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EXCEL - IDEA: XBRL DOCUMENT - Lithium Exploration Group, Inc.Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - Lithium Exploration Group, Inc.exhibit31-1.htm
EX-10.80 - EXHIBIT 10.80 - Lithium Exploration Group, Inc.exhibit10-80.htm
EX-10.81 - EXHIBIT 10.81 - Lithium Exploration Group, Inc.exhibit10-81.htm
EX-32.1 - EXHIBIT 32.1 - Lithium Exploration Group, Inc.exhibit32-1.htm
EX-10.82 - EXHIBIT 10.82 - Lithium Exploration Group, Inc.exhibit10-82.htm
EX-20.1 - EXHIBIT 20.1 - Lithium Exploration Group, Inc.exhibit20-1.htm

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

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

[   ] 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 (IRS Employer Identification No.)
organization)  
   
3800 N Central Avenue, Suite 820, Phoenix, 85012
AZ 85012  
(Address of principal executive offices) (Zip Code)

480.641.4790
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

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 past 90 days.
[X] YES      [   ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] YES      [   ] NO


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions 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]
(Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
[   ] YES      [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[   ] YES      [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
668,546,134 common shares issued and outstanding as of May 18, 2015.


 

 

LITHIUM EXPLORATION GROUP, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

 

 

 


Lithium Exploration Group, Inc.
Condensed Consolidated Balance Sheets

    March 31,     June 30,  
    2015     2014  
    (Unaudited)        
             
ASSETS            
             
Current            
       Cash and cash equivalents $  58,572   $  69,732  
       Receivable   33,831     26,419  
       Loan receivable   20,000     20,000  
       Prepaid expenses   2,788     21,862  
Total current assets   115,191     138,013  
             
Investment Held for Sale (Note 11)   300,000     924,753  
             
Total Assets $ 415,191   $  1,062,766  
             
LIABILITIES AND DEFICIT            
             
Current            
       Accounts payable and accrued liabilities (Note 9) $  67,488   $  14,520  
       Derivative liability – convertible promissory notes (Note 6)   164,889     2,832,989  
       Due to related party (Note 7 and 9)   115,000     45,332  
       Convertible promissory notes            
       (net of discount of $1,489,384 and $2,797,850) (Note 6)   704,735     450,057  
       Accrued interest – convertible promissory notes (Note 6)   178,189     75,004  
             
Total Current Liabilities   1,230,301     3,417,902  
             
Commitments and contingencies            
             
DEFICIT            
Lithium Explorations Group, Inc. Stockholders’ Deficit            
Capital stock (Note 3)            
        Authorized: 
        100,000,000 preferred shares, $0.001 par value 
        2,000,000,000 (June 30, 2014 – 500,000,000) common shares, $0.001 par value
       
       Issued and outstanding:            
       Nil preferred shares (June 30, 2014 – Nil)   -     -  
         90,087,220 common shares (June 30, 2014 – 9,597,906)   90,087     9,598  
Additional paid-in capital  

42,014,271

    38,564,306  
Accumulated other comprehensive loss  

(27,600

)   (5,769 )
Accumulated deficit  

(42,640,545

)   (40,821,871 )
Total Lithium Exploration Group, Inc. Stockholders’ Deficit  

(563,787

)   (2,253,736 )
Non-controlling interest  

(251,323

)   (101,400 )
Total Deficit  

(815,110

)   (2,355,136 )
   

 

       
Total Liabilities and Stockholders’ Deficit $

415,191

  $  1,062,766  

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



Lithium Exploration Group, Inc.
Condensed Consolidated Statements of Operations And Comprehensive Loss
(Unaudited)

    Three Months                    
    Ended     Three Months     Nine Months     Nine Months  
    March 31,     Ended     Ended March 31,     Ended  
    2015     March 31, 2014     2015     March 31, 2014  
                         
Revenue $  16,176   $  17,882   $  57,476   $  17,882  
                         
Operating Expenses:                        
Mining (Notes 3 & 5)   16,212     2,024     31,212     12,152  
Selling, general and administrative (Notes 3 & 5)   399,489     534,818     1,308,405     1,245,523  
Goodwill Impairment   -     -     -     383,238  
Impairment loss   624,429     -     624,429     -  
Total operating expenses   1,040,130     536,842     1,964,046     1,640,913  
                         
Loss from operations   (1,023,954 )   (518,960 )   (1,906,570 )   (1,623,031 )
                         
Other income (expenses)                        
Interest expense (Note 6)   (146,468 )   (1,984,721 )   (2,818,008 )   (2,835,206 )
Other recovery (Note 7)   80,524     -     80,524     -  
Gain (loss) on change in the fair value of derivative liability (Note 6)  

819,513

    42,768    

3,638,090

    316,472  
Fair value of warrants issued  

(865,239

)   (2,309,345 )  

(962,309

)   (2,420,086 )
Equity in income (loss) of unconsolidated affiliate  

(6,469

)   5,473    

(324

)   5,473  
                         
Loss before income taxes   (1,142,093 )   (4,764,785 )   (1,968,597 )   (6,556,378 )
                         
Provision for Income Taxes (Note 4)   -     -     -     -  
                         
Net loss for the period   (1,142,093 )   (4,764,785 )   (1,968,597 )   (6,556,378 )
                         
Less: Net loss attributable to the non-controlling interest   (11,798 )   (55,835 )   (149,923 )   (290,487 )
                         
Net loss attributable to Lithium Exploration Group, Inc. Common shareholders   (1,130,295 )   (4,708,950 )   (1,818,674 )   (6,265,891 )
                         
Basic and Diluted Loss per Common Share $  (0.01 ) $  (0.04 ) $  (0.04 ) $  (0.07 )
                         
Basic and Diluted Weighted Average Number of Common Shares Outstanding   79,863,541     125,915,600     44,636,800     91,509,236  
                         
Comprehensive loss:                        
Net loss   (1,142,093 )   (4,764,785 )   (1,968,597 )   (6,556,378 )
Foreign currency translation adjustment   (13,997 )   (11,357 )   (21,831 )   (27,757 )
Comprehensive loss   (1,156,090 )   (4,776,142 )   (1,990,428 )   (6,584,135 )
Comprehensive loss attributable to non-controlling interest   (11,798 )   (55,835 )   (149,923 )   (290,487 )
Comprehensive loss attributable to Lithium Exploration Group, Inc.   (1,144,292 )   (4,720,307 )   (1,840,505 )   (6,293,648 )

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



Lithium Exploration Group, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)

    Preferred Shares     Common Shares           Accumulated                    
    Number               Number           Additional     Other            Non-     Stockholders’    
  of           of           Paid-in     Comprehensive     Accumulated     controlling     Equity  
    Shares     Amount     Shares     Amount     Capital     Loss     Deficit     interest     (Deficit)  
                                                       
Balance – June 30, 2014   -   $ -     9,597,906   $  9,598   $  38,564,306   $  (5,769 ) $  (40,821,871 ) $  (101,400 ) $  (2,355,136 )
                                                       
Common shares issued for consulting fees   -     -     518,788     519     118,471     -     -     -     118,990  
                                                       
Common shares issued for investor relations   -     -     100,000     100     4,900     -     -     -     5,000  
                                                       
Common shares issued for debt conversion   -     -     69,028,097     69,028     2,570,114     -     -     -     2,639,143  
                                                       
Common shares issued to depository trust   -     -     2,004     2     -     -     -     -     2  
                                                       
Common shares issued for exercise of warrants   -     -     10,840,425     10,840     756,480     -     -     -     767,320  
                                                       
Foreign exchange translation   -     -     -     -     -     (21,831 )   -     -     (21,831 )
                                                       
Net income (loss) for the period   -     -     -     -     -     -     (1,818,674 )   (149,923 )   (1,968,597 )
                                                       
Balance – March 31, 2015   -   $ -     90,087,220   $  90,087   $ 42,014,271   $  (27,600 ) $  (42,640,545 ) $  (251,323 ) $  (815,110 )

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



Lithium Exploration Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

    Nine Months     Nine Months  
    Ended     Ended  
    March 31,     March 31,  
    2015     2014  
             
Cash Flows from Operating Activities            
       Net income (loss) $  (1,968,597 ) $  (6,556,378 )
       Adjustments to reconcile net loss to net cash used in operating activities:        
               Equity in income (loss) of investment held for sale   324     (5,473 )
               Non-cash expenses   -     44,185  
               Common shares issued for investor relations   5,000     -  
               Common shares issued for consulting fees   118,990     177,167  
               Goodwill impairment   -     383,238  
               Investment impairment   624,429     -  
               Common shares issued for interest expenses   103,048     -  
               Interest expense   2,611,775     2,835,206  
               (Gain) loss on change in the fair value of derivative liability   (3,638,090 )   (316,472 )
               Fair value of warrants issued   962,309     2,420,086  
             
       Changes in operating assets and liabilities:            
               Receivable   (7,412 )   (30,490 )
               Loan receivable   -     (20,000 )
               Prepaid expenses   19,074     22,889  
               Accrued interest   103,185     -  
               Accrued expenses – related party   115,000     -  
               Accounts payable and accrued liabilities   52,968     17,847  
Net cash used in operating activities   (897,997 )   (1,028,195 )
             
             
Cash Flows from Investing Activities            
     Investment   -     (912,173 )
     Deposit applied for acquisition of subsidiary   -     (153,192 )
     Deposit   -     10,170  
Net cash used in investing activities   -     (1,055,195 )
             
Cash Flows from Financing Activities            
       Repayment to related party   (45,332 )   -  
       Issuance of note payable   -     259,077  
       Proceed from issuance of convertible promissory notes   954,000     2,318,000  
Net cash provided by financing activities   908,668     2,577,077  
             
Effect of foreign exchange   (21,831 )   (10,780 )
             
Increase (decrease) in cash and cash equivalents   (11,160 )   482,907  
Cash and cash equivalents - beginning of period   69,732     248,624  
Cash and cash equivalents - end of period $  58,572   $  731,531  
             
Supplementary disclosure of cash flow information:            
Cash paid during the period for:            
                   Interest $  -   $  -  
                   Income taxes $  -   $  -  
             
Supplementary non- cash Investing and Financing Activities:            
Non-cash investing and financing activities:            
                   Common stock issued for debt conversion $  2,536,097   $  2,004,000  
                   Deposit applied to acquisition of subsidiary $  -   $  10,170  
                   Transfer of beneficial conversion feature to fair value of note $  518,808   $  -  
                   Common stock issued on cashless exercise of warrants $  779,600   $  -  

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



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 Scottsdale, 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.).

On March 1, 2014, the Company through its 100% subsidiary Alta Disposal Ltd. acquired 50% interest in Tero Oilfield Services Ltd.

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 Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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.

These interim financial statements as of and for the nine months ended March 31, 2015 and 2014 are unaudited; however, in the opinion of management, such statements include all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position, results of operations and cash flows of the Company for the periods presented. The results for the nine months ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending June 30, 2015 or for any future period. All references to March 31, 2015 and 2014 in these footnotes are unaudited.

These unaudited condensed consolidated financial statements should be read in conjunction with our audited financial statements and the notes thereto for the year ended June 30, 2014, included in the Company's annual report on Form 10-K filed with the SEC on October 14, 2014.

The condensed balance sheet as of June 30, 2014 has been derived from the audited financial statements at that date but do not 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 Blue Tap Resources Ltd.). Intercompany accounts and transactions have been eliminated in consolidation.

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 $58,572 and $69,732 in cash and cash equivalents at March 31, 2015 and June 30, 2014, respectively.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 March 31, 2015 and June 30, 2014, the Company had $Nil and $Nil, respectively, in 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 mainly consist of legal retainers and deposit for office lease. Legal retainers and deposit for office lease will be expensed in the period when services are completed.

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.

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.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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.

No significant realized exchange gain or losses were recorded as March 31, 2015 and June 30, 2014.

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; 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 ended March 31, 2015 closing rate at 0.7885 CND$:US$, average rate at 0.8655 CND$: US$ and for year ended June 30, 2014 closing rate at 0.9367 CND$: US$ average rate at 0.9341 CND$: US$

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 March 31, 2015 and June 30, 2014, 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 Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 value its warrants with provisions resulting in derivative liabilities at fair value using the lattice model according to ASC-815-10-55. The Company revalue its warrants at the end of every period at fair value and record the difference in other income (expense) in the consolidated statements of operations.

