10-K 1 form10k.htm FORM 10-K Lithium Exploration Group, Inc.: - Form 10-K - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(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, 2016

[   ] 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)  

4635 South Lakeshore Drive, Suite 200, Tempe Arizona 85282-7127
(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, 2015 was $393,780 based on a $0.11 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 registrant’s classes of common stock as of the latest practicable date.

162,724,024 common shares as of October 13, 2016

DOCUMENTS INCORPORATED BY REFERENCE

None.


TABLE OF CONTENTS

Item 1. Business 4
     
Item 1A. Risk Factors 31
     
Item 1B. Unresolved Staff Comments 36
     
Item 2. Properties 36
     
Item 3. Legal Proceedings 36
     
Item 4. Mine Safety Disclosures 38
     
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 39
     
Item 6. Selected Financial Data 40
     
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 40
     
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 48
     
Item 8. Financial Statements and Supplementary Data 48
     
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 51
     
Item 9A. Controls and Procedures 51
     
Item 9B. Other Information 52
     
Item 10. Directors, Executive Officers and Corporate Governance 52
     
Item 11. Executive Compensation 54
     
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 57
     
Item 13. Certain Relationships and Related Transactions, and Director Independence 57
     
Item 14. Principal Accounting Fees and Services 58
     
Item 15. Exhibits, Financial Statement Schedules 58


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 industry’s 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, our wholly owned subsidiaries, Alta Disposal Ltd., an Alberta, Canada corporation, Black Box Energy, Inc., a Nevada corporation, and our 51% 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 4635 South Lakeshore Drive, Suite 200, Tempe Arizona, 85282-7127, 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. became 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. 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 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.

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 company’s 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.

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 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 OTC Markets 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.

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.

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 company’s 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-USA’s 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.

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-USA’s 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 International’s 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 International’s 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 owned 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 International’s 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 International’s 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 International’s 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-USA’s 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.

On December 18, 2015 we withdrew our complaint against Glottech-USA, LLC filed in the Court of Common Pleas in Chester County, Pennsylvania. Concurrently, we released Glottech –USA, LLC and its former principals, Mark Seigel, Larry Nesbit and Ron Fender, from any and all claims related to the complaint.

Subsequent to the litigation in Pennsylvania, Glottech-USA initiated a legal action for dissolution in Mississippi. The Company was not a party to the dissolution action in Mississippi. A court-appointed receiver for Glottech-USA recently approved a previously proposed settlement. The settlement has been recently approved by the court in Mississippi. The Company believes that the litigation in Pennsylvania produced positive outcomes that resulted in the Company's current relationship with the inventors and owners of the technology previously licensed to Gottech-USA.

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 Morinville’s 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 Morinville’s 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 Morinville’s 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.

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 Morinville’s common shares on a diluted basis) for each $105,000 funded until Alta Disposal holds an aggregate of 70% of Alta Disposal Morinville’s 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 Morinville’s 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 Morinville’s 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.

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 Tero’s 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 Tero’s 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 from JDF Capital

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 company’s 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, 2016 and 2015, an interest expense of $Nil and $6,279 respectively, was accrued in respect of the note.

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 were 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. These warrants were cancelled on September 19, 2016 in consideration for the issuance of a convertible promissory note pursuant to an Exchange Agreement with JDF Capital Inc. dated September 19, 2016.

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.

The $400,000 portion of the March 15, 2014 convertible promissory note held by JDF Capital has been fully converted into shares of our common stock.

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 $7,766.

On April 28, 2015, we issued 39,303 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $7,860.

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 $7,288.




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 $9,573.

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 $6,311.

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 $8,891.

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 $11,239.

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 $11,676.

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.

On November 11, 2015 the balance note of $6,639 along with interest of $5,681 totaling to $12,320 was assigned to VES Trust whereas all 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 50% 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. The terms of this note were not amended in the assignment. 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 $10,109.

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 $7,198.

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 $8,900.

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 8,723.

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 $8,061.

On July 10, 2015, we issued 201,465 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $7,800.

As at the date of this report, there remains no balance payable pursuant to the note.

$200,000 Loan  from JDF Capital

On March 3, 2014, we entered into a securities purchase agreement with JDF Capital, Inc., pursuant to which JDF Capital agreed to provide us with an aggregate investment of $220,000 in consideration of our issuance of convertible promissory notes and common share purchase warrants.

On March 3, 2014, JDF Capital funded an aggregate investment of $200,000 to us. Therefore, we issued JDF Capital an original issue discount 10% convertible promissory note of $220,000 due September 3, 2014 and convertible into common shares on a cashless basis at a price per share 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 convertible note was later assigned to Blue Citi, LLC on March 19, 2014.


During the year ended June 30, 2015, $220,000 (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 $5,000.

  • 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 $28,200.

  • 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 $25,000.

  • 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 $12,500.

  • 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 $23,500.

  • 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 $20,000.

  • 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 $15,000.

  • 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 $30,000.

  • 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 $20,000.

  • 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 $18,000.

  • 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 $15,000.

  • 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 $12,000.

  • 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 $9,000.

There is no outstanding balance payable in respect of the note as of the date of this report.

In addition on March 3, 2014, we issued an aggregate of 1,000 warrants to JDF Capital 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. 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.

On September 4, 2014, 25 warrants were exercised for 146 of our common shares at a deemed price of $456 in accordance with the terms of the agreement.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $140,000 in consideration for the cancellation of 700 share purchase warrants issued to JDF Capital on March 3, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $140,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 65% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

$600,000 Loan from JDF Capital

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. On May 19, 2016 JDF Capital Inc. signed an extension of the maturity of the note due January 22, 2016. The note now matures on January 22, 2017 with the same terms and conditions.

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 $7,500.

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 $10,010.

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 $12,512.

On July 8, 2015, we issued 125,000 common shares at a deemed price of $0.04 per share for promissory note conversion of $4,875.

On July 21, 2015, we issued 250,000 common shares at a deemed price of $0.04 per share for promissory note conversion of $9,750.

On July 29, 2015, we issued 298,269 common shares at a deemed price of $0.04 per share for promissory note conversion of $11,633.

On September 18, 2015, we issued 475,000 common shares at a deemed price of $0.03 per share for promissory note conversion of $12,350.

On March 30, 2016, we issued 450,000 common shares at a deemed price of $0.14365 per share for promissory note conversion of $6,464.25

On April 4, 2016 the Company issued 650,000 common shares at a deemed price of $0.026 per share for promissory note conversion and interest conversion of $16,900.00.

On April 13, 2016 the Company issued 775,000 common shares at a deemed price of $0.00975 per share for promissory note conversion and interest conversion of $7556.25.

On April 19, 2016 the Company issued 850,000 common shares at a deemed price of $0.00975 per share for promissory note conversion $8,287.50.

On April 22, 2016 the Company issued 1,100,000 common shares at a deemed price of $0.00975 per share for promissory note conversion $10,725.00.

On April 28, 2016 the Company issued 1,500,000 common shares at a deemed price of $0.0065 per share for promissory note conversion $9,750.00.

On April 29, 2016 the Company issued 1,700,000 common shares at a deemed price of $0.00494 per share for promissory note conversion $8,398.00.




On May 9, 2016 the Company issued 2,500,000 common shares at a deemed price of $0.001625 per share for promissory note conversion $4,062.50.
On May 11, 2016 the Company issued 3,500,000 common shares at a deemed price of $0.00975 per share for promissory note conversion $3,412.50.

As at the date of this report, $185,314 remains unconverted and outstanding.

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 by our company) to Blue Citi PR LLC. On June 22, 2016, Blue Citi, LLC signed an extension of the maturity of the note due January 22, 2016. The note now matures on January 22, 2017 with the same terms and conditions. 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 $5,000.

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 $7.605.

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 $6,825.

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 $8,100.

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 $9,750.

On April 22, 2016 the Company issued 256,410 common shares at a deemed price of $0.00975 per share for promissory note conversion $2,500.00.

On April 28, 2016 the Company issued 1,214,575 common shares at a deemed price of $0.0076 per share for promissory note conversion $6,000.00.On April 29, 2016, the Company issued 769,231 common shares at a deemed price of $0.0065 per share for promissory note conversion $5,000.00.

As at the June 30, 2016, there remains a balance of $10,220 unconverted and payable pursuant to the note. On March 25, 2016 Blue Citi, LLC agreed to assign an aggregate of $39,000 from the convertible promissory note of Blue Citi, LLC (that was assigned by JDF Capital) to APG Capital Holdings. As at the date of this report, we have issued the following securities in conversion of the promissory note:

  • On April 4, 2016, the Company issued 160,043 common shares at a deemed price of $0.0126 per share for promissory note conversion and interest conversion of $2,016.54.

  • On April 5, 2016, the Company issued 227,770 common shares at a deemed price of $0.011 per share for promissory note conversion and interest conversion of $2,505.47.

  • On April 7, 2016, the Company issued 267,396 common shares at a deemed price of $0.0075 per share for promissory note conversion and interest conversion of $2,005.47.

  • On April 13, 2016, the Company issued 669,222 common shares at a deemed price of $0.0075 per share for promissory note conversion and interest conversion of $5,019.17.

  • On April 14, 2016, the Company issued 803,725 common shares at a deemed price of $0.0075 per share for promissory note conversion and interest conversion of $6,027.94.

  • On April 19, 2016, the Company issued 1,041,960 common shares at a deemed price of $0.0075 per share for promissory note conversion $7,744.70.


  • On April 22, 2016, the Company issued 1,140,474 common shares at a deemed price of $0.0075 per share for promissory note conversion $8,553.56.

  • On May 2, 2016, the Company issued 1,514,380 common shares at a deemed price of $0.002 per share for promissory note conversion $3,028.76.

As at the June 30, 2016, there remains a balance of $2,286 unconverted and payable pursuant to the note.

On April 19, 2016, JDF Capital agreed to assign an aggregate of $50,000 from the convertible promissory note of JDF Capital (that was issued by our company) to Toledo Advisors LLC. As at the date of this report, we have issued the following securities in conversion of the promissory note:

On April 20, 2016 the Company issued 750,000 common shares at a deemed price of $0.0075 per share for promissory note conversion $5,625.00.

On May 2, 2016 the Company issued 1,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion $2,000.00.

On May 3, 2016 the Company issued 2,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion $4,000.00.

On May 4, 2016 the Company issued 2,302,321 common shares at a deemed price of $0.00145 per share for promissory note conversion $3,338.37.

On May 5, 2016 the Company issued 3,500,000 common shares at a deemed price of $0.00125 per share for promissory note conversion $4,375.00.

On May 9, 2016 the Company issued 5,500,000 common shares at a deemed price of $0.00115 per share for promissory note conversion $6,325.00.

On May 9, 2016 the Company issued 6,100,000 common shares at a deemed price of $0.00075 per share for promissory note conversion $4,575.00

On May 10, 2016 the Company issued 6,600,000 common shares at a deemed price of $0.00075 per share for promissory note conversion $4,950.00.

On May 11, 2016 the Company issued 6,000,000 common shares at a deemed price of $0.00075 per share for promissory note conversion $4,500.00.

On May 12, 2016 the Company issued 7,900,000 common shares at a deemed price of $0.0065 per share for promissory note conversion $5,135.00.

On May 13, 2016 the Company issued 9,717,385 common shares at a deemed price of $0.00055 per share for promissory note conversion $5,109.30.

On February 1, 2016, JDF Capital agreed to assign an aggregate of $70,500 from the convertible promissory note of JDF Capital (that was issued by our company) to Vigere Capital.

On April 1, 2016, JDF Capital agreed to assign an aggregate of $50,000 from the convertible promissory note of to APG Capital.

As at the June 30, 2016, there remains a balance of $67.00 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. On July 13, 2016, JMJ Financial signed an extension of the maturity of the note due February 13, 2016. The note now matures on October 13, 2016 with the same terms and conditions.

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 $116,550.



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 $58,275.

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 $58,275.

On January 6, 2014, we issued 638 common shares at a deemed price of $91.28 per share for promissory note conversion of $58,275.

On February 14, 2014, we issued 500 common shares at a deemed price of $89.60 per share for promissory note conversion of $44,800.

On March 3, 2014, we issued 475 common shares at a deemed price of $89.60 per share for promissory note conversion of $42,613.

On June 10, 2014, we issued 400 common shares at a deemed price of $85.20 per share for promissory note conversion of $34,000.

On June 27, 2014, we issued 425 common shares at a deemed price of $74.00 per share for promissory note conversion of $31,450.

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 $33,300.

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 $17,800.

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 $30,000.

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 $28,275.

 

 

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 $27,550.

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 $20,895.

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 $27,200.

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 $14,490.

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 $18,510.

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 $8,060.

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 $8,715.

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 $6,475.

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 $7,920

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 $9,725.

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 $9,000

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 $8,520.

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 $7,485.

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.




