UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ___________
Commission file number 000-54332
LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11380 S. Virginia St. #2011, Reno, Nevada 89521
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (775) 410-5287
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
------------------- -----------------------------------------
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the last 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registration statement was required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of Common Stock held by non-affiliates of the
Registrant on June 29, 2012 was $3,012,637 based on a $0.069 average bid and
asked price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
74,661,408 common shares as of April 3, 2013.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Item 1. Business 3
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 11
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. Mine Safety Disclosures 11
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 11
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 33
Item 9A. Controls and Procedures 33
Item 9B. Other Information 34
Item 10. Directors, Executive Officers and Corporate Governance 34
Item 11. Executive Compensation 39
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 41
Item 13. Certain Relationships and Related Transactions, and Director
Independence 42
Item 14. Principal Accounting Fees and Services 43
Item 15. Exhibits, Financial Statement Schedules 43
2
PART I
ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms "we",
"us" and "our" mean Lithium Corporation, and our wholly owned subsidiary, Nevada
Lithium Corporation, unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on January 30, 2007
under the name "Utalk Communications Inc." At inception, we were a development
stage corporation engaged in the business of developing and marketing a
call-back service using a call-back platform. Because we were not successful in
implementing our business plan, we considered various alternatives to ensure the
viability and solvency of our company.
On August 31, 2009, we entered into a letter of intent with Nevada Lithium
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 changed our name from "Utalk
Communications, Inc." to "Lithium Corporation", by way of a merger with our
wholly owned subsidiary Lithium Corporation, which was formed solely for the
change of name. The name change and forward stock split became effective with
the Over-the-Counter Bulletin Board at the opening for trading on October 1,
2009 under the stock symbol "LTUM". Our CUSIP number is 536804 107.
3
On October 9, 2009, we entered into a share exchange agreement with Nevada
Lithium 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 then
director of our company cancelled 220,000,000 restricted shares of our common
stock.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification,
acquisition, and exploration of metals and minerals with a focus on lithium
mineralization on properties located in Nevada.
Our current operational focus is to conduct exploration activities on our
properties in Nevada, known as the Fish Lake Valley property and the San Emidio
prospect.
FISH LAKE VALLEY PROPERTY
Fish Lake Valley is a lithium enriched playa (also known as a salar, or salt
pan), which is located in northern Esmeralda county in west central Nevada, and
the property is roughly centered at 417050E 4195350N (NAD 27 CONUS). We
currently hold forty - eighty (80) acre Association Placer claims that cover
approximately 3200 acres (1280 hectares). Lithium-enriched Tertiary-era Fish
Lake formation Rhyolitic tuffs or ash flow tuffs have accumulated in a valley or
basinal environment. Over time interstitial formational waters in contact with
these tuffs, have become enriched in lithium, boron and potassium which could
possibly be amenable to extraction by evaporative methods. Our company allowed
56 claims to lapse on September 01, 2012 that covered the southern playa area.
These claims were allowed to lapse as it was determined through the course of
work over the past three years that they are not overly prospective for hosting
lithium brine resources, nor is it strategically advantageous to continue to
hold them.
The property was originally held under mining lease purchase agreement dated
June 1, 2009 between Nevada Lithium Corporation, and Nevada Alaska Mining Co.
Inc., Robert Craig, Barbara Craig, and Elizabeth Dickman. Nevada Lithium had
agreed to issue the vendors $350,000 worth of common stock of our company in
eight regular disbursements. To date all disbursements have been made of stock
worth a total of $350,000, and claim ownership has been transferred to our
company.
The geological setting at Fish Lake Valley is highly analogous to the salars of
Chile, Bolivia, & Peru, and more importantly Clayton Valley, where Chemetall has
its Silver Peak lithium-brine operation. Access is excellent in Fish Lake Valley
with all-weather gravel roads leading to the property from State Highways 264,
and 265, and maintained gravel roads ring the Playa. Power is available
approximately 10 miles from the property, and the village of Dyer is
approximately 12 miles to the south, while the town of Tonopah Nevada is
approximately 50 miles to the East.
