Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2014
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ___________
Commission file number 000-54332
LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5976 Lingering Breeze St., Las Vegas, Nevada 89148
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (775) 410-5287
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
------------------- -----------------------------------------
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the last 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registration statement was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of Common Stock held by non-affiliates of the
Registrant on June 30, 2014 was $777,784.50 based on a $0.2815 average bid and
asked price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date. 74,911,408 common shares as of
February 20, 2015.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Item 1. Business 3
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 9
Item 2. Properties 9
Item 3. Legal Proceedings 13
Item 4. Mine Safety Disclosures 13
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 14
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 16
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 21
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 35
Item 9A. Controls and Procedures 35
Item 9B. Other Information 37
Item 10. Directors, Executive Officers and Corporate Governance 37
Item 11. Executive Compensation 41
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 44
Item 13. Certain Relationships and Related Transactions, and Director
Independence 46
Item 14. Principal Accounting Fees and Services 46
Item 15. Exhibits, Financial Statement Schedules 47
2
PART I
ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms "we",
"us" and "our" mean Lithium Corporation, and our wholly owned subsidiary, Nevada
Lithium Corporation, unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on January 30, 2007
under the name "Utalk Communications Inc.". At inception, we were a development
stage corporation engaged in the business of developing and marketing a
call-back service using a call-back platform. Because we were not successful in
implementing our business plan, we considered various alternatives to ensure the
viability and solvency of our company.
On August 31, 2009, we entered into a letter of intent with Nevada Lithium
regarding a business combination which may be effected in one of several
different ways, including an asset acquisition, merger of our company and Nevada
Lithium, or a share exchange whereby we would purchase the shares of Nevada
Lithium from its shareholders in exchange for restricted shares of our common
stock.
Effective September 30, 2009, we effected a 1 old for 60 new forward stock split
of our issued and outstanding common stock. As a result, our authorized capital
increased from 50,000,000 shares of common stock with a par value of $0.001 to
3,000,000,000 shares of common stock with a par value of $0.001 and our issued
and outstanding shares increased from 4,470,000 shares of common stock to
268,200,000 shares of common stock.
Also effective September 30, 2009, we changed our name from "Utalk
Communications, Inc." to "Lithium Corporation", by way of a merger with our
wholly owned subsidiary Lithium Corporation, which was formed solely for the
change of name. The name change and forward stock split became effective with
the Over-the-Counter Bulletin Board at the opening for trading on October 1,
2009 under the stock symbol "LTUM". Our CUSIP number is 536804 107.
3
On October 9, 2009, we entered into a share exchange agreement with Nevada
Lithium and the shareholders of Nevada Lithium. The closing of the transactions
contemplated in the share exchange agreement and the acquisition of all of the
issued and outstanding common stock in the capital of Nevada Lithium occurred on
October 19, 2009. In accordance with the closing of the share exchange
agreement, we issued 12,350,000 shares of our common stock to the former
shareholders of Nevada Lithium in exchange for the acquisition, by our company,
of all of the 12,350,000 issued and outstanding shares of Nevada Lithium. Also,
pursuant to the terms of the share exchange agreement, a director of our company
cancelled 220,000,000 restricted shares of our common stock. Nevada Lithium's
corporate status was allowed to lapse and the company's status with the Nevada
Secretary of State has been revoked.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification,
acquisition, and exploration of metals and minerals with a focus on lithium
mineralization on properties located in Nevada, and Graphite properties in
British Columbia.
Our current operational focus is to conduct exploration activities on the Fish
Lake Valley property and San Emidio prospects in Nevada and the BC Sugar and
Mount Heimdal properties in British Columbia.
We are currently evaluating the opportunities that the Summa lands present (the
Hughes Claims), while also exploring other locations which are believed to be
prospective for hosting lithium or graphite mineralization, as well as
evaluating opportunities brought to our company by third parties.
Effective April 23, 2014, we entered into an operating agreement with All
American Resources, L.L.C and TY & Sons Investments Inc. with respect to Summa,
LLC, a Nevada limited liability company incorporated on December 12, 2013,
wherein we hold a 25% membership. Our company's capital contribution to Summa,
LLC was $125,000, of which $100,000 was in cash and the balance in services.
Effective August 15, 2014, we entered into an asset purchase agreement with
Pathion, Inc., a Delaware corporation, and Pathion Mining Inc., a Nevada
corporation. Pursuant to the Agreement, we agreed to sell to Pathion, Inc. and
Pathion Mining, our rights, interests and assets relating to our Fish Lake
Valley, San Emidio and BC Sugar properties. The asset purchase agreement was set
to close at the end of September 2014, but was extended to October 17, 2014 by
mutual agreement, and was further extended until January 19, 2015.
Pathion, Inc. and Pathion Mining, Inc. were in default of their obligations
under the asset purchase agreement and on December 10, 2014, we amended certain
terms of the agreement such that Pathion Mining waived its right to require no
negotiation during the pre-closing period and any related penalties for default
and its right to require a non-competition agreement. As consideration for these
amendments our company chose to forebear our right to terminate the agreement
without first providing further written notice to Pathion Mining; for any
subsequent default our company would issue notice to Pathion Mining; and in the
event that Pathion Mining cured its current default and then was in default of
the agreement again, our company would then issue 10 days written notice to cure
the default before we terminated the agreement.
On January 27, 2015, we gave notice to Pathion, Inc., of the termination of the
asset purchase agreement entered into on August 15, 2014. The termination of the
agreement was due to the failure by Pathion to close the agreement according to
the agreed upon schedule in the agreement and the additional extensions provided
by our company.
Our company intends to continue with our exploration/assessment of the Fish Lake
Valley and San Emidio lithium brine properties in Nevada and on our BC Sugar
flake graphite property in BC, while determining further plans of action with
respect to our Mount Heimdal flake graphite property in BC. We will continue
assessing our options with respect to our 25% interest in Summa, LLC, a private
Nevada company, which holds the residue of the "Howard Hughes" Summa Corp.,
while generating new prospects and evaluating property submittals for option or
purchase.
4
COMPETITION
The mining industry is intensely competitive. We compete with numerous
individuals and companies, including many major mining companies, which have
substantially greater technical, financial and operational resources and staffs.
Accordingly, there is a high degree of competition for access to funds. There
are other competitors that have operations in the area and the presence of these
competitors could adversely affect our ability to compete for financing and
obtain the service providers, staff or equipment necessary for the exploration
and exploitation of our properties.
COMPLIANCE WITH GOVERNMENT REGULATION
Mining operations and exploration activities are subject to various national,
state, provincial and local laws and regulations in United States and Canada, as
well as other jurisdictions, which govern prospecting, development, mining,
production, exports, taxes, labor standards, occupational health, waste
disposal, protection of the environment, mine safety, hazardous substances and
other matters.
We believe that we are and will continue to be in compliance in all material
respects with applicable statutes and the regulations passed in the United
States and Canada. There are no current orders or directions relating to our
company with respect to the foregoing laws and regulations.
RESEARCH AND DEVELOPMENT
We have incurred $Nil in research and development expenditures over the last two
fiscal years.
INTELLECTUAL PROPERTY
We do not currently have any intellectual property, other than our domain name
and website, www.lithiumcorporation.com.
EMPLOYEES
We have no employees. Our officers and directors provide their services to our
company as independent consultants.
SUBSIDIARIES
We have one wholly owned subsidiary, Nevada Lithium Corporation, a Nevada
corporation.
ITEM 1A. RISK FACTORS
Our business operations are subject to a number of risks and uncertainties,
including, but not limited to those set forth below:
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RISKS ASSOCIATED WITH MINING
ALL OF OUR PROPERTIES ARE IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT
WE CAN ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON ANY OF OUR PROPERTIES
IN COMMERCIALLY EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY
REVENUES FROM OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS
THAT WE EXPEND ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A
COMMERCIALLY EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral properties, we have not established that
any of them contain any mineral reserve, nor can there be any assurance that we
will be able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/about/forms/industryguides.pdf) as that part of a mineral
deposit which could be economically and legally extracted or produced at the
time of the reserve determination. The probability of an individual prospect
ever having a "reserve" that meets the requirements of the Securities and
Exchange Commission's Industry Guide 7 is extremely remote; in all probability
our mineral resource property does not contain any "reserve" and any funds that
we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on one or more of our
properties, there can be no assurance that we will be able to develop our
properties into producing mines and extract those resources. Both mineral
exploration and development involve a high degree of risk and few properties
which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTIES, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.
6
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON ANY OF OUR PROPERTIES IN
A COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
any of our properties, we will be required to expend substantial sums of money
to establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involves many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource properties or from the extraction and sale of lithium and/or associated
byproducts. The price of those commodities has fluctuated widely in recent
years, and is affected by numerous factors beyond our control, including
international, economic and political trends, expectations of inflation,
currency exchange fluctuations, interest rates, global or regional consumptive
patterns, speculative activities and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and therefore the economic
viability of any of our exploration properties and projects, cannot accurately
be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
7
RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL
PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on one or more of our mineral properties and we build and
operate a mine. We had cash in the amount of $379,512 as of December 31, 2014.
At December 31, 2014, we had working capital of $405,854. We incurred a net loss
of $366,607 for the year ended December 31, 2014. We estimate our average
monthly operating expenses to be approximately $35,000, including property
costs, management services and administrative costs. Should the results of our
planned exploration require us to increase our current operating budget, we may
have to raise additional funds to meet our currently budgeted operating
requirements for the next 12 months. As we cannot assure a lender that we will
be able to successfully explore and develop our mineral properties, we will
probably find it difficult to raise debt financing from traditional lending
sources. We have traditionally raised our operating capital from sales of equity
securities, but there can be no assurance that we will continue to be able to do
so. If we cannot raise the money that we need to continue exploration of our
mineral properties, we may be forced to delay, scale back, or eliminate our
exploration activities. If any of these were to occur, there is a substantial
risk that our business would fail.