On March 28, 2016 we issued 600,000 common shares at a deemed price of $ $0.025 per share for promissory note conversion of $15,000.
On April 14, 2016 the Company issued 790,000 common shares at a deemed price of $0.007500 per share for promissory note conversion and interest conversion of $5925.00.
On May 5, 2016 the Company issued 2,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion $4,000.00.
On May 10, 2016 the Company issued 3,200,000 common shares at a deemed price of $0.000750 per share for promissory note conversion $2,400.00.

As at June 30, 2016, there remains a balance of approximately $21,908 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 (120 warrants exercised, 59 warrants outstanding);

warrants to purchase up to 952 of our common shares at an exercise price of $210.00 expiring April 16, 2019 (not exercised).

On April 21, 2016 the Company issued 1,048,416 common shares at a deemed price of $0.007500 per share pursuant to warrant exercises.

On April 29, 2016 the Company issued 1,529,480 common shares at a deemed price of $0.007500 per share pursuant to warrant exercises.

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. 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 $105,983.

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. 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.

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 $37,375.

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 $20,322.

  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 $18,475.

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 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. During the year ended June 30, 2015, the full face value of the note including interest (being $80,145 (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 $19,050.
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 $34,113.
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 $11,862.
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 $15,120.

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 July 7, 2016, we signed an extension of the maturity of the note due March 3, 2016. The note now matures on May 3, 2016 with the same terms and conditions.

On September 11, 2015 the Company issued 80,801 common shares at a deemed price of $0.04 per share for promissory note conversion and interest conversion of $3,151.
On April 6, 2016 the Company issued 490,027 common shares at a deemed price of $0.01807 per share for promissory note conversion and interest conversion of $8854.79.
On April 11, 2016 the Company issued 575,327 common shares at a deemed price of $0.010985 per share for promissory note conversion and interest conversion of $6319.97.



On April 18, 2016 the Company issued 819,493 common shares at a deemed price of $0.010595 per share for promissory note conversion and interest conversion of $8,682.53.

On April 21, 2016 the Company issued 469,119 common shares at a deemed price of $0.010595 per share for promissory note conversion and interest conversion of $4,970.32.

As at the date of this report, there remains a balance of $0 unconverted and payable pursuant to the note. During the years ended June 30, 2016 and June 30, 2015, interest expense of $2,430 and $967, respectively, was accrued in respect of the note.

On September 30, 2015, we entered into a securities purchase agreement with LG Capital Funding, LLC. 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 April 28, 2016 the Company issued 1,007,941 common shares at a deemed price of $0.0065 per share for promissory note conversion and interest conversion of $6,552.

As at the date of this report, there remains a balance of $20,800 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. 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 $10,000.

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 $12,500.

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 $15,000.

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 $15,000.

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 $15,000.

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 $15,000.

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 $15,000.

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 $15,000.

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 $0.64 in accordance with the terms of the agreement.

  On April 16, 2015, we issued 42,417 common shares at a deemed price of $3.14 per share 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. 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 $27,520.

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 $21,520.

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 $17,250.

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 $10,200.

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 $18,000.

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 $22,950.

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 5, 2015 we issued 75,000 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $7,500.

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 $5,250.

  On May 13, 2015, we issued 122,357 common shares at a deemed price of $ 0.07 for promissory note and interest conversion of $8,565.

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 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 $203.13 per share for the cashless conversion of warrants issued on February 28, 2014.


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. 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 8, 2014, we issued 277 common shares at a deemed price of $38.00 per share for promissory note and interest conversion of $10,510.

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 $15,777.

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 $15,781.

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 $10,529.

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.

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. 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 $50,000.
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 $10,000.
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 $20,000.
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 $27,335.

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 $23.74 per share in full exercise of the warrants.


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. 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 $10,000.

On September 11, 2014, we issued 413 common shares at a deemed price of $24.20 per share for promissory note and interest conversion of $10,000.

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 $7,000.

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 $4,655.

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 $15,750.

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 $5,353.

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.

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 $32,934.

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 $22,334.

On March 31, 2015, we issued 20,834 common shares at a deemed price of $1.20 per share for promissory note and interest conversion of $25,000.

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 $16,850.

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 $6,354.

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 $6,354.




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 $8,911.
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 $12,868.

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, each warrant is convertible into common shares at a price of $240.00 per share 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:

On August 5, 2014, we issued 5,161 common shares pursuant to the exercise of warrants at a deemed price of $33.59 per share or $173,367 in the aggregate.
On September 15, 2014, we issued 2,737 common shares pursuant to the exercise of warrants at a deemed price of $34.12 per share or $93,401 in the aggregate.

As at the date of this report, there are no warrants remaining pursuant to the securities purchase agreement.



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 $9,800.

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 $9,800.

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 $4,459.

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 $10,010.

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 $8,580.

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 $9,750.




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 $7,800.

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.

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. On July 27, 2016, InLight Capital Partners, LLC signed an extension of the maturity of the note due February 23, 2016. The note now matures on February 23, 2017 with the same terms and conditions.

As at the date of this report, we have made the following issuances of common stock in conversion of the August 22, 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$16,721.

On April 27, 2015, we issued 26,250 common shares at a deemed price of $0.22 per share for promissory note and interest conversion of $5,801.

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 $9,160.

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 $9,230.

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 $8,439.

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 $13,091.

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 $13,260.

On July 22, 2015, we issued 100,000 common shares at a deemed price of $0.05 per share for promissory note conversion of $5,200.

On April 11, 2016, we issued 500,000 common shares at a deemed price of $0.00975 per share for promissory note conversion and interest conversion of $4,875.

On April 26, 2016, we issued 1,600,000 common shares at a deemed price of $0.00715 per share for promissory note conversion $11,400.

On July 27, 2016, we agreed with InLight Capital to amend the promissory note by extending the maturity until February 23, 2017 in exchange for $35,000 in consideration to be added to the note. As at September 29, 2016 the principal amount of $43,644.68 plus interest remained payable pursuant to the promissory note, as amended.

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 $112.00 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 Louis Feld

On February 6, 2015, Louis Feld provided our company with an aggregate investment of $88,500 in consideration of our issuance of $88,500 convertible promissory note and warrants to acquire 13,828 common shares with 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 periods ended June 30, 2016 and June 30, 2015, interest expense of $7,911 and $8,863 was accrued, respectively. As at the date of this report, we have made the following issuances of common stock in conversion of promissory note:

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 $9,750.

On September 18, 2015, we issued 394,231 common shares at a deemed price of $0.03 per share for promissory note conversion of $10,250.

On March 29, 2015 the Company issued 450,748 common shares at a deemed price of $0.0221 per share for promissory note conversion of $6,475.

On April 4, 2016 the Company issued 641,025 common shares at a deemed price of $0.0252 per share for promissory note conversion and interest conversion of $10,500.00.

On April 8, 2016 the Company issued 769,230 common shares at a deemed price of $0.0126 per share for promissory note conversion and interest conversion of $7,500.00.

On April 14, 2016 the Company issued 846,153 common shares at a deemed price of $0.00975 per share for promissory note conversion and interest conversion of $8,250.

On April 17, 2016 the Company issued 1,128,205 common shares at a deemed price of $0.00975 per share for promissory note conversion $11,000.00. On May 3, 2016 the Company issued 1,586,538 common shares at a deemed price of $0.0026 per share for promissory note conversion $4,125.00.

As at the date of this report, there remains $7,150 balance unconverted and payable pursuant to the note.

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 a convertible promissory note with a face value of $118,000. The face value of the note includes minimum interest for 18 months at the rate of 12% per annum, calculated monthly. The promissory note, which is due August 24, 2016, is 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.

On November 10, 2015, River North agreed to assign an aggregate of $100,000 from the convertible promissory note to VES Trust.

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.

Promissory Notes with VES Investment Trust

On November 11, 2015 the balance note of $6,639 along with interest of $5,681 totaling to $12,320 was assigned to VES Trust

On March 24, 2015, the Company issued 500,000 common shares at a deemed price of $0.014 per share for promissory note of $7,183.

On April 8, 2016, the Company issued 591,620 common shares at a deemed price of $0.0086 per share for promissory note conversion of $5,138.

As at the June 30, 2016, there remains a balance of $0 unconverted and payable pursuant to the note.

On December 1, 2015, we entered into a securities purchase agreement with VES Investment Trust dated December 1, 2015 pursuant to which we issued to VES Investment Trust a convertible promissory note in the aggregate principal amount of $18,000, which amount includes the purchase price of $15,000, 10% pre-paid interest (per annum, for 12 months) of $1,500, and $1,500 in respect of legal fees incurred by VES Investment Trust. The convertible note has a maturity date of December 1, 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 December 1, 2015 or prior to the applicable conversion date.

On January 27, 2016, we entered into a securities purchase agreement with VES Investment Trust. Pursuant to the terms of the agreement, VES Investment acquired a 10% convertible note with an aggregate face value of $5,500, with an issuance discount of $500 and maturity of one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company’s common stock.


On November 10, 2015, River North agreed to assign an aggregate of $100,000 from the convertible promissory note to VES Trust. As at the date of this report, we have made the following issuances of common stock in conversion of promissory note:

On April 13, 2016 the Company issued 750,312 common shares at a deemed price of $0.009329 per share for promissory note conversion and interest conversion of $7,000.

On April 19, 2016 the Company issued 750,312 common shares at a deemed price of $0.009329 per share for promissory note conversion $7,000.

On April 26, 2016 the Company issued 923,077 common shares at a deemed price of $0.0065 per share for promissory note conversion $6,000.

On May 12, 2016 the Company issued 4,000,000 common shares at a deemed price of $0.000845 per share for promissory note conversion $3,380.

As at June 30, 2016, there remains a balance of $76,239 unconverted and payable pursuant to the note.

Recent Loans and Related Agreements

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 May 19, 2016, JDF Capital Inc. signed an extension of the maturity of the note due February 3, 2016. The note now matures on February 3, 2017 with the same terms and 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 09, 2016, JDF Capital Inc. signed an extension of the maturity of the note due on September 9, 2016. The note now matures on September 9, 2017 with the same terms and 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.

On December 1, 2015, we entered into a securities purchase agreement with JDF Capital Inc. dated December 1, 2015 pursuant to which we issued to JDF a convertible promissory note in the aggregate principal amount of $18,000, which amount includes the purchase price of $15,000, 10% pre-paid interest (per annum, for 12 months) of $1,500, and $1,500 in respect of legal fees incurred by JDF. The convertible note has a maturity date of December 1, 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 December 1, 2015 or prior to the applicable conversion date.


On December 3, 2015, we entered into a securities purchase agreement with LG Capital Funding pursuant to which we issued to LG Capital a convertible redeemable note with an aggregate face value of $17,000 due December 3, 2016 and bearing interest form issuance at the rate of 10% per annum payable on maturity. The holder of the note is entitled, at its option, before or after maturity, to convert all or a part of the principal or interest outstanding into shares of our common stock at a price equal to 65% of lowest trading price during the 20 trading days on the date the notice of conversion is delivered. In the event that we experience a DTC “Chill” on our shares, the conversion price shall be decreased to 55% instead of 65% while that “Chill” is in effect.

On January 27, 2016, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a 10% convertible note with an aggregate face value of $24,750, with an issuance discount of $2,250 and legal fees of $2,500. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company’s common stock.  at a price equal to a 65% of the lowest sale price of the common stock during the 20 trading days immediately prior to the date of the securities purchase agreement or prior to the applicable conversion date.

On February 1, 2016, we entered into a securities purchase agreement with Vigere Capital LP, a Delaware limited partnership. Pursuant to the terms of the agreement, Vigere acquired all right, title and interest to an aggregate of $70,500 portion of the note issued pursuant to a securities purchase agreement between JDF Capital, Inc. and our company on July 22, 2014. The convertible note purchased by Vigere 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. On August 11, 2016, Vigere signed an extension of the maturity of the note to be due January 22, 2017.

  • On April 12, 2016 the Company issued 776,000 common shares at a deemed price of $0.0075 per share for promissory note conversion $5,820.

  • On May 02, 2016 the Company issued 1,700,000 common shares at a deemed price of $0.0049 per share for promissory note conversion $8,398.

  • On May 10, 2016 the Company issued 3,100,000 common shares at a deemed price of $0.0010 per share for promissory note conversion $3,023.

  • On May 12, 2016 the Company issued 2,500,000 common shares at a deemed price of $0.0016 per share for promissory note conversion $4,063.

As at the June 30, 2016, there remains a balance of $49,197 unconverted and payable pursuant to the note.

On March 1, 2016, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a 10% convertible note with an aggregate face value of $13,200, with an issuance discount of $1,200 and $2,000 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a price equal to a 65% of the lowest sale price of the common stock during the 20 trading days immediately prior to the date of the securities purchase agreement or prior to the applicable conversion date.