Convertible Debentures and Convertible Promissory Notes

The Company value its convertible debentures and convertible promissory notes with provisions resulting in beneficial conversion features from the embedded derivative at fair value according to ASC-480-10-25-14, rather than have its conversion feature bifurcated and reported separately due to ASC-815-15-25-1b. Because the value of the derivative related to the warrant exceeds the proceeds of the loan, the Company allocated 100% of the proceeds to the warrant derivative and took a day one loss for the difference between the proceeds and the fair value of the warrants, resulting in a debt discount on the full fair value of the debenture because no proceeds were available to be allocated to the debt or its beneficial conversion feature. That debt discount is accreted to interest expense over the stated life of the note using the interest method in accordance with ASC 470-20-35-7a and ASC 835-30-35-2. Unaccreted debt discount on the date of conversion is accreted to interest expense on that date.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

2. Significant Accounting Policies - Continued

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.

Investment in Unconsolidated Affiliate

Investments in affiliates that are not controlled by the Company, but over which it has significant influence, are accounted for using the equity method. The Company’s share of net income from its unconsolidated affiliate is reflected in the Consolidated Statements of Operations and Comprehensive Loss as Equity in Income of Unconsolidated Affiliate.

Recent Accounting Pronouncements

The Company has adopted Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification.

A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For example, many start-ups or even long-lived organizations that have not yet begun their principal operations or do not have significant revenue would be identified as development stage entities.

For public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted.

FASB Statements:

In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Accounting Standards Updates ("ASUs") through ASU No. 2014-08 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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. 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.

Effective 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. 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.

Share Issuances

Common Stock Issuance

For the period ended March 31, 2015:

On July 1, 2014, the Company issued 9,978 common shares at a market price of $1.00 per share for consulting fees.

On July 4, 2014, the Company issued 27,076 common shares at a market price of $1.20 per share for consulting fees.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On July 9, 2014, the Company issued 485,700 common shares at a deemed price of $0.20 per share for warrants exercise of $117,962 (Note 6).

On July 16, 2014, the Company issued 90,000 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $46,769 (Note 6).

On July 30, 2014, the Company issued 905,683 common shares at a deemed price of $0.40 per share for warrants exercise of $386,433 (Note 6).

On August 1, 2014, the Company issued 53,134 common shares at a deemed price of $0.40 per share for promissory note and interest conversion of $25,000 (Note 6).

On August 1, 2014, the Company issued 12,262 common shares at a market price of $0.04 per share for consulting fees.

On August 5, 2014, the Company issued 1,032,273 common shares at a deemed price of $0.04 per share for warrants exercise of $41,244 (Note 6).

On August 8, 2014, the Company issued 445,228 common shares at a deemed price of $0.40 per share for warrants exercise of $136,555 (Note 6).

On August 12, 2014, the Company issued 160,003 common shares at a deemed price of $0.40 per share for warrants exercise of $59,953 (Note 6).

On August 28, 2014, the Company issued 519,527 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $205,984 (Note 6).

On September 1, 2014, the Company issued 17,510 common shares at a market price of $0.03 per share for consulting fees.

On September 1, 2014, the Company issued 58,366 common shares at a market price of $0.03 per share for consulting fees.

On September 3, 2014, the Company issued 150,000 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $42,135 (Note 6).

On September 3, 2014, the Company issued 25,000 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $9,717 (Note 6).

On September 4, 2014, the Company issued 45,455 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $20,000 (Note 6).

On September 4, 2014, the Company issued 29,167 common shares at a deemed price of $1.60 per share for warrants exercise of $2,322 (Note 6).

On September 8, 2014, the Company issued 55,314 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $20,510 (Note 6).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On September 10, 2014, the Company issued 336,712 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $62,375 (Note 6).

On September 10, 2014, the Company issued 76,923 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $20,000 (Note 6).

On September 11, 2014, the Company issued 130,386 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $30,777 (Note 6).

On September 11, 2014, the Company issued 279,951 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $39,712 (Note 6).

On September 11, 2014, the Company issued 82,645 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $20,000 (Note 6).

On September 12, 2014, the Company issued 495,050 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $100,000 (Note 6).

On September 12, 2014, the Company issued 143,462 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $30,781(Note 6).

On September 15, 2014, the Company issued 279,208 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $54,804 (Note 6).

On September 15, 2014, the Company issued 95,716 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $20,529 (Note 6).

On September 15, 2014, the Company issued 547,348 common shares at a deemed price of $0.04 per share for warrants exercise of $22,207 (Note 6).

On September 16, 2014, the Company issued 190,515 common shares at a deemed price of $0.20 per share for promissory note and interest conversion of $40,447 (Note 6).

On September 17, 2014, the Company issued 70,707 common shares at a deemed price of $0.10 per share for promissory note and interest conversion of $14,000 (Note 6).

On September 23, 2014, the Company issued 73,894 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $9,311 (Note 6).

On September 23, 2014, the Company issued 192,308 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $25,000 (Note 6).

On September 23, 2014, the Company issued 90,909 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $7,692 (Note 6).

On September 23, 2014, the Company issued 500,000 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $55,000 (Note 6).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On September 24, 2014, the Company issued 454,545 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $48,585 (Note 6).

On September 29, 2014, the Company issued 302,387 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $37,050 (Note 6).

On September 29, 2014, the Company issued 250,000 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $31,500 (Note 6).

On October 1, 2014, the Company issued 12,048 common shares at a market price of $0.01 per share for consulting fees.

On October 2, 2014, the Company issued 227,273 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $24,292 (Note 6).

On October 3, 2014, the Company issued 500,000 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $38,462 (Note 6).

On October 6, 2014, the Company issued 500,000 common shares at a deemed price of $0.06 per share for promissory note and interest conversion of $38,462 (Note 6).

On October 7, 2014, the Company issued 550,000 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $37,231 (Note 6).

On October 9, 2014, the Company issued 333,333 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $30,000 (Note 6).

On October 13, 2014, the Company issued 681,818 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $46,154 (Note 6).

On October 13, 2014, the Company issued 534,091 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $45,669 (Note 6).

On October 16, 2014, the Company issued 365,854 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $30,000 (Note 6).

On October 20, 2014, the Company issued 555,556 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $38,867 (Note 6).

On October 21, 2014, the Company issued 500,000 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $29,150 (Note 6).

On October 21, 2014, the Company issued 1,000,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $44,615 (Note 6).

On October 22, 2014, the Company issued 381,549 common shares at a market price of $0.06 per share for consulting fees.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On October 22, 2014, the Company issued 950,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $38,694 (Note 6).

On October 22, 2014, the Company issued 100,000 common shares at a market price of $0.06 per share for investor relations fees.

On October 23, 2014, the Company issued 294,118 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $20,000 (Note 6).

On October 24, 2014, the Company issued 441,176 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $30,000 (Note 6).

On October 27, 2014, the Company issued 1,100,415 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $66,113 (Note 6).

On October 27, 2014, the Company issued 1,000,000 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $58,301 (Note 6).

On October 27, 2014, the Company issued 750,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $43,500 (Note 6).

On October 27, 2014, the Company issued 167,288 common shares at a deemed price of $0.04 per share for promissory note and interest conversion of $7,948 (Note 6).

On October 27, 2014, the Company issued 1,135,655 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $62,934 (Note 6).

On October 31, 2014, the Company issued 750,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $26,538 (Note 6).

On October 31, 2014, the Company issued 625,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $30,000 (Note 6).

On November 3, 2014, the Company issued 750,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $34,500 (Note 6).

On November 4, 2014, the Company issued 869,565 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $38,867 (Note 6).

On November 6, 2014, the Company issued 995,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $28,578 (Note 6).

On November 10, 2014, the Company issued 990,476 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $32,000 (Note 6).

On November 13, 2014, the Company issued 1,000,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $27,692 (Note 6).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On November 14, 2014, the Company issued 1,052,632 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $40,000 (Note 6).

On November 17, 2014, the Company issued 789,474 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $30,000 (Note 6).

On November 18, 2014, the Company issued 1,282,051 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $30,769 (Note 6).

On November 18, 2014, the Company issued 1,438,673 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $47,335 (Note 6).

On November 19, 2014, the Company issued 1,700,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $37,202 (Note 6).

On December 1, 2014, the Company issued 1,500,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $32,308 (Note 6).

On December 3, 2014, the Company issued 1,071,429 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $17,500 (Note 6).

On December 4, 2014, the Company issued 1,500,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $34,980 (Note 6).

On December 5, 2014, the Company issued 1,363,636 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $29,150 (Note 6).

On December 5, 2014, the Company issued 1,500,000 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $23,077 (Note 6).

On December 8, 2014, the Company issued 1,333,333 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $23,320 (Note 6).

On December 8, 2014, the Company issued 1,750,000 common shares at a deemed price of $0.008 per share for promissory note and interest conversion of $18,846 (Note 6).

On December 9, 2014, the Company issued 1,285,714 common shares at a deemed price of $0.008 per share for promissory note and interest conversion of $17,498 (Note 6).

On December 10, 2014, the Company issued 2,250,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $20,769 (Note 6).

On December 10, 2014, the Company issued 2,415,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $19,818 (Note 6).

On December 10, 2014, the Company issued 1,700,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $20,400 (Note 6).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued

Share Issuances – Continued

On December 11, 2014, the Company issued 1,694,560 common shares at a deemed price of $0.008 per share for promissory note and interest conversion of $22,862 (Note 6).

On December 12, 2014, the Company issued 3,722,374 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $42,334 (Note 6).

On December 15, 2014, the Company issued 2,500,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $23,077 (Note 6).

On December 16, 2014, the Company issued 1,857,143 common shares at a deemed price of $0.008 per share for promissory note and interest conversion of $13,000 (Note 6).

On December 17, 2014, the Company issued 3,085,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $25,317 (Note 6).

On December 17, 2014, the Company issued 2,520,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $29,120 (Note 6).

On December 18, 2014, the Company issued 3,000,000 common shares at a deemed price of $0.006 per share for promissory note and interest conversion of $27,692 (Note 6).

On March 11, 2015, the Company issued 2,004 common shares at a deemed price of $0.02 per share to the depository trust as a result of the reverse stock split.

On March 16, 2015, the Company issued 7,235,023 common shares at a deemed price of $0.04 per share for warrants exercise of $12,924 (Note 6).

On March 31, 2015, the Company issued 4,166,712 common shares at a deemed price of $0.12 per share for promissory note and interest conversion of $46,524 (Note 6).

As at March 31, 2015, 1,196,677 (June 30, 2014- 677,889) were issued to directors and officers of the Company. 925,802 (June 30, 2014- 925,802) were issued to independent investors. 43,619 (June 30, 2014- 43,619) were issued for mining expenses. 38,442 (June 30, 2014 – 38,442) were issued for related party consulting expenses. 147,430 (June 30, 2014 – 47,430) were issued for investor relation expenses. 10,000 (June 30, 2014- 10,000) were issued for debt settlement. 2,150,056 (June 30, 2014 – 2,150,056) were issued for debenture and interest conversion. 51,406 (June 30, 2014 – 51,406) were issued for exercise of warrants attached to convertible debentures. 70,091,388 (June 30, 2014 – 1,063,291) were issued for promissory note and interest conversions. 11,300,402 (June 30, 2014 – 459,977) were issued for exercise of warrants attached to convertible promissory notes. 47,723 (June 30, 2014 – 47,723) were issued for note payable conversion. 100,000 (June 30, 2014 - 100,000) were issued for a mining option settlement. 1,000,000 (June 30, 2014 - 1,000,000) were issued for the conversion of Series A Convertible Preferred shares. 5,982,272 (June 30, 2014 – 5,982,272) were issued for the conversion of Series B Convertible Preferred shares. 2,004 (June 30, 2014 – Nil) were issued to depository trust as a result of the reverse stock split. The Company has no stock option plan, warrants or other dilutive securities, other than warrants issued to acquire 1,897,970 shares of the Company regarding convertible promissory notes (Note 6).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

3. Capital Stock – Continued Share Issuances – Continued

On January 3, 2014, the Company entered into a convertible debt settlement agreement with one investor. Pursuant to the terms of the agreement, the investor acquired 1,134,500 convertible Series B Preferred Shares to extinguish the balance of convertible debts with an aggregate principal amount of $1,134,500. The conversion price of the Series B Preferred Shares shall be the lower of 50% of the lowest reported sale price of the common stock for the 20 trading days immediately prior to (i) the closing date of the applicable convertible debt instrument of the Corporation from which the applicable Series B Preferred Shares were converted, or (ii) 50 % of the lowest reported sale price for the 20 days prior to the conversion date of the Series B Preferred Shares.

As at June 30, 2014, all of the Series B Preferred Shares issued on the January 3, 2014 debt settlement agreement were converted into 2,982,271 common shares of the Company for a total fair value of $3,639,623 of which a gain of $331,127 was recorded.

