Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2009
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 333-148266
LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 S Virginia St - 8th Floor, Reno, Nevada 89501
(Address of principal executive offices) (Zip Code)
714.475.3512
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
60,550,000 common shares issued and outstanding as of November 16, 2009
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
These financial statements have been prepared by our company without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted in accordance with such SEC rules and regulations.
In the opinion of management, the accompanying statements contain all
adjustments necessary to present fairly the financial position of our company as
of September 30, 2009, and our results of operations, and our cash flows for the
nine month period ended September 30, 2009 and the period from inception
toSeptember 30, 2009. The results for these interim periods are not necessarily
indicative of the results for the entire year. The accompanying financial
statements should be read in conjunction with the financial statements and the
notes thereto filed as a part of our company's Form 10-K.
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LITHIUM CORP.
(formerly Utalk Communications, Inc.)
(A Development Stage Company)
BALANCE SHEETS
September 30, December 31,
2009 2008
-------- --------
(unaudited) (audited)
ASSETS
Current assets
Cash and bank accounts $ 855 $ 7,084
Prepaid expenses -- 7,300
-------- --------
Total current assets 855 14,384
Software development -- 12,000
-------- --------
Total assets $ 855 $ 26,384
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 4,193 $ 4,200
Due to stockholder 10,500 5,500
-------- --------
Total liabilities 14,693 9,700
-------- --------
Stockholders' equity
Common stock authorized -
50,000,000 common shares with a par value of $0.001
Common stock issued and outstanding
4,470,000 common shares (Note 4) 4,470 4,470
Additional paid-in capital 62,530 62,530
Deficit accumulated during the development stage (80,838) (50,316)
-------- --------
Total stockholders' equity (13,838) 16,684
-------- --------
Total liabilities and stockholders' equity $ 855 $ 26,384
======== ========
The accompanying notes are an integral part of these financial statements.
3
LITHIUM CORP.
(formerly Utalk Communications, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS (unaudited)
Cumulative
From Date of
Three Months Three Months Nine Months Nine Months Inception on
Ended Ended Ended Ended January 30, 2007 to
September 30, September 30, September 30, September 30, September 30,
2009 2008 2009 2008 2009
---------- ---------- ---------- ---------- ----------
REVENUE $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Accounting fees 2,500 2,274 6,500 4,524 23,097
Legal fees -- -- -- -- 16,282
Website development costs -- -- 412 -- 3,912
General and administrative 3,729 1,658 11,610 3,757 25,547
---------- ---------- ---------- ---------- ----------
Loss before other item (6,229) (3,842) (18,522) (8,281) (68,838)
Writedown of software development (12,000) -- (12,000) -- (12,000)
Loss before income taxes (18,229) (3,842) (30,522) (8,281) (80,838)
Provision for income taxes -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net loss $ (18,229) $ (3,842) $ (30,522) $ (8,281) $ (80,838)
========== ========== ========== ========== ==========
Basic and diluted loss per
Common share (1) (1) (1) (1) (1)
========== ========== ========== ==========
Weighted average number of
common shares outstanding (Note 4) 4,470,000 4,470,000 4,470,000 4,327,995
========== ========== ========== ==========
----------
(1) less than $0.01
The accompanying notes are an integral part of these financial statements.
4
LITHIUM CORP.
(formerly Utalk Communications, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS (unaudited)
Cumulative
From Date of
Nine Months Nine Months Inception on
Ended Ended January 30, 2007 to
September 30, September 30, September 30,
2009 2008 2009
-------- -------- --------
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss for the period $(30,522) $(13,907) $(80,838)
Adjustment for non-cash items -
Writedown of software development 12,000 -- 12,000
(Increase) Decrease in prepaid expenses 7,300 (9,800) --
Increase (Decrease) in accounts payable and
accrued liabilities (7) (9,797) 4,193
-------- -------- --------
Net cash used in operating activities (11,229) (33,504) (64,645)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in due to stockholder 5,000 7,000 10,500
Proceeds from issuance of common stock -- 47,000 67,000
-------- -------- --------
Net cash provided by financing activities 5,000 54,000 77,500
CASH FLOWS USED IN INVESTING ACTIVITY
Purchase of software development costs -- (15,500) (12,000)
-------- -------- --------
Change in cash during the period (6,229) 4,996 855
Cash, beginning of the period 7,084 7,552 --
-------- -------- --------
Cash, end of the period $ 855 $ 12,548 $ 855
======== ======== ========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ -- $ --
======== ======== ========
Cash paid for interest $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these financial statements.