On March 24, 2016, we entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, JDF Capital acquired a 10% convertible note with an aggregate face value of $12,100, with an issuance discount of $ $1,100 and $1,000 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a price equal to a 65% of the lowest sale price of the common stock during the 20 trading days immediately prior to the date of the securities purchase agreement or prior to the applicable conversion date.

On March 28, 2016, we entered into a securities purchase agreement with APG Capital Holdings, LLC. Pursuant to the terns of the agreement, APG Capital Holdings, LLC acquired a 10% convertible note with an aggregate face value of $40,700, with an issuance discount of $ 3,700.00. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a price equal to a 65% of the lowest sale price of the common stock during the 20 trading days immediately prior to the date of the securities purchase agreement or prior to the applicable conversion date.

On April 19, 2016, our company entered into an agreement with Toledo Advisors LLC. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $50,000, with issuance discount of $7,500. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a price equal to a 50% of the lowest sale price of the common stock during the 20 trading days ending on to the date of the applicable conversion date. The note was assigned to a third party on September 7, 2016.

On April 19, 2016, our company entered into an agreement with VES Investment Trust. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $30,000, with an issuance discount of $2,500 and $2,500 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company’s common stock at a 65% discount to the lowest trading price occurring during the 20 trading days prior to the notice of conversion.

On April 19, 2016, our company entered into an agreement with APG Capital. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $59,500, with an issuance discount of $9,500. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a 65% discount to the lowest trading price occurring during the 20 trading days prior to the applicable notice of conversion.

On May 16, 2016, our company entered into a securities purchase agreement with JDF Capital Inc. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $30,250, with an issuance discount of $2,750 and $2,500 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of our company's common stock at a 65% discount to the lowest trading price occurring during the 20 trading days prior to the applicable notice of conversion.

On August 12, 2016, our company entered into an agreement with JDF Capital Inc. Pursuant to the agreement, in consideration of $37,000 paid to our company, we issued to JDF Capital a convertible promissory note in the aggregate principal amount of $42,500, which amount is inclusive of prepaid interest at the rate of 10% per annum and $2,500 for legal expenses. The promissory note is due and payable on August 12, 2017 and will bear additional interest after maturity at the rate of 10% per annum The Note is convertible at the option of the holder into common shares of our company at a price per share equal to 65% of the lowest trading price of our common stock as reported on the OTC Markets electronic quotation system during the twenty trading days ending on the date the applicable conversion notice is received by our company.


On September 1, 2016, our company entered into letter agreements with five separate investors with the intent to buyout their notes and warrants. Pursuant to the terms of the agreement, the investors have agreed to a standstill period until September 16, 2016. The buyout will take place over a six month period of time and will result in an aggregate of $252,856 in debt being retired, an aggregate of $195,500 in warrants being retired and an aggregate buyout amount of $460,000 will be paid over the period Additionally the Company will also issue an aggregate of $232,500 in new convertible debt. Conversion Price for note will be 65% of the lowest trading price of the Common Stock as reported on the OTC Markets electronic quotation service or such marketplace. Note will have no prepayment penalties and can be purchased from the holder at face value.

The various letters of agreement impose standstill periods on the holders of the convertible notes during which time they will refrain from converting their convertible notes into common shares. Each standstill period will expire upon termination of the applicable letter of intent or until the execution of a definitive agreement, whichever is earlier. Each letter of intent contemplates the completion of good faith negotiation and due diligence by the parties by September 12, 2016 which, if successful, will be followed by the execution and closing of a definitive agreement by September 14, 2016 and September 16, 2016, respectively. The closing of the definitive definitive agreement will be subject to a number of conditions precedent which include, without limitation, our Company’s ability to secure sufficient and timely financing to complete the transaction, customary director approvals, and the participation of each of the convertible noteholders in question.

On September 2, 2016 we entered into a loan agreement with JDF Capital Inc. pursuant to which JDF Capital has provided our company with a bridge loan in the amount of $50,000. The loan bears interest at the rate of 10% per annum and is due November 2, 2016. In the event the loan is not repaid on maturity, as additional consideration to JDF Capital, we have agreed to amend the July 22, 2015, $708,000 convertible promissory note held by JDF Capital so that the note shall be convertible into our common shares at a 50% discount to market price rather than a 35% discount to market price. In September, 2016 we prepaid $50,082.19 to JDF Capital in full settlement of all principal and interest outstanding pursuant to the loan agreement.

On September 07, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $116,000, with an issuance discount of $11,600. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 08, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $27,778, with an issuance discount of $2,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 15, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $257,778, with an issuance discount of $25,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 27, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $64,900, with an issuance discount of $5,900 and legal fees of $4,000. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 29, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $61,112, with an issuance discount of $6,112. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.


Agreements with Executive Officers, Directors and Consultants

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. Walsh’s 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 company’s 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.

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 company’s 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

   
2.

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.


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.

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 management’s 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 own 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.


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 two wholly-owned subsidiaries, Alta Disposal Ltd. and Black Box Energy, Inc., and a 51% owned subsidiary, Alta Disposal Morinville Ltd. Alta Disposal Ltd., was 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 which subsequently lapsed or were sold. Black Box Energy, Inc. was incorporated on September 9, 2016 in the State of Nevada for the purposes of acquiring a 50% working interest in the McKean County Project. Alta Disposal Morinville Ltd. (formerly Blue Tap Resources, Inc.) is an Alberta, Canada corporation, In September 4, 2015 we sold substantially all of the assets, business and undertaking of Alta Disposal Morinville Ltd.

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.

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 $25,208 and working capital deficiency (current liabilities exceeding current assets) of $2,473,600 as of the year ended June 30, 2016. 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.

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.

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, 2016, states that there is a substantial doubt that we will be able to continue as a going concern.

As of June 30, 2016, 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.

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 anyone’s 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 Markets 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 OTCQB tier of the electronic quotation system operated by OTC Markets . Trading in stock quoted on the OTC Markets 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 Markets is not a stock exchange, and trading of securities on the OTC Markets 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.

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 customer’s 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 customer’s 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 purchaser’s 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.

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

On May 25, 2016 we entered into a lease agreement with Lakeshore Investment Group II, LLC to lease the premises of our executive offices located at 4635 South Lakeshore Drive, Suite 200 and 130, Tempe Arizona. The lease is for a period of 12 months beginning June 1, 2016 for a monthly rate of $1,198.67, inclusive of internet and utilities.

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-USA’s 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 International’s 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 (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 International’s 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 owned 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 International’s 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 International’s 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 International’s 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-USA’s 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.

On December 18, 2015 we withdrew our complaint against Glottech-USA, LLC filed in Court of Common Pleas in Chester County, Pennsylvania. Concurrently, we released Glottech –USA, LLC and its former principals, Mark Seigel, Larry Nesbit and Ron Fender , from any and all claims related to the complaint.

Item 4. Mine Safety Disclosures

Not applicable.

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 Markets electronic quotation system 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*
October 10, 2016 0.01 0.00
September 30, 2016 $0.02 $0.00
June 30, 2016 $0.05 $0.00
March 31, 2016 $0.14 $0.04
December 31, 2015 $0.45 $0.02
September 30, 2015 $0.15 $0.06
June 30, 2015 $5.80 $0.06
March 31, 2015 $9.20 $3.19
December 31, 2014 $32.20 $2.00
September 30, 2014 $199.60 $23.20

 

Prices reflect actual prices as quoted on the OTC Markets 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.

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 October 11, 2016, the list of stockholders for our shares of common stock showed 15 registered stockholders and 162,724,024 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, 2016, 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, 2016.

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, 2016 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, 2016. We completed the following sales of unregistered securities during and subsequent to the three month period under June 30, 2016:

On April 4, 2016 the Company issued 160,043 common shares at a deemed price of $0.0126 per share for promissory note conversion.

On April 4, 2016 the Company issued 650,000 common shares at a deemed price of $0.026 per share for promissory note conversion.

On April 4, 2016 the Company issued 641,025 common shares at a deemed price of $0.0252 per share for promissory note conversion.

On April 5, 2016 the Company issued 227,770 common shares at a deemed price of $0.011 per share for promissory note conversion.

On April 6, 2016 the Company issued 490,027 common shares at a deemed price of $0.01807 per share for promissory note conversion.

On April 7, 2016 the Company issued 267,396 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 8, 2016 the Company issued 591,620 common shares at a deemed price of $0.009329 per share for promissory note conversion.

On April 8, 2016 the Company issued 769,230 common shares at a deemed price of $0.0126 per share for promissory note conversion.

On April 11, 2016 the Company issued 500,000 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 12, 2016 the Company issued 776,000 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 13, 2016 the Company issued 775,000 common shares at a deemed price of $0.00975 per share for promissory note conversion.


On April 13, 2016 the Company issued 669,222 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 13, 2016 the Company issued 750,312 common shares at a deemed price of $0.009329 per share for promissory note conversion.

On April 11, 2016 the Company issued 575,327 common shares at a deemed price of $0.010985 per share for promissory note conversion.

On April 14, 2016 the Company issued 790,000 common shares at a deemed price of $0.007500 per share for promissory note conversion.

On April 14, 2016 the Company issued 803,725 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 14, 2016 the Company issued 846,153 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 17, 2016 the Company issued 1,128,205 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 18, 2016 the Company issued 819,493 common shares at a deemed price of $0.010595 per share for promissory note conversion.

On April 19, 2016 the Company issued 850,000 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 19, 2016 the Company issued 1,041,960 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 19, 2016 the Company issued 750,312 common shares at a deemed price of $0.009329 per share for promissory note conversion.

On April 20, 2016 the Company issued 750,000 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 21, 2016 the Company issued 469,119 common shares at a deemed price of $0.010595 per share for promissory note conversion.

On April 21, 2016 the Company issued 1,048,416 common shares at a deemed price of $0.007500 per share for exercise of warrants.

On April 22, 2016 the Company issued 1,140,474 common shares at a deemed price of $0.0075 per share for promissory note conversion.

On April 22, 2016 the Company issued 1,100,000 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 22, 2016 the Company issued 256,410 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On April 26, 2016 the Company issued 923,077 common shares at a deemed price of $0.0065 per share for promissory note conversion.


On April 26, 2016 the Company issued 1,600,000 common shares at a deemed price of $0.00715 per share for promissory note conversion.

On April 28, 2016 the Company issued 1,500,000 common shares at a deemed price of $0.0065 per share for promissory note conversion.

On April 28, 2016 the Company issued 1,007,941 common shares at a deemed price of $0.0065 per share for promissory note conversion.

On April 29, 2016 the Company issued 769,231 common shares at a deemed price of $0.0065 per share for promissory note conversion.

On April 29, 2016 the Company issued 1,214,575 common shares at a deemed price of $0.0076 per share for promissory note conversion.

On April 29, 2016 the Company issued 1,529,480 common shares at a deemed price of $0.007500 per share for exercise of warrants.

On April 29, 2016 the Company issued 1,700,000 common shares at a deemed price of $0.00494 per share for promissory note conversion.

On May 2, 2016 the Company issued 1,700,000 common shares at a deemed price of $0.00494 per share for promissory note conversion.

On May 2, 2016 the Company issued 1,514,380 common shares at a deemed price of $0.002 per share for promissory note conversion.

On May 3, 2016 the Company issued 1,586,538 common shares at a deemed price of $0.0026 per share for promissory note conversion.

On May 3, 2016 the Company issued 1,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion.

On May 5, 2016 the Company issued 2,302,321 common shares at a deemed price of $0.00145 per share for promissory note conversion.

On May 5, 2016 the Company issued 2,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion.

On May 5, 2016 the Company issued 2,000,000 common shares at a deemed price of $0.002 per share for promissory note conversion.

On May 9, 2016 the Company issued 2,500,000 common shares at a deemed price of $0.001625 per share for promissory note conversion.

On May 9, 2016 the Company issued 5,500,000 common shares at a deemed price of $0.00115 per share for promissory note conversion.

On May 9, 2016 the Company issued 3,500,000 common shares at a deemed price of $0.00125 per share for promissory note conversion.

On May 9, 2016 the Company issued 6,100,000 common shares at a deemed price of $0.00075 per share for promissory note conversion.

On May 10, 2016 the Company issued 3,200,000 common shares at a deemed price of $0.000750 per share for promissory note conversion.


On May 10, 2016 the Company issued 3,100,000 common shares at a deemed price of $0.000975 per share for promissory note conversion.

On May 10, 2016 the Company issued 6,600,000 common shares at a deemed price of $0.00075 per share for promissory note conversion.

On May 11, 2016 the Company issued 6,000,000 common shares at a deemed price of $0.00075 per share for promissory note conversion.

On May 11, 2016 the Company issued 3,500,000 common shares at a deemed price of $0.00975 per share for promissory note conversion.

On May 12, 2016 the Company issued 2,500,000 common shares at a deemed price of $0.001625 per share for promissory note conversion.