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 due to the uncertainty of their utilization in future periods. Operating loss carryforwards generated during the period from May 31, 2006 (date of inception) through March 31, 2015 of approximately $12,400,000 will begin to expire in 2026. Accordingly, deferred tax assets were offset by the valuation allowance that increased by approximately $947,750 and $536,536 during the periods ended March 31, 2015 and June 30, 2014, 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.

The Company has no tax position at March 31, 2015 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 March 31, 2015. 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, 2014, June 30, 2013, June 30, 2012 and June 30, 2011 are still open for examination by the Internal Revenue Service (IRS).



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

4. Provision for Income Taxes - Continued

    2014  
    Amount     Tax Effect (35%)
             
Net income $  (1,968,597 ) $  (689,009 )
             
Shares issued for consulting fees, mining expenses, investor relation and director fees   (222,038 )   (77,713 )
Accretion of beneficial conversion feature   (2,611,775 )   (914,121 )
Loss on change in the fair value of derivative liability and fair value of warrant issued   2,675,781     936,523  
             
Total   2,126,629     744,320  
             
Valuation allowance   (2,126,629 )   (744,320 )
             
Net deferred tax asset (liability) $  -   $  -  

    2013  
    Amount     Tax Effect (35%)
Net loss $  595,524   $  1208,433  
Shares issued for consulting fees, mining expenses, investor relation and director fees   (82,167 )   (28,758 )
Accretion of beneficial conversion feature   (258,218 )   (90,376 )
Gain on derivative liability   41,485     14,520  
Total   296,624     103,818  
Valuation allowance   (296,624 )   (103,818 )
Net deferred tax asset (liability) $  -   $  -  

5. Mineral Property Costs

Mineral Claims, Clinton Mining District

On September 25, 2009, and amended June 24, 2010, the Company entered into an Option Agreement under which the Company was granted an option to acquire an undivided 50% interest in eight mineral claims located in the Clinton Mining District, Province of British Columbia, Canada (the “Claims”), which Claims total in excess of 3,900 hectares, in consideration of the issuance of 75,000 common shares of the Company on or before December 31, 2010. The Claims were subject to a two percent net smelter royalty which can be paid out for the sum of $1,000,000 (CAD). The Company can earn an undivided 50% interest in the Claims by carrying out a $100,000 (CAD) exploration and development program on the Claims on or before December 31, 2010, plus an additional $200,000 (CAD) exploration and development program on the Claims on or before September 25, 2011.

In the event that the Company acquires an interest in the Claims, the Company and the Optionor have further agreed, at the request of either party, to negotiate a joint venture agreement for further exploration and development of the Claims.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

5. Mineral Property Costs - Continued

On April 29, 2011, the Company entered into a mutual release agreement. The Company is released from any obligations related to the Claims for considerations of a cash payment of CDN $54,624 (US$57,901) and the issuance of 10,000 common shares of the Company. The shares have been valued at a market price of $74 for a total of $740,000. The total amount of $797,901 has been recorded as mining expenses during the year ended June 30, 2011.

Mineral Permit

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);

  iv.)

CDN $300,000 on or before January 1, 2014; 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 March 31, 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 47,723 common shares of the Company at a price of US$1,.65 per share.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 100,000 shares for $1.00 to Glottech – USA upon receipt of the operational ultrasonic generator that they are building for Lithium Exploration Group. The 100,000 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 100,000 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, 2,000,000 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 Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 March 31, 2015 and June 30, 2014 is as follows:

    June 30,     Fair value     Fair value     Fair value     March 31,  
    2014     issued     converted     repaid     2015  
                               
February 13, 2013 $  461,754   $  -   $  (284,014 ) $  - $     177,740  
February 27, 2014   200,000     -     (200,000 )   -     -  
February 27, 2014   150,000     -     (150,000 )   -     -  
February 28, 2014   100,000     -     (90,250 )   -     9,750  
February 28, 2014   200,000     -     (200,000 )   -     -  
February 28, 2014   220,000     -     (153,400 )   -     66,600  
March 3, 2014   100,000     -     (100,000 )   -     -  
March 3, 2014   200,000     -     (200,000 )   -     -  
March 3, 2014   100,000     -     (100,000 )   -     -  
March 3, 2014   230,000     -     (143,048 )   -     86,952  
March 3, 2014   440,000     -     (440,000 )   -     -  
March 15, 2014   846,154     -     (475,385 )   -     370,769  
July 22, 2014   -     923,077     -     -     923,077  
August 22, 2014   -     153,846     -     -     153,846  
October 31, 2014   -     91,538     -     -     91,538  
February 6, 2015   -     115,385     -     -     115,385  
February 24, 2015   -     153,846     -     -     153,846  
March 3, 2015   -     44,615     -     -     44,615  
                               
  $  3,247,908   $  1,482,307   $  (2,536,097 ) $  -   $ 2,194,118  
Less: Debt discount   2,797,850                       1,489,384  
Net Convertible                              
promissory Note   450,058                       704,734  
                               
Current portion $  450,058                   $ 704,734  
Long term portion $  -                     $ -  

On February 13, 2013, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $1,100,000, at an issuance discount of $100,000; resulting in $1,000,000 net proceeds to the Company.

As of March 31, 2015, total net proceeds of $675,000 (June 30, 2014 - $675,000) were received with an issuance discount of $67,500 (June 30, 2014 - $67,500) for an aggregate face value of $742,500 (June 30, 2014 - $742,500). During the period ended March 31, 2015, $303,225 (June 30, 2014 - $419,272) in face value of the note including interest was converted to 9,718,085 (June 30, 2014 -708,229) common shares in accordance with the terms of the agreement.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

There is no guarantee the investor will make additional payments. The face value of $177,740 is due on February 13, 2016 and carries a one-time interest rate of 5% over the term of note, with an effective interest rate of 171.61% . The note is convertible at the lower of $5.00 and 70% of the lowest reported sales price of the common stock for the 20 days immediately prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $1,060,714. During the period ended March 31, 2015, an interest expense of $3,380 (June 30, 2014 - $7,409) was accrued.

Effective February 27, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due on August 27, 2014 and carries an interest rate of 12% per annum over the term of note, with an effective interest rate of 1220.64% . The note is convertible at the lower of 50% discount to the average of the three lowest bids on the 20 days before the date this note executed and 50% discount to the average of the three lowest bids during the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $200,000. During the period ended March 31, 2015, $205,984 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 519,527 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000 due on August 28, 2015 and carries a one-time interest rate of 15% over the term of note, with an effective interest rate of 268.24% . The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $100,000. During the period ended March 31, 2015, $102,822 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 527,227 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the period ended March 31, 2015, an interest expense of $21,000 (June 30, 2014 - $1,667) was accrued.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Effective February 27, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $75,000 due on February 27, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible 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. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $150,000. During the period ended March 31, 2015, $155,145 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 5,617,363 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $125,500 with 15% prepaid interest per annum, resulting in $100,000 net proceeds to the Company due on August 28, 2015, with an effective interest rate of 227.33% . The note is convertible at the lower of 50% discount of the lowest closing price for the 20 days prior to date of the purchase agreement or the voluntary conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $200,000. During the period ended March 31, 2015, $225,500 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 5,752,639 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective February 28, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $110,000, at an issuance discount of $10,000; resulting in $100,000 net proceeds to the Company. The note is due on September 1, 2014 and carries a one-time interest rate of 12% over the term of the note, with an effective interest rate of 781.10% . The note is convertible at the lower of $0.075 or 50% of the lowest trade during the 25 consecutive trading days immediately prior to the conversion date of the Note. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $220,000. During the period ended March 31, 2015, $153,400 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 3,700,000 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the period ended December 31, 2014, an interest expense of $55,648 (June 30, 2014 - $7,543) was accrued.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000 due on March 5, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible at the investor’s option at any time after 180 days at a price equal to 50% of the lowest closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $100,000. During the period ended March 31, 2015, $102,596 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 424,878 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due on September 3, 2014 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 1220.64% . The note is convertible at a 50% discount of the lowest closing price for the 20 days prior to date of the purchase agreement or the voluntary conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $200,000. During the period ended March 31, 2015, $207,335 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 3,280,472 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $50,000 due on March 4, 2015 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 1303.72% . The convertible note is convertible at the investor’s option at any time after 180 days at a price equal to 50% of the lowest closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $100,000. During the period ended March 31, 2015, $102,759 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 689,988 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $115,000, at an issuance discount of $15,000; resulting in $100,000 net proceeds to the Company. The note is due on April 1, 2015 and carries an interest rate of 15% per annum over the term of the note, with an effective interest rate of 361.67% . The note is convertible at the lower of $0.06 or 50% of the lowest trade during the 20 consecutive trading days immediately prior to the conversion date of the Note. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $230,000. During the period ended March 31, 2015, $151,792 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 9,024,742 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the period ended March 31, 2015, an interest expense of $10,255 (June 30, 2014 - $5,750) was accrued.

Effective March 3, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $220,000, at an issuance discount of $20,000; resulting in $200,000 net proceeds to the Company. The note is due on September 3, 2014 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 1220.64% . The note is convertible at a 50% discount of the lowest closing price for the 20 trading days immediately prior to (i) date of the purchase agreement, or (ii) the voluntary conversion of the Note. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $440,000. During the period ended March 31, 2015, $453,200 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 9,927,922 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. The note was fully converted during the period.

Effective March 15, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $550,000, at an issuance discount of $50,000; resulting in $500,000 net proceeds to the Company. The note is due on September 15, 2015 and carries an interest rate of 15% per annum over the term of the note, with an effective interest rate of 207.18% . The note is convertible at a 35% discount of the lowest closing price for the 20 trading days immediately prior to (i) date of the purchase agreement, or (ii) the voluntary conversion of the Note. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $846,154. During the period ended March 31, 2015, $475,384 (June 30, 2014 - $Nil) in face value of the note including interest was converted to 19,845,255 (June 30, 2014 - Nil) common shares in accordance with the terms of the agreement. During the period ended March 31, 2015, an interest expense of $19,479 (June 30, 2014 - $24,063) was accrued.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Effective July 22, 2014, the Company entered into a securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $600,000 due on January 22, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% .

As of December 31, 2014, total net proceeds of $600,000 were received. There is no guarantee the investor will make additional payments. The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately prior to (i) the closing date on July 22, 2014 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $923,077. During the period ended March 31, 2015, an interest expense of $40,990 was accrued.

Effective August 22, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due on February 23, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 219.75% . The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately prior to (i) the closing date on July 22, 2014 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $153,846. During the period ended March 31, 2015, an interest expense of $8,344 was accrued.

Effective October 31, 2014, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $59,500 due on October 31, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 202.17% . The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately prior to (i) the closing date on July 22, 2014 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $91,538. During the period ended March 31, 2015, an interest expense of $1,488 was accrued.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Effective February 6, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $75,000 due on August 6, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% . The note is convertible at the lower of 65% of the lowest reported sale price for the 20 trading days immediately prior to (i) the closing date on February 3, 2015 or (ii) 65% of the lowest reported sale price for the 20 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $115,385. During the period ended March 31, 2015, an interest expense of $1,500 was accrued.

Effective February 24, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $100,000 due on August 24, 2016 and carries an interest rate of 12% per annum over the term of the note, with an effective interest rate of 230.27% . The note is convertible at the lower of 65% of the lowest reported sale price for the 25 trading days immediately prior to (i) the closing date on February 24, 2015 or (ii) 65% of the lowest reported sale price for the 25 days prior the conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $153,846. During the period ended March 31, 2015, an interest expense of $1,500 was accrued.

Effective March 3, 2015, the Company entered into another securities purchase agreement with one investor. Pursuant to the terms of the agreement, the investor acquired a convertible promissory note with an aggregate face value of $29,000 due on March 3, 2016 and carries an interest rate of 10% per annum over the term of the note, with an effective interest rate of 445.74% . The convertible note is convertible at the investor’s option at any time at a price equal to 65% of the lowest closing bid price for the 20 days prior to conversion date subject to various prescribed conditions. The convertible note has a fixed stated principal amount but is not convertible into a fixed number of shares, so the conversion feature is considered an imbedded derivative. However, the convertible note as a standalone instrument is to be measured at its fair value in accordance with ASC 480-10-25-14 rather than have its conversion feature bifurcated and reported separately. The fair value at issuance was $44,615. During the period ended March 31, 2015, an interest expense of $242 was accrued.