4
Our company has completed a number of geochemical and geophysical studies on the
property, and conducted a short drill program on the periphery of the playa in
the fall of 2010. Near-surface brine sampling during the Spring of 2011 outlined
a boron/lithium/potassium anomaly on the northern portions of the northern
playa, that is roughly 1.3 x 2 miles long, which has a smaller higher grade core
where lithium mineralization ranges from 100 to 150 mg/L (Average 122.5 mg/L),
with boron ranging from 1,500 to 2,670 mg/L (Average 2219 mg/L), and potassium
from 5,400 to 8,400 mg/L (Average 7030 mg/L. Wet conditions on the playa
precluded drilling there in 2011, and for a good portion of 2012, however a
window of opportunity presented itself in late fall 2012. In November/December
2012 we conducted a short direct push drill program on the northern end of the
playa, wherein a total of 1,240.58 feet (378.09 meters) was drilled in 20 holes
at 17 discrete sites, and an area of 3,356 feet (1,023 meters) by 2,776 feet
(846 meters) was systematically explored by grid drilling. The deepest hole was
81 feet (24.69 meters), and the shallowest hole that produced brine was 34 feet
(10.36 meters). The average depth of the holes drilled during the program was 62
feet (18.90). The program successfully demonstrated that
lithium-boron-potassium-enriched brines exist to at least 62 feet (18.9 meters)
depth in sandy or silty aquifers that vary from approximately three to ten feet
(one to three meters) in thickness. Lithium values range from 7.6 mg/L to 151.3
mg/L, whereas boron ranges from 146 to 2,160.7 mg/L, and potassium ranged from
0.1 to 1.3%. Average lithium, boron and potassium contents of all samples are
47.05 mg/L, 992.7 mg/L, and 0.535% respectively. The anomaly outlined by the
drill program is 1,476 by 2,461 feet (450 meters by 750 meters), and is not
fully delimited, as the area available for drilling was restricted due to soft
ground conditions to the east and to the south. A 50 mg/L lithium cutoff is used
to define this anomaly and within this zone average lithium, boron and potassium
contents are 90.97 mg/L, 1,532.92 mg/L, and 0.88% respectively.
Our company is very pleased with the results here, and believes that the playa
at Fish Lake Valley may be conducive to the formation of a "Silver Peak" style
lithium brine deposit. Our company is reviewing the results in regards to the
overall geological interpretation of the lithium, boron and potassium bearing
strata. The results confirm the presence of targeted mineralization and further
evaluation programs will focus on determining the extent and depth of
mineralization.
SAN EMIDIO
The San Emidio property was acquired through the staking of claims in September
2011. The twenty - eighty (80) acre Association Placer claims currently held
here cover an area of approximately 1600 acres (640 hectares). Ten claims in the
southern portions of the original claim block that was staked in 2011 were
allowed to lapse on September 01, 2012, and a further ten claims were then
staked and recorded. These new claims are north of, and contiguous to the
surviving claims from our earlier block. The property is approximately 65 miles
north-northeast of Reno, Nevada, and has excellent infrastructure.
We developed this prospect during 2009, and 2010 through surface sampling, and
the early reconnaissance sampling determined that anomalous values for Lithium
occur in the playa sediments over a good portion of the playa. This sampling
appeared to indicate that the most prospective areas on the playa may be on the
newly staked block proximal to the southern margin of the basin, where it is
possible the structures that are responsible for the geothermal system here may
also have influenced lithium deposition in sediments.
Our company conducted near-surface brine sampling in the Spring of 2011, and a
high resolution gravity geophysical survey in Summer/Fall 2011. Our company then
permitted a 7 hole drilling program with the Bureau of Land management in late
Fall 2011, and a direct push drill program was commenced in early February 2012.
