Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - RIMROCK GOLD CORP. | Financial_Report.xls |
| EX-31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER - RIMROCK GOLD CORP. | f10q0512_tucanaex31i.htm |
| EX-32.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER - RIMROCK GOLD CORP. | f10q0512_tucanaex32i.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
_______________
(Mark One)
| x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended May 31, 2012
or
| o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______to______.
Commission File Number: 333-149552
TUCANA LITHIUM CORP.
(Exact name of registrant as specified in charter)
|
NEVADA
|
||
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employee Identification No.)
|
3651 Lindell Rd. Suite D155
Las Vegas, NV, 89103
(Address of Principal Executive Offices)
_______________
1-800-854-7970
(Registrants telephone number, including area code)
_______________
Not Applicable
(Former Name or Former Address 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 Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer,” “accelerated filer” and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o Accelerated Filer o
Non-Accelerated Filer o (Do not check if a smaller reporting company) 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 o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of July 15, 2012, there were 58,894,202 shares of common stock issued and outstanding.
TUCANA LITHIUM CORP. AND SUBSIDIARIES
FORM 10-Q
May 31, 2012
INDEX
PART I-- FINANCIAL INFORMATION
|
Item 1.
|
Consolidated Financial Statements
|
F-1 - F-8
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
1
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
6
|
|
Item 4.
|
Control and Procedures
|
6
|
PART II-- OTHER INFORMATION
|
Item 1
|
Legal Proceedings
|
7
|
|
Item 1A.
|
Risk Factors
|
7
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
7
|
|
Item 3.
|
Defaults Upon Senior Securities
|
7
|
|
Item 4.
|
Mine Safety Disclosures
|
7
|
|
Item 5.
|
Other Information
|
7
|
|
Item 6.
|
Exhibits
|
8
|
SIGNATURE
PART I – FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements
|
TUCANA LITHIUM CORP. AND SUBSIDIARIES
CONTENTS
|
PAGE
|
F-1
|
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2012 AND AS OF AUGUST 31, 2011.
|
|
PAGE
|
F-2
|
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 31, 2012 AND 2011
|
|
PAGE
|
F-3
|
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MAY 31, 2012 AND 2011 AND FOR THE PERIOD JUNE 5, 2003 (INCEPTION) TO MAY 31, 2012.
|
|
PAGE
|
F-4
|
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 2012 AND 2011 AND FOR THE PERIOD JUNE 5, 2003 (INCEPTION) TO MAY 31, 2012.
|
|
PAGE
|
F-5 – F-8
|
NOTES TO FINANCIAL STATEMENTS.
|
TUCANA LITHIUM CORP. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
AS OF
(Expressed in United States Dollars)
|
31 May
2012
(Unaudited)
|
31 August
2011
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 35,916 | $ | 86,876 | ||||
|
Prepaid and other
|
12,424 | 5,840 | ||||||
|
Total Current Assets
|
48,340 | 92,716 | ||||||
|
Long Term Assets
|
||||||||
|
Equipment
|
1,016 | 1,161 | ||||||
|
Mineral rights
|
584,978 | 550,000 | ||||||
|
Total Long Term Assets
|
585,994 | 551,161 | ||||||
|
Total Assets
|
$ | 634,334 | $ | 643,877 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$ | 24,137 | $ | 18,818 | ||||
|
Convertible note payable
|
106,504 | 3,939 | ||||||
|
Advances from related party
|
- | 203 | ||||||
|
Total Liabilities
|
130,641 | 22,960 | ||||||
|
Stockholders' Equity
|
||||||||
|
Capital stock, $0.001 par value; Authorized 200,000,000; Issued and outstanding 58,894,202 (31 August 2011 - 54,464,202)
|
58,894 | 54,464 | ||||||
|
Additional paid-in capital
|
1,724,664 | 1,633,229 | ||||||
|
Shares to be issued
|
6,813 | - | ||||||
|
Accumulated other comprehensive loss
|
(33,055 | ) | (34,166 | ) | ||||
|
Deficit accumulated during the development stage
|
(1,253,623 | ) | (1,032,610 | ) | ||||
|
Total Stockholders' Equity
|
503,693 | 620,917 | ||||||
|
Total Liabilities and Stockholders' Equity
|
$ | 634,334 | $ | 643,877 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-1
TUCANA LITHIUM CORP. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in United States Dollars)
(Unaudited)
|
For the
Three Months
Ended
31 May 2012
|
For the
Three Months
Ended
31 May 2011
|
|||||||
|
SALES
|
-
|
-
|
||||||
|
COST OF GOODS SOLD
|
-
|
-
|
||||||
|
GROSS PROFIT
|
-
|
-
|
||||||
|
EXPENSES
|
||||||||
|
Professional and management fees
|
91,045
|
181,210
|
||||||
|
Interest and bank charges
|
1,993
|
848
|
||||||
|
Depreciation
|
62
|
779
|
||||||
|
Office and general
|
3,510
|
700
|
||||||
|
Advertising and promotion
|
51
|
873
|
||||||
|
Rent
|
1,937
|
-
|
||||||
|
Telecommunications
|
1,067
|
1,093
|
||||||
|
Exploration
|
2,277
|
-
|
||||||
|
TOTAL OPERATING EXPENSES
|
101,942
|
185,503
|
||||||
|
LOSS FROM OPERATIONS
|
(101,942
|
)
|
(185,503
|
)
|
||||
|
Foreign exchange loss
|
(128
|
)
|
(2,841
|
)
|
||||
|
Gain on disposal of subsidiary
|
137,000
|
-
|
||||||
|
Forgiveness of advances to subsidiary
|
(137,000
|
)
|
-
|
|||||
|
NET LOSS
|
$
|
(102,070
|
)
|
$
|