Warrants issued along with Convertible Promissory Notes

Along with the promissory note issued on February 13, 2013, the Company issued warrants for 27,027 shares of the Company at an exercise price of $3.70 expiring February 13, 2018, 13,158 shares of the Company at an exercise price of $3.80 expiring April 24, 2018, 14,881 shares of the Company at an exercise price of $3.36 expiring June 4, 2018, 20,000 shares of the Company at an exercise price of $2.50 expiring June 27, 2018, 16,741 shares of the Company at an exercise price of $4.48 expiring August 14, 2018, 83,333 shares of the Company at an exercise price of $1.20 expiring December 10, 2018, 35,714 shares of the Company at an exercise price of $1.40 expiring February 20, 2019 and 190,476 shares of the Company at an exercise price of  $1.05 expiring April 16, 2019 respectively.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Along with the promissory note entered on September 16, 2013, the Company issued warrants for 138,889 shares of the Company at an exercise price of $1.80 and warrants for 185,185 shares of the Company at an exercise price of $1.36 for a period of five years.

Along with the promissory note entered on February 27, 2014, the Company issued warrants to acquire a total of 55,555 shares of the Company for a period of five years at an exercise price of $1.80.

Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 257,813 shares of the Company for a period of 180 days at an exercise price of $1.20.

Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 74,074 shares of the Company for a period of five years at an exercise price of $1.35.

Along with the promissory note entered on February 28, 2014, the Company issued warrants to acquire a total of 515,625 shares of the Company for a period of five years at an exercise price of $1.20.

Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 47,081 shares of the Company for a period of five years at an exercise price of $1.06.

Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 100,000 shares of the Company for a period of three years at an exercise price of $1.00.

Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 47,081 shares of the Company for a period of five years at an exercise price of $1.06.

Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 83,333 shares of the Company for a period of five years at an exercise price of $1.20.

Along with the promissory note entered on March 3, 2014, the Company issued warrants to acquire a total of 200,000 shares of the Company for a period of three years at an exercise price of $1.00.

Along with the promissory note entered on March 15, 2014, the Company issued warrants to acquire a total of 916,667 shares of the Company for a period of three years at an exercise price of $1.20.

Along with the promissory note entered on July 22, 2014, the Company issued warrants to acquire a total of 840,000 shares of the Company for a period of five years at an exercise price of $5.60.

Along with the promissory note entered on August 22, 2014, the Company issued warrants to acquire a total of 215,178 shares of the Company for a period of five years at an exercise price of $5.60.

Along with the promissory note entered on February 6, 2015, the Company issued warrants to acquire a total of 2,765,625 shares of the Company for a period of five years at an exercise price of $0.032.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

Derivative Liability

The warrants 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 topic 815-10-55. Fair values at issuance totaled $669,682, $1,126,054, $709,074 for warrants issued along with the promissory note on February 28, 2013, March 1, 2013, and September 16, 2013 respectively. Fair values at issuance for warrants issued on February 27, 2014, February 28, 2014, March 3, 2014, March 15, 2014, April 16, 2014, July 22, 2014, August 22, 2014, February 6, 2015 totaled $58,966, $938,833, $1,732,432, $1,267,156, $199,917, $634,669, $162,588, and $940,054 respectively.

On July 9, 2014, 35,714 warrants were exercised for 485,700 common shares of the Company at a deemed price of $4.00 in accordance with the terms of the agreement. A gain of $15,276 was recorded when the warrants were valued prior to the warrants exercise.

On July 30, 2014, 515,625 warrants were exercised for 905,683 common shares of the Company at a deemed price of $8.00 in accordance with the term of the agreement. A gain of $108,275 was recorded when the warrants were valued prior to the warrants exercise.

On August 5, 2014, 54,167 warrants were exercised for 1,032,273 common shares of the Company at a deemed price of $0. 80 in accordance with the term of the agreement. A gain of $10,725 was recorded when the warrants were valued prior to the warrants exercise.

On August 8, 2014, 185,185 warrants were exercised for 445,228 common shares of the Company at a deemed price of $4.00 in accordance with the term of the agreement. A gain of $41,112 was recorded when the warrants were valued prior to the warrants exercise.

On August 12, 2014, 83,333 warrants were exercised for 160,003 common shares of the Company at a deemed price of $8.00 in accordance with the terms of the agreement. A gain of $20,000 was recorded when the warrants were valued prior to the warrants exercise.

On August 27, 2014, 257,813 warrants expired in accordance with the terms of the agreement.

On September 4, 2014, 5,000 warrants were exercised for 29,167 common shares of the Company at a deemed price of $4.00 in accordance with the terms of the agreement. A gain of $1,490 was recorded when the warrants were valued prior to the warrants exercise.

On September 15, 2014, 29,167 warrants were exercised for 547,348 common shares of the Company at a deemed price of $0.80 in accordance with the terms of the agreement. A gain of $5,777 was recorded when the warrants were valued prior to the warrants exercise.

On March 16, 2015, 28,136 warrants were exercised for 361,751 common shares of the Company at a deemed price of $0.40 in accordance with the terms of the agreement. A loss of $12,925 was recorded when the warrants were valued prior to the warrants exercise.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

6. Convertible Promissory Notes - Continued

The Company used the Lattice Model for valuing warrants using the following assumptions:

  March 31, 2015 June 30, 2014
     
Risk-free interest rates 1.55% - 1.85% 1.39% - 1.77%
Term 180 days – 5 years 180 days – 5 years
Dividend yield 0% 0%
Underlying stock prices $0.42 $0.42
Volatilities 278% - 489% 278% - 489%

At March 31, 2015, the warrants were valued at $164,889 (June 30, 2014 - $2,832,989) resulting in a gain of $3,263,964 (June 30, 2014 - $2,650,532). The corresponding debt discount of the promissory notes was accreted to interest expense over the terms of notes of 3 years, 1 year, 18 months and 6 months respectively. During the period ended March 31, 2015, an accretion of $254,678 (June 30, 2014 - $412,447) was recognized as interest expense.

    Warrants     Weighted     Weighted  
    Outstanding     Average     Average  
          Exercise     Remaining  
          Price     life  
Balance, June 30, 2013  

256,688

   

  3.600

    4.71 years  
   Warrants issued  

3,057,568

   

  1.240

    2.63 years  
   Exercised  

(273,429

)  

  3.640

    -  
   Cancelled  

-

   

 -

    -  
   Expired  

-

   

 -

    -  
Balance, June 30, 2014  

3,040,827

  $

  1.220

    2.62 years  
   Warrants issued  

3,820,804

   

  1.460

    4.71 years  
   Exercised  

(1,039,502

)  

  1.300

    -  
   Cancelled  

-

   

 -

    -  
   Expired  

(257,813

)  

1.200

    -  
                   
Balance, March 31, 2015   5,564,316   $ 0.700     4.00 years  



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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 March 31, 2015 and June 30, 2014:

    Derivative  
    Liability  
Balance, June 30, 2013 $  513,375  
Initial fair value of warrant derivatives at note issuances   5,558,520  
Fair value of warrant exercised   (588,375 )
Mark-to-market at June 30, 2014 - Embedded debt derivatives   (2,650,532 )
Balance, June 30, 2014 $  2,832,988  
Initial fair value of warrant derivatives at note issuances  

1,737,309

 
Fair value of warrant exercised  

(767,319

)
Mark-to-market at March 31, 2015 - Embedded debt derivatives  

(3,638,089

)
Balance, March 31, 2015 $

164,889

 
       
Net gain for the period included in earnings relating to the      
liabilities held at December 31, 2014 $ 3,638,090  

7. Related Party Transactions

During the period ended March 31, 2015, the Company incurred consulting fees of $77,990 (June 30, 2014 - $219,300) with directors and officers out of which $58,990 were paid by issuance of 433,347 shares of the Company common stock.

On December 22, 2014, the Company entered into an short swing settlement agreement with a director wherein in exchange for forbearance of legal action by the Company, the director agreed to disgorge the short swing profit of the Company as of the effective date of the agreement. As of March 31, 2015, an aggregate amount of $80,523 was paid in settlement for this agreement.

As of March 31, 2015, the Company repaid to a director for a non-interest bearing demand loan of $47,537 (Note 9) (June 30, 2014 – payable $45,332).

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.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

8. Going Concern and Liquidity Considerations

The accompanying unaudited condensed 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 March 31, 2015, the Company had a working capital deficiency of $1,114,110 (June 30, 2014 - $3,279,889) and an accumulated deficit of $42,640,545 (June 30, 2014 - $40,821,871). 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.

Consulting Agreements

On October 1, 2013, the Company entered into an agreement with an Agent to act as its non-exclusive intermediary to locate qualified prospects (each, a “Prospect”) that may desire to provide financing (debt or equity).

The Company agreed to pay the following:

  i.

A cash retainer fee equal to $15,000.

  ii.

A cash success fee equal to ten percent (10%) of the total amount of equity raised by Agent for the initial financing transaction and ten percent (10%) for all follow on equity from the same or new Prospects (includes common stock, preferred equity, membership or partnership units and convertible debt). The total amount of the financing(s) shall mean the fair market value of the consideration (including without limitation, cash, securities, other assets, and contingent payments) actually received by the Company in connection with the financing transaction(s).

  iii.

A cash success fee equal to five percent (5%) of the total amount of debt raised by the Agent for the initial financing transaction and five percent (5%) for all follow on debt from the same or new Prospects. The total amount of the financing(s) shall mean the fair market value of the consideration (including without limitation, cash, securities, other assets, and contingent payments) actually received by the Company in connection with the financing transaction(s).




Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

9. Commitments and Contingencies - Continued

This agreement shall become effective October 1, 2013. Termination of this agreement shall be the date of the closing transaction(s) or three (3) months from the date above, whichever is earlier. However, the Company agrees to extend the terms of the Agreement twenty four (24) months following the date of termination, to any transaction(s) with any Prospect previously introduced in writing to The Company that are a result of Agent’s documented efforts prior to the date of termination.

On January 1, 2014, the Company entered in a consulting agreement with an 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 $0.05 per share, issuable on May 15, 2014, effective April 28, 2014 to April 27, 2015. These shares have not yet been issued.

On May 15, 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 an effective date of May 30, 2014 to May 31, 2016.

On August 1, 2014, the Company entered into a consulting agreement with an 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 100,000 common shares of the Company valued at $5,000. These shares were issued in full effective October 22, 2014.

Lease Commitment

On May 15, 2014, the Company entered into a sublease agreement for a term of twenty four and one half months and expiring on May 31, 2016. Future minimum rental payments required under operating lease (exclusive of other additional rent payments) are as follows:

Year ending June 30:      
2015 $  31,996  
2016   30,044  
Total minimum payments required $  62,040  



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

9. Commitments and Contingencies - Continued

Litigation

The Company filed a complaint against Glottech-USA involving a dispute over a contract for the assembly and delivery of certain equipment contractually promised by Glottech-USA, but not timely delivered in a manner required under the relevant contract(s). Although the Company previously sought equitable relief, the Company amended its Complaint to assert claims for damages against Glottech-USA. After a hearing in April of 2013, the Court of Common Pleas stayed all activity in the lawsuit against Glottech-USA pending clarification of the dissolution action in Mississippi. The lawsuit was stayed until December of 2013 and there has been no substantial activity in the case since that time. There are no claims for damages pending against the Company.

In April 2014, the Company signed a release and settlement agreement with O’Hare Energy Services Inc. (“O’Hare”) regarding unpaid fees and termination of a Non-Circumvention, Non-Disclosure and Fee Agreement dated April 19, 2013. Pursuant to the release and settlement agreement, the Company will pay to O’Hare:

  i.

$100,000 for acquisition severance payment

  ii.

$35,000 within 60 days of the date the option to purchase additional 25% of Tero Oilfield Services Ltd. (“Tero”) is exercised

As of March 31, 2015, the Company paid $75,000 (June 30, 2014 - $50,000) of the $100,000 acquisition severance payment and has not exercise the option to purchase additional investment in Tero.

On December 23, 2014, a member of the Board of Directors made demand for repayment of the debt by the company. In connection with the assignment of debt agreement and the demand, Mr. Walsh and the Company entered into a settlement agreement dated December 23, 2014 wherein the Company is to repay the debt to Mr. Walsh in full (Note 7). The 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:

  i.

an aggregate of $50,000 due immediately; and (paid $35,000)

  ii.

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.

On January 29, 2015, a lawsuit was filed against the Company for reimbursement of costs and disbursements including reasonable attorney’s, accountants and expert witness fees, in relations to the complaint for recovery of short-swing profits. On March 26, 2015, agreement was reached by all parties involved that upon payment $15,400, all outstanding claims will be settled and forever discharged.

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.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

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.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

11. Investment Held for Sale

Tero Oilfield Services Ltd (“Tero”)

On March 1, 2014, the Company acquired a 50% interest in Tero Oilfield Services Ltd. (“Tero”), a private company, in exchange for an aggregate of CDN$1,000,680 (US$906,700).

