U S PRECIOUS METALS INC - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - April 23, 2012
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SUBSEQUENT EVENTS
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9 Months Ended | ||
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Feb. 29, 2012
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| SUBSEQUENT EVENTS [Abstract] | |||
| SUBSEQUENT EVENTS |
On March 9, 2012 we issued warrants with an expiry date of May 5, 2012 to purchase 500,000 shares of our common stock at $0.25 to an accredited investor. The investor exercised warrants to purchase 200,000 shares of our common stock and we received proceeds of$50,000. Effective March 13, 2012, we issued 1 million shares of our common stock and stock warrants with an exercise period of six months to purchase 500,000 shares of our common stock at $0.25 to an accredited investor for cash consideration of $100,000. On March 28, 2012, we filed a Form 8-K in which we disclosed that as reported in our prior filings with the Securities and Exchange Commission, we are seeking funding through debt and equity placement and/or through a joint venture participation or sale of all or part of our 37,000 acre mining concessions. To that end, our President, Dave Burney, has spent a substantial amount of time during the past two months in the Pacific Rim facilitating meetings and discussions with interested parties. Under confidentiality agreements, we have provided legal, geological, and technical information to these interested parties. Discussions to date have focused both on a joint venture arrangement to further explore and develop the property and the proposed sale of all or part of the 37,000 acre mining concessions. As of the date of this filing, discussions with such parties are ongoing, however, we have not received a definitive offer or term sheet from any third party, and there can be no assurance that any transaction will result from these ongoing discussions. On April 3, 2012, our Mexican subsidiary company, US Precious Metals SA de CV, was served with a lawsuit under case number 293/2012 in Mexico City, Federal District Court by Mr. Israel Tentory Garcia ("the Plaintiff") regarding one of our mining concessions. During 2003, we acquired from eight private individuals, including the Plaintiff, an exploration concession to acquire 174.54 hectares. Pursuant to this Assignment Agreement ('the Agreement"), we paid the former holders 1.5 million shares of our common stock. The Agreement further provided for the payment of $1 million to the former holders upon the occurrence of certain conditions. In his lawsuit, the Plaintiff alleges that the payment was due and payable on or about 2009 and ownership of the mining concession should revert back to him. We have retained counsel in Mexico to represent our subsidiary in this matter. We strongly dispute the allegations raised in the lawsuit and intend to vigorously defend the lawsuit. We intend to file our answer to the complaint on or before April 25, 2012 pursuant to which we will allege numerous defects in both fact and law and will seek dismissal of the action. While we remain firm in our legal position, we have nonetheless conducted preliminary discussions with the Plaintiff in an effort to settle this matter. At the time of this filing, these discussions are ongoing. There can be no guarantee that we will be able to arrive at a settlement with the Plaintiff that is acceptable to us. While we will vigorously defend the lawsuit, we cannot predict the likely outcome of this litigation in the Mexican judicial system. If we are unable to prevail in this matter and the Plaintiff is found to be entitled to the reversion of the concession, such event would have a material adverse impact on us and our plans for this concession. On April 13, 2012, Mr. Cutler, our Chief Financial Officer, was granted stock options to acquire 500,000 shares of our common stock at an exercise price of $0.17, all of which have been vested. The options expire five years from the date of grant unless sooner terminated by resignation or removal We have evaluated subsequent events through April 23, 2012. Other than those set out above, there have been no subsequent events after February 29, 2011 for which disclosure is required. |
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