Management has plans to seek additional capital through private placements of
its capital stock. These conditions raise substantial doubt about our company's
ability to continue as a going concern. Although there are no assurances that
management's plans will be realized, management believes that our company will
be able to continue operations in the future. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of liabilities that might
be necessary in the event our company cannot continue in existence." We continue
to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority ("FINRA"). Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices, due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin
Board is not a stock exchange, and trading of securities on the OTC Bulletin
Board is often more sporadic than the trading of securities listed on a
quotation system like NASDAQ or a stock exchange like Amex. Accordingly,
shareholders may have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE
SECURITIES AND EXCHANGE COMMISSION'S PENNY STOCK REGULATIONS AND FINRA'S SALES
PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission ("SEC") has
adopted Rule 15g-9 which generally defines "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and "accredited investors". The term "accredited investor"
refers generally to institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
8
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the SEC, FINRA has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low-priced securities will not be suitable for at least some customers. FINRA's
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 2. PROPERTIES
Our corporate head office is located at 5976 Lingering Breeze Street, Las Vegas,
Nevada, 89148, our monthly rent is $700, which also includes storage space for
field gear, and enclosed parking for a field vehicle.
MINERAL PROPERTIES
FISH LAKE VALLEY PROPERTY
Fish Lake Valley is a lithium enriched playa (also known as a salar, or salt
pan), which is located in northern Esmeralda County in west central Nevada, and
the property is roughly centered at 417050E 4195350N (NAD 27 CONUS). We
currently hold forty, 80-acre Association Placer claims that cover approximately
3,200 acres (1280 hectares). Lithium-enriched Tertiary-era Fish Lake formation
rhyolitic tuffs or ash flow tuffs have accumulated in a valley or basinal
environment. Over time interstitial formational waters in contact with these
tuffs, have become enriched in lithium, boron and potassium which could possibly
be amenable to extraction by evaporative methods. Our company allowed 56 claims
to lapse on September 1, 2012, which covered the southern playa area. These
claims were allowed to lapse as it was determined through the course of work
over the past three years that they are not overly prospective for hosting
lithium brine resources, nor is it strategically advantageous to continue to
hold them.
9
The property was originally held under mining lease purchase agreement dated
June 1, 2009, between Nevada Lithium Corporation, and Nevada Alaska Mining Co.
Inc., Robert Craig, Barbara Craig, and Elizabeth Dickman. Nevada Lithium issued
to the vendors $350,000 worth of common stock of our company in eight regular
disbursements. All disbursements were made of stock worth a total of $350,000,
and claim ownership was transferred to our company.
The geological setting at Fish Lake Valley is highly analogous to the salars of
Chile, Bolivia, and Peru, and more importantly Clayton Valley, where Albemarle
has its Silver Peak lithium-brine operation. Access is excellent in Fish Lake
Valley with all-weather gravel roads leading to the property from state highways
264, and 265, and maintained gravel roads ring the playa. Power is available
approximately 10 miles from the property, and the village of Dyer is
approximately 12 miles to the south, while the town of Tonopah, Nevada is
approximately 50 miles to the east.
Our company completed a number of geochemical and geophysical studies on the
property, and conducted a short drill program on the periphery of the playa in
the fall of 2010. Near-surface brine sampling during the spring of 2011 outlined
a boron/lithium/potassium anomaly on the northern portions of the northern
playa, that is roughly 1.3 x 2 miles long, which has a smaller higher grade core
where lithium mineralization ranges from 100 to 150 mg/L (average 122.5 mg/L),
with boron ranging from 1,500 to 2,670 mg/L (average 2,219 mg/L), and potassium
from 5,400 to 8,400 mg/L (average 7,030 mg/L). Wet conditions on the playa
precluded drilling there in 2011, and for a good portion of 2012, however a
window of opportunity presented itself in late fall 2012. In November/December
2012 we conducted a short direct push drill program on the northern end of the
playa, wherein a total of 1,240.58 feet (378.09 meters) was drilled in 20 holes
at 17 discrete sites, and an area of 3,356 feet (1,023 meters) by 2,776 feet
(846 meters) was systematically explored by grid probing. The deepest hole was
81 feet (24.69 meters), and the shallowest hole that produced brine was 34 feet
(10.36 meters). The average depth of the holes drilled during the program was 62
feet (18.90 meters). The program successfully demonstrated that
lithium-boron-potassium-enriched brines exist to at least 62 feet (18.9 meters)
depth in sandy or silty aquifers that vary from approximately three to ten feet
(one to three meters) in thickness. Average lithium, boron and potassium
contents of all samples are 47.05 mg/L, 992.7 mg/L, and 0.535% respectively,
with lithium values ranging from 7.6 mg/L to 151.3 mg/L, boron ranging from 146
to 2,160.7 mg/L, and potassium ranging from 0.1 to 1.3%. The anomaly outlined by
the program is 1,476 by 2,461 feet (450 meters by 750 meters), and is not fully
delimited, as the area available for probing was restricted due to soft ground
conditions to the east and to the south. A 50 mg/L lithium cutoff is used to
define this anomaly and within this zone average lithium, boron and potassium
contents are 90.97 mg/L, 1,532.92 mg/L, and 0.88% respectively. On September 3,
2013, we announced that drilling had commenced at Fish Lake Valley. Due to
storms and wet conditions in the area which our company hoped to concentrate on,
the playa was not passable, and so the program concentrated on larger step-out
drilling well off the playa. This 11 hole, 1,025 foot program did prove that
mineralization does not extend much, if at all, past the margins of the playa,
as none of the fluids encountered in this program were particularly briny, and
returned values of less than 5 mg/L lithium.
Our company is very pleased with the results here, and believes that the playa
at Fish Lake Valley may be conducive to the formation of a "silver peak" style
lithium brine deposit. Our company reviewed the results in regards to the
overall geological interpretation of the lithium, boron and potassium bearing
strata. The results confirm the presence of targeted mineralization and further
evaluation programs will focus on determining the extent and depth of
mineralization. Our company is currently assessing options on how best to
further explore here.
SAN EMIDIO PROPERTY
The San Emidio property, located in Washoe County in northwestern Nevada, was
acquired through the staking of claims in September 2011. The twenty, 80-acre,
Association Placer claims currently held here cover an area of approximately
1,600 acres (640 hectares). Ten claims in the southern portions of the original
claim block that was staked in 2011 were allowed to lapse on September 1, 2012,
and a further ten claims were then staked and recorded. These new claims are
north of and contiguous to the surviving claims from our earlier block. The
property is approximately 65 miles north-northeast of Reno, Nevada, and has
excellent infrastructure.
We developed this prospect during 2009, and 2010 through surface sampling, and
the early reconnaissance sampling determined that anomalous values for lithium
occur in the playa sediments over a good portion of the playa. This sampling
appeared to indicate that the most prospective areas on the playa may be on the
10
newly staked block proximal to the southern margin of the basin, where it is
possible the structures that are responsible for the geothermal system here may
also have influenced lithium deposition in sediments.
Our company conducted near-surface brine sampling in the spring of 2011, and a
high resolution gravity geophysical survey in summer/fall 2011. Our company then
permitted a 7 hole drilling program with the Bureau of Land Management in late
fall 2011, and a direct push drill program was commenced in early February 2012.
Drilling here delineated a narrow elongated shallow brine reservoir which is
greater than 2.5 miles length, and which is adjacent to a basinal feature
outlined by the earlier gravity survey. Two values of over 20 milligrams/liter
lithium were obtained from two holes located centrally in this brine anomaly.
Most recently we drilled this prospect in late October 2012, further testing the
area of the property in the vicinity where prior exploration by our company
discovered elevated lithium levels in subsurface brines. During the 2012 program
a total of 856 feet (260.89 meters) was drilled at 8 discrete sites. The deepest
hole was 160 feet (48.76 meters), and the shallowest hole that produced brine
was 90 feet (27.43 meters). The average depth of the seven hole program was 107
feet (32.61 meters). The program better defined a lithium-in-brine anomaly that
was discovered in early 2012. This anomaly is approximately 0.6 miles (370
meters) wide at its widest point by more than 2 miles (3 kilometers) long. The
peak value seen within the anomaly is 23.7 mg/l lithium, which is 10 to 20 times
background levels outside the anomaly. Our company believes that, much like Fish
Lake Valley, the playa at San Emidio may be conducive to the formation of a
"Silver Peak" style lithium brine deposit, and the recent drilling indicates
that the anomaly occurs at or near the intersection of several faults that may
have provided the structural setting necessary for the formation of a
lithium-in-brine deposit at depth.
Our company has compiled all data and amended our permit with the Bureau of Land
Management to allow for the drilling of three reverse circulation drill holes to
depths of 500 feet in order to test for lithium brine mineralization.
MOUNT HEIMDAL FLAKE GRAPHITE PROPERTY
On April 15, 2013, we entered into a mining option agreement with, Tom Lewis, a
director and former president of our company, wherein we had the option to
acquire a 100% interest in the Mount Heimdal Flake Graphite property in the
Slocan Mining Division of British Columbia, Canada.
The Mount Heimdal property is comprised of three mineral claims, which encompass
2,582 acres (1,045 hectares) of highly metamorphosed rock. The property is
roughly six miles (10 kms) south of Eagle Graphite's Black Crystal quarry, and
is located within the same package of gneisses, graphite mineralized marbles,
and calc-silicate gneisses. Data from BC Geological Survey assessment reports
indicate that mineralization grading up to 4.8% graphitic carbon may be located
on the property.
High purity graphite is presently the most widely used anode material for
lithium ion battery technology, and typically greater than 10 times more
graphite is used in comparison to lithium in lithium ion battery production. In
addition to increased graphite consumption due to growth in lithium ion
batteries sales, carbon fiber composites are increasingly being utilized in
auto, and aircraft construction. Also, presently there is considerable research
into graphene, a flake graphite product, and it is possible a myriad of new
applications or discoveries will ensue as a direct result of this work.
Pursuant to the terms of the original agreement, we were required to spend
$15,000 in exploration on the property and complete an assessment report by
November 30, 2013, and upon successful completion of the program and the report,
our company was to earn a 100% interest in the claims, subject to a 1.5% net
overriding royalty to the vendor from the proceeds of production.
