UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 7, 2020
PUREBASE CORPORATION
(Exact name of registrant as specified in its charter)
| Nevada | 000-55517 | 27-2060863 | ||
|
(State
or other jurisdiction
of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
8625 State Hwy, 124
Ione, CA 95640
(Address of principal executive offices)
(888) 791-9474
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
| Item 1.01 | Entry into a Material Definitive Agreement. |
Between February 19, 2016 and July 31, 2019, US Mine Corp. (“USMC”), an affiliate of PureBase Corporation, a Nevada corporation (the “Company”), made loans to the Company in the aggregate amount of $4,264,789 (the “USMC Loan Amount”). In addition, as of July 31, 2019, Craig Barto, an affiliate of USMC, assigned $1,234,247 of principal and accrued and unpaid interest due to him by the Company to USMC. Following such assignment, the total amount due to USMC by the Company was $5,499,036 (the “USMC Debt”). As of July 31, 2019, the Company and USMC agreed to convert the entire USMC Debt into shares of common stock of the Company, $0.001 par value per share (“Common Stock”), at a conversion price of $0.09 per share (the “Conversion Price”). The Conversion Price was negotiated in an arm’s-length transaction between the Company and USMC, and the Company’s board of directors (“Board”) determined that, since there was a limited market for the Company’s shares, such Conversion Price represented the fair market value of the Company’s stock as of July 31, 2019.
As previously reported, on September 5, 2019 (the “Conversion Date”), the Company converted $5,442,363 of the USMC Debt into 60,248,484 shares of the Company’s Common Stock (the “Initial Conversion Shares”), pursuant to the terms and conditions of an agreement by and between the Company and USMC (the “Debt Conversion Agreement”). Subsequently, it came to the attention of the Board that the Company mistakenly converted only $5,442,363 of the USMC Debt (rather than the full $5,499,036 USMC Debt) into only the 60,248,484 Initial Conversion Shares (rather than the full 60,470,698 shares of the Company’s Common Stock that USMC should have received upon conversion of the $5,442,363). Therefore, the Board determined to (a) issue to USMC the additional 222,216 shares of the Company’s Common Stock that USMC should have received upon the conversion of $5,442,363 of the USMC Debt, and convert the remaining $56,673 of the USMC Debt (at the Conversion Price of $0.09 per share) into 629,700 additional shares of the Company’s Common Stock (collectively, the “Additional Conversion Shares”).
Further, in consideration for USMC’s agreement to convert the USMC Loan Amount, and as an inducement therefor, the Board deemed it fair and equitable to pay to USMC a payable conversion fee on the amount of the USMC Loan Amount, calculated at a rate of 6% per annum through July 31, 2019 (the “Payable Conversion Fee”). The Company and USMC agreed that the resulting $489,436 Payable Conversion Fee would be paid to USMC by the issuance to USMC of 5,438,178 additional shares of the Company’s Common Stock (the “Payable Conversion Fee Shares”), calculated at the Conversion Price of $0.09 per share. The Payable Conversion Fee was negotiated in an arms-length transaction, based on the market rate that would have been charged by an unrelated third party.
On February 7, 2020, the Company and USMC entered into an amendment to the Debt Conversion Agreement (the “Amendment to Debt Conversion Agreement”), pursuant to which to the Company agreed to issue to USMC the 851,916 Additional Conversion Shares and 5,438,178 Payable Conversion Fee Shares. The USMC Debt has been deemed paid-in-full and cancelled as a result of the issuances of the Initial Conversion Shares, the Additional Conversion Shares and the Payable Conversion Fee Shares.
The Company utilizes the services of its affiliate, USMC, for exploration and other services. A. Scott Dockter, the principal executive officer and a director of the Company, and John Bremer, a director of the Company, are also officers, directors and shareholders of USMC.
The foregoing summary of the Amendment to Debt Conversion Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amendment to Debt Conversion Agreement, a copy of which is filed as Exhibits 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
| Item 3.02 | Unregistered Sales of Equity Securities. |
Reference is made to the disclosure set forth under Item 1.01 above, which disclosure is incorporated herein by reference.
The Company’s issuances of the 851,916 Additional Conversion Shares and 5,438,178 Payable Conversion Fee Shares in connection with the Company’s conversion of the USMC Debt and entry into the Amendment to Debt Conversion Agreement were exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated by the Securities and Exchange Commission under of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 |
Amendment to Debt Conversion Agreement, dated February 7, 2020
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PUREBASE CORPORATION | ||
| Dated: February 13, 2020 | By: | /s/ A. Scott Dockter |
| A. Scott Dockter | ||
| Chief Executive Officer | ||
Exhibit 10.1
AMENDMENT TO DEBT CONVERSION AGREEMENT
THIS AMENDMENT TO DEBT CONVERSION AGREEMENT (this “Amendment”) is made as of February 7, 2020, by and among PUREBASE CORPORATION, a Nevada corporation (“PureBase”), and US MINE CORP., a Nevada corporation (“USMC”). PureBase and USMC may be referred to herein, individually, as a “Party” and, collectively, as the “Parties.”
