000,000,000 common shares, par value $0.001.
Convertible Promissory Notes
On August 3, 2015, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $36,000 due on February 3, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 9, 2015, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $30,000 due on September 9, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
On September 30, 2015, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible redeemable promissory note with an aggregate principal amount $27,000 due on September 30, 2016 which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at the lower of 65% discount of the lowest trading price for the 20 days prior to conversion date subject to various prescribed conditions.
On November 6, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $12,000 due on November 6, 2016, which amount includes an issuance discount of 10% and carries interest at the rate of 10% per annum after 12 months. The note is convertible at a 35% discount to the lowest sale price for the 20 days trading days immediately prior to (i) the date of the purchase agreement, or (ii) the voluntary conversion date, subject to various prescribed conditions.
Agreements
Effective September 4, 2015, the Company entered into an
Asset Purchase Agreement with Cancen Oil Canada whereby the Company agrees to
sell all right, title and interest of Alta Disposal Morinville Ltd. assets for
total purchase price of CAD$10,000 (approximately USD$7,531.25).
The Company has evaluated subsequent events from July 1, 2015, through the date of this report, and determined there are no other items to disclose.
Item
9.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements with our accountants related to
accounting principles or practices, financial statement disclosure, internal
controls or auditing scope or procedure during the two fiscal years and
subsequent interim periods.
Item
9A. Controls
and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, our
management evaluated the effectiveness of the design and operation of our
disclosure controls and procedures as of June 30, 2015.
Our management, with the participation of our president (our
principal executive officer, principal accounting officer and principal
financial officer), evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end
of the period covered by this report. Based on this evaluation, our president
(our principal executive officer, principal accounting officer and principal
financial officer) has concluded that, as of the end of such period, our
disclosure controls and procedures were not effective to ensure that information
that is required to be disclosed by us in the reports we file or submit under
the Exchange Act is (i) recorded, processed, summarized and reported, within the
time periods specified in the SECs rules and forms and (ii) accumulated and
communicated to our management, including our president (our principal executive
officer, principal accounting officer and principal financial officer), as
appropriate, to allow timely decisions regarding required disclosure.
Managements Report on Internal Control over Financial
Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial
reporting is a process designed by, or under the supervision of, our president
(our principal executive officer) and our chief financial officer (our principal
accounting officer and principal financial officer), to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements in accordance with GAAP. Internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of our company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of our company are being made only in accordance with
authorizations of management and directors of our company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our companys assets that could have a
material effect on the financial statements. Because of its inherent
limitations, internal control over financial reporting may not provide absolute
assurance that a misstatement of our financial statements would be prevented or
detected.
Further, the evaluation of the effectiveness of internal
control over financial reporting was made as of a specific date, and continued
effectiveness in future periods is subject to the risks that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management has conducted, with the participation of our
president (our principal executive officer) and our chief financial officer (our
principal accounting officer and principal financial officer), an evaluation of
the effectiveness of our internal control over financial reporting as of June
30, 2015 in accordance with the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control
Integrated Framework. Based on this assessment, management concluded that as
of June 30, 2014, our companys internal control over financial reporting was
not effective based on present company activity. Our company is in the process
of adopting specific internal control mechanisms with our board and officers
collaboration to ensure effectiveness as we grow. We are presently engaging an
outside consultant to assist in adopting new measures to improve upon our
internal controls. Future controls, among other things, will include more checks
and balances and communication strategies between the management and the board
to ensure efficient and effective oversight over company activities as well as
more stringent accounting policies to track and update our financial reporting.
51
This annual report does not include an attestation report from
our registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our registered
public accounting firm pursuant to rules of the Securities and Exchange
Commission that permit us to provide only the managements report in this annual
report.
Change in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting that occurred during our last fiscal year that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item
9B. Other
Information
On November 1, 2014, Bryan Kleinlein resigned as chief
financial officer or our company. Mr. Kleinlein's resignation was not the result
of any disagreement with our company regarding our operations, policies,
practices or otherwise.
On February 12, 2015, Brandon Colker resigned as a director of
our company. Mr. Colker's resignation was not the result of any disagreements
with our company regarding our operations, policies, practices or otherwise.
PART III
Item
10. Directors,
Executive Officers and Corporate Governance
All of the directors of our company hold office until the next
annual meeting of the stockholders or until their successors have been elected
and qualified. Our officers are appointed by our board of directors and hold
office until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
Name |
Positions
Held with the Company |
Age
|
Date First Elected
or Appointed |
Alexander Walsh |
President, Chief Executive
Officer and Director |
35 |
November 4, 2010 |
Business Experience
The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he was employed.