Prospecting work was performed on the Mount Heimdal property in June/July 2013
and several mineralized zones were noted here, the best of which graded 3.72%
flake graphite. Although the work was encouraging it was decided that our
company would be best served presently by focusing on the BC Sugar property. Our
company negotiated an agreement with our president and director, Tom Lewis, as
the vendor of Mount Heimdal, whereby Mr. Lewis assigned his 100% interest in the
property for a 2% net smelter royalty on any proceeds from future production
11
from the property. In addition Mr. Lewis holds title to both the Mount Heimdal,
and BC Sugar properties, in trust, for our company and will transfer all
interest at such time as our company creates a subsidiary that is eligible to
hold title in mineral properties in British Columbia.
In August 2014, an exploration crew was mobilized to explore the Mt Heimdal
flake graphite property. The program focused on flake graphite mineralization
discovered on the property during the brief program undertaken in 2013, while
exploring other areas of the property that were felt to also be prospective for
hosting flake graphite mineralization. No further significant mineralization was
found, and our company is considering options for this property moving forward.
BC SUGAR FLAKE GRAPHITE PROPERTY
On June 6, 2013, we entered into a mining claim sale agreement with Herb Hyder
wherein Mr. Hyder agreed to sell to our company a 50.829 acre (20.57 hectare)
claim located in the Cherryville area of British Columbia. As consideration for
the purchase of the property, we issued 250,000 shares of our company's common
stock to Mr. Hyder. In addition to the acquired claim, our company staked or
acquired another 13 claims at various times over the subsequent months, to bring
the total area held under tenure to approximately 19,816 acres (8,020 hectares).
The flake graphite mineralization of interest here is hosted predominately in
graphitic quartz/biotite, and lesser graphitic calc-silicate gneisses. The rocks
in the general area of the BC Sugar prospect are similar to the host rocks in
the area of the crystal graphite deposit 55 miles (90 kms) to the southeast, in
the vicinity of our company's Mount Heimdal block of claims.
The BC Sugar property is well placed in the Shushwap Metamorphic Complex, in a
geological environment favorable for the formation of flake graphite deposits,
and is in an area of excellent logistics, with a considerable network of logging
roads within the project area. Additionally the town of Lumby is approximately
19 miles (30 kms) to the south of the property, while the City of Vernon is only
30 miles (50 kms) to the southwest of the western portions of the claim block.
We received final assays from the October 2013 prospecting and geological
program at the BC Sugar property in December of 2013. That work increased the
area known to be underlain by graphitic bearing gneisses, and further
evaluations were made in the area of the Sugar Lake, Weather Station, and Taylor
Creek showings. In the general vicinity of the Weather Station showing, a
further 13 samples were taken, and hand trenching was performed at one of
several outcrops in the area. In the trench a 5.2 meter interval returned an
average of 3.14% graphitic carbon, all in an oxidized relatively friable
gneissic host rock. Additionally a hydrothermal or vein type mineralized
graphitic quartz boulder was discovered in the area which graded up to 4.19%
graphitic carbon. The source of this boulder was not discovered during this
program, but it is felt to be close to its point of origin. Samples
representative of the mineralization encountered here were taken for
petrographic study, which was received in late 2013. A brief assessment work
program was performed in September 2014 to ensure all claims in the package were
in good standing prior to the anticipated sale of this asset to Pathion.
Recommendations were made by the consulting geologist who wrote the assessment
report with respect to trenching, and eventually drilling the Weather Station
showing. Our company is currently compiling data in support of a trenching
permit application, which should be submitted in early spring 2015.
THE HUGHES CLAIMS
Effective April 23, 2014, we entered into an operating agreement with All
American Resources, L.L.C and TY & Sons Investments Inc. with respect to Summa,
LLC, a Nevada limited liability company incorporated on December 12, 2013,
wherein we hold a 25% membership in a number of patented mining claims that
spring from the once vast holdings of Howard Hughes. Our company's capital
contribution paid to Summa, LLC was $125,000, of which $100,000 was in cash and
the balance in services.
12
Our company participated in the formation of Summa, which holds 88 fee-title
patented lode claims, which cover approximately 1,191.3 acres of prospective
mineral lands. Our company has recently signed a joint operating agreement with
the other participants to govern the conduct of Summa, and the development of
the lands. Our company's president, Tom Lewis, has been named as a managing
member of Summa.
The Hughes lands are situated in six discrete prospect areas in Nevada, the most
notable of which being the Tonopah block in Nye County where Summa holds 56
claims that cover approximately 770 acres in the heart of the historic mining
camp where over 1.8 million ounces of gold and 174 million ounces of silver were
produced predominately in the early 1900's. The Hughes claims include a number
of the prolific past producers in Tonopah, such as the Belmont, the Desert
Queen, and the Midway mines. In addition there are also claims in the area of
the past producing Klondyke East mining district, which is to the south of
Tonopah, and at the town of Belmont (not to be confused with the Belmont claim
in Tonopah), Nevada, another notable silver producer from the 1800's, which is
roughly 40 miles to the northeast of Tonopah.
Recently research has been conducted on the Hughes properties, focusing on the
Tonopah area where reporting in the 1980's, indicate that over 2.175 million
tons of mine dumps and mill tailings exist at surface on Summa's properties that
contain in the order of 3.453 million ounces of silver, and 28,500 ounces of
gold. In addition to this easily extractable surficial resource, other reports
indicate that 300 - 500,000 tons of mineralized material is expected to remain
at depth in old workings on Summa's properties, which is believed to contain an
average 20 ounces silver and 0.02 ounces gold per ton. Also several partially
tested exploration targets have been identified on Summa's Tonopah claims, where
further work could potentially lead to a marked increase in known underground
resources.
In the general area of our company's newest acquisition, West Kirkland Mining
has recently announced that it has completed a $29.2 million dollar financing,
the proceeds of which were used to purchase a 75% interest in Allied Nevada Gold
Corporation's Tonopah properties. West Kirkland also has the option to purchase
the remaining 25% interest by paying Allied Nevada a further $10 million dollars
on or before October 23, 2016. West Kirkland has recently compiled an updated
NI-43-101 resource on the Hasbrouck and Three Hills prospects which are roughly
5.5 and 2 miles, respectively, from Summa's Tonopah claim block and it is West
Kirkland's intent to advance these properties to a pre-feasibility study and
initiate mine permitting. To date the Nye County Recorder's office has not
recorded the transfer of the titles into Summa Corporation, hence it behooves
our company to refrain from expending much more in the line of resources here
until the title defects are rectified.
We are currently exploring other locations which are believed to be prospective
for hosting lithium or graphite mineralization, as well as evaluating
opportunities brought to our company by third parties.
Additionally our company is looking to ramp up its generative program exploring
for new deposits of next generation battery related materials.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against us, nor
are we involved as a plaintiff in any material proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
13
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares are quoted on the Over-the-Counter Bulletin Board under the
symbol "LTUM." The following quotations, obtained from Stockwatch, reflect the
high and low bids for our common shares based on inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
The high and low bid prices of our common stock for the periods indicated below
are as follows:
OTC BULLETIN BOARD (1)
Quarter Ended High Low
------------- ---- ---
December 31, 2014 $ 0.109 $ 0.0401
September 30, 2014 $ 0.15 $ 0.045
June 30, 2014 $ 0.085 $ 0.0425
March 31, 2014 $ 0.183 $ 0.0177
December 31, 2013 $ 0.055 $ 0.0151
September 30, 2013 $ 0.059 $ 0.0231
June 30, 2013 $ 0.059 $ 0.0271
March 31, 2013 $ 0.06 $ 0.04
December 31, 2012 $ 0.08 $ 0.04
----------
(1) Over-the-counter market quotations reflect inter-dealer prices without
retail mark-up, mark-down or commission, and may not represent actual
transactions.
Our shares are issued in registered form. Nevada Agency and Transfer Company, 50
West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone: (775) 322-0626;
Facsimile: (775) 322-5623 is the registrar and transfer agent for our common
shares.
On February 20, 2015, the shareholders' list showed 10 registered shareholders
with 74, 911,408 common shares outstanding.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and have no present
intention of paying any dividends on the shares of our common stock. Our current
policy is to retain earnings, if any, for use in our operations and in the
development of our business. Our future dividend policy will be determined from
time to time by our board of directors.
EQUITY COMPENSATION PLAN INFORMATION
On December 29, 2009, our board of approved the adoption of the 2009 Stock Plan
which permits our company to issue up to 6,055,000 shares of our common stock to
directors, officers, employees and consultants. This plan has not been approved
by our security holders.
The following table summarizes certain information regarding our equity
compensation plans as at December 31, 2014:
14
Number of Securities
Number of Securities to be Remaining Available for
Issued Upon Exercise of Weighted-Average Exercise Future Issuance Under
Outstanding Options, Price of Outstanding Options, Equity Compensation Plans
Plan Category Warrants and Rights Warrants and Rights (excluding column (a))
------------- ------------------- ------------------- ----------------------
Equity Compensation Plans Nil Nil Nil
Approved by Security
Holders
Equity Compensation Plans Not 1,250,000 (1) $0.045 4,805,000
Approved by Security Holders
Total 1,250,000 (1) $0.045 4,805,000
----------
(1) Includes 700,000 unexercised stock options issued on November 12, 2014;
200,000 unexercised stock options issued on March 15, 2013, 100,000
unexercised stock options issued on May 31, 2012 and 250,000 unexercised
stock options issued on September 23, 2010.
CONVERTIBLE SECURITIES
As of December 31, 2014, we had outstanding options to purchase 1,250,000 shares
of our common stock exercisable at $0.045.
On May 31, 2012, the directors of our company determined that due to current
adverse market conditions, it would be in the best interests of our company to
re-price an aggregate of 500,000 incentive stock options granted to directors
and officers of our company on September 23, 2010 with an exercise price of
$0.28, and an aggregate of 450,000 incentive stock options granted to directors
and officers of our company on September 23, 2010 with an exercise price of
$0.25, to reflect the closing price for our company's common shares quoted on
the OTC Bulletin Board on May 29, 2012 of $0.07.
Also on May 31, 2012, our company granted an aggregate of 400,000 incentive
stock options to certain directors and consultants of our company at an exercise
price of $0.07, exercisable for a period of five years from the date of grant.
This option price on all directors and consultants options was revised downward
to $0.045 on March 15, 2013.
