10-Q

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended:	AUGUST 31, 2014
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period:
	Commission File Number:	000-50703

U.S. PRECIOUS METALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	14-1839426
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
176 Route 9 North, Suite 306 Marlboro, New Jersey	07728
(Address of principal executive offices)	(Zip Code)
732 - 851-7707
(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   o  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-K (§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   o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x 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: 155,687,226 shares of common stock issued and outstanding as of October 14, 2014.

U.S.PRECIOUS METALS, INC.

INDEX

 

PART 1: FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
CONDENSED CONSOLIDATED BALANCE SHEETS	1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)	2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT	3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	4
NOTES TO CONDENSED CONSOLIDATD FINANCIAL STATEMENTS	5
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
ITEM 4. CONTROLS AND PROCEDURES.	39
PART 2: OTHER INFORMATION	40
ITEM 1. LEGAL PROCEEDINGS	40
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
ITEM 3. DEFAULT OF SENIOR SECURITIES	41
ITEM 4. MINING SAFETY DISCLOSURES	41
ITEM 5. OTHER INFORMATION	41
ITEM 6. EXHIBITS	42
SIGNATURES	43

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

U.S. PRECIOUS METALS, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED BALANCE SHEETS
	August 31, 2014 (Unaudited)			May 31, 2014 (Audited)
ASSETS
Current Assets:
Cash	$	153,333		$	121,754
Prepaid and other current assets		11,385			23,802
Total current assets		164,718			145,556
Property and equipment, net		23,015			25,543
Other Assets
Investment in mining rights and other		44,401			44,437
Total Assets	$	232,134		$	215,536
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	3,765,653		$	3,457,557
Convertible notes payable		1,159,178			1,262,298
Total current liabilities		4,924,831			4,719,855
Long Term Liability
Convertible note payable, net of debt discount		-			34,472
Derivative liability on long term convertible note payable		-			149,674
Total Ling term liabilities		-			184,146
Commitments and Contingencies
Stockholders' Deficit:
Preferred stock:  authorized 10,000,000 shares of $0.00001 par value; 1,250,000 shares issued and outstanding, respectively		13			13
Common stock:  authorized 325,000,000 shares of $0.00001 par value; 154,186,035 and 143,748,746 shares issued and outstanding respectively		1,542			1,437
Additional paid in capital		46,490,260			44,854,841
Deficit accumulated during exploration stage		(51,184,512	)		(49,544,756	)
Total stockholders' deficit		(4,692,697	)		(4,688,465	)
Total Liabilities and Stockholders' Deficit	$	232,134		$	215,536

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

1

U.S. PRECIOUS METALS, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended August 31,
	2014			2013
Revenues	$	-		$	-
Costs and Expenses
General and administrative		1,432,394			462,716
Operating Loss		(1,432,394	)		(462,716	)
Other Income (Expense):
Change in derivative liability		(34,151	)		(47,908	)
Interest expense (net)		(173,211	)		(146,331	)
Total other income (expense)		(207,362	)		(194,239	)
Loss before income taxes		(1,639,756	)		(656,955	)
Provision for income taxes		-			-
Net loss	$	(1,639,756	)	$	(656,955	)
Net loss per share
Basic and diluted	$	(0.01	)	$	(0.01	)
Weighted average number of  shares
outstanding		148,461,468			122,407,059

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

2

U.S. PRECIOUS METALS, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
	Preferred Stock				Common Stock				Additional Paid In Capital		Deficit Accumulated During Exploration Stage			Total
	Shares		Amount		Shares		Amount
Balance, May 31 2013		-	$	-		121,781,244	$	1,218	$	25,325,355	$	(28,977,646	)	$	(3,651,073	)
RTC restructuring agreement – related party		1,250,000		13		-		-		16,249,987		-			16,250,000
Shares issued for cash		-		-		4,800,000		48		407,452					407,500
Shares issued as compensation		-		-		2,250,000		22		382,478					382,500
Shares issued for services		-		-		9,450,000		94		1,601,906					1,602,000
Notes payable converted for shares		-		-		4,600,835		46		482,255					482,301
Warrants exercised		-		-		866,667		9		103,324					103,333
Stock options issued		-		-		-		-		302,084					302,084
Net loss for the year		-		-		-		-		-		(20,677,110	)		(20,567,110	)
Balance, May 31, 2014		1,250,000		13		143,748,746		1,437		44,854,841		(49,544,756	)		(4,688,465	)
Shares issued for cash		-		-		5,046,667		50		455,925		-			455,975
Notes payable converted for shares		-		-		3,040,622		31		462,560		-			462,591
Shares issued as compensation		-		-		2,250,000		23		494,977		-			495,000
Warrants exercised		-		-		100,000		1		14,999		-			15,000
Stock option issued		-		-		-		-		206,958		-			206,958
Net loss for the period		-		-		-		-		-		(1,639,756	)		(1,639,756	)
Balance at August 31, 2014 unaudited		1,250,000	$	13		154,186,035	$	1,542	$	46,490,260	$	(51,184,512	)	$	(4,692,697	)

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

3

U.S. PRECIOUS METALS, INC. (An Exploration Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended August 31,
	2014			2013
Cash Flows From Operating Activities:
Net loss	$	(1,639,756	)	$	(656,955	)
Adjustments required to reconcile net loss to net cash used in operating activities:
Charges and credits not requiring the use of cash:
Depreciation		2,528			2,528
Shares issued as compensation		495,000			-
Stock option expense		206,958			-
Amortization of loan discount		7,319			8,766
Origination interest on derivative liability		111,975			79,767
Change in fair derivative value		34,151			47,908
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets		12,453			1,035
Increase in interest accrued  on convertible notes		21,879			27,654
Increase (decrease) in accounts payable,
accrued expenses and other current liabilities		308,097			104,130
Net Cash Used in Operating Activities		(439,396	)		(385,167	)
Cash Flows From Investing Activities:
Net Cash Used in Investing Activities		-			-
Cash Flows From Financing Activities:
Proceeds from sales of common stock		455,975			190,000
Proceeds from exercises of warrants		15,000			-
Proceeds from convertible notes, net		-			192,000
Net Cash Provided by Financing Activities		470,975			382,000
Net increase (decrease) in cash		31,579			(3,167	)
Cash beginning of period		121,754			28,691
Cash end of period	$	153,333		$	25,524

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

4

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS

U.S. Precious Metals, Inc. was incorporated in the state of Delaware in 1998 as a mineral exploration company. U.S. Precious Metals, Inc. and its wholly owned Mexican subsidiary company, U.S. Precious Metals de Mexico, S.A. de C.V, ("U.S. Precious Metals Mexico"), (collectively "the Company", "We" or "Us")   are engaged in the acquisition, exploration and development of mineral properties. We currently focus on gold and base minerals primarily located in the State of Michoacán, Mexico where we own exploration and exploitation concessions to approximately 37,000 contiguous acres of land (the "Solidaridad Property").

The Company has acquired exploration or exploitation concessions to approximately 37,000 acres of land in Michoacán, Mexico. Below is a list of the concessions which the Company has acquired:

Name of Concession	Title Number	Hectares*	Date Acquired	Expiration Date
Solidaridad I	220315	174.5408	July 11, 2003	July 10, 2053
Solidaridad II	220503	2162.2311	August 14, 2003	August 13, 2053
Solidaridad II, Fraction A	220504	1.4544	August 14, 2003	August 13, 2053
Solidaridad II, Fraction B	220505	.0072	August 14, 2003	August 13, 2053
Solidaridad III	223444	294.0620	December 14, 2004	December 13, 2054
Solidaridad IV	220612	149.4244	September 4, 2003	September 3, 2053
Solidaridad V (AKA Le Ceiba)	223119	921.3201	October 19, 2004	October 18, 2054
La Sabila	227272	11,405.0000	June 2, 2006	June 1, 2056

*A Hectare is equivalent to 2.47 acres.

The above group of concessions are collectively referred to as the "Solidaridad Concessions" The Company's concessions have a term of fifty years from the date first acquired and can be renewed for another fifty years. Concessions grant the holder the right to explore and exploit all minerals found in the ground. In order to maintain the concessions, the Company must pay surface taxes semi-annually in January and July and perform minimum amounts of assessment work, on a calendar year basis. Assessment work reports are required to be filed annually in May for the preceding calendar year. The amount of surface taxes and annual assessments are set by regulation and may increase over the life of the concession and include periodic adjustments for inflation.

Mining concessions do not automatically grant the holder the right to enter or use the surface land of the property where such mining concessions are located. In order to access the surface land, the holder must obtain permission from the surface owner. The Company currently has secured access rights to the portions of the Solidaridad Property where its concessions Solidaridad I, Solidaridad III, and Solidaridad V are located by way of a written agreement entered into by and between its Mexican Subsidiary and the owners of the portions of the Solidaridad Property where these concessions are located. This agreement requires the Company to pay an annual rent to the landowner. The Company is in the process of securing, but has not yet secured, access rights to the other portions of the Solidaridad Property, which it plans to do in the future in connection with any decision to begin exploration and/or exploitation of those areas. If the Company is ultimately unable to receive access, or unable to receive access at a reasonable price, it may affect the ability of the Company to explore for, or exploit, mineralized material from those areas.

5

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS CONTINUED

Original Transaction with Resource Technology Corp

On May 11, 2013, the Company entered into a Share Exchange Agreement with Resource Technology Corp., a newly formed Florida corporation ("RTC"), and the RTC shareholders to acquire all of the issued and outstanding shares of RTC in exchange for 300 million shares of common stock of the Company.  The agreement was subject to shareholder approval along with shareholder approval to increase the authorized number of shares of common stock to 480 million. As part of the transaction, RTC had three ore supply contracts with third party suppliers, and a Plasmafication™ Toll Processing Agreement with Plasma Processing, LP., a Florida limited partnership ("PP LP") and an affiliated entity of RTC. The ore supply agreements and the Toll Processing Agreement would enable RTC to receive 1/3rd of the revenues derived from the plasma processing of ore concentrates from the ore supply agreements.

The Plasma Plant and Plasma Processing.

PP LP owned the right to operate a plasma processing facility located in 29 Palms, California. The plant took three years to build and is permitted to process ore concentrate. Plasmafication™ or plasma processing employs extreme temperatures (in excess of 7,000 F) to dissociate ore concentrates into their basic elemental state. At the time of the transaction, the plant is not in commercial production.  The parties at the time believed that initial upgrades to the facility will commence within 90 to 120 days which will enable the facility to process concentrates at the rate of approximately 9 tons/day. PP LP expected to make further upgrades to the facility which would increase its capacity to approximately 27 tons/day.  These upgrades were subject to PP LP raising funds sufficient to complete necessary improvements to its plasma processing plant.

Plasmafication™ Toll Processing Agreement.

The Toll Processing Agreement between PP LP and RTC required PP LP to deliver a range of services, including the Plasmafication™ of the RTC concentrate from the ore supply contracts. These services would be provided at the sole cost and expense of PP LP. The agreement required an initial processing capacity of 5 tons/day of RTC concentrate for approximately 200 days per annum. PP LP will be required to upgrade its current plant to achieve this processing rate which as mentioned above is expected to occur within 90 to 120 days. These upgrades are expected to bring the total processing rate of the plant to about 9 tons/day. The agreement allows for an increased capacity to process 10 tons/day of RTC concentrate for approximately 300 days per annum. In order to achieve this rate, total plant capacity will have to be increased to about 29 tons/day.

PP LP guaranteed a benchmark run of 5 tons/day for 20 consecutive days ("Benchmark Run") with a minimum value of $50,000 (net to RTC) per ton using the RTC concentrate (or a total of $5,000,000 in net proceeds to RTC) from the existing ore supply contracts. The guarantee is limited to the proportionate reduction of the number of shares of USPR common stock issuable to the RTC shareholders (as described below). The benchmark run must be completed prior to June 1, 2014.

6

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS CONTINUED

Share Exchange Agreement.

As stated above, pursuant to the Share Exchange Agreement, the Company agreed to acquire all of the issued and outstanding shares of RTC ("RTC Shares") from the RTC shareholders in exchange for 300 million shares of common stock of the Company. The transaction shares were to be held in escrow, however, voting rights will remain with the named party. The agreement further provided that if the Benchmark Run did not yield net cash proceeds of $5 million to RTC, then the number of exchange shares in total will be proportionately reduced. The closing of the transactions contemplated by the Agreement was expected to occur no later than June 1, 2014. The agreement contains customary representations and warranties by all parties. On September 10, 2013, the Company amended the Share Exchange Agreement with RTC and the RTC shareholders. Under the amendment, the parties agreed to reduce the number of "Exchange Shares" as defined in Section 4.01 of the Agreement (issuable to the RTC shareholders) from 300,000,000 shares of USPR common stock to 290,000,000 shares of USPR common stock.

The RTC shareholders are Wolz International, LLC ("Wolz"), Titan Productions, Inc. ("Titan"), and Mercury6, LP ("Mercury6"). Assuming a completion of the transaction without further proportionate reduction in the USPR Shares, Wolz, Titan and Mercury would have received 145 million shares, 72.5 million shares and 72.5 million shares, of common stock of USPR, respectively. Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is the sole officer and member of Wolz (and owns approximately 51% of the shares of Wolz), and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Messrs. Pane and Altieri own or control limited partnership interests in PP LP.

Restructuring Agreement with RTC

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). PTH, as mentioned above, is an affiliate of RTC and owns and operates a plasma processing plant located in 29 Palms, California which employs the Plasmafication™ technology ("Plasma Plant").

Pursuant to the Restructuring Agreement, the Company, RTC and the RTC Shareholders terminated ab initio the Share Exchange Agreement, and the Company entered into new agreements and instruments with the counter parties described below. These new agreements and instruments consist of (i) the Restructuring Agreement, the Technology License Agreement by and between the Company and PTH ("License Agreement"), (ii) An Equipment Purchase and Sale Agreement by and between the Company and PTH ("Equipment Purchase Agreement"), (iii) A Promissory Note issued by PTH in favor of the Company in the amount $5,000,000 ("Promissory Note"), and (iv) A Certificate of Designations relating to 1,250,000 shares of Preferred Stock (defined below) issued to RTC in connection with the transaction ("Certificate of Designations"). The closing of the Restructuring Agreement occurred on February 4, 2014 ("Closing").

The Restructuring Agreement and related agreements and instruments provide the following material terms and conditions, among others:

Processing Rights.

Under the terms of the Restructuring Agreement, PTH will process the Company's ore concentrate at its Plasma Plant five (5) days per month for each month during a term agreed by the parties. The term begins with the date that the Plasma Plant is ready to commence commercial operations at the processing rate of 5 tons/day and terminating on the date that the Company Plasma Facility (defined below) is fully permitted and ready to commence commercial operations at a processing rate of 10 tons/day. PTH has informed the Company that it expects to be fully operational during the fourth calendar quarter of 2014. The Company has agreed to pay its ratable share of PTH overhead and direct costs as set forth in the agreement, and apart from the foregoing, PTH will not receive any royalty or other fee.

7

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS-CONTINUED

Licensing Rights. 

Under the Technology Licensing Agreement, PTH granted the Company a non-exclusive, royalty free license to use PTH's Plasmafication™ technology for a term of 25 years. The technology covers and relates to the construction and use of a Company owned plasma plant described below. The Licensing Agreement is subject to other customary terms and conditions.

Construction of a Company Owned Plasma Plant.

Under the Equipment Purchase Agreement, PTH has agreed to construct, on behalf of the Company, a 10 ton/day plasma processing plant on its premises located in 29 Palms, California ("Company Facility"). The plant will be constructed on an actual costs basis without markup by PTH, and PTH also has agreed to pay for 1/3rd of the construction costs. The estimated costs of construction for the Company Facility is approximately $18 million. The parties will formulate in the near future a draw schedule which will detail construction and payment milestones, however, in order to initiate the construction process, the Company will be required to pay a down payment of $1.5 million. In addition to other terms and conditions therein, PTH will assist in obtaining the necessary Federal, state and local permits and licenses to construct and operate the Company Plasma facility, however, the Company will be required to bear the related costs. Upon completion of the facility, the Company will own 100% of the Company Facility, however, any Licensed Technical Information will be subject to the Licensing Agreement.

In addition, the parties will be required to enter into an operating and maintenance agreement which address the operation and maintenance of the Company Owned Plasma Plant.

Promissory Note. 

PTH has delivered to the Company a Promissory Note in the principal amount is $5 million. The note is payable on or before January 30, 2015, and bears no interest prior to the payment due date. The promissory note may be offset under certain conditions set forth therein.

No value has been assigned to the Processing Rights, Licensing Rights, PTH's assistance to construct a Company Owned Plant or Promissory Note in these financial statements. Effective as the date of this report, the Company, RTC and PTH, are all development stage companies, none of which have the existing financials resources, established business operating processes or ongoing profitable business operations to meet their obligations under the terms of these agreements at this time. The Company, RTC and PTH's ability to meet their obligations under the terms of these agreements is dependent on their ability to raise the future funding required and to successfully develop and implement their business plans which cannot be guaranteed at this time. Accordingly the realization of any future value from these rights and notes is highly uncertain at this time and accordingly no value has been assigned to them. 

Preferred Stock and Certificate of Designation. In connection with the Restructuring Agreement, the Company issued to RTC 1,250,000 shares of its newly created Class A Super Voting Preferred Stock ("Preferred Stock"). The Preferred Stock has the rights privileges and preferences as is set forth in the Certificate of Designations filed with the Delaware Secretary of State. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i). each share of Preferred Stock has 100 to 1 voting rights, voting along with the Company's common stock, (ii). each share of Preferred Stock has 100 to 1 rights upon liquidation and distribution of the Company, (iii). each share of Preferred Stock has the right to convert into 100 shares of common stock of the company. The Company increased its authorized shares of common stock from 150 million to 325 million in order to allow for the conversion of the Preferred Stock, among other considerations.

8

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS CONTINUED

Construction of a Company Owned Plasma Plant

The market value of the 1,250,000 shares of its newly created Class A Super Voting Preferred Stock is assumed to equate to the value of 125,000,000 shares of the common stock which was $16,250,000 on January 30, 2014 when the Company became contractually obligated to issue these shares.

In addition, under the Restructuring Agreement, the Company and RTC and its shareholders granted mutual releases, and provided customary representations and warranties.

The Share Exchange Agreement was adopted by the unanimous consent of the Board of Directors of the Company, RTC, each RTC shareholders and PTH. All of the shareholders of RTC were signatories to the agreement.

The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming the issuance of the Preferred Stock to its shareholders, Wolz will receive 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury will receive 312,500 shares of Preferred Stock convertible into 31.5 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and member of Wolz and owns approximately 51% of Wolz, and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Mr. Pane is a managing member of PTH and Messrs. Pane and Altieri own or control approximately 20% and 8%, respectively of PTH.

Unregistered Sale of Securities.

At Closing, the Company issued to RTC 1,250,000 shares of Preferred Stock. Each share of Preferred Stock has identical rights as 100 shares of common stock except that each share Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company).

These securities qualified for exemption under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, manner of the offering and number of securities offered. These shareholders made certain representations and warranties, including their investment intent. They also agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act.

Material Modification to Rights of Security Holders.

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i) each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii) each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii) each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred Stock created thereby to RTC.

9

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS-CONTINUED

Change of Control of Registrant.

At Closing of the Restructuring Agreement, the Company issued to RTC 1,250,000 shares of Preferred Stock. Each share of Preferred Stock has identical rights as 100 shares of common stock except that each share Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company). As a result, a change of control occurred with respect to the Company. Immediately prior to Closing, the Company had 150 million shares of common stock authorized, of which 135,259,321 shares were issued and outstanding and 10 million shares of preferred stock, of which no shares were outstanding.

Immediately after Closing, the authorized, issued and outstanding shares of common stock of the Company were unchanged and the Company had 10 million shares of preferred stock authorized, of which the Company had 1,250,000 shares of preferred stock issued and outstanding designated the Series A Super Voting Preferred Stock referred to herein as the "Preferred Stock."

After giving effect to the conversion of the Preferred Stock by RTC, RTC will own approximately 125 million shares of common stock or approximately 48% of the common stock of the Company after giving effect to the conversion of the Preferred Stock to common stock. The RTC shareholders are Wolz International, LLC (" Wolz ") owning 50% of RTC, Titan Productions, Inc. (" Titan ") owning 25% of RTC, and Mercury6, LP (" Mercury6 ") owning 25% of RTC. Wolz received 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury received 312,500 shares of Preferred Stock convertible into 31.25 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and a member of Wolz owning 51% of that company, and Chad Altieri, our Board member, is the sole owner of Mercury.

Mining Services Agreement with Mesa Acquisition Group LLC

On May 22, 2013, US Precious Metals, Inc. ("Company") entered into a Mining Services Agreement with Mesa Acquisitions Group, LLC, a Florida limited liability company ("Contractor"), in association with Alba Petroleos De El Salvador Sem De CV, a Venezuelan company. Under the agreement, Contractor has agreed to perform certain mining services on a portion of the Company's Mexican mining concessions. The Company maintains approximately 37,000 acres of mining concessions located in the State of Michoacán, Mexico, and the agreement covers the Solidaridad I & II mining concessions (or approximately 5,000 acres). Under the agreement, Contractor has agreed to perform the various mining services in three, separate phases described below:

· Phase 1 entails the immediate commission of high-tech satellite imaging to identify mineralization and confirm the two previous drilling campaigns on the mining concessions known as Solidaridad I and/or Solidaridad II.

The estimated costs of Phase 1 are approximately $400,000.

· Phase 2 entails the development of the necessary infrastructure to conduct full scale mining operations on the Solidaridad I and/or Solidaridad II mining concessions, including limited exploration, establishment of roads, water, power (electricity) and staging area for employees on site.

The estimated costs of Phase 2 are approximately $10 million.

· Phase 3 entails the construction of a processing plant to process the ore, which will be owned by the Company and the performance of all surface and underground mining operations.

The estimated costs for the construction of the processing plant are approximately $40 million.

10

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1. NATURE OF OPERATIONS-CONTINUED

Mining Services Agreement with Mesa Acquisition Group LLC Continued

As of February 28, 2014, Phase I was substantially complete, although the Company has not received the results of the ground work conducted on the property.

Contractor will be responsible for the costs and expenses of: the satellite imaging described in Phase 1, the limited exploration and build out of the infrastructure described in Phase 2, and the construction of the processing plant described in Phase 3 and all mining costs. The obligation of contractor to proceed to Phases 2 and 3 will be dependent upon the company receiving positive results of the satellite imaging. The size and capacity of the processing plant to be constructed by the Contractor will be determined by parties, subject however to the results of the satellite imaging. Actual mining costs will be paid for by Contractor and milling and processing expenses will be allocated between the parties in proportion to their revenue allocation described below (70% for Company/30% for Contractor).

As consideration for the mining services, Contractor will receive the following consideration from the Company:

Phase 1 and Phase 2. As consideration for Phases 1 and 2, the Company has issued to Contractor 10 million shares of its common stock.

Phase 3. As consideration for completion of Phase 3, Contractor will earn a 30% revenue interest in the revenues resulting from the sale of the ore, subject to it paying its proportionate share of the milling expenses. If Contractor fails to perform or elects not to perform Phase 3 for any reason within 12 months from the completion of Phase 2, Contractor will forfeit all rights to the project.

In addition to the consideration stated above, as a further inducement for Contractor to enter into the Mining Services Agreement, the Company's Chairman has agreed to issue to Contractor an additional 5 million shares of our common stock.  This is not a Company obligation but will be treated as a capital contribution and will occur after completion of development under separate agreement.

The parties will be obligated to share in the milling and processing costs and revenues generated from any ore processing on a proportionate basis that is 70% to the Company and 30% to Contractor. The Mining Services Agreement contains extensive terms and obligations regarding the performance of the mining services by Contractor. Accordingly, the descriptions of the Mining Services Agreement are not complete, and are qualified in their entirety by reference to each agreement which are filed as an exhibit to our Annual Report on Form 10-K/A for the fiscal year ended May 31, 2013, filed with the Securities and Exchange Commission on September 16, 2013.