On May 12, 2016 the Company issued 4,000,000 common shares at a deemed price of $0.000845 per share for promissory note conversion.

On May 13, 2016 the Company issued 9,717,385 common shares at a deemed price of $0.00055 per share for promissory note conversion.

On May 12, 2016 the Company issued 7,900,000 common shares at a deemed price of $0.0065 per share for promissory note conversion.

On June 8, 2016 (effective September 9, 2016) the Company issued 4,518,720 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 7, 2016 the Company issued 5,800,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 15, 2016 the Company issued 6,480,660 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 19, 2016 the Company issued 5,500,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 22, 2016 the Company issued 6,807,860 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 29, 2016 the Company issued 6,500,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 29, 2016 the Company issued 7,344,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

We completed the above described issuances of common shares in reliance on Rule 506 under Regulation D and/or Section 4(2) of the Securities Act of 1933.

Item 6. Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7. Management’s 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, 2016 and June 30, 2015 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, 2017 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, 2017.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the twelve months ending June 30, 2017.

Results of Operations for the Years Ended June 30, 2016 and 2015

The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended June 30, 2016 and 2015.

Our operating results for the years ended June 30, 2016 and 2015 are summarized as follows:

    Year Ended  
    June 30,  
    2016     2015  
             
Revenue $  -   $  -  
Operating Expenses $  548,217   $  1,853,632  
Interest Expense $  781,107   $  1,371,159  
Gain on change in the fair value of derivative liability $  (595,512 ) $ (2,806,127 )
Amortization of debt discount $  515,942   $  1.970,562  
Bad-debt write off $  20,000   $  -  
Gain on disposal business operations $  7,761   $  -  
Equity in loss of unconsolidated affiliate $ -   $  384  
Other Income $  -   $  93,944  
Loss from discontinued operations $  78,624   $  2,728,419  
Impairment from discontinued operations $  -   $  60,178  
Net Loss $  1,340,617   $  2,728,419  

Revenues

We have not earned revenues since our inception.

Operating Expenses

Our operating expenses for the years ended June 30, 2016 and June 30, 2015 are outlined in the table below:

    Year Ended  
    June 30,  
    2016     2015  
             
Mining expenses $  31,174   $  37,033  
Selling, general and administrative $  517,043   $  1,192,170  
Impairment loss $  -   $  624,429  
Total operating expenses $  548,217   $  1,853,632  

The decrease of $1,305,415 in operating expenses for the year ended June 30, 2016, compared to the same period in fiscal 2015, was mainly due to a decrease in selling, general, and administrative expenses, and a decrease in impairment loss during the fiscal 2016. The decrease in selling, general, and administrative expenses resulted primarily from our sale of the assets and business of our 51% owned subsidiary, Alta Disposal Morinville, Ltd.


Liquidity and Financial Condition

Working Capital

      As at     As at  
      June 30,     June 30,  
      2016     2015  
  Total current assets $  48,007   $  115,021  
  Total current liabilities $  2,521,607   $ 2,571,497  
  Working capital (deficit) $  (2,473,600 ) $  (2,456,476 )

As of June 30, 2016, our total current assets were $48,007, our total current liabilities were $2,521,607 and we had a working capital deficit of $2,473,600 (June 30, 2015 - $2,456,476). Our financial statements report a net loss of $1,340,617 as at June 30, 2016 and an accumulated deficit of $50,806,438 for the period from May 31, 2006 (date of inception) to June 30, 2016 (June 30, 2015 - $49,504,350).

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,  
      2016     2015  
  Net Cash (Used in) Operations $  (402,644 ) $  (1,178,427 )
  Net Cash Provided by Investing Activities $  -   $  299,940  
  Net Cash Provided by Financing Activities $  368,000   $  908,668  
  Cash (decrease) increase during the year $  (38,890 ) $  6,466  

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 $2,473,600 as of June 30, 2016 compared to working capital deficit of $2,456,476 as of June 30, 2015.

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 $650,000 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

Our audited consolidated financial statements have been prepared assuming that our 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, 2016, we had a working capital deficiency of $2,473,600 (June 30, 2015 - $2,456,476) and an accumulated deficit of $50,806,439 (June 30, 2015 - $49,504,348). We intend 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.

Our ability 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, our management intends to raise additional funds through public or private placement offerings.

These factors, among others, raise substantial doubt about our 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..

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.

Restatement to previously issued financial statements

Subsequent to the issuance of June 30, 2015 financial statements, management determined that the warrants issued were incorrectly valued and derivative liability on the conversion option embedded in convertible notes was not recognized and during the year period ending June 30, 2016, these warrants were revalued and a derivative liability on the conversion option was calculated. As a result of revaluation of the warrants, the consolidated balance sheet for the year ending June 30, 2015, the consolidated statements of operations and comprehensive income (loss) and consolidated statement of cash flows for the year period ending June 30, 2015 and consolidated statements of changes in stockholders' deficit for the period ending June 30, 2014 and June 30, 2015 were restated.

The tables contained in Item 13 of the notes to the June 30, 2016 financial statements reflect the corrections to the affected line items in the previously issued financial statements as of and for the year ended June 30, 2015.

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 Bluetap Resources Ltd.). Intercompany accounts and transactions have been eliminated in consolidation in conformity with the applicable accounting framework. The consolidated financial statements do not include the accounts of our wholly owned subsidiary, Black Box Energy, Inc., which was incorporated subsequent to the year ended June 30, 2016.

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 $25,208 and $64,098 in cash and cash equivalents at June 30, 2016 and 2015, 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, 2016 and 2015, the Company had no 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

Our company’s 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 company’s 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.

Non-controlling Interest

The 49% third party ownership of Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.) at June 30, 2016 and 2015 are recorded as non-controlling interests in the consolidated financial statements. Details of changes in the non-controlling interests during the years ended June 30, 2016 and 2015 and are reflected in the consolidated statement of deficit.


Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

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. The total number of potential no. of shares is 441,092,305 at the year ending June 30, 2016.

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.

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;
- equity is translated at historical exchange rates; 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 period ending June 30, 2016 closing rate at 0.769 CDN$: US$, average rate at 0.7761 CDN$: US$ and for the year ended June 30, 2015 closing rate at 0.8017 CDN$: US$, average rate at 0.8518 CDN$: US$. 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, 2016 and 2015, 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.

Warrants

The Company accounts for currently outstanding detachable warrants to purchase common stock as derivative liabilities as they are freestanding derivative financial instruments. The warrants are recorded as derivative liabilities at fair value, estimated using a Black-Scholes option pricing model, and marked to market at each balance sheet date, with changes in the fair value of the derivative liabilities recorded in the consolidated statements of operations and comprehensive loss. Upon exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. It provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption.

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 our 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.

Our company’s Level 3 financial liabilities consist of the derivative liability of our 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. 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

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.

During the year ended June 30, 2016 and 2015, the Company didn’t record any revenue under continuing operation.

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 $Nil (June 30, 2015 - $18,984) in allowance for doubtful accounts.

Recent Accounting Pronouncements

In January 2016, the FASB issued an accounting standard update which requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in earnings. Under the standard, entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available for sale as a component of other comprehensive income. For equity investments without readily determinable fair values the cost method of accounting is also eliminated, however subject to certain exceptions, entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment and plus or minus adjustments for observable price changes, with all such changes recognized in earnings. This new standard does not change the guidance for classifying and measuring investments in debt securities and loans. The standard is effective for us on July 1, 2018 (the first quarter of our 2019 fiscal year). The Company is currently evaluating the anticipated impact of this standard on its consolidated financial statements.


In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-10 on its consolidated financial statements.


FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The effective dates are the same as those for Topic 606.

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.


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, 2016 and 2015 and the related statement of operations, comprehensive loss, stockholders’ deficit and cash flows for the two years in the period ended June 30, 2016. 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 have 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lithium Exploration Group, Inc. as of June 30, 2016 and 2015, and the results of their operations and their cash flows for the two years in the period ended June 30, 2016, 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 has accumulated deficit, negative cash flows from operations, and working capital deficit, 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/RBSM LLP
October 18, 2016
New York, New York


LITHIUM EXPLORATION GROUP, INC.

CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016



Lithium Exploration Group, Inc.
Consolidated Balance Sheets
 

    June 30,     June 30,  
    2016     2015  
          (Restated)  
             
 ASSETS            
             
 Current            
     Cash and cash equivalents $  25,208   $  64,098  
     Receivable   -     13,421  
     Loan receivable   -     20,000  
     Prepaid expenses   2,788     2,789  
     Current assets held for sale (Note 12)   20,011     14,713  

 Total current assets

  48,007     115,021  
             
 Total Assets $  48,007   $  115,021  
             
 LIABILITIES AND DEFICIT            
             
 Current            
       Accounts payable and accrued liabilities (Note 9) $  211,813   $  65,962  
       Derivative liability – convertible promissory notes (Note 6)   1,162,058     1,646,448  
       Derivative liability – warrants (Note 6)   268,611     143,375  
       Due to related party (Note 7 and 9)   115,000     115,000  
       Convertible promissory notes - net of unamortized debt discount (Note 6)   619,769     533,994  
       Accrued interest – convertible promissory notes (Note 6)   137,936     60,022  
       Current liabilities held for sale (Note 12)   6,420     6,696  
             
 Total Current Liabilities   2,521,607     2,571,497  
             
 Commitments and contingencies            
             
 DEFICIT            
 Lithium Explorations Group, Inc. Stockholders’ Deficit            
Capital stock (Note 3) 
         Authorized: 
         100,000,000 preferred shares, $0.001 par value 
         10,000,000,000 (June 30, 2015 – 2,000,000,000) common 
         shares, $0.001 par value 
  -     -  
         Issued and outstanding: 
         Nil preferred shares (June 30, 2015 – Nil) 
         119,772,784 common shares (June 30, 2015 – 7,574,353)
   119,773     7,575  
 Additional paid-in capital   48,598,773     47,383,231  
 Accumulated other comprehensive loss   (33,731 )   (29,484 )
 Accumulated deficit   (50,806,439 )   (49,504,348 )
 Total Lithium Exploration Group, Inc. Stockholders’ Deficit   (2,121,624 )   (2,143,026 )
 Non-controlling interest   (351,976 )   (313,450 )
 Total Deficit   (2,473,600 )   (2,456,476 )
             
 Total Liabilities and Deficit $  48,007   $  115,021  

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, 2016     (Restated)  
             
Revenue $  -   $  -  
             
Operating Expenses:            

   Mining (Notes 3 & 5)

  31,174     37,033  

   Selling, general and administrative (Notes 3 & 5)

  517,043     1,192,170  

   Impairment Loss

  -     624,429  
Total operating expenses   548,217     1,853,632  
(Loss) from operations   (548,217 )   (1,853,632 )
Other income (expenses)            
Interest expense (Note 6)   (781,107 )   (1,371,159 )
Gain on change in the fair value of derivative liability (Note 6)   595,512     2,806,127  
Amortization of debt discount   (515,942 )   (1,970,562 )
Bad-debt write off   (20,000 )   -  
Gain on disposal of business operations   7,761     -  
Equity in loss of unconsolidated affiliate   -     (384 )
Other income   -     93,944  
             
(Loss) before income taxes   (1,261,993 )   (2,295,666 )
Provision for income taxes (Note 4)   -     -  
             
Net (loss) from continued operations   (1,261,993 )   (2,295,666 )
             
(Loss) from discontinued operations   (78,624 )   (372,575 )
Impairment (loss) from discontinued operations   -     (60,178 )
             
Net (loss)   (1,340,617 )   (2,728,419 )
Less: Net loss attributable to the non-controlling interest   (38,526 )   (212,050 )
             
Net (loss) attributable to Lithium Exploration Group, Inc. Common shareholders $  (1,302,091 ) $  (2,516,369 )
             
Basic and Diluted (loss) per Common Share from continuing operations $  (0.05 ) $  (2.20 )
Basic and Diluted (loss) per Common Share from discontinued operations $  (0.00 ) $  (0.41 )
             
Basic and Diluted Weighted Average Number of Common Shares Outstanding   28,018,300     1,045,061  
Comprehensive loss:            
Net (loss) $  (1,340,617 ) $  (2,728,419 )
Foreign currency translation adjustment   (4,248 )   (23,715 )
Comprehensive (loss)   (1,344,865 )   (2,752,134 )
Comprehensive (loss) attributable to non-controlling interest   (38,526 )   (212,050 )
Comprehensive (loss) attributable to Lithium Exploration Group, Inc. $  (1,306,339 ) $  (2,540,084 )

The accompanying notes are an integral part of these consolidated financial statements.