Alexander Walsh President, Chief Executive Officer,
Secretary, Treasurer and Director
Mr. Walsh was appointed president, chief executive officer,
secretary, treasurer, and director of our company in November 2010. From May
2008 to November of 2010, Alex Walsh was a management consultant at AW
Enterprises, LLC. AW Enterprises was established as a management consulting firm
assisting small and middle market businesses in expanding their revenue and
profits through strategic partnerships. Mr. Walshs efforts included strategic
planning for companies looking to raise capital and assisting clients with
forming strategic partnerships that could increase their revenue and profits.
From May 2006 to May 2008, Mr. Walsh was a small business consultant and
managing partner for Business Strategies Group. Business Strategies Group is a
highly specialized team focusing on providing employee benefits, retirement
programs, and insurance products to small and middle market companies.
Mr.Walsh attended DePauw University in Greencastle, Indiana
where he majored in economics and management.
52
Mr. Walsh was chosen as one of our directors due to his
background in venture capital, investor relations and corporate development.
Family Relationships
There are no family relationships among our directors or
officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or
executive officers has, during the past ten years:
1. |
been convicted in a criminal proceeding or been subject
to a pending criminal proceeding (excluding traffic violations and other
minor offences); |
2. |
had any bankruptcy petition filed by or against the
business or property of the person, or of any partnership, corporation or
business association of which he was a general partner or executive
officer, either at the time of the bankruptcy filing or within two years
prior to that time; |
3. |
been subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction or federal or state authority, permanently or temporarily
enjoining, barring, suspending or otherwise limiting, his involvement in
any type of business, securities, futures, commodities, investment,
banking, savings and loan, or insurance activities, or to be associated
with persons engaged in any such activity; |
4. |
been found by a court of competent jurisdiction in a
civil action or by the SEC or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated; |
5. |
been the subject of, or a party to, any federal or state
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated (not including any settlement
of a civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease- and-desist order, or removal or
prohibition order, or any law or regulation prohibiting mail or wire fraud
or fraud in connection with any business entity; or |
6. |
been the subject of, or a party to, any sanction or
order, not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or
any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member. |
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act requires our
executive officers and directors, and persons who own more than 10% of our
common stock, to file reports regarding ownership of, and transactions in, our
securities with the Securities and Exchange Commission and to provide us with
copies of those filings. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting persons, we
believe that during the year ended June 30, 2015, all filing requirements
applicable to its officers, directors and greater than 10% percent beneficial
owners were complied with, with the exception of the following:
Name |
Number of Late
Reports |
Number of Transactions
Not Reported on a Timely Basis |
Failure to
File Requested Forms |
Alexander Walsh(1) |
3 |
9 |
Nil |
(1) |
The named officer, director or greater than 10%
stockholder, as applicable, filed a late Form 4 Statement of Changes of
Beneficial Ownership of Securities. |
53
Audit Committee and Audit Committee Financial Expert
Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an "audit committee financial
expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent"
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.
We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.
Code of Ethics
We have adopted a Code of Ethics that applies to, among other
persons, our companys principal executive officers and senior financial
executives, as well as persons performing similar functions. As adopted, our
Code of Ethics sets forth written policies to promote:
- honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
- full, fair, accurate, timely and understandable disclosure in all reports
and documents that the Corporation files with, or submits to, the Securities
and Exchange Commission ("SEC") and in other public communications made by the
Corporation that are within the Senior Officers area of responsibility;
- compliance with applicable governmental laws, rules and regulations;
- the prompt internal reporting of violations of the Code; and
- accountability for adherence to the Code.
Our Code of Ethics and Business Conduct was filed with the
Securities and Exchange Commission as Exhibit 14.1 to our annual report on Form
10-KSB on September 28, 2007. We will provide a copy of the Code of Ethics and
Business Conduct to any person without charge, upon request. Requests can be
sent to: Lithium Exploration Group, Inc. 3200 N. Hayden Road, Suite 235,
Scottsdale, AZ 85251.