Drilling here delineated a narrow elongated shallow brine reservoir which is
greater than 2.5 miles length, and which is adjacent to a basinal feature
outlined by the earlier gravity survey. Two values of over 20 milligrams/liter
lithium were obtained from two holes located centrally in this brine anomaly.
5
Most recently we drilled this prospect in late October 2012, further testing the
area of the property in the vicinity where prior exploration by our company
discovered elevated lithium levels in subsurface brines. During the recent
program a total of 856 feet (260.89 meters) was drilled at 8 discrete sites. The
deepest hole was 160 feet (48.76 meters), and the shallowest hole that produced
brine was 90 feet (27.43 meters). The average depth of the seven hole program
was 107 feet (32.61 meters). The program better defined a lithium-in-brine
anomaly that was discovered in early 2012. This anomaly is approximately 0.6
miles (370 meters) wide at its widest point by more than 3 miles (2 kilometers)
long. The peak value seen within the anomaly is 23.7 mg/l lithium, which is 10
to 20 times background levels outside the anomaly. Our company believes that
much like Fish Lake Valley the playa at San Emidio may be conducive to the
formation of a "Silver Peak" style lithium brine deposit, and the recent
drilling indicates that the anomaly occurs at or near the intersection of
several faults that may have provided the structural setting necessary for the
formation of a lithium-in-brine deposit at depth.
Our company is compiling all data, and intends to amend its permits with the
Bureau of Land Management, and to commence a deeper drilling program here in our
second quarter or possibly early in our third quarter of 2013.
OTHER
Our company allowed all 62 Association Placer Claims held at our Cortez Prospect
in Lander County Nevada to lapse in September of 2011 as, although drilling
there in the Summer of 2011 determined that a considerable volume of brine can
be found locally, lithium contents were below anomalous thresholds, and our
company concluded that it would perhaps be more prudent to focus resources
elsewhere.
Similarly the Salt Wells property was acquired through staking a 12,320 acre
parcel that covers the Eightmile Basin, in Churchill County, Nevada in 2009 and
2010. In September 2011 the property was reduced as we allowed a number of
non-prospective, non-strategic claims to lapse. Exploratory drilling in the Fall
of 2011 was disappointing and the remaining eighty (80) claims here were allowed
to lapse in September 2012.
There are no further commitments or contingencies related to any of these
mineral properties.
We are currently exploring other locations which are felt to be prospective for
hosting lithium mineralization, as well as evaluating opportunities brought to
the company by third parties.
COMPETITION
The mining industry is intensely competitive. We compete with numerous
individuals and companies, including many major mining companies, which have
substantially greater technical, financial and operational resources and staffs.
Accordingly, there is a high degree of competition for access to funds. There
are other competitors that have operations in the area and the presence of these
competitors could adversely affect our ability to compete for financing and
obtain the service providers, staff or equipment necessary for the exploration
and exploitation of our properties.
COMPLIANCE WITH GOVERNMENT REGULATION
Mining operations and exploration activities are subject to various national,
state, provincial and local laws and regulations in United States, as well as
other jurisdictions, which govern prospecting, development, mining, production,
exports, taxes, labor standards, occupational health, waste disposal, protection
of the environment, mine safety, hazardous substances and other matters.
We believe that we are and will continue to be in compliance in all material
respects with applicable statutes and the regulations passed in the United
States. There are no current orders or directions relating to our company with
respect to the foregoing laws and regulations.
6
RESEARCH AND DEVELOPMENT
We have incurred $Nil in research and development expenditures over the last two
fiscal years.
EMPLOYEES
We have no employees. Our officers and directors provide their services to our
company as independent contractors.
SUBSIDIARIES
We have one (1) wholly owned subsidiary, Nevada Lithium Corporation, a Nevada
corporation.