Mr. George Mesa, the sole owner of Contractor, has been the Company's Director of Security for the Company's Mexican mining concessions since September 2012.  On September 21, 2012, Mr. Mesa received stock options to acquire 1 million share of our common stock at an exercise price of $0.12 in connection with that appointment.

On September 19, 2013, the Company in conjunction with its Mining Services partners Mesa Acquisition Group LLC/Alba Petroleos De El Salvador Sem De Cv, reported the results of the Phase 1 Satellite Imaging program under the Mining Services Agreement.

11

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

1.NATURE OF OPERATIONS-CONTINUED

Amendments to Articles of Incorporation or Bylaws;

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i). each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii). each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii). each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred stock created thereby to RTC.

The conversion privilege of the preferred stock contains a provision restricting conversion until such time as there are adequate common shares authorized to allow full conversion of the preferred.  On April 14, 2014, we increased our authorized shares of common stock from 175 million to 325 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally  accepted  accounting  principles for interim  financial  information  and with the  instructions  to Form  10-Q and Article  8 of  Regulation  S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading. Operating results for the three months ended August 31, 2014 are not necessarily indicative of the results that may be expected for the year ended May 31, 2015. For more complete financial information, these unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended May 30, 2014 included in our Form 10-K filed with the SEC.

Exploration Stage Accounting

The Company is an exploration stage company, as defined in pronouncements of the Financial Accounting Standards Board (FASB) and Industry Guide #7 of the Securities and Exchange Commission.  Generally accepted accounting principles govern the recognition of revenue by an exploration stage enterprise and the accounting for costs and expenses. As an exploration stage company is also required to make additional disclosures as defined under the then current Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, "Development-Stage Entities". Additional disclosures required are that our financial statements be identified as those of an exploration stage company, and that the statements of operations, changes in changes in stockholders' deficit and cash flows disclosed activity since the date of its Inception (January 21, 1998). Effective June 10, 2014, the FASB changed its regulations with respect to development stage entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2015, with the option for entities to early adopt these new provisions. The Company has elected to early adopt these provisions and consequently these additional disclosures are not included in its financial statements

12

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Proven and Probable Reserves

The definition of proven and probable reserves is set forth in SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. 

In addition, reserves cannot be considered proven and probable until they are supported by a feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable at the time of the reserve determination. As of August 31, 2014, none of our mineralized material met the definition of proven or probable reserves.

Consolidated Statements

The consolidated financial statements include the accounts of the Company and its subsidiary company.  All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimated

Foreign Currency Translation

The assets of the Mexican subsidiary are located in Mexico.  The Mexican subsidiary depends on the ability of the parent company to raise cash which is transferred to the subsidiary to meet its operating cash needs.  Therefore, the Company's management has determined that the functional currency of the Mexican subsidiary is the US dollar. Since that is the case, the Company remeasures its subsidiary financial statements in US dollars.  Any gains or losses are reflected on the Statements of Operations

The accounts of the Mexican subsidiary are remeasured in US dollars as follows:

(a) Current assets, current liabilities, and long-term monetary assets and liabilities are translated based on the rates of exchange in effect at the balance sheet dates.

(b) Non-monetary assets, liabilities, and equity accounts are translated at the exchange rates prevailing at the times of acquisition of assets, assumption of liabilities or equity investments.

(c) Revenues and expenses are translated at the average exchange rates for each period, except for charges for amortization and depreciation of non-monetary assets which are translated at the rates associated with the assets.

13

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Cash Equivalents

The Company considers all short term investments purchased with an original maturity of three months or less to be cash equivalents.

Financial Instruments

The estimated fair values for financial instruments were determined at discrete points in time based on relevant market information. These estimates involved uncertainties and could not be determined with precision. The carrying amounts of notes receivable, accounts receivable, accounts payable and accrued liabilities approximated fair value because of the short-term maturities of these instruments. The fair value of notes payable approximated to their carrying value as generally their interest rates reflected our effective annual borrowing rate.

Fair Value Measurements: 

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements.  Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs.  ASC 820 defines the hierarchy as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date.  The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

Level 3 – Significant inputs to pricing that are unobservable as of the reporting date.  The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

Our financial instruments consist of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable.  The carrying values of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable approximate their fair value due to their short maturities.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, a small portion of which is located in Mexico.

Property and equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the related reasonably assured lease term.  The estimated useful lives are as follows:

Vehicles	4 years
Machinery and equipment	3-10 years

14

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Property and Equipment Continued

We review our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

Maintenance and repairs of property and equipment are charged to operations. Major improvements are capitalized.

Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is included in operations.

Investments in Mining Rights

Mining rights held for development are recorded at the cost of the rights, plus related acquisition costs.  These costs will be amortized when extraction begins.

Mine Development Costs

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.  Costs incurred at a mine site before proven reserves have been established are expensed as mine development costs.  At the point proven reserves have been established at a mine site, such costs will be capitalized and will be written off as depletion expense as the minerals are extracted.

As of August 31, 2014, none of the mine concessions met the requirements for qualification as having proven reserves.

Impairment of Long-Lived and Intangible Assets

In the event that facts and circumstances indicated that the cost of long-lived and intangible assets may be impaired, an evaluation of recoverability will be performed. If an evaluation was required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value was required. No impairment was recorded during the three month periods ended August 31, 2014 and 2103. 

Deferred Costs and Other

Offering costs with respect to issue of common stock, warrants or options by us were initially deferred and ultimately offset against the proceeds from these equity transactions if successful or expensed if the proposed equity transaction is unsuccessful. 

Derivative Financial Instruments: 

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

15

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Income Taxes

We account for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Current tax benefits are offset by a valuation reserve as they are considered not likely to be realized in the foreseeable future.

Recognition of Revenue

Revenue will be recognized when persuasive evidence of an arrangement exists, such as when a purchase order or contract is received from a customer, the price is fixed, title to the goods has passed, and there is reasonable assurance of collection.  The Company has not yet entered into any contractual arrangement to deliver product or services.

Advertising Costs

The Company will expense advertising costs when advertisements occur.  There has been no spending thus far on advertising.

Stock Based Compensation

The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the goods or services received or the measurement date fair value of the equity instruments issued, whichever is the more readily determinable.  The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.

Discount and Amortization of Debt Discount:

Debt discount represents costs incurred in obtaining the debt funding and the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations. 

Net Income (Loss) Per Share

The Company computes net income (loss) per common share in accordance with Accounting  Standards  Update ("ASU"),  Earning Per Share (Topic 260) which requires the  presentation of both basic and diluted  earnings per share ("EPS")on the  consolidated  income  statements..  Under these provisions, basic and diluted net income (loss) per common share are computed by dividing the net income (loss) available to common shareholders for each period by the weighted average number of shares of common stock outstanding during the period.  At May 31, 2014 and 2013 there were warrants and options outstanding to purchase Company common stock and notes payable that are convertible into shares of the Company's common stock. The common share equivalents of these have not been included in the calculations of loss per share because such inclusions would have anti-dilutive effects as the Company incurred a loss from operations during the three month periods ended August 31, 2014 and 2013.

16

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED

Other Comprehensive Income (Loss)

The Company reports as other comprehensive income (loss) those revenues, gains and losses not included in the determination of net income.  During the three month periods ended May 31, 2014 and 2013, the Company did not have any gains and losses resulting from activities or transactions that resulted in comprehensive income or loss.

Segment Reporting

Management treats the operation of the Company as one segment.

New Accounting Pronouncements

The Company has  reviewed  all  recently  issued,  but not  yet  effective,  accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material  impact on its  financial  condition  or the results of its operations.

3.GOING CONCERN AND LIQUIDITY

As shown in the accompanying financial statements, we have experienced continuing losses since Inception (January 21, 1998), and as at August 31, 2014, have a working capital deficit of $4,778,113, accumulated losses of $51,184,512, recurring negative cash flows from operations and presently do not have sufficient resources to meet our outstanding liabilities or accomplish our objectives during the next twelve months.

As at August 31, 2014, we were in default on repayment of convertible promissory notes with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096.

Moreover, effective May 23, 2012, we amended our Settlement Agreement and Payment Agreement with our former attorneys. As result of the amendment, the payment of the initial installment of $403,554, originally due on May 24, 2012, was extended to July 24, 2012. In addition, commencing May 23, 2012, interest accrued on the amount due, which is $1,614,216, at the rate of 5% per annum. We were unable to make the scheduled payment of $403,554 and accrued interest on July 24, 2012 and defaulted under the terms of this agreement, and the entire amount, including interest, became due and payable. On October 1, 2012, we entered into a second amendment to our Settlement Agreement and Payment Agreement with our former attorneys effective July 23, 2012. As a result of the second amendment, the date for the payment of the initial installment of $403,554 was extended to December 1, 2012. We have failed to make this schedule payment on December 1, 2012. Thus, our former attorneys have the ability to avail themselves of all rights and privileges under the existing agreements with us and under the laws of Mexico and the United States. During the twelve months ended May 31, 2014 we made a single payment of $25,000 in respect of this liability. The total balance due to our former attorneys, including accrued interest, at August 31, 2014 was $1,770,560.

In addition, we owe another former attorney the sum of approximately $90,000 under an arbitration award. The attorney has initiated efforts to effect a judgment against the Company.

At the time of this report, we do not have the funding available to repay the convertible promissory notes, make the payment required under the amended agreement with our former attorneys or pay the arbitration award to the other former attorney.

17

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

3.GOING CONCERN AND LIQUIDITY-CONTINUED

These conditions raise substantial doubt about our ability to continue as a going concern.

In our audited financial statements for the fiscal years ended May 31, 2014 and 2013, contained in our Annual Report, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

Our present plans to overcome these difficulties, the realization of which cannot be assured, include, but are not limited to, continuing efforts to raise new funding in the public and private markets, to sell some or all of our assets and to initiate a renegotiation of the terms of scheduled repayments to our creditors.

4.SUPPLEMENTAL CASH FLOW INFORMATION

	Three Months Ended August 31,
	2014		2013
Income taxes paid	$	-	$	-
Interest paid	$	-	$	-
Convertible Notes Payable, debt discount, accrued interest and derivative liabilities settled with the issuance of 3,040,622 shares of  common stock	$	462,591	$	-

5.PROPERTY AND EQUIPMENT

As at August 31, 2014 and May 31, 2014, property and equipment consisted of the following:

	August 31, 2014			May 31, 2014
Vehicles	$	41,877		$	41,877
Machinery and equipment		92,515			92,515
Total property and equipment		134,392			134,392
Less accumulated depreciation		(111,377	)		(108,849	)
Total property and equipment net	$	23,105		$	25,543

Depreciation expense for the three months ended August 31, 2014 and 2014 was $2,528 and $2,528, respectively.

18

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

6.CONVERTIBLE NOTES PAYABLE

	Principal Balance			Loan Discount			Accrued Interest			Total
May 31, 2013	$	575,000		$	-		$	355,923		$	930,923
Issued in the year		647,000			(414,726	)		-			260,274
Converted into shares of common stock		(316,080	)		174,181			(20,137	)		98,244
Amortization of debt discount		-			142,091			-			142,091
Interest accrued		-			-			125,512			125,512
May 31, 2014		933,920			(98,448	)		461,298			1,296,770
Issued in the period		-			-			-			-
Converted into shares of common stock		(233,920	)		116,866			(23,298	)		(140,352	)
Amortization of debt discount		-			(18,418	)		-			(18,418	)
Interest accrued		-			-			21,879			21,879
August 31, 2014	$	700,000		$	-		$	459,178		$	1,159,178
Less long term		-			-			-			-
Short term	$	700,000		$	-		$	459,178		$	1,159,178

As at May 31, 2014, we were in default on repayment of various convertible promissory notes included in the above table with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096. The notes in default bear simple interest at an annual rate of 16% and may be converted into the shares of our common stock at the option of the note holder or automatically, if we complete any financing that results in proceeds of at least $10 million to us, or upon the occurrence of a change in control of us. 

On September 30, 2013, a holder of our convertible notes (referenced above) served us with a lawsuit. The lawsuit demanded repayment of a total of $632,666 in principal and interest due under the convertible notes. The lawsuit was dismissed by court due to lack of jurisdiction.

During the three month ended August 31, 2014, the Company did not issue any further convertible notes payable and settled two previously outstanding convertible notes payable through the issuance of a total of 3,040,622 shares of common stock.

Convertible Note Payable A

On September 26, 2013, we entered into a convertible promissory note with a maximum amount of $300,000, to be funded during a two year term, bearing interest at 12%. The maximum proceeds to be received under the note is $270,000 with the balance of $30,000 representing a discount on issue. We initially received $150,000 upon closing the note.  The lender may convert the convertible promissory note into shares of our common stock at any time after six months at a 40% discount to the lowest trade price in the 25 trading days prior to conversion.

The $150,000 advance was received net of a debt discount of $16,667 and the principal balance to be repaid is $166,667. The $16,667 debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.

19

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

6.CONVERTIBLE NOTES PAYABLE-CONTINUED

Convertible Note Payable A Continued

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

We valued the conversion feature at origination at $259,659 using the Black Scholes valuation model with the following assumptions:  dividend yield of zero, 18 month to maturity, risk free interest rate of 0.34% and annualized volatility of 143%. $150,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture. The debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture. The balance of $109,659 of the value assigned to the derivative liability was recognized as origination interest on the derivative liability and expensed on origination.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as another income or expense item.

At November 30, 2013, we revalued the conversion feature of the convertible debenture using the Black Scholes valuation model with the following assumptions: 6 month risk free interest rate of 0.26% and annualized volatility of 133% and determined that, since origination, the fair value of our derivative liability had decreased by $33,956 to $225,703. Accordingly, we recognized a corresponding gain on derivative liability in conjunction with this revaluation.

On February 20, 2014 we received a further net advance for 30,000 under the terms of the note.

The $30,000 advance was received net of a debt discount of $3,333 and the principal balance to be repaid is $33,333. The $3,333 debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

We valued the conversion feature at origination at $42,385 using the Black Scholes valuation model with the following assumptions:  dividend yield of zero, 18 month to maturity, risk free interest rate of 0.25% and annualized volatility of 128%. $30,000 of the value assigned to the beneficial conversion feature was recognized as a debt discount on the convertible debenture. The debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture. The balance of $12,385 of the value assigned to the beneficial conversion feature was recognized as origination interest on the derivative liability and expensed on origination.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as another income or expense item.

20

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

6.CONVERTIBLE NOTES PAYABLE-CONTINUED

Convertible Note Payable A-Continued

At February 28, 2014, we revalued the conversion feature of the entire $200,000 convertible debenture using the Black Scholes valuation model with the following assumptions: 18 month term, risk free interest rate of 0.25% and annualized volatility of 128%  and determined that, since the previous revaluation or origination, the fair value of our derivative liability had increased by $37,892 to $305,980 Accordingly we recognized a corresponding loss on derivative liability in conjunction with this revaluation.

Between March 26, 2014 and May 15, 2014, the holder made 4 separate conversion requests and converted the $91,080 of the principal receiving a total of 1,320,000 shares of our common stock upon such conversions.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

At May 31, 2014, we revalued the conversion feature of the remaining balance of $132,920 principal and interest outstanding using the Black Scholes valuation model with the following assumptions: 16 month term, risk free interest rate of 0195% and annualized volatility of 120%  and determined that, since the previous revaluation, the fair value of our remaining derivative liability had decreased by $27,310 to $146,674 Accordingly we recognized a corresponding gain on derivative liability in conjunction with this revaluation.

Between June 1, 2014 and August 20, 2014 the holder made 4 separate conversion requests and converted the remaining $132,920 of the principal receiving a total of 1,724,266 shares of our common stock upon such conversions.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

As at August 31, 2014, no balance was outstanding under this convertible note payable.

However, as disclosed in Note 11 Subsequent Events below, a further advance of $83,333 was made under this convertible note payable and we received funds $75,000, net of debt discount on September 3, 2014.

Convertible Note Payable B

On January 30, 2014, we issued a convertible debenture to a former lender for $125,000. The convertible debenture had a 6 month term and bore interest of 12%. The convertible debenture could have been prepaid at a rate of 150% of the principal balance outstanding along with accrued interest. At any time after the maturity date of the convertible loan, if any principal balance is still outstanding, the balance was convertible into shares of the common stock at a 40% discount to the lowest closing price of the prior 20 trading days. As the conversion feature only applied after the maturity of the convertible debenture, no value was assigned to it at origination of the loan and no loan discount was recognized on the convertible debenture at origination. This convertible debenture was due on July 30, 2014 and the holder converted the entire principal amount of the note as described further below.

21

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

6.CONVERTIBLE NOTES PAYABLE-CONTINUED

Convertible Note Payable B-Continued

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815- 40, Derivatives and Hedging - Contracts in Entity's Own Stock. Since the conversion price can change with reductions in the price of Company common stock, the conversion feature meets the definition of a derivative. We therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. We valued the conversion feature at default at $111,975 using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 3 month to maturity, risk free interest rate of 0.03% and annualized volatility of 59%. The balance of $111,975 was recognized as interest on origination and expensed in full on default.

Between January 30, 2014 and August 15, 2014, the holder made 6 separate conversion requests and converted the entire $125,000 principal amount of the note receiving a total of 1,316,356 shares of our common stock. The holder waived their right to charge interest on this loan. As of August 31, 2014, the note has been satisfied in full.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

Convertible Note Payable C

On April 4 2014, we issued a further convertible debenture for $150,000 to the same lender as for Convertible Note Payable B above. The convertible debenture has a 6 month term and bears interest of 10%. The convertible debenture could have been prepaid at a rate of 150% of the principal balance outstanding along with accrued interest. At any time after the maturity date of the convertible loan, if any principal balance was still outstanding, the balance could be convertible into shares of the common stock at a 40% discount to the lowest closing price of the prior 20 trading days. As the conversion feature only applies after the maturity of the convertible debenture, no value has been assigned to it and no loan discount has been recognized on the convertible debenture. This convertible debenture is due on October 4, 2014.

The effect of changes in the value of our derivative liabilities described in this note are summarized in the following table:

May 31, 2013	$	-
Value acquired during the period		511,197
Settled on issuance of common stock		(320,270	)
Revaluation on settlement on issuance of common stock or at reporting dates stock or at reporting dates		(41,253	)
May 31, 2014		149,674
Value acquired during the period		111,975
Settled on issuance of common stock		(227,498	)
Revaluation on settlement on issuance of common stock		(34,151	)
August 31, 2014	$	-

22

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

7.COMMITMENTS AND CONTINGENCIES

Lease – Head Office

Our head office is in Marlboro, New Jersey where we are now renting office space under a the terms of a 12 month lease, with an option to extend the term of the lease for a further 12 months, at $1,300 per month and operating expenses. This lease is personally guaranteed by one of our officers and directors. Neither the lease of the personal guarantee have ever been finalized or signed

Leases – Mexican Operation

The Company leases a warehouse (storage) facility in the city of Morelia, Michoacán, Mexico at a monthly rental of $2,234. This lease expired on February 1, 2014 and was extended for a further twelve month period on the same terms. Effective February 1, 2014 we extended the terms of the lease for a further twelve months on the same terms as before.

Effective January 1, 2014, we entered into a new rental agreement with the landowner of the land on which our mining concessions are located. Under the terms of the new agreement we agreed to pay a monthly rental of approximately $5,400 on a going basis to be able to have access to our mining concessions.

Mining rights

The Company is required to make payments to the Mexican government on a bi-annual basis to maintain its mining concessions. In the twelve months ended May 31, 2014 the Company made payments of $147,105 to the Mexican government to maintain its mining concessions. It is anticipated that these payments will increase in the twelve months ending May 31, 2015.

Other Commitments

Under an employment agreement we have with Mr. Hertell, among other terms, we agreed to pay Mr. Hertell an annual salary of $500,000. The salary commences at such time as we generate monthly gross revenues from our plasma processing operations of at least one million dollars ($1,000,000) for two (2) consecutive months ("Performance Event"), and (ii) upon our achievement of the Performance Event, the Base Salary shall commence effective as of the first day of the stated two (2) consecutive month period and shall continue throughout the Term.. Either party may terminate this Agreement by providing at least ten (10) days written notice to the other party.

In May 2014, we paid $35,000 as a deposit on a sales proposal to install limited production equipment on our property in Mexico for a total cost of $450,000. In August 2014, we made a further deposit of $21,250 under the terms of the sales proposal. As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be success in raising the necessary funding.

As disclosed in Note 11 Subsequent Events below, on September 15, 2014, we paid $75,000 as a deposit on a proposal to undertake a drilling program on our property in Mexico. The proposal is in excess of $1 million.As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be successful in raising the necessary funding.

23

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

7.COMMITMENTS AND CONTINGENCIES-CONTINUED

Legal

Title Dispute

On April 3, 2012, as we have previously reported, Mr. Israel Tentory Garcia filed an action against our Mexican subsidiary, US Precious Metals SA de CV, wherein the plaintiff asserted a number of claims against us, including a demand for the return of one of our concessions (Solidaridad I) for failure to develop the concession. The case was filed in a local court in the Federal District of Mexico City. On May 21, 2013, the Court ruled that the Plaintiff did not prove the claims asserted in the lawsuit, and that our subsidiary is not liable to for any of such claims.

On June 12, 2014, our Mexican subsidiary, US Precious Metals SA de CV was served with another lawsuit from Mr. Israel Tentory Garcia along with seven other plaintiffs. The lawsuit was filed in a commercial court in Mexico City. The claims of the new lawsuit essentially restate the claims of the original lawsuit filed in April 2012.

By way of background, the plaintiffs obtained the exploration rights to the concession known as Solidaridad I from the Mexican government on November 24, 1996. These exploration rights expired on November 23, 2001 under the terms of the concession from the government and as prescribed by the governing statute. On March 13, 2003, we entered into an agreement with the plaintiffs pursuant to which they assigned their rights to this (expired) concession to our Mexican subsidiary. In July 2003, our Mexican subsidiary then applied for and obtained a new exploration and exploitation concession from the Mexican government covering Solidaridad I. The new concession expires July 2053.

Pursuant to this 2003 agreement with the plaintiffs, we issued 1.5 million shares of our common stock to them. The agreement further provided for the payment of $1 million to the plaintiffs upon the occurrence of a sale of the concession for exploitation purposes. In the original action filed in 2012 and in the current action, plaintiff(s) claim that under the agreement the $1 million payment was due and payable no later than 2009 and ownership of the mining concession should revert back to the plaintiff(s) due to the non-payment.

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. Our defense will include, among other positions, the fact that plaintiffs had no concession rights to assign under the March 2003 agreement as their concession expired 16 months earlier, we independently obtained the rights to a new (and current) concession from the Mexican government in July 2003, the agreement is ambiguous as to the payment requirement in 2009 and the matter was previously adjudicated in our favor in earlier action, albeit in a different court. We have filed an answer to the above complaint.

8.STOCKHOLDERS' DEFICIT

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of 0.00001 per share.

Unregistered Sale of Securities.

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). Under the terms of the agreement, the Company was contracted to issue at Closing 1,250,000 shares of Class A Preferred Stock to RTC. Each share of this Class A Preferred Stock has identical rights as 100 shares of common stock except that each share of this Class A  Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company).

24

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

8.STOCKHOLDERS' DEFICIT-CONTINUED

Unregistered Sale of SecuritiesContinued.

The market value of the 1,250,000 shares of its newly created Class A Super Voting Preferred Stock is assumed to equate to 125,000,000 shares of the common stock which was $16,250,000 on January 30, 2014 when the Company became contractually obligated to issue these shares. These securities qualified for exemption under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, manner of the offering and number of securities offered. These shareholders made certain representations and warranties, including their investment intent. They also agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act.

Material Modification to Rights of Security Holders.

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i) each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii) each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii) each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred stock created thereby to RTC.

Common Stock and Warrants

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.00001 per share. On or about February 25, 2014, a majority of the Company's shareholders approved the increase of the authorized common stock from 150,000,000 to 325,000,000 shares.  The Board of Directors previously approved the stated corporate action.  On March 26, 2014, the Company filed with the Securities and Exchange Commission and mailed to its shareholders a Definitive Schedule 14C with respect to the stated increase in authorized shares.