Item
11. Executive
Compensation
The particulars of the compensation paid to the following
persons:
|
(a) |
our principal executive officer; |
|
(b) |
each of our two most highly compensated executive
officers who were serving as executive officers at the end of the years
ended June 30, 2015 and 2014; and |
|
(c) |
up to two additional individuals for whom disclosure
would have been provided under (b) but for the fact that the individual
was not serving as our executive officer at the end of the years ended
June 30, 2014 and 2013, |
who we will collectively refer to as the named executive
officers of our company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:
54
SUMMARY COMPENSATION
TABLE |
Name and
Principal Position |
Year |
Salary ($) |
Bonus ($) |
Stock Awards
($) |
Option
Awards ($) |
Non-Equity Incentive Plan
Compensation ($) |
Change in
Pension Value and Nonqualified
Deferred Compensation Earnings
($) |
All
Other Compensation ($) |
Total ($) |
Alexander Walsh(1)
President,Chief
Executive Officer and
Director |
2015 2014
|
120,000 120,000
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
120,000 120,000
|
Bryan A. Kleinlein(2)
Former
Chief Financial Officer |
2015 2014
|
Nil 36,000
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
Nil Nil
|
77,990(4) 144,000(4) |
77,990
180,000
|
Alexander Koretsky(3)
Former
Chief Operating Officer |
2015 2014
|
N/A 26,800
|
N/A Nil
|
N/A Nil
|
N/A Nil
|
N/A Nil
|
N/A Nil
|
N/A
75,300(5) |
N/A 102,100 |
|
(1) |
Alexander Walsh was appointed president, chief executive
officer, chief financial officer and director on November 4,
2010. |
|
(2) |
Bryan A. Kleinlein was appointed Chief Financial Officer
on May 15, 2012 and resigned on November 1, 2014. |
|
(3) |
Alexander Koretsky was appointed Chief Operating Officer
on May 1, 2012 and, pursuant to the terms of a consulting agreement
between our company and Mr. Koretsky, his position ceased on February 1,
2014. |
|
(4) |
Consists of fees paid to International Compass LLC, a corporation
controlled by Bryan A. Kleinlein, for consulting services rendered. |
|
(5) |
Consists of consulting fees paid to Mr. Koretsky for consulting services
rendered. |
2014 Stock Option Plan
On July 22, 2014, our directors approved the adoption of the
2014 Stock Plan which permits our company to issue up to 20,000,000 shares of
our common stock to directors, officers, employees and consultants of our
company.
Stock Options/SAR Grants
During the period from inception to June 30, 2015, we did not
grant any stock options to our executive officers.
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Values
There were no options exercised during our fiscal year ended
June 30, 2015 and 2014 by any officer or director of our company.
Outstanding Equity Awards at Fiscal Year End
No equity awards were outstanding as of the year ended June 30,
2015.
55
Compensation of Directors
We reimburse our directors for expenses incurred in connection
with attending board meetings. We did not pay any directors fees during our
fiscal years ending June 30, 2015 and June 30, 2014, respectively.
We have no formal plan for compensating our directors for their
service in their capacity as directors. Directors are entitled to reimbursement
for reasonable travel and other out-of-pocket expenses incurred in connection
with attendance at meetings of our board of directors. Our board of directors
may award special remuneration to any director undertaking any special services
on our behalf other than services ordinarily required of a director.
Employment Contracts and Termination of Employment and
Change in Control Arrangements
Effective January 12, 2014, we entered into an employment
agreement with Alexander Walsh for provision of services as our president and
chief executive officer. The employment agreement will terminate on January 12,
2016. Pursuant to the terms of the employment agreement, Mr. Walsh will receive
an annual salary of $120,000 payable in monthly cash installments or, in the
event cash is unavailable, in shares of our companys common stock. The
employment agreement also provides for liability insurance and any travel and
out-of-pocket expenses incurred and approved by our company.
Also on January 12, 2012, we entered into consulting
agreements, effective April 27, 2011, with former directors, Brandon Colker and
Jonathan Jazwinski, to provide services on behalf of our company. Pursuant to
the terms of the consulting agreements, Mr. Colker and Mr. Jazwinski received
compensation payable of 150,000 shares of our company's common stock issuable at
the beginning of every year served during the term of their agreements. Mr.
Colkers consulting agreement terminated on April 27, 2014. Mr. Jazwinski
resigned as a director of our company on January 10, 2014 and, consequently, his
consulting agreement terminated.
On May 1, 2013, we entered into a consulting agreement with
Alexander Koretsky whereby, Mr. Koretsky has agreed to provide consulting duties
and services in the capacity as chief operating officer of our company and any
other consulting duties and services as may be requested by our company. As
compensation, our company has agreed to pay to Mr. Koretsky a salary of
$8,333.33 per month in cash, common shares of our company, or in both cash and
common shares of our company, at the sole discretion of our company. This
consulting agreement expired on January 31, 2014 and our company did not renew
this agreement. As a result, effective February 1, 2014, Mr. Koretsky no long
acts as chief operating officer of our company. Mr. Koretsky currently provides
consulting services to our company on a month to month basis and has since
received $35,500 in compensation as at June 30, 2015.
On January 1, 2014, we entered into a consulting agreement
effective January 1, 2014 for a term of 12 months with International Compass,
LLC for the services of Bryan Kleinlein as chief financial officer of our
company. As compensation, we agreed to pay to International Compass $12,000 per
month during the term of the agreement payable in cash and/or common shares of
our company that were previously registered on Form S-8 at our sole discretion.
The value of the shares of our company issued as compensation, if any, shall be
based on the volume weighted average trading closing price of the shares of our
company in the five (5) trading days immediately preceding the date(s) which the
shares are due. The January 1, 2014 consulting agreement with International
Compass replaces and supersedes our agreement with Mr. Kleinlein dated May 15,
2013 which was disclosed in our report on Form 8-K filed on March 29, 2013. The
consulting agreement was terminated on November 1, 2014 upon the resignation of
Mr. Kleinlein as chief financial officer or our company.