ITEM 1A. RISK FACTORS
Our business operations are subject to a number of risks and uncertainties,
including, but not limited to those set forth below:
RISKS ASSOCIATED WITH MINING
ALL OF OUR PROPERTIES ARE IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT
WE CAN ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON ANY OF OUR PROPERTIES
IN COMMERCIALLY EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY
REVENUES FROM OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS
THAT WE EXPEND ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A
COMMERCIALLY EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral properties, we have not established that
any of them contain any mineral reserve, nor can there be any assurance that we
will be able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/about/forms/industryguides.pdf) as that part of a mineral
deposit which could be economically and legally extracted or produced at the
time of the reserve determination. The probability of an individual prospect
ever having a "reserve" that meets the requirements of the Securities and
Exchange Commission's Industry Guide 7 is extremely remote; in all probability
our mineral resource property does not contain any 'reserve' and any funds that
we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on one or more of our
properties, there can be no assurance that we will be able to develop our
properties into producing mines and extract those resources. Both mineral
exploration and development involve a high degree of risk and few properties
which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
7
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 MINER
AL RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTIES, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.
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.
8
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource properties or from the extraction and sale of lithium and/or associated
byproducts. The price of those commodities has fluctuated widely in recent
years, and is affected by numerous factors beyond our control, including
international, economic and political trends, expectations of inflation,
currency exchange fluctuations, interest rates, global or regional consumptive
patterns, speculative activities and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of base and precious metals, and therefore the economic
viability of any of our exploration properties and projects, cannot accurately
be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
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 $1,186,683 as of December 31, 2012.
At December 31, 2012, we had working capital of $1,195,837. We incurred a net
loss of $755,565 for the year ended December 31, 2012 and $2,439,862 since
inception. We estimate our average monthly operating expenses to be
approximately $45,000, including property costs, management services and
administrative costs. Should the results of our planned exploration require us
to increase our current operating budget, we may have to raise additional funds
to meet our currently budgeted operating requirements for the next 12 months. As
we cannot assure a lender that we will be able to successfully explore and
develop our mineral properties, we will probably find it difficult to raise debt
financing from traditional lending sources. We have traditionally raised our
operating capital from sales of equity securities, but there can be no assurance
that we will continue to be able to do so. If we cannot raise the money that we
need to continue exploration of our mineral properties, we may be forced to
delay, scale back, or eliminate our exploration activities. If any of these were
to occur, there is a substantial risk that our business would fail.
Management has plans to seek additional capital through 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.
9
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
SECURITIES AND EXCHANGE COMMISSION'S PENNY STOCK REGULATIONS AND FINRA'S SALES
PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL
OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission ("SEC") has
adopted Rule 15g-9 which generally defines "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and "accredited investors". The term "accredited investor"
refers generally to institutions with assets in excess of $5,000,000 or
individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the SEC, 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.
10
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 2. PROPERTIES
Our corporate head office is located at 11380 S Virginia St., # 2011, Reno,
Nevada, 89511, our monthly rent is $500. Additionally our company rents storage
space in Reno for field equipment for $71 per month.
MINERAL PROPERTIES
As of the date of this annual report on Form 10-K, we hold the following
properties: Fish Lake Valley and San Emidio. For detailed description of these
properties, please see the section entitled "Business" above.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against us, nor
are we involved as a plaintiff in any material proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares are quoted on the Over-the-Counter Bulletin Board under the
symbol "LTUM." The following quotations, obtained from Stockwatch, reflect the
high and low bids for our common shares based on inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
11
The high and low bid prices of our common stock for the periods indicated below
are as follows:
OTC Bulletin Board(1)
Quarter Ended High Low
------------- ---- ---
December 31, 2012 $ 0.08 $ 0.04
September 30, 2012 $ 0.079 $ 0.0553
June 30, 2012 $ 0.13 $ 0.055
March 31, 2012 $ 0.17 $ 0.102
December 31, 2011 $ 0.32 $ 0.12
September 30, 2011 $ 0.38 $ 0.151
June 30, 2011 $ 1.92 $ 0.18
March 31, 2011 $ 0.30 $ 0.165
December 31, 2010 $ 0.40 $ 0.25
----------
(1) Over-the-counter market quotations reflect inter-dealer prices without
retail mark-up, mark-down or commission, and may not represent actual
transactions.