(188,344
|
)
|
||
|
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
|
270
|
(5,875
|
)
|
|||||
|
COMPREHENSIVE LOSS
|
(101,800
|
)
|
(194,219
|
)
|
||||
|
LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
|
(0.00)
|
(0.00)
|
||||||
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
|
55,513,543
|
43,395,888
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
TUCANA LITHIUM CORP. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in United States Dollars)
(Unaudited)
|
For the Nine Months
Ended
31 May 2012
|
For the Nine Months
Ended
31 May 2011
|
For the Period from Inception
(5 June 2003) to
31 May 2012
|
||||||||||
|
SALES
|
3,024
|
425
|
387,810
|
|||||||||
|
COST OF GOODS SOLD
|
2,175
|
-
|
268,109
|
|||||||||
|
GROSS PROFIT
|
849
|
425
|
119,701
|
|||||||||
|
EXPENSES
|
||||||||||||
|
Professional and management fees
|
184,588
|
222,462
|
1,080,100
|
|||||||||
|
Interest and bank charges
|
2,873
|
1,643
|
23,874
|
|||||||||
|
Depreciation
|
1,240
|
2,371
|
22,116
|
|||||||||
|
Office and general
|
3,866
|
987
|
41,814
|
|||||||||
|
Advertising and promotion
|
2,577
|
3,304
|
45,870
|
|||||||||
|
Rent
|
5,812
|
-
|
36,944
|
|||||||||
|
Vehicle
|
-
|
251
|
2,158
|
|||||||||
|
Bad debts
|
-
|
-
|
9,774
|
|||||||||
|
Telecommunications
|
3,575
|
3,670
|
45,024
|
|||||||||
|
Exploration
|
17,077
|
-
|
110,144
|
|||||||||
|
TOTAL OPERATING EXPENSES
|
221,608
|
234,688
|
1,417,818
|
|||||||||
|
LOSS FROM OPERATIONS
|
(220,759
|
)
|
(234,263
|
)
|
(1,298,117
|
)
|
||||||
|
Foreign exchange (loss)gain
|
(254
|
)
|
(2,874
|
)
|
18,405
|
|||||||
|
Interest income
|
-
|
-
|
11,821
|
|||||||||
|
Realized loss on disposal of available-for-sale securities
|
-
|
-
|
(2,096
|
)
|
||||||||
|
Gain on extinguishment of debt
|
-
|
-
|
19,126
|
|||||||||
|
Loss on disposal of assets
|
-
|
-
|
(2,762
|
)
|
||||||||
|
Gain on disposal of subsidiary
|
137,000
|
137,000
|
||||||||||
|
Forgiveness of advances to subsidiary
|
(137,000
|
)
|
(137,000
|
)
|
||||||||
|
NET LOSS
|
$
|
(221,013
|
)
|
$
|
(237,137
|
)
|
$
|
(1,253,623
|
)
|
|||
|
Unrealized loss on convertible note receivable, net of tax
|
-
|
-
|
(23,135
|
)
|
||||||||
|
Foreign currency translation adjustment
|
1,111
|
(3,031
|
)
|
(9,920
|
)
|
|||||||
|
COMPREHENSIVE LOSS
|
$
|
(219,902
|
)
|
$
|
(240,168
|
)
|
(1,286,678
|
)
|
||||
|
LOSS PER WEIGHTED NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
|
$
|
0.00
|
$
|
0.01
|
||||||||
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC AND DILUTED
|
55,035,521
|
24,661,118
|
||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
TUCANA LITHIUM CORP. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
(Unaudited)
|
For the Nine Months Ended
31 May 2012
|
For the Nine Months Ended
31 May 2011
|
For the Period from Inception (5 June 2003) to
31 May 2012
|
||||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net loss
|
$
|
(221,013
|
)
|
$
|
(237,137
|
)
|
$
|
(1,253,623
|
)
|
|||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
|
Depreciation
|
1,240
|
2,371
|
22,116
|
|||||||||
|
Accretion expense and deferred financing costs
|
804
|
-
|
804
|
|||||||||
|
Loss on disposal of assets
|
-
|
-
|
2,762
|
|||||||||
|
Issuance of common stock for services
|
18,000
|
-
|
119,000
|
|||||||||
|
Write off deferred costs
|
-
|
-
|
120,000
|
|||||||||
|
Gain on disposal of subsidiary
|
(137,000
|
)
|
-
|
(137,000
|
)
|
|||||||
|
Forgiveness of advances to subsidiary
|
137,000
|
-
|
137,000
|
|||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Prepaid and others
|
(3,752)
|
-
|
(9,592
|
)
|
||||||||
|
Accounts payable and accrued liabilities
|
5,319
|
(32,646
|
)
|
24,137
|
||||||||
|
CASH FLOWS USED IN OPERATING ACTIVITIES
|
(199,402
|
)
|
(267,412
|
)
|
(974,396
|
)
|
||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
|
Acquisition of mineral rights
|
(14,978
|
)
|
-
|
(14,978
|
)
|
|||||||
|
Acquisition of equipment - net
|
(1,130)
|
-
|
(25,662
|
)
|
||||||||
|
CASH FLOWS USED IN INVESTING ACTIVITIES
|
(16,108
|
)
|
-
|
(40,640
|
)
|
|||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
|
Proceeds from convertible notes payable
|
112,500
|
10,000
|
112,500
|
|||||||||
|
Repayment of convertible notes payable
|
(3,939
|
)
|
(110,000
|
)
|
-
|
|||||||
|
Advances to stockholder
|
-
|
(6,344
|
)
|
-
|
||||||||
|
Advances from (to) related party
|
(2,939
|
)
|
-
|
(2,736
|
)
|
|||||||
|
Proceeds from common shares issuable
|
6,813
|
357,250
|
6,813
|
|||||||||
|
Issuance of common stock, net of commissions
|
51,065
|
204,138
|
939,160
|
|||||||||
|
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
163,500
|
455,044
|
1,055,737
|
|||||||||
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
1,050
|
(9,524
|
)
|
(4,785
|
)
|
|||||||
|
NET (DECREASE)INCREASE IN CASH
|
(50,960
|
)
|
178,108
|
35,916
|
||||||||
|
CASH, BEGINNING OF PERIOD
|
86,876
|
84
|
-
|
|||||||||
|
CASH, END OF PERIOD
|
$
|
35,916
|
$
|
178,192
|
$
|
35,916
|
||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
TUCANA LITHIUM CORP. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM THE DATE OF INCEPTION (5 JUNE 2003) TO 31 MAY 2012
(Expressed in United States Dollars)
(Unaudited)
|
1.
