PUBC.OTC.PinkPurebase CORP
10-Q: PureBase Corporation Reports Q1 2025 Results: No Revenue, Increased Losses, and Going Concern Uncertainty
Sentiment:
Quarterly Report
PureBase Corporation reported no revenue and increased net losses for the quarter ended February 28, 2025, while also expressing substantial doubt about its ability to continue as a going concern.
Capital raiseThe company is exploring options to meet short-term cash requirements, including issuances of equity securities or equity-linked securities to USMC and other third parties.The company has previously funded, and plans to continue funding, these losses with cash advances from USMC and the sale of equity and convertible notes.
Worse than expectedThe company reported no revenue and a net loss, indicating worse than expected financial performance.The report expresses substantial doubt about the company's ability to continue as a going concern, which is a significant negative indicator.
Summary
- PureBase Corporation reported its financial results for the first quarter of 2025, ended February 28, 2025.
- The company reported no revenue for the quarter, consistent with the same period in the previous year.
- The net loss for the quarter was $452,688, compared to a net loss of $490,972 for the three months ended February 29, 2024.
- Operating expenses totaled $418,216, a decrease from $461,756 in the prior year's quarter.
- The company's accumulated deficit as of February 28, 2025, was $64,661,211.
- The company had a working capital deficiency of $1,494,421 as of February 28, 2025.
- The report expresses substantial doubt about the company's ability to continue as a going concern.
- The company is dependent on related-party financing, primarily from US Mine Corporation (USMC).
- The company is exploring options to meet short-term cash requirements, including equity or equity-linked securities issuances.
- Management believes that revenue generation, along with debt and equity financing, will provide the necessary funding for the next twelve months.
Sentiment
Score: 3
Explanation: The sentiment is negative due to the lack of revenue, increased losses, going concern uncertainty, and reliance on related-party financing. The company's internal control weaknesses also contribute to the negative sentiment.
Positives
- The net loss decreased by $38,284 compared to the same quarter last year.
- Operating expenses decreased by $43,540 compared to the same quarter last year.
- The company is actively exploring options to secure additional funding.
Negatives
- The company reported no revenue for the quarter.
- The company has a significant accumulated deficit of $64,661,211.
- The company has a working capital deficiency of $1,494,421.
- The report expresses substantial doubt about the company's ability to continue as a going concern.
- The company is heavily reliant on related-party financing.
Risks
- The company's ability to continue as a going concern is uncertain.
- The company is dependent on related-party financing, which may not always be available on favorable terms.
- The company has not yet commenced mining operations and relies on USMC for its mineral resources.
- The company's success depends on its ability to successfully implement its business plan and generate revenue.
- The company faces risks related to competition, supply constraints, and the retention of key personnel.
- The company's internal control over financial reporting was ineffective due to material weaknesses.
Future Outlook
Management believes that revenue generation, along with debt and equity financing, will provide the necessary funding for the Company to continue as a going concern for the next twelve months. The company anticipates that it will continue to incur operating losses as it executes its development plans for 2025, as well as other potential strategic and business development initiatives.
Management Comments
- Management currently believes that the revenue to be generated from operations together with equity and debt financing, including funding from USMC in the form of a line of credit, will provide the necessary funding for the Company to continue as a going concern for the next twelve months.
Industry Context
The company operates in the industrial mineral and natural resource sector, providing solutions to the agriculture and construction materials markets. The construction sector is focused on developing supplementary cementitious materials (SCMs) to reduce CO2 emissions in concrete, aligning with stricter environmental regulations.
Comparison to Industry Standards
- It is difficult to compare PureBase's results directly to industry standards due to its early stage and lack of revenue.
- However, other companies in the SCM space, such as Solidia Technologies and CarbonCure Technologies, have attracted significant investment and partnerships, indicating growing interest in low-carbon concrete solutions.
- PureBase's reliance on related-party financing and its going concern uncertainty are significant challenges compared to more established players in the industry.
Related Party Transactions
- The company has significant related party transactions with US Mine Corporation (USMC) and US Mine LLC.
- A. Scott Dockter, the Company’s Chief Executive Officer and a director, and John Bremer, a director, are also officers, directors, and owners of USMC.
- A substantial portion of the minerals used by the Company are obtained from properties owned or controlled by US Mine, LLC.
- The company entered into a $1,000,000 line of credit agreement with USMC on March 7, 2024.
- USMC has advanced an additional $406,449 to the company as of April 14, 2025.
- The company leases office space from USMC.
Stakeholder Impact
- Shareholders face significant risk due to the company's financial condition and going concern uncertainty.
- Employees' job security is uncertain due to the company's financial challenges.
- Customers may be concerned about the company's ability to fulfill orders and provide ongoing support.