Our shares are issued in registered form. Nevada Agency and Transfer Company, 50
West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone: (775) 322-0626;
Facsimile: (775) 322-5623 is the registrar and transfer agent for our common
shares.
On April 3, 2013, the shareholders' list showed 11 registered shareholders with
74,661,408 common shares outstanding.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and have no present
intention of paying any dividends on the shares of our common stock. Our current
policy is to retain earnings, if any, for use in our operations and in the
development of our business. Our future dividend policy will be determined from
time to time by our board of directors.
EQUITY COMPENSATION PLAN INFORMATION
On December 29, 2009, our board of approved the adoption of the 2009 Stock Plan
which permits our company to issue up to 6,050,000 shares of our common stock to
directors, officers, employees and consultants. This plan has not been approved
by our security holders.
The following table summarizes certain information regarding our equity
compensation plans as at December 31, 2012:
12
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Number of Securities to be Remaining Available for
Issued Upon Exercise of Weighted-Average Exercise Future Issuance Under
Outstanding Options, Price of Outstanding Options, Equity Compensation Plans
Plan Category Warrants and Rights Warrants and Rights (excluding column (a))
------------- ------------------- ------------------- ----------------------
Equity Compensation Plans Nil Nil Nil
Approved by Security
Holders
Equity Compensation Plans Not 1,050,000 (1) $0.07 5,000,000
Approved by Security Holders
Total 1,050,000 $0.07 4,650,000
----------
(1) Includes 450,000 stock options issued on May 31, 2012 and 600,000
unexercised stock options issued on September 23, 2010.
CONVERTIBLE SECURITIES
As of December 31, 2012, we had outstanding options to purchase 1,050,000 shares
of our common stock exercisable at $0.07.
On May 31, 2012, the directors of our company determined that due to current
adverse market conditions it would be in the best interests of our company to
re-price an aggregate of 500,000 incentive stock options granted to directors
and officers of our company on September 23, 2010 with an exercise price of
$0.28, and an aggregate of 450,000 incentive stock options granted to directors
and officers of our company on September 23, 2010 with an exercise price of
$0.25 to reflect the closing price for our company's common shares quoted on the
OTC Bulletin Board on May 29, 2012 of $0.07.
Also on May 31, 2012, our company granted an aggregate of 400,000 incentive
stock options to certain directors and consultants of our company at an exercise
price of $0.07, exercisable for a period of five years from the date of grant.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
Effective November 19, 2012, we closed a private placement wherein we issued
11,000,000 units at a price of $0.05 per unit, for gross proceeds of $550,000.
Each unit consisted of one share of common stock and one common share purchase
warrant. Each common share purchase warrant is exercisable into one share of
common stock for a period of 12 months from the closing date at a price of $0.10
per share and at a price of $0.15 per share for a period of a further 12 months
thereafter. We issued the securities to one non U.S. person relying on
Regulation S and/or Section 4(2) of the Securities Act of 1933.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during
our fourth quarter of our fiscal year ended December 31, 2012.
13
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our consolidated
audited financial statements and the related notes that appear elsewhere in this
annual report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to
those discussed below and elsewhere in this annual report, particularly in the
section entitled "Risk Factors" beginning on page 8 of this annual report.
Our consolidated audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
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.
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.
PLAN OF OPERATIONS AND CASH REQUIREMENTS
CASH REQUIREMENTS
Our current operational focus is to conduct exploration activities on our
properties in Nevada, known as the Fish Lake Valley Property and the San Emidio
Property. We expect to review other potential exploration projects from time to
time as they are presented to us.
Our net cash provided by financing activities during the year ended December 31,
2012 was $550,000 as compared to $84,984 during the year ended December 31,
2011.