|
ORGANIZATION AND NATURE OF OPERATIONS
|
Tucana Lithium Corp. (the “Company”), formerly named Oteegee Innovations Inc. and formerly named Pay By The Day Holdings Inc., was incorporated in August 2007 in the State of Nevada.The Company is primarily engaged in exploration for lithium deposits at the Abigail Lithium Property in the James Bay region of Quebec, Canada.
On 9 December 2011, the Company staked an additional 83 claims in the James Bay region of Quebec. The claims are 100% owned by the Company and registered in the name of Tucana's subsidiary, Tucana Exploration Inc. The property is made up of 83 map-designated cells totaling 4,439 hectares with 82 claims covered by NTS sheets 32O12 and 1 claim covered by NTS sheets 32N09. The cost of staking the claims was $8,215. The claims will expire in November 2013 and exploration work in the amount of $100,000 will be required upon renewal.
In March 2012, the Company renewed 71 mineral claims on the Abigail property based upon the exploration work reported in the summer of 2011. These claims will expire between March and May 2014. In addition, the Company has dropped 85 mineral claims located on the northern perimeter of the property. The Company's decision was based upon the results from the exploration program in the summer 2011 and a review of the airborne magnetic survey.
In May 2012, the Company entered into an asset purchase agreement to acquire a 100% interest in two mining properties known as the Lac Kame and EM-1 both located in the James Bay, Quebec region of Canada. The two properties are covered by NTS sheets 32O13. The properties are made up of 37 map-designated cells totaling 1,961 hectares. In addition, pursuant to the asset purchase agreement, the Company agreed to an additional payment of $50,000 and the issuance of 1,000,000 shares to the selling group if and when the Company spends a total of $1,000,000, an additional payment of $100,000 and the issuance of 1,000,000 if and when the Company spends $2,500,000, and an additional payment of $150,000 and the issuance of 1,000,000 shares if and when the Company spends a total of $5,000,000 on the acquired properties. The amount of spending by the Company on the acquired properties is deemed as an index of any previously unidentified and additional value of the properties. The Company also agreed to pay the selling group a 3% net smelter royalty on any commercial producing mineral deposit from the acquired properties. The Company's main interest with the newly acquired claims will be magnetic anomalies for kimberlite based upon the airborne magnetic survey released in October 2011.
On 11 May 2012, the Company also entered into a stock purchase agreement with Jordan Starkman, Chief Executive Officer and the sole director of the Company, pursuant to which, Mr. Starkman acquired all of the issued and outstanding common shares of the Company’s wholly-owned subsidiary Pay By The Day Company Inc. (“PBTD”), and in exchange, Mr. Starkman agreed to assume all of the liabilities and obligations of PBTD. Upon sale of PBTD, the Company recognized a gain of $137,000 which represented the balance of an outstanding loan between the two parties. The loan was simultaneously forgiven by the Company upon completion of the sale.
The Company operates Tucana Exploration as a wholly owned subsidiary. The Company operates under the web-site address www.tucanalithium.com and www.tucanaexploration.com.
|
2.
|
BASIS OF PRESENTATION
|
The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended 31 May 2012 are not necessarily indicative of the results that may be expected for the year ending 31 August 2012. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended 31 August 2011.
The accompanying consolidated financial statements of the Company include the accounts of Tucana Lithium Corp. and its wholly owned subsidiaries, Pay By The Day Company, Inc. (up to 11 May 2012 as discussed in note 1) and Tucana Exploration Inc. Inter-company balances and transactions have been eliminated upon consolidation.
The Company is considered to be in the development stage as defined in Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company has devoted substantially all of its efforts to business planning and development by means of raising capital for operations. The Company has also not realized any significant revenues. Among the disclosures required by ASC 915 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations and comprehensive loss, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception.
F-5
|
3.
|
GOING CONCERN
|
These consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. The Company is actively seeking financing to fully execute the next phase of the Company’s exploration campaign and future acquisitions. Any capital raised will be through either a private placement or a convertible debenture and will result in the issuance of common shares from the Company’s authorized capital. The Company is optimistic that the financing will be secured. We are in discussions with various parties and believe a successful financing is likely. The Company believes it can satisfy minimum cash requirements for the next twelve months with either an equity financing, convertible debenture or if needed, a loan from our director, Jordan Starkman.
There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded in these consolidated financial statements.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
|
4.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Mineral Claims and Exploration Costs
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.