5
LITHIUM CORP.
(formerly Utalk Communications, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Lithium Corp., have
been prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto contained in Lithium Corp.'s Annual Report filed
with the SEC on Form 10-K. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for fiscal 2008 as
reported in the form 10-K have been omitted.
ACCOUNTING POLICIES
CAPITALIZED WEBSITE COSTS
Internal costs incurred to develop a web site to be used for commercial purposes
are charged to expense when incurred until technological feasibility has been
established for the web site. Technological feasibility is established upon
completion of a detailed program design or, in its absence, completion of a
working model. After technological feasibility is established, the costs of
coding and testing and other costs of producing product masters are capitalized.
Cost capitalization ceases when the product is available for general release to
customers.
Capitalized website development costs are amortized over the web sites estimated
useful life once it is available for general use by customers. Annual
amortization is the greater of straight-line over the product's estimated useful
life or the percent of the product's current-year revenues as compared to the
product's anticipated future revenues.
Capitalized website development costs are evaluated for impairment on a
product-by-product basis by a comparison of the unamortized capitalized costs to
the product's net realizable value. The amount by which the unamortized
capitalized costs exceed the net realizable value is recognized as an impairment
charge.
NOTE 2 - GOING CONCERN
These financial statements have been prepared on a going concern basis. As of
September 30, 2009, Lithium Corp. has not generated any revenue since inception
and has accumulated losses of $65,489. The continuation of Lithium Corp. as a
going concern is dependent upon the continued financial support from its
shareholders, the ability to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. These factors raise
substantial doubt regarding Lithium Corp.'s ability to continue as a going
concern.
NOTE 3 - SUBSEQUENT EVENTS
On October 9, 2009, we entered into a share exchange agreement with Nevada
Lithium Corporation, a Nevada corporation, and the shareholders of Nevada
Lithium Corporation. Pursuant to the terms of the share exchange agreement, we
have agreed to acquire all of the issued and outstanding shares of Nevada
Lithium Corporation's common stock in exchange for the issuance by our company
of 12,350,000 shares of our common stock to the shareholders of Nevada Lithium
Corporation.
The Company has analyzed its operations subsequent to September 30, 2009 through
November 13, 2009 and has determined that it does not have any other material
subsequent events to disclose in these financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States dollars and are
prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "common stock" refer to
the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", "our company"
mean Lithium Corporation, a Nevada corporation, unless otherwise indicated and
the term "Nevada Lithium" means Nevada Lithium Corporation, our wholly owned
subsidiary.
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 25, 2009, Tom Lewis was appointed as President, Treasurer, Secretary
and director of our company and Mazen Hleiss resigned as the President,
Treasurer and Secretary of our company.
On August 31, 2009, we entered into a letter of intent with Nevada Lithium
Corporation 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 Corporation, or a share exchange whereby we would purchase
the shares of Nevada Lithium Corporation from its shareholders in exchange for
restricted shares of our common stock.
Effective September 30, 2009, we effected a one (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 have 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 becomes effective with
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the Over-the-Counter Bulletin Board at the opening for trading on October 1,
2009 under the new stock symbol "LTUM". Our new CUSIP number is 536804 107.
On October 9, 2009, we entered into a share exchange agreement with Nevada
Lithium Corporation, a Nevada corporation, and the shareholders of Nevada
Lithium Corporation. 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 Corporation 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 Corporation in exchange for the acquisition, by our company, of
all of the 12,350,000 issued and outstanding shares of Nevada Lithium
Corporation. 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.
On October 25, 2009, John Hiner was appointed as Vice President of Exploration
and a director of our company. Our board of directors now consists of Mazen
Hleiss, Tom Lewis and John Hiner.
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.
Our current operational focus is to conduct exploration activities on our newly
acquired properties in Nevada, known as the Fish Lake Valley property and the
Fish Creek Caldera property.
FISH LAKE VALLEY PROPERTY
Fish Lake Valley is a lithium enriched salar (also known as a Playa, dry lake,
or Salt Pan), which is located in west central Nevada in northern Esmeralda
county, and the property is roughly centered at 417050E 4195350N (NAD 27 CONUS).