The Company has been granted an option to acquire an additional 25% of the shares in Tero for $500,000 by February 28, 2015.

Based on evaluation of the fair value of the investment less costs to sell, the fair value was less than the carrying value. The Company’s evaluation of the investment resulted in a total impairment charge of US$624,429 for the period ended March 31, 2015.

Summary financial results of Tero for the period ended March 31, 2015 are as follows:

Operations      
    US$  
       
Disposal Well Revenues $  871,763  
Operating expense   (875,631 )
    (3,868 )
Provision for Income Taxes Recovery   3,220  
Net income $ (648 )
       
Equity in income of investment held for sale $ (324 )

Summary financial position for Tero as at March 31, 2015 follows:

Financial Position

    US$  
Cash $  -  
Other current assets   181,267  
Property and equipment   358,652  
Total Assets $  539,919  
       
Current liabilities $ 230,753  
Long term debt   391,602  
Total Liabilities   622,355  
       
Capital stock   5  
Retained earnings   (82,441 )
Total Equity   (82,436 )
Total Liabilities and Equity $  539,919  
       
Investment Held for Sale:      
Balance at June 30, 2014 $  924,753  
                   Equity in income   (324 )
                   Impairment   (624,429 )
Balance at March 31, 2015 $ 300,000  



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

12. Subsequent Events

Issuances of Common Shares

On April 1, 2015, the Company issued 3,000,000 common shares at a market price of $0.018 per share for promissory note and interest conversion.

On April 1, 2015, the Company issued 3,822,000 common shares at a market price of $0.018 per share for promissory note and interest conversion.

On April 7, 2015, the Company issued 3,921,568 common shares at a market price of $0.009 per share for promissory note and interest conversion.

On April 7, 2015, the Company issued 4,500,000 common shares at a market price of $0.009 per share for promissory note and interest conversion.

On April 8, 2015, the Company issued 4,367,609 common shares at a market price of $0.008 per share for promissory note and interest conversion.

On April 10, 2015, the Company issued 5,000,000 common shares at a market price of $0.005 per share for promissory note and interest conversion.

On April 14, 2015, the Company issued 5,000,000 common shares at a market price of $0.005 per share for promissory note and interest conversion.

On April 14, 2015, the Company issued 5,000,000 common shares at a market price of $0.005 per share for promissory note and interest conversion.

On April 13, 2015, the Company issued 5,250,000 common shares at a market price of $0.005 per share for promissory note and interest conversion.

On April 16, 2015, the Company issued 8,483,394 common shares at a market price of $0.004 per share for warrants exercise.

On April 20, 2015, the Company issued 5,000,000 common shares at a market price of $0.004 per share for promissory note and interest conversion.

On April 20, 2015, the Company issued 5,000,000 common shares at a market price of $0.004 per share for promissory note and interest conversion.

On April 20, 2015, the Company issued 5,184,405 common shares at a market price of $0.004 per share for promissory note and interest conversion.

On April 20, 2015, the Company issued 6,000,000 common shares at a market price of $0.004 per share for promissory note and interest conversion.

On April 20, 2015, the Company issued 6,200,000 common shares at a market price of $0.004 per share for promissory note and interest conversion.

On April 21, 2015, the Company issued 1,076,923 common shares at a market price of $0.004 per share for warrants exercise.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

12. Subsequent Events - Continued

Issuances of Common Shares

On April 22, 2015, the Company issued 6,000,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 22, 2015, the Company issued 2,958,580 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 24, 2015, the Company issued 7,500,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 23, 2015, the Company issued 6,471,951 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 24, 2015, the Company issued 8,300,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 27, 2015, the Company issued 5,250,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 28, 2015, the Company issued 6,000,000 common shares at a market price of $0.001 per share for promissory note and interest conversion.

On April 28, 2015, the Company issued 7,860,681 common shares at a market price of $0.001 per share for promissory note and interest conversion.

On April 29, 2015, the Company issued 9,000,000 common shares at a market price of $0.001 per share for promissory note and interest conversion.

On April 30, 2015, the Company issued 9,800,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 30, 2015, the Company issued 9,000,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 30, 2015, the Company issued 9,000,000 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 30, 2015, the Company issued 10,839,994 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On April 30, 2015, the Company issued 9,716,815 common shares at a market price of $0.002 per share for promissory note and interest conversion.

On May 1, 2015, the Company issued 10,748,106 common shares at a market price of $0.001 per share for promissory note and interest conversion.

On May 1, 2015, the Company issued 9,800,000 common shares at a market price of $0.001 per share for promissory note and interest conversion.



Lithium Exploration Group, Inc.
Notes to Condensed Consolidated Interim Financial Statements
March 31, 2015
(Unaudited)

12. Subsequent Events - Continued

Issuances of Common Shares

On May 1, 2015, the Company issued 21,063,048 common shares at a market price of $0.001 per share for promissory note and interest conversion.

On May 5, 2015, the Company issued 14,727,449 common shares at a market price of $0.0011 per share for promissory note and interest conversion.

On May 5, 2015, the Company issued 15,778,495 common shares at a market price of $0.0011 per share for promissory note and interest conversion.

On May 5, 2015, the Company issued 15,000,000 common shares at a market price of $0.0011 per share for promissory note and interest conversion.

On May 4, 2015, the Company issued 10,000,000 common shares at a market price of $0.0013 per share for promissory note and interest conversion.

On May 7, 2015, the Company issued 18,154,990 common shares at a market price of $0.0008 per share for promissory note and interest conversion.

On May 7, 2015, the Company issued 15,000,000 common shares at a market price of $0.0008 per share for promissory note and interest conversion.

On May 7, 2015, the Company issued 9,800,000 common shares at a market price of $0.0008 per share for promissory note and interest conversion.

On May 7, 2015, the Company issued 15,000,000 common shares at a market price of $0.0008 per share for promissory note and interest conversion.

On May 8, 2015, the Company issued 15,778,495 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 8, 2015, the Company issued 15,000,000 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 8, 2015, the Company issued 18,500,000 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 8, 2015, the Company issued 15,000,000 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 12, 2015, the Company issued 18,154,990 common shares at a market price of $0.0008 per share for promissory note and interest conversion.

On May 11, 2015, the Company issued 18,548,242 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 12, 2015, the Company issued 17,802,198 common shares at a market price of $0.0008 per share for promissory note and interest conversion.


12. Subsequent Events - Continued

Issuances of Common Shares

On May 11, 2015, the Company issued 22,000,000 common shares at a market price of $0.0009 per share for promissory note and interest conversion.

On May 13, 2015, the Company issued 22,227,542 common shares at a market price of $0.0007 per share for promissory note and interest conversion.

On May 13, 2015, the Company issued 24,471,429 common shares at a market price of $0.0007 per share for promissory note and interest conversion.

On May 14, 2015, the Company issued 26,400,000 common shares at a market price of $0.0007 per share for promissory note and interest conversion.

On May 15, 2015, the Company issued 25,000,000 common shares at a market price of $0.0007 per share for promissory note and interest conversion.

Tero Oilfield Services Ltd (“Tero”)

On May 1, 2015, the Company entered into a Share Purchase Agreement with an individual to dispose the 50% interest in Tero for the purchase price of US$300,000. The purchase price shall be paid in two installments, with one installment of US$100,000 paid on the closing date of May 15, 2015 and the balance US$200,000 on or before June 1, 2015.

The Company has evaluated subsequent events from April 1, 2015, through the date of this report, and determined there are no other items to disclose.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly 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, 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 unaudited condensed consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly 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 quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our company”, mean Lithium Exploration Group, Inc. a Nevada corporation, and our wholly owned subsidiary, Alta Disposal Ltd., an Alberta, Canada corporation, our partially 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 3800 N Central Avenue, Suite 820, Phoenix, AZ 85012, 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. is now 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.


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. Our authorized capital will not be affected by the reverse stock split.

The amendment is currently being submitted to the Financial Industry Regulatory Authority (“FINRA”) for review. We will announce the completion of FINRA's review and the effectiveness of the amendment on the market by filing a Current Report on Form 8-K.

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. Through our subsidiary Alta Disposal Morinville Ltd., we also operate in the waste water disposal industry.

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 954,461 shares of our common stock at the price of USD$0.0825 per share (based on pre-split basis where on January 19, 2015 our board of directors approved 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).

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 2,000,000 shares of our common stock currently held by him (based on pre-split basis where on January 19, 2015 our board of directors approved 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), for a total price of $1.00. Additionally, if, for any reason, Mr. Walsh failed to deliver the 2,000,000 shares of our common stock (based on pre-split basis where on January 19, 2015 our board of directors approved 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) 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 2,000,000 common shares of our capital stock (based on pre-split basis where on January 19, 2015 our board of directors approved 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), which obligation has been satisfied through the transfer to GD Glottech International of 2,000,000 shares (based on pre-split basis where on January 19, 2015 our board of directors approved 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) 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 own 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.

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 (based on pre-split basis where on January 19, 2015 our board of directors approved 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)) 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) (based on pre-split basis where on January 19, 2015 our board of directors approved 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) 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.

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 exchange for an aggregate of $300,000 (the “Purchase Price”). The Purchase Price was payable in an aggregate of $100,000 on May 15, 2015 and $200,000 on June 1, 2015.

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 description below of the loans and the conversions of debt into shares, the warrant issuance and debt to share conversions prior to January 19, 2015 are on a share pre-split basis as our board of directors approved a reverse stock split of our issued and outstanding shares of common stock on January 19, 2015 on a basis of 20 old shares of common stock for one (1) new share of common stock (the “Share Split”). All the loans have terms that make them subject to the Share Split.

Loan Agreements with JDF Capital Inc.

$500,000 Loan

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, 2014, an interest expense of $24,063 was accrued in respect of the note.

In addition on March 15, 2014, we issued an aggregate of 18,333,333 warrants to JDF in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.06 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 23, 2014, we issued 1,818,181 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $7,692.
  • On October 3, 2014, we issued 10,000,000 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $38,462.
  • On October 6, 2014, we issued 10,000,000 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $38,462.
  • On October 7, 2014, we issued 11,000,000 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $37,231.
  • On October 13, 2014, we issued 13,636,363 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $46,154.
  • On October 21, 2014, we issued 20,000,000 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $44,615.

  • On October 31, 2014, we issued 15,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $26,538.
  • On November 10, 2014, we issued 19,809,523 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $32,000.
  • On November 13, 2014, we issued 20,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $27,692.
  • On November 18, 2014, we issued 25,641,025 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $30,769.
  • On December 1, 2014, we issued 30,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $32,308.
  • On December 5, 2014, we issued 30,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $23,077.
  • On December 8, 2014, we issued 35,000,000 common shares at a deemed price of $0.0004 per share for promissory note and interest conversion of $18,846.
  • On December 10, 2014, we issued 45,000,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $20,769.
  • On December 15, 2014, we issued 50,000,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $23,077.
  • On December 18, 2014, we issued 60,000,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $27,692.
  • On April 1, 2015, we issued 3,822,000 common shares for promissory note and interest conversion of $22,932.
  • On April 7, 2015, we issued 3,921,568 common shares for promissory note and interest conversion of $20,000.
  • On April 14, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $15,250.
  • On April 15, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $12,000.
  • On April 20, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $10,000.
  • On April 21, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $6,500.
  • On April 27, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $7,200.
  • On April 30, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $6,000.
  • On May 4, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $5,850.
  • On May 7, 2015, we issued 10,000,000 common shares for promissory note and interest conversion of $6,500.
  • On May 11, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $6,375.
  • On May 12, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $5,250.

As at the date of this report $8,393 of the note and the full amount of the 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 amend the conversion price to equal to 65% 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. As at the date of this report, we have made the following issuances of common stock in conversion of this convertible note:

  • On April 21, 2015, we issued 5,184,405 common shares for promissory note and interest conversion of $10,109.59.

  • On May 4, 2015, we issued 3,810,301 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $8,061.08.

As at the date of this report, there remains a balance $32,050 in principal payable pursuant to the note.

$600,000 Loan

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 ($0.04) 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.

As additional consideration for the proceeds of the convertible note, we issued to JDF Capital warrants exercisable for 5 years to purchase up to 16,800,000 shares of our common stock at an exercise price of $0.04 per share, subject to cashless exercise provisions.

As at the date of this report, $600,000 has been funded pursuant to the note which amount 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 note of JDF Capital (that was issued from our company) to LG Capital. As at the date of this report, the note which amount remains unconverted and outstanding.