Recent Accounting Pronouncements
Other recent accounting pronouncements issued by the FASB and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
|
5.
|
CONVERTIBLE NOTES PAYABLE
|
On 16 May 2012, the Company issued a one-year convertible note payable in the amount of $125,000. The convertible note payable matures in twelve months, is unsecured, bears interest at 4% per annum and interest accrues and is payable in cash upon maturity or repayment of the principal prior to the date of maturity, provided that the elected conversion to common shares does not occur. At any time or times on or before 16 May 2013, the note holder shall be entitled to convert any portion of the outstanding and unpaid amount, including accrued interest, into fully paid and non-assessable shares of common stock at a conversion price of $0.025 per common share. In accordance with ASC 470-20, Debt with Conversions and Other Options, the Company has identified a beneficial conversion feature imbedded within this convertible debenture. Accordingly, the Company recognized $6,800 which is equal to the fair value of the imbedded beneficial conversion feature and was deducted from the proceeds of issuance and was attributed to additional paid-in capital. The beneficial conversion feature will be amortized over the term to maturity. Accretion expense of $283 was recognized for the three and nine months ending May 31, 2012 and is presented within interest expense on the consolidated statement of operations.
The Company paid $12,500 in commissions related to raising the above mentioned proceeds which were reduced from the liability component of the debentures are being amortized over the term to maturity.
F-6
|
6.
|
MINERAL CLAIMS
|
The Company's main exploration focus is the Abigail Lithium Property located in the James Bay region of Quebec, Canada. As of 31 May 2012 the property consists of 220 map-designated cells totaling approximately 11,700 hectares.
The Abigail Lithium Property was initially acquired for a cost of $550,000 on December 2, 2010 and was made up of 222 map-designated cells covering 11,844 hectares and having claims which expired in May 2012. These claims are covered by NTS sheets 320/12 and 320/13. In addition, the Company is subject to a 3% net smelter returns royalty on any commercial production from mineral deposits on this property.
In December 2011, the Company acquired an additional 83 claims which are contiguous to the initial 222 claim units. The claims are 100% owned by the Company and registered in the name of Tucana Exploration. The claims are made up of 83 map-designated cells totaling 4,439 hectares with 82 claims covered by NTS sheets 32O12 and 1 claim covered by NTS sheets 32N09. The cost of acquiring the claims was $8,215. The claims will expire in November 2013 and exploration work in the amount of $100,000 will be required upon renewal. The Company secured the additional claims based upon the magnetic and gradiometric airborne survey released by the Quebec Ministry of Natural Resources in September 2011.
In March 2012, the Company renewed 71 mineral claims on the Abigail property based upon the exploration work reported in the summer of 2011. These claims will expire between March and May 2014. In addition, the Company has dropped 85 mineral claims located on the northern perimeter of the property. The Company's decision was based upon the results from the exploration program in the summer 2011 and a review of the airborne magnetic survey.
In May 2012, the Company entered into an asset purchase agreement to acquire the Lac Kame and EM-1 Properties, which are located to the north of the Abigail Lithium Property in the James Bay region of Quebec, Canada. These properties are covered by NTS sheets 320/13 and are made up of 37 map-designated cells totaling 1,961 hectares. Shares issued in connection with the acquisition of the Lac Kame and EM-1 Properties are disclosed in note 8.
|
7.
|
RELATED PARTY TRANSACTIONS
|
The transactions with related parties were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the parties. Related party transactions not disclosed elsewhere in these consolidated financial statements are as follows:
Advances from a related company controlled by Jordan Starkman, the sole director of the Company are non-interest bearing, unsecured and due on demand.
Consulting fees paid to Mr. Starkman for the nine months ended 31 May 2012 were $11,139 (nine months ended 31 May 2011 – Nil).
As disclosed in note 1, on 11 May 2012, Mr. Starkman acquired all the shares of common stock of Pay By The Day Company Inc. from the Company. In exchange for the shares, Mr. Starkman agreed to assume all of the outstanding liabilities of the former subsidiary. Upon sale of PBTD, the Company recognized a gain of $137,000 which represented the balance of an outstanding loan between the two parties. The loan was simultaneously forgiven by the Company upon completion of the sale.
|
8.
|
CAPITAL STOCK
|
In September 2011, the Company entered into a rental agreement for a period of two years commencing 1 September 2011. The Company paid $12,000 in cash and will deliver to the lessor shares of common stock worth $3,500 to fulfill rental payment for the entire term of lease. In April 2012, the Company issued 125,000 shares of common stock pursuant to the rental agreement at a price of $0.028 per share.
F-7
On 5 September 2011, the Company received $5,000 in exchange for 100,000 shares of common stock at $0.05 per share. These shares were issued on 17 May 2012.
On 15 September 2011, the Company issued 360,000 shares of common stock at $0.05 per share for consulting services. The services were valued based on the fair market value of the common stock on the date of issuance.
On 15 December 2011, the Company received $15,000 in exchange for 750,000 shares of common stock at $0.02 per share. These shares were issued on 17 May 2012.
On 8 February 2012, the Company received $6,600 in exchange for 220,000 shares of common stock at $0.03 per share. These shares were issued on 17 May 2012.
On 29 February 2012, the Company received $26,250 in exchange for 875,000 shares of common stock at $0.03 per share. These shares were issued on 17 May 2012.
On 5 March 2012, the Company received $5,000 in exchange for 166,667 shares of common stock at $0.03 per share. These shares will be issued in the next quarter.
On 13 April 2012, the Company received $9,000 in exchange for 300,000 shares of common stock at $0.03 per share. These shares will be issued in the next quarter.
On 17 May 2012, the Company issued 2,000,000 shares of common stock in connection with its purchase of the Lac Kame and EM-1 Properties, as disclosed in note 6. The issuance of these shares was recorded at a price of $0.01 per share.
