PUREBASE CORPORATION (OTCMKTS:PUBC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
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”), 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”), 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.
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.
(d) Exhibits
PureBase Corp Exhibit
EX-10.1 2 ex10-1.htm Exhibit 10.1 AMENDMENT TO DEBT CONVERSION AGREEMENT THIS AMENDMENT TO DEBT CONVERSION AGREEMENT (this “Amendment”) is made as of February 7,…
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About PUREBASE CORPORATION (OTCMKTS:PUBC)
PureBase Corporation is a diversified, industrial mineral and natural resource company. The Company provides solutions to a range of markets, including the cornerstone markets of agriculture and construction. Through its subsidiary, Purebase Agricultural, Inc. (Purebase Ag), it intends to identify, acquire, define, develop and operate industrial and natural resource properties, and to provide mine development and operations services to mining properties located in the Western United States, and in California and Nevada. Within the Agricultural Sector, it intends to provide soil amendment solutions that may be used by both farming operations and consumer retail, domestically in the United States and internationally. Within the Construction Sector, operating through Purebase Build, it intends to develop and market a Supplementary Cementitious Material, a solution that may be used in infrastructure development projects for government, commercial industries and residential buildings.