 The following shares of common stock and warrants were issued and warrants cancelled in the three months ending August 31, 2014:

	Common Stock		Warrants
May 31, 2014		143,748,746		3,564,797
Issued for cash proceeds of $455,975		5,046,667		2,523,334
Issued on settlement of convertible notes payable		3,040,622		-
Issued as directors' compensation		2,250,000		-
Warrants exercised		100,000		(100,000	)
Warrants expired, unexercised		-		(800,000	)
August 31, 2014		154,186,035		5,188,131

25

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

8.STOCKHOLDERS' DEFICIT-CONTINUED

Common Stock and Warrants Continued

During the three months ended August 31, 2014, the Company issued:

i) 5,046,667 shares of its common stock, together with warrants to buy 2,523,334 shares of its common stock for proceeds of $455,975. The warrants had terms of 12 months and exercise prices of $0.125 or $0.20.

ii) 3,040,622 shares of commons stock in settlement of convertible notes payable, accrued interest, debt discount and derivative liabilities totaling $462,591

iii) 2,250,000 shares valued at $495,000 as compensation to its nine directors.

In addition, 100,000 warrants with an exercise price of $0.15 were exercised for cash proceeds of $15,000 and 800,000 warrants expired, unexercised.

The following table summarizes information about warrants outstanding at August 31, 2014:

Exercise Price		Warrants Outstanding		Weighted Average Life of Outstanding Warrants In Months
	$0.125		3,746,667		9.1
	$0.16		924,797		11.7
	$0.20		516,667		11.6
Total			5,188,130		79.8

Stock Options

In August 2008, our shareholders approved a Stock Option Plan (the "Plan"). Under the terms of the Plan, options to purchase up to 20,000,000 shares of Company common stock may be issued to officers, directors, key employees and consultants.

In August 2014, our Board of directors approved the establishment of a 2014 Stock Option Plan for up to 20,000,000 shares of Company common stock.

The following table sets stock options granted, exercised and outstanding during the three months ended August 31, 2014 and the twelve months ended May 31, 2014:

26

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

8.STOCKHOLDERS' DEFICIT-CONTINUED

Stock Options Continued

	# of Options		Weighted-Average Exercise Price
Options outstanding and vested, May 31, 2013		16,500,000	$	0.13
Granted		1,500,000		0.21
Exercised		(500,000		(0.18
Cancelled or forfeited		-		-
Options outstanding and vested at May 31, 2014		17,500,000		0.13
Granted		1,000,000		0.23
Exercised		-		-
Cancelled or forfeited		-		-
Options outstanding and vested at August 31, 2014		18,500,000	$	0.14

On August 27, 2014, the Company's Board of Directors appointed a Mexican national to its advisory board to assist the Company with its operations in Mexico, including regulatory affairs and granted 1,000,000 stock options to this individual under the newly created 2014 Stock Option Plan. The option exercise price of the option was $0.23 per share.

The following table summarizes information about stock options outstanding at August 31, 2014:

Exercise Price		Options Outstanding and Exercisable		Intrinsic Value of Options Outstanding and Exercisable (1)		Weighted Average Life of Options Outstanding and Exercisable In Years
	$0.065		6,000,000	$	1,050,000		1.5
	$0.07		1,000,000		170,000		1.0
	$0.12		1,000,000		120,000		3.0
	$0.16		3,500,000		280,000		2.6
	$0.18		1,000,000		60,000		2.3
	$0.185		1,000,000		55,000		2.1
	$0.19		1,000,000		75,000		3.8
	$0.20		500,000		20,000		2.0
	$0.22		1,000,000		20,000		4.0
	$0.23		1,000,000		10,000		5.0
	$0.25		1,000,000		-		3.8
			18,500,000	$	1,860,000		2.3

(1) Based on closing share price of $0.24 at close of business on August 29, 2014

27

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

8.STOCKHOLDERS' DEFICIT-CONTINUED

Stock Options Continued

The total fair value of options issued during the three month periods ended August 31, 2014 and 2013 were $206,958 and $0 respectively.

The fair value of options granted under the Plan are estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions during the twelve months ending August 31, 2014:

Weighted-average risk-free interest rate	1.65%
Weighted-average expected life	5 Years
Weighted-average expected volatility	168%
Weighted-average expect dividends	$ 0

The Company expects to issue shares upon exercise of these options from its authorized shares of common stock.

9.RELATED PARTY TRANSACTIONS

During the three months ended August 31, 2014, we issued 2,250,000 shares of our common stock valued as $495,000 as compensation to our directors. Each of our nine directors at the time received 250,000 shares of common stock. In addition, 1,000,000 fully vested stock options with an exercise price of $0.23, valued at $206,958, were issued to a Mexican national appointed to our advisory board to assist the Company with its operations in Mexico, including regulatory affairs.

In July and August 2013, the Company paid a total of $125,000 to a company controlled by Mr. George Mesa, our Director of Security, and owner of Mesa Acquisitions Group LLC. Mr. Mesa had previously advanced a like amount of funds which were used by Resource Technology Corp. ("RTC") in connection with the transportation of ore supply, and related costs. As mentioned above, in May 2013, we entered into a Share Exchange Agreement with RTC and its shareholders, which includes our Chairman and a director, to acquire the issued and outstanding shares of RTC from the RTC shareholders.

Effective August 28, 2013, we appointed Mr. Hans H. Hertell as the Company's President. In addition, on that same date, our   Board of Directors approved an Employment Agreement with Mr. Hertell and a Consulting Agreement with Hertell Group, LLC. ("Hertell Group"). Mr. Hertell is the sole officer and member of Hertell Group.

Under the Employment Agreement, among other terms, we agreed to pay Mr. Hertell an annual salary of $500,000. The salary commences at such time as we generate monthly gross revenues from our plasma processing operations of at least one million dollars ($1,000,000) for two (2) consecutive months ("Performance Event"), and (ii) upon our achievement of the Performance Event, the Base Salary shall commence effective as of the first day of the stated two (2) consecutive month period and shall continue throughout the Term. In addition, upon occurrence of the Performance Event, the Executive will be entitled to receive a stock award of 1,000,000 shares of common stock ("Stock Grant"), which shall vest immediately. Either party may terminate this Agreement by providing at least ten (10) days written notice to the other party.

28

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

9.RELATED PARTY TRANSACTIONS-CONTINUED

Under the Consulting Agreement, among other terms, the Hertell Group will provide general business consulting services including but not limited to business development strategy, introduction of prospective business acquisitions or joint venture participation, deal-making, introduction to capital markets, marketing strategies, and other duties as mutually agreed upon by the parties. As consideration or the services, the Hertell Group will receive 9,000,000 shares of our common stock. The term of the Consulting Agreement is three years. The shares were issued, and the associated expense recognized, during the three months ended November 30, 2013.

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). Pursuant to the Restructuring Agreement 1,250,000 shares of our designated Class of Preferred stock, valued at $16,250,000 was issued to the RTC shareholders. The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming the issuance of the Preferred Stock to its shareholders, Wolz will receive 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury will receive 312,500 shares of Preferred Stock convertible into 31.5 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and member of Wolz and owns approximately 51% of Wolz, and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Mr. Pane is a managing member of PTH and Messrs Pane and Altieri own or control approximately 20% and 8%, respectively of PTH.

10.INCOME TAXES

The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The change of ownership following the RTC restructuring agreement may be limited our ability to utilize these US NOLs under the terms of IRC Section 381. The Mexican equivalent of the Internal Revenue Code allows NOL's to be carried forward for ten years.

We did not provide any current or deferred US federal income tax provision or benefit for any of the periods presented in these financial statements because we have experienced losses since Inception. When it is more likely than not, that a tax asset cannot be realized through future income, the Company must record an allowance against any future potential future tax benefit. We provided a full valuation allowance against the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the three months ended August 31, 2014 and 2013 as defined under ASC 740, "Accounting for Income Taxes." We did not recognize any adjustment to the liability for uncertain ta position and therefore did not record any adjustment to the beginning balance of the accumulated deficit on the balance sheet.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

29

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

10.INCOME TAXES CONTINUED

	August 2014		August 2013
Income tax provision at the federal statutory rate		39%		39%
Effect of operating losses		(39%)		(39%)
		-%		-%

Changes in the cumulative net deferred tax assets consist of the following:

	August 2014			August 2013
Net loss carry forward	$	19,961,960		$	19,322,455
Valuation allowance		(19,961,960	)		(19,322,455	)
	$	-		$	-

A reconciliation of income taxes computed at the statutory rate is as follows:

	August 2014			August 2013
Tax at statutory rate	$	639,505		$	256,212
Valuation allowance		(639,505	)		(256,212	)
	$	-		$	-

11.SUBSEQUENT EVENTS

On September 3, 2014, we received a further advance of $83,333 under an outstanding convertible note payable and we received funds $75,000, net of debt discount, as described in Note 6 Convertible Notes Payable above.

On September 15, 2014, we paid $75,000 as a deposit on a proposal to undertake a drilling program on our property in Mexico. The proposal is in excess of $1 million.As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be success in raising the necessary funding.

On October 2, 2014, 200,000 of our warrants with an exercise price of $0.125 were exercised for proceeds of $25,000.

On September 30, 2014, we issued 450,000 shares of our common stock as compensation under a 12 month consulting contract.

On October 6, 8 and 10, 2014, the holder of Convertible Note 6 converted a total principal balance of $100,000 into 851,191 shares of our common stock.

30

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. This quarterly report on Form 10-Q (this "Quarterly Report") contains certain forward-looking statements that are subject to risks and uncertainties. The statements contained in this Quarterly Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this Quarterly Report, the words "anticipate," "believe," "plan," "target," "estimate," "intend," "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our strategy, future plans for exploration and production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material. All forward-looking statements in this Quarterly Report are based upon information available to our management on the date of this Quarterly Report.

Forward-looking statements are subject to a number of risks and uncertainties and there can be no assurance that such statements will be accurate. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially and adversely from those described herein as anticipated, believed, planned, targeted, estimated, intended or expected. Although we believe the assumptions underlying and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Actual results could differ materially and adversely from those discussed in this Quarterly Report.

Substantial risks exist with respect to an investment in us. These risks include but are not limited to, those factors discussed in our Annual Report on Form 10-K/A for the fiscal year ended May 31, 2014, filed with the Securities and Exchange Commission (" Commission ") on September 10, 2014 (the " Annual Report ") including the section entitled " Item 1A. Risk Factors." More broadly, these factors include, but are not limited to:

· Our current financial condition and immediate need for capital;

· Potential dilution resulting from the issuance of new securities for any funding;

· Unexpected changes in business and economic conditions;

· Change in interest rates and currency exchange rates;

· Timing and amount of production, if any;

· Technological changes in the mining industry;

· Changes in exploration and overhead costs;

· Access to and availability of materials, equipment, supplies, labor and supervision, power and water;

· Results of future feasibility studies, if any;

· The level of demand for our products;

· Changes in our business strategy;

· Interpretation of drill hole results and the geology, grade and continuity of mineralization;

· The uncertainty of mineralized material estimates and timing of development expenditures;

· Commodity price fluctuations; and

· Changes in exploration results.

We qualify all of our forward-looking statements by the cautionary statements listed above, as well as those factors described in our Annual Report including the referenced "Item 1A. Risk Factors." The list above, together with the factors described in our Annual Report under "Item 1A. Risk Factors," is not exhaustive of the factors that may affect the accuracy of our forward-looking statements. You should read this Quarterly Report completely and with the understanding that our actual future results may be materially and adversely different from what we expect. These forward-looking statements represent our beliefs, expectations and opinions only as of the date of this Quarterly Report. Except as required by applicable law, including the securities laws of the United States, we assume no obligation to update any such forward-looking statements.

31

Management's discussion and analysis of financial condition, changes in financial condition and results of operations is provided as a supplement to the accompanying consolidated financial statements and notes to help provide an understanding of the Company's financial condition and results of operations.

Overview

We were formed as a mineral exploration company on January 21, 1998. We are engaged in the acquisition, exploration and development of mineral properties. We focus on gold and base minerals primarily located in the State of Michoacán, Mexico where we own exploration and exploitation concessions to approximately 37,000 acres of land (the "Solidaridad Property"). Mineral exploration requires significant capital and our assets and resources are limited. We have never earned revenue from our operations and have relied on equity and debt financing to fund our operations to date.

We are considered an exploration stage company for accounting purposes because we have not demonstrated the existence of proven or probable reserves. In accordance with accounting principles generally accepted in the United States of America, all expenditures for exploration and evaluation of our properties have been expensed as incurred. Furthermore, unless our mineralized material is classified as proven or probable reserves, substantially all expenditures have been or will be expensed as incurred. Since substantially all of our expenditures to date have been expensed, most of our investment in mining properties do not appear as an asset on our balance sheet.

RTC Transactions.

As previously reported by the Company on its Form 8-K filed with the Commission on May 17, 2013 and as stated above, on May 11, 2013, the Company entered into a Share Exchange Agreement with Resource Technology Corp., a newly formed Florida corporation ("RTC"), and the RTC shareholders to acquire all of the issued and outstanding shares of RTC in exchange for 300 million shares of common stock of the Company. The transaction included three ore supply contracts with third party suppliers, and a Plasmafication™ Toll Processing Agreement with Plasma Processing, LP., a Florida limited partnership ("PP LP"). The ore supply agreements and the Toll Processing Agreement enabled RTC to receive 1/3rd of the revenues derived from the plasma processing of ore concentrates from the ore supply agreements.

PP LP owns the right to operate a plasma processing facility located in 29 Palms, California. The plant took three years to build and is permitted to process ore concentrate. The parties believed that initial upgrades to the facility would commence within 90 to 120 days which will enable the facility to process concentrates at the rate of approximately 9 tons/day. PP LP expected to make further upgrades to the facility which would increase its capacity to approximately 27 tons/day. PP LP guaranteed a benchmark run of 5 tons/day for 20 consecutive days ("Benchmark Run") with a minimum value of $50,000 (net to RTC) per ton using the RTC concentrate (or a total of $5,000,000 in net proceeds to RTC) from the existing ore supply contracts. The agreement provided that if the Benchmark Run does not yield net cash proceeds of Five Million Dollars ($5,000,000) to RTC, then the number of Exchange Shares in total will be proportionately reduced. The completion date for the Benchmark Run was June 1, 2014.

The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming a completion of the transaction without further proportionate reduction in the USPR Shares, Wolz, Titan and Mercury would have received a proportionate amount of the 300 million shares of our common stock Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is the sole officer and member of Wolz (and will own approximately 51% of such shares), and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Messrs Pane and Altieri own or control limited partnership interests in PP LP.

The Share Exchange Agreement was approved by an independent committee of Directors, subject however to shareholder approval. In addition to normal closing conditions, the Company would have been required to obtain shareholder approval of the transaction, as well as shareholder approval to an increase in its authorized shares necessary to complete the transaction.

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No approval was obtained as this Agreement was terminated and replaced by Restructuring Agreement (described below).

The above description is a summary of the May 11, 2013 transactions with RTC. For more complete information, please refer to the above stated Form 8-K filed with the Commission on May 17, 2013.

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). PTH is an affiliate of RTC and owns and operates a plasma processing plant located in 29 Palms, California which employs the Plasmafication™ technology ("Plasma Plant").

Pursuant to the Restructuring Agreement, the Company, RTC and the RTC Shareholders terminated ab initio the Share Exchange Agreement, and the Company entered into new agreements and instruments with the counter parties described below consisting of (i) the Restructuring Agreement, the Technology License Agreement by and between the Company and PTH ("License Agreement"), (ii) An Equipment Purchase and Sale Agreement by and between the Company and PTH ("Equipment Purchase Agreement"), and (iii) A Promissory Note issued by PTH in favor of the Company in the amount $5,000,000 ("Promissory Note"), and (iv) A Certificate of Designations relating to 1,250,000 shares of Preferred Stock (defined below) issued to RTC in connection with the transaction ("Certificate of Designations"). The closing of the Restructuring Agreement occurred on February 4, 2014 ("Closing").

The Restructuring Agreement and related agreements and instruments provide the following material terms and conditions, among others:

Processing Rights. Under the terms of the Restructuring Agreement, PTH will process the Company's ore concentrate² at its Plasma Plant five (5) days per month for each month during a term agreed by the parties. The term begins with the date that the Plasma Plant is ready to commence commercial operations at the processing rate of 5 tons/day and terminating on the date that the Company Plasma Facility (defined below) is fully permitted and ready to commence commercial operations at a processing rate of 10 tons/day. PTH has informed the Company that it expects to be fully operational during the fourth calendar quarter of 2014. The Company has agreed to pay its ratable share of PTH overhead and direct costs as set forth in the agreement, and apart from the foregoing, PTH will not receive any royalty or other fee.

Licensing Rights. Under the Technology Licensing Agreement, PTH granted the Company a non-exclusive, royalty free license to use PTH's Plasmafication™ technology for a term of 25 years. The technology covers and relates to the construction and use of a Company owned plasma plant described below. The Licensing Agreement is subject to other customary terms and conditions.

Construction of a Company Owned Facility. Under the Equipment Purchase Agreement, PTH has agreed to construct, on behalf of the Company, a 10 ton/day plasma processing plant on its premises located in 29 Palms, California ("Company Owned Facility"). The plant will be constructed on an actual costs basis without markup by PTH, and PTH also has agreed to pay for 1/3rd of the construction costs. The estimated costs of construction for the Company Facility is approximately $18 million. The parties will formulate in the near future a draw schedule which will detail construction and payment milestones, however, in order to initiate the construction process, the Company will be required to pay a down payment of $1.5 million. In addition to other terms and conditions therein, PTH will assist in obtaining the necessary Federal, state and local permits and licenses to construct and operate the Company Plasma facility, however, the Company will be required to bear the related costs. Upon completion of the facility, the Company will own 100% of the Company Facility, however, any Licensed Technical Information will be subject to the Licensing Agreement. In addition, the parties will be required to enter into a operating and maintenance agreement which address the operation and maintenance of the Company Owned Facility.

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Promissory Note. PTH has delivered to the Company a Promissory Note in the principal amount is $5 million. The note is payable on or before January 30, 2015, and bears no interest prior to the payment due date. The promissory note may be offset under certain conditions set forth therein.

The above descriptions of the Restructuring Agreement, the Licensing Agreement, the Equipment Purchase Agreement, the Promissory Note and the Certificate of Designations are not complete, and are qualified in their entirety by reference to each respective agreement which are filed as Exhibits to the Form 8-K filed with the Commission on February 5, 2014.

No value has been assigned to the Processing Rights, Licensing Rights, PTH's assistance to construct a Company owned plant or the Promissory Note in these financial statements. Effective as the date of this report, the Company, RTC and PTH, are all development stage companies, none of which have the existing financials resources, established business operating processes or ongoing profitable business operations to meet their obligations under the terms of these agreements at this time. The Company, RTC and PTH's ability to meet their obligations under the terms of these agreements is dependent on the future ability to raise the future funding required and to successful development and implement their business plans which cannot be guaranteed at this time. Accordingly the realization of any future value from these rights and notes is highly uncertain at this time and accordingly no value has been assigned to them. 

Preferred Stock and Certificate of Designation. The Company issued to RTC 1,250,000 shares of its newly created Class A Super Voting Preferred Stock ("Preferred Stock"). The Preferred Stock has the rights privileges and preferences as is set forth in the Certificate of Designations. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i). each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii). each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, and (iii). each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the company. The Company has increased its authorized shares of common stock from 150 million to 325 million to allow for the conversion of the Preferred Stock, among other reasons.

The market value of the 1,250,000 shares of its newly created Class A Super Voting Preferred Stock is assumed to equate to 125,000,000 shares of the common stock which was $16,250,000 on January 30, 2014 when the Company became contractually obligated to issue these shares.

In addition, under the Restructuring Agreement, the Company and RTC and its shareholders granted mutual releases, and provided customary representations and warranties.

The Restructuring Agreement was adopted by the unanimous consent of the Board of Directors of the Company, RTC, each RTC shareholders and PTH. All of the shareholders of RTC were signatories to the agreement.

The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming the issuance of the Preferred Stock to its shareholders, Wolz will receive 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury will receive 312,500 shares of Preferred Stock convertible into 31.5 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and member of Wolz and owns approximately 51% of Wolz, and Chad Altieri, our Board member, is the sole owner and sole officer of Mercury. In addition, Mr. Pane is a managing member of PTH and Messrs Pane and Altieri own or control approximately 20% and 8% respectively, of PTH.

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Mining Services Agreement.

On May 22, 2013, the Company entered into a Mining Services Agreement with Mesa Acquisitions Group, LLC, a Florida limited liability company ("Contractor"), in association with Alba Petroleos De El Salvador Sem De CV, a Venezuelan company. Under the agreement, Contractor has agreed to perform certain mining services on a portion of the Company's Mexican mining concessions. The Company maintains approximately 37,000 acres of mining concessions located in the State of Michoacán, Mexico, and the agreement covers the Solidaridad I & II mining concessions (or approximately 5,000 acres). Under the agreement, Contractor has agreed to perform the various mining services in three, separate phases described below: 

· Phase 1 entailed the immediate commission of high-tech satellite imaging to identify mineralization and confirm the two previous drilling campaigns on the mining concessions known as Solidaridad I and/or Solidaridad II. 

The estimated costs of Phase 1 is approximately $400,000. 

· Phase 2 entails the development of the necessary infrastructure to conduct full scale mining operations on the Solidaridad I and/or Solidaridad II mining concessions, including limited exploration, establishment of roads, water, power (electricity) and staging area for employees on site.

The estimated costs of Phase 2 is approximately $10 million. 

· Phase 3 entails the construction of a processing plant to process the ore, which will be owned by the Company, and the performance of all surface and underground mining operations. 

The estimated costs for the construction of the processing plant is approximately $40 million. 

Contractor will be responsible for the costs and expenses of: the satellite imaging described in Phase 1, the limited exploration and build out of the infrastructure described in Phase 2, and the construction of the processing plant described in Phase 3 and all mining costs. The obligation of contractor to proceed to Phases 2 and 3 will be dependent upon the company receiving positive results of the satellite imaging. The size and capacity of the processing plant to be constructed by the Contractor will be determined by parties, subject however to the results of the satellite imaging. Actual mining costs will be paid for by Contractor and milling and processing expenses will be allocated between the parties in proportion to their revenue allocation described below (70% for Company/30% for Contractor). 

As consideration for the mining services, Contractor will receive the following consideration from the Company: 

Phase 1 and Phase 2. As consideration for Phases 1 and 2, the Company issued to Contractor 10 million shares of its common stock.

Phase 3. As consideration for completion of Phase 3, Contractor will earn a 30% revenue interest in the revenues resulting from the sale of the ore, subject to it paying its proportionate share of the milling expenses. If Contractor fails to perform or elects not to perform Phase 3 for any reason within 12 months from the completion of Phase 2, Contractor will forfeit all rights to the project.

In addition to the consideration stated above, as a further inducement for Contractor to enter into the Mining Services Agreement, the Company's Chairman has agreed to issue to Contractor an additional 5 million shares of our common stock held by the Chairman.  This is not a Company obligation and will occur after completion of development under separate agreement.

The parties will be obligated to share in the mining and processing costs and revenues generated from any ore processing on a proportionate basis that is 70% to the Company and 30% to Contractor. 

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The Mining Services Agreement contains extensive terms and obligations regarding the performance of the mining services by Contractor. Accordingly, the descriptions of the Mining Services Agreement is not complete, and is qualified in their entirety by reference to each agreement which are filed as an exhibit to our Annual Report on Form 10-K/A for the fiscal year ended May 31, 2013, filed with the Securities and Exchange Commission on September 16, 2013.

Mr. George Mesa, the sole owner of Contractor, has been the Company's Director of Security for the Company's Mexican mining concessions since September 2012. Mr. Mesa received stock options to acquire 1 million shares of our common stock at an exercise price of $0.12 in connection with that appointment.

In July and August 2013, the Company paid a total of $125,000 to a company controlled by Mr. George Mesa, our Director of Security, and owner of Mesa Acquisitions Group LLC. Mr. Mesa had previously advanced a like amount of funds to Resource Technology Corp. ("RTC") in connection with the transportation of ore supply, and related costs.