The Company paid $12,472 in commissions related to raising the above mentioned private placements, of which $5,285 has been deducted from additional paid-in capital and $7,187 has been deducted from shares to be issued.
|
9.
|
CONTINGENCIES
|
In accordance with the Abigail Purchase Agreement, the Company will also owe to the selling group of the Abigail Property the following contingent payments:
|
·
|
After spending a total amount of $2,500,000 on the property, $250,000 and an additional 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
|
·
|
After spending a total amount of $5,000,000 on the property, a further $250,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
|
·
|
If a feasibility study is put in place an additional $250,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
|
·
|
If a bankable feasibility is put in place a further $500,000 and 2,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
In accordance with the Lac Kame and EM-1 Purchase Agreement, the Company will also owe to the selling group of the properties the following contingent payments:
|
·
|
After spending a total amount of $1,000,000 on the property, $50,000 and an additional 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
|
·
|
After spending a total amount of $2,500,000 on the property, a further $100,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
|
·
|
After spending a total amount of $5,000,000 on the property, a further $150,000 and 1,000,000 shares of the Company’s common stock shall be delivered to the selling group.
|
If the Company reaches commercial production, it is also subject to a 3% net smelter returns royalty payable to the selling groups in the Abigail Purchase Agreement and the Lac Kame EM-1 Purchase Agreement.
|
10.
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
During the nine months ended 31 May 2012 and 2011 and for the period from inception to 31 May 2012, there was no interest or taxes paid by the Company.
On 15 September 2011, the Company issued 360,000 shares of common stock at $0.05 per share for consulting services.
F-8
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to raise adequate financing and develop profitable operations. Management is actively targeting sources of additional financing to provide continuation of the Company’s operations. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.
The Company is actively seeking financing for its current projects. The Company is optimistic that the financing will be secured and the going concern risk will be removed. We are in discussions with various parties and believe a successful financing is likely. Any capital raised will be through either a private placement and will result in the issuance of shares of common stock from the Company’s authorized capital.
Plan of Operation for Tucana Segment
The Company's main exploration target in 2012 will be the Abigail Lithium Property (the “Property”) situated within and adjacent to Nemaska Exploration's Whabouchi Lithium discovery (as referenced in the Form 8-K filed with the SEC on December 3, 2010). The Property is located in a gneissic formation between the Lac des Montagnes volcano-sedimentary belt and the Champion Lake granitoids.
The principal exploration target for the Property is lithium-bearing spodumene and the Property is on strike with the high-grade spodumene-bearing pegmatite located on the Whabouchi property. The Property is underlain by the same gneissic formation that hosts the Lac Arques SW pegmatite showings with 1,189 ppm Th and 563 ppm U3O8. Magmatic NI-Cu type deposit associated with ultramafic intrusions may also be found. The Whabouchi spodumene-bearing pegmatite is located in a low magnetic anomaly on the flank of a medium magnetic high. A high magnetic anomaly located about 1 km north of the Whabouchi pegmatite can be interpreted as an ultramafic intrusion. An airborne survey over the Property could lead to the discovery of the same magnetic signature and help locate pegmatite and ultramafic intrusions of the Whabouchi and Nisk-1 type. In addition, the Property is easily accessible with year round roads, electrical power intersecting the Property from the town of Nemaska, cell phone service throughout the region, and a local airport in the town of Nemaska.
Nemaska's Whabouchi deposit continues to confirm high-grade channel samples illustrating the width of the main mineralized zone. Furthermore, Nemaska has recently announced it is partnering with Chengdu Tianqi. Tianqi is the largest lithium battery material provider in China that uses spodumene concentrate as its raw material to produce lithium carbonate and has extensive expertise in lithium products. This relationship validates Nemaska's deposit and signals the strong potential for their lithium assets in the James Bay region.
On June 13, 2011, the Company entered into a geological and management services agreement (the “Exploration Agreement”) with Nemaska Exploration Inc. (“Nemaska”) to coordinate and execute the Company’s Summer 2011 exploration program. The exploration campaign was led by geologist Yves Caron. Mr. Caron is currently Vice-President Exploration for both Nemaska Exploration and Monarques Resources and has been a member of the Ordre des Gйologues du Quйbec since 2001. The Exploration Agreement term which was for a period of six months has expired and the Company is currently negotiating to renew the contract at a future date.
Nemaska provided exploration services to the Company subject to the schedule of fees below.
-1-
|
Position
|
Cost per day
|
|||
|
Sr. Consultant - QP Services
|
$
|
1000
|
||
|
Project Manager – I.T. Geologist
|
$
|
600
|
||
|
Student Geologist
|
$
|
450
|
||
|
Geologist Assistant
|
$
|
350
|
||
The Company had committed to an initial exploration work budget of a minimum of $300,000 to commence no later than May 16, 2011. The Company announced on June 27, 2011 it started its first phase of the exploration campaign on the Property. The program commence date was delayed due to poor weather conditions in the region. The program was carried out with a team of six people including two geologists and four technicians under a service agreement with Nemaska Exploration. The work program covered geological reconnaissance of approximately 2,500 hectares, mostly in the central and north part of the property. In addition, the Company focused its efforts on the same geological corridor east of the Whabouchi lithium deposit consisting of twelve kilometers on the same geological trend. The purpose of the exploration program was mainly to locate mineralized pegmatites, but also any other kind of economic mineralization. The Company has completed its geological and prospecting program on approximately 15% of the Property for approximately $175,000, falling below the budgeted schedule.
On September 19, 2011 the Company obtained the airborne magnetic survey for the Property from the Ministry of Natural Resources in Quebec. The airborne survey encompasses the entire Property covered by NTS Sheets 32O12 and 32O13 in the Lac Des Montagnes and Lac Abigail region of Quebec. The airborne survey will locate the ultramafic intrusions if they exist, the basalt and/or ultramafic remnants, the contrast between the gneiss and Champion Lake granitoids and, if the magnetic contrast with the encasing rocks is strong enough, the pregmatites. The Company believes the airborne survey is a critical step in the development of the Property. The Company had budgeted $150,000 for the survey, and fortunately was able to obtain the report from the Ministry of Natural Resources at a zero cost base. The Company retained the services of Donald Theberge, a professional engineer, to fulfill a Canadian NI43-101 report on its field operations, and to review the survey in respect to the planning of Phase II of the Company's exploration campaign. The Nemaska report in conjunction with the airborne survey will allow the Company to prepare a plan and budget for Phase II of the exploration campaign on the Property. Phase II of the exploration campaign will involve a geological survey and prospecting program covering the targets to be defined by the airborne survey.