We currently hold eighty (80) acre Association Placer claims that cover
approximately 6400 acres. 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, which could possibly be amenable to the
extraction by evaporative methods. Additionally evaporative brine mining is
environmentally benign, and is achieved with a minimal carbon footprint. The
geological setting at Fish Lake Valley is highly analogous to the salars of
Chile, Bolivia, & Peru. 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 15
kilometers from the property, and the village of Dyer is approximately 20
kilometers to the south, while the town of Tonopah Nevada is approximately 75
kilometers to the East. Further sediment and brine sampling studies were
conducted on the property in early September, and the company is awaiting
further assay information. The company anticipates additional sampling programs
in Fall 2009, followed by a geophysical survey, and eventual drilling in Spring
2010. The property is 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 has agreed to
issue the vendors $350,000 worth of common stock of the company in eight regular
disbursements, the last of which is slated to occur on March 31st 2011. To date
one disbursement has been made of stock worth $43,750.
FISH CREEK CALDERA
The Fish Creek Caldera prospect is located in west-central Lander County
approximately 55 kilometers south of the county seat at the town of Battle
Mountain in northern Nevada. The property is roughly centered at 473052E
4453013N (NAD 27 CONUS), and is comprised of 117 conventional 20 acre Lode
Mining Claims which cover an area of approximately 2340 acres. Unlike the Fish
Lake Valley prospect it is a more traditional bulk mining target which covers an
area of clay altered Caetano, and Fish Creek formation Tertiary volcanic tuffs.
Both formations originally contained relatively high concentrations of lithium,
and locally, through a possible combination of weathering, and hydrothermal
processes, these volcanic rocks have been altered to clays. It is thought that
the alteration process may have contributed to further lithium enrichment of the
clays. During the conduct of uranium exploratory drilling operations here in
1978 by Phillips Uranium Corporation, lithium mineralization of up to 20,000 ppm
was discovered. Access is good to the property with an all weather road leading
up from Buffalo Valley to the west of the property, and a county maintained
track leading up from Highway 305, some 15 kilometers to the east of the
property. A low voltage powerline does terminate at the west edge of the claim
block, and higher tension power lines can be found in the general area. We
8
intend to begin preliminary work this fall to outline areas of lithium
enrichment in an effort to define drill targets, for more precise evaluation of
the economic potential of the property in 2010.
Our wholly owned subsidiary, Nevada Lithium Corporation, entered into a lease
agreement with Cerro Rico Ventures LLC on March 16, 2009. The lease is
maintained by an initial payment, and continuing lease payments as set forth in
the table below. Cerro Rico reserves a 3% NSR. We may purchase 1% of the NSR
within 5 years for a payment of $500,000. We can purchase an additional 1% of
the NSR by paying $1,000,000 within 10 years. The remainder of the NSR can be
purchased within 15 years by paying $2,000,000.
Payment Amount Timing
------- ------ ------
Upon signature $ 20,000 March 16, 2009 (paid)
Upon 1st anniversary $ 25,000 March 16, 2010
Upon 2nd anniversary $ 30,000 March 16, 2011
Upon 3rd -10th anniversary $ 50,000 March 16, 2012 - 2019
Upon 11th - 20th anniversary $ 75,000 March 16, 2020 - 2029
At any time upon commercial production $250,000
Any commercial production and payment therefore shall supercede the annual lease
payment requirements, which cease so long as production is maintained. Upon
cessation of production for any period in excess of 6 months, the annual lease
payments shall resume.
RESULTS OF OPERATIONS
THREE MONTH SUMMARY ENDING SEPTEMBER 30, 2009 AND 2008
Three Months Ended
September 30,
2009 2008
------- -------
Revenue $ Nil $ Nil
Expenses $ 6,229 $ 3,842
Net (Loss) $18,229 $ 3,842
EXPENSES
Our total expenses for the three month periods ended September 30, 2009 and
September 30, 2008 are outlined in the table below:
Three Months Ended
September 30,
2009 2008
------- -------
General and administrative $ 3,729 $ 1,658
Professional fees $ 2,500 $ 2,274
9
Expenses for the three months ended September 30, 2009, increased by 62% as
compared to the comparative period in 2008 primarily as a result of an overall
increase in activity by the Company.