Lithium Exploration Group, Inc.
Consolidated Statements of Changes in Stockholders’ Deficit
 

    Common Shares                                      
                      Accumulated Other                    
                Additional Paid-in     Comprehensive     Accumulated           Stockholders’  
                Capital     Loss     Deficit     Non-controlling     (Deficit)  
    Number of     Amount   $’   $’   $’     Interest   $’  
    Shares   $’     (Restated)     (Restated)     (Restated)   $’     (Restated)  

Balance – June 30, 2014 (restated)

  47,990   $  48   $  39,111,899   $  (5,769 ) $  (46,987,979 ) $  (101,400 ) $  (7,983,201 )

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 Stock issued for debt conversion

  7,421,245     7,421     2,179,398     -     -     -     2,186,819  

Derivative liability transferred to additional paid
in capital on conversion of note

  -     -     3,174,990     -     -     -     3,174,990  

Common shares issued for cash less exercise of warrants

  102,004     102     2,729,920     -     -     -     2,730,022  

Common shares issued to trust

  20     -     38     -     -     -     38  

Foreign currency translation loss

  -     -     -     (23,715 )   -     -     (23,715 )

Net loss for the year

  -     -     -     -     (2,516,370 )   (212,050 )   (2,728,419 )

Balance – June 30, 2015 (restated)

  7,574,353   $  7,575   $  47,383,231   $  (29,484 ) $  (49,504,348 ) $  (313,450 ) $  (2,456,476 )

Common shares issued for debt conversion and interest

  109,612,491     109,612     367,289     -     -     -     476,901  

Derivative liability transferred to additional paid in capital on conversion of note

  -     -     768,175     -     -     -     768,175  

Common shares issued for cash less exercise of warrants

  2,577,896     2,578     19,898                 22,476  

Common shares issued for fractional shares adjustment

  8,044     8     (7 )   -     -     -     1  

Disposal of business operations

  -     -     60,187     -     -     -     60,187  

Foreign currency translation loss

  -     -     -     (4,247 )   -           (4,247 )

Net loss for the year

  -     -     -     -     (1,302,091 )   (38,526 )   (1,340,617 )

Balance – June 30, 2016

  119,772,784   $  119,773   $  48,598,773   $  (33,731 ) $  (50,806,439 ) $  (351,976 ) $  (2,473,600 )

The accompanying notes are an integral part of these consolidated financial statements.



Lithium Exploration Group, Inc.
Consolidated Statements of Cash Flows
 

          June 30,  
    June 30,     2015  
    2016     (Restated)  
             
Cash Flows from Operating Activities            
       Net loss from continuing operations $  (1,261,993 ) $  (2,295,666 )
       Loss from discontinued operations   (78,624 )   (432,753 )
       Adjustments to reconcile net loss to net cash used in operating activities:        
               Equity in income of investment held for sale   -     (104 )
               Loss on sale of unconsolidated entities   -     488  
               Gain on disposal of business operation   (7,761 )      
               Common shares issued for consulting fees   -     118,990  
               Non-cash Interest expense   695,945     1,127,002  
               Common shares issued for interest   4,118     259,139  
               Common shares issued for investor relations   -     68,000  
             
               Impairment Loss   -     624,429  
               Bad debt written-off   20,000     -  
               Gain on change in the fair value of derivative liability   (595,512 )   (2,806,127 )
               Amortization of debt discount   515,942     1,970,562  
             
             
       Changes in operating assets and liabilities:            
               Receivable, net   13,421     (13,421 )
               Prepaid expenses   -     16,610  
               Due to related party   -     115,000  
               Accrued interest   83,594     (14,982 )
               Accounts payable and accrued liabilities   145,851     52,235  
Net cash used in operating activities from continuing operations   (465,019 )   (1,210,598 )
Net cash provided by operating activities from discontinued operations   62,375     32,171  
Net cash used in operating activities   (402,644 )   (1,178,427 )
             
Cash Flows from Investing Activities            
       Proceeds from disposal of investment   -     299,940  
Net cash provided by investing activities   -     299,940  
             
             
Cash Flows from Financing Activities            
       Repayment to related party   -     (45,332 )
       Proceed from issuance of convertible promissory notes, net   368,000     954,000  
Net cash provided by financing activities   368,000     908,668  
             
Effect of foreign exchange   (4,246 )   (23,715 )
             
(Decrease) increase in cash and cash equivalents   (38,890 )   6,466  
Cash and cash equivalents - beginning of period   64,098     57,632  
Cash and cash equivalents - end of period $  25,208   $  64,098  
             
Supplementary disclosure of cash flow information:            
             
Cash paid during the period for:            
                   Interest $  -   $  2,698  
                   Income taxes $  -   $  -  
             
Supplementary non- cash Investing and Financing Activities:            
Non-cash investing and financing activities:            
                   Common stock issued for debt conversion and interest $  476,901   $  2,186,820  
                   Common stock issued on cashless exercise of warrants $  22,476   $  2,730,022  
                   Derivative liability re-classed to additional paid in capital $  768,175   $  3,174,990  
                   Debt discount on issuance of convertible note and warrants $  394,068   $  901,327  
                   Initial derivative liability on note issuance and warrants $  1,027,009   $  2,018,791  
                   Interest reclassed to convertible note $  5,680   $  -  
                   Re-classification of discontinued assets and liabilities to additional paid in capital $  60,187   $  -  

The accompanying notes are an integral part of these consolidated financial statements.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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.). 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$7,466.

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.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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.

The consolidated financial statements as of June 30, 2015 were restated during the period, and include all disclosures required by the 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 Bluetap Resources Ltd.). Intercompany accounts and transactions have been eliminated in consolidation in conformity with the applicable accounting framework.

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 $25,208 and $64,098 in cash and cash equivalents at June 30, 2016 and 2015, respectively.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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, 2016 and 2015, the Company had no 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.

Non-controlling Interest

The 49% third party ownership of Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.) at June 30, 2016 and 2015 are recorded as non-controlling interests in the consolidated financial statements. Details of changes in the non-controlling interests during the years ended June 30, 2016 and 2015 and are reflected in the consolidated statement of deficit.

Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

2.

Significant Accounting Policies - Continued

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. The total number of potential no. of shares is 441,092,305 at the year ending June 30, 2016.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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.

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;
- equity is translated at historical exchange rates; 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 period ending June 30, 2016 closing rate at 0.769 CDN$: US$, average rate at 0.7761 CDN$: US$ and for the year ended June 30, 2015 closing rate at 0.8017 CDN$: US$, average rate at 0.8518 CDN$: US$.

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, 2016 and 2015, 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, 2016 and 2015
 

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 accounts for currently outstanding detachable warrants to purchase common stock as derivative liabilities as they are freestanding derivative financial instruments. The warrants are recorded as derivative liabilities at fair value, estimated using a Black-Scholes option pricing model, and marked to market at each balance sheet date, with changes in the fair value of the derivative liabilities recorded in the consolidated statements of operations and comprehensive loss. Upon exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. It provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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.

During the year ended June 30, 2016 and 2015, the Company didn’t record any revenue under continuing operation.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

2.

Significant Accounting Policies - Continued

Income Taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, “Income Taxes” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company also follows the provisions of ASC 740-10 related to accounting for uncertain income tax positions. When tax returns are filed, some positions taken may be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. As of June 30, 2016 and 2015, the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception.

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 $Nil (June 30, 2015 - $18,984) in allowance for doubtful accounts.

Recent Accounting Pronouncements

In January 2016, the FASB issued an accounting standard update which requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in earnings. Under the standard, entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available for sale as a component of other comprehensive income. For equity investments without readily determinable fair values the cost method of accounting is also eliminated, however subject to certain exceptions, entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment and plus or minus adjustments for observable price changes, with all such changes recognized in earnings. This new standard does not change the guidance for classifying and measuring investments in debt securities and loans. The standard is effective for us on July 1, 2018 (the first quarter of our 2019 fiscal year). The Company is currently evaluating the anticipated impact of this standard on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this Update supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of adopting ASU No. 2016-02 on its consolidated financial statements.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

2.

Significant Accounting Policies - Continued

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method. We are currently evaluating the impact of adopting ASU No. 2016-09 on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-10 on its consolidated financial statements.

FASB ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” was issued in June 2016 and clarifies the objective of the collectability criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in Topic 606 is retrospectively applied. The amendments do not change the core principle of the guidance in Topic 606. The effective dates are the same as those for Topic 606.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

3.

Capital Stock – Continued

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 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 Company’s 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 Company’s Articles of Incorporation.

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.

Share Issuances

Common Stock Issuance

For the year ended June 30, 2016:

During the year ended June 30, 2016, the Company issued 109,612,491 shares upon conversion of the convertible promissory notes and accrued interest, valued at $476,901.

The Company also issued 2,577,896 shares, valued at $22,476 on cashless exercise of the warrants during the year ended June 30, 2016.

For the year ended June 30, 2015:

During the year ended June 30, 2015, the Company issued 7,421,245 shares upon conversion of the convertible promissory notes and accrued interest, valued at $2,186,820.

The Company also issued 102,004 shares, valued at $2,730,022 on cashless exercise of the warrants during the year ended June 30, 2015.

The Company issued 3,094 shares for investor relations and consulting fees during the year ended June 30, 2015 for a total amount of $186,990.

Issuances of Preferred Shares

On 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, 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. These shares were issued at par value of $0.001. These shares were subsequently cancelled on December 5, 2015 therefore the net impact on share capital is nil.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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, based upon management evaluation that such losses will more likely than not will be utilized in future periods. Additonally, the utilization of net operating losses may be limited by change of control provisions under IRC section 382 of the Internal Revenue code. Management has not evaluated if a change of control has taken place, as of date of the statements. Operating loss carryforwards generated during the period from May 31, 2006 (date of inception) through June 30, 2016 of approximately $15,320,225 will begin to expire in 2026. Accordingly, deferred tax assets were offset by the valuation allowance that increased by approximately $795,006 and $3,017,712 during the year ended June 30, 2016 and 2015 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, 2016 and 2015
 

4.

Provision for Income Taxes - Continued

The Company has no tax position at June 30, 2016 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, 2016. The Company’s 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).

    For the year ended June 30, 2016  
    Amount     Tax Effect (35%)  
Loss before income tax $ 1,340,617   $  469,216  
Non-cash interest expense   (632,942 )   (221,530 )
Gain on change in fair value of derivative liability   595,512     208,429  
Amortization of debt discount   (515,942 )   (180,580 )
Gain on disposal of business operation   7,761     2,716  
Total   795,006     278,252  
Valuation allowance   (795,006 )   (278,252 )
Net deferred tax asset (liability) $  -   $  -  

    For the year ended June 30, 2015  
    Amount     Tax Effect (35%)  
             
Net loss $  2,728,419   $  954,947  
             
Shares issued for consulting fees, mining expenses, investor relation and director fees   118,990     41,647  
Shares issued for investor relations   68,000     23,800  
Shares issued for interest expenses   259,139     90,699  
Amortization of discount   1,970,562     689,697  
Non-cash interest expense   1,117,464     391,112  
Impairment loss   (624,429 )   (218,550 )
Gain on change in fair value of derivative liability   (2,806,127 )   982,144  
             
Total   2,832,017     991,206  
             
Valuation allowance   (2,832,017 )   (991,206 )
             
Net deferred tax asset (liability) $  -   $  -  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

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 assignor’s 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 June 30, 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 Company’s 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, 2016 and 2015
 

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 International’s 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, 2016 and 2015
 

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 30, 2016 and 2015 is as follows:

    June     Principal     Interest     Total     Total     June 30,  
    30,     Issued     Converted     converted     repaid     2016  
    2015           to                    
                Principal                    
                                     
February 13, 2013 $  67,913   $  -   $  -   $  (46,005 ) $  -   $  21,908  
March 15, 2014   29,394     -     5,681     (35,075 )   -     -  
July 22, 2014   540,498     -     -     (242,239 )   -     298,259  
August 22, 2014   37,242     -     -     (21,475 )   -     15,768  
February 6, 2015   75,000     -     -     (67,850 )   -     7,150  
February 24, 2015   100,000     -     -     (23,761 )   -     76,239  
March 3, 2015   29,000     -     -     (29,000 )   -     -  
August 3, 2015   -     36,000     -     -     -     36,000  
September 9, 2015   -     30,000     -     -     -     30,000  
September 30, 2015   -     27,000     -     (7,374 )   -     19,626  
November 06,2015   -     12,000     -     -     -     12,000  
December 01, 2015   -     18,000     -     -     -     18,000  
December 01, 2015   -     18,000     -     -     -     18,000  
December 03, 2015   -     17,000     -     -     -     17,000  
January 27, 2016   -     24,750     -     -     -     24,750  
January 27, 2016   -     5,000     -           -     5,000  
March 01, 2016   -     13,200     -     -     -     13,200  
March 24, 2016   -     12,100     -     -     -     12,100  
March 28, 2016   -     40,700     -           -     40,700  
April 19, 2016   -     147,000     -           -     147,000  
May 16, 2016   -     30,250     -     -     -     30,250  
                                     
  $  879,047   $  431,000   $  5,681   $ (472,780 ) $     $  842,950  
                                     
Less: Unamortized debt discount $  (345,053 )   (394,070 )         515,942         $  (223,181 )
Total note payable, net of debt discount $  533,994                           $  619,769  
Current portion $  533,994                           $  619,769  
                                     
Long term portion $  -                           $  -  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

On August 3, 2015 the Company issued an aggregate of $36,000 Convertible Promissory Notes that matures on February 03, 2016. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $52,720 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   269.35%  
Risk free rate:   0.17%  

The initial fair values of the embedded debt derivative of $33,231 was allocated as a debt discount with the remainder $19,489 was charged to current period operations as interest expense.