On March 15, 2013, we granted an aggregate of 200,000 stock options to
consultants of our company pursuant to our 2009 Stock Option Plan. The stock
options are exercisable for five years from the date of grant at an exercise
price of $0.045 per share.
On November 12, 2014, our company granted an aggregate of 700,000 stock options
to directors and consultants of our company pursuant to our 2009 Stock Option
Plan. The stock options are exercisable for five years from the date of grant at
an exercise price of $0.045 per share.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
On November 12, 2014, we issued an aggregate of 500,000 stock options to one (1)
person, relying on Rule 506 under Regulation D and/or Section 4(2) of the
Securities Act of 1933 and an aggregate of 200,000 stock options to two (2)
15
persons relying on to certain persons in an offshore transaction relying on
Regulation S and/or Section 4(2) of the Securities Act of 1933.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during
our fourth quarter of our fiscal year ended December 31, 2014.
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our consolidated
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to
those discussed below and elsewhere in this annual report, particularly in the
section entitled "Risk Factors" beginning on page 6 of this annual report.
Our consolidated audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
PLAN OF OPERATIONS AND CASH REQUIREMENTS
CASH REQUIREMENTS
Our current operational focus is to conduct exploration activities on the Fish
Lake Valley property and San Emidio prospect in Nevada and the BC Sugar and
Mount Heimdal properties in British Columbia. We expect to review other
potential exploration projects from time to time as they are presented to us.
Our net cash used in financing activities during the year ended December 31,
2014 was $2,500 as compared to $Nil during the year ended December 31, 2013.
Over the next twelve months we expect to expend funds as follows:
ESTIMATED NET EXPENDITURES DURING THE NEXT TWELVE MONTHS
$
-------
General, Administrative Expenses 190,000
Exploration Expenses 200,000
Travel 30,000
-------
TOTAL 420,000
=======
We have suffered recurring losses from operations. The continuation of our
company is dependent upon our company attaining and maintaining profitable
operations and raising additional capital as needed.
The continuation of our business is dependent upon obtaining further financing,
a successful program of exploration and/or development, and, finally, achieving
a profitable level of operations. The issuance of additional equity securities
by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
16
There are no assurances that we will be able to obtain further funds required
for our continued operations. As noted herein, we are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will be unable to conduct our operations as planned, and we will not be able
to meet our other obligations as they become due. In such event, we will be
forced to scale down or perhaps even cease our operations.
RESULTS OF OPERATIONS - TWELVE MONTHS ENDED DECEMBER 31, 2014 AND 2013
The following summary of our results of operations should be read in conjunction
with our financial statements for the year ended December 31, 2014, which are
included herein.
Our operating results for the twelve months ended December 31, 2014, for the
twelve months ended December 31, 2013 and the changes between those periods for
the respective items are summarized as follows:
Change Between
Twelve Month
Period Ended
Twelve Month Twelve Month December 31, 2014
Ended Ended and
December 31, December 31, December 31,
2014 2013 2013
---------- ---------- ----------
Revenue $ Nil $ Nil $ Nil
Professional fees 48,768 60,646 (11,878)
Depreciation Nil 162 (162)
Exploration expenses 88,762 123,014 (34,252)
Consulting fees 98,163 72,663 25,500
Insurance expense 11,658 13,844 (2,186)
Investor relations 29,605 40,872 (11,267)
Transfer agent and filing fees 6,439 8,595 (2,156)
Travel 20,208 30,210 (10,002)
Stock option compensation 38,723 16,642 22,081
General and administrative 11,706 11,989 (283)
Interest (income) (293) (380) (87)
Loss on investment 17,868 Nil 17,868
Other income (5,000) Nil (5,000)
--------- --------- ---------
Net loss $(366,607) $(378,257) $ (11,650)
========= ========= =========
Our financial statements report a net loss of $366,607 for the twelve month
period ended December 31, 2014 compared to a net loss of $378,257 for the twelve
month period ended December 31, 2013. Our losses have decreased by $11,650,
primarily as a result of decreases in professional fees, exploration expense,
investor relations and travel offset by increases in consulting fees and stock
option compensation expense.
Our operating expenses for the year ended December 31, 2014 were $354,032
compared to $378,637 as of December 31, 2013. The decrease in operating expenses
was primarily as a result of decreases in professional fees, exploration
expense, investor relations and travel offset by increases in consulting fees
and stock option compensation expense.
17
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, December 31,
2014 2013
---------- ----------
Current assets $ 421,574 $ 830,657
Current liabilities 15,720 12,982
---------- ----------
Working capital $ 405,854 $ 817,675
========== ==========
CASH FLOWS
Year Ended
December 31,
2014 2013
---------- ----------
Net cash (used in) operating activities $ (326,239) $ (362,386)
Net cash (used in) investing activities (99,305) (16,709)
Net cash (used in) financing activities (2,500) Nil
---------- ----------
Net increase (decrease) in cash during period $ (428,044) $ (379,095)
========== ==========
Our total current liabilities as of December 31, 2014 were $15,720 as compared
to total current liabilities of $12,982 as of December 31, 2013. The increase
was immaterial and not outside the normal course of business.
OPERATING ACTIVITIES
Net cash used in operating activities was $326,239 for the year ended December
31, 2014 compared with net cash used in operating activities of $362,386 in the
same period in 2013.
INVESTING ACTIVITIES
Net cash used in investing activities was $99,305 for the year ended December
31, 2014 compared to net cash used in investing activities of $16,709 in the
same period in 2013.
FINANCING ACTIVITIES
Net cash used in financing activities was $2,500 for the year ended December 31,
2014 compared to $Nil in financing activities in the same period in 2013.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
18
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with the accounting principles generally accepted in the United States of
America. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. These estimates and assumptions are affected by
management's application of accounting policies. We believe that understanding
the basis and nature of the estimates and assumptions involved with the
following aspects of our financial statements is critical to an understanding of
our financial statements.
EXPLORATION STAGE COMPANY
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration stage companies. An exploration stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
ACCOUNTING BASIS
Our company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). Our
company has adopted a December 31 fiscal year end.
CASH AND CASH EQUIVALENTS
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
CONCENTRATIONS OF CREDIT RISK
Our company maintains our cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. Our company continually monitors
our banking relationships and consequently has not experienced any losses in
such accounts. Our company believes we are not exposed to any significant credit
risk on cash and cash equivalents.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
19
REVENUE RECOGNITION
Our company is in the exploration stage and has yet to realize revenues from
operations. Once our company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
LOSS PER SHARE
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per share assumes the conversion,
exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on earnings per share. The
dilutive effect of convertible securities is reflected in diluted earnings per
share by application of the "if converted" method. In the periods in which a
loss is incurred, the effect of potential issuances of shares under options and
warrants would be anti-dilutive, and therefore basic and diluted losses per
share are the same.
INCOME TAXES
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
FINANCIAL INSTRUMENTS
Our company's financial instruments consist of cash, accounts receivable,
prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise
noted, it is management's opinion that our company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.
Because of the short maturity and capacity of prompt liquidation of such assets
and liabilities, the fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although our company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee our company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impairment of $Nil and $Nil was recorded in the years ended December 31, 2014
and 2013, respectively.
OFFICE LEASE
Our company rents office space in Las Vegas, Nevada for $700 per month. The
arrangement is on a month-by-month basis and can be terminated by either party.
20
RECENT ACCOUNTING PRONOUNCEMENTS
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. Our company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
[KLJ & ASSOCIATES, LLP LOGO]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Lithium Corporation
We have audited the accompanying balance sheet of Lithium Corporation as of
December 31, 2014 and the related statements of operations, stockholders'
equity, and cash flows for the year then ended. Lithium Corporation's management
is responsible for these financial statements. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lithium Corporation as of
December 31, 2014, the results of their operations, and their cash flows, for
the year ended December 31, 2014, in conformity with accounting principles
generally accepted in the United States of America.
/s/ KLJ & Associates, LLP
-------------------------------------
KLJ & Associates, LLP
St. Louis Park, MN
March 10, 2015
22
Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Lithium Corporation
Las Vegas, Nevada
We have audited the accompanying balance sheet of Lithium Corporation (the
"Company") as of December 31, 2013, and the related statements of operations,
stockholders' deficit, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lithium Corporation as of
December 31, 2013, and the results of its operations and its cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Silberstein Ungar, PLLC
-------------------------------------
Bingham Farms, Michigan
March 20, 2014
23
LITHIUM CORPORATION
Balance Sheets
December 31, December 31,
2014 2013
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ 379,512 $ 807,556
Deposits 700 700
Prepaid expenses 41,362 22,401
------------ ------------
TOTAL CURRENT ASSETS 421,574 830,657
OTHER ASSETS
Investment 82,132 --
Mineral properties 187,653 188,348
------------ ------------
TOTAL ASSETS $ 691,359 $ 1,019,005
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 15,720 $ 12,982
------------ ------------
TOTAL CURRENT LIABILITIES 15,720 12,982
------------ ------------
TOTAL LIABILITIES 15,720 12,982
------------ ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, 3,000,000,000 shares authorized, par value $0.01;
74,661,408 and 74,911,408 common shares issued and outstanding,
respectively 74,662 74,912
Additional paid in capital 3,368,453 3,370,703
Additional paid in capital - options 159,301 120,578
Additional paid in capital - warrants 257,949 257,949
Accumulated deficit (3,184,726) (2,818,119)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 675,639 1,006,023
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 691,359 $ 1,019,005
============ ============
The accompanying notes are an integral part of these financial statements.
24
LITHIUM CORPORATION
Statements of Operations
Year-Ended Year-Ended
December 31, December 31,
2014 2013
------------ ------------
REVENUE $ -- $ --
------------ ------------
OPERATING EXPENSES
Professional fees 48,768 60,646
Depreciation -- 162
Exploration expenses 88,762 123,014
Consulting fees 98,163 72,663
Insurance expense 11,658 13,844
Investor relations 29,605 40,872
Transfer agent and filing fees 6,439 8,595
Travel 20,208 30,210
Stock-based compensation 38,723 16,642
General and administrative expenses 11,706 11,989
------------ ------------
TOTAL OPERATING EXPENSES 354,032 378,637
------------ ------------
LOSS FROM OPERATIONS (354,032) (378,637)
OTHER INCOME (EXPENSES)
Loss on investment (17,868) --
Other income 5,000 --
Interest income 293 380
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (12,575) 380
------------ ------------
LOSS BEFORE INCOME TAXES (366,607) (378,257)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS $ (366,607) $ (378,257)
============ ============
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.00) $ (0.01)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 74,724,130 74,804,168
============ ============
The accompanying notes are an integral part of these financial statements.