On April 28, 2014, we entered into a consulting agreement, with
our director, Brandon Colker, to provide services on behalf of our company.
Pursuant to the terms of the consulting agreement, Mr. Colker was to receive
compensation of $12,000 in unregistered restricted common shares of our
company's common stock at a deemed value of $0.05 per share and issuable on May
15, 2014. Our company has not yet issued these shares. This consulting agreement
supersedes and replaces the consulting agreement with Mr. Colker dated January
12, 2012 which expired on April 27, 2014. The April 28, 2014 consulting
agreement terminated on February 12, 2015 upon the resignation of Mr. Colker.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. Our directors and
executive officers may receive stock options at the discretion of our board of
directors in the future. We do not have any material bonus or profit sharing plans pursuant to
which cash or non-cash compensation is or may be paid to our directors or
executive officers, except that stock options may be granted at the discretion
of our board of directors.
56
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The following table sets forth, as of November 27, 2015,
certain information with respect to the beneficial ownership of our common stock
by each stockholder known by us to be the beneficial owner of more than 5% of
our common stock and by each of our current directors and executive officers.
Each person has sole voting and investment power with respect to the shares of
common stock, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the shares of common stock, except as otherwise indicated.
|
Amount and Nature of |
Percentage of |
Name and Address of Beneficial Owner |
Beneficial Owner(1) |
Class |
Alexander Walsh(2) |
2,095 common |
* |
320 E. Fairmont Dr., |
|
|
Tempe, AZ, 85282 |
|
|
All Officers and Directors As a Group |
2,095 common |
*% |
|
Amount and Nature of |
Percentage of |
Name and Address of Beneficial Owner |
Beneficial Owner(1) |
Class |
Blue Citi LLC
440 East 79th Street |
|
* |
Suite 4M/CO MUSS |
8,090,049(4) |
69.32% |
New York, NY 10075 |
|
|
Other holders of 5% or more |
8,090,049 Common Shares(4) |
69.32% |
*represents an amount less than 1%
|
(1) |
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on December 2, 2015. As of December 2, 2015, there were11,669,869 shares of our company’s common stock issued and outstanding. |
|
(2) |
Alexander Walsh is our companys president, chief
executive officer, chief financial officer and
director. |
|
(3) |
Robert Malin and Linda Malin share voting and dispositive control over
securities held by Blue Citi LLC. |
|
(4) |
Includes: (i) approximately 30,049 shares of unissued common stock which may be purchased within 90 days upon conversion of outstanding convertible promissory notes; and (ii) voting rights underlying 130,000 shares of Series “A” Preferred Stock which carry general voting rights with the common stock at the rate of 62 votes per share. The Series “A” Preferred Stock will be deemed cancelled on July 13, 2015, are not entitled to share in dividends or other distributions, and are not convertible into shares of common stock. |
Changes in Control
We are unaware of any contract or other arrangement or
provisions of our Articles or Bylaws the operation of which may at a subsequent
date result in a change of control of our company. There are not any provisions
in our Articles or Bylaws, the operation of which would delay, defer, or prevent
a change in control of our company.
Item
13. Certain
Relationships and Related Transactions, and Director Independence
Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest.
The promoters of our company are our directors and
officers.
Director Independence
We currently act with one director, consisting of Alexander
Walsh. We have determined that we do not have an independent director as
defined in NASDAQ Marketplace Rule 4200(a)(15).
57
We do not have a standing audit, compensation or nominating
committee, but our entire board of directors act in such capacity. We believe
that our directors are capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. Our directors do not believe that it is necessary to have an audit
committee because we believe that the functions of an audit committee can be
adequately performed by the board of directors. In addition, we believe that
retaining additional independent directors who would qualify as an audit
committee financial expert would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development.
Item
14. Principal
Accounting Fees and Services
During the fiscal years ended June 30, 2015 and 2014, we
retained our independent auditor, RBSM LLP, Accountants & Advisors, to
provide services in the following categories and amounts:
|
Year Ended
June 30,
|
2015
($) |
2014
($) |
Audit Fees(1) |
45,000 |
100,500 |
Audit Related Fees(2) |
Nil |
Nil |
Tax Fees(3) |
Nil |
900 |
All Other Fees(4) |
Nil |
Nil |
Total |
45,000 |
101,400 |
|
(1) |
Audit fees consist of fees incurred for professional
services rendered for the audit of our financial statements, for reviews
of our interim financial statements included in our quarterly reports on
Form 10-Q and for services that are normally provided in connection with
statutory or regulatory filings or engagements. |
|
(2) |
Audit related fees consists of fees billed for
professional services that are reasonably related to the performance of
the audit or review of our financial statements, but are not reported
under "Audit Fees". |
|
(3) |
Tax fees consist of fees billed for professional services
relating to tax compliance, tax planning and tax advice. |
|
(4) |
All other fees consist of fees billed for all other
services. |
Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.
Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.
PART IV
Item
15. Exhibits,
Financial Statement Schedules
(a) |
Financial Statements |
|
(1) |
Financial statements for our company are listed in the
index under Item 8 of this document |
|
(2) |
All financial statement schedules are omitted because
they are not applicable, not material or the required information is shown
in the financial statements or notes thereto. |
|
|
|
(b) |
Exhibits |
58
Exhibit |
|
Number |
Description |
(3) |
(i) Articles
of Incorporation; and (ii) Bylaws |
3.1 |
Articles of Incorporations (incorporated by reference to
our Registration Statement on Form SB-2 filed on September 20, 2006) |
3.2 |
Bylaws (incorporated by reference to our Registration
Statement on Form SB-2 filed on September 20, 2006) |
3.3 |
Articles of Amendment dated May 31, 2006 (incorporated by
reference to our Current Report on Form 8-K filed on April 21, 2009) |
3.4 |
Certificate of Amendment dated April 8, 2009
(incorporated by reference to our Current Report on Form 8- K/A filed on
April 23, 2009) |
3.5 |
Articles of Merger dated November 17, 2010 (incorporated
by reference to our Current Report on Form 8-K filed on December 7, 2010) |
3.6 |
Certificate of Amendment dated October 17, 2014
(incorporated by reference to our Quarterly Report on Form 10-Q/A filed on
December 2, 2014) |
3.7 |
Articles of Incorporation of Alta Disposal Morinville
Ltd. (formerly Blue Tap Resources Inc.) (incorporated by reference to our
Current Report on Form 8-K filed on October 24, 2013) |
3.8 |
Certificate of Amendment of Alta Disposal Morinville Ltd.
(formerly Blue Tap Resources Inc.) (incorporated by reference to our
Current Report on Form 8-K filed on October 24, 2013) |
3.9 |
Bylaws of Alta Disposal Morinville Ltd. (formerly Blue
Tap Resources Inc.) (incorporated by reference to our Current Report on
Form 8-K filed on October 24, 2013) |
3.10 |
Certificate of Incorporation of 1617437 Alberta Ltd.
(incorporated by reference to our Current Report on Form 8-K filed on
October 24, 2013) |
3.11 |
Articles of Amendment of Alta Disposal Ltd. (incorporated
by reference to our Current Report on Form 8-K filed on October 24, 2013) |
3.12 |
Bylaws of Alta Disposal Ltd. (incorporated by reference
to our Current Report on Form 8-K filed on October 24, 2013) |
3.13 |
Certificate of Amendment filed September 9, 2015 (incorporated by reference to exhibit 4.1 of our Current Report on Form 8-K filed on September 15, 2015) |
(4) |
Instruments Defining the Rights of Security Holders,
Including Indentures |
4.1 |
Certificate of Designation of Series B Preferred Stock
(incorporated by reference to our Current Report on Form 8-K filed on
January 9, 2014) |
4.2 |
Certificate of Designation of Series A Preferred Stock (incorporated by
reference to exhibit 4.1 of our Current Report on Form 8-K filed July 15,
2015 |
(10) |
Material Contracts |
10.1 |
Assignment Agreement between our company and Lithium
Exploration VIII Ltd. dated December 16, 2010 (incorporated by reference
to our Current Report on Form 8-K filed on January 10, 2011) |
10.2 |
Letter Agreement between our company and Glottech-USA,
LLC dated March 17, 2011 (incorporated by reference to our Current Report
on Form 8-K filed on May 4, 2011) |
10.3 |
Securities Purchase Agreement between our company and
Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 1, 2011) |
10.4 |
Registration Rights Agreement between our company and
Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 1, 2011) |
10.5 |
12% Senior Convertible Debenture between our company and
Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 1, 2011) |
59
Exhibit |
|
Number |
Description |
10.6 |
Escrow Agreement between our company and Hagen
Investments Ltd. dated June 29, 2011 (incorporated by reference to our
Current Report on Form 8-K filed on July 1, 2011) |
10.7 |
Guaranty and Pledge Agreement between our company and
Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 1, 2011) |
10.8 |
Common Stock Purchase Warrant between our company and
Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 1, 2011) |
10.9 |
12% Senior Convertible Debenture between our company and
Hagen Investments Ltd. dated July 12, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 13, 2011) |
10.10 |
Common Stock Purchase Warrant between our company and
Hagen Investments Ltd. dated July 12, 2011 (incorporated by reference to
our Current Report on Form 8-K filed on July 13, 2011) |
10.11 |
Letter Agreement between our company and Glottech-USA,
LLC dated November 18, 2011 (incorporated by reference to our Current
Report on Form 8-K filed on November 21, 2011) |
10.12 |
Securities Purchase Agreement between our company and
Hagen Investments Ltd. dated March 28, 2012 (incorporated by reference to
our Current Report on Form 8-K filed on April 3, 2012) |
10.13 |
Debenture between our company and Hagen Investments Ltd.