Corporate Matters.

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i) each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii) each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii) each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred stock created thereby to RTC.

On April 16, 2014, the Company filed a Certificate of Amendment to Amended and Restated Certificate of Incorporation with the Delaware Secretary of State ("Certificate of Amendment"). The Certificate of Amendment increases the authorized shares of common stock, $0.00001 par value, of the Company from 150,000,000 to 325,000,000 shares. The Company previously filed a Schedule 14C Definitive Information Statement with respect to the Certificate of Amendment on March 26, 2014, and mailed the Information Statement to its shareholders on that same date.

During the three months ended August 31, 2014, the Company issued:

i)5,046,667 shares of its common stock, together with warrants to buy 2,523,334 shares of its common stock for proceeds of $455,975. The warrants had terms of 12 months and exercise prices of $0.125 or $0.20.

ii)3,040,622 shares of commons stock in settlement of convertible notes payable, accrued interest, debt discount and derivative liabilities totaling $462,591

iii)2,250,000 shares valued at $495,000 as compensation to its nine directors.

In addition, 100,000 warrants with an exercise price of $0.15 were exercised for cash proceeds of $15,000 and 800,000 warrants expired, unexercised.

On June 24, 2014, the Company and Dr. Edgar Choueiri entered into a Consulting Agreement, pursuant to which Dr. Choueiri agreed to provide certain consulting services to the Company with respect to plasma processing. The agreement is on a month to month basis, and Dr. Choueiri, among other terms, will receive a remuneration of $4,000 per month. In addition, in connection with the agreement, Dr. Choueiri resigned from the Board of Directors of the Company.

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On August 27, 2014, the Board of Directors approved the following:

1) the establishment of a 2014 Stock Option Plan for up to 20,000,000 shares of common stock, and

2) the creation of an advisory board, and appointed a Mexican national to its advisory board to assist the Company with its operations in Mexico, including regulatory affairs. The Company also granted 1,000,000 stock options to this individual under the newly created 2014 Stock Option Plan. The option exercise price is $0.23 per share.

Liquidity and Capital Resources

As shown in the accompanying financial statements, we have experienced continuing losses since Inception (January 21, 1998), and as at August 31, 2014, have a working capital deficit of $4,778,113, accumulated losses of $51,184,512, recurring negative cash flows from operations and presently do not have sufficient resources to meet our outstanding liabilities or accomplish our objectives during the next twelve months.

As at August 31, 2014, we were in default on repayment of convertible promissory notes with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096.

Moreover, effective May 23, 2012, we amended our Settlement Agreement and Payment Agreement with our former attorneys. As result of the amendment, the payment of the initial installment of $403,554, originally due on May 24, 2012, was extended to July 24, 2012. In addition, commencing May 23, 2012, interest accrued on the amount due, which is $1,614,216, at the rate of 5% per annum. We were unable to make the scheduled payment of $403,554 and accrued interest on July 24, 2012 and defaulted under the terms of this agreement, and the entire amount, including interest, became due and payable. On October 1, 2012, we entered into a second amendment to our Settlement Agreement and Payment Agreement with our former attorneys effective July 23, 2012. As a result of the second amendment, the date for the payment of the initial installment of $403,554 was extended to December 1, 2012. We have failed to make this schedule payment on December 1, 2012. Thus, our former attorneys have the ability to avail themselves of all rights and privileges under the existing agreements with us and under the laws of Mexico and the United States. During the twelve months ended May 31, 2014 we made a single payment of $25,000 in respect of this liability. The total balance due to our former attorneys, including accrued interest, at August 31, 2014 was $1,770,560.

In addition, we owe another former attorney the sum of approximately $90,000 under an arbitration award. The attorney has initiated efforts to effect a judgment against the Company.

At the time of this report, we do not have the funding available to repay the convertible promissory notes, make the payment required under the amended agreement with our former attorneys or pay the arbitration award to the other former attorney.

These conditions raise substantial doubt about our ability to continue as a going concern.

In our audited financial statements for the fiscal years ended May 31, 2014 and 2013, contained in our Annual Report, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

Since we do not anticipate generating any revenue for the foreseeable future, we will have to continue to seek additional funding from outside sources. However, we are facing volatile financial markets that may make it difficult to satisfy our need for additional capital to finance our plan of operations for fiscal 2015 through either debt or equity. As a result, we continue to seek appropriate opportunities that are likely to provide us with adequate fiscal resources to execute our plan of operations in the current fiscal year and beyond.

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Depending on market conditions and the options available to us, we may attempt to enter into a joint venture with an operating company or permit an operating company or third party to undertake exploration work on the Solidaridad Property, we may attempt to sell all or part of our Solidaridad Property, or we may seek equity or debt financing (including borrowing from commercial lenders) or we may consider a sale of ourselves or our assets.

To date, we have raised capital through the sale of shares of our common stock and sales of convertible promissory notes.

During the three months ended August 31, 2014, we sold 5,046,667 shares of our common stock, together with warrants to buy 2,523,334 shares of our common stock for proceeds of $455,975. The warrants had terms of 12 months and exercise prices of $0.125 or $0.20.We further issued 3,040,622 shares of commons stock in settlement of convertible notes payable, accrued interest, debt discount and derivative liabilities totaling $462,591. We also received $15,000 from the exercise of 100,000 warrants with an exercise price of $01.5.

As mentioned above, we must obtain additional funding to continue our operations. There can be no guarantee that we will be able to obtain additional funding on terms that are favorable to us or at all. As an exploration stage company, we have no current ability to generate revenue and no plans to do so in the foreseeable future. Our assets consist of cash, prepaid expenses, nominal equipment and certain mineral property interests. There can be no assurance that we will obtain sufficient funding to continue operations, or if, we do receive funding, to generate revenues in the future or to operate profitably in the future. We have incurred net losses in each fiscal year since Inception of our operations. These conditions raise substantial doubt about our ability to continue as a going concern.

Because of the exploratory nature of our current business plan, we anticipate incurring operating losses for the foreseeable future. Our future financial results also are uncertain due to a number of factors, some of which are outside our control. These factors include, but are not limited to:

i. Our ability to raise sufficient additional funding;

ii. The results of our proposed exploration programs on the Solidaridad Property; and

iii. Assuming significant mineral deposits, our ability to be successful in commercially producing mineral deposits, find joint venture partners for the development of our property interests or find a purchaser for the property interests.

RESULTS OF OPERATIONS

THREE MONTHS ENDED AUGUST 31, 2014 COMPARED TO THE THREE MONTHS ENDED AUGUST 31, 2013

Revenue

We earned no revenue in either the three months ended August 31, 2014 or 2013 and as an exploration stage company we do not anticipate earning revenue in the foreseeable future.

General and administrative expenses

During the three months ended August 31, 2014, we incurred general and administrative expenses of $1,423,394, compared to the $462,716 incurred in the three months ending August 31, 2013, an increase of $960,678. The increase relates primarily relates to increased salary and compensation between the two periods. Specifically, during the three months ended August 31, 2014, we issued 2,250,000 shares of our common stock valued at $494,000, as compensation to our nine directors and 1,000,000 stock options valued $206,938 to a member of our advisory board.

There were no similar equity or stock option issuances during the three months ended August 31, 2013.

Change in derivative liability

During the three months ended August 31, 2014, we recognized a loss on revaluation of derivative liabilities of $34,151, compared to the $47,908 incurred in the three months ending August 31, 2013, a decrease of $13,757. The decrease arose because there no derivatives outstanding throughout the three months ended August 31, 2014 while there were during the three months ended August 31, 2013 and consequently more variance during the three month ended August 31, 2013 as compared to the three months ended August 31, 2014.

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Interest expense (net)

During the three months ended August 31, 2014, we incurred interest expense (net) of $173,211 compared to $146,331 during the three months ended August 31, 2013, an increase of $26,880.

The increase reflects the increased level of Company's borrowings between the two periods.

Net loss

The net loss for the three months ended August 31, 2013 was $1,639,756 compared to $656,955 during the three months ended August 31, 2013, an increase of $982,801.

CASH FLOW INFORMATION FOR THE THREE MONTHS ENDED AUGUST 31, 2014 COMPARED TO THE THREE MONTHS ENDED AUGUST 31, 2013

Net cash flow used in operations in the three months ended August 31, 2014 was $439,396 compared to $385,167 for the three months ended August 31, 2013, an increase of $54,229

In the three months ended August 31, 2014, our net loss was $1,639,756 which was offset by $857,930 in non- cash items and an increase in our net operating liabilities of $342,429 to arrive at net cash used in operations of $439,396. By comparison, in the three months ended August 31, 2013, our net loss was $656,955 which was offset by $138,969 in non-cash items and an increase in our net operating liabilities of $132,819 to arrive at net cash used in operations of $385,167.

No cash flow was provided by, or used in, investing activities during the three months ended August 31, 2014 or 201

Net cash flow generated from financing activities was $470,975 in the three months ended August 31, 2014 compared to $382,000 for the three months ended August 31, 2013, an increase of $88,975.

In the three months ended August 31, 2014, we received $455,975 from the sale of shares of our common stock and warrants and $15,000 from the exercise of warrants. By comparison, in the three months ended August 31, 2013, we received $190,000 from the sale of shares of our common stock and warrants and $192,000 from the issuance of convertible notes payable.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the " Exchange Act "), as of the last day of the fiscal period covered by this report, August 31, 2014.The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of August 31, 2013. Specifically, we concluded that we had identified a significant deficiency with respect to the operation of our internal controls relating to the documentation and authorization procedures of certain travel and entertaining expenses incurred by certain directors, officers and non-Company individuals as of August 31, 2014. In order to correct the above described deficiency, the Company established an Ad Hoc Committee, consisting of two directors who also are attorneys. The committee has been authorized to review and approve all Company related expenses.

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Changes in Internal Control over Financial Reporting.

During the fiscal quarter ended August 31, 2014, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART 2: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On April 3, 2012, as we have previously reported, Mr. Israel Tentory Garcia filed an action against our Mexican subsidiary, US Precious Metals SA de CV, wherein the plaintiff asserted a number of claims against us, including a demand for the return of one of our concessions (Solidaridad I) for failure to develop the concession. The case was filed in a local court in the Federal District of Mexico City. On May 21, 2013, the Court ruled that the Plaintiff did not prove the claims asserted in the lawsuit, and that our subsidiary is not liable to for any of such claims.

On June 12, 2014, our Mexican subsidiary, US Precious Metals SA de CV was served with another lawsuit from Mr. Israel Tentory Garcia along with seven other plaintiffs. The lawsuit was filed in a commercial court in Mexico City. The claims of the new lawsuit essentially restate the claims of the original lawsuit filed in April 2012.

By way of background, the plaintiffs obtained the exploration rights to the concession known as Solidaridad I from the Mexican government on November 24, 1996. These exploration rights expired on November 23, 2001 under the terms of the concession from the government and as prescribed by the governing statute. On March 13, 2003, we entered into an agreement with the plaintiffs pursuant to which they assigned their rights to this (expired) concession to our Mexican subsidiary. In July 2003, our Mexican subsidiary then applied for and obtained a new exploration and exploitation concession from the Mexican government covering Solidaridad I. The new concession expires July 2053.

Pursuant to this 2003 agreement with the plaintiffs, we issued 1.5 million shares of our common stock to them. The agreement further provided for the payment of $1 million to the plaintiffs upon the occurrence of a sale of the concession for exploitation purposes. In the original action filed in 2012 and in the current action, plaintiff(s) claim that under the agreement the $1 million payment was due and payable no later than 2009 and ownership of the mining concession should revert back to the plaintiff(s) due to the non-payment.

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. Our defense will include, among other positions, the fact that plaintiffs had no concession rights to assign under the March 2003 agreement as their concession expired 16 months earlier, we independently obtained the rights to a new (and current) concession from the Mexican government in July 2003, the agreement is ambiguous as to the payment requirement in 2009 and the matter was previously adjudicated in our favor in earlier action, albeit in a different court. We have filed an answer to the above complaint.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the three months ended August 31, 2013, we received $455,950 from the sale of 5,046,667 units. Each unit consists of one share of our common stock, and one half of a warrant. The warrants had terms of 12 months and exercise prices of $0.125 or $0.20. The transaction was exempt under Section 4(2) and 3(b) of the Securities Act of 1933, as amended, and the rules and regulations promulgated there under, including Regulations D, due to the facts that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution, had access to sufficient information concerning the Company, and the certificate(s) representing such shares will bear a restrictive legend.

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During the three months ended August 31, 2013, we received $190,000 from the sale of 1,900,000 units. Each unit consists of one share of our common stock, and one half of a warrant. The warrants had terms of 6 or 12 months and exercise prices of $0.15 or $0.20. The transaction was exempt under Section 4(2) and 3(b) of the Securities Act of 1933, as amended, and the rules and regulations promulgated there under, including Regulations D, due to the facts that the investor was an accredited investor, had acquired the shares for investment purposes and not with a view for re-distribution, had access to sufficient information concerning the Company, and the certificate(s) representing such shares will bear a restrictive legend.

ITEM 3. DEFAULT OF SENIOR SECURITIES.

As at August 31, 2014, we were in default on repayment of convertible promissory notes with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096.

As of the date of this report, we have not paid the holders of these notes as required under their terms.

ITEM 4. MINING SAFETY DISCLOSURES

Mining operations and properties in the United States are subject to regulation by the Federal Mine Safety and Health Administration ("MSHA") under the Federal Mine Safety and Health Act of 1977 (the "Mine Act"). Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"), issuers are required to disclose specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities.

During the three month periods ending August 31, 2013 and, 2012, we did not conduct mining operations nor maintain any mining properties in the US. Consequently we were not subject to any health or safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities during the three month periods ending August 31, 2013 and 2012.

ITEM 5. OTHER INFORMATION.

None.

41

ITEM 6. EXHIBITS.

Exhibit Number	Exhibit Description	Incorporation by Reference				Filed herewith
		Form	File Number	Exhibit	File Date
31.1	Certification of Principal Executive Officer as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended					X
31.2	Certification of Principal Financial Officer as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended					X
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)					X
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)					X
101.INS	XBRL Instance Document (1)					X
101.SCH	XBRL Taxonomy Extension Schema Document (1)					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (1)					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (1)					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (1)					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (1)					X
(1)	Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

42

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

U.S. Precious Metals, Inc.
By:	/s/ Gennaro Pane
	Name: Gennaro Pane
	Title: Chief Executive Officer
	Date: October 14, 2014

U.S. Precious Metals, Inc.
By:	/s/ David J Cutler
	Name: David J Cutler
	Title: Chief Financial Officer
	Date: October 14, 2014

43

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Chief Executive Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2014 of U.S. Precious Metals, Inc. (the " Registrant ");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: October 14, 2014

/s/ Gennaro Pane

Gennaro Pane

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David J Cutler, Chief Financial Officer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2014 of U.S. Precious Metals, Inc . (the " Registrant ");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: October 14, 2014

/s/ David J. Cutler

David J Cutler

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of the registrant certify, to the best of their knowledge, that the registrant's Quarterly Report on Form 10-Q for the period ended August 31, 2014 (the "Form 10-Q") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q, fairly presents, in all material respects, the financial condition and results of operations of the registrant.

US Precious Metals, Inc.

Dated: October 14, 2014

/s/ Gennaro Pane

Gennaro Pane

Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of the registrant certify, to the best of their knowledge, that the registrant's Quarterly Report on Form 10-Q for the period ended August 31, 2014 (the "Form 10-Q") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q, fairly presents, in all material respects, the financial condition and results of operations of the registrant.

US Precious Metals, Inc.

Date: October 14, 2014

/s/ David J. Cutler

David J Cutler

Chief Financial Officer

(Principal Financial Officer)

XML

STOCKHOLDERS' DEFICIT (Schedule of Stock Option Activity) (Details) (USD $)	3 Months Ended	12 Months Ended
	Aug. 31, 2014	May 31, 2014
# of Options
Options outstanding	17,500,000	16,500,000
Granted	1,000,000	1,500,000
Exercised		(500,000)
Cancelled or forfeited
Options outstanding	18,500,000	17,500,000
Weighted-Average Exercise Price
Options outstanding	$ 0.13	$ 0.13
Granted	$ 0.23	$ 0.21
Exercised		$ (0.18)
Cancelled or forfeited
Options outstanding	$ 0.14	$ 0.13

XML

SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended		12 Months Ended	3 Months Ended		1 Months Ended		2 Months Ended	3 Months Ended			0 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	May 31, 2014	Aug. 31, 2014 Common Stock [Member]	Aug. 31, 2014 Director [Member] Common Stock [Member]	Feb. 28, 2014 Convertible Note Payable A [Member]	Sep. 30, 2013 Convertible Note Payable A [Member]	May 15, 2014 Convertible Note Payable A [Member]	Aug. 20, 2014 Convertible Note Payable A [Member]	May 31, 2014 Convertible Note Payable A [Member]	Sep. 26, 2013 Convertible Note Payable A [Member]	Oct. 02, 2014 Subsequent Event [Member]	Sep. 15, 2014 Subsequent Event [Member]	Sep. 30, 2014 Subsequent Event [Member] Common Stock [Member]	Oct. 08, 2014 Subsequent Event [Member] Convertible Note Payable A [Member]	Sep. 03, 2014 Subsequent Event [Member] Convertible Note Payable A [Member]
Subsequent Event [Line Items]
Principal balance of the note						$ 33,333		$ 91,080	$ 132,920	$ 132,920	$ 166,667				$ 100,000	$ 83,333
Funds received, net of debt discount			260,274			30,000	150,000									75,000
Deposits paid on two alternative sales proposals to undertake a drilling program on property in Mexico													75,000
Threshold amount of alternative sales proposals													1,000,000
Warrants issued												200,000
Warrant exercise price	$ 0.15											$ 0.125
Proceeds from exercise of warrants	$ 15,000											$ 25,000
Shares issued as compensation, shares				2,250,000	250,000									450,000
Period of consulting contract														12 months
Notes converted for shares, shares	3,040,622			3,040,622				1,320,000	1,724,266						851,191

XML

CONVERTIBLE NOTES PAYABLE (Schedule of Convertible Notes Payable) (Details) (USD $)	3 Months Ended		12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	May 31, 2014
Debt Conversion [Line Items]
Convertible notes payable, beginning of the period	$ 1,296,770	$ 930,923	$ 930,923
Issued in the period			260,274
Converted into shares of common stock	(140,352)		98,244
Amortization of debt discount	7,319	8,766	142,091
Interest accrued	21,879		125,512
Convertible notes payable, end of the period	1,159,178		1,296,770
Less long term			34,472
Short term	1,159,178		1,262,298
Principal Balance [Member]
Debt Conversion [Line Items]
Convertible notes payable, beginning of the period	933,920	575,000	575,000
Issued in the period			647,000
Converted into shares of common stock	(233,920)		(316,080)
Amortization of debt discount
Interest accrued
Convertible notes payable, end of the period	700,000		933,920
Less long term
Short term	700,000
Loan Discount [Member]
Debt Conversion [Line Items]
Convertible notes payable, beginning of the period	(98,448)
Issued in the period			(414,726)
Converted into shares of common stock	116,866		174,181
Amortization of debt discount	(18,418)		142,091
Interest accrued
Convertible notes payable, end of the period			(98,448)
Less long term
Short term
Accrued Interest [Member]
Debt Conversion [Line Items]
Convertible notes payable, beginning of the period	461,298	355,923	355,923
Issued in the period
Converted into shares of common stock	(23,298)		(20,137)
Amortization of debt discount
Interest accrued	21,879		125,512
Convertible notes payable, end of the period	459,178		461,298
Less long term
Short term	$ 459,178

XML

INCOME TAXES (Tables)

3 Months Ended

Aug. 31, 2014

INCOME TAXES [Abstract]

Schedule of Provision for Income Taxes Rate

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

	August 2014		August 2013
Income tax provision at the federal statutory rate		39%		39%
Effect of operating losses		(39%)		(39%)
		-%		-%

Schedule of Changes in the Cumulative Net Deferred Tax Assets

Changes in the cumulative net deferred tax assets consist of the following:

	August 2014			August 2013
Net loss carry forward	$	19,961,960		$	19,322,455
Valuation allowance		(19,961,960	)		(19,322,455	)
	$	-		$	-

Schedule of Reconciliation of Income Taxes

A reconciliation of income taxes computed at the statutory rate is as follows:

	August 2014			August 2013
Tax at statutory rate	$	639,505		$	256,212
Valuation allowance		(639,505	)		(256,212	)
	$	-		$	-

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	3 Months Ended	12 Months Ended	3 Months Ended	0 Months Ended	1 Months Ended		1 Months Ended			2 Months Ended						3 Months Ended		3 Months Ended			3 Months Ended			3 Months Ended
	Aug. 31, 2014	May 31, 2014	Aug. 31, 2014 Common Stock [Member]	Sep. 30, 2014 Common Stock [Member] Subsequent Event [Member]	Jan. 31, 2014 Preferred Class A [Member] Scenario, Plan [Member]	Aug. 31, 2014 RTC [Member]	Sep. 30, 2013 RTC [Member] Scenario, Plan [Member]	May 31, 2013 RTC [Member] Scenario, Plan [Member]	Feb. 28, 2014 RTC [Member] Preferred Class A [Member]	Aug. 31, 2013 Director of Security [Member]	Aug. 31, 2013 Mr. Hans H. Hertell, President [Member] Scenario, Plan [Member]	Aug. 31, 2013 Hertell Group [Member] Common Stock [Member] Scenario, Plan [Member]	Aug. 31, 2014 Wolz [Member] Preferred Class A [Member] Scenario, Plan [Member]	Aug. 31, 2014 Wolz [Member] Mr. Pane, Chief Executive Officer [Member]	Aug. 31, 2014 Wolz [Member] RTC [Member]	Aug. 31, 2014 Wolz [Member] RTC [Member] Scenario, Plan [Member]	Aug. 31, 2014 Titan [Member] RTC [Member]	Aug. 31, 2014 Titan [Member] RTC [Member] Scenario, Plan [Member]	Aug. 31, 2014 Mercury6 [Member] Preferred Class A [Member] Scenario, Plan [Member]	Aug. 31, 2014 Mercury6 [Member] RTC [Member]	Aug. 31, 2014 Mercury6 [Member] RTC [Member] Scenario, Plan [Member]	Aug. 31, 2014 Plasmafication Technology Holding, LLC [Member] Mr. Pane, Chief Executive Officer [Member]	Aug. 31, 2014 Plasmafication Technology Holding, LLC [Member] Chad Altieri, Member of the Board [Member]	Aug. 31, 2014 Directors [Member] Common Stock [Member]	Aug. 31, 2014 Director [Member]	Aug. 31, 2014 Director [Member] Common Stock [Member]	Aug. 31, 2014 Advisory Board [Member] 2014 Stock Option Plan [Member]
Related Party Transaction [Line Items]
Shares issued as compensation, shares			2,250,000	450,000							1,000,000													2,250,000		250,000
Shares issued as compensation	$ 495,000	$ 382,500	$ 495,000																					$ 495,000
Number of shares of common stock granted to each of the nine directors of the company																									250,000
Stock options granted	1,000,000	1,500,000																									1,000,000
Exercise price	$ 0.23	$ 0.21																									$ 0.23
Value of stock options issued																											206,958
Payment to related party										125,000
Officer's annual salary											500,000
Monthly gross revenues from plasma processing operations											1,000,000
Shares issued for services, shares												9,000,000
Shares issued in business acquisition							290,000,000	300,000,000	1,250,000
Value of shares issued in acquisition									$ 16,250,000				$ 625,000						$ 312,500
Percent of ownership														51.00%	50.00%		25.00%			25.00%		20.00%	8.00%
Common stock issued for conversion of preferred stock, shares					125,000,000											62,500,000		31,500,000			31,500,000
Percent of outstanding common stock						48.00%										24.00%		12.00%			12.00%

XML

STOCKHOLDERS' DEFICIT (Schedule of Common Stock and Warrant Activity) (Details) (USD $)	3 Months Ended	12 Months Ended
	Aug. 31, 2014	May 31, 2014	Feb. 28, 2014	Jan. 31, 2014
Class of Stock [Line Items]
Balance, shares	143,748,746		135,259,321	135,259,321
Notes payable converted for shares, shares	3,040,622
Balance, shares	154,186,035	143,748,746	135,259,321	135,259,321
Outstanding at end of period	5,188,130
Shares issued for cash	$ 455,975
Notes payable converted for shares	462,591	482,301
Warrants exercised	$ 15,000	$ 103,333
Common Stock [Member]
Class of Stock [Line Items]
Balance, shares	143,748,746
Shares issued for cash, shares	5,046,667
Notes payable converted for shares, shares	3,040,622
Shares issued as compensation, shares	2,250,000
Issued on exercise of warrants	100,000
Warrants expired, unexercised
Balance, shares	154,186,035
Warrant [Member]
Class of Stock [Line Items]
Notes payable converted for shares, shares
Shares issued as compensation, shares
Outstanding at beginning of period	3,564,797
Warrants issued	2,523,334
Warrants exercised	(100,000)
Warrants expired	(800,000)
Outstanding at end of period	5,188,131

XML

GOING CONCERN AND LIQUIDITY

3 Months Ended

Aug. 31, 2014

GOING CONCERN AND LIQUIDITY [Abstract]

GOING CONCERN AND LIQUIDITY

3.GOING CONCERN AND LIQUIDITY

As shown in the accompanying financial statements, we have experienced continuing losses since Inception (January 21, 1998), and as at August 31, 2014, have a working capital deficit of $4,778,113, accumulated losses of $51,184,512, recurring negative cash flows from operations and presently do not have sufficient resources to meet our outstanding liabilities or accomplish our objectives during the next twelve months.