25
LITHIUM CORPORATION
Statements of Stockholders' Equity (Deficit)
Additional Additional
Common Stock Additional Paid-in Paid-in Total
-------------------- Paid-in Capital - Capital - Accumulated Stockholders'
Shares Amount Capital Warrants Options Deficit Equity
------ ------ ------- -------- ------- ------- ------
Balance, December 31, 2012 74,661,408 $ 74,662 $ 3,292,348 $ 257,949 $ 174,041 $(2,439,862) $1,359,138
Shares issued with respect
to BC Sugar 250,000 250 8,250 -- -- -- 8,500
Issuance and modification of
newly and previously issued
options -- -- -- -- 16,642 -- 16,642
Expiration of stock options -- -- 70,105 -- (70,105) -- --
Net loss -- -- -- -- -- (378,257) (378,257)
---------- -------- ----------- --------- --------- ----------- ----------
Balance, December 31, 2013 74,911,408 74,912 3,370,703 257,949 120,578 (2,818,119) 1,006,023
Stock based compensation -- -- -- -- 38,723 -- 38,723
Cancellation of stock (250,000) (250) (2,250) -- -- -- (2,500)
Net loss -- -- -- -- -- (366,607) (366,607)
---------- -------- ----------- --------- --------- ----------- ----------
Balance, December 31, 2014 74,661,408 $ 74,662 $ 3,368,453 $ 257,949 $ 159,301 $(3,184,726) $ 675,639
========== ======== =========== ========= ========= =========== ==========
The accompanying notes are an integral part of these financial statements.
26
LITHIUM CORPORATION
Statements of Cash Flows
Year-Ended Year-Ended
December 31, December 31,
2014 2013
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period $ (366,607) $ (378,257)
Adjustments to reconcile net loss to net
cash used in operating activities
Stock-based compensation 38,723 16,642
Amortization -- 162
Loss on investment 17,868 --
Changes in assets and liabilities:
(Increase) in deposits -- (700)
(Increase) decrease in prepaid expenses (18,961) 39,986
Increase (decrease) in accounts payable and accrued liabilities 2,738 (40,219)
------------ ------------
Net Cash Used in Operating Activities (326,239) (362,386)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of long term investment (100,000) --
Interest in mineral properties 695 (16,709)
------------ ------------
Net Cash Used in Investing Activities (99,305) (16,709)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITY:
Repurchase of stock (2,500) --
------------ ------------
Net Cash Used in Financing Activities (2,500) --
------------ ------------
Decrease in cash (428,044) (379,095)
Cash, beginning of period 807,556 1,186,651
------------ ------------
Cash, end of period $ 379,512 $ 807,556
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ -- $ --
============ ============
Cash paid for income taxes $ -- $ --
============ ============
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for mineral properties $ -- $ 8,500
============ ============
The accompanying notes are an integral part of these financial statements.
27
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lithium Corporation (formerly Utalk Communications Inc.) (the "Company") was
incorporated on January 30, 2007 under the laws of Nevada. On September 30,
2009, Utalk Communications Inc. changed its name to Lithium Corporation.
Nevada Lithium Corporation was incorporated on March 16, 2009 under the laws of
Nevada under the name Lithium Corporation. On September 10, 2009, the Company
amended its articles of incorporation to change its name to Nevada Lithium
Corporation. By agreement dated October 9, 2009 Nevada Lithium Corporation and
Lithium Corporation amalgamated as Lithium Corporation. Lithium Corporation is
engaged in the acquisition and development of certain lithium interests in the
state of Nevada, and flake graphite prospects in British Columbia and is
currently in the exploration stage.
Exploration Stage Company
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration stage companies. An exploration stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue Recognition
The Company has yet to realize revenues from operations. Once the Company has
commenced operations, it will recognize revenues when delivery of goods or
completion of services has occurred provided there is persuasive evidence of an
agreement, acceptance has been approved by its customers, the fee is fixed or
determinable based on the completion of stated terms and conditions, and
collection of any related receivable is probable.
28
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Loss per Share
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per share assumes the conversion,
exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on earnings per share. The
dilutive effect of convertible securities is reflected in diluted earnings per
share by application of the "if converted" method. In the periods in which a
loss is incurred, the effect of potential issuances of shares under options and
warrants would be anti-dilutive, and therefore basic and diluted losses per
share are the same.
Income Taxes
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
Financial Instruments
The Company's financial instruments consist of cash, deposits, prepaid expenses,
and accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. Because of
the short maturity and capacity of prompt liquidation of such assets and
liabilities, the fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impairment of $0 and $0 was recorded during the years ended December 31, 2014
and 2013, respectively.
Office Lease
The Company rents office space in Las Vegas, Nevada for $700 per month. The
arrangement is on a month-by-month basis and can be terminated by either party.
Recent Accounting Pronouncements
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. The Company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
29
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 2 - PREPAID EXPENSES
Prepaid expenses consisted of the following at December 31, 2014 and December
31, 2013:
December 31, December 31,
2014 2013
-------- --------
Professional fees $ -- $ 1,925
Bonds 23,361 16,271
Transfer agent fees 3,600 1,800
Insurance 5,829 --
Office Misc 700 1,065
Investor relations 7,872 1,340
-------- --------
Total prepaid expenses $ 41,362 $ 22,401
======== ========
NOTE 3 - INVESTMENT
Effective April 23, 2014, the Company entered into an operating agreement with
All American Resources, L.L.C and TY & Sons Investments Inc. with respect to
Summa, LLC, a Nevada limited liability company incorporated on December 12,
2013, wherein we hold a 25% membership. The Company's capital contribution to
Summa, LLC was $125,000, of which $100,000 was in cash and the balance in
services.
The Company participated in the formation of Summa, which holds 88 fee-title
patented lode claims, which cover approximately 1,191.3 acres of prospective
mineral lands. The Company has recently signed a joint operating agreement with
the other participants to govern the conduct of Summa, and the development of
the lands. The Company's president, Tom Lewis, has been named as a managing
member of Summa.
The investment has been accounted for using the equity method of accounting. As
such, the Company shall record its proportionate share of income or loss in the
investment. As of December 31, 2014, the Company has recorded a loss on
investment of $17,868.
NOTE 4 - MINERAL PROPERTIES
Fish Lake Property
The Company purchased a 100% interest in the Fish Lake property by making staged
payments of $350,000 worth of common stock. Title to the pertinent claims was
transferred to the Company through quit claim deed dated June 1, 2011, and this
quit claim was recorded at the county level on August 3, 2011 and at the BLM on
August 4, 2011. Quarterly stock disbursements were made on the following
schedule:
1st Disbursement: Within 10 days of signing agreement (paid)
2nd Disbursement: within 10 days of June 30, 2009 (paid)
3rd Disbursement: within 10 days of December 30, 2009 (paid)
4th Disbursement: within 10 days of March 31, 2010 (paid)
5th Disbursement: within 10 days of June 30, 2010 (paid)
6th Disbursement: within 10 days of September 30, 2010 (paid)
7th Disbursement: within 10 days of December 31, 2010 (paid)
8th Disbursement: within 10 days of March 31, 2011 (paid)
As at December 31, 2014, the Company has recorded $436,764 in acquisition costs
related to the Fish Lake Property and associated impairment of $276,908 related
to abandonment of claims. The carrying value of the Fish Lake Property was
$159,856 as of December 31, 2014.
30
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 4 - MINERAL PROPERTIES (CONTINUED)
Mt. Heimdal Property
The Company entered into an agreement in April 2013, as amended in August 2013,
whereby it earned a 100% interest in the Mt. Heimdal Flake Graphite property in
BC, subject to a 1.5% net overriding royalty. The carrying value of the Mt.
Heimdal property is $300 as of December 30, 2014.
Sugar Property
In June 2013, the company purchased claims in the Cherryville, BC area for
250,000 shares of the Company's common stock. Since this time the company has
expanded the claim block considerably, and has expended approximately $45,000 to
date exploring this property for flake graphite deposits. In January, 2014, the
company agreed to buy back the shares issued pursuant to the June agreement for
$2,500. The buy-back was completed in April, 2014 and recorded the purchase of
stock in the Company's equity.
Staked Properties
The Company has staked claims with various registries as summarized below:
Net Carry
Name Claims Cost Impairment Value
---- ------ ---- ---------- -----
San Emidio 20 (1,600 acres) $ 11,438 $(5,719) $ 5,719
Cherryville/BC Sugar 8019.41 (hectares) $ 21,778 $ Nil $21,778
The Company has recorded $14,392 as cost to the San Emidio property which
represents the annual maintenance fees on the property for 2014.
The Company performs an impairment test on an annual basis to determine whether
a write-down is necessary with respect to the properties. The Company believes
no circumstances have occurred and no evidence has been uncovered that warrant a
write-down of the mineral properties other than those abandoned by management
and thus included in write-down of mineral properties. No impairment charges
were recorded during the period ended December 31, 2014.
NOTE 5 - CAPITAL STOCK
The Company is authorized to issue 300,000,000 shares of it $0.001 par value
common stock. On September 30, 2009, the Company effected a 60-for-1 forward
stock split of its $0.001 par value common stock.
All share and per share amounts have been retroactively restated to reflect the
splits discussed above.
Common Stock
On June 6, 2013, the Company issued 250,000 shares of its common stock as part
of the Cherryville property acquisition located in British Columbia.
On January 17, 2014 the Company repurchased the 250,000 shares of its common
stock issued as part of the Cherryville property acquisition for $2,500. The
shares were returned to the treasury and retired in April 2014.
There were 74,661,408 shares of common stock issued and outstanding as of
December 31, 2014.