RESULTS OF OPERATIONS
NINE MONTH SUMMARY ENDING SEPTEMBER 30, 2009 AND 2008
Nine Months Ended
September 30,
2009 2008
------- -------
Revenue $ Nil $ Nil
Operating Expenses $18,522 $ 8,281
Other Expenses $12,000 $ Nil
Net (Loss) $30,522 $ 8,281
EXPENSES
Our total operating expenses for the nine month periods ended September 30, 2009
and September 30, 2008 are outlined in the table below:
Nine Months Ended
September 30,
2009 2008
------- -------
General and administrative $11,610 $ 3,757
Professional fees $ 6,500 $ 4,524
Website development costs $ 412 $ Nil
Expenses for the nine months ended September 30, 2009, increased by 123% as
compared to the comparative period in 2008 primarily as a result of a an overall
increase in activity by the Company. We also incurred a $12,000 expense in 2009
as a result of writing down our software development asset.
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
EQUITY COMPENSATION
We currently do not have any stock option or equity compensation plans or
arrangements.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
September 30, December 31, Increase/
2009 2008 Decrease
-------- -------- --------
Current Assets $ 855 $ 14,384 $(13,529)
Current Liabilities $ 14,693 $ 9,700 $ 4,993
Working Capital (deficit) $(13,838) $ 4,684 $(18,522)
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CASH FLOWS
Nine months Nine months
Ended Ended
September 30, September 30,
2009 2008
-------- --------
Net Cash Used in Operating Activities $(11,229) $(19,580)
Net Cash Provided by Investing Activities $ Nil $ Nil
Net Cash Provided by Financing Activities $ 5,000 $ 54,000
Net Increase (Decrease) in Cash During the Period $ (6,229) $ 18,920
We estimate that we will spend approximately $30,000 on general and
administrative expenses, $50,000 on exploration and $15,000 on travel over the
next 12 months.
We will require additional funds to fund our budgeted expenses over the next 12
months. These funds may be raised through equity financing, debt financing, or
other sources, which may result in further dilution in the equity ownership of
our shares. There is still no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on his
investment in our common stock. Further, we may continue to be unprofitable. We
need to raise additional funds in the immediate future in order to proceed with
our budgeted expenses.
Specifically, we estimate our operating expenses and working capital
requirements for the next 12 months to be as follows:
ESTIMATED FUNDING REQUIRED DURING THE NEXT 12 MONTHS
Expense Amount
------- ------
General and administrative $ 70,000
Exploration $130,000
Mineral Property Costs $250,000
Travel $ 25,000
--------
TOTAL $475,000
========
CASH ON HAND, SEPTEMBER 30, 2009 $ 855
We are not aware of any known trends, demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in our
liquidity increasing or decreasing in any material way.
FUTURE FINANCINGS
We will require additional financing in order to enable us to proceed with our
plan of operations, as discussed above, including approximately $350,000 over
the next 12 months to pay for our ongoing expenses. These expenses include
general and administrative, website and travel expenses. These cash requirements
are in excess of our current cash and working capital resources. Accordingly, we
will require additional financing in order to continue operations and to repay
our liabilities. There is no assurance that any party will advance additional
funds to us in order to enable us to sustain our plan of operations or to repay
our liabilities.
We anticipate continuing to rely on equity sales of our common stock in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing stockholders. There is no assurance that we
will achieve any additional sales of our equity securities or arrange for debt
or other financing to fund our planned business activities.
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We presently do not have any arrangements for additional financing for the
expansion of our exploration operations, and no potential lines of credit or
sources of financing are currently available for the purpose of proceeding with
our plan of operations.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
GOING CONCERN
We anticipate that additional funding will be required in the form of equity
financing from the sale of our common stock. At this time, we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock or through a loan from our directors to meet
our obligations over the next twelve months. We do not have any arrangements in
place for any future debt or equity financing.
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.
CASH AND CASH EQUIVALENTS
The Company considers deposits that can be redeemed on demand and investments
that have original maturities of less than three months, when purchased, to be
cash equivalents.