  • On April 29, 2015, we issued 2,958,580 common shares for promissory note and interest conversion of $5,000.
  • On May 4, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $7,605.
  • On May 11, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $6,825.
  • On May 13, 2015, we issued 17,802,198 common shares for promissory note and interest conversion of $8,100.
  • On May 15, 2015, we issued 25,000,000 common shares for promissory note and interest conversion of $9,750.

As at the date of this report, there remains a balance of $62,720 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 540,540 shares of our common stock at an exercise price of $0.185 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. 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 1,585,714 common shares at a deemed price of $0.0735 per share for promissory note and interest conversion of $163,693.
  • On November 11, 2013, we issued 1,387,500 common shares at a deemed price of $0.042 per share for promissory note and interest conversion of $81,846.
  • On December 4, 2013, we issued 1,435,345 common shares at a deemed price of $0.0406 per share for promissory note and interest conversion of $81,846.

  • On January 6, 2014, we issued 2,553,681 common shares at a deemed price of $0.02282 per share for promissory note conversion of $81,846.
  • On February 14, 2014, we issued 2,000,000 common shares at a deemed price of $0.0224 per share for promissory note conversion of $62,921.
  • On March 3, 2014, we issued 1,902,344 common shares at a deemed price of $0.0224 per share for promissory note conversion of $59,849.
  • On June 10, 2014, we issued 1,600,000 common shares at a deemed price of $0.0213 per share for promissory note conversion of $47,752.
  • On June 27, 2014, we issued 1,700,000 common shares at a deemed price of $0.0185 per share for promissory note conversion of $44,171.
  • On July 16, 2014, we issued 1,800,000 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $46,769.
  • On August 1, 2014, we issued 1,062,687 common shares at a deemed price of $0.02 per share for promissory note and interest conversion of $25,000.
  • On September 3, 2014, we issued 3,000,000 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $42,135.
  • On September 11, 2014, we issued 5,599,010 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $39,712.
  • On October 22, 2014, we issued 19,000,000 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $38,694.
  • On November 6, 2014, we issued 19,900,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $28,578.
  • On November 19, 2014, we issued 34,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $37,202.
  • On December 10, 2014, we issued 48,300,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $19,818.
  • On December 17, 2014, we issued 61,700,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $25,317.
  • On April 22, 2015, we issued 6,200,000 common shares for promissory note and interest conversion of $8,060.
  • On April 30, 2015, we issued 8,300,000 common shares for promissory note and interest conversion of $8,715.
  • On May 12, 2015, we issued 18,500,000 common shares for promissory note and interest conversion of $6,475.
  • On May 15, 2015, we issued 26,400,000 common shares for promissory note and interest conversion of $8,715.

As at the date of this report, there remains a balance of $93,285 unconverted and payable pursuant to the note.

On September 23, 2013 we issued 1,293,717 common shares at a deemed of $0.04 per share in full cashless exercise of the 540,540 warrants issued in connection with the note.

On August 20, 2014, we issued an aggregate of 3,200,066 common shares for the conversion of 1,666,667 warrants at a deemed exercise price of $0.01675 for warrant issued on December 10, 2013.

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. The fair value of the note at issuance was $200,000.


  • On August 28, 2014, we issued 10,390,546 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $205,984.

As at November 11, 2014, there remains no balance unconverted and payable pursuant to the note.

In addition, we issued warrants to purchase an aggregate of 1,111,111 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 $0.09 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. The fair value of the note at issuance was $100,000. In addition, we issued warrants to purchase an aggregate of 5,156,250 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 $0.06 and expire after a term of six months. In the case that our common share closing price is greater than $0.06 per share for two days, the warrants may be exercised on a cashless basis at a price pursuant to the warrant.

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 6,734,235 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $62,375.
  • On September 16, 2014, we issued 3,810,301 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $40,447.
  • On April 14, 2015, we issued 4,367,609 common shares for promissory note and interest conversion of $18,474.99.

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

Loan Agreement with LG Capital Funding, LLC

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.


As at the date of this report, there remains a balance of $29,000 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. The fair value of the note at issuance was $200,000. 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 1,538,462 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $20,000.
  • On September 23, 2014, we issued 3,846,154 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $25,000.
  • On October 9, 2014, we issued 6,666,667 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $30,000.
  • On October 16, 2014, we issued 7,317,073 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $30,000.
  • On October 24, 2014, we issued 8,823,529 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $30,000.
  • On October 31, 2014, we issued 12,500,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $30,000.
  • On November 17, 2014, we issued 15,789,474 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $30,000.
  • On December 3, 2014, we issued 21,428,571 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $17,500.
  • On December 16, 2014, we issued 37,142,857 common shares at a deemed price of $0.0004 per 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 1,481,481 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 $0.0675 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 exercise of the February 28, 2014 warrant:

  • On April 2, 2015, we issued 8,483,394 common shares by cashless exercise.
  • On April 24, 2015, we issued 7,235,023 common shares by cashless exercise.

Due to the above warrant exercises, there remains no balance of the February 28, 2014 warrant.

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 $0.075 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. The fair value of the note at issuance was $220,000. 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 23, 2014, we issued 10,000,000 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $55,000.
  • On October 27, 2014, we issued 15,000,000 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $43,500.
  • On November 3, 2014, we issued 15,000,000 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $34,500.
  • On December 10, 2014, we issued 34,000,000 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $20,400.
  • On April 2, 2015, we issued 3,000,000 common shares for promissory note and interest conversion of $18,000.
  • On April 8, 2015, we issued 4,500,000 common shares for promissory note and interest conversion of $22,950.
  • On April 15, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $12,250.
  • On April 21, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $7,800.
  • On April 27, 2015, we issued 7,500,000 common shares for promissory note and interest conversion of $7,875.
  • On May 1, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $6,300.

As at the date of this report, there remains a balance of $21,315 unconverted and payable pursuant to the note.

In addition, we issued warrants to purchase an aggregate of 10,312,500 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 $0.06 during the period beginning August 28, 2014 and ending August 28, 2019. In the case that our common share closing price is greater than $0.06 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 18,113,654 common shares 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.


The fair value of the note at issuance was $100,000. 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 8, 2014, we issued 1,106,273 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $20,510.
  • On September 11, 2014, we issued 2,607,721 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $30,777.
  • On September 12, 2014, we issued 2,869,240 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $30,781.
  • On September 15, 2014, we issued 1,914,321 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $20,529.

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 941,619 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 $0.0531 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. The fair value of the note at issuance was $100,000. 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 9,900,990 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $100,000.
  • On October 23, 2014, we issued 5,882,353 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $20,000.
  • On November 14, 2014, we issued 21,052,632 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $40,000.
  • On November 18, 2014, we issued 28,773,463 common shares at a deemed price of $0.001 per share for promissory note and interest conversion of $47,335.

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 2,000,000 warrants to Iconic in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.05 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 warrant:

  • On April 14, 2015, we issued 1,076,923 common shares.

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. The fair value of the note at issuance was $100,000. 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 909,091 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $20,000.
  • On September 11, 2014, we issued 1,652,893 common shares at a deemed price of $0.01 per share for promissory note and interest conversion of $20,000.
  • On September 17, 2014, we issued 1,414,141 common shares at a deemed price of $0.005 per share for promissory note and interest conversion of $14,000.
  • On September 23, 2014, we issued 1,477,873 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $9,311.
  • On September 29, 2014, we issued 5,000,000 common shares at a deemed price of $0.003 per share for promissory note and interest conversion of $31,500.
  • On October 27, 2014, we issued 3,345,769 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $7,948.

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 941,619 warrants to Adar in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.0531 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 $0.06 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. The fair value of the note at issuance was $230,000.

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 22,713,104 common shares at a deemed price of $0.002 per share for promissory note and interest conversion of $62,934.
  • On December 12, 2014, we issued 74,447,489 common shares at a deemed price of $0.0003 per share for promissory note and interest conversion of $42,334.
  • On April 2, 2015, we issued 4,166,712 common shares the promissory note and interest conversion of $21,524.
  • On May 5, 2015, we issued 21,063,048 common shares the promissory note and interest conversion of $14,350.

As at the date of this report, there remains a principal balance of $29,126 unconverted and payable pursuant to the note.

In addition on March 3, 2014, we issued an aggregate of 1,666,666 warrants to Black Mountain in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.06 and expire after a term of five years. In the case that our common share closing price is greater than $0.06 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 exercise of the March 3, 2014 warrants:

  • On August 5, 2014, we issued 20,645,463 common shares at a deemed price of $0.002 per share for warrants exercise of $41,244.
  • On September 25, 2014, we issued 10,946,967 common shares for the exercise of 583,333 warrants.

As at the date of this report, there remain 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 of 2,200,000 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 $0.05 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 $0.005 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 May 1, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $9,800.

  • On May 4, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $9,800.
  • On May 7, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $4,459.
  • On May 11, 2015, we issued 22,000,000 common shares for promissory note and interest conversion of $10,010.

As at the date of this report, there remains a balance of $15,931 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.

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 April 22, 2015, we issued 5,250,000 common shares the promissory note and interest conversion of $16,721.25.
  • On April 30, 2015, we issued 5,250,000 common shares the promissory note and interest conversion of $5,801.25.
  • On May 4, 2015, we issued 10,839,994 common shares the promissory note and interest conversion of $9,159.79.
  • On May 11, 2015, we issued 15,778,495 common shares the promissory note and interest conversion of $9,230.42.
  • On May 12, 2015, we issued 18,548,242 common shares the promissory note and interest conversion of $8,439.45.

There remains a principal balance of $71,147.84 unconverted and payable pursuant to the note.In addition on August 22, 2014, we issued an aggregate of 4,303,571 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 $0.28 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 a $88,500 convertible promissory note and warrants 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. As at the date of this report, there remains the entire 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 convertible promissory notes. We issued River North a convertible promissory note with 12% interest due August 24, 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 25 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 February 24, 2015 note:

  • On April 27, 2015, we issued 6,471,951 common shares for promissory note and interest conversion of $7,766.34.
  • On April 29, 2015, we issued 7,860,681 common shares for promissory note and interest conversion of $7,860.68.
  • On May 4, 2015, we issued 9,716,815 common shares for promissory note and interest conversion of $7,287.61.
  • On May 5, 2015, we issued 14,727,449 common shares for promissory note and interest conversion of $9,572.84.
  • On May 11, 2015, we issued 15,778,495 common shares for promissory note and interest conversion of $6,311.40.
  • On May 14, 2015, we issued 22,227,542 common shares for promissory note and interest conversion of $8,891.02.

As at the date of this report, there remains a balance of $55,931.46 unconverted and payable pursuant to the note.

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.

Other Business Matters

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 20,000,000 Series A Convertible Preferred shares in our capital stock in consideration of the cancellation and return to treasury of 20,000,000 shares of our common stock (based on pre-split basis where on January 19, 2015 our board of directors approved 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) 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 7,630,987 S-8 shares on October 22, 2014 (based on pre-split basis where on January 19, 2015 our board of directors approved 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). 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 will receive compensation of $12,000 in unregistered restricted common shares of our company's common stock at a deemed value of $0.05 per share (based on pre-split basis where on January 19, 2015 our board of directors approved 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) and issuable on May 15, 2014. Our company has not yet issued these shares.

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 1,167,316 S-8 shares (based on pre-split basis where on January 19, 2015 our board of directors approved 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) on September 1, 2014. As of the date of this report the agreement has not been 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 2,000,000 common shares of our company (based on pre-split basis where on January 19, 2015 our board of directors approved 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) 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.

Results of Operations

We have generated minimal revenues since inception and have incurred $406,287 and $923,916 respectively, in operating expenses for the three and nine month periods ended March 31, 2015.

The following provides selected financial data about our company for the three and nine month periods ended March 31, 2015 and 2014.

Three months ended March 31, 2015 and 2014.

    Three months     Three months  
    Ended     Ended  
    March 31,     March31,  
    2015     2014  
Revenue $ 16,176   $ 17,882  
Operating expenses $ (1,040,130 ) $ (536,842 )
Other income (expenses):            
Other recovery $ 80,524   $ Nil  
Interest expense $ (146,468 ) $ (1,984,721 )
Gain (loss) on change in fair value of derivative liability $ (819,513 ) $ 42,768  
Fair value of warrants issued $ (865,239 ) $ (2,309,345 )
Equity in income (loss) of unconsolidated affiliate $ (6,469 ) $ 5,473  
Net loss $ (1,142,093 ) $ (4,764,785 )


Operating expenses for the three months ended March 31, 2015 increased as a result of increases in selling, general and administrative and impairment loss expenses.

Nine months ended March 31, 2015 and 2014.