As at August 31, 2014, we were in default on repayment of convertible promissory notes with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096.

Moreover, effective May 23, 2012, we amended our Settlement Agreement and Payment Agreement with our former attorneys. As result of the amendment, the payment of the initial installment of $403,554, originally due on May 24, 2012, was extended to July 24, 2012. In addition, commencing May 23, 2012, interest accrued on the amount due, which is $1,614,216, at the rate of 5% per annum. We were unable to make the scheduled payment of $403,554 and accrued interest on July 24, 2012 and defaulted under the terms of this agreement, and the entire amount, including interest, became due and payable. On October 1, 2012, we entered into a second amendment to our Settlement Agreement and Payment Agreement with our former attorneys effective July 23, 2012. As a result of the second amendment, the date for the payment of the initial installment of $403,554 was extended to December 1, 2012. We have failed to make this schedule payment on December 1, 2012. Thus, our former attorneys have the ability to avail themselves of all rights and privileges under the existing agreements with us and under the laws of Mexico and the United States. During the twelve months ended May 31, 2014 we made a single payment of $25,000 in respect of this liability. The total balance due to our former attorneys, including accrued interest, at August 31, 2014 was $1,770,560.

In addition, we owe another former attorney the sum of approximately $90,000 under an arbitration award. The attorney has initiated efforts to effect a judgment against the Company.

At the time of this report, we do not have the funding available to repay the convertible promissory notes, make the payment required under the amended agreement with our former attorneys or pay the arbitration award to the other former attorney.

These conditions raise substantial doubt about our ability to continue as a going concern.

In our audited financial statements for the fiscal years ended May 31, 2014 and 2013, contained in our Annual Report, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.

Our present plans to overcome these difficulties, the realization of which cannot be assured, include, but are not limited to, continuing efforts to raise new funding in the public and private markets, to sell some or all of our assets and to initiate a renegotiation of the terms of scheduled repayments to our creditors.

XML

INCOME TAXES (Schedule of Provision for Income Taxes Rate) (Details)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
INCOME TAXES [Abstract]
Income tax provision at the federal statutory rate	39.00%	39.00%
Effect of operating losses	(39.00%)	(39.00%)
Income tax provision rate

XML

GOING CONCERN AND LIQUIDITY (Details) (USD $)	1 Months Ended			12 Months Ended
	Oct. 31, 2012	May 31, 2012	Apr. 30, 2012	May 31, 2014	Aug. 31, 2014
GOING CONCERN AND LIQUIDITY [Abstract]
Working capital deficit					$ (4,778,113)
Accumulated losses				(49,544,756)	(51,184,512)
Principal balances				550,000
Accrued interest				453,096
Convertible promissory notes default on repayment				1,003,096
Settlement Agreement, initial payment due	403,554	403,554
Settlement Agreement, initial payment due date	Dec. 01, 2012	Jul. 24, 2012	May 24, 2012
Settlement Agreement, interest accrued on the amount due		1,614,216
Settlement Agreement, interest rate		5.00%
Settlement payment				25,000
Legal fees payable, including interest					1,770,560
Former attorney under arbitration award fees due					$ 90,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Impairment of long-lived and intangible assets
Advertising costs
Property, Plant and Equipment [Line Items]
Estimated useful life	50 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	4 years
Machinery and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Machinery and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life	10 years

XML

INCOME TAXES (Schedule of Changes in the Cumulative Net Deferred Tax Assets) (Details) (USD $)	Aug. 31, 2014	Aug. 31, 2013
INCOME TAXES [Abstract]
Net loss carry forward	$ 19,961,960	$ 19,322,455
Valuation allowance	(19,961,960)	(19,322,455)
Net deferred tax assets

XML

SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
SUPPLEMENTAL CASH FLOW INFORMATION [Abstract]
Income taxes paid
Interest paid
Common Stock [Member]
Debt Conversion [Line Items]
Liabilities settled for shares of common stock, shares	3,040,622
Common Stock [Member] | Convertible Notes Payable [Member]
Debt Conversion [Line Items]
Convertible Notes Payable, debt discount, accrued interest and derivative liabilities settled with the issuance of 3,040,622 shares of common stock	$ 462,591

XML

PROPERTY AND EQUIPMENT (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	May 31, 2014
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 134,392		$ 134,392
Less accumulated depreciation	(111,377)		(108,849)
Total property and equipment net	23,015		25,543
Depreciation expense	2,528	2,528
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	41,877		41,877
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 92,515		$ 92,515

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Aug. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally  accepted  accounting  principles for interim  financial  information  and with the  instructions  to Form  10-Q and Article  8 of  Regulation  S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading. Operating results for the three months ended August 31, 2014 are not necessarily indicative of the results that may be expected for the year ended May 31, 2015. For more complete financial information, these unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended May 30, 2014 included in our Form 10-K filed with the SEC.

Exploration Stage Accounting

The Company is an exploration stage company, as defined in pronouncements of the Financial Accounting Standards Board (FASB) and Industry Guide #7 of the Securities and Exchange Commission.  Generally accepted accounting principles govern the recognition of revenue by an exploration stage enterprise and the accounting for costs and expenses. As an exploration stage company is also required to make additional disclosures as defined under the then current Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, "Development-Stage Entities". Additional disclosures required are that our financial statements be identified as those of an exploration stage company, and that the statements of operations, changes in changes in stockholders' deficit and cash flows disclosed activity since the date of its Inception (January 21, 1998). Effective June 10, 2014, the FASB changed its regulations with respect to development stage entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2015, with the option for entities to early adopt these new provisions. The Company has elected to early adopt these provisions and consequently these additional disclosures are not included in its financial statements

Proven and Probable Reserves

The definition of proven and probable reserves is set forth in SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. 

In addition, reserves cannot be considered proven and probable until they are supported by a feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable at the time of the reserve determination. As of August 31, 2014, none of our mineralized material met the definition of proven or probable reserves.

Consolidated Statements

The consolidated financial statements include the accounts of the Company and its subsidiary company.  All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimated

Foreign Currency Translation

The assets of the Mexican subsidiary are located in Mexico.  The Mexican subsidiary depends on the ability of the parent company to raise cash which is transferred to the subsidiary to meet its operating cash needs.  Therefore, the Company's management has determined that the functional currency of the Mexican subsidiary is the US dollar. Since that is the case, the Company remeasures its subsidiary financial statements in US dollars.  Any gains or losses are reflected on the Statements of Operations

The accounts of the Mexican subsidiary are remeasured in US dollars as follows:

(a) Current assets, current liabilities, and long-term monetary assets and liabilities are translated based on the rates of exchange in effect at the balance sheet dates.

(b) Non-monetary assets, liabilities, and equity accounts are translated at the exchange rates prevailing at the times of acquisition of assets, assumption of liabilities or equity investments.

(c) Revenues and expenses are translated at the average exchange rates for each period, except for charges for amortization and depreciation of non-monetary assets which are translated at the rates associated with the assets.

Cash Equivalents

The Company considers all short term investments purchased with an original maturity of three months or less to be cash equivalents.

Financial Instruments

The estimated fair values for financial instruments were determined at discrete points in time based on relevant market information. These estimates involved uncertainties and could not be determined with precision. The carrying amounts of notes receivable, accounts receivable, accounts payable and accrued liabilities approximated fair value because of the short-term maturities of these instruments. The fair value of notes payable approximated to their carrying value as generally their interest rates reflected our effective annual borrowing rate.

Fair Value Measurements: 

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements.  Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs.  ASC 820 defines the hierarchy as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date.  The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

Level 3 – Significant inputs to pricing that are unobservable as of the reporting date.  The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

Our financial instruments consist of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable.  The carrying values of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable approximate their fair value due to their short maturities.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, a small portion of which is located in Mexico.

Property and equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the related reasonably assured lease term.  

The estimated useful lives are as follows:

Vehicles	4 years
Machinery and equipment	3-10 years

We review our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

Maintenance and repairs of property and equipment are charged to operations. Major improvements are capitalized.

Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is included in operations.

Investments in Mining Rights

Mining rights held for development are recorded at the cost of the rights, plus related acquisition costs.  These costs will be amortized when extraction begins.

Mine Development Costs

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.  Costs incurred at a mine site before proven reserves have been established are expensed as mine development costs.  At the point proven reserves have been established at a mine site, such costs will be capitalized and will be written off as depletion expense as the minerals are extracted.

As of August 31, 2014, none of the mine concessions met the requirements for qualification as having proven reserves.

Impairment of Long-Lived and Intangible Assets

In the event that facts and circumstances indicated that the cost of long-lived and intangible assets may be impaired, an evaluation of recoverability will be performed. If an evaluation was required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value was required. No impairment was recorded during the three month periods ended August 31, 2014 and 2103. 

Deferred Costs and Other

Offering costs with respect to issue of common stock, warrants or options by us were initially deferred and ultimately offset against the proceeds from these equity transactions if successful or expensed if the proposed equity transaction is unsuccessful. 

Derivative Financial Instruments: 

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Income Taxes

We account for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Current tax benefits are offset by a valuation reserve as they are considered not likely to be realized in the foreseeable future.

Recognition of Revenue

Revenue will be recognized when persuasive evidence of an arrangement exists, such as when a purchase order or contract is received from a customer, the price is fixed, title to the goods has passed, and there is reasonable assurance of collection.  The Company has not yet entered into any contractual arrangement to deliver product or services.

Advertising Costs

The Company will expense advertising costs when advertisements occur.  There has been no spending thus far on advertising.

Stock Based Compensation

The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the goods or services received or the measurement date fair value of the equity instruments issued, whichever is the more readily determinable.  The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.

Discount and Amortization of Debt Discount:

Debt discount represents costs incurred in obtaining the debt funding and the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations. 

Net Income (Loss) Per Share

The Company computes net income (loss) per common share in accordance with Accounting  Standards  Update ("ASU"),  Earning Per Share (Topic 260) which requires the  presentation of both basic and diluted  earnings per share ("EPS")on the  consolidated  income  statements..  Under these provisions, basic and diluted net income (loss) per common share are computed by dividing the net income (loss) available to common shareholders for each period by the weighted average number of shares of common stock outstanding during the period.  At May 31, 2014 and 2013 there were warrants and options outstanding to purchase Company common stock and notes payable that are convertible into shares of the Company's common stock. The common share equivalents of these have not been included in the calculations of loss per share because such inclusions would have anti-dilutive effects as the Company incurred a loss from operations during the three month periods ended August 31, 2014 and 2013.

Other Comprehensive Income (Loss)

The Company reports as other comprehensive income (loss) those revenues, gains and losses not included in the determination of net income.  During the three month periods ended May 31, 2014 and 2013, the Company did not have any gains and losses resulting from activities or transactions that resulted in comprehensive income or loss.

Segment Reporting

Management treats the operation of the Company as one segment.

New Accounting Pronouncements

The Company has  reviewed  all  recently  issued,  but not  yet  effective,  accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material  impact on its  financial  condition  or the results of its operations.

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CONVERTIBLE NOTES PAYABLE (Narrative) (Details) (USD $)	1 Months Ended	3 Months Ended		12 Months Ended		1 Months Ended						2 Months Ended	3 Months Ended			1 Months Ended		0 Months Ended		1 Months Ended		6 Months Ended
	Sep. 30, 2013	Aug. 31, 2014 item	Aug. 31, 2013	May 31, 2014	May 31, 2013	Feb. 28, 2014 Convertible Note Payable dated July 31, 2013 [Member]	May 31, 2014 Convertible Note Payable A [Member]	Feb. 28, 2014 Convertible Note Payable A [Member]	Feb. 28, 2014 Convertible Note Payable A [Member]	Nov. 30, 2013 Convertible Note Payable A [Member]	Sep. 30, 2013 Convertible Note Payable A [Member]	May 15, 2014 Convertible Note Payable A [Member]	Aug. 20, 2014 Convertible Note Payable A [Member]	Aug. 31, 2014 Convertible Note Payable A [Member]	Sep. 26, 2013 Convertible Note Payable A [Member]	Sep. 30, 2013 Convertible Note Payable A [Member] Scenario, Forecast [Member]	Sep. 26, 2013 Convertible Note Payable A [Member] Scenario, Forecast [Member]	Oct. 08, 2014 Convertible Note Payable A [Member] Subsequent Event [Member]	Sep. 03, 2014 Convertible Note Payable A [Member] Subsequent Event [Member]	Apr. 30, 2014 Convertible Note Payable C [Member]	Jan. 31, 2014 Convertible Note Payable B	Aug. 15, 2014 Convertible Note Payable B	Jan. 30, 2014 Convertible Note Payable B
Debt Conversion [Line Items]
Principal balances				$ 550,000													$ 300,000
Accrued interest				453,096
Convertible promissory notes default on repayment				1,003,096
Automatic conversion, minimum proceeds				10,000,000
Amount of claim filed against the company	632,666
Number of previously outstanding convertible notes payable settled through the issuance of shares of common stock		2
Principal balance of the note							132,920	33,333	33,333			91,080	132,920		166,667			100,000	83,333			125,000	111,975
Notes payable converted for shares, shares		3,040,622										1,320,000	1,724,266					851,191				1,316,356
Convertible debenture issued				260,274					30,000		150,000					270,000			75,000	150,000	125,000
Outstanding balance		1,159,178		1,296,770	930,923									0
Convertible debenture term									6 months		2 years									6 months	6 months
Annual rate																	12.00%			10.00%	12.00%
Convertible debenture prepaid rate															12.00%					150.00%			150.00%
Convertible discount percentage									40.00%											40.00%	40.00%
Beneficial conversion feature of promissory note									42,385		259,659
Valuation model						Black Scholes	Black Scholes		Black Scholes	Black Scholes	Black Scholes
Dividend yield									0.00%		0.00%										0.00%
Term to maturity							16 months	18 months	18 months	6 months	18 months										3 months
Risk free interest rate							0.195%	0.25%	0.25%	0.26%	0.34%										0.03%
Annualized volatility							120.00%	128.00%	128.00%	133.00%	143.00%										59.00%
Debt discount on the convertible debenture															150,000
Origination interest on derivative liability									12,385		109,659
Origination interest on derivative liability		111,975	79,767
Increase (decrease) in fair value of derivative liabilities							(27,310)		37,892	(33,956)
Fair value of derivative liability							146,674	305,980	305,980	225,703
Debt discount								$ 3,333	$ 3,333						$ 16,667

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STOCKHOLDERS' DEFICIT (Schedule of Stock Options by Exercise Price) (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 29, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding and Exercisable	18,500,000
Intrinsic Value of Options Outstanding and Exercisable	$ 1,860,000
Weighted Average Life of Options Outstanding and Exercisable	2 years 3 months 18 days
Closing stock price		$ 0.24
$0.065 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.065
Options Outstanding and Exercisable	6,000,000
Intrinsic Value of Options Outstanding and Exercisable	1,050,000
Weighted Average Life of Options Outstanding and Exercisable	1 year 6 months
$0.07 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.07
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	170,000
Weighted Average Life of Options Outstanding and Exercisable	1 year
$0.12 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.12
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	120,000
Weighted Average Life of Options Outstanding and Exercisable	3 years
$0.16 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.16
Options Outstanding and Exercisable	3,500,000
Intrinsic Value of Options Outstanding and Exercisable	280,000
Weighted Average Life of Options Outstanding and Exercisable	2 years 7 months 6 days
$0.18 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.18
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	60,000
Weighted Average Life of Options Outstanding and Exercisable	2 years 3 months 18 days
$0.185 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.185
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	55,000
Weighted Average Life of Options Outstanding and Exercisable	2 years 1 month 6 days
$0.19 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.19
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	75,000
Weighted Average Life of Options Outstanding and Exercisable	3 years 9 months 18 days
$0.20 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.20
Options Outstanding and Exercisable	500,000
Intrinsic Value of Options Outstanding and Exercisable	20,000
Weighted Average Life of Options Outstanding and Exercisable	2 years
$0.22 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.22
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	20,000
Weighted Average Life of Options Outstanding and Exercisable	4 years
$0.23 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.23
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable	10,000
Weighted Average Life of Options Outstanding and Exercisable	5 years
$0.25 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.25
Options Outstanding and Exercisable	1,000,000
Intrinsic Value of Options Outstanding and Exercisable
Weighted Average Life of Options Outstanding and Exercisable	3 years 9 months 18 days

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Aug. 31, 2014	May 31, 2014
Current Assets:
Cash	$ 153,333	$ 121,754
Prepaid and other current assets	11,385	23,802
Total current assets	164,718	145,556
Property and equipment, net	23,015	25,543
Other Assets
Investment in mining rights and other	44,401	44,437
Total Assets	232,134	215,536
Current Liabilities:
Accounts payable and accrued expenses	3,765,653	3,457,557
Convertible notes payable	1,159,178	1,262,298
Total current liabilities	4,924,831	4,719,855
Long Term Liability
Convertible note payable, net of debt discount		34,472
Derivative liability on long term convertible note payable		149,674
Total Long term liabilities		184,146
Commitments and Contingencies
Stockholders' Deficit:
Preferred stock: authorized 10,000,000 shares of $0.00001 par value; 1,250,000 shares issued and outstanding, respectively	13	13
Common stock: authorized 325,000,000 shares of $0.00001 par value; 154,186,035 and 143,748,746 shares issued and outstanding respectively	1,542	1,437
Additional paid in capital	46,490,260	44,854,841
Deficit accumulated during exploration stage	(51,184,512)	(49,544,756)
Total stockholders' deficit	(4,692,697)	(4,688,465)
Total Liabilities and Stockholders' Deficit	$ 232,134	$ 215,536

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INCOME TAXES (Schedule of Reconciliation of Income Taxes) (Details) (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
INCOME TAXES [Abstract]
Tax at statutory rate	$ 639,505	$ 256,212
Valuation allowance	(639,505)	(256,212)
Income taxes

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
Cash Flows From Operating Activities:
Net loss	$ (1,639,756)	$ (656,955)
Charges and credits not requiring the use of cash:
Depreciation	2,528	2,528
Shares issued as compensation	495,000
Stock option expense	206,958
Amortization of loan discount	7,319	8,766
Origination interest on derivative liability	111,975	79,767
Change in fair derivative value	34,151	47,908
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets	12,453	1,035
Increase in interest accrued on convertible notes	21,879	27,654
Increase (decrease) in accounts payable, accrued expenses and other current liabilities	308,097	104,130
Net Cash Used in Operating Activities	(439,396)	(385,167)
Cash Flows From Investing Activities:
Net Cash Provided by (Used in) Investing Activities
Cash Flows From Financing Activities:
Proceeds from sales of common stock	455,975	190,000
Proceeds from exercises of warrants	15,000
Proceeds from convertible notes, net		192,000
Net Cash Provided by Financing Activities	470,975	382,000
Net increase (decrease) in cash	31,579	(3,167)
Cash beginning of period	121,754	28,691
Cash end of period	$ 153,333	$ 25,524

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) Share data in Millions, unless otherwise specified	1 Months Ended			3 Months Ended	12 Months Ended		0 Months Ended	2 Months Ended
	Aug. 31, 2014	May 31, 2014	Jan. 31, 2014	Aug. 31, 2014	May 31, 2014	Jan. 31, 2014	Sep. 15, 2014 Subsequent Event [Member]	Aug. 31, 2013 President [Member] Scenario, Plan [Member]
Other Commitments [Line Items]
Operating lease term				12 months
Operating lease extension option				12 months
Head Office monthly rent expense				$ 1,300
Mexican Operation monthly rent expense			5,400			2,234
Mining rights payments					147,105
Deposit on sales proposal to install equipment	21,250	35,000
Total cost of sales proposal to install equipment		450,000
Litigation, number of shares demanded for return	1.5			1.5
Litigation, amount paid for exploration concession	1,000,000			1,000,000
Officer's annual salary								500,000
Monthly gross revenues from plasma processing operations								1,000,000
Deposits paid on two alternative sales proposals to undertake a drilling program on property in Mexico							75,000
Threshold amount of alternative sales proposals							$ 1,000,000

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Aug. 31, 2014

PROPERTY AND EQUIPMENT

Schedule of property and equipment

As at August 31, 2014 and May 31, 2014, property and equipment consisted of the following:

	August 31, 2014		May 31, 2014
Vehicles	$	41,877	$	41,877
Machinery and equipment		92,515		92,515
Total property and equipment		134,392		134,392
Less accumulated depreciation		(111,377)		(108,849)
Total property and equipment net	$	23,105	$	25,543

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STOCKHOLDERS' DEFICIT (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended					0 Months Ended	3 Months Ended			3 Months Ended	1 Months Ended		3 Months Ended	0 Months Ended		3 Months Ended	1 Months Ended		3 Months Ended
	Aug. 31, 2014 item	Aug. 31, 2013	May 31, 2014	Apr. 30, 2014	Mar. 31, 2014	Feb. 28, 2014	Jan. 31, 2014	Oct. 02, 2014 Subsequent Event [Member]	Aug. 31, 2014 Stock Options [Member]	Aug. 31, 2013 Stock Options [Member]	Aug. 31, 2014 2014 Stock Option Plan [Member]	Aug. 31, 2014 2014 Stock Option Plan [Member] Advisory Board [Member]	Sep. 30, 2013 RTC [Member] Scenario, Plan [Member]	May 31, 2013 RTC [Member] Scenario, Plan [Member]	Aug. 31, 2014 Common Stock [Member]	Sep. 30, 2014 Common Stock [Member] Subsequent Event [Member]	Aug. 31, 2008 Common Stock [Member] 2008 Stock Option Plan [Member] Stock Options [Member]	Aug. 31, 2014 Series A Preferred Stock [Member]	Jan. 31, 2014 Series A Preferred Stock [Member] Scenario, Plan [Member]	Feb. 28, 2014 Series A Preferred Stock [Member] RTC [Member]	Aug. 31, 2014 Warrant [Member]	Aug. 31, 2014 Warrant [Member] Minimum [Member]	Aug. 31, 2014 Warrant [Member] Maximum [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized	10,000,000		10,000,000			10,000,000	10,000,000
Preferred stock, par value per share	$ 0.00001		$ 0.00001
Shares issued in business acquisition													290,000,000	300,000,000						1,250,000
Preferred stock, rights upon liquidation																		100
Preferred stock, voting rights per share																		100
Number of common stock issuable for each share of convertible preferred stock																		100
Common stock issued for conversion of preferred stock, shares																			125,000,000
Common stock issued for conversion of preferred stock, value																			$ 16,250,000
Common stock, shares authorized	325,000,000		325,000,000	325,000,000	175,000,000	150,000,000	150,000,000							480,000,000
Common stock, par value per share	$ 0.00001		$ 0.00001
Warrants issued																					2,523,334
Warrant term																					12 months
Warrant exercise price	$ 0.15							$ 0.125														$ 0.125	$ 0.20
Liabilities settled for shares of common stock, shares															3,040,622
Liabilities settled for shares of common stock	462,591
Shares issued as compensation, shares															2,250,000	450,000
Shares issued as compensation	495,000		382,500												495,000
Number of directors to whom shares are issued as compensation	9
Proceeds from exercises of warrants	15,000							25,000
Shares authorized under the plan											20,000,000						20,000,000
Total fair value of options issued									$ 206,958	$ 0		$ 206,958