The note matured during the period however, no repayment was made. An agreement was entered into by the investor and the Company and the maturity of the note has been extended by a year till February 3, 2017.

On September 9, 2015, the Company issued an aggregate of $30,000 Convertible Promissory Notes that matures on September 09, 2016. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $54,495 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   275.84%  
Risk free rate:   0.39%  

The initial fair values of the embedded debt derivative $30,000 was allocated as a debt discount up to the proceeds of the note with the remainder $24,495 was charged to current period operations as interest expense.

The note matured during the period however, no repayment was made. An agreement was entered into by the investor and the Company and the maturity of the note has been extended by a year till September 9, 2017.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6. Convertible Promissory Notes – Continued

On September 30, 2015, Company issued an aggregate of $27,000 Convertible Promissory Notes that matures on September 30, 2016. These notes bear 10% interest per annum and the holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $306,808 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   375.79%  
Risk free rate:   0.33%  

The initial fair values of the embedded debt derivative $27,000 was allocated as a debt discount up to the proceeds of the note with the remainder $279,808 was charged to current period operations as interest expense.

On November 6, 2015, the Company issued an aggregate of $12,000 Convertible Promissory Notes that matures on November 6, 2016. These notes bear interest at 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $108,927 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   383.46%  
Risk free rate:   0.47%  

The initial fair values of the embedded debt derivative of $12,000 was allocated as a debt discount up to the proceeds of the note with the remainder $96,927 charged to operations as interest expense.

On December 1, 2015, the Company issued an aggregate of $18,000 Convertible Promissory Notes that matures on December 1, 2016. These notes bear interest at 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $72,119 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued


Dividend yield:   0%  
Volatility   392.28%  
Risk free rate:   0.51%  

The initial fair values of the embedded debt derivative of $18,000 was allocated as a debt discount up to the proceeds of the note with the remainder $54,119 charged to operations as interest expense.

On December 1, 2015, the Company issued an aggregate of $18,000 Convertible Promissory Notes that matures on December 1, 2016. These note bear interest at 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $72,119 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   392.28%  
Risk free rate:   0.51%  

The initial fair values of the embedded debt derivative of $18,000 was allocated as a debt discount up to the proceeds of the note with the remainder $54,119 charged to operations as interest expense.

On December 3, 2015, the Company issued an aggregate of $17,000 Convertible Promissory Notes that matures on December 3, 2016. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $27,706 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   394.55%  
Risk free rate:   0.57%  

The initial fair values of the embedded debt derivative of $17,000 was allocated as a debt discount up to the proceeds of the note with the remainder $10,706 charged to operations as interest expense.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

On January 27, 2016, the Company issued an aggregate of $24,750 Convertible Promissory Notes that mature on January 27, 2017. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $45,731 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   383.68%  
Risk free rate:   0.47%  

The initial fair values of the embedded debt derivative of $22,846 was allocated as a debt discount with the remainder $22,885 charged to operations as interest expense.

On January 27, 2016, the Company issued an aggregate of $5,500 Convertible Promissory Notes that mature on January 27, 2017. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $9,239 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued


Dividend yield:   0%  
Volatility   383.68%  
Risk free rate:   0.47%  

The initial fair values of the embedded debt derivative of $4,615 was allocated as a debt discount with the remainder $4,623 charged to operations as interest expense.

On March 01, 2016, the Company issued an aggregate of $13,200 Convertible Promissory Notes that mature on March 01, 2017. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $29,217 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.68%  

The initial fair values of the embedded debt derivative of $13,200 was allocated as a debt discount up to the proceeds of the note with the remainder $16,017 charged to operations as interest expense.

On March 23, 2016, the Company issued an aggregate of $12,100 Convertible Promissory Notes that mature on March 23, 2017. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $17,671 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.64%  

The initial fair values of the embedded debt derivative of $6,515 was allocated as a debt discount with the remainder $11,156 charged to operations as interest expense.

On March 28, 2016, the Company issued an aggregate of $40,700 Convertible Promissory Notes that mature on March 28, 2017. These notes bear interest at a rate of 10% per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $36,293 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued


Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.65%  

The initial fair values of the embedded debt derivative of $21,915 was allocated as a debt discount with the remainder $14,378 charged to operations as interest expense.

On April 19, 2016, Company issued an aggregate of $57,500 Convertible Promissory Notes that matures on April 19, 2017. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $55,966 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.53%  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

The initial fair values of the embedded debt derivative of $55,966 was allocated as a debt discount with the remainder $nil was charged to current period operations as interest expense.

On April 19, 2016, Company issued an aggregate of $59,500 Convertible Promissory Notes that matures on April 19, 2017. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $55,966 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.53%  

The initial fair values of the embedded debt derivative of $55,966 was allocated as a debt discount with the remainder $nil was charged to current period operations as interest expense.

On April 19, 2016, Company issued an aggregate of $30,000 Convertible Promissory Notes that matures on April 19, 2017. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $55,966 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.53%  

The initial fair values of the embedded debt derivative of $30,000 was allocated as a debt discount up to the proceeds of the note with the remainder $25,966 was charged to current period operations as interest expense.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

On May 16, 2016 Company issued an aggregate of $30,250 Convertible Promissory Notes that matures on May 16, 2017. These notes bear 10% interest per annum and the Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

The Company identified embedded derivatives related to the Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Promissory Note, the Company determined a fair value of $22,132 of the embedded derivative. The fair value of the embedded derivative was determined using the Black Scholes Model based on the following assumptions:

Dividend yield:   0%  
Volatility   371.21%  
Risk free rate:   0.57%  

The initial fair values of the embedded debt derivative of $22,132 was allocated as a debt discount up to the proceeds of the note with the remainder $nil was charged to current period operations as interest expense.

The Company during the period and subsequently has extended the maturity dates on few of the Convertible Promissory Notes.

During the year ended June 30, 2016 and 2015 the Company amortized the debt discount on all the notes of $515,942 and $1,970,562 to operations as interest expense, respectively.

Derivative Liability- Debt

The fair value of the described embedded derivative on all debt was valued at $1,162,058 and $1,646,448 at June 30, 2016 and 2015, respectively, which was determined using the Black Scholes Model with the following assumptions:

    June 30, 2016     June 30, 2015  
Dividend yield:   0%     0%  
Volatility   346.6 – 453.3%     258.89%  
Risk free rate:   0.39%-0.66%     0.11% - 0.64%  

At June 30, 2016 and 2015, the Company adjusted the recorded fair value of the derivative liability on debt to market resulting in non-cash, non-operating gain of $743,224 and loss of $527,854 for the year ended June 30, 2016 and 2015, respectively

During the year ended June 30, 2016 and 2015 the Company issued 109,612,491 and 7,421,245 no of shares of the Company common stock in settlement of $476,901 and $2,186,820, respectively, of convertible note and interest.

During the year ended June 30, 2016 and 2015 the Company reclassed the derivative liability of $768,175 and $3,174,990, respectively, to additional paid in capital on conversion of convertible note.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2016 and June 30, 2015:

      Derivative  
      Liability (convertible  
      promissory notes)  
  Balance, June 30, 2014 $  3,066,200  
  Initial fair value at note issuances   1,227,384  
  Fair value of liability at note conversion   (3,174,990 )
  Mark-to-market at June 30, 2015   527,854  
  Balance, June 30, 2015 $  1,646,448  
  Initial fair value at note issuances   1,027,009  
  Fair value of liability at note conversion   (768,175 )
  Mark-to-market at June 30, 2016   (743,224 )
  Balance, June 30, 2016 $  1,162,058  
         
  Net gain for the year included in earnings relating to the liabilities held at June 30, 2016 $  743,224  

Derivative Liability- Warrants

Along with the promissory notes, the Company issued warrants that 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 480. The warrants are recorded at fair value using the Black-Scholes option pricing model and marked-to-market at each reporting period, with the changes in the fair value recorded in the consolidated statement of operations and comprehensive income (loss).



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

During the year ended June 30, 2016 no warrants were issued along with convertible note.

The fair value of the described embedded derivative on all warrants was valued at $268,611 at June 30, 2016 and $143,375 at June 30, 2015 which was determined using the Black Scholes Model with the following assumptions:

    June 30, 2016     June 30, 2015  
Dividend yield:   0%     0%  
Volatility   229.1 – 275.4%     288.96%  
Risk free rate:   0.71 – 1.01%     1.01 - 1.63%  

      Warrants     Weighted     Weighted  
      Outstanding     Average     Average  
            Exercise     Remaining  
            Price     life  
  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  
     Warrants issued   -     -     -  
     Exercised   (120 )   280.00     -  
     Cancelled   -     -     -  
     Expired   -     -     -  
  Balance, June 30, 2016   26,972   $  100.20     2.79 years  

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of June 30, 2016 and 2015:

      Derivative  
      Liability (warrants)  
  Balance, June 30, 2014 $  5,415,982  
  Initial fair value of warrant derivatives at note issuances   791,407  
  Fair value of warrant exercised   (2,730,022 )
  Mark-to-market at June 30, 2015 – warrant liability   (3,333,992 )
  Balance, June 30, 2015 $  143,375  
  Initial fair value of warrant derivatives at note issuances   -  
  Fair value of warrant exercised   (22,476 )
  Mark-to-market at June 30, 2016 – warrant liability   147,712  
  Balance, June 30, 2016 $  268,611  
         
  Net loss for the year included in earnings relating to the liabilities held at June 30, 2016 $  147,712  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

6.

Convertible Promissory Notes – Continued

At June 30, 2016 and 2015, the Company adjusted the recorded fair value of the derivative liability on warrants to market resulting in non-cash, non-operating loss of $147,712 and gain of $3,333,992 for the year ended June 30, 2016 and 2015, respectively.

During the year ended June 30, 2016 and 2015 the Company reclassed the derivative liability on warrants of $22,476 and $2,730,022, respectively, to additional paid in capital on exercise of warrants.

7.

Related Party Transactions

During the year ended June 30, 2016, the Company incurred consulting fees of $9,115 (June 30, 2015 - $157,086) with directors and officers out of which there were no stock payments (June 30, 2015 - $58,990 were paid by issuance of 2,167 shares of the Company common stock).

As of June 30, 2016, the Company repaid to a director for a non-interest bearing demand loan of $nil (Note 9) (June 30, 2015 – payable $47,537). The balance outstanding for this loan is $115,000.

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.

8.

Going Concern and Liquidity Considerations

The accompanying audited 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, 2016, the Company had a working capital deficiency of $2,473,600 (June 30, 2015 - $2,456,476) and an accumulated deficit of $50,806,439 (June 30, 2015 - $49,504,348). 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.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

9.

Commitments and Contingencies - Continued

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.

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 $68,000. These shares were issued in full effective October 22, 2014.

Lease Commitment

On May 25, 2016, the Company entered into a sublease agreement for a term of twelve months and expiring on May 30, 2017. Future minimum rental payments required under operating lease (exclusive of other additional rent payments) are $13,185.

Litigation

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.

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.

During the year ending June 30, 2016, the directors of the company decided that the loan is irrecoverable and has been written off to $nil.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

11.

Discontinued Operations

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 CDN$10,000.

Operating results for the year ended June 30, 2016 and 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.

A breakdown of the discontinued operations is presented as follow:

Consolidated Statements of Operations and Comprehensive Loss

    June 30,     June 30,  
    2016     2015  
             
             
Revenue $  -   $ 72,577  
Selling, general and administrative $  (78,624 )   (445,152 )
             
Loss from discontinued operations $  (78,624 ) $   (372,575 )

Consolidated Balance Sheets   June 30,     June 30,  
    2016     2015  
             
             
Current assets:            
Cash and cash equivalents $  1,301   $  46,731  
Receivable, net   651     28,160  
Prepaid expenses   1,822     -  
GST Receivable   16,237     -  
Impairment of net assets   -     (60,178 )
  $  20,011   $  14,713  
Current liabilities:            
Accounts payable $  6,420   $  6,696  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

12.

Subsequent Events

Black Box Energy, Inc.