    Nine months     Nine months  
    ended     ended  
    March 31,     March 31,  
    2015     2014  
Revenue $

57,476

  $ 17,882  
Operating expenses $

 (1,964,046

) $ (1,640,913 )
Other income (expenses):          
Interest expense $

(2,818,008

) $ (2,835,206 )
Other recovery $ 80,524   $ Nil  
Gain (loss) on change in fair value of derivative liability $

3,638,090

  $ (2,103,614 )
Fair value of warrants issued $

(962,309

) $ Nil  
Equity in income (loss) of unconsolidated affiliate $

(324

) $ 5,473  
Net loss $

 (1,968,597

) $ (6,556,378 )

Operating expenses for the nine months ended March 31, 2015 increased as a result of increases in selling, general and administrative and impairment loss expenses.

Liquidity and Capital Resources

The following table provides selected financial data about our company as of March 31, 2015, and June 30, 2014, respectively.

Working Capital

    As at     As at  
    March 31,     June 30,  
    2015     2014  
Total current assets $

115,191

  $  138,013  
Total current liabilities $

1,230,301

  $  3,417,902  
Working capital (deficit) $

(1,115,110

) $  (3,279,889 )

Cash Flows

    Nine Months     Nine Months  
    ended     ended  
    March 31,     March 31,  
    2015     2014  
Net cash used in operating activities $

(897,997

) $  (1,028,195 )
Net cash used in investing activities $

Nil

  $  (1,055,195 )
Net cash provided by financing activities $

908,668

  $  2,577,077  
Effect of foreign exchange on cash $

(21,831

) $  (10,780 )
Increase (Decrease) in cash $

(11,610

) $  482,907  


We had cash and cash equivalents of $58,572 as of March 31, 2015 compared to cash and cash equivalents of $69,732 as of June 30, 2014. We had a working capital deficit of $1,115,110 as of March 31, 2015 compared to a working capital deficit of $3,279,889 as of June 30, 2014.

The report of our auditors on our audited consolidated financial statements for the fiscal year ended June 30, 2014, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have achieved no operating revenues since our inception. We have depended on loans and sales of equity securities to conduct operations. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.

Anticipated Cash Requirements

We estimate that our expenses over the next 12 months will be approximately $1,550,000 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  
Tero acquisition expenses   12 months   $  500,000  
Morinville expansion   12 months   $  400,000  
Legal and accounting   12 months   $  200,000  
Total       $  1,550,000  

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.

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.

Inflation

The amounts presented in our financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Critical Accounting Policies and Estimates

Principal of Consolidation


The consolidated financial statements include the accounts of our company, its wholly-owned subsidiary Alta Disposal Ltd. and its 51% owned subsidiary Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Ltd.). Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of unaudited condensed 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. Our 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 our 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. Our company had $58,572 and $69,732 in cash and cash equivalents at March 31, 2015 and June 30, 2014, respectively.

Concentration of Risk

Our 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 December 31, 2014 and June 30, 2014, our company had $Nil and $Nil, respectively, in deposits in excess of federally insured limits in its US bank. Our 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 mainly consist of legal retainers and deposit paid to obtain a license on patent rights. Legal retainers will be expensed in the period when services are completed.

Start-Up Costs

In accordance with FASC 720-15-20 “Start-Up Costs,” our company expenses all costs incurred in connection with the start-up and organization of our company.

Mineral Acquisition and Exploration Costs

Our company has been in the exploration stage since its formation on May 31, 2006 and has not yet realized any revenue from its planned operations. 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 its cash and cash equivalents and related party payables it will likely incur in the near future. Our 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. Our 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.

Net Income or (Loss) per Share of Common Stock

Our 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.

Foreign Currency Translations

Our 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.

No significant realized exchange gain or losses were recorded as of March 31, 2015 to June 30, 2014.

Translation of Foreign Operations

The financial results and position of foreign operations whose functional currency is different from our company’s presentation currency are translated as follows:

  • assets and liabilities are translated at period-end exchange rates prevailing at that reporting date; 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 our 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 ended March 31, 2015 closing rate at 0.07885 CND$: US$, average rate at 0.8655 CND$: US$ and for year ended June 30, 2014 closing rate at 0.9367 CND$: US$ average rate at 0.9341 CND$: US$


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 March 31, 2015 and June 30, 2014, our company had no material items of other comprehensive income except for 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

We value our warrants with provisions resulting in derivative liabilities at fair value using the lattice model according to ASC-815-10-55. We revalue our warrants at the end of every period at fair value and record the difference in other income (expense) in the condensed consolidated statement of operations.

Convertible Debentures

We value our convertible debentures with provisions resulting in beneficial conversion features from the embedded derivative at fair value according to ASC-840-10-25-14, rather than have its conversion feature bifurcated and reported separately due to ASC-815-15-25-1b. Because the value of the derivative related to the warrant exceeds the proceeds of the loan, our company allocated 100% of the proceeds to the warrant derivative and took a day one loss for the difference between the proceeds and the fair value of the warrants, resulting in a debt discount on the full fair value of the debenture because no proceeds were available to be allocated to the debt or its beneficial conversion feature. That debt discount is accreted to interest expense over the stated life of the note using the interest method in accordance with ASC 470-20-35-7a and 835-30-35-2. Unaccreted debt discount on the date of conversion is accreted to interest expense on that date.


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 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

Our company has generated little revenues to date. It is our 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. Our company will defer any revenue for which the product/services was not delivered or is subject to refund until such time that our 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 our company’s activities. Sales are presented, net of tax, rebates and discounts, and after eliminating intercompany sales. Our 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.


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. Our company includes any balances that are determined to be uncollectible in its overall allowance for doubtful accounts.

Investment in Unconsolidated Affiliate

Investments in affiliates that are not controlled by our company, but over which we have significant influence, are accounted for using the equity method. Our company’s share of net income from its unconsolidated affiliate is reflected in the Consolidated Statements of Operations and Comprehensive Loss and Equity investment in Unconsolidated Affiliate.

Recent Accounting Pronouncements

Our company has adopted Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this ASU remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, including the removal of Topic 915, Development Stage Entities, from the FASB Accounting Standards Codification.

A development stage entity is one that devotes substantially all of its efforts to establishing a new business and for which: (a) planned principal operations have not commenced; or (b) planned principal operations have commenced, but have produced no significant revenue. For example, many start-ups or even long-lived organizations that have not yet begun their principal operations or do not have significant revenue would be identified as development stage entities.

For public business entities, the presentation and disclosure requirements in Topic 915 will no longer be required for the first annual period beginning after December 15, 2014. The revised consolidation standards are effective one year later, in annual periods beginning after December 15, 2015. Early adoption is permitted.

FASB Statement

In June 2009 the FASB established the Accounting Standards Codification ("Codification" or "ASC") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). Rules and interpretive releases of the Securities and Exchange Commission ("SEC") issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.

Accounting Standards Updates ("ASUs") through ASU No. 2014-15 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to our company or their effect on the financial statements would not have been significant.


Item 3.      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 4.      Controls and Procedures

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. 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 have engaged 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.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.      Legal Proceedings

Lithium Exploration Group v. Glottech-USA, et al.

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 petrochemical 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 2,000,000 common shares of our capital stock, which obligation has been satisfied through the transfer to GD Glottech International of 2,000,000 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 own 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.

The case remained largely inactive and on December 10, 2014, the parties attended an administrative conference. At the conclusion of the administrative conference, the parties advised that they had reached a settlement whereby the adverse parties agreed to general releases against each other, with each party to bear its own attorney’s fees and costs. However, due in large part to the Mississippi dissolution proceedings, the parties have not yet finalized the settlement. We are reasonably hopeful that the matter will soon be resolved, either through written agreement or through court enforcement of the terms stated upon the record on December 10, 2014.

We continue to believe that Glottech-USA has insufficient capital to continue as an ongoing business. We have provided full consideration to Glottech-USA and complied with all other agreed upon terms of the original agreement(s).

Donoghue v. Lithium Exploration Group, Inc. and Richard A. Walsh.

On November 12, 2014, 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 (the “Short-Swing Profit”) 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 22, 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 January 31, 2014, attorneys representing shareholders of our company (the “Plaintiff”) served us with a notice to recover their respective fees related to notifying us of the Short-Swing Profit (the “Fees”). On March 26, 2015, we settled the Fees with the Plaintiff for an aggregate of $15,400.

Item 1A.    Risk Factors

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

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds

We made the following issuances of our common stock, which have not been previously disclosed, with respect to the conversion amounts pursuant to convertible notes. The following issuances of shares of our company in the description below prior to January 19, 2015 are on a share pre-split basis as our board of directors approved the Share Split:

Loan Agreement with JDF Capital Inc.

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, 2014, an interest expense of $24,063 was accrued in respect of the note.

In addition on March 15, 2014, we issued an aggregate of 18,333,333 warrants to JDF in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.06 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 April 1, 2015, we issued 3,822,000 common shares for promissory note and interest conversion of $22,932.
  • On April 7, 2015, we issued 3,921,568 common shares for promissory note and interest conversion of $20,000.
  • On April 14, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $15,250.
  • On April 15, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $12,000.
  • On April 20, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $10,000.
  • On April 21, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $6,500.
  • On April 27, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $7,200.

  • On April 30, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $6,000.
  • On May 4, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $5,850.
  • On May 7, 2015, we issued 10,000,000 common shares for promissory note and interest conversion of $6,500.
  • On May 11, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $6,375.
  • On May 12, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $5,250.

As at the date of this report $8,393 of the note and the full amount of the warrants remain unconverted and outstanding.

On March 9, 2015, JDF Capital and Blue Citi PR, LLC agreed to assign an aggregate of $100,000 from the note of JDF Capital (that was issued from our company) to LG Capital. As at the date of this report, the note which amount remains unconverted and outstanding.

  • On April 29, 2015, we issued 2,958,580 common shares for promissory note and interest conversion of $5,000.
  • On May 4, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $7,605.
  • On May 11, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $6,825.
  • On May 13, 2015, we issued 17,802,198 common shares for promissory note and interest conversion of $8,100.
  • On May 15, 2015, we issued 25,000,000 common shares for promissory note and interest conversion of $9,750.

As at the date of this report, there remains a balance of $62,720 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 540,540 shares of our common stock at an exercise price of $0.185 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. 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 April 22, 2015, we issued 6,200,000 common shares for promissory note and interest conversion of $8,060.
  • On April 30, 2015, we issued 8,300,000 common shares for promissory note and interest conversion of $8,715.
  • On May 12, 2015, we issued 18,500,000 common shares for promissory note and interest conversion of $6,475.
  • On May 15, 2015, we issued 26,400,000 common shares for promissory note and interest conversion of $8,715.

As at the date of this report, there remains a balance of $93,285 unconverted and payable pursuant to the note.

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. The fair value of the note at issuance was $100,000. In addition, we issued warrants to purchase an aggregate of 5,156,250 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 $0.06 and expire after a term of six months. In the case that our common share closing price is greater than $0.06 per share for two days, the warrants may be exercised on a cashless basis at a price pursuant to the warrant.

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 April 14, 2015, we issued 4,367,609 common shares for promissory note and interest conversion of $18,474.99.

As at the date of this report, there remains no balance 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. The fair value of the note at issuance was $200,000.

In addition, we issued an aggregate of 1,481,481 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 $0.0675 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 exercise of the February 28, 2014 warrant:

  • On April 2, 2015, we issued 8,483,394 common shares by cashless exercise.
  • On April 24, 2015, we issued 7,235,023 common shares by cashless exercise.

Due to the above warrant exercises, there remains no balance of the February 28, 2014 warrant.

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 $0.075 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. The fair value of the note at issuance was $220,000. 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 April 2, 2015, we issued 3,000,000 common shares for promissory note and interest conversion of $18,000.
  • On April 8, 2015, we issued 4,500,000 common shares for promissory note and interest conversion of $22,950.
  • On April 15, 2015, we issued 5,000,000 common shares for promissory note and interest conversion of $12,250.
  • On April 21, 2015, we issued 6,000,000 common shares for promissory note and interest conversion of $7,800.
  • On April 27, 2015, we issued 7,500,000 common shares for promissory note and interest conversion of $7,875.
  • On May 1, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $6,300.
  • On May 7, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $7,500.
  • On May 12, 2015, we issued 15,000,000 common shares for promissory note and interest conversion of $5,250.
  • On May 14, 2015, we issued 9,000,000 common shares for promissory note and interest conversion of $8,565.

As at the date of this report, there remains a balance of Nil unconverted and payable pursuant to the note.


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. The fair value of the note at issuance was $100,000.