The initial budget to complete the Phase I work program on the Property is described below:
|
Airborne Magnetic and Electromagnetic Survey (125m line spacing):
|
||||
|
Airborne survey, mob and demob, lump sum
|
20,000
|
|||
|
Survey (Mag and VLF) 1,095km @ $73/km
|
79,935
|
|||
|
Wait time, additional survey lines, ect
|
35,000
|
|||
|
Contingency 12%
|
16,192
|
|||
|
Total Airborne Survey
|
$
|
151,127
|
||
|
Geological Survey and Prospecting:
|
||||
|
Geological survey, 2 geologists, 2 helpers, room and board, helicopter support if needed, assays, all inclusive for approximately 45 days
|
135,000
|
|||
|
Contingency 12%
|
16,200
|
|||
|
Total Geological Survey
|
$
|
151,200
|
||
|
Total Airborne and Geological
|
$
|
302,327
|
||
On November 4, 2011, the Company received the NI 43-101 report (the “Report”) summarizing the analysis of the airborne survey and containing the details and results from the Nemaska exploration campaign in June 2011. The reconnaissance geology program was carried out on the property by Nemaska Exploration Inc. on behalf of the Company. More than 2,000 GPS points were recorded and 39 samples were taken and analyzed. Samples were mainly taken from pegmatites, but also from granitoid, gabbro, basalts and diabases. Samples were taken where mineralization was seen or suspected, like pegmatite and rusted and/or silicified zones, and when sulphides were observed. Samples were analyzed by ALS Minerals, located at 1322, rue Harricana, Val-d’Or (Quйbec). Two grab samples returned slightly anomalous results. The first, numbered 18070, is from a pegmatite visually containing 1% Mo, which returned 292 ppm Mo and 466 ppm Rb. The second, numbered 18005, is from a pink pegmatite and returned 151.5 ppm Nb, 24 ppm Sm and 147.5 ppm Ta.
No drilling has been done by Tucana since it purchased the Property. According to the NI 43-101 report, the magnetic/gradiometric airborne survey released in September 2011, observed at least three families of magnetic lineaments. The first is oriented at about 070°, and outlines the north boundary of the Lac des Montagnes volcanic belt. The second is oriented at approximately 040° and is located in the paragneiss. The third is oriented NW/SE and has been mapped in the field as a regional diabase dyke. At this point, the most interesting magnetic feature is the magnetic lineament located on the south part of the property, which seems to outline the north boundary of the volcanic belt. In 1987, Westmin detected several Dighem EM anomalies along this lineament, but did not follow up. This horizon can be fertile, mainly for sulphide-type mineralization.
-2-
The Company believes the Property has good potential for both rare earths in pegmatites and for sulphide deposits in volcanics. In addition, the airborne survey has found magnetic anamalies for kimberlite targets. Several kimberlite targets were discovered in the immediate vicinity of the Property, from one to three kilometers to the north/west of the Property. On May 11, 2012, the Company entered into an Asset Purchase Agreement to acquire 37 mining claims relevant to these kimberlite targets.
To fully explore the potential of the Property, a two-phase program is recommended. It is described in the proposed budget shown below:
|
Phase I (Compilation, geophysical and geological surveys and sampling with 2000 m of drilling)
|
|
Work
|
Quantity
|
Unit
|
Unit Cost
|
Total
|
||||||||||||||||
|
Compilation of the EM Input (SDBJ) and Dighem (2007) anomalies (location of anomalies and interpretation)
|
$
|
10,000
|
||||||||||||||||||
|
Line cutting (cut every 100 m and picketed every 25 m) on the main coincident Mag and EM anomalies. Provision of 125 km
|
125
|
km
|
$
|
550
|
$
|
68,750
|
||||||||||||||
|
Ground geophysics, EM (MaxMin) and Mag
|
125
|
km
|
$
|
350
|
$
|
43,750
|
||||||||||||||
|
Geology and prospecting on the cut lines and on the north part of the property (including room and board, transportation, etc.)
|
$
|
100,000
|
||||||||||||||||||
|
Stripping, trenching and sampling, all inclusive
|
$
|
50,000
|
||||||||||||||||||
|
Drilling on the target to be defined ($225/m, all inclusive)
|
2,000
|
m
|
$
|
225
|
$
|
460,000
|
||||||||||||||
|
Report update, NI 43-101 and for statutory
purposes
|
$
|
10,000
|
||||||||||||||||||
|
Contingency, estimated at 10%
|
||||||||||||||||||||
|
TOTAL PHASE I
|
$
|
805,750
|
||||||||||||||||||
|
Phase II
|
||||||||||||||||||||
|
Provision of 5,000 m of drilling to test the targets defined during Phase I
|
5,000
|
m
|
$
|
225
|
$
|
1,125,000
|
||||||||||||||
|
Report update, NI 43-101 and for statutory
purposes
|
$
|
12,000
|
||||||||||||||||||
|
Contingency, estimated at 10%
|
$
|
113,700
|
||||||||||||||||||
|
TOTAL PHASE II
|
$
|
1,250,700
|
||||||||||||||||||
|
TOTAL PHASE I AND II
|
$
|
2,056,450
|
||||||||||||||||||
-3-
In December 2011, the Company staked an additional 83 claims in the James Bay region of Quebec. The claims are 100% owned by the Company and registered in the name of Tucana's subsidiary, Tucana Exploration Inc. The property is made up of 83 map-designated cells totaling 4,439 hectares with 82 claims covered by NTS sheets 32O12 and 1 claim covered by NTS sheets 32N09. The cost of staking the claims was $8,215. The claims will expire in November 2013 and exploration work in the amount of $100,000 will be required upon renewal. The Company secured the additional claims based upon the NI 43-101 technical report and the magnetic and gradiometric airborne survey released by the Quebec Ministry of Natural Resources in September 2011. The Lac des Montagnes formation is the most fertile rock in this area for massive sulfides, and it is the same kind of volcano-sedimentary belt you would find in the Rouyn-Noranda and Val d'Or area yet more metamorphosed. The gradiometric magnetic survey shows magnetic anomalies are present on the property and should be further investigated.