On September 9, 2016, the Company acquired 100% interest in Black Box Energy, Inc. a company incorporated in the State of Nevada. Black Box Energy will purchase 50% of a 70% of the working interest in the McKean County Project from PetroChase, Inc. The consideration paid for the 50% interest in McKean County Project, is in the following amounts:

  • First Payment made on September 09, 2016 for an amount of $125,000;

  • Second Payment made on September 16, 2016 for an amount of $125,000; and

  • Management Fees Payment for an amount of $34,000 within 90 days after the Second Payment.

Issuances of Convertible Note

On August 12, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $42,500, with an issuance discount of $4,250 and $2,500 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 07, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $116,000, with an issuance discount of $11,600. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 08, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $27,778, with an issuance discount of $2,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 15, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $257,778, with an issuance discount of $25,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 27, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $64,900, with an issuance discount of $5,900 and legal fees of $4,000. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

12.

Subsequent Events - Continued

On September 29, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $61,112, with an issuance discount of $6,112. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

Intent Buyout of Convertible Promissory Notes and Warrants

On September 1, 2016, The Company entered into letter agreements with five separate investors with the intent to buyout their convertible promissory notes and warrants. Pursuant to the terms of the Agreement, the investors have agreed to a standstill period until September 16, 2016. The buyout will take place over a six month period of time and will result in an aggregate of $252,856 in debt being retired, an aggregate of $195,500 in warrants being retired and an aggregate buyout amount of $460,000 will be paid over the period. Additionally the Company will also issue an aggregate of $232,500 in new convertible debt. Conversion Price for note will be 65% of the lowest trading price of the Common Stock as reported on the OTC Markets electronic quotation service or such marketplace. Note will have no prepayment penalties and can be purchased from the holder at face value.

Bridge Loan

On September 2, 2016 the Company entered into a bridge loan in the amount of $50,000 with 10% interest per annum due November 2, 2016.

On September 7, 2016, the Company pre-paid the loan of $50,000 as per agreement dated September 2, 2016 for a total amount of $50,082 of which, $50,000 is the principal and $82 is the interest amount.

Assigned Notes

On September 7, 2016, a convertible promissory note assigned on April 19, 2016 in the amount of $50,000 to an investor is restated into a promissory note with a new investor, for an amount of $53,919.68. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 8, 2016, a convertible promissory note assigned on July 22, 2014 in the amount of $120,000 to an investor is restated into a promissory note with a new investor, for an amount of $120,000. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 9, 2016, a convertible promissory note assigned on March 28, 2016 in the amount of $40,700 to an investor is restated into a promissory note with a new investor, for an amount of $44,296.82. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

12.

Subsequent Events - Continued

On September 9, 2016, a convertible promissory note assigned on April 19, 2016 in the amount of $59,500 to an investor is restated into a promissory note with a new investor, for an amount of $64,400. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

Warrant Exchange

On September 19, 2016 the Company entered into an Exchange Agreement with JDF Capital Inc. pursuant to which it issued to JDF Capital a convertible promissory note with a face value of $140,000 in consideration for the cancellation of 700 share purchase warrants issued to JDF Capital on March 3, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $140,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 65% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $550,000 in consideration for the cancellation of 4,583 share purchase warrants issued to JDF Capital on March 15, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $550,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 65% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $708,000 in consideration for the cancellation of 4,200 share purchase warrants issued to JDF Capital on July 22, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $708,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 60% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion

Conversions

Subsequent to June 30, 2016, the following conversions occurred:

On June 8, 2016 (effective September 9, 2016) the Company issued 4,518,720 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 7, 2016 the Company issued 5,800,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 15, 2016 the Company issued 6,480,660 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 19, 2016 the Company issued 5,500,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 22, 2016 the Company issued 6,807,860 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 29, 2016 the Company issued 6,500,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

On September 29, 2016 the Company issued 7,344,000 common shares at a deemed price of $0.0005 per share for promissory note conversion.

The Company has evaluated subsequent events from July 1, 2016, through the date of this report, and determined there are no other items to disclose.



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

13.

Restatement to previously issued financial statements

Subsequent to the issuance of June 30, 2015 financial statements, management determined that the warrants issued were incorrectly valued and derivative liability on the conversion option embedded in convertible notes was not recognized and during the year period ending June 30, 2016, these warrants were revalued and a derivative liability on the conversion option was calculated. As a result of revaluation of the warrants, the consolidated balance sheet for the year ending June 30, 2015, the consolidated statements of operations and comprehensive income (loss) and consolidated statement of cash flows for the year period ending June 30, 2015 and consolidated statements of changes in stockholders’ deficit for the period ending June 30, 2014 and June 30, 2015 were restated.

The following tables reflect the corrections to the affected line items in the previously issued financial statements as of and for the year ended June 30, 2015.

Effect on Consolidated Balance Sheet

    Year ended June 30, 2015  
                   
    As previously     Effect of     As Restated  
    reported     Restatement        
                   
ASSETS                  
Current                  
   Cash and cash equivalents $  64,098   $  -   $  64,098  
   Receivable   13,421     -     13,421  
   Loan receivable   20,000     -     20,000  
   Prepaid expenses   2,789     -     2,789  
   Current assets held for sale   14,713     -     14,713  
Total current assets   115,021     -     115,021  
                   
Total Assets $  115,021   $  -   $  115,021  
                   
LIABILITIES AND DEFICIT                  
Current                  
   Accounts payable and accrued liabilities $  65,962   $  -   $  65,962  
   Derivative liability – warrants   3,134     140,241     143,375  
   Derivative liability – convertible promissory notes   -     1,646,448     1,646,448  
   Due to related party   115,000     -     115,000  
   Convertible promissory notes   300,887     233,107     533,994  
   Accrued interest – convertible promissory notes   60,022     -     60,022  
   Liabilities of discontinued operations   6,696     -     6,696  
Total Current Liabilities $  551,701   $  2,019,796   $  2,571,497  
                   
STOCKHOLDERS DEFICIT                  
   Capital stock                  
                   
   Nil preferred shares   -     -     -  

   7,574,353 common shares

  7,575     -     7,575  
Additional paid-in capital   43,165,743     4,217,488     47,383,231  
Accumulated other comprehensive loss   (29,484 )   -     (29,484 )
Deficit accumulated during the exploration   (43,267,064 )   (6,237,284 )   (49,504,348 )
Total Lithium Exploration Group, Inc. Stockholders’ Deficit   (123,230 )   (2,019,796 )   (2,143,026 )
Non-controlling interest   (313,450 )   -     (313,450 )
Total Deficit   (436,680 )   (2,019,796 )   (2,456,476 )
Total Liabilities and Deficit $  115,021   $  -   $  115,021  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

13.

Restatement to previously issued financial statements - continued

Effect on Consolidated Statement of Operations and Comprehensive Income (Loss)

    Year ended June 30, 2015  
    As previously     Effect of        
    reported     Restatement     As Restated  
                   
Revenue $  -   $  -   $  -  
Operating Expenses:                  
Mining (Notes 3 & 5)   37,033     -     37,033  
Selling, general and administrative (Notes 3 & 5)   1,192,170     -     1,192,170  
Impairment Loss   624,429     -     624,429  
Total operating expenses   1,853,632     -     1,853,632  
(Loss) from operations   (1,853,632 )   -     (1,853,632 )
Other income (expenses)                  
                   
Interest expense (Note 6)   (3,301,291 )   1,930,132     (1,371,159 )
Other income   93,944     -     93,944  
Gain on change in the fair value of derivative liability (Note 6)   3,710,345     (904,218 )   2,806,127  
Fair value of warrants issued   (873,471 )   873,471     -  
Amortization of discount on debt discount   -     (1,970,562 )   (1,970,562 )
Equity in income of investment held for sale   104     -     104  
Loss on sale of investment held for sale   (488 )         (488 )
Loss before income taxes   (2,224,489 )   (71,177 )   (2,295,666 )
                   
Provision for income Taxes (Note 4)   -     -     -  
Loss from continuing operations   (2,224,489 )   (71,177 )   (2,295,666 )
                   
Loss from discontinued operations   (372,575 )   -     (372,575 )
Impairment loss on discontinued operations   (60,178 )   -     (60,178 )
Net loss   (2,657,242 )   (71,177 )   (2,728,419 )
Less: Net loss attributable to the non-controlling interest   (212,050 )   -     (212,050 )
Net loss attributable to Lithium Exploration Group, Inc. Common shareholders $  (2,445,192 ) $  (71,177 ) $  (2,516,369 )
Basic and Diluted loss per Common Share   (2.34 )   (0.07 )   (2.41 )
Basic and Diluted Weighted Average Number of Common Shares Outstanding   1,045,061     -     1,045,061  
Comprehensive loss :                  
Net loss   (2,657,242 )   (71,177 )   (2,728,419 )
Foreign currency translation adjustment   (23,715 )   -     (23,715 )
Comprehensive loss   (2,680,957 )   (71,177 )   (2,752,134 )
Comprehensive loss attributable to non-controlling interest   (212,050 )   -     (212,050 )
Comprehensive loss attributable to Lithium Exploration Group, Inc. $  (2,468,907 ) $  (71,177 ) $  (2,540,084 )
                   
                   



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

13.

Restatement to previously issued financial statements - continued


Effect on Consolidated Statements of Cash Flows
    Year ending June 30, 2015  
                   
    As previously     Misstatement     As Restated  
    reported     Adjustment        
                   
Cash Flows from Operating Activities                  
   Net loss from continuing operations $  (2,224,489 ) $  (71,177 ) $  (2,295,666 )
Loss from discontinued operations   (432,753 )   -     (432,753 )
                   
                   
   Adjustments to reconcile net loss to net cash used in operating activities:            
           Equity in income of investment held for sale   (104 )   -     (104 )
           Loss on sale of unconsolidated affiliate   488     -     488  
           Common shares issued for consulting fees   118,990     -     118,990  
           Common shares issued for investor relations   68,000     -     68,000  
           Interest expense   3,057,135     (1,930,133 )   1,127,002  
           Amortization of discount on derivative liabilities   -     1,970,562     1,970,562  
           Common shares issued for interest expenses   259,139     -     259,139  
           Gain on change in the fair value of derivative liability   (3,710,345 )   904,218     (2,806,127 )
           Fair value of warrants issued   873,471     (873,471 )   -  
                   
           Impairment Loss   624,429     -     624,429  
   Changes in operating assets and liabilities:                  
           Receivable, net   (13,421 )   -     (13,421 )
           Prepaid expenses   16,610     -     16,610  
           Accounts payable and accrued liabilities   52,235     -     52,235  
           Due to related party   115,000     -     115,000  
           Accrued interest   (14,982 )   -     (14,982 )
Net cash used in operating activities from continuing operations   (1,210,598 )   -     (1,210,598 )
Net cash used in operating activities from discontinued operations   32,171     -     32,171  
Net cash used in operating activities   (1,178,427 )   -     (1,178,427 )
Cash Flows from Investing Activities                  
   Proceeds from disposal of investment   299,940     -     299,940  
                   
                   
Cash Flows from Financing Activities                  
   Repayment of related party   (45,332 )   -     (45,332 )
   Proceed from issuance of convertible promissory notes   954,000     -     954,000  
Net cash provided by financing activities   908,668     -     908,668  
                   
Effect of foreign exchange   (23,715 )   -     (23,715 )
                   
Decrease in cash and cash equivalents   6,466     -     6,466  
Cash and cash equivalents - beginning of period   57,632     -     57,632  
Cash and cash equivalents - end of period $  64,098     -   $  64,098  
                   
Supplementary disclosure of cash flow information:            
Cash paid during the period for:                  
             Interest $  2,698     (2,698 ) $  -  
             Income taxes $  -     -   $  -  
Supplementary non- cash Investing and Financing                  
Activities:                  
Non-cash investing and financing activities:                  
 Common stock issued for debt conversion and interest $  3,385,302   $  (1,198,482 ) $  2,186,820  
 Transfer of beneficial conversion feature to fair value of note $  518,808   $  (518,808 ) $  -  
 Common stock issued on cashless exercise of warrants $  767,982   $  1,962,038   $  2,730,020  
 Derivative liability re-classed to additional paid in capital $  -   $  3,174,990   $  3,174,990  
                   
Debt discount on convertible note and warrants $  -   $  901,327   $  901,327  
Initial derivative liability on note issuance $  -   $  2,018,791   $  2,018,791  



Lithium Exploration Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2016 and 2015
 

13.