31
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 5 - CAPITAL STOCK (CONTINUED)
Warrants
On November 18, 2014, 11,000,000 warrants exercisable at $0.15 expired.
The Company has no warrants outstanding as of December 31, 2014.
Stock Based Compensation
During the year ended December 31, 2010, the Company granted 500,000 consultants
options at an exercise price of $0.28 and 400,000 options at an exercise price
of $0.24 to consultants in exchange for various professional services. On May
31, 2012, the options granted with exercise prices of $0.28 and $0.24were
modified to exercise prices at $0.07. The modification resulted in stock based
compensation of $11,524. Also on May 31, 2012, the Company granted an additional
400,000 options to consultants for management services with an exercise price of
$0.07. These options were vested on the date of grant and resulted in
stock-based compensation of $23,891.On September 30, 2014, 250,000 options
expired unexercised as a result of a director resigning from the Company.
On March 15, 2013, all pre-existing options were modified to exercise prices of
$0.045. The modification resulted in stock-based compensation of $8,848. Also on
March 15, 2013, the Company issued an additional 200,000 options at an exercise
price of $0.045 to consultants for management services. These options were
vested on the date of grant and resulted in stock-based compensation of $7,794.
The Company uses the Black-Scholes option valuation model to value stock
options. The Black-Scholes model was developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. The model requires management to make estimates, which are
subjective and may not be representative of actual results. Assumptions used to
determine the fair value of the remaining stock options are as follows:
Modification New Options
------------ -----------
Risk free interest rate 0.35% 0.67%
Expected dividend yield 0% 0%
Expected stock price volatility 129% 129%
Expected life of options 3 years 5 years
On November 12, 2014, the Company granted 700,000 options at an exercise price
of $0.045 in exchange for various professional and managerial services. The fair
value of these options was $38,723. The Company uses the Black-Scholes option
valuation model to value stock options. The Black-Scholes model was developed
for use in estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. The model requires management to make
estimates, which are subjective and may not be representative of actual results.
Assumptions used to determine the fair value of the remaining stock options are
as follows:
Risk free interest rate 1.65%
Expected dividend yield 0%
Expected stock price volatility 150%
Expected life of options 5 years
32
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 5 - CAPITAL STOCK (CONTINUED)
Stock Based Compensation (continued)
The following table summarizes the stock options outstanding at September 30,
2014:
Outstanding at
Issue Date Number Price Expiry Date December 31, 2014
---------- ------ ----- ----------- -----------------
September 23, 2010 250,000 $0.045 September 23, 2015 250,000
May 31, 2012 100,000 $0.045 May 31, 2017 100,000
March 15, 2013 200,000 $0.045 March 15, 2018 200,000
November 12, 2014 700,000 $0.045 November 12, 2019 700,000
Total stock-based compensation for the years ended December 31, 2014 and 2013
was $38,723 and $16,642, respectively.
NOTE 6 - INCOME TAXES
As of December 31, 2014, the Company had net operating loss carry forwards of
approximately $3,184,000 that may be available to reduce future years' taxable
income in varying amounts through 2033. Future tax benefits which may arise as a
result of these losses have not been recognized in these financial statements,
as their realization is determined not likely to occur and accordingly, the
Company has recorded a valuation allowance for the deferred tax asset relating
to these tax loss carry-forwards.
The provision for Federal income tax consists of the following for the years
ended December 31, 2014 and 2013:
2014 2013
------------ ------------
Federal income tax benefit attributable to:
Current operations $ 111,481 $ 122,950
Less: valuation allowance (111,481) (122,950)
------------ ------------
Net provision for Federal income taxes $ 0 $ 0
============ ============
The cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows at December 31, 2014 and
2013:
December 31, December 31,
2014 2013
------------ ------------
Deferred tax asset attributable to:
Net operating loss carryover $ 1,162,271 $ 1,050,790
Less: valuation allowance (1,162,271) (1,050,790)
------------ ------------
Net deferred tax asset $ 0 $ 0
============ ============
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry forwards of approximately $3,184,000 for Federal income tax
reporting purposes are subject to annual limitations. Should a change in
ownership occur net operating loss carry forwards may be limited as to use in
future years.
33
LITHIUM CORPORATION
Notes to the Financial Statements
December 31, 2014 and 2013
NOTE 7 - SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to December 31, 2014 through
the date these financial statements were issued, and has determined that it does
not have any material subsequent events to disclose other than those described
below.
The Company entered into an extension of the Asset Purchase Agreement to sell
its interests in the BC Sugar flake graphite property, as well as the San Emidio
and Fish Lake Valley lithium - brine properties, to PATHION, Inc. Under the
terms of the original agreement PATHION Inc. was to pay the Company an initial
$1.25 million, and issue 500,000 common shares of PATHION stock at the closing.
A further $1 million was to be held in escrow and paid out to the Company on the
first anniversary of the closing of the deal. The agreement also laid the
groundwork for continuing co-operation between the two companies moving forward.
The companies anticipated that the agreement would close by the end of September
2014, however it was first extended until October 17, 2014. Under an extension
effective Oct 17, 2014, PATHION would pay the Company $5,000 within 5 days of
signing and issue 60,000 shares of restricted common stock, and pay the Company
a further $10,000 on each monthly anniversary in November and December 2014 in
order to extend the agreement until January 17, 2015.
On January 29, 2015, the Company gave notice to PATHION Inc. of the termination
of the agreement due to the failure by PATHION to close the agreement according
to the agreed upon schedule.
34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On or about July 25, 2014, the principals of Silberstein Ungar, PLLC
("Silberstein"), the principal accountant for our company joined the accounting
firm of KLJ & Associates, LLP ("KLJ"). As a result of the transaction, on July
25, 2014, Silberstein resigned as our independent registered public accounting
firm and our company engaged KLJ as our independent registered public accounting
firm. The engagement of KLJ was approved by our company's board of directors.
Silberstein's audit reports on the financial statements of our company for the
fiscal years ended December 31, 2013 and 2012 contained no adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles, except that the audited financial
statements contained in our Annual Reports on Form 10-K for the fiscal years
ended December 31, 2012 and December 31, 2013 contained a going concern
qualification.
There were no disagreements between our company and Silberstein, during the
fiscal years ended December 31, 2013 and 2012 and any subsequent interim periods
through July 25, 2014 (date of resignation) on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of Silberstein, would have
caused them to make reference to the subject matter of the disagreement in
connection with its report. In addition, during that time there were no
"reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation
S-K. Further, Silberstein has not advised our company that:
(1) internal controls necessary to develop reliable financial statements
did not exist; or
(2) information has come to the attention of Silberstein which made it
unwilling to rely upon management's representations, or made it
unwilling to be associated with the financial statements prepared by
management; or
(3) the scope of the audit should be expanded significantly, or
information has come to the attention of Silberstein that they have
concluded will, or if further investigated, might materially impact
the fairness or reliability of a previously issued audit report or the
underlying financial statements, or the financial statements issued or
to be issued covering the fiscal year ended December 31, 2014.
On July 25, 2014 we engaged KLJ as our principal accountant to audit our
financial statements as successor to Silberstein. During the fiscal years ended
December 31, 2013 and 2012 or subsequent interim periods through July 25, 2014,
we did not consult with KLJ regarding the application of accounting principles
to a specific transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our financial statements, nor did KLJ provide
advice to our company, either written or oral, that was an important factor
considered by our company in reaching a decision as to the accounting, auditing
or financial reporting issue. Further, during the fiscal years ended December
31, 2013 and 2012 or subsequent interim periods through July 25, 2014, we did
not consult KLJ on any matter that was the subject of a disagreement or a
reportable event (as those terms are defined in Item 304(a)(2) of Regulation
S-K).
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to our management,
including our president (our principal executive officer, principal financial
officer and principle accounting officer) to allow for timely decisions
regarding required disclosure.
35
As of December 31, 2014, the end of our fiscal year covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (our principal executive officer, principal financial officer and
principle accounting officer), of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on the foregoing, our president
(our principal executive officer, principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this annual report.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control include providing
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United
States. Our management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2014. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") in INTERNAL CONTROL-INTEGRATED
FRAMEWORK. Our management has concluded that, as of December 31, 2014, our
internal control over financial reporting is effective. Our management reviewed
the results of their assessment with our board of directors.
This annual report does not include an attestation report of our company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit our company to provide only management's report in this annual report.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Internal control over financial reporting has inherent limitations which include
but is not limited to the use of independent professionals for advice and
guidance, interpretation of existing and/or changing rules and principles,
segregation of management duties, scale of organization, and personnel factors.
Internal control over financial reporting is a process which involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the year ended December 31, 2014 that have materially or
are reasonably likely to materially affect, our internal controls over financial
reporting.
36
ITEM 9B. OTHER INFORMATION
On May 30, 2014, John Hiner resigned as a director and as vice president of
exploration of our company. The resignation of Mr. Hiner was not the result of
any disagreement with our company regarding our operations, policies, practices
or otherwise.
On May 30, 2014, we appointed Brian Goss as a director of our company.
On August 13, 2014, Tom Lewis resigned as president, secretary and treasurer of
our company. Mr. Lewis remains as a member of our board of directors. The
resignation of Mr. Lewis was not the result of any disagreement with our company
regarding our operations, policies, practices or otherwise.
On August 13, 2014, we appointed Brian Goss as president, secretary and
treasurer of our company. Mr. Goss currently stands as a member of our board of
directors.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All directors of our company hold office until the next annual meeting of the
security holders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
Position Held Date First Elected
Name with the Company Age or Appointed
---- ---------------- --- ------------
Tom Lewis Director 60 August 25, 2009
James Brown Director 51 December 19, 2012
Brian Goss President, Treasurer,
Secretary and Director 36 May 30, 2014
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience during
at least the past five years of each director, executive officer and key
employee of our company, indicating the person's principal occupation during
that period, and the name and principal business of the organization in which
such occupation and employment were carried out.
TOM LEWIS - DIRECTOR
Tom Lewis acted as president, treasurer, secretary and director of our company
since August 25, 2009. Mr. Lewis resigned as president, treasurer and secretary
of our company on August 13, 2014. Mr. Lewis has more than 38 years' experience
in the oil and gas and mineral exploration industries. He has held various
positions including project geologist, project manager, senior project
geologist, and vice president exploration. He also was an integral member of the
development team that explored, and developed the Cortez Hills deposit in
Crescent Valley Nevada.