- Suppliers and creditors face increased risk of non-payment.
Next Steps
- The company plans to continue promoting its products to existing and potential customers to generate sufficient revenues.
- The company will continue exploring options to meet its short-term cash requirements, including issuances of equity securities or equity-linked securities to USMC and other third parties.
- Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Key Dates
| Date | Description |
|---|---|
| 2010-03-02 | PureBase Corporation was incorporated in the State of Nevada. |
| 2013-12-01 | The Company entered into a contract mining agreement with USMC. |
| 2014-11-28 | US Mining and Minerals Corporation entered into a Purchase Agreement to sell its fee simple property interest and certain mining claims to USMC. |
| 2014-12-01 | USMC assigned its rights and obligations under the Purchase Agreement to the Company. |
| 2017-08-31 | The Company issued a note in the amount of $197,096 to A. Scott Dockter. |
| 2017-11-10 | The Board approved the 2017 PureBase Corporation Stock Option Plan. |
| 2018-10-12 | The Company entered into a material supply agreement with USMC. |
| 2020-04-01 | The Company entered into a purchase and sale agreement with the Bremer Family 1995 Living Trust to purchase the Snow White Mine for $836,000. |
| 2020-04-22 | The Company entered into a Material Supply Agreement with USMC which amended the prior Materials Supply Agreement entered on October 12, 2018. |
| 2020-07-08 | The Companys former Chief Financial Officer, Al Calvanico (Calvanico), filed a demand for arbitration alleging retaliation, wrongful termination, and demand for a minimum of $600,000 in alleged stock value, plus interest, recovery of past and future wages, attorneys fees, and punitive damages (collectively, the Calvanico Claims). |
| 2020-10-01 | The Company entered into a two-year lease agreement for its office space with USMC with a monthly rent of $1,500. |
| 2021-04-08 | The Company entered into a twelve-month director agreement with Jeffrey Guzy. |
| 2021-05-27 | The Company entered into the Materials Extraction Agreement with US Mine, LLC. |
| 2021-08-13 | The Company entered into a twelve-month director agreement with Dr. Kurtis. |
| 2022-08-30 | The Company issued a convertible promissory note in the amount of $470,862 to USMC (Tranche #7). |
| 2022-11-01 | The lease was amended to extend the lease for an additional two-year term effective November 1, 2022 and to add an additional 700 square feet of office space for a total monthly rental price of $3,500 per month. |
| 2022-11-29 | The Company issued a convertible promissory note in the amount of $140,027 to USMC (Tranche #8). |
| 2023-02-28 | The Company issued a convertible promissory note in the amount of $308,320 to USMC (Tranche #9). |
| 2023-05-31 | The Company issued a convertible promissory note in the amount of $412,533 to USMC (Tranche #10). |
| 2023-06-30 | The Company issued a convertible promissory note in the amount of $193,935 to USMC (Tranche #11). |
| 2023-07-10 | The Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. |
| 2023-09-11 | The Company entered into a twelve-month director agreement with Brady Barto. |
| 2023-12-13 | The Company granted the Chief Financial Officer an option to purchase 200,000 shares of the Companys common stock at an exercise price of $0.09 per share and a fair value of $16,762. |
| 2024-01-31 | The principal and accrued interest of Tranches #7, #8, #9, #10, and #11 were converted into shares of the Company's common stock. |
| 2024-02-06 | The Company agreed to pay $618,000 in six equal monthly payments of $103,000 with the first payment made February 8, 2024. |
| 2024-02-08 | The Company issued a convertible promissory note in the amount of $618,000 to USMC. |
| 2024-02-16 | The Company entered into a one-year consulting agreement with Magmatics, Inc. |
| 2024-03-07 | The Company entered into a line of credit agreement and unsecured convertible grid promissory note with USMC. |
| 2024-03-31 | The noteholder converted the July 10, 2023 line of credit principal of $1,000,000 and accrued interest of $25,640 into 10,256,400 shares of common stock. |
| 2024-11-01 | The Company issued a $31,000 promissory note to a related party. |
| 2024-11-30 | End of the fiscal year 2024. |
| 2024-12-01 | Effective November 1, 2024, the lease was amended to change the term to month-to-month at $1,500 per month. |
| 2025-02-05 | Mr. Barto resigned as director. |
| 2025-02-06 | The Company granted the Chief Financial Officer an option to purchase 200,000 shares of the Companys common stock at an exercise price of $0.06 per share and a fair value of $15,886. |
| 2025-02-28 | End of the quarterly period. |
| 2025-04-14 | As of April 14, 2025, there were 250,497,328 shares of the registrants common stock outstanding. |
Keywords
financial results, going concern, related party transactions, convertible notes, mining, kaolin clay, USMC, PureBase Corporation, financial statements, liquidity
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