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STOCKHOLDERS' DEFICIT (Tables)

3 Months Ended

Aug. 31, 2014

STOCKHOLDERS' DEFICIT [Abstract]

Schedule of Common Stock and Warrant Activity

The following shares of common stock and warrants were issued and warrants cancelled in the three months ending August 31, 2014:

	Common Stock		Warrants
May 31, 2014		143,748,746		3,564,797
Issued for cash proceeds of $455,975		5,046,667		2,523,334
Issued on settlement of convertible notes payable		3,040,622		-
Issued as directors' compensation		2,250,000		-
Warrants exercised		100,000		(100,000	)
Warrants expired, unexercised		-		(800,000	)
August 31, 2014		154,186,035		5,188,131

Schedule of Warrants Outstanding by Exercise Price

The following table summarizes information about warrants outstanding at August 31, 2014:

Exercise Price		Warrants Outstanding		Weighted Average Life of Outstanding Warrants In Months
	$0.125		3,746,667		9.1
	$0.16		924,797		11.7
	$0.20		516,667		11.6
	Total		5,188,130		79.8

Schedule of Stock Option Activity

The following table sets stock options granted, exercised and outstanding during the three months ended August 31, 2014 and the twelve months ended May 31, 2014:

	# of Options		Weighted-Average Exercise Price
Options outstanding and vested, May 31, 2013		16,500,000	$	0.13
Granted		1,500,000		0.21
Exercised		(500,000		(0.18
Cancelled or forfeited		-		-
Options outstanding and vested at May 31, 2014		17,500,000		0.13
Granted		1,000,000		0.23
Exercised		-		-
Cancelled or forfeited		-		-
Options outstanding and vested at August 31, 2014		18,500,000	$	0.14

Schedule of Stock Options by Exercise Price

The following table summarizes information about stock options outstanding at August 31, 2014:

Exercise Price		Options Outstanding and Exercisable		Intrinsic Value of Options Outstanding and Exercisable (1)		Weighted Average Life of Options Outstanding and Exercisable In Years
	$0.065		6,000,000	$	1,050,000		1.5
	$0.07		1,000,000		170,000		1.0
	$0.12		1,000,000		120,000		3.0
	$0.16		3,500,000		280,000		2.6
	$0.18		1,000,000		60,000		2.3
	$0.185		1,000,000		55,000		2.1
	$0.19		1,000,000		75,000		3.8
	$0.20		500,000		20,000		2.0
	$0.22		1,000,000		20,000		4.0
	$0.23		1,000,000		10,000		5.0
	$0.25		1,000,000		-		3.8
			18,500,000	$	1,860,000		2.3

Schedule of Stock Options Assumptions

The fair value of options granted under the Plan are estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions during the twelve months ending August 31, 2014:

Weighted-average risk-free interest rate		1.65	%
Weighted-average expected life		5 Years
Weighted-average expected volatility		168	%
Weighted-average expect dividends	$	0

XML

NATURE OF OPERATIONS

3 Months Ended

Aug. 31, 2014

NATURE OF OPERATIONS [Abstract]

NATURE OF OPERATIONS

1. NATURE OF OPERATIONS

U.S. Precious Metals, Inc. was incorporated in the state of Delaware in 1998 as a mineral exploration company. U.S. Precious Metals, Inc. and its wholly owned Mexican subsidiary company, U.S. Precious Metals de Mexico, S.A. de C.V, ("U.S. Precious Metals Mexico"), (collectively "the Company", "We" or "Us")   are engaged in the acquisition, exploration and development of mineral properties. We currently focus on gold and base minerals primarily located in the State of Michoacán, Mexico where we own exploration and exploitation concessions to approximately 37,000 contiguous acres of land (the "Solidaridad Property").

The Company has acquired exploration or exploitation concessions to approximately 37,000 acres of land in Michoacán, Mexico. Below is a list of the concessions which the Company has acquired:

Name of Concession	Title Number	Hectares*	Date Acquired	Expiration Date
Solidaridad I	220315	174.5408	July 11, 2003	July 10, 2053
Solidaridad II	220503	2162.2311	August 14, 2003	August 13, 2053
Solidaridad II, Fraction A	220504	1.4544	August 14, 2003	August 13, 2053
Solidaridad II, Fraction B	220505	.0072	August 14, 2003	August 13, 2053
Solidaridad III	223444	294.0620	December 14, 2004	December 13, 2054
Solidaridad IV	220612	149.4244	September 4, 2003	September 3, 2053
Solidaridad V (AKA Le Ceiba)	223119	921.3201	October 19, 2004	October 18, 2054
La Sabila	227272	11,405.0000	June 2, 2006	June 1, 2056

*

A Hectare is equivalent to 2.47 acres.

The above group of concessions are collectively referred to as the "Solidaridad Concessions" The Company's concessions have a term of fifty years from the date first acquired and can be renewed for another fifty years. Concessions grant the holder the right to explore and exploit all minerals found in the ground. In order to maintain the concessions, the Company must pay surface taxes semi-annually in January and July and perform minimum amounts of assessment work, on a calendar year basis. Assessment work reports are required to be filed annually in May for the preceding calendar year. The amount of surface taxes and annual assessments are set by regulation and may increase over the life of the concession and include periodic adjustments for inflation.

Mining concessions do not automatically grant the holder the right to enter or use the surface land of the property where such mining concessions are located. In order to access the surface land, the holder must obtain permission from the surface owner. The Company currently has secured access rights to the portions of the Solidaridad Property where its concessions Solidaridad I, Solidaridad III, and Solidaridad V are located by way of a written agreement entered into by and between its Mexican Subsidiary and the owners of the portions of the Solidaridad Property where these concessions are located. This agreement requires the Company to pay an annual rent to the landowner. The Company is in the process of securing, but has not yet secured, access rights to the other portions of the Solidaridad Property, which it plans to do in the future in connection with any decision to begin exploration and/or exploitation of those areas. If the Company is ultimately unable to receive access, or unable to receive access at a reasonable price, it may affect the ability of the Company to explore for, or exploit, mineralized material from those areas.

Original Transaction with Resource Technology Corp

On May 11, 2013, the Company entered into a Share Exchange Agreement with Resource Technology Corp., a newly formed Florida corporation ("RTC"), and the RTC shareholders to acquire all of the issued and outstanding shares of RTC in exchange for 300 million shares of common stock of the Company.  The agreement was subject to shareholder approval along with shareholder approval to increase the authorized number of shares of common stock to 480 million. As part of the transaction, RTC had three ore supply contracts with third party suppliers, and a Plasmafication™ Toll Processing Agreement with Plasma Processing, LP., a Florida limited partnership ("PP LP") and an affiliated entity of RTC. The ore supply agreements and the Toll Processing Agreement would enable RTC to receive 1/3rd of the revenues derived from the plasma processing of ore concentrates from the ore supply agreements.

The Plasma Plant and Plasma Processing.

PP LP owned the right to operate a plasma processing facility located in 29 Palms, California. The plant took three years to build and is permitted to process ore concentrate. Plasmafication™ or plasma processing employs extreme temperatures (in excess of 7,000 F) to dissociate ore concentrates into their basic elemental state. At the time of the transaction, the plant is not in commercial production.  The parties at the time believed that initial upgrades to the facility will commence within 90 to 120 days which will enable the facility to process concentrates at the rate of approximately 9 tons/day. PP LP expected to make further upgrades to the facility which would increase its capacity to approximately 27 tons/day.  These upgrades were subject to PP LP raising funds sufficient to complete necessary improvements to its plasma processing plant.

Plasmafication™ Toll Processing Agreement.

The Toll Processing Agreement between PP LP and RTC required PP LP to deliver a range of services, including the Plasmafication™ of the RTC concentrate from the ore supply contracts. These services would be provided at the sole cost and expense of PP LP. The agreement required an initial processing capacity of 5 tons/day of RTC concentrate for approximately 200 days per annum. PP LP will be required to upgrade its current plant to achieve this processing rate which as mentioned above is expected to occur within 90 to 120 days. These upgrades are expected to bring the total processing rate of the plant to about 9 tons/day. The agreement allows for an increased capacity to process 10 tons/day of RTC concentrate for approximately 300 days per annum. In order to achieve this rate, total plant capacity will have to be increased to about 29 tons/day.

PP LP guaranteed a benchmark run of 5 tons/day for 20 consecutive days ("Benchmark Run") with a minimum value of $50,000 (net to RTC) per ton using the RTC concentrate (or a total of $5,000,000 in net proceeds to RTC) from the existing ore supply contracts. The guarantee is limited to the proportionate reduction of the number of shares of USPR common stock issuable to the RTC shareholders (as described below). The benchmark run must be completed prior to June 1, 2014.

Share Exchange Agreement.

As stated above, pursuant to the Share Exchange Agreement, the Company agreed to acquire all of the issued and outstanding shares of RTC ("RTC Shares") from the RTC shareholders in exchange for 300 million shares of common stock of the Company. The transaction shares were to be held in escrow, however, voting rights will remain with the named party. The agreement further provided that if the Benchmark Run did not yield net cash proceeds of $5 million to RTC, then the number of exchange shares in total will be proportionately reduced. The closing of the transactions contemplated by the Agreement was expected to occur no later than June 1, 2014. The agreement contains customary representations and warranties by all parties. On September 10, 2013, the Company amended the Share Exchange Agreement with RTC and the RTC shareholders. Under the amendment, the parties agreed to reduce the number of "Exchange Shares" as defined in Section 4.01 of the Agreement (issuable to the RTC shareholders) from 300,000,000 shares of USPR common stock to 290,000,000 shares of USPR common stock.

The RTC shareholders are Wolz International, LLC ("Wolz"), Titan Productions, Inc. ("Titan"), and Mercury6, LP ("Mercury6"). Assuming a completion of the transaction without further proportionate reduction in the USPR Shares, Wolz, Titan and Mercury would have received 145 million shares, 72.5 million shares and 72.5 million shares, of common stock of USPR, respectively. Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is the sole officer and member of Wolz (and owns approximately 51% of the shares of Wolz), and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Messrs. Pane and Altieri own or control limited partnership interests in PP LP.

Restructuring Agreement with RTC

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). PTH, as mentioned above, is an affiliate of RTC and owns and operates a plasma processing plant located in 29 Palms, California which employs the Plasmafication™ technology ("Plasma Plant").

Pursuant to the Restructuring Agreement, the Company, RTC and the RTC Shareholders terminated ab initio the Share Exchange Agreement, and the Company entered into new agreements and instruments with the counter parties described below. These new agreements and instruments consist of (i) the Restructuring Agreement, the Technology License Agreement by and between the Company and PTH ("License Agreement"), (ii) An Equipment Purchase and Sale Agreement by and between the Company and PTH ("Equipment Purchase Agreement"), (iii) A Promissory Note issued by PTH in favor of the Company in the amount $5,000,000 ("Promissory Note"), and (iv) A Certificate of Designations relating to 1,250,000 shares of Preferred Stock (defined below) issued to RTC in connection with the transaction ("Certificate of Designations"). The closing of the Restructuring Agreement occurred on February 4, 2014 ("Closing").

The Restructuring Agreement and related agreements and instruments provide the following material terms and conditions, among others:

Processing Rights.

Under the terms of the Restructuring Agreement, PTH will process the Company's ore concentrate at its Plasma Plant five (5) days per month for each month during a term agreed by the parties. The term begins with the date that the Plasma Plant is ready to commence commercial operations at the processing rate of 5 tons/day and terminating on the date that the Company Plasma Facility (defined below) is fully permitted and ready to commence commercial operations at a processing rate of 10 tons/day. PTH has informed the Company that it expects to be fully operational during the fourth calendar quarter of 2014. The Company has agreed to pay its ratable share of PTH overhead and direct costs as set forth in the agreement, and apart from the foregoing, PTH will not receive any royalty or other fee.

Licensing Rights. 

Under the Technology Licensing Agreement, PTH granted the Company a non-exclusive, royalty free license to use PTH's Plasmafication™ technology for a term of 25 years. The technology covers and relates to the construction and use of a Company owned plasma plant described below. The Licensing Agreement is subject to other customary terms and conditions.

Construction of a Company Owned Plasma Plant.

Under the Equipment Purchase Agreement, PTH has agreed to construct, on behalf of the Company, a 10 ton/day plasma processing plant on its premises located in 29 Palms, California ("Company Facility"). The plant will be constructed on an actual costs basis without markup by PTH, and PTH also has agreed to pay for 1/3rd of the construction costs. The estimated costs of construction for the Company Facility is approximately $18 million. The parties will formulate in the near future a draw schedule which will detail construction and payment milestones, however, in order to initiate the construction process, the Company will be required to pay a down payment of $1.5 million. In addition to other terms and conditions therein, PTH will assist in obtaining the necessary Federal, state and local permits and licenses to construct and operate the Company Plasma facility, however, the Company will be required to bear the related costs. Upon completion of the facility, the Company will own 100% of the Company Facility, however, any Licensed Technical Information will be subject to the Licensing Agreement.

In addition, the parties will be required to enter into an operating and maintenance agreement which address the operation and maintenance of the Company Owned Plasma Plant.

Promissory Note. 

PTH has delivered to the Company a Promissory Note in the principal amount is $5 million. The note is payable on or before January 30, 2015, and bears no interest prior to the payment due date. The promissory note may be offset under certain conditions set forth therein.

No value has been assigned to the Processing Rights, Licensing Rights, PTH's assistance to construct a Company Owned Plant or Promissory Note in these financial statements. Effective as the date of this report, the Company, RTC and PTH, are all development stage companies, none of which have the existing financials resources, established business operating processes or ongoing profitable business operations to meet their obligations under the terms of these agreements at this time. The Company, RTC and PTH's ability to meet their obligations under the terms of these agreements is dependent on their ability to raise the future funding required and to successfully develop and implement their business plans which cannot be guaranteed at this time. Accordingly the realization of any future value from these rights and notes is highly uncertain at this time and accordingly no value has been assigned to them. 

Preferred Stock and Certificate of Designation. In connection with the Restructuring Agreement, the Company issued to RTC 1,250,000 shares of its newly created Class A Super Voting Preferred Stock ("Preferred Stock"). The Preferred Stock has the rights privileges and preferences as is set forth in the Certificate of Designations filed with the Delaware Secretary of State. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i). each share of Preferred Stock has 100 to 1 voting rights, voting along with the Company's common stock, (ii). each share of Preferred Stock has 100 to 1 rights upon liquidation and distribution of the Company, (iii). each share of Preferred Stock has the right to convert into 100 shares of common stock of the company. The Company increased its authorized shares of common stock from 150 million to 325 million in order to allow for the conversion of the Preferred Stock, among other considerations.

Construction of a Company Owned Plasma Plant

The market value of the 1,250,000 shares of its newly created Class A Super Voting Preferred Stock is assumed to equate to the value of 125,000,000 shares of the common stock which was $16,250,000 on January 30, 2014 when the Company became contractually obligated to issue these shares.

In addition, under the Restructuring Agreement, the Company and RTC and its shareholders granted mutual releases, and provided customary representations and warranties.

The Share Exchange Agreement was adopted by the unanimous consent of the Board of Directors of the Company, RTC, each RTC shareholders and PTH. All of the shareholders of RTC were signatories to the agreement.

The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming the issuance of the Preferred Stock to its shareholders, Wolz will receive 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury will receive 312,500 shares of Preferred Stock convertible into 31.5 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and member of Wolz and owns approximately 51% of Wolz, and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Mr. Pane is a managing member of PTH and Messrs. Pane and Altieri own or control approximately 20% and 8%, respectively of PTH.

Unregistered Sale of Securities.

At Closing, the Company issued to RTC 1,250,000 shares of Preferred Stock. Each share of Preferred Stock has identical rights as 100 shares of common stock except that each share Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company).

These securities qualified for exemption under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, manner of the offering and number of securities offered. These shareholders made certain representations and warranties, including their investment intent. They also agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act.

Material Modification to Rights of Security Holders.

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i) each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii) each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii) each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred Stock created thereby to RTC.

Change of Control of Registrant.

At Closing of the Restructuring Agreement, the Company issued to RTC 1,250,000 shares of Preferred Stock. Each share of Preferred Stock has identical rights as 100 shares of common stock except that each share Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company). As a result, a change of control occurred with respect to the Company. Immediately prior to Closing, the Company had 150 million shares of common stock authorized, of which 135,259,321 shares were issued and outstanding and 10 million shares of preferred stock, of which no shares were outstanding.

Immediately after Closing, the authorized, issued and outstanding shares of common stock of the Company were unchanged and the Company had 10 million shares of preferred stock authorized, of which the Company had 1,250,000 shares of preferred stock issued and outstanding designated the Series A Super Voting Preferred Stock referred to herein as the "Preferred Stock."

After giving effect to the conversion of the Preferred Stock by RTC, RTC will own approximately 125 million shares of common stock or approximately 48% of the common stock of the Company after giving effect to the conversion of the Preferred Stock to common stock. The RTC shareholders are Wolz International, LLC (" Wolz ") owning 50% of RTC, Titan Productions, Inc. (" Titan ") owning 25% of RTC, and Mercury6, LP (" Mercury6 ") owning 25% of RTC. Wolz received 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury received 312,500 shares of Preferred Stock convertible into 31.25 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and a member of Wolz owning 51% of that company, and Chad Altieri, our Board member, is the sole owner of Mercury.

Mining Services Agreement with Mesa Acquisition Group LLC

On May 22, 2013, US Precious Metals, Inc. ("Company") entered into a Mining Services Agreement with Mesa Acquisitions Group, LLC, a Florida limited liability company ("Contractor"), in association with Alba Petroleos De El Salvador Sem De CV, a Venezuelan company. Under the agreement, Contractor has agreed to perform certain mining services on a portion of the Company's Mexican mining concessions. The Company maintains approximately 37,000 acres of mining concessions located in the State of Michoacán, Mexico, and the agreement covers the Solidaridad I & II mining concessions (or approximately 5,000 acres). Under the agreement, Contractor has agreed to perform the various mining services in three, separate phases described below:

• Phase 1 entails the immediate commission of high-tech satellite imaging to identify mineralization and confirm the two previous drilling campaigns on the mining concessions known as Solidaridad I and/or Solidaridad II.

The estimated costs of Phase 1 are approximately $400,000.

• Phase 2 entails the development of the necessary infrastructure to conduct full scale mining operations on the Solidaridad I and/or Solidaridad II mining concessions, including limited exploration, establishment of roads, water, power (electricity) and staging area for employees on site.

The estimated costs of Phase 2 are approximately $10 million.

• Phase 3 entails the construction of a processing plant to process the ore, which will be owned by the Company and the performance of all surface and underground mining operations.

The estimated costs for the construction of the processing plant are approximately $40 million.

Mining Services Agreement with Mesa Acquisition Group LLC Continued

As of February 28, 2014, Phase I was substantially complete, although the Company has not received the results of the ground work conducted on the property.

Contractor will be responsible for the costs and expenses of: the satellite imaging described in Phase 1, the limited exploration and build out of the infrastructure described in Phase 2, and the construction of the processing plant described in Phase 3 and all mining costs. The obligation of contractor to proceed to Phases 2 and 3 will be dependent upon the company receiving positive results of the satellite imaging. The size and capacity of the processing plant to be constructed by the Contractor will be determined by parties, subject however to the results of the satellite imaging. Actual mining costs will be paid for by Contractor and milling and processing expenses will be allocated between the parties in proportion to their revenue allocation described below (70% for Company/30% for Contractor).

As consideration for the mining services, Contractor will receive the following consideration from the Company:

Phase 1 and Phase 2. As consideration for Phases 1 and 2, the Company has issued to Contractor 10 million shares of its common stock.

Phase 3. As consideration for completion of Phase 3, Contractor will earn a 30% revenue interest in the revenues resulting from the sale of the ore, subject to it paying its proportionate share of the milling expenses. If Contractor fails to perform or elects not to perform Phase 3 for any reason within 12 months from the completion of Phase 2, Contractor will forfeit all rights to the project.

In addition to the consideration stated above, as a further inducement for Contractor to enter into the Mining Services Agreement, the Company's Chairman has agreed to issue to Contractor an additional 5 million shares of our common stock.  This is not a Company obligation but will be treated as a capital contribution and will occur after completion of development under separate agreement.

The parties will be obligated to share in the milling and processing costs and revenues generated from any ore processing on a proportionate basis that is 70% to the Company and 30% to Contractor. The Mining Services Agreement contains extensive terms and obligations regarding the performance of the mining services by Contractor. Accordingly, the descriptions of the Mining Services Agreement are not complete, and are qualified in their entirety by reference to each agreement which are filed as an exhibit to our Annual Report on Form 10-K/A for the fiscal year ended May 31, 2013, filed with the Securities and Exchange Commission on September 16, 2013.

Mr. George Mesa, the sole owner of Contractor, has been the Company's Director of Security for the Company's Mexican mining concessions since September 2012.  On September 21, 2012, Mr. Mesa received stock options to acquire 1 million share of our common stock at an exercise price of $0.12 in connection with that appointment.

On September 19, 2013, the Company in conjunction with its Mining Services partners Mesa Acquisition Group LLC/Alba Petroleos De El Salvador Sem De Cv, reported the results of the Phase 1 Satellite Imaging program under the Mining Services Agreement.

Amendments to Articles of Incorporation or Bylaws;

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i). each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii). each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii). each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred stock created thereby to RTC.

The conversion privilege of the preferred stock contains a provision restricting conversion until such time as there are adequate common shares authorized to allow full conversion of the preferred.  On April 14, 2014, we increased our authorized shares of common stock from 175 million to 325 million.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Aug. 31, 2014	May 31, 2014	Apr. 30, 2014	Mar. 31, 2014	Feb. 28, 2014	Jan. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Preferred stock, shares authorized	10,000,000	10,000,000			10,000,000	10,000,000
Preferred stock, par value per share	$ 0.00001	$ 0.00001
Preferred stock, shares issued	1,250,000	1,250,000				0
Preferred stock, shares outstanding	1,250,000	1,250,000				0
Common stock, shares authorized	325,000,000	325,000,000	325,000,000	175,000,000	150,000,000	150,000,000
Common stock, par value per share	$ 0.00001	$ 0.00001
Common stock, shares issued	154,186,035	143,748,746			135,259,321	135,259,321
Common stock, shares outstanding	154,186,035	143,748,746			135,259,321	135,259,321

XML

SUBSEQUENT EVENTS

3 Months Ended

Aug. 31, 2014

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

11.SUBSEQUENT EVENTS

On September 3, 2014, we received a further advance of $83,333 under an outstanding convertible note payable and we received funds $75,000, net of debt discount, as described in Note 6 Convertible Notes Payable above.

On September 15, 2014, we paid $75,000 as a deposit on a proposal to undertake a drilling program on our property in Mexico.  The proposal is in excess of $1 million.As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be success in raising the necessary funding.

On October 2, 2014, 200,000 of our warrants with an exercise price of $0.125 were exercised for proceeds of $25,000.

On September 30, 2014, we issued 450,000 shares of our common stock as compensation under a 12 month consulting contract.

On October 6, 8 and 10, 2014, the holder of Convertible Note 6 converted a total principal balance of $100,000 into 851,191 shares of our common stock.