dated March 28, 2012 (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2012) |
10.14 |
Debenture between our company and Hagen Investments Ltd.
dated May 15, 2012 (incorporated by reference to our Current Report on
Form 8-K filed on May 18, 2012) |
10.15 |
Option Agreement between our company and GD Glottech
International, Limited dated August 14, 2012 (incorporated by reference to
our Current Report on Form 8-K filed on September 5, 2012) |
10.16 |
Amendment Agreement between our company and Hagen
Investments Ltd. dated September 17, 2012 (incorporated by reference to
our Current Report on Form 8-K filed on September 18, 2012) |
10.17 |
License Agreement between our company and GD
Glottech-International Ltd. dated October 1, 2012 (incorporated by
reference to our Current Report on Form 8-K filed on October 10, 2012)
|
10.18 |
Sales Agreement between our company and GD Glottech
International Ltd. dated October 1, 2012 (incorporated by reference to our
Current Report on Form 8-K filed on October 10, 2012) |
10.19 |
Certificate of Designation, Series A Preferred
Convertible Stock (incorporated by reference to our Current Report on Form
8-K filed on October 29, 2012) |
10.20 |
Share Exchange Agreement between our company and
Alexander Walsh dated October 18, 2012 (incorporated by reference to our
Current Report on Form 8-K filed on October 29, 2012) |
10.21 |
Securities Purchase Agreement between our company and JMJ
Financial dated February 13, 2013 (incorporated by reference to our
Current Report on Form 8-K filed on February 15, 2013) |
10.22 |
Securities Purchase Agreement between our company and JDF
Capital Inc. dated February 19, 2013 (incorporated by reference to our
Current Report on Form 8-K filed on February 25, 2013) |
10.23 |
Rule 10b5-1 Sales Plan, Client Representations, and Sales
Instructions (incorporated by reference to our Current Report on Form 8-K
filed on March 15, 2013) |
10.24 |
Letter of Agreement between our company and Alta Disposal
Morinville Ltd. (formerly Blue Tap Resources Inc.) dated June 11, 2013
(incorporated by reference to our Current Report on Form 8- K filed on
June 14, 2013) |
10.25 |
Convertible Debenture Agreement between our company and
Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) dated
July 29, 2013 (incorporated by reference to our Current Report on Form 8-K
filed on August 5, 2013) |
60
Exhibit |
|
Number |
Description |
10.26 |
Unanimous Shareholders and Management Agreement among
Alta Disposal Ltd., Excel Petroleum Ltd. and Alta Disposal Morinville Ltd.
(formerly Blue Tap Resources Inc.) dated October 18, 2013 2013
(incorporated by reference to our Current Report on Form 8-K filed on
October 24, 2013) |
10.27 |
Subscription Agreement dated October 18, 2013 between
Alta Disposal Ltd. and Alta Disposal Morinville Ltd. (formerly Blue Tap
Resources Inc.) (incorporated by reference to our Current Report on Form
8-K filed on October 24, 2013) |
10.28 |
Operating Agreement dated July 9, 2013 between Alta
Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) and Valeura
Energy Inc. (incorporated by reference to our Current Report on Form 8-K
filed on October 24, 2013) |
10.29 |
Gross Overriding Royalty Agreement dated June 30, 2013
between Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.)