37
In 1974, Mr. Lewis started his career in the oil fields, and worked in the
geophysical, and drilling industries until 1981, when he became a petroleum
landman for Westburne Petroleum & Minerals. While there he was responsible for
the acquisition and disposition of interests and maintaining title to petroleum
lands in various locales in the United States, and Western Canada. In 1989, he
started his own business as a consulting geologist and has worked in numerous
locations over the past 25 years, including the United States, Mexico, Canada,
Portugal, Chile, Africa, India and Honduras. Some of the positions he held
include: working with Teck Cominco in 1996 evaluating and exploring precious
metal deposits in Southern Mexico; project manager on the Farim phosphate
deposit for Champion Resources in Guinea Bissau, West Africa in 1998; project
geologist in 2001 and 2002 for Crystal Graphite Corporation, project geologist
on the Midway Gold project in Tonopah, Nevada, followed by two years as senior
geologist at the Cortez Joint Venture in Crescent Valley, Nevada. By August 2005
he was named vice president of exploration in Portugal for St. Elias Mines,
working on the Jales project, and developing grass roots projects in Nevada.
Following his experience in Portugal and Nevada he consulted to Selkirk Metals
and New World Resource Corp. on projects in western Canada and Nevada. Most
recently he consulted to Kinross Gold USA evaluating possible acquisitions.
JAMES BROWN - DIRECTOR
James Brown has acted as a director of our company since December 19, 2012. Mr.
Brown is a mining engineer with more than 25 years' experience in the coal
mining and exploration industry in Australia and Indonesia, including 22 years
at Australian based coal producer New Hope Corporation. During this time he has
held positions from front line mine planning and supervision, land acquisition,
government approvals and mine and business development. Mr. Brown is also the
managing director of Altura Mining Limited (ASX: AJM) an Australian listed
company focused on coal, lithium and iron ore exploration. Since his appointment
as general manager in 2008 and subsequently managing director of Altura in
September 2010, Mr. Brown has overseen the growth of Altura from $10 million to
$86 million in market capitalization via successful capital raisings and
acquisition of near term production projects such as Tabalong Coal (Indonesia),
Altura Lithium (Western Australia) and Mt Webber Iron Ore (Western Australia).
James is a member of the Australian Institute of Company Directors (MAICD).
BRIAN GOSS -PRESIDENT, TREASURER, SECRETARY AND DIRECTOR
Brian Goss has acted as a director of our company since May 30, 2014. Mr. Goss
was appointed as president, treasurer and secretary of our company on August 13,
2014. Mr. Goss served as president, chief executive officer, chief financial
officer, treasurer and a director of Graphite Corp. July 9, 2012 through August
12, 2014. Mr. Goss graduated from Wayne State University with a Bachelor of
Science Degree in Geology in 2003. Mr. Goss worked the 2002-2003 field seasons
for Kennecott Exploration during the early exploration stages of the Eagle
Project, a Duluth Type high grade nickel and copper deposit in Michigan's Upper
Peninsula. At the end of 2003, he moved to Northeast Nevada to explore for
Carlin Type gold deposits. From 2004-2007, he worked as a staff geologist for
Cameco Corporation, and subsequently in its spin out company, Centerra Gold
Inc., on the REN deposit where the exploration team drilled deep exploration
holes using pre-collars with core tails to contribute to the expansion of the +1
million ounce gold deposit that was subsequently taken over by Barrick Gold. Mr.
Goss also held several other project geologist positions before founding
Rangefront Geological in early 2008. Mr. Goss has built Rangefront into a
premier geological services company that caters to a large spectrum of clients
in the mining and minerals exploration industries.
EMPLOYMENT AGREEMENTS
We have no formal employment agreements with any of our directors or officers.
FAMILY RELATIONSHIPS
There are no family relationships between any of our directors, executive
officers and proposed directors or executive officers.
38
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, none of our directors or executive officers has,
during the past ten years:
1. been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
2. had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer,
either at the time of the bankruptcy filing or within two years prior
to that time;
3. been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type
of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with
persons engaged in any such activity;
4. been found by a court of competent jurisdiction in a civil action or
by the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated;
5. been the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
6. been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26)), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the SEC initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our shares of common stock and other
equity securities, on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by our company,
or written representations from certain reporting persons that no Form 5s were
required for those persons, we believe that, during the fiscal year ended
December 31, 2014, all filing requirements applicable to our officers, directors
and greater than 10% beneficial owners as well as our officers, directors and
greater than 10% beneficial owners of our subsidiaries were complied with, with
the exception of the following:
39
Number of
Transactions Not
Number of Late Reported on a Timely Failure to File
Name Reports Basis Requested Forms
---- ------- ----- ---------------
Brian Goss(1) 1 1 0
John Hiner(1) 1 2 0
----------
(1) The insider was late filing a Form 4, Statement of Changes of Beneficial
Ownership.
CODE OF ETHICS
Effective March 25, 2011, our company's board of directors adopted a Code of
Business Conduct and Ethics that applies to, among other persons, our company's
principal executive officer and our principal financial and accounting officer,
as well as persons performing similar functions. As adopted, our Code of
Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:
1. honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
2. full, fair, accurate, timely, and understandable disclosure in reports
and documents that we file with, or submit to, the SEC and in other
public communications made by us;
3. compliance with applicable governmental laws, rules and regulations;
4. the prompt internal reporting of violations of the Code of Business
Conduct and Ethics to an appropriate person or persons identified in
the Code of Business Conduct and Ethics; and
5. accountability for adherence to the Code of Business Conduct and
Ethics.
Our Code of Business Conduct and Ethics requires, among other things, that all
of our company's personnel shall be accorded full access to our president and
secretary with respect to any matter which may arise relating to the Code of
Business Conduct and Ethics. Further, all of our company's personnel are to be
accorded full access to our company's board of directors if any such matter
involves an alleged breach of the Code of Business Conduct and Ethics by our
president or secretary.
In addition, our Code of Business Conduct and Ethics emphasizes that all
employees, and particularly managers and/or supervisors, have a responsibility
for maintaining financial integrity within our company, consistent with
generally accepted accounting principles, and federal, provincial and state
securities laws. Any employee who becomes aware of any incidents involving
financial or accounting manipulation or other irregularities, whether by
witnessing the incident or being told of it, must report it to his or her
immediate supervisor or to our company's president or secretary. If the incident
involves an alleged breach of the Code of Business Conduct and Ethics by the
president or secretary, the incident must be reported to any member of our board
of directors. Any failure to report such inappropriate or irregular conduct of
others is to be treated as a severe disciplinary matter. It is against our
company policy to retaliate against any individual who reports in good faith the
violation or potential violation of our company's Code of Business Conduct and
Ethics by another.
Our Code of Business Conduct and Ethics was attached as an exhibit to our annual
report filed on Form 10-K with the SEC on April 15, 2013. We will provide a copy
of the Code of Business Conduct and Ethics to any person without charge, upon
request. Requests can be sent to: Lithium Corporation, 5976 Lingering Breeze
St., Las Vegas, Nevada, 89148.
40
BOARD AND COMMITTEE MEETINGS
Our board of directors held no formal meetings during the year ended December
31, 2014. All proceedings of the board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the Nevada General Corporate Law and our Bylaws, as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.
NOMINATION PROCESS
As of December 31, 2014, we did not effect any material changes to the
procedures by which our shareholders may recommend nominees to our board of
directors. Our board of directors does not have a policy with regards to the
consideration of any director candidates recommended by our shareholders. Our
board of directors has determined that it is in the best position to evaluate
our company's requirements as well as the qualifications of each candidate when
the board considers a nominee for a position on our board of directors. If
shareholders wish to recommend candidates directly to our board, they may do so
by sending communications to the president of our company at the address on the
cover of this annual report.
AUDIT COMMITTEE
Currently our audit committee consists of our entire board of directors. We do
not have a standing audit committee as we currently have limited working capital
and no revenues. Should we be able to raise sufficient funding to execute our
business plan, we will form an audit, compensation committee and other
applicable committees utilizing our directors' expertise.
AUDIT COMMITTEE FINANCIAL EXPERT
Currently our audit committee consists of our entire board of directors. We do
not currently have a director who is qualified to act as the head of the audit
committee.
ITEM 11. EXECUTIVE COMPENSATION
The particulars of the compensation paid to the following persons:
(a) our principal executive officer;
(b) each of our two most highly compensated executive officers who were
serving as executive officers at the end of the years ended December
31, 2014 and 2013; and
(c) up to two additional individuals for whom disclosure would have been
provided under (b) but for the fact that the individual was not
serving as our executive officer at the end of the years ended
December 31, 2014 and 2013, who we will collectively refer to as the
named executive officers of our company, are set out in the following
summary compensation table, except that no disclosure is provided for
any named executive officer, other than our principal executive
officers, whose total compensation did not exceed $100,000 for the
respective fiscal year:
41
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Tom Lewis (1) 2014 Nil Nil Nil Nil Nil Nil 95,670 95,670
Director and 2013 Nil Nil Nil Nil Nil Nil 99,463(2) 99,463(2)
Former
President,
Treasurer and
Secretary
Brian Goss (3) 2014 Nil Nil Nil 27,659 Nil Nil 21,000 48,659
President, 2013 Nil Nil Nil Nil Nil Nil Nil Nil
Treasurer,
Secretary and
Director
----------
(1) Tom Lewis acted as president, treasurer, secretary and director of our
company since August 25, 2009. Mr. Lewis resigned as president, treasurer
and secretary of our company on August 13, 2014.
(2) Mr. Lewis provides consulting services to our company as needed in relation
to administration, project generation, and exploration of our company's
properties.
(3) Mr. Goss has acted as a director of our company since May 30, 2014 and was
appointed as president, treasurer and secretary of our company on August
13, 2014.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. Our directors and
executive officers may receive share options at the discretion of our board of
directors in the future. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that share options may be granted at the
discretion of our board of directors.