W I T N E S S E T H
WHEREAS, between February 19, 2016 and July 31, 2019, USMC, which is an affiliate of PureBase, made loans to PureBase in the aggregate amount of $4,264,789 (the “USMC Loan Amount”); and
WHEREAS, on November 24, 2014, Craig Barto, an affiliate of USMC (“Barto”), made a loan to PureBase in the amount of $1,000,000 (the “Barto Loan Amount”), at an agreed upon interest rate of 5.00% per annum; and
WHEREAS, as of July 31, 2019, accrued and unpaid interest on the Barto Loan Amount totaled $234,247 (the “Barto Interest” and, together with the Barto Loan Amount, the “Barto Debt”); and
WHEREAS, effective as of July 31, 2019, for good and valuable consideration, Barto assigned the full amount of the $1,234,247 Barto Debt to USMC, and USMC accepted such assignment; and
WHEREAS, following such assignment of the Barto Debt from Barto to USMC, the total amount due to USMC by PureBase was $5,499,036 (the “USMC Debt”); and
WHEREAS, as of July 31, 2019, PureBase and USMC agreed to convert the entire USMC Debt into shares of common stock of PureBase, $0.001 par value per share (“Common Stock”), at a conversion price of $0.09 per share (the “Conversion Price”); and
WHEREAS, on September 5, 2019 (the “Conversion Date”), PureBase incorrectly converted only $5,442,363 of the USMC Debt into only 60,248,484 shares of PureBase’s Common Stock (the “Initial Conversion Shares”), pursuant to the terms and conditions of a letter agreement by and between PureBase and USMC (the “Agreement”), dated as of the Conversion Date; and
WHEREAS, subsequently, it came to PureBase’s attention that PureBase erroneously converted only $5,442,363 of the USMC Debt (rather than the full $5,499,036 USMC Debt) into only the 60,248,484 Initial Conversion Shares (rather than the full 60,470,698 shares of PureBase’s Common Stock that USMC should have received upon conversion of $5,442,363 of the USMC Debt); and
WHEREAS, PureBase desires to (a) issue to USMC the additional 222,216 shares of PureBase’s Common Stock that USMC should have received upon the conversion of $5,442,363 of the USMC Debt, and (b) convert the remaining $56,673 of the USMC Debt (at the Conversion Price of $0.09 per share) into 629,700 additional shares of PureBase’s Common Stock (collectively, the “Additional Conversion Shares”); and
WHEREAS, in consideration for USMC’s agreement to convert the USMC Loan Amount, and as an inducement therefor, PureBase deems it fair and equitable to pay to USMC a payable conversion fee on the amount of the USMC Loan Amount, calculated at a rate of 6.00% per annum through July 31, 2019 (the “Payable Conversion Fee”); and
WHEREAS, PureBase and USMC have agreed that the resulting $489,436 Payable Conversion Fee will be paid to USMC by the issuance to USMC of 5,438,178 additional shares PureBase’s Common Stock (the “Payable Conversion Fee Shares”), calculated at the Conversion Price of $0.09 per share; and
WHEREAS, the Parties wish to amend the Agreement on the terms set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree to amend the Agreement as follows:
1. Definitions; References; Continuation of Agreement. Unless otherwise specified herein, each term used herein that is defined in the Agreement shall have the meaning assigned to such term in the Agreement. Each reference to “hereof,” “hereto,” “hereunder,” “herein” and “hereby” and each other similar reference, and each reference to “this Agreement” and each other similar reference, contained in the Agreement shall from and after the date hereof refer to the Agreement as amended hereby. Except as specifically amended hereby, all terms and provisions of the Agreement shall continue unmodified and remain in full force and effect.
2. Issuance of the Additional Conversion Shares and Payable Conversion Fee Shares.
(a) Upon execution and delivery of this Amendment, PureBase shall issue to USMC the 851,916 Additional Conversion Shares.
(b) Upon execution and delivery of this Amendment, PureBase shall issue to USMC the 5,438,178 Payable Conversion Fee Shares as payment of the Payable Conversion Fee.
(c) Upon the issuance to USMC of the Additional Conversion Shares (together with the prior issuance of the Initial Conversion Shares) and the Payable Conversion Fee Shares, the entire amount of the USMC Debt shall be deemed extinguished and PureBase shall be discharged from all liabilities thereunder.
(d) Upon PureBase’s issuance of the Additional Conversion Shares and the Payable Conversion Fee Shares pursuant to the terms and conditions of the Agreement, as amended hereby, the Additional Conversion Shares and Payable Conversion Fee Shares shall be deemed to be duly issued, fully paid and non-assessable.
| 2 |
3. Warranties and Representations in Agreement. The warranties and representations made by PureBase and USMC in the Agreement, respectively, are true and correct as of the date of this Amendment and are incorporated herein with respect to the issuance of the Additional Conversion Shares and Payable Conversion Fee Shares.
4. Miscellaneous.
4.1 Except as specifically amended or modified as set forth herein, all other terms of the Agreement are ratified and confirmed and remain in full force and effect, to the extent they are in full force and effect as of the date of this Amendment.
4.2 This Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
4.3 This Amendment shall be construed, interpreted and the rights of the Parties determined in accordance with the laws of the State of New York (without reference to any choice of law rules that would require the application of the laws of any other jurisdiction).
(Signature page to follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed on the date first above written.
| US MINE CORP. | ||
| /s/ John Bremer | ||
| Name: | John Bremer | |
| Title: | President | |
| PUREBASE CORPORATION | ||
| By: | /s/ A. Scott Dockter | |
| Name: | A. Scott Dockter | |
| Title: | Chief Executive Officer | |
| 4 |