The Company evaluated subsequent events through the date these financial statements were issued. Other than those set out above, there have been no subsequent events after August 31, 2013 for which disclosure is required

XML

Document and Entity Information	3 Months Ended
	Aug. 31, 2014	Oct. 14, 2014
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2014
Entity Registrant Name	U S PRECIOUS METALS INC
Entity Central Index Key	0001286181
Current Fiscal Year End Date	--05-31
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		155,687,226

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

3 Months Ended

Aug. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Presentation

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally  accepted  accounting  principles for interim  financial  information  and with the  instructions  to Form  10-Q and Article  8 of  Regulation  S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading. Operating results for the three months ended August 31, 2014 are not necessarily indicative of the results that may be expected for the year ended May 31, 2015. For more complete financial information, these unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended May 30, 2014 included in our Form 10-K filed with the SEC.

Exploration Stage Accounting

Exploration Stage Accounting

The Company is an exploration stage company, as defined in pronouncements of the Financial Accounting Standards Board (FASB) and Industry Guide #7 of the Securities and Exchange Commission.  Generally accepted accounting principles govern the recognition of revenue by an exploration stage enterprise and the accounting for costs and expenses. As an exploration stage company is also required to make additional disclosures as defined under the then current Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, "Development-Stage Entities". Additional disclosures required are that our financial statements be identified as those of an exploration stage company, and that the statements of operations, changes in changes in stockholders' deficit and cash flows disclosed activity since the date of its Inception (January 21, 1998). Effective June 10, 2014, the FASB changed its regulations with respect to development stage entities and these additional disclosures are no longer required for annual reporting periods beginning after December 15, 2015, with the option for entities to early adopt these new provisions. The Company has elected to early adopt these provisions and consequently these additional disclosures are not included in its financial statements

Proven and Probable Reserves

Proven and Probable Reserves

The definition of proven and probable reserves is set forth in SEC Industry Guide 7. Proven reserves are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; (b) grade and/or quality are computed from the results of detailed sampling; and (c) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. 

In addition, reserves cannot be considered proven and probable until they are supported by a feasibility study, indicating that the reserves have had the requisite geologic, technical and economic work performed and are economically and legally extractable at the time of the reserve determination. As of August 31, 2014, none of our mineralized material met the definition of proven or probable reserves.

Consolidated Statements

Consolidated Statements

The consolidated financial statements include the accounts of the Company and its subsidiary company.  All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from those estimated

Foreign Currency Translation

Foreign Currency Translation

The assets of the Mexican subsidiary are located in Mexico.  The Mexican subsidiary depends on the ability of the parent company to raise cash which is transferred to the subsidiary to meet its operating cash needs.  Therefore, the Company's management has determined that the functional currency of the Mexican subsidiary is the US dollar. Since that is the case, the Company remeasures its subsidiary financial statements in US dollars.  Any gains or losses are reflected on the Statements of Operations

The accounts of the Mexican subsidiary are remeasured in US dollars as follows:

(a) Current assets, current liabilities, and long-term monetary assets and liabilities are translated based on the rates of exchange in effect at the balance sheet dates.

(b) Non-monetary assets, liabilities, and equity accounts are translated at the exchange rates prevailing at the times of acquisition of assets, assumption of liabilities or equity investments.

(c) Revenues and expenses are translated at the average exchange rates for each period, except for charges for amortization and depreciation of non-monetary assets which are translated at the rates associated with the assets.

Cash Equivalents

Cash Equivalents

The Company considers all short term investments purchased with an original maturity of three months or less to be cash equivalents.

Financial Instruments

Financial Instruments

The estimated fair values for financial instruments were determined at discrete points in time based on relevant market information. These estimates involved uncertainties and could not be determined with precision. The carrying amounts of notes receivable, accounts receivable, accounts payable and accrued liabilities approximated fair value because of the short-term maturities of these instruments. The fair value of notes payable approximated to their carrying value as generally their interest rates reflected our effective annual borrowing rate.

Fair Value Measurements

Fair Value Measurements: 

ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements.  Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs.  ASC 820 defines the hierarchy as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 – Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date.  The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts, or priced with models using highly observable inputs.

Level 3 – Significant inputs to pricing that are unobservable as of the reporting date.  The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.

Our financial instruments consist of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable.  The carrying values of cash and cash equivalents, short-term trade prepaid expenses, payables, accruals and convertible notes payable approximate their fair value due to their short maturities.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, a small portion of which is located in Mexico.

Property and equipment

Property and equipment

Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.  Leasehold improvements are amortized using the straight-line method over the shorter of their estimated useful lives or the related reasonably assured lease term.  

The estimated useful lives are as follows:

Vehicles	4 years
Machinery and equipment	3-10 years

We review our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable.

Maintenance and repairs of property and equipment are charged to operations. Major improvements are capitalized.

Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts and any gain or loss is included in operations.

Investments in Mining Rights

Investments in Mining Rights

Mining rights held for development are recorded at the cost of the rights, plus related acquisition costs.  These costs will be amortized when extraction begins.

Mine Development Costs

Mine Development Costs

Mine development costs include engineering and metallurgical studies, drilling and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps and other infrastructure at underground mines.  Costs incurred at a mine site before proven reserves have been established are expensed as mine development costs.  At the point proven reserves have been established at a mine site, such costs will be capitalized and will be written off as depletion expense as the minerals are extracted.

As of August 31, 2014, none of the mine concessions met the requirements for qualification as having proven reserves.

Impairment of Long-Lived and Intangible Assets

Impairment of Long-Lived and Intangible Assets

In the event that facts and circumstances indicated that the cost of long-lived and intangible assets may be impaired, an evaluation of recoverability will be performed. If an evaluation was required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value was required. No impairment was recorded during the three month periods ended August 31, 2014 and 2103. 

Deferred Costs and Other

Deferred Costs and Other

Offering costs with respect to issue of common stock, warrants or options by us were initially deferred and ultimately offset against the proceeds from these equity transactions if successful or expensed if the proposed equity transaction is unsuccessful. 

Derivative Financial Instruments

Derivative Financial Instruments: 

We do not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Income Taxes

Income Taxes

We account for income taxes under the liability method, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Current tax benefits are offset by a valuation reserve as they are considered not likely to be realized in the foreseeable future.

Recognition of Revenue

Recognition of Revenue

Revenue will be recognized when persuasive evidence of an arrangement exists, such as when a purchase order or contract is received from a customer, the price is fixed, title to the goods has passed, and there is reasonable assurance of collection.  The Company has not yet entered into any contractual arrangement to deliver product or services.

Advertising Costs

Advertising Costs

The Company will expense advertising costs when advertisements occur.  There has been no spending thus far on advertising.

Stock Based Compensation

Stock Based Compensation

The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the goods or services received or the measurement date fair value of the equity instruments issued, whichever is the more readily determinable.  The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.

Discount and Amortization of Debt Discount

Discount and Amortization of Debt Discount:

Debt discount represents costs incurred in obtaining the debt funding and the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations. 

Net Income (Loss) Per Share

Net Income (Loss) Per Share

The Company computes net income (loss) per common share in accordance with Accounting  Standards  Update ("ASU"),  Earning Per Share (Topic 260) which requires the  presentation of both basic and diluted  earnings per share ("EPS")on the  consolidated  income  statements..  Under these provisions, basic and diluted net income (loss) per common share are computed by dividing the net income (loss) available to common shareholders for each period by the weighted average number of shares of common stock outstanding during the period.  At May 31, 2014 and 2013 there were warrants and options outstanding to purchase Company common stock and notes payable that are convertible into shares of the Company's common stock. The common share equivalents of these have not been included in the calculations of loss per share because such inclusions would have anti-dilutive effects as the Company incurred a loss from operations during the three month periods ended August 31, 2014 and 2013.

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

The Company reports as other comprehensive income (loss) those revenues, gains and losses not included in the determination of net income.  During the three month periods ended May 31, 2014 and 2013, the Company did not have any gains and losses resulting from activities or transactions that resulted in comprehensive income or loss.

Segment Reporting

Segment Reporting

Management treats the operation of the Company as one segment.

New Accounting Pronouncements

New Accounting Pronouncements

The Company has  reviewed  all  recently  issued,  but not  yet  effective,  accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material  impact on its  financial  condition  or the results of its operations.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Aug. 31, 2014	Aug. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Revenues
Costs and Expenses
General and administrative	1,432,394	462,716
Operating Loss	(1,432,394)	(462,716)
Other Income (Expense):
Change in derivative liability	(34,151)	(47,908)
Interest expense (net)	(173,211)	(146,331)
Total other income (expense)	(207,362)	(194,239)
Loss before income taxes	(1,639,756)	(656,955)
Provision for income taxes
Net loss	$ (1,639,756)	$ (656,955)
Net loss per share
Basic and diluted	$ (0.01)	$ (0.01)
Weighted average number of shares outstanding	148,461,468	122,407,059

XML

CONVERTIBLE NOTES PAYABLE

3 Months Ended

Aug. 31, 2014

CONVERTIBLE NOTES PAYABLE [Abstract]

CONVERTIBLE NOTES PAYABLE

6.CONVERTIBLE NOTES PAYABLE

	Principal Balance		Loan Discount		Accrued Interest		Total
May 31, 2013	$	575,000	$	-	$	355,923	$	930,923
Issued in the year		647,000		(414,726)		-		260,274
Converted into shares of common stock		(316,080)		174,181		(20,137)		98,244
Amortization of debt discount		-		142,091		-		142,091
Interest accrued		-		-		125,512		125,512
May 31, 2014		933,920		(98,448)		461,298		1,296,770
Issued in the period		-		-		-		-
Converted into shares of common stock		(233,920)		116,866		(23,298)		(140,352)
Amortization of debt discount		-		(18,418)		-		(18,418)
Interest accrued		-		-		21,879		21,879
August 31, 2014	$	700,000	$	-	$	459,178	$	1,159,178
Less long term		-		-		-		-
Short term	$	700,000	$	-	$	459,178	$	1,159,178

As at May 31, 2014, we were in default on repayment of various convertible promissory notes included in the above table with principal balances of $550,000 together with accrued interest of $453,096 totaling $1,003,096. The notes in default bear simple interest at an annual rate of 16% and may be converted into the shares of our common stock at the option of the note holder or automatically, if we complete any financing that results in proceeds of at least $10 million to us, or upon the occurrence of a change in control of us. 

On September 30, 2013, a holder of our convertible notes (referenced above) served us with a lawsuit. The lawsuit demanded repayment of a total of $632,666 in principal and interest due under the convertible notes. The lawsuit was dismissed by court due to lack of jurisdiction.

During the three month ended August 31, 2014, the Company did not issue any further convertible notes payable and settled two previously outstanding convertible notes payable through the issuance of a total of 3,040,622 shares of common stock.

Convertible Note Payable A

On September 26, 2013, we entered into a convertible promissory note with a maximum amount of $300,000, to be funded during a two year term, bearing interest at 12%. The maximum proceeds to be received under the note is $270,000 with the balance of $30,000 representing a discount on issue. We initially received $150,000 upon closing the note.  The lender may convert the convertible promissory note into shares of our common stock at any time after six months at a 40% discount to the lowest trade price in the 25 trading days prior to conversion.

The $150,000 advance was received net of a debt discount of $16,667 and the principal balance to be repaid is $166,667. The $16,667 debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

We valued the conversion feature at origination at $259,659 using the Black Scholes valuation model with the following assumptions:  dividend yield of zero, 18 month to maturity, risk free interest rate of 0.34% and annualized volatility of 143%. $150,000 of the value assigned to the derivative liability was recognized as a debt discount on the convertible debenture. The debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture. The balance of $109,659 of the value assigned to the derivative liability was recognized as origination interest on the derivative liability and expensed on origination.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as another income or expense item.

At November 30, 2013, we revalued the conversion feature of the convertible debenture using the Black Scholes valuation model with the following assumptions: 6 month risk free interest rate of 0.26% and annualized volatility of 133% and determined that, since origination, the fair value of our derivative liability had decreased by $33,956 to $225,703. Accordingly, we recognized a corresponding gain on derivative liability in conjunction with this revaluation.

On February 20, 2014 we received a further net advance for 30,000 under the terms of the note.

The $30,000 advance was received net of a debt discount of $3,333 and the principal balance to be repaid is $33,333. The $3,333 debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture.

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined it is indexed to the Company's common stock and that the conversion features meet the definition of a liability and therefore bifurcated the conversion feature and accounted for it as a separate derivative liability.

We valued the conversion feature at origination at $42,385 using the Black Scholes valuation model with the following assumptions:  dividend yield of zero, 18 month to maturity, risk free interest rate of 0.25% and annualized volatility of 128%. $30,000 of the value assigned to the beneficial conversion feature was recognized as a debt discount on the convertible debenture. The debt discount was recorded as reduction (contra-liability) to the convertible debenture and is being amortized over the life of the convertible debenture. The balance of $12,385 of the value assigned to the beneficial conversion feature was recognized as origination interest on the derivative liability and expensed on origination.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as another income or expense item.

At February 28, 2014, we revalued the conversion feature of the entire $200,000 convertible debenture using the Black Scholes valuation model with the following assumptions: 18 month term, risk free interest rate of 0.25% and annualized volatility of 128%  and determined that, since the previous revaluation or origination, the fair value of our derivative liability had increased by $37,892 to $305,980 Accordingly we recognized a corresponding loss on derivative liability in conjunction with this revaluation.

Between March 26, 2014 and May 15, 2014, the holder made 4 separate conversion requests and converted the $91,080 of the principal receiving a total of 1,320,000 shares of our common stock upon such conversions.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

At May 31, 2014, we revalued the conversion feature of the remaining balance of $132,920 principal and interest outstanding using the Black Scholes valuation model with the following assumptions: 16 month term, risk free interest rate of 0195% and annualized volatility of 120%  and determined that, since the previous revaluation, the fair value of our remaining derivative liability had decreased by $27,310 to $146,674 Accordingly we recognized a corresponding gain on derivative liability in conjunction with this revaluation.

Between June 1, 2014 and August 20, 2014 the holder made 4 separate conversion requests and converted the remaining $132,920 of the principal receiving a total of 1,724,266 shares of our common stock upon such conversions.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

As at August 31, 2014, no balance was outstanding under this convertible note payable.

However, as disclosed in Note 11 Subsequent Events below, a further advance of $83,333 was made under this convertible note payable and we received funds $75,000, net of debt discount on September 3, 2014.

Convertible Note Payable B

On January 30, 2014, we issued a convertible debenture to a former lender for $125,000. The convertible debenture had a 6 month term and bore interest of 12%. The convertible debenture could have been prepaid at a rate of 150% of the principal balance outstanding along with accrued interest. At any time after the maturity date of the convertible loan, if any principal balance is still outstanding, the balance was convertible into shares of the common stock at a 40% discount to the lowest closing price of the prior 20 trading days. As the conversion feature only applied after the maturity of the convertible debenture, no value was assigned to it at origination of the loan and no loan discount was recognized on the convertible debenture at origination. This convertible debenture was due on July 30, 2014 and the holder converted the entire principal amount of the note as described further below.

We evaluated the terms of the conversion features of the convertible debenture in accordance with ASC Topic No. 815- 40, Derivatives and Hedging - Contracts in Entity's Own Stock. Since the conversion price can change with reductions in the price of Company common stock, the conversion feature meets the definition of a derivative. We therefore bifurcated the conversion feature and accounted for it as a separate derivative liability. We valued the conversion feature at default at $111,975 using the Black Scholes valuation model with the following assumptions: dividend yield of zero, 3 month to maturity, risk free interest rate of 0.03% and annualized volatility of 59%. The balance of $111,975 was recognized as interest on origination and expensed in full on default.

Between January 30, 2014 and August 15, 2014, the holder made 6 separate conversion requests and converted the entire $125,000 principal amount of the note receiving a total of 1,316,356 shares of our common stock. The holder waived their right to charge interest on this loan. As of August 31, 2014, the note has been satisfied in full.

On each partial settlement, we revalued the proportionate amount of the derivative liability to it fair value and recognized any gain or loss on the change in fair value of the derivative liability as other income or expense in the statement of operations. On issuance of shares of our common stock on partial settlement of the note, we transferred the proportionate balance of the derivative liability together with the proportionate balance of unamortized debt discount to additional paid in capital.

Convertible Note Payable C

On April 4 2014, we issued a further convertible debenture for $150,000 to the same lender as for Convertible Note Payable B above. The convertible debenture has a 6 month term and bears interest of 10%. The convertible debenture could have been prepaid at a rate of 150% of the principal balance outstanding along with accrued interest. At any time after the maturity date of the convertible loan, if any principal balance was still outstanding, the balance could be convertible into shares of the common stock at a 40% discount to the lowest closing price of the prior 20 trading days. As the conversion feature only applies after the maturity of the convertible debenture, no value has been assigned to it and no loan discount has been recognized on the convertible debenture. This convertible debenture is due on October 4, 2014.

The effect of changes in the value of our derivative liabilities described in this note are summarized in the following table:

May 31, 2013	$	-
Value acquired during the period		511,197
Settled on issuance of common stock		(320,270	)
Revaluation on settlement on issuance of common stock or at reporting dates stock or at reporting dates		(41,253	)
May 31, 2014		149,674
Value acquired during the period		111,975
Settled on issuance of common stock		(227,498	)
Revaluation on settlement on issuance of common stock		(34,151	)
August 31, 2014	$	-

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PROPERTY AND EQUIPMENT

3 Months Ended

Aug. 31, 2014

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

5.PROPERTY AND EQUIPMENT

As at August 31, 2014 and May 31, 2014, property and equipment consisted of the following:

	August 31, 2014		May 31, 2014
Vehicles	$	41,877	$	41,877
Machinery and equipment		92,515		92,515
Total property and equipment		134,392		134,392
Less accumulated depreciation		(111,377)		(108,849)
Total property and equipment net	$	23,105	$	25,543

Depreciation expense for the three months ended August 31, 2014 and 2014 was $2,528 and $2,528, respectively.

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CONVERTIBLE NOTES PAYABLE (Tables)

3 Months Ended

Aug. 31, 2014

CONVERTIBLE NOTES PAYABLE [Abstract]

Schedule of Convertible Notes Payable

	Principal Balance		Loan Discount		Accrued Interest		Total
May 31, 2013	$	575,000	$	-	$	355,923	$	930,923
Issued in the year		647,000		(414,726)		-		260,274
Converted into shares of common stock		(316,080)		174,181		(20,137)		98,244
Amortization of debt discount		-		142,091		-		142,091
Interest accrued		-		-		125,512		125,512
May 31, 2014		933,920		(98,448)		461,298		1,296,770
Issued in the period		-		-		-		-
Converted into shares of common stock		(233,920)		116,866		(23,298)		(140,352)
Amortization of debt discount		-		(18,418)		-		(18,418)
Interest accrued		-		-		21,879		21,879
August 31, 2014	$	700,000	$	-	$	459,178	$	1,159,178
Less long term		-		-		-		-
Short term	$	700,000	$	-	$	459,178	$	1,159,178

Schedule of Effect of Changes in Value of Derivatives

The effect of changes in the value of our derivative liabilities described in this note are summarized in the following table:

May 31, 2013	$	-
Value acquired during the period		511,197
Settled on issuance of common stock		(320,270	)
Revaluation on settlement on issuance of common stock or at reporting dates stock or at reporting dates		(41,253	)
May 31, 2014		149,674
Value acquired during the period		111,975
Settled on issuance of common stock		(227,498	)
Revaluation on settlement on issuance of common stock		(34,151	)
August 31, 2014	$	-

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NATURE OF OPERATIONS (Tables)

3 Months Ended

Aug. 31, 2014

NATURE OF OPERATIONS [Abstract]

Schedule of Business Concessions

The Company has acquired exploration or exploitation concessions to approximately 37,000 acres of land in Michoacán, Mexico. Below is a list of the concessions which the Company has acquired:

Name of Concession	Title Number	Hectares*	Date Acquired	Expiration Date
Solidaridad I	220315	174.5408	July 11, 2003	July 10, 2053
Solidaridad II	220503	2162.2311	August 14, 2003	August 13, 2053
Solidaridad II, Fraction A	220504	1.4544	August 14, 2003	August 13, 2053
Solidaridad II, Fraction B	220505	.0072	August 14, 2003	August 13, 2053
Solidaridad III	223444	294.0620	December 14, 2004	December 13, 2054
Solidaridad IV	220612	149.4244	September 4, 2003	September 3, 2053
Solidaridad V (AKA Le Ceiba)	223119	921.3201	October 19, 2004	October 18, 2054
La Sabila	227272	11,405.0000	June 2, 2006	June 1, 2056

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RELATED PARTY TRANSACTIONS

3 Months Ended

Aug. 31, 2014

RELATED PARTY TRANSATIONS [Abstract]

RELATED PARTY TRANSACTIONS

9.RELATED PARTY TRANSACTIONS

During the three months ended August 31, 2014, we issued 2,250,000 shares of our common stock valued as $495,000 as compensation to our directors. Each of our nine directors at the time received 250,000 shares of common stock. In addition, 1,000,000 fully vested stock options with an exercise price of $0.23, valued at $206,958, were issued to a Mexican national appointed to our advisory board to assist the Company with its operations in Mexico, including regulatory affairs.

In July and August 2013, the Company paid a total of $125,000 to a company controlled by Mr. George Mesa, our Director of Security, and owner of Mesa Acquisitions Group LLC. Mr. Mesa had previously advanced a like amount of funds which were used by Resource Technology Corp. ("RTC") in connection with the transportation of ore supply, and related costs. As mentioned above, in May 2013, we entered into a Share Exchange Agreement with RTC and its shareholders, which includes our Chairman and a director, to acquire the issued and outstanding shares of RTC from the RTC shareholders.

Effective August 28, 2013, we appointed Mr. Hans H. Hertell as the Company's President. In addition, on that same date, our   Board of Directors approved an Employment Agreement with Mr. Hertell and a Consulting Agreement with Hertell Group, LLC. ("Hertell Group"). Mr. Hertell is the sole officer and member of Hertell Group.

Under the Employment Agreement, among other terms, we agreed to pay Mr. Hertell an annual salary of $500,000. The salary commences at such time as we generate monthly gross revenues from our plasma processing operations of at least one million dollars ($1,000,000) for two (2) consecutive months ("Performance Event"), and (ii) upon our achievement of the Performance Event, the Base Salary shall commence effective as of the first day of the stated two (2) consecutive month period and shall continue throughout the Term. In addition, upon occurrence of the Performance Event, the Executive will be entitled to receive a stock award of 1,000,000 shares of common stock ("Stock Grant"), which shall vest immediately. Either party may terminate this Agreement by providing at least ten (10) days written notice to the other party.

Under the Consulting Agreement, among other terms, the Hertell Group will provide general business consulting services including but not limited to business development strategy, introduction of prospective business acquisitions or joint venture participation, deal-making, introduction to capital markets, marketing strategies, and other duties as mutually agreed upon by the parties. As consideration or the services, the Hertell Group will receive 9,000,000 shares of our common stock. The term of the Consulting Agreement is three years. The shares were issued, and the associated expense recognized, during the three months ended November 30, 2013.

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). Pursuant to the Restructuring Agreement 1,250,000 shares of our designated Class of Preferred stock, valued at $16,250,000 was issued to the RTC shareholders. The RTC shareholders are Wolz International, LLC ("Wolz") owning 50% of RTC, Titan Productions, Inc. ("Titan") owning 25% of RTC, and Mercury6, LP ("Mercury6") owning 25% of RTC. Assuming the issuance of the Preferred Stock to its shareholders, Wolz will receive 625,000 shares of Preferred Stock convertible into 62.5 million shares of common stock (or approximately 24% of the Company's issued and outstanding common stock), and each of Titan and Mercury will receive 312,500 shares of Preferred Stock convertible into 31.5 million shares of common stock (or approximately 12% of the Company's issued and outstanding common stock for each entity). Mr. Gennaro Pane, our Chairman and Chief Executive Officer, is an officer and member of Wolz and owns approximately 51% of Wolz, and Chad Altieri, our Board member, is the sole owner of Mercury. In addition, Mr. Pane is a managing member of PTH and Messrs Pane and Altieri own or control approximately 20% and 8%, respectively of PTH.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Aug. 31, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

7.COMMITMENTS AND CONTINGENCIES

Lease – Head Office

Our head office is in Marlboro, New Jersey where we are now renting office space under a the terms of a 12 month lease, with an option to extend the term of the lease for a further 12 months, at $1,300 per month and operating expenses. This lease is personally guaranteed by one of our officers and directors. Neither the lease of the personal guarantee have ever been finalized or signed

Leases – Mexican Operation

The Company leases a warehouse (storage) facility in the city of Morelia, Michoacán, Mexico at a monthly rental of $2,234. This lease expired on February 1, 2014 and was extended for a further twelve month period on the same terms. Effective February 1, 2014 we extended the terms of the lease for a further twelve months on the same terms as before.