and Vincent Murphy. (incorporated by reference to our Current Report on
Form 8- K filed on October 24, 2013) |
10.30 |
Assignment Agreement dated October 31, 2013 between our
company and JDF Capital Inc. (incorporated by reference to our Current
Report on Form 8-K filed on December 30, 2013) |
10.31 |
Consulting Agreement dated January 1, 2014 between our
company and International Compass, LLC (incorporated by reference to our
Current Report on Form 8-K filed on January 16, 2014) |
10.32 |
Amendment and Settlement Agreement dated January 3, 2014
between our company and JDF Capital Inc. (incorporated by reference to our
Current Report on Form 8-K filed on January 9, 2014) |
10.33 |
Securities Purchase Agreement dated as of February 23,
2014 between our company and JSJ Investments Inc. (incorporated by
reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.34 |
Form of Convertible Promissory Note between our company
and JSJ Investments Inc. (incorporated by reference to our Current Report
on Form 8-K filed on April 3, 2014) |
10.35 |
Form of Common Stock Purchase Warrant between our company
and JSJ Investments Inc. (incorporated by reference to our Current Report
on Form 8-K filed on April 3, 2014) |
10.36 |
Securities Purchase Agreement dated as of February 27,
2014 between our company and Centaurian Fund. (incorporated by reference
to our Current Report on Form 8-K filed on April 3, 2014) |
10.37 |
Form of Convertible Promissory Note between our company
and Centaurian Fund (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.38 |
Form of Common Stock Purchase Warrant between our company
and Centaurian Fund (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.39 |
Securities Purchase Agreement dated as of February 27,
2014 between our company and LG Capital Funding, LLC (incorporated by
reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.40 |
Form of Convertible Promissory Note between our company
and LG Capital Funding, LLC (incorporated by reference to our Current
Report on Form 8-K filed on April 3, 2014) |
10.41 |
Securities Purchase Agreement dated as of February 28,
2014 between our company and St. George Investments LLC (incorporated by
reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.43 |
Form of Convertible Promissory Note between our company
and St. George Investments LLC (incorporated by reference to our Current
Report on Form 8-K filed on April 3, 2014) |
61
Exhibit |
|
Number |
Description |
10.44 |
Form of Common Stock Purchase Warrant between our company
and St. George Investments LLC (incorporated by reference to our Current
Report on Form 8-K filed on April 3, 2014) |
10.45 |
Securities Purchase Agreement dated as of February 28,
2014 between our company and Vista Capital Investments, LLC (incorporated
by reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.45 |
Form of Convertible Promissory Note between our company
and Vista Capital Investments, LLC (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.46 |
Form of Common Stock Purchase Warrant between our company
and Vista Capital Investments, LLC (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.47 |
Securities Purchase Agreement dated as of March 3, 2014
between our company and Union Capital, LLC (incorporated by reference to
our Current Report on Form 8-K filed on April 3, 2014) |
10.48 |
Form of Convertible Promissory Note between our company
and Union Capital, LLC (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.49 |
Form of Common Stock Purchase Warrant between our company
and Union Capital, LLC (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.50 |
Securities Purchase Agreement dated as of March 3, 2014
between our company and Iconic Holdings, LLC (incorporated by reference to
our Current Report on Form 8-K filed on April 3, 2014) |
10.51 |
Form of Convertible Promissory Note between our company
and Iconic Holdings, LLC (incorporated by reference to our Current Report
on Form 8-K filed on April 3, 2014) |
10.52 |
Form of Common Stock Purchase Warrant between our company
and Iconic Holdings, LLC (incorporated by reference to our Current Report
on Form 8-K filed on April 3, 2014) |
10.53 |
Securities Purchase Agreement dated as of March 3, 2014
between our company and Adar Bays, LLC (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.54 |
Form of Convertible Promissory Note between our company
and Adar Bays, LLC (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.55 |
Form of Common Stock Purchase Warrant between our company
and Adar Bays, LLC (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.56 |
Securities Purchase Agreement dated as of March 3, 2014
between our company and Black Mountain Equities, Inc. (incorporated by
reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.57 |
Form of Convertible Promissory Note between our company
and Black Mountain Equities, Inc. (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.58 |
Form of Common Stock Purchase Warrant between our company
and Black Mountain Equities, Inc. (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.59 |
Securities Purchase Agreement dated as of March 3, 2014
among our company, Alta Disposal Ltd., and 514742 B.C. Ltd. (incorporated
by reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.60 |
Form of Convertible Promissory Note among Alta Disposal
Ltd. and 514742 B.C. Ltd. (incorporated by reference to our Current Report
on Form 8-K filed on April 3, 2014) |
10.61 |
Form of Common Stock Purchase Warrant between our company
and 514742 B.C. Ltd. (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
62
Exhibit |
|
Number |
Description |
10.62 |
Securities Purchase Agreement dated as of March 3, 2014
between our company and JDF Capital Inc. (incorporated by reference to our
Current Report on Form 8-K filed on April 3, 2014) |
10.63 |
Form of Convertible Promissory Note between our company
and JDF Capital Inc. (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.64 |
Form of Common Stock Purchase Warrant between our company
and JDF Capital Inc. (incorporated by reference to our Current Report on