Over the next twelve months we expect to expend funds as follows:
ESTIMATED NET EXPENDITURES DURING THE NEXT TWELVE MONTHS
General, Administrative Expenses $235,000
Exploration Expenses 270,000
Travel 40,000
--------
TOTAL $545,000
========
We have suffered recurring losses from operations. The continuation of our
company is dependent upon our company attaining and maintaining profitable
operations and raising additional capital as needed.
14
The continuation of our business is dependent upon obtaining further financing,
a successful program of exploration and/or development, and, finally, achieving
a profitable level of operations. The issuance of additional equity securities
by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. As noted herein, we are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will be unable to conduct our operations as planned, and we will not be able
to meet our other obligations as they become due. In such event, we will be
forced to scale down or perhaps even cease our operations.
RESULTS OF OPERATIONS - TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
The following summary of our results of operations should be read in conjunction
with our financial statements for the year ended December 31, 2012, which are
included herein.
Our operating results for the twelve months ended December 31, 2012, for the
twelve months ended December 31, 2011 and the changes between those periods for
the respective items are summarized as follows:
Change Between
Twelve Month
Period Ended
Twelve Months Twelve Months December 31, 2012
Ended Ended and
December 31, December 31, December 30,
2012 2011 2011
---------- ---------- ----------
Revenue $ Nil $ Nil $ Nil
Professional fees 74,106 27,903 46,203
Amortization 215 552 (337)
Exploration expenses 102,839 264,379 (161,540)
Consulting fees 70,328 49,120 21,208
Insurance expense 16,038 15,601 437
Investor relations 49,420 71,406 (21,986)
Stock Option Compensation 35,415 Nil 35,415
Transfer agent and filing fees 11,102 12,536 (1,434)
Travel 17,824 18,805 (981)
Write-down of mineral properties 369,137 134,213 234,924
General and administrative 10,638 14,668 (4,031)
Other income Nil (17,952) (17,952)
Interest (income) (1,497) (1,305) (192)
Interest expense Nil (985) (985)
---------- ---------- ----------
Net loss $ 755,565 $ 590,911 $ 164,654
========== ========== ==========
Our accumulated losses increased to $2,439,862 as of December 31, 2012. Our
financial statements report a net loss of $755,565 for the twelve month period
ended December 31, 2012 compared to a net loss of $590,911 for the twelve month
period ended December 31, 2011. Our losses have increased, primarily as a result
of an increase in the write down of our mineral properties, offset by a decrease
in exploration expenses In addition to an increase in professional fees, stock
option compensation expense and consulting fees, offset by a decrease investor
relation fees.
15
Our operating expenses for the year ended December 31, 2012 were $757,062
compared to $609,183 as of December 31, 2011. The increase in operating expenses
was primarily as a result an increase in the write down of our mineral
properties, offset by a decrease in exploration expenses. In addition to an
increase in professional fees, stock option compensation expense and consulting
fees, offset by a decrease investor relation fees.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, December 31,
2012 2011
---------- ----------
Current assets $1,249,038 $1,044,125
Current liabilities 53,201 21,730
---------- ----------
Working capital $1,195,837 $1,022,395
========== ==========
CASH FLOWS
Year Ended
December 31,
2012 2011
---------- ----------
Net cash (used in) operating activities $(307,617) $(487,498)
Net Cash (used in) investing activities (25,762) (26,214)
Net cash provided by financing activities 550,000 84,984
--------- ---------
Net increase (decrease) in cash during period $ 216,621 $(428,728)
========= =========
Our total current liabilities as of December 31, 2012 were $53,201 as compared
to total current liabilities of $21,730 as of December 31, 2011. The increase
was due to accumulated drilling expenses related to our recent drilling program
at Fish Lake Valley in December, 2012.
OPERATING ACTIVITIES
Net cash used in operating activities was $307,617 for the year ended December
31, 2012 compared with net cash used in operating activities of $487,498 in the
same period in 2011.