In addition, we issued an aggregate of 2,000,000 warrants to Iconic in consideration for purchasing the note. Subject to adjustments, these warrants are convertible into common shares at a price of $0.05 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 warrant:

  • On April 14, 2015, we issued 1,076,923 common shares.

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 $0.06 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. The fair value of the note at issuance was $230,000.

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 April 2, 2015, we issued 4,166,712 common shares the promissory note and interest conversion of $21,524.
  • On May 5, 2015, we issued 21,063,048 common shares the promissory note and interest conversion of $14,350.
  • On May 11, 2015, we issued 18,154,990 common shares the promissory note and interest conversion of $5,400.
  • On May 12, 2015, we issued 18,154,990 common shares the promissory note and interest conversion of $5,400.

As at the date of this report, there remains a balance of $23,726 unconverted and payable pursuant to the note.

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 $0.005 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 May 1, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $9,800.
  • On May 4, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $9,800.
  • On May 7, 2015, we issued 9,800,000 common shares for promissory note and interest conversion of $4,459.
  • On May 11, 2015, we issued 22,000,000 common shares for promissory note and interest conversion of $10,010.

As at the date of this report, there remains a balance of $15,931 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.

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 April 22, 2015, we issued 5,250,000 common shares the promissory note and interest conversion of $16,721.25.
  • On April 30, 2015, we issued 5,250,000 common shares the promissory note and interest conversion of $5,801.25.
  • On May 4, 2015, we issued 10,839,994 common shares the promissory note and interest conversion of $9,159.79.
  • On May 11, 2015, we issued 15,778,495 common shares the promissory note and interest conversion of $9,230.42.
  • On May 12, 2015, we issued 18,548,242 common shares the promissory note and interest conversion of $8,439.45.

There remains a balance of $71,147.84 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 convertible promissory notes. We issued River North a convertible promissory note with 12% interest due August 24, 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 25 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 February 24, 2015 note:

  • On April 27, 2015, we issued 6,471,951 common shares for promissory note and interest conversion of $7,766.34.
  • On April 29, 2015, we issued 7,860,681 common shares for promissory note and interest conversion of $7,860.68.
  • On May 4, 2015, we issued 9,716,815 common shares for promissory note and interest conversion of $7,287.61.
  • On May 5, 2015, we issued 14,727,449 common shares for promissory note and interest conversion of $9,572.84.
  • On May 11, 2015, we issued 15,778,495 common shares for promissory note and interest conversion of $6,311.40.
  • On May 14, 2015, we issued 22,227,542 common shares for promissory note and interest conversion of $8,891.02.

As at the date of this report, there remains a balance of $55,931.46 unconverted and payable pursuant to the note.

Item 3.      Defaults Upon Senior Securities

None.

Item 4.      Mine Safety Disclosures

Not applicable.

Item 5.      Other Information

On January 19, 2015, our board of directors approved 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. Stockholders of our company originally approved the reverse stock split on October 14, 2014 at a special meeting. Upon effect of the reverse stock split our issued and outstanding shares will decrease from 1,571,669,638 to 78,583,482 shares of common stock, with a par value of $0.001. Our authorized share capital will remain unchanged.

The reverse stock split has been reviewed by the Financial Industry Regulatory Authority (“FINRA”) and has been approved for filing with an effective date of February 25, 2015.

The reverse split was effective with the Over-the-Counter Bulletin Board at the opening of trading on February 25, 2015 under the symbol “LEXGD”. Our new CUSIP number is 53680P209.

Effective February 12, 2015, Brandon Colker resigned as a director of our company. Mr. Colker's resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.

Our board of directors now consists solely of Alexander Walsh.

Item 6.      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)

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)

(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)

(10)

Material Contracts

10.1

Assignment Agreement between our company and Lithium Exploration VIII Ltd. dated December 16, 2010 (incorporated by reference to our Current Report on Form 8-K filed on January 10, 2011)

10.2

Letter Agreement between our company and Glottech-USA, LLC dated March 17, 2011 (incorporated by reference to our Current Report on Form 8-K filed on May 4, 2011)

10.3

Securities Purchase Agreement between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.4

Registration Rights Agreement between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.5

12% Senior Convertible Debenture between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.6

Escrow Agreement between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.7

Guaranty and Pledge Agreement between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.8

Common Stock Purchase Warrant between our company and Hagen Investments Ltd. dated June 29, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 1, 2011)

10.9

12% Senior Convertible Debenture between our company and Hagen Investments Ltd. dated July 12, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 13, 2011)

10.10

Common Stock Purchase Warrant between our company and Hagen Investments Ltd. dated July 12, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 13, 2011)

10.11

Letter Agreement between our company and Glottech-USA, LLC dated November 18, 2011 (incorporated by reference to our Current Report on Form 8-K filed on November 21, 2011)

10.12

Securities Purchase Agreement between our company and Hagen Investments Ltd. dated March 28, 2012 (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2012)

10.13

Debenture between our company and Hagen Investments Ltd. dated March 28, 2012 (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2012)

10.14

Debenture between our company and Hagen Investments Ltd. dated May 15, 2012 (incorporated by reference to our Current Report on Form 8-K filed on May 18, 2012)

10.15

Option Agreement between our company and GD Glottech International, Limited dated August 14, 2012 (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2012)

10.16

Amendment Agreement between our company and Hagen Investments Ltd. dated September 17, 2012 (incorporated by reference to our Current Report on Form 8-K filed on September 18, 2012)




10.17

License Agreement between our company and GD Glottech-International Ltd. dated October 1, 2012 (incorporated by reference to our Current Report on Form 8-K filed on October 10, 2012)

10.18

Sales Agreement between our company and GD Glottech International Ltd. dated October 1, 2012 (incorporated by reference to our Current Report on Form 8-K filed on October 10, 2012)

10.19

Certificate of Designation, Series A Preferred Convertible Stock (incorporated by reference to our Current Report on Form 8-K filed on October 29, 2012)

10.20

Share Exchange Agreement between our company and Alexander Walsh dated October 18, 2012 (incorporated by reference to our Current Report on Form 8-K filed on October 29, 2012)

10.21

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)

10.22

Securities Purchase Agreement between our company and JDF Capital Inc. dated February 19, 2013 (incorporated by reference to our Current Report on Form 8-K filed on February 25, 2013)

10.23

Rule 10b5-1 Sales Plan, Client Representations, and Sales Instructions (incorporated by reference to our Current Report on Form 8-K filed on March 15, 2013)

10.24

Letter of Agreement between our company and Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) dated June 11, 2013 (incorporated by reference to our Current Report on Form 8-K filed on June 14, 2013)

10.25

Convertible Debenture Agreement between our company and Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) dated July 29, 2013 (incorporated by reference to our Current Report on Form 8-K filed on August 5, 2013)

10.26

Unanimous Shareholders and Management Agreement among Alta Disposal Ltd., Excel Petroleum Ltd. and Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) dated October 18, 2013 2013 (incorporated by reference to our Current Report on Form 8-K filed on October 24, 2013)

10.27

Subscription Agreement dated October 18, 2013 between Alta Disposal Ltd. and 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)

10.28

Operating Agreement dated July 9, 2013 between Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) and Valeura Energy Inc. (incorporated by reference to our Current Report on Form 8-K filed on October 24, 2013)

10.29

Gross Overriding Royalty Agreement dated June 30, 2013 between Alta Disposal Morinville Ltd. (formerly Blue Tap Resources Inc.) and Vincent Murphy. (incorporated by reference to our Current Report on Form 8- K filed on October 24, 2013)

10.30

Assignment Agreement dated October 31, 2013 between our company and JDF Capital Inc. (incorporated by reference to our Current Report on Form 8-K filed on December 30, 2013)

10.31

Consulting Agreement dated January 1, 2014 between our company and International Compass, LLC (incorporated by reference to our Current Report on Form 8-K filed on January 16, 2014)

10.32

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)

10.33

Securities Purchase Agreement dated as of February 23, 2014 between our company and JSJ Investments Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.34

Form of Convertible Promissory Note between our company and JSJ Investments 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 JSJ Investments Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.36

Securities Purchase Agreement dated as of February 27, 2014 between our company and Centaurian Fund. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)




10.37

Form of Convertible Promissory Note between our company and Centaurian Fund (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.38

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)

10.39

Securities Purchase Agreement dated as of February 27, 2014 between our company and LG Capital Funding, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.40

Form of Convertible Promissory Note between our company and LG Capital Funding, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.41

Securities Purchase Agreement dated as of February 28, 2014 between our company and St. George Investments LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.43

Form of Convertible Promissory Note between our company and St. George Investments LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.44

Form of Common Stock Purchase Warrant between our company and St. George Investments LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.45

Securities Purchase Agreement dated as of February 28, 2014 between our company and Vista Capital Investments, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.45

Form of Convertible Promissory Note between our company and Vista Capital Investments, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.46

Form of Common Stock Purchase Warrant between our company and Vista Capital Investments, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.47

Securities Purchase Agreement dated as of March 3, 2014 between our company and Union Capital, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.48

Form of Convertible Promissory Note between our company and Union Capital, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.49

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)

10.50

Securities Purchase Agreement dated as of March 3, 2014 between our company and Iconic Holdings, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.51

Form of Convertible Promissory Note between our company and Iconic Holdings, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.52

Form of Common Stock Purchase Warrant between our company and Iconic Holdings, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.53

Securities Purchase Agreement dated as of March 3, 2014 between our company and Adar Bays, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.54

Form of Convertible Promissory Note between our company and Adar Bays, LLC (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.55

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)

10.56

Securities Purchase Agreement dated as of March 3, 2014 between our company and Black Mountain Equities, Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.57

Form of Convertible Promissory Note between our company and Black Mountain Equities, Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.58

Form of Common Stock Purchase Warrant between our company and Black Mountain Equities, Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.59

Securities Purchase Agreement dated as of March 3, 2014 among our company, Alta Disposal Ltd., and 514742 B.C. Ltd. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)




10.60

Form of Convertible Promissory Note among Alta Disposal Ltd. and 514742 B.C. Ltd. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.61

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)

10.62

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,

10.63

2014) 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)

10.64

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)

10.65

Securities Purchase Agreement dated as of March 1, 2014 between Alta Disposal Ltd. and Tero Oilfield Services Ltd. (incorporated by reference to our Current Report on Form 8-K filed on April 3, 2014)

10.66

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)

10.67

Consulting Agreement with Brandon Colker dated April 28, 2014 (incorporated by reference to our Annual Report on Form 10-K filed on October 14, 2014)

10.68

2014 Stock Option Plan (incorporated by reference to our Current Report on Form 8-K filed on August 6, 2014)

10.69

Form of Stock Option Agreement (incorporated by reference to our Current Report on Form 8-K filed on August 6, 2014)

10.70

Form of Stock Grant Agreement (incorporated by reference to our Current Report on Form 8-K filed on August 6, 2014)

10.71

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)

10.72

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)

10.73

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)

10.74

General Security Agreement dated July 22, 2014 between Alta Disposal Ltd. and JDF Capital Inc. (incorporated by reference to our Current Report on Form 8-K filed on August 7, 2014)

10.75

Consultant Agreement dated May 30, 2014 between our company and Robert Gomer (incorporated by reference to our Quarterly Report on Form 10-Q/A filed on December 2, 2014)

10.76

Consultant Agreement dated August 1, 2014 between our company and TEN Associates LLC (incorporated by reference to our Quarterly Report on Form 10-Q/A filed on December 2, 2014)

10.77

Amending Agreement dated October 22, 2014 between International Compass, LLC and our company (incorporated by reference to our Quarterly Report on Form 10-Q/A filed on December 2, 2014)

10.78

Short Swing Settlement Agreement with Alexander R. Walsh dated December 22, 2014 (incorporated by reference to our Quarterly Report on Form 10-Q filed on February 23, 2015)

10.79

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)

10.80

Form of Convertible Promissory Note between our company and River North Equity LLC

10.81

Loan Agreement dated April 15, 2015 between JDF Capital Inc. and our company.

10.82

Share Purchase Agreement dated May 1, 2015 among our company, Natel Hofmann and Tero Oilfield Services Ltd.

(14)

Code of Ethics




14.1

Code of Ethics (Incorporated by reference to our Annual Report on Form 10-KSB on September 28, 2007)

(20) Other Documents or Statements to Security Holders
20.1 Financial Statements of Tero Oilfield Services as at December 31, 2014
(21)

Subsidiaries of the Registrant

21.1

Alta Disposal Ltd., an Alberta, Canada 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

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  LITHIUM EXPLORATION GROUP, INC.
  (Registrant)
   
   
   
Date: May 22, 2015 /s/ Alexander Walsh
  Alexander Walsh
  President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer
  and Principal Accounting Officer)