In March 2012, the Company renewed 71 mineral claims on the Abigail property based upon the exploration work reported in the summer of 2011. These claims will expire between March and May 2014. In addition, the Company has dropped 85 mineral claims located on the northern perimeter of the property. The Company's decision was based upon the results from the exploration program in the summer 2011 and a review of the airborne magnetic survey. The majority of the claims are located in the Lac des Montagnes volcano-sedimentary formation, and its immediate surrounding area. This is the most fertile ground in the area, and resembles the Abitibi greenstone volcano-sedimentary formations. The Company believes it has kept the most promising portion of the Abigail property based upon the geology reports. The property now consists of 220 map-designated cells totaling approximately 11,700 hectares within and adjacent to Nemaska Lithium's Whabouchi discovery.
In March 2012, the Company also retained the services of Gestion SDM Inc. to represent the Company and manage all of the Company's mineral claims with the Department of Natural Resources in Quebec.
The Company believes the Report facilitates further development of the Property and will utilize such report to plan and coordinate the next phase of the Company's exploration program. The Company is currently negotiating financing in the amount of $1,000,000 to further explore the Property. The Company will review the survey, and begin to coordinate and plan Phase II of the exploration campaign once the funds are secured. Any capital raised will be through either a private placement or a convertible debenture and will result in the issuance of common shares from the Company’s authorized capital.
In addition to the Abigail Property, the Company entered into an Asset Purchase Agreement to acquire a One Hundred (100%) interest in two mining properties known as the Lac Kame and EM-1 both located in the James Bay, Quebec region of Canada. It is covered by NTS sheets 32O13. The property is made up of 37 map-designated cells totaling 1,961 hectares. The Company's main interest with the newly acquired claims will be magnetic anomalies for kimberlite based upon the airborne magnetic survey released in October 2011. The Company plans on raising an addition $150,000 to commence an initial exploration campaign designed to discover the precise location of dill test targets identified by the aireborne electromagnetic (EM) data. Each identified target will be surveyed with ground EM instruments to insure that the character of the anomaly is consistent with known kimberlites.
Plan of Operation for PBTD Segment
On May 11, 2012, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with (i) Pay By The Day Company Inc., a Ontario corporation and a wholly owned subsidiary of the Company (“Pay By The Day”); and (ii) Jordan Starkman, Chief Executive Officer and the sole director of the Company and President of the Subsidiary (“Starkman”), pursuant to which, Starkman acquired all of the issued and outstanding common shares of Pay By The Day, and in exchange, Starkman assumed and agreed to pay, perform and discharge any and a all the liabilities and obligations of Pay By The Day (the “Spin-out”). The Company has divested its interest and will no longer operate and own as a wholly owned subsidiary Pay By The Day Company Inc.
Results of Operations for the nine months ended May 31, 2012 compared to the nine months ended May 31, 2011
For the period from inception through May 31, 2012, we had $387,810 in revenue. Cost of goods sold and operating expenses for the period from inception totaled $268,109 and $1,436,700, respectively, and our loss from operations was $1,316,999 and our net loss was $1,272,507.
-4-
Revenue for the nine months ended May 31, 2012 was $3,024 compared to $425 for the nine months ended May 31, 2011. The lack of revenue was due to the low number of applications generated from the Pay By The Day web site and the poor consumer credit leading to a low level of customer credit approvals. The revenue was generated from the sale of computer and consumer electronics financed through PBTD. To date, the Company has generated no income from its mining operations.
Operating expenses for the nine months ended May 31, 2012 were $240,491 compared to $234,688 for the nine months ended May 31, 2011. Operating expenses during the nine months ended May 31, 2012 compared to the nine months ended May 31, 2011 was primarily attributed to professional fees and management fees and exploration costs. Professional fees and management fees for the nine months ended May 31, 2012 were $203,754 and $222,462 for the nine months ended May 31, 2011. These fees paid in the nine months ended May 31, 2012 were attributable to legal, accounting, consulting, and auditing services related to quarterly and audit filings. In addition, advisory services, public/investor relations relating to the Company’s current operation and future planned corporate acquisitions were responsible for the professional and management fees. The exploration costs for the nine months ended May 31, 2012 was $17,077 and nil for the nine months ended May 31, 2011, because the Company didn’t have any exploration activity during the nine months ended May 31, 2011.
Net loss was $239,896 for the nine months ended May 31 2012 and $237,137 for the nine months ended May 31, 2011. Professional fees relating to advisory services for the Company’s current operations and future planned corporate actions contributed to the net loss in the nine months ended May 31, 2012. In addition, explorations costs in the nine months ended May 31 2012 contributed to the net loss.
During the quarter ending May 31, 2012 and 2011, we had no provision for income taxes due to the net operating losses incurred.
We currently have no known mineral reserves and have generated no revenue from our mining activities.
All of our sales since inception consist of computer and electronic products financed through our internal financing program or our third party finance service provider. The profit is generated from the margins on the products sold. We charge 0% interest on our internal financing and CreditPlus card, and we did not have any interest charges revenue. Service fees revenue from our CreditPlus Card is nil.