2014 GRANTS OF PLAN-BASED AWARDS
On November 12, 2014, our company granted an aggregate of 700,000 stock options
to directors and consultants of our company pursuant to our 2009 Stock Option
Plan. The stock options are exercisable for five years from the date of grant at
an exercise price of $0.045 per share.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The particulars of unexercised options, stock that has not vested and equity
incentive plan awards for our named executive officers are set out in the
following table:
42
Option Awards Stock Awards
---------------------------------------------------------------- ------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- -------- ---- --------- --------- --------- ---------
Tom Lewis 250,000 Nil Nil $0.045 Sept. 23, 2015 Nil Nil Nil Nil
Brian Goss 500,000 Nil Nil $0.045 Nov. 12, 2019 Nil Nil Nil Nil
John
Hiner (1) Nil Nil Nil $0.045 Sept. 30, 2014 Nil Nil Nil Nil
----------
(1) John Hiner resigned as a director and as vice president of exploration of
our company on May 30, 2014. Consequently, his stock options expired on
September 30, 2014, three months after his resignation. None these stock
options were exercised.
OPTION EXERCISES AND STOCK VESTED
During our fiscal year ended December 31, 2014 there were no options exercised
by our named officers.
COMPENSATION OF DIRECTORS
We do not have any agreements for compensating our directors for their services
in their capacity as directors, although such directors are expected in the
future to receive stock options to purchase shares of our common stock as
awarded by our board of directors.
The following table sets forth a summary of the compensation paid to our
non-employee directors in 2014:
43
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
Tom Lewis (1) Nil Nil Nil Nil Nil Nil Nil
John Hiner (2) Nil Nil Nil Nil Nil Nil Nil
James Brown (3) Nil Nil Nil Nil Nil Nil Nil
Brian Goss (4) Nil Nil 27,659 Nil Nil Nil 27,659
----------
(1) Tom Lewis acted as president, treasurer, secretary and director of our
company since August 25, 2009. Mr. Lewis resigned as president, treasurer
and secretary of our company on August 13, 2014.
(2) John Hiner resigned as vice president of exploration and as a director of
our company on May 30, 2014.
(3) James Brown was appointed as a director of our company on December 19,
2012.
(4) Brian Goss has acted as a director of our company since May 30, 2014. Mr.
Goss was appointed as president, treasurer and secretary of our company on
August 13, 2014.
PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. We have no material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers, except that stock options
may be granted at the discretion of the board of directors or a committee
thereof.
INDEBTEDNESS OF DIRECTORS, SENIOR OFFICERS, EXECUTIVE OFFICERS AND OTHER
MANAGEMENT
None of our directors or executive officers or any associate or affiliate of our
company during the last two fiscal years, is or has been indebted to our company
by way of guarantee, support agreement, letter of credit or other similar
agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of February 20, 2015, certain information
with respect to the beneficial ownership of our common shares by each
shareholder known by us to be the beneficial owner of more than 5% of our common
shares, as well as by each of our current directors and executive officers as a
group. Each person has sole voting and investment power with respect to the
shares of common stock, except as otherwise indicated. Beneficial ownership
consists of a direct interest in the shares of common stock, except as otherwise
indicated.
44
Amount and Nature of Percentage
Name and Address of Beneficial Owner Beneficial Ownership of Class(1)
------------------------------------ -------------------- -----------
Tom Lewis (2) 10,250,000 (3) 13.68%
PO Box 2053 Common Shares
Richland, WA 99352
James Brown (4) Nil 0%
Apartment Pearl Garden, Unit No. Wp00606
Jl. Jen. Gatot Subroto Kav 5-7
Jakarta 12930 Indonesia
Brian Goss (5)(6) 500,000 (6) 0.67%
1031 Railroad Street
Suite 102B
Elko, NV 89801
Directors and Executive Officers as a Group 10,750,000 14.35%
Common Shares
John Hiner
9443 Axlund Road 9,970,000 13.31%
Lynden, WA 98264 Common Shares
Altura Lithium Pty. Ltd.
P.O. Box 4088
Springfield, Qld., 4300 11,000,000 14.68%
Australia Common Shares
Shareholders Holding Over 5% 20,970,000 26.99%
Common Shares
----------
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes
the power to vote, or to direct the voting of shares; and (ii) investment
power, which includes the power to dispose or direct the disposition of
shares. Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of common stock actually outstanding on
February 20, 2015. As of February 20, 2015 there were 74,911,408 shares of
our company's common stock issued and outstanding.
(2) Tom Lewis acted as president, treasurer, secretary and director of our
company since August 25, 2009. Mr. Lewis resigned as president, treasurer
and secretary of our company on August 13, 2014.
(3) Includes options to acquire 250,000 shares of common stock by Mr. Lewis
exercisable within 60 days.
(4) James Brown was appointed as a director of our company on December 19,
2012.
(5) Mr. Goss has acted as a director of our company since May 30, 2014 and was
appointed as president, treasurer and secretary of our company on August
13, 2014.
(6) Includes options to acquire 500,000 shares of common stock by Mr. Goss
exercisable within 60 days.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement or provisions of our
Articles or Bylaws the operation of which may at a subsequent date result in a
change of control of our company. There are not any provisions in our Articles
or Bylaws, the operation of which would delay, defer, or prevent a change in
control of our company.
45
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Except as disclosed herein, no director, executive officer, shareholder holding
at least 5% of shares of our common stock, or any family member thereof, had any
material interest, direct or indirect, in any transaction, or proposed
transaction since the year ended December 31, 2014, in which the amount involved
in the transaction exceeded or exceeds the lesser of $120,000 or one percent of
the average of our total assets at the year-end for the last three completed
fiscal years.
DIRECTOR INDEPENDENCE
We currently act with three directors, consisting of Tom Lewis, James Brown and
Brian Goss.
We have determined that James Brown is an independent director, as that term is
used in Rule 4200(a)(15) of the Rules of National Association of Securities
Dealers.
Currently our audit committee consists of our entire board of directors. We
currently do not have nominating, compensation committees or committees
performing similar functions. There has not been any defined policy or procedure
requirements for shareholders to submit recommendations or nomination for
directors.
From inception to present date, we believe that the members of our audit
committee and the board of directors have been and are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed for the most recently completed fiscal year ended
December 31, 2014 and for fiscal year ended December 31, 2013 for professional
services rendered by the principal accountant for the audit of our annual
financial statements and review of the financial statements included in our
quarterly reports on Form 10-Q and services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:
Year Ended
December 31, 2014 December 31, 2013
----------------- -----------------
Audit Fees $ 14,600 $ 15,350
Audit Related Fees $ -- $ 850
Tax Fees $ -- $ --
All Other Fees $ -- $ --
-------- --------
Total $ 14,600 $ 16,200
======== ========
Our board of directors pre-approves all services provided by our independent
auditors. All of the above services and fees were reviewed and approved by the
board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by
our independent auditors and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining our independent
auditors' independence.
46
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) Financial statements for our company are listed in the index under
Item 8 of this document.
(2) All financial statement schedules are omitted because they are not
applicable, not material or the required information is shown in the
financial statements or notes thereto.
(b) Exhibits
Exhibit
Number Description
------ -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement on Form SB-2 filed on December 21, 2007)
3.2 Bylaws (Incorporated by reference to our Registration Statement on Form
SB-2 filed on December 21, 2007)
3.3 Articles of Merger (Incorporated by reference to our Current Report on
Form 8-K filed on October 2, 2009)
3.4 Certificate of Change (Incorporated by reference to our Current Report
on Form 8-K filed on October 2, 2009)
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 2009 Stock Option Plan (Incorporated by reference to our Current Report
on Form 8-K filed on December 30, 2009)
(10) MATERIAL CONTRACTS
10.1 Lease Purchase Agreement dated June 1, 2009 between Nevada Lithium
Corporation, Nevada Mining Co., Inc., Robert Craig, Barbara Craig and
Elizabeth Dickman. (Incorporated by reference to our Current Report on
Form 8-K filed on October 26, 2009)
10.3 Mining Option Agreement dated April 15, 2013 between our company and
Thomas Lewis (incorporated by reference to our Current Report on Form
8-K filed on April 22, 2013)
10.4 Mining Claim Sale Agreement dated June 6, 2013 between our company and
Herb Hyder (incorporated by reference to our Current Report on Form 8-K
filed on June 12, 2013)
10.5 Trust Agreement dated August 30, 2013 between our company and Tom Lewis
(incorporated by reference to our Quarterly Report on Form 10-Q filed
on November 7, 2013)
10.6 Operating Agreement dated effective April 23, 2014 between our company,
All American Resources, L.L.C. and TY & Sons Investments Inc.
(incorporated by reference to our Current Report on Form 8-K filed on
April 29, 2014)
47
Exhibit
Number Description
------ -----------
10.7 Asset Purchase Agreement dated August 15, 2014 between our company and
Pathion, Inc. (incorporated by reference to our Quarterly Report on
Form 10-Q filed on November 7, 2014)
(14) CODE OF ETHICS
14.1 Code of Business Conduct and Ethics (incorporated by reference to our
Annual Report on Form 10-K filed on April 15, 2013)
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Nevada Lithium Corporation, a Nevada corporation
(31) RULE 13A-14 (D)/15D-14D) CERTIFICATIONS
31.1* Section 302 Certification by the Principal Executive Officer, Principal
Financial Officer and Principal Accounting Officer
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification by the Principal Executive Officer, Principal
Financial Officer and Principal Accounting Officer
101* INTERACTIVE DATA FILE
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
----------
* Filed herewith.
48
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, thereto duly authorized.
LITHIUM CORPORATION
(Registrant)
Dated: March 13, 2015 /s/ Brian Goss
--------------------------------------------
Brian Goss
President, Treasurer, Secretary and Director
(Principal Executive Officer, Principal
Financial Officer and Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: March 13, 2015 /s/ Brian Goss
--------------------------------------------
Brian Goss
President, Treasurer, Secretary and Director
(Principal Executive Officer, Principal
Financial Officer and Principal Accounting
Officer)
Dated: March 13, 2015 /s/ Tom Lewis
--------------------------------------------
Tom Lewis
Director
Dated: March 13, 2015 /s/ James Brown
--------------------------------------------
James Brown
Director
4