INVESTING ACTIVITIES
Net cash used in investing activities was $25,762 for the year ended December
31, 2012 compared to net cash used in investing activities of $26,214 in the
same period in 2011.
FINANCING ACTIVITIES
Net cash provided by financing activities was $550,000 for the year ended
December 31, 2012 compared to $84,984 provided by financing activities in the
same period in 2011.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
16
GOING CONCERN
As of December 31, 2012, our company has accumulated losses of $2,439,862 since
inception and has earned no revenues since inception. Our company intends to
fund operations through equity financing arrangements, which may be insufficient
to fund its capital expenditures, working capital and other cash requirements
for the year ending December 31, 2013. The ability of our company to emerge from
the development stage is dependent upon, among other things, obtaining
additional financing to continue operations, and development of our business
plan. In response to these problems, management intends to raise additional
funds through public or private placement offerings. These factors, among
others, raise substantial doubt about our company's ability to continue as a
going concern. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with the accounting principles generally accepted in the United States of
America. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. These estimates and assumptions are affected by
management's application of accounting policies. We believe that understanding
the basis and nature of the estimates and assumptions involved with the
following aspects of our financial statements is critical to an understanding of
our financial statements.
EXPLORATION STAGE COMPANY
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration stage companies. An exploration stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
ACCOUNTING BASIS
Our company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). Our
company has adopted a December 31 fiscal year end.
CASH AND CASH EQUIVALENTS
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
CONCENTRATIONS OF CREDIT RISK
Our company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. Our company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. Our company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
17
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Our company is in the exploration stage and has yet to realize revenues from
operations. Once our company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of our wholly-owned
subsidiary. All material inter-company transactions have been eliminated.
LOSS PER SHARE
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per share assumes the conversion,
exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on earnings per share. The
dilutive effect of convertible securities is reflected in diluted earnings per
share by application of the "if converted" method. In the periods in which a
loss is incurred, the effect of potential issuances of shares under options and
warrants would be anti-dilutive, and therefore basic and diluted losses per
share are the same.
PROPERTY AND EQUIPMENT
Property and equipment is stated on the basis of historical cost less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets which has been estimated as
2 years. Impairment losses are recorded on computer equipment 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.
INCOME TAXES
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
FINANCIAL INSTRUMENTS
Our company's financial instruments consist of cash, accounts receivable,
prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise
noted, it is management's opinion that our company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.
Because of the short maturity and capacity of prompt liquidation of such assets
and liabilities, the fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
18
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although our company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee our company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impairment of $369,137 and $134,213 was recorded in the years ended December 31,
2012 and 2011, respectively, relating to the abandonment of some mineral claims.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on our company's results of
operations, financial position or cash flow.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LITHIUM CORP.
(AN EXPLORATION STAGE COMPANY)
TABLE OF CONTENTS
DECEMBER 31, 2012
Report of Independent Registered Public Accounting Firm 21
Consolidated Balance Sheets as of December 31, 2012 and 2011 22
Consolidated Statements of Operations for the years ended
December 31, 2012 and 2011 and for the period from
January 30, 2007 (Date of Inception) to December 31, 2012 23
Consolidated Statement of Stockholders' Equity as of
December 31, 2012 24
Consolidated Statements of Cash Flows for the years ended
December 31, 2012 and 2011 and for the period from
January 30, 2007 (Date of Inception) to December 31, 2012 25
Notes to the Consolidated Financial Statements 26
20
Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Lithium Corporation
Reno, Nevada
We have audited the accompanying consolidated balance sheets of Lithium
Corporation (the "Company") as of December 31, 2012 and 2011, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended and the period from January 30, 2007 (Inception) to
December 31, 2012. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company has
determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lithium Corporation
as of December 31, 2012 and 2011 and the results of its operations and its cash
flows for the years then ended and for the period from January 30, 2007
(inception) through December 31, 2012 in conformity with accounting principles
generally accepted in the United States of America.