Restatement to previously issued financial statements - continued

Effect on Consolidated Statements of Changes in Stockholders’ Deficit

    Year ended June 30, 2015  
    As previously     Misstatement     As Restated  
    reported     Adjustment        
Additional Paid in Capital                  
Beginning Balance $  38,573,856   $  538,043   $  39,111,899  
Common shares issued for debt conversion   3,636,984     (1,457,586 )   2,179,398  
Common shares issued for exercise of warrants   767,879     1,962,041     2,729,920  
Common shares issued for consulting   118,987     -     118,987  
Common shares issued for investor relation   67,999     -     67,999  
Common shares issued to trust   38     -     38  
Common shares issued for reclassification of derivative liability on convertible notes - 3,174,990 3,174,990
Closing Balance $  43,165,743   $  4,217,488   $  47,383,231  
                   
Accumulated deficit                  
Beginning Balance $  (40,821,871 ) $  (6,166,108 ) $  (46,987,979 )
Net loss for the year   (2,445,192 )   (71,177 )   (2,516,369 )
Closing Balance $  (43,267,063 ) $  (6,237,285 ) $  (49,504,348 )
                   
Total Equity                  
Beginning Balance $  (2,355,136 ) $  (5,628,065 ) $  (7,983,201 )
Common shares issued for consulting fees   118,990     -     118,990  
Common shares issued for investor relations   68,000     -     68,000  
Common shares issued for exercise of warrants   767,981     1,962,041     2,730,022  
Common shares issued for debt conversion   3,644,405     (1,457,585 )   2,186,820  
Common shares issued for reclassification of derivative liability on convertible notes   -     3,174,990     3,174,990  
Common shares issued to trust   38     -     38  
Foreign exchange translation loss   (23,715 )   -     (23,715 )
Net loss for the year   (2,657,243 )   (71,177 )   (2,728,420 )
Closing Balance $  (436,680 ) $  (2,019,796 ) $  (2,456,476 )



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, 2016.

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 SEC’s 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.

Management’s 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 company’s 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, 2016 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 company’s 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.

This annual report does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting. Management’s 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 management’s 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 May 25, 2016 we entered into a lease agreement with Lakeshore Investment Group II, LLC to lease the premises of our executive offices located at 4635 South Lakeshore Drive, Suite 200 and 130, Tempe Arizona. The lease is for a period of 12 months beginning June 1, 2016 for a monthly rate of $1,198.67, inclusive of internet and utilities.

On August 12, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $42,500, with an issuance discount of $4,250 and $2,500 of legal fees. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to 65% of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 07, 2016, the Company entered into an agreement with Concord Holding Group, LLC. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $116,000, with an issuance discount of $11,600. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of the of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 08, 2016, the Company entered into an agreement with Concord Advisors LLC. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $27,778, with an issuance discount of $2,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 9, 2016, a convertible promissory note assigned on March 28, 2016 in the amount of $40,700 to an investor is restated into a promissory note with a new investor, for an amount of $44,296. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 9, 2016, a convertible promissory note assigned on April 19, 2016 in the amount of $59,500 to an investor is restated into a promissory note with a new investor, for an amount of $64,400. The note matures in one year from the effective date of transfer. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock of the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 9, 2016, we incorporated a wholly-owned subsidiary, Black Box Energy, Inc., in the State of Nevada.


On September 9, 2016, through our wholly-owned subsidiary, Black Box Energy, Inc., we entered into a letter agreement with PetroChase, Inc. pursuant to which we purchased 50% of a 70% working interest held by PetroChase in a certain oil & gas lease known as the McKean County Project, located in McKean County, Pennsylvania. Each 10% working interest entitles the holder to earn a $0.70% net revenue interest derived from the lease. In consideration for the working interest we paid $250,000 to PetroChase, Inc. in equal installments on September 9th and September 16th, 2016. We are required to pay an additional $34,000 to PetroChase for management fees by December 16, 2016. Pursuant to the letter agreement, PetroChase will serve as the operator and drill contractor for the project. The drilling of an initial well on the property is scheduled for fall of 2016. The parties anticipate that a second well will be drilled, however the agreement does not specify the number of planned wells.

On September 15, 2016, the Company entered into an agreement with Concord Holding Group LLC. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $257,778, with an issuance discount of $25,778. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $550,000 in consideration for the cancellation of 4,583 share purchase warrants issued to JDF Capital on March 15, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $550,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 65% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $708,000 in consideration for the cancellation of 4,200 share purchase warrants issued to JDF Capital on July 22, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $708,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 60% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

On September 19, 2016 we entered into an Exchange Agreement with JDF Capital Inc. pursuant to which we issued to JDF Capital a convertible promissory note with a face value of $140,000 in consideration for the cancellation of 1,000 share purchase warrants issued to JDF Capital on March 3, 2014. The cancelled warrants were exercisable on a cashless basis and had a fair value of approximately $140,000 upon cancellation. The convertible promissory note has a maturity dated of September 19, 2017, bears interest of 8% per year, and is convertible at a price equal to 65% of the lowest closing bid price of our common stock occurring during the twenty trading days immediately preceding September 19, 2016, or immediately preceding the notice of conversion.

On September 27, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $64,900, with an issuance discount of $5,900 and legal fees of $4,000. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.

On September 29, 2016, the Company entered into an agreement with an investor. Pursuant to the terms of the agreement, the investor acquired a 10% convertible note with an aggregate face value of $61,112, with an issuance discount of $6,112. The note matures in one year. The holder of this note is entitled, at its option, to convert all or a part of the principal outstanding at the date into shares of common stock in the Company at a price equal to the lesser of $0.005 or 50% discount of the lowest trading price of the Common Stock as reported on the OTC Markets for the twenty prior trading days including the day upon which a Notice of Conversion is received.


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 36 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. Walsh’s 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. 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, 2016, 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.

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 company’s 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 Officer’s 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, 2016 and 2015; 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, 2016 and 2015.

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:



    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
2016

2015
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
2016

2015
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

77,990(3)
Nil

77,990

  (1)

Alexander Walsh was appointed president, chief executive officer, chief financial officer and director on November 4, 2010.

  (2)

Bryan A. Kleinlein served as our Chief Financial Officer from May 15, 2012 until November 1, 2014. He continued to provide consulting services to the Company during fiscal 2015 following his resignation.

  (3)

Consists of fees paid to International Compass LLC, a corporation controlled by Bryan A. Kleinlein, 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, 2016, 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, 2016 and 2015 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, 2016.

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, 2016 and 2015, 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. 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 company’s common stock. The employment agreement also provides for liability insurance and any travel and out-of-pocket expenses incurred and approved by our company. The employment agreement expired on January 12, 2016, following which Mr. Walsh has provided his services to the Company on a month to month basis at the same rate of compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of October 13, 2016, 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 (3)
320 E. Fairmont Dr.,    
Tempe, AZ, 85282    
All Officers and Directors As a Group 2,095 common (3)
Toledo Advisors LLC    
641 5th St 0 common (4) 9.99%
Lakewood, NJ 08701    
Over 5% Shareholders 0 common (4) 9.99%

  (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 October 13, 2016. As of October 13, 2016, there were 162,724,024 shares of our company’s common stock issued and outstanding.




  (2)

Alexander Walsh is our company’s president, chief executive officer, chief financial officer and director.

  (3)

Represents less than 1%

  (4)

Toledo Advisors LLC has rights under a convertible note to own a aggregate number of share of the issue common stock not to exceed 9.9 percent of shares outstanding.

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).

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, 2016 and 2015, we retained our independent auditor, RBSM LLP, Accountants & Advisors, to provide services in the following categories and amounts:

Year Ended
June 30,
2016
($)
2015
($)
Audit Fees(1) 45,000 45,000
Audit Related Fees(2) Nil Nil
Tax Fees(3) Nil Nil
All Other Fees(4) Nil Nil
Total 45,000 45,000



  (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 auditor’s 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


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)



Exhibit  
Number Description
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 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)
   
10.2 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)
   
10.3 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)
   
10.4 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)
   
10.5 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)
   
10.6 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)
   
10.7 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)
   
10.8 2014 Stock Option Plan (incorporated by reference to our Current Report on Form 8-K filed on August 6, 2014)
   
10.9 Form of Stock Option Agreement (incorporated by reference to our Current Report on Form 8- K filed on August 6, 2014)
   
10.10 Form of Stock Grant Agreement (incorporated by reference to our Current Report on Form 8-K filed on August 6, 2014)
   
10.11 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)
   
10.12 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)
   
10.13 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)
   
10.14 Securities Purchase Agreement dated as of February 24, 2015 between our company and River North Equity LLC 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)



10.15

Form of Convertible Promissory Note between our company and River North Equity LLC (incorporated by reference to our Quarterly Report on Form 10-Q filed on February 23, 2015)

 
10.16

Loan Agreement dated April 15, 2015 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.17

Purchase Agreement dated November 6, 2015 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.18

Convertible Promissory Note dated November 6, 2015 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.19

Securities Purchase Agreement dated December 1, 2015 with VES Investment Trust (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016).

 
10.20

Convertible Promissory Note dated December 1, 2015 with VES Investment Trust. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.21

Securities Purchase Agreement dated December 1, 2015 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.22

Convertible Promissory Note dated December 1, 2015 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.23

Securities Purchase Agreement dated December 3, 2015 with LG Capital Funding, LLC. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.24

Convertible Promissory Note dated December 3, 2015 with LG Capital Funding, LLC. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 4, 2016)

 
10.25

Securities Purchase Agreement dated January 27, 2016 with VES Investment Trust. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.26

Convertible Promissory Note dated January 27, 2016 with VES Investment Trust. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.27

Securities Purchase Agreement dated January 27, 2016 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.28

Convertible Promissory Note dated January 27, 2016 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.29

Securities Purchase Agreement dated March 1, 2016 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.30

Convertible Promissory Note dated March 1, 2016 with JDF Capital Inc. (incorporated by reference to our Quarterly Report on Form 10-Q filed on March 22, 2016)

 
10.31

Partial replacement note issued to APG Capital Holdings, LLC, originally issued on July 22, 2014 in the amount of $672,000 (incorporated by reference to our Quarterly Report on Form 10-Q filed on September 7, 2016)

 
10.32

Convertible Promissory Note dated April 19, 2016 with Toledo Advisors LLC (incorporated by reference to our Quarterly Report on Form 10-Q filed on September 7, 2016)




10.33 Convertible Promissory Note dated February 1, 2016 with Vigere Capital LP (incorporated by reference to our Quarterly Report on Form 10-Q filed on September 7, 2016)
 
10.34 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)
 
10.35 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)
 
10.36 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)
 
10.37* Letter Agreement dated September 9, 2016, between Black Box Energy, Inc. and PetroChase Inc.
   
10.38* Lease Agreement dated May 25, 2016 with Lakeshore Investment Group II, LLC.
   
10.39* Exchange Agreement dated September 19, 2016 ($550,000) with JDF Capital Inc.
   
10.40* Convertible Promissory Note ($550,000) dated September 19, 2016 with JDF Capital Inc.
   
10.41* Exchange Agreement dated September 19, 2016 ($708,000) with JDF Capital Inc.
   
10.42* Convertible Promissory Note ($708,000) dated September 19, 2016 with JDF Capital Inc.
   
10.43* Exchange Agreement dated September 19, 2016 ($140,000) with JDF Capital Inc.
   
10.44* Convertible Promissory Note ($140,000) dated September 19, 2016 with JDF Capital Inc.
   
10.45* Agreement for Purchase of Debt dated September 2, 2016 (executed September 7, 2016) with Concord Holding Group, LLC and APG Capital Holdings, LLC.
   
10.46* Convertible Promissory Note dated September 7, 2016 ($53,919.68) with Concord Holding Group, LLC.
   
10.47* Securities Purchase Agreement dated September 2, 2016 with Concord Holding Group, LLC.
   
10.48* Convertible Promissory Note dated September 2, 2016 ($116,000) with Concord Holding Group, LLC.
   
10.49* Securities Purchase Agreement dated September 15, 2016 with Concord Holding Group, LLC.
   
10.50* Convertible Promissory Note dated September 15, 2016 ($257,778) with Concord Holding Group, LLC.
   
10.51* Securities Purchase Agreement dated September 8, 2016 with Concord Holding Group, LLC.
   
10.52* Convertible Promissory Note dated September 8, 2016 ($27,777) with Concord Holding Group, LLC.
   
10.53* Agreement for Purchase of Debt dated September 2, 2016 with Concord Holding Group, LLC and APG Capital Holdings, LLC.
   
10.54* Convertible Promissory Note dated September 2, 2016 ($64,000) with Concord Holding Group, LLC.

Exhibit  
Number Description
(14) Code of Ethics
14.1 Code of Ethics (Incorporated by reference to our Annual Report on Form 10-KSB on September 28, 2007)
(21) Subsidiaries of the Registrant
21.1 Alta Disposal Ltd., an Alberta, Canada corporation (wholly-owned)
Black Box Energy, Inc., a Nevada corporation (wholly-owned)
(31) Rule 13a-14(a)/15d-14(a) Certification
31.1* Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer



(32) Section 1350 Certification
32.1* Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
(101)* Interactive Data Files
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* 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.


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: October 18, 2016 /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: October 18, 2016 /s/ Alexander Walsh
  Alexander Walsh
  President, Chief Executive Officer, and Director
  (Principal Executive Officer)