Effective January 1, 2014, we entered into a new rental agreement with the landowner of the land on which our mining concessions are located. Under the terms of the new agreement we agreed to pay a monthly rental of approximately $5,400 on a going basis to be able to have access to our mining concessions.

Mining rights

The Company is required to make payments to the Mexican government on a bi-annual basis to maintain its mining concessions. In the twelve months ended May 31, 2014 the Company made payments of $147,105 to the Mexican government to maintain its mining concessions. It is anticipated that these payments will increase in the twelve months ending May 31, 2015.

Other Commitments

Under an employment agreement we have with Mr. Hertell, among other terms, we agreed to pay Mr. Hertell an annual salary of $500,000. The salary commences at such time as we generate monthly gross revenues from our plasma processing operations of at least one million dollars ($1,000,000) for two (2) consecutive months ("Performance Event"), and (ii) upon our achievement of the Performance Event, the Base Salary shall commence effective as of the first day of the stated two (2) consecutive month period and shall continue throughout the Term.. Either party may terminate this Agreement by providing at least ten (10) days written notice to the other party.

In May 2014, we paid $35,000 as a deposit on a sales proposal to install limited production equipment on our property in Mexico for a total cost of $450,000. In August 2014, we made a further deposit of $21,250 under the terms of the sales proposal. As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be success in raising the necessary funding.

As disclosed in Note 11 Subsequent Events below, on September 15, 2014, we paid $75,000 as a deposit on a proposal to undertake a drilling program on our property in Mexico.  The proposal is in excess of $1 million.As at the date of this report, there is no contract for this work and we do not have the funding to pay the balance due under the sales proposal and will need to raise the additional funds through the sale of further equity or debt instruments. There is no guarantee that we will be successful in raising the necessary funding.

Legal

Title Dispute

On April 3, 2012, as we have previously reported, Mr. Israel Tentory Garcia filed an action against our Mexican subsidiary, US Precious Metals SA de CV, wherein the plaintiff asserted a number of claims against us, including a demand for the return of one of our concessions (Solidaridad I) for failure to develop the concession. The case was filed in a local court in the Federal District of Mexico City. On May 21, 2013, the Court ruled that the Plaintiff did not prove the claims asserted in the lawsuit, and that our subsidiary is not liable to for any of such claims.

On June 12, 2014, our Mexican subsidiary, US Precious Metals SA de CV was served with another lawsuit from Mr. Israel Tentory Garcia along with seven other plaintiffs. The lawsuit was filed in a commercial court in Mexico City. The claims of the new lawsuit essentially restate the claims of the original lawsuit filed in April 2012.

By way of background, the plaintiffs obtained the exploration rights to the concession known as Solidaridad I from the Mexican government on November 24, 1996. These exploration rights expired on November 23, 2001 under the terms of the concession from the government and as prescribed by the governing statute. On March 13, 2003, we entered into an agreement with the plaintiffs pursuant to which they assigned their rights to this (expired) concession to our Mexican subsidiary. In July 2003, our Mexican subsidiary then applied for and obtained a new exploration and exploitation concession from the Mexican government covering Solidaridad I. The new concession expires July 2053.

Pursuant to this 2003 agreement with the plaintiffs, we issued 1.5 million shares of our common stock to them. The agreement further provided for the payment of $1 million to the plaintiffs upon the occurrence of a sale of the concession for exploitation purposes. In the original action filed in 2012 and in the current action, plaintiff(s) claim that under the agreement the $1 million payment was due and payable no later than 2009 and ownership of the mining concession should revert back to the plaintiff(s) due to the non-payment.

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. Our defense will include, among other positions, the fact that plaintiffs had no concession rights to assign under the March 2003 agreement as their concession expired 16 months earlier, we independently obtained the rights to a new (and current) concession from the Mexican government in July 2003, the agreement is ambiguous as to the payment requirement in 2009 and the matter was previously adjudicated in our favor in earlier action, albeit in a different court. We have filed an answer to the above complaint.

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STOCKHOLDERS' DEFICIT

3 Months Ended

Aug. 31, 2014

STOCKHOLDERS' DEFICIT [Abstract]

STOCKHOLDERS' DEFICIT

8.STOCKHOLDERS' DEFICIT

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of 0.00001 per share.

Unregistered Sale of Securities.

On January 30, 2014, the Company entered into a Restructuring Agreement with RTC, the RTC Shareholders, and Plasmafication Technology Holding, LLC, a Florida limited liability company ("PTH"). Under the terms of the agreement, the Company was contracted to issue at Closing 1,250,000 shares of Class A Preferred Stock to RTC. Each share of this Class A Preferred Stock has identical rights as 100 shares of common stock except that each share of this Class A  Preferred Stock is convertible to 100 shares of common stock (or a total of 125 million shares of common stock of the Company).

Unregistered Sale of SecuritiesContinued.

The market value of the 1,250,000 shares of its newly created Class A Super Voting Preferred Stock is assumed to equate to 125,000,000 shares of the common stock which was $16,250,000 on January 30, 2014 when the Company became contractually obligated to issue these shares. These securities qualified for exemption under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the offering, manner of the offering and number of securities offered. These shareholders made certain representations and warranties, including their investment intent. They also agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act.

Material Modification to Rights of Security Holders.

On January 31, 2014, the Company filed the Certificate of Designations with the Delaware Secretary of State. The Certificate of Designation allows for the creation and issuance of the 1,250,000 shares of Preferred Stock. As stated in the Certificate of Designations, each share of the Preferred Stock has identical rights as 100 shares of the Company's common stock. These rights, privileges and preferences include among others; (i) each share of Preferred Stock shall have 100 to 1 voting rights, voting along with the Company's common stock, (ii) each share of Preferred Stock shall have 100 to 1 rights upon liquidation and distribution of the Company, (iii) each share of Preferred Stock shall have the right to convert into 100 shares of common stock of the Company. On January 29, 2014, the Company's Board of Directors approved the Certificate of Designations, the filings of the Certificate of Designations with the Delaware Secretary of State and the issuance of the Preferred stock created thereby to RTC.

Common Stock and Warrants

The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.00001 per share. On or about February 25, 2014, a majority of the Company's shareholders approved the increase of the authorized common stock from 150,000,000 to 325,000,000 shares.  The Board of Directors previously approved the stated corporate action.  On March 26, 2014, the Company filed with the Securities and Exchange Commission and mailed to its shareholders a Definitive Schedule 14C with respect to the stated increase in authorized shares.

The following shares of common stock and warrants were issued and warrants cancelled in the three months ending August 31, 2014:

	Common Stock		Warrants
May 31, 2014		143,748,746		3,564,797
Issued for cash proceeds of $455,975		5,046,667		2,523,334
Issued on settlement of convertible notes payable		3,040,622		-
Issued as directors' compensation		2,250,000		-
Warrants exercised		100,000		(100,000	)
Warrants expired, unexercised		-		(800,000	)
August 31, 2014		154,186,035		5,188,131

Common Stock and Warrants Continued

During the three months ended August 31, 2014, the Company issued:

i) 5,046,667 shares of its common stock, together with warrants to buy 2,523,334 shares of its common stock for proceeds of $455,975. The warrants had terms of 12 months and exercise prices of $0.125 or $0.20.

ii) 3,040,622 shares of commons stock in settlement of convertible notes payable, accrued interest, debt discount and derivative liabilities totaling $462,591

iii) 2,250,000 shares valued at $495,000 as compensation to its nine directors.

In addition, 100,000 warrants with an exercise price of $0.15 were exercised for cash proceeds of $15,000 and 800,000 warrants expired, unexercised.

The following table summarizes information about warrants outstanding at August 31, 2014:

Exercise Price		Warrants Outstanding		Weighted Average Life of Outstanding Warrants In Months
	$0.125		3,746,667		9.1
	$0.16		924,797		11.7
	$0.20		516,667		11.6
	Total		5,188,130		79.8

Stock Options

In August 2008, our shareholders approved a Stock Option Plan (the "Plan"). Under the terms of the Plan, options to purchase up to 20,000,000 shares of Company common stock may be issued to officers, directors, key employees and consultants.

In August 2014, our Board of directors approved the establishment of a 2014 Stock Option Plan for up to 20,000,000 shares of Company common stock.

The following table sets stock options granted, exercised and outstanding during the three months ended August 31, 2014 and the twelve months ended May 31, 2014:

Stock Options Continued

	# of Options		Weighted-Average Exercise Price
Options outstanding and vested, May 31, 2013		16,500,000	$	0.13
Granted		1,500,000		0.21
Exercised		(500,000		(0.18
Cancelled or forfeited		-		-
Options outstanding and vested at May 31, 2014		17,500,000		0.13
Granted		1,000,000		0.23
Exercised		-		-
Cancelled or forfeited		-		-
Options outstanding and vested at August 31, 2014		18,500,000	$	0.14

On August 27, 2014, the Company's Board of Directors appointed a Mexican national to its advisory board to assist the Company with its operations in Mexico, including regulatory affairs and granted 1,000,000 stock options to this individual under the newly created 2014 Stock Option Plan. The option exercise price of the option was $0.23 per share.

The following table summarizes information about stock options outstanding at August 31, 2014:

Exercise Price		Options Outstanding and Exercisable		Intrinsic Value of Options Outstanding and Exercisable (1)		Weighted Average Life of Options Outstanding and Exercisable In Years
	$0.065		6,000,000	$	1,050,000		1.5
	$0.07		1,000,000		170,000		1.0
	$0.12		1,000,000		120,000		3.0
	$0.16		3,500,000		280,000		2.6
	$0.18		1,000,000		60,000		2.3
	$0.185		1,000,000		55,000		2.1
	$0.19		1,000,000		75,000		3.8
	$0.20		500,000		20,000		2.0
	$0.22		1,000,000		20,000		4.0
	$0.23		1,000,000		10,000		5.0
	$0.25		1,000,000		-		3.8
			18,500,000	$	1,860,000		2.3

(1) Based on closing share price of $0.24 at close of business on August 29, 2014

US PRECIOUS METALS, INC.

(An Exploration Stage Company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED AUGUST 31, 2014 AND 2013

(unaudited)

8.STOCKHOLDERS' DEFICIT-CONTINUED

Stock Options Continued

The total fair value of options issued during the three month periods ended August 31, 2014 and 2013 were $206,958 and $0 respectively.

The fair value of options granted under the Plan are estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions during the twelve months ending August 31, 2014:

Weighted-average risk-free interest rate		1.65	%
Weighted-average expected life		5 Years
Weighted-average expected volatility		168	%
Weighted-average expect dividends	$	0

The Company expects to issue shares upon exercise of these options from its authorized shares of common stock.

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INCOME TAXES

3 Months Ended

Aug. 31, 2014

INCOME TAXES [Abstract]

INCOME TAXES

10.INCOME TAXES

The Internal Revenue Code allows net operating losses (NOL's) to be carried forward and applied against future profits for a period of twenty years. The change of ownership following the RTC restructuring agreement may be limited our ability to utilize these US NOLs under the terms of IRC Section 381. The Mexican equivalent of the Internal Revenue Code allows NOL's to be carried forward for ten years.

We did not provide any current or deferred US federal income tax provision or benefit for any of the periods presented in these financial statements because we have experienced losses since Inception. When it is more likely than not, that a tax asset cannot be realized through future income, the Company must record an allowance against any future potential future tax benefit. We provided a full valuation allowance against the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the three months ended August 31, 2014 and 2013 as defined under ASC 740, "Accounting for Income Taxes." We did not recognize any adjustment to the liability for uncertain ta position and therefore did not record any adjustment to the beginning balance of the accumulated deficit on the balance sheet.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

	August 2014		August 2013
Income tax provision at the federal statutory rate		39%		39%
Effect of operating losses		(39%)		(39%)
		-%		-%

Changes in the cumulative net deferred tax assets consist of the following:

	August 2014			August 2013
Net loss carry forward	$	19,961,960		$	19,322,455
Valuation allowance		(19,961,960	)		(19,322,455	)
	$	-		$	-

A reconciliation of income taxes computed at the statutory rate is as follows:

	August 2014			August 2013
Tax at statutory rate	$	639,505		$	256,212
Valuation allowance		(639,505	)		(256,212	)
	$	-		$	-

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CONVERTIBLE NOTES PAYABLE (Schedule of Effect of Changes in Value of Derivatives) (Details) (USD $)	3 Months Ended		12 Months Ended
	Aug. 31, 2014	Aug. 31, 2013	May 31, 2014
CONVERTIBLE NOTES PAYABLE [Abstract]
Balance, beginning of year	$ 149,674
Value acquired during the period	111,975		511,197
Settled on issuance of common stock	(227,498)		(320,270)
Revaluation on settlement on issuance of common stock	(34,151)	(47,908)	(41,253)
Balance, end of year			$ 149,674

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

3 Months Ended

Aug. 31, 2014

SUPPLEMENTAL CASH FLOW INFORMATION [Abstract]

Schedule of Supplemental Cash Flow Information

	Three Months Ended August 31,
	2014		2013
Income taxes paid	$	-	$	-
Interest paid	$	-	$	-
Convertible Notes Payable, debt discount, accrued interest and derivative liabilities settled with the issuance of 3,040,622 shares of  common stock	$	462,591	$	-

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NATURE OF OPERATIONS (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended					3 Months Ended		1 Months Ended				3 Months Ended	1 Months Ended	3 Months Ended		3 Months Ended	1 Months Ended	3 Months Ended		1 Months Ended	3 Months Ended		1 Months Ended					1 Months Ended				3 Months Ended		3 Months Ended		3 Months Ended
	Aug. 31, 2014 acre	May 31, 2014	Apr. 30, 2014	Mar. 31, 2014	Feb. 28, 2014	Jan. 31, 2014	Aug. 31, 2014 Series A Preferred Stock [Member]	Feb. 28, 2014 Series A Preferred Stock [Member]	Jan. 31, 2014 Scenario, Plan [Member] Series A Preferred Stock [Member]	May 31, 2013 Company [Member]	May 31, 2013 Contractor [Member] acre	Sep. 30, 2012 Contractor [Member]	Aug. 31, 2014 Wolz [Member] Series A Preferred Stock [Member]	Sep. 30, 2013 Wolz [Member] Scenario, Plan [Member]	Aug. 31, 2014 Wolz [Member] Scenario, Plan [Member] Series A Preferred Stock [Member]	Aug. 31, 2014 Wolz [Member] Chief Executive Officer [Member]	Aug. 31, 2014 Titan [Member] Series A Preferred Stock [Member]	Sep. 30, 2013 Titan [Member] Scenario, Plan [Member]	Aug. 31, 2014 Titan [Member] Scenario, Plan [Member] Series A Preferred Stock [Member]	Aug. 31, 2014 Mercury6 [Member] Series A Preferred Stock [Member]	Sep. 30, 2013 Mercury6 [Member] Scenario, Plan [Member]	Aug. 31, 2014 Mercury6 [Member] Scenario, Plan [Member] Series A Preferred Stock [Member]	Aug. 31, 2014 Mercury6 [Member] Chad Altieri [Member]	Feb. 28, 2014 Plasmafication Technology Holding, LLC [Member]	Feb. 28, 2014 Plasmafication Technology Holding, LLC [Member] Scenario, Plan [Member]	Aug. 31, 2014 Plasmafication Technology Holding, LLC [Member] Chief Executive Officer [Member]	Aug. 31, 2014 Plasmafication Technology Holding, LLC [Member] Chad Altieri [Member]	Aug. 31, 2014 RTC [Member]	Feb. 28, 2014 RTC [Member] Series A Preferred Stock [Member]	Sep. 30, 2013 RTC [Member] Scenario, Plan [Member]	May 31, 2013 RTC [Member] Scenario, Plan [Member]	Aug. 31, 2014 RTC [Member] Wolz [Member]	Aug. 31, 2014 RTC [Member] Wolz [Member] Scenario, Plan [Member]	Aug. 31, 2014 RTC [Member] Titan [Member]	Aug. 31, 2014 RTC [Member] Titan [Member] Scenario, Plan [Member]	Aug. 31, 2014 RTC [Member] Mercury6 [Member]	Aug. 31, 2014 RTC [Member] Mercury6 [Member] Scenario, Plan [Member]
Business Acquisition, Equity Interests Issued or Issuable [Line Items]
Area of land owned	37,000										5,000
Estimated useful life	50 years
Common stock, shares authorized	325,000,000	325,000,000	325,000,000	175,000,000	150,000,000	150,000,000																									480,000,000
Common stock, shares issued	154,186,035	143,748,746			135,259,321	135,259,321
Common stock, shares outstanding	154,186,035	143,748,746			135,259,321	135,259,321																						125,000,000
Benchmark minimum value per ton																															$ 50,000
Required net cash proceeds yielded for total exchange of shares																															5,000,000
Shares issued in business acquisition													625,000	145,000,000	625,000		312,500	72,500,000	312,500	312,500	72,500,000	312,500							1,250,000	290,000,000	300,000,000
Value of shares issued in acquisition																													16,250,000
Percent of ownership																51.00%							100.00%			20.00%	8.00%					50.00%		25.00%		25.00%
Percent of outstanding common stock																												48.00%					24.00%		12.00%		12.00%
Phase 1 estimated costs											400,000
Phase 2 estimated costs											10,000,000
Phase 3 estimated costs											40,000,000
Shares issued for services, shares											10,000,000
Shares of common stock held by the Chairman to be issued under the Mining Services Agreement											5,000,000
Revenue interest										70.00%	30.00%
Stock options granted	1,000,000	1,500,000										1,000,000
Exercise price	$ 0.23	$ 0.21										$ 0.12
Debt issued																								5,000,000
Maturity date																								Jan. 30, 2015
License term																								25 years
Estimated costs of construction for the Company Facility																								18,000,000
Down payment																									1,500,000
Preferred stock, shares authorized	10,000,000	10,000,000			10,000,000	10,000,000
Preferred stock, shares issued	1,250,000	1,250,000				0		1,250,000
Preferred stock, shares outstanding	1,250,000	1,250,000				0		1,250,000
Preferred stock, rights upon liquidation							100
Preferred stock, voting rights per share							100
Number of common shares issued in conversion							100
Common stock issued for conversion of preferred stock, shares									125,000,000																								62,500,000		31,500,000		31,500,000
Common stock issued for conversion of preferred stock, value									$ 16,250,000

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STOCKHOLDERS' DEFICIT (Schedule of Stock Options Assumptions) (Details) (Stock Options [Member], USD $)	3 Months Ended
	Aug. 31, 2014
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average risk-free interest rate	1.65%
Weighted-average expected life	5 years
Weighted-average expected volatility	168.00%
Weighted-average expect dividends	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (USD $)	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid in Capital [Member]	Deficit Accumulated During Exploration Stage [Member]
Balance at May. 31, 2013	$ (3,651,073)		$ 1,218	$ 25,325,355	$ (28,977,646)
Balance, shares at May. 31, 2013			121,781,244
RTC restructuring agreement - related party	16,250,000	13		16,249,987
RTC restructuring agreement - related party, shares		1,250,000
Shares issued for cash	407,500		48	407,452
Shares issued for cash, shares			4,800,000
Shares issued as compensation	382,500		22	382,478
Shares issued as compensation, shares			2,250,000
Shares issued for services	1,602,000		94	1,601,906
Shares issued for services, shares			9,450,000
Notes payable converted for shares	482,301		46	482,255
Notes payable converted for shares, shares			4,600,835
Warrants exercised	103,333		9	103,324
Warrants exercised, shares			866,667
Stock options issued	302,084			302,084
Net loss for the year	(20,567,110)				(20,677,110)
Balance at May. 31, 2014	(4,688,465)	13	1,437	44,854,841	(49,544,756)
Balance, shares at May. 31, 2014		1,250,000	143,748,746
Shares issued for cash	455,975		50	455,925
Shares issued for cash, shares			5,046,667
Shares issued as compensation	495,000		23	494,977
Shares issued as compensation, shares			2,250,000
Notes payable converted for shares	462,591		31	462,560
Notes payable converted for shares, shares	3,040,622		3,040,622
Warrants exercised	15,000		1	14,999
Warrants exercised, shares			100,000
Stock options issued	206,958			206,958
Net loss for the year	(1,639,756)				(1,639,756)
Balance at Aug. 31, 2014	$ (4,692,697)	$ 13	$ 1,542	$ 46,490,260	$ (51,184,512)
Balance, shares at Aug. 31, 2014		1,250,000	154,186,035

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SUPPLEMENTAL CASH FLOW INFORMATION

3 Months Ended

Aug. 31, 2014

SUPPLEMENTAL CASH FLOW INFORMATION [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

4.SUPPLEMENTAL CASH FLOW INFORMATION

	Three Months Ended August 31,
	2014		2013
Income taxes paid	$	-	$	-
Interest paid	$	-	$	-
Convertible Notes Payable, debt discount, accrued interest and derivative liabilities settled with the issuance of 3,040,622 shares of  common stock	$	462,591	$	-

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NATURE OF OPERATIONS (Schedule of Business Concessions) (Details)	3 Months Ended
	Aug. 31, 2014 ha
Organization and Business [Line Items]
Hectares	37,000
Solidaridad I [Member]
Organization and Business [Line Items]
Hectares	174.5408	[1]
Date Acquired	Jul. 11, 2003
Expiration Date	Jul. 10, 2053
Solidaridad II [Member]
Organization and Business [Line Items]
Hectares	2,162.2311	[1]
Date Acquired	Aug. 14, 2003
Expiration Date	Aug. 13, 2053
Solidaridad II, Fraction A [Member]
Organization and Business [Line Items]
Hectares	1.4544	[1]
Date Acquired	Aug. 14, 2003
Expiration Date	Aug. 13, 2053
Solidaridad II, Fraction B [Member]
Organization and Business [Line Items]
Hectares	0.0072	[1]
Date Acquired	Aug. 14, 2003
Expiration Date	Aug. 13, 2053
Solidaridad III [Member]
Organization and Business [Line Items]
Hectares	294.0620	[1]
Date Acquired	Dec. 14, 2004
Expiration Date	Dec. 13, 2054
Solidaridad IV [Member]
Organization and Business [Line Items]
Hectares	149.4244	[1]
Date Acquired	Sep. 04, 2003
Expiration Date	Sep. 03, 2053
Solidaridad V [Member]
Organization and Business [Line Items]
Hectares	921.3201	[1]
Date Acquired	Oct. 19, 2004
Expiration Date	Oct. 18, 2054
La Sabila [Member]
Organization and Business [Line Items]
Hectares	11,405.0000	[1]
Date Acquired	Jun. 02, 2006
Expiration Date	Jun. 01, 2056

[1] A Hectare is equivalent to 2.47 acres.

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STOCKHOLDERS' DEFICIT (Schedule of Warrants Outstanding by Exercise Price) (Details) (USD $)	3 Months Ended
	Aug. 31, 2014
Class of Warrant or Right [Line Items]
Exercise Price	$ 0.15
Warrants Outstanding	5,188,130
Weighted Average Life of Outstanding Warrants	79 years 9 months 18 days
$0.125 [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 0.125
Warrants Outstanding	3,746,667
Weighted Average Life of Outstanding Warrants	9 years 1 month 6 days
$0.16 [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 0.16
Warrants Outstanding	924,797
Weighted Average Life of Outstanding Warrants	11 years 8 months 12 days
$0.20 [Member]
Class of Warrant or Right [Line Items]
Exercise Price	$ 0.20
Warrants Outstanding	516,667
Weighted Average Life of Outstanding Warrants	11 years 7 months 6 days

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Aug. 31, 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Property and Equipment Estimated Useful Lives

The estimated useful lives are as follows:

Vehicles	4 years
Machinery and equipment	3-10 years