CAPITALIZED WEBSITE AND SOFTWARE COSTS
The Company follows AICPA Statement of Position 98-1: "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use" In accordance with
SOP 98-1, internal costs incurred to develop a computer software to be used for
commercial purposes are charged to expense when incurred until technological
feasibility has been established for the software. Technological feasibility is
established upon completion of a detailed program design or, in its absence,
completion of a working model. After technological feasibility is established,
the costs of coding and testing and other costs of producing product masters are
capitalized. Cost capitalization ceases when the product is available for
general release to customers.
Capitalized software costs are amortized using the straight line method over the
software's estimated useful life once it is available for use.
INCOME TAXES
The Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. The Company provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not.
12
BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share calculations are presented in accordance
with Financial Accounting Standards Statement 128, and are calculated on the
basis of the weighted average number of common shares outstanding during the
year. They include the dilutive effect of common stock equivalents in years with
net income. Basic and diluted loss per share are the same due to the absence of
common stock equivalents and the Company`s net loss incurred for the period
presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on their financial position, results
of operations or cash flows.
RECENT ACCOUNTING PRONOUNCEMENTS
Management does not believe that any recently issued, but not yet effective
accounting standards if currently adopted could have a material effect on the
accompanying financial statements.
ITEM 3. QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS.
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 4T. CONTROLS AND PROCEDURES.
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (who is acting as our
principal executive officer, principal financial officer and principle
accounting officer) to allow for timely decisions regarding required disclosure.
As of September 30, 2009, the end of our quarter covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (who is acting as 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 (who is acting as 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 quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during our quarter ended September 30, 2009 that have materially
or are reasonably likely to materially affect, our internal controls over
financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We know of no material, existing or pending legal proceedings against our
company, 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 interest.
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:
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/divisions/corpfin/forms/industry.htm#secguide7) 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, labour 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.
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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.
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 ore. 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.
15
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.
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 $855 as of September 30, 2009. At
September 30, 2009, we had a working capital deficiency of $13,838. We incurred
a net loss of $30,522 for the nine month period ended September 30, 2009 and
$80,838 since inception. We estimate our average monthly operating expenses to
be approximately $20,000 to $40,000, including mineral 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.
These circumstances lead our independent registered public accounting firm, in
their report dated April 6, 2009, to comment about our company's ability to
continue as a going concern. Management has plans to seek additional capital
through a private placement 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. 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 SEC'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 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
16
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
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 Securities and
Exchange Commission, the Financial Industry Regulatory Authority 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, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority ' 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
17
ITEM 6. EXHIBITS.
Exhibits required by Item 601 of Regulation S-K
Exhibit Number Description
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on December 21,
2007).
3.2 By-laws (incorporated by reference from our Registration
Statement on Form SB-2 filed on December 21, 2007).
3.3 Articles of Merger (incorporated by reference from our Current
Report on Form 8-K filed on October 2, 2009).
3.4 Certificate of Change (incorporated by reference from our
Current Report on Form 8-K filed on October 2, 2009).
(10) MATERIAL CONTRACTS
10.1 Share exchange agreement dated October 9, 2009, among our
company, Nevada Lithium Corporation and the selling
shareholders of Nevada Lithium Corporation as set out in the
share exchange agreement (incorporated by reference from our
Current Report on Form 8-K filed on October 26, 2009).
10.2 Lease Purchase Agreement dated June 1, 2009 between Nevada
Lithium Corporation as purchaser and Nevada Mining Co., Inc.,
Robert Craig, Barbara Craig and Elizabeth Dickman as vendors.
(incorporated by reference from our Current Report on Form 8-K
filed on October 26, 2009).
10.3 Lease Agreement dated March 16, 2009 between Nevada Lithium
Corporation as Lessee and Cerro Rico Ventures LLC as Lessor.
(incorporated by reference from our Current Report on Form 8-K
filed on October 26, 2009).
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Nevada Lithium Corporation
(31) RULE 13A-14(D)/15D-14(D) CERTIFICATIONS
31.1* Section 302 Certification of Principal Executive Officer and
Principal Financial Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification of Principal Executive Officer and
Principal Financial Officer.
----------
* Filed herewith
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
LITHIUM CORPORATION
(Registrant)
Dated: November 16, 2009 /s/ Tom Lewis
--------------------------------------------
Tom Lewis
President, Treasurer, Secretary and Director
(Principal Executive Officer, Principal
Accounting Officer and Principal Financial
Officer)
1