Form 8-K filed on April 3, 2014) |
10.65 |
Securities Purchase Agreement dated as of March 1, 2014
between Alta Disposal Ltd. and Tero Oilfield Services Ltd. (incorporated
by reference to our Current Report on Form 8-K filed on April 3, 2014)
|
10.66 |
Employment Agreement with Alexander Walsh dated January
12, 2014 (incorporated by reference to our Current Report on Form 8-K
filed on April 4, 2014) |
10.67 |
Consulting Agreement with Brandon Colker dated April 28,
2014 (incorporated by reference to our Annual Report on Form 10-K filed on
October 14, 2014) |
10.68 |
2014 Stock Option Plan (incorporated by reference to our
Current Report on Form 8-K filed on August 6, 2014) |
10.69 |
Form of Stock Option Agreement (incorporated by reference
to our Current Report on Form 8-K filed on August 6, 2014) |
10.70 |
Form of Stock Grant Agreement (incorporated by reference
to our Current Report on Form 8-K filed on August 6, 2014) |
10.71 |
Securities Purchase Agreement dated July 22, 2014 between
our company and JDF Capital Inc. Agreement (incorporated by reference to
our Current Report on Form 8-K filed on August 7, 2014) |
10.72 |
Convertible Promissory Note dated July 22, 2014 between
our company and JDF Capital Inc. (incorporated by reference to our Current
Report on Form 8-K filed on August 7, 2014) |
10.73 |
Common Stock Purchase Warrant dated July 22, 2014 between
our company and JDF Capital Inc. (incorporated by reference to our Current
Report on Form 8-K filed on August 7, 2014) |
10.74 |
General Security Agreement dated July 22, 2014 between
Alta Disposal Ltd. and JDF Capital Inc. (incorporated by reference to our
Current Report on Form 8-K filed on August 7, 2014) |
10.75 |
Consultant Agreement dated May 30, 2014 between our
company and Robert Gomer (incorporated by reference to our Quarterly
Report on Form 10-Q/A filed on December 2, 2014) |
10.76 |
Consultant Agreement dated August 1, 2014 between our
company and TEN Associates LLC (incorporated by reference to our Quarterly
Report on Form 10-Q/A filed on December 2, 2014) |
10.77 |
Amending Agreement dated October 22, 2014 between
International Compass, LLC and our company (incorporated by reference to
our Quarterly Report on Form 10-Q/A filed on December 2, 2014) |
10.78 |
Short Swing Settlement Agreement with Alexander R. Walsh
dated December 22, 2014 (incorporated by reference to our Quarterly Report
on Form 10-Q filed on February 23, 2015) |
10.79 |
Debt Settlement Agreement with Alexander R. Walsh dated
December 23, 2014 (incorporated by reference to our Quarterly Report on
Form 10-Q filed on February 23, 2015) |
10.80 |
Form of Convertible Promissory Note between our company
and River North Equity LLC |
10.81 |
Loan Agreement dated April 15, 2015 between JDF Capital
Inc. and our company. |
10.82 |
Share Purchase Agreement dated May 1, 2015 among our
company, Natel Hofmann and Tero Oilfield Services Ltd.
|
10.83 |
Settlement Agreement dated June 25, 2015 among our company, Alta Disposal
Ltd. and JDF Capital Inc. (incorporated by reference to our Current Report
on Form 8-K filed July 15, 2015) |
63
* |
Filed herewith. |
|
|
** |
Furnished herewith. Pursuant to Rule 406T of
Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are
deemed not filed or part of any registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed
not filed for purposes of Section 18 of the Securities and Exchange Act of
1934, and otherwise are not subject to liability under those
sections. |
64
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
LITHIUM EXPLORATION GROUP, INC. |
|
|
|
|
|
|
Date: December 4, 2015 |
/s/ Alexander Walsh |
|
Alexander Walsh |
|
President, Secretary, Treasurer and Director
|
|
(Principal Executive Officer, Principal
Financial Officer and |
|
Principal Accounting Officer)
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
Date: December 4, 2015 |
/s/ Alexander Walsh |
|
Alexander Walsh |
|
President, Chief Executive Officer, and
Director |
|
(Principal Executive Officer)
|
65
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS
ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Alexander Walsh, certify that:
1. I have reviewed this Annual Report on Form 10-K/A of Lithium
Exploration Group, Inc.;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
|
|
(b) |
Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
|
|
(c) |
Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
|
(d) |
Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and |
5. The registrant's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
|
(a) |
All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and |
|
|
|
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal control over financial
reporting. |
Date: December 4, 2015
/s/Alexander
Walsh |
|
Alexander Walsh |
|
President, Secretary, Treasurer and Director |
|
(Principal Executive Officer, Principal Financial |
|
Officer and Principal Executive Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Alexander Walsh, hereby certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) |
the Annual Report on Form 10-K/A of Lithium Exploration
Group, Inc. for the year ended June 30, 2015 (the "Report") fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and |
|
|
(2) |
the information contained in the Report fairly presents,
in all material respects, the financial condition and results of
operations of Lithium Exploration Group, Inc. |
Dated: December 4, 2015
|
/s/Alexander Walsh |
|
Alexander Walsh |
|
President, Secretary, Treasurer and Director
|
|
(Principal Executive Officer, Principal
Financial Officer |
|
and Principal Executive Officer) |
|
Lithium Exploration Group, Inc.
|
A signed original of this written statement required by Section
906, or other document authenticating, acknowledging, or otherwise adopting the
signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to Lithium
Exploration Group, Inc. and will be retained by Lithium Exploration Group, Inc.
and furnished to the Securities and Exchange Commission or its staff upon
request.