Quarterly report pursuant to Section 13 or 15(d)

Debt, Commitments and Contingencies

v3.20.2
Debt, Commitments and Contingencies
9 Months Ended
Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Debt, Commitments and Contingencies

NOTE 5 - DEBT, COMMITMENTS AND CONTINGENCIES

 

Debt consists of the following :

 

    Maturity     Interest     September 30,     December 31,  
    Date     Rate     2020     2019  
                         
Convertible Note     9/1/2021       5 %   $ -     $ 999,106  
Less: debt discount                                   -       -  
Total convertible notes, net of discount                   $ -     $ 999,106  
                                 
Total                   $ -     $ 999,106  
Less: current portion                     -       -  
Long term portion                   $ -     $ 999,106  

 

On August 14, 2017, the Company entered into a unit purchase agreement (the “Unit Purchase Agreement”) with certain accredited investors providing for the sale of up to $5,500,000 of 5% secured convertible promissory notes (the “Convertible Notes”), which are convertible into shares of the Corporation’s common stock, and the issuance of warrants to purchase 1,718,750 shares of the Company’s Common Stock (the “Warrants”). The Convertible Notes are convertible into shares of the Company’s Common Stock at the lesser of (i) $0.80 per share or (ii) the closing bid price of the Company’s common stock on the day prior to conversion of the Convertible Note; provided that such conversion price may not be less than $0.40 per share. The Warrants have an exercise price of $4.80 per share. In two closings of the Unit Purchase Agreement, the Company issued $5,500,000 in Convertible Notes to the investors. The remaining balance of the Convertible Notes were due to mature on May 31, 2018. On February 10, 2020, in consideration of the payment of $65,000, the investor agreed to extend the maturity date to September 1, 2021, and the conversion price changed to the lower of, the closing price on the previous days close prior to the conversion request or a maximum conversion price of $1.00 and a floor of $0.80. The Company made such payment on February 11, 2020. On May 19, 2020, the Company amended the note with the investor to reduce the conversion price to $0.60  per share. During the nine months ended September 30, 2020, $999,106 remaining balance of the Convertible Notes and $215,136 of accrued and unpaid interest were converted into 2,023,739 shares of the Company’s Common Stock, and the Company recorded $364,832 of expenses  pursuant to the inducement of the conversion terms.

 

During the nine months ended September 30, 2020 and 2019, there was no amortization of debt discount. Interest expenses were $0 and $12,951 for the three months ended September 30, 2020 and 2019, respectively. Interest expenses were $20,984 and $37,363 for the nine months ended September 30, 2020 and 2019, respectively.

 

Note Payable

 

On May 6, 2020, the Company entered into a Paycheck Protection Program Promissory Note agreement with a bank which is providing $62,500 to the Company. The note accrues interest at a rate of 1% per annum and matures on May 6, 2022.

 

Leases

 

Effective June 1, 2018, the Company rented its corporate office at 1180 North Town Center Drive, Suite 100, Las Vegas, Nevada 89144, on a month to month basis. The monthly rent is $1,997. A security deposit of $3,815 has been paid.

 

The Company also assumed a lease in connection with the mining operations in Quebec, Canada. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and noncurrent operating lease liabilities on the balance sheets .

 

Operation lease costs are recorded on a straight-line basis within operating expenses. The Company’s total lease expense is comprised of the following :  

 

    For the Three Months Ended  
    September 30, 2020     September 30, 2019  
Operating leases                
Operating lease cost   $ 26,803     $ 26,693  
Operating lease expense     26,803       26,693  
Short-term lease rent expense     6,231       6,465  
Total rent expense   $ 33,034     $ 33,158  

 

 

    For the Nine Months Ended  
    September 30, 2020     September 30, 2019  
Operating leases                
Operating lease cost   $ 79,925     $ 80,004  
Operating lease expense     79,925       80,004  
Short-term lease rent expense     18,295       16,413  
Total rent expense   $ 98,220     $ 96,417  

 

Additional information regarding the Company’s leasing activities as a lessee is as follow:

 

    For the Nine Months Ended  
    September 30, 2020     September 30, 2019  
Operating cash flows from operating leases   $ 78,796     $ 79,184  
Weighted-average remaining lease term – operating leases     1.6       1.7  
Weighted-average discount rate – operating leases     6.5 %     6.5 %

 

As of September 30, 2020, contractual minimal lease payments are as follows:

 

2020   $ 18,112  
2021     99,615  
2022     27,168  
Total     144,895  
Less present value discount     (7,337 )
Less current portion of operating lease liabilities     (93,197 )
Non-current operating lease liabilities   $ 44,361  

 

Legal Proceedings

 

Feinberg Litigation

 

On March 27, 2018, Jeffrey Feinberg, purportedly joined by the Jeffrey L. Feinberg Personal Trust and the Jeffrey L. Feinberg Family Trust, filed a complaint against the Company and certain of its former officers and directors. The complaint was filed in the Supreme Court of the State of New York, County of New York. The plaintiffs purported to state claims under Sections 11, 12(a)(2) and 15 of the federal Securities Act of 1933 and common law claims for “actual fraud and fraudulent concealment,” constructive fraud, and negligent misrepresentation, seeking unspecified money damages (including punitive damages), as well as costs and attorneys’ fees, and equitable or injunctive relief. On June 15, 2018, the defendants filed a motion to dismiss all claims asserted in the complaint and, on July 27, 2018, the plaintiffs filed an opposition to that motion. The court heard argument on the motion and, on January 15, 2019, the court granted the motion to dismiss, allowing 30 days for the filing of an amended complaint. On February 15, 2019, Jeffrey Feinberg, individually and as trustee of the Jeffrey L. Feinberg Personal Trust, and Terrence K. Ankner, as trustee of the Jeffrey L. Feinberg Family Trust, filed an amended complaint that purports to state the same claims and seeks the same relief sought in the original complaint. On March 7 and 22, 2019, defendants filed motions to dismiss the amended complaint and on April 5, 2019, plaintiffs filed an opposition to those motions. The court heard oral argument on the motions to dismiss on July 9, 2019, and at the conclusion of the argument the court took the motions under submission. The parties are waiting for the court’s rulings on the motions to dismiss and, while the motions have been under submission, no discovery has been taken and there have been no other significant developments in the case.