We have experienced a dramatic decrease in sales from fiscal year August 31, 2005 to May 31, 2012. Our slow growth and decrease in sales is attributed to the difficulty in effectively approving customer credit applications. We have also been affected by the current credit market conditions and as a result approval rates have decreased due to the poor credit quality of customers applying for credit.
If our third party finance providers increase the criteria for credit approvals or its parameters for credit approvals, the increased restriction on credit approvals will make customer applications more difficult to finance. In this situation, it is uncertain if we will be able to continue to finance customer‘s purchases through our third party service provider. We may have to enter into additional agreements with multiple third party finance providers, or increase the number of transactions financed internally. Our decrease in sales from inception to date is also attributed to the lack of advertising dollars to fully market the Company and our offerings. In addition, over the past three years there has been a significant drop in the selling prices of computers and consumer electronics making these goods easily accessible at local retailers without the need for customer financing. Furthermore, the dramatic drop in retail prices of computers and consumer electronics has reduced our profit margins.
Liquidity and Capital Resources
As of May 31, 2012 we had a cash balance of $35,916 and a working capital deficit of $100,797.
The Company is actively seeking financing in the amount of $1,000,000 to fully execute the next phase of the Company’s exploration campaign in accordance with the NI 43-101 and future acquisitions. Any capital raised will be through either a private placement or a convertible debenture and will result in the issuance of common shares from the Company’s authorized capital. The Company is optimistic that the financing will be secured and our going concern risk will be removed. In addition, the Company is seeking a dual listing on a Canadian exchange to further increase its access to capital funding.
-5-
We anticipate that our fixed costs made up of legal & accounting and general & administrative expenses for the next twelve months will total approximately $45,000. Legal and accounting expenses of $35,000 represents the minimum funds needed to sustain operations. The $35,000 will be financed through the Company’s cash on hand, additional financing, net sales and if needed, advances from our director, Jordan Starkman. Currently there is no firm loan commitment in place between the Company and Jordan Starkman.
We believe we can satisfy our cash requirements for the next twelve months with our cash balances and if needed an additional loan from our sole director, Jordan Starkman. However, completion of our plan of operations is subject to attaining adequate revenue and adequate financing. We cannot assure investors that adequate revenues will be generated from our mining properties. In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without adequate revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we may require financing to achieve our growth and exploration goals.
We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees, unless financing is raised. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and required, and our progress with the execution of our business plan.
In the event we are not successful in reaching our initial revenue targets or operational goals, additional funds may be required, and we may not be able to proceed with our business plan for the development and exploration of our mining targets. Should this occur, we would likely seek additional financing to support the continued operation of our business. We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern. We will need approximately $1,000,000 to aggressively pursue and implement our business plan’s exploration campaign.
Off-Balance Sheet Arrangements
We do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Not required for Smaller Reporting Companies.
|
Item 4.
|
Controls and Procedures
|
Evaluation of disclosure controls and procedures
Disclosure controls and procedures. Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were not effective for the material weakness identified below as of May 31, 2012:
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·
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Due to limited resources available, the Company currently does not employ any employees except for its sole director and officer, Jordan Starkman. As such, there is no segregation of duties within the Company.
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It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
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Item 1.
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Legal Proceedings.
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We are currently not involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
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Item 1A.
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Risk Factor
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Not required for Smaller Reporting Company.
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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In September 2011, the Company entered into a rental agreement for a period of two years commencing September 1, 2011. The Company paid $12,000 in cash and will deliver to the lessor shares of common stock worth $3,500 to fulfill rental payment for the entire term of lease. In April 2012, the Company issued 125,000 shares of common stock pursuant to the rental agreement at a price of $.028 per share.
On 5 September 2011, the Company received $5,000 in exchange for 100,000 shares of common stock at $0.05 per share. These shares were issued in May 17, 2012.
On 15 December 2011, the Company received $15,000 in exchange for 750,000 shares of common stock at $0.02 per share. These shares were issued in May 17, 2012.
On 8 February 2012, the Company received $6,600 in exchange for 220,000 shares of common stock at $0.03 per share. These shares were issued in May 17, 2012.
On 29 February 2012, the Company received $26,250 in exchange for 875,000 shares of common stock at $0.03 per share. These shares were issued in May 17, 2012.
On March 5, 2012, the Company received $5000 in exchange for 166,667 shares of common stock at $0.03 per share. These shares will be issued in the next quarter.
On April 13, 2012, the Company received $9000 in exchange for 300,000 shares of common stock at $0.03 per share. These shares will be issued in the next quarter.
The above issued shares were offered and sold in a private transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act. Our reliance on Section 4(2) of the Securities Act was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the stock took place directly between the offerees and us.
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Item 3.
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Defaults Upon Senior Securities.
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None
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Item 4.
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Mine Safety Disclosures
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Not applicable.
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Item 5.
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Other Information.
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None
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Item 6.
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Exhibits
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10.1 Assets Purchase Agreement, dated May 11, 2012, by and among the Company and the Seller Group, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with SEC on May 17, 2012.
10.2 Stock Purchase Agreement, dated May 11, 2012, by and among the Company, Pay By The Day Company Inc., and Jordan Starkman, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with SEC on May 17, 2012.
31.1 Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+ Certification of Principal Executive Officer and Principal Financial Officer of the Registrant pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101* Interactive Data File (Form 10-Q for the quarterly period ended May 31, 2012 furnished in XBRL).
+In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
*Furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise not subject to liability under these sections.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date
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TUCANA LITHIUM CORP.
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July 23, 2012
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By:
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/s/ Jordan Starkman |
| President, Chief Executive Officer, Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer, and Principal Financial Officer) | ||
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