/s/ Silberstein Ungar, PLLC
--------------------------------------
Bingham Farms, Michigan
April 11, 2013
21
Lithium Corporation
(An Exploration Stage Company)
Consolidated Balance Sheets
As of December 31, 2012 and 2011
December 31, December 31,
2012 2011
------------ ------------
ASSETS
Current Assets
Cash $ 1,186,651 $ 970,030
Accounts receivable 0 674
Prepaid expenses 62,387 73,421
------------ ------------
Total Current Assets 1,249,038 1,044,125
------------ ------------
Other Assets
Property and equipment, net 162 377
Mineral properties 163,139 506,516
------------ ------------
Total Other Assets 163,301 506,893
------------ ------------
TOTAL ASSETS $ 1,412,339 $ 1,551,018
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 53,201 $ 21,730
------------ ------------
TOTAL LIABILITIES 53,201 21,730
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, 3,000,000,000 shares authorized, par value
$0.001; 74,661,408 common shares issued and outstanding
(2011 - 63,661,408) 74,662 63,662
Additional paid in capital 3,292,348 1,718,093
Additional paid in capital - options 174,041 179,587
Additional paid in capital - warrants 257,949 1,252,243
Deficit accumulated during the exploration stage (2,439,862) (1,684,297)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,359,138 1,529,288
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,412,339 $ 1,551,018
============ ============
See the accompanying notes to the consolidated financial statements
22
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Operations
For the years ended December 31, 2012 and 2011
For the period from January 30, 2007 (Inception) to December 31, 2012
Period from
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2012 2011 2012
------------ ------------ ------------
REVENUE $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES
Professional fees 74,106 27,903 212,625
Depreciation 215 552 2,272
Exploration expenses 102,839 264,379 616,203
Consulting fees 70,328 49,120 298,192
Insurance expense 16,038 15,601 34,942
Investor relations 49,420 71,406 231,413
Management fees -- -- 53,800
Transfer agent and filing fees 11,102 12,536 45,997
Travel 17,824 18,805 63,152
Stock option compensation 35,415 -- 279,460
Website development costs -- -- 3,912
Write-down of website costs -- -- 12,000
Write-down of mineral properties 369,137 134,213 518,746
General and administrative 10,638 14,668 76,052
------------ ------------ ------------
TOTAL OPERATING EXPENSES 757,062 609,183 2,448,766
------------ ------------ ------------
LOSS BEFORE FROM OPERATIONS (757,062) (609,183) (2,448,766)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Other income -- 17,952 17,952
Interest income 1,497 1,305 2,802
Interest expense -- (985) (11,850)
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) 1,497 18,272 8,904
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (755,565) (590,911) (2,439,862)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (755,565) $ (590,911) $ (2,439,862)
============ ============ ============
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.01) $ (0.01)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 65,314,413 63,244,913
============ ============
See the accompanying notes to the consolidated financial statements
23
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statement of Stockholders' Equity
From January 30, 2007 (Inception) to December 31, 2012
Deficit
Additional Additional Accumulated
Common Stock Additional Paid in Paid in during the
-------------------- Paid in Capital- Capital- Exploration
Shares Amount Capital Warrants Options Stage Total
------ ------ ------- -------- ------- ----- -----
Balance, January 30, 2007
(date of inception) -- $ -- $ -- $ -- $ -- $ -- $ --
Shares issued to founder on
January 30, 2007 @ $0.001
per share (par value $0.001
per share) 240,000,000 240,000 (220,000) -- -- -- 20,000
Net loss for the period ended
December 31, 2007 -- -- -- -- -- (23,448) (23,448)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2007 240,000,000 240,000 (220,000) -- -- (23,448) (3,448)
Common stock issued for cash
@ $0.10 per share 28,200,000 28,200 18,800 -- -- -- 47,000
Net loss for the year ended
December 31, 2008 -- -- -- -- -- (26,868) (26,868)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2008 268,200,000 268,200 (201,200) -- -- (50,316) 16,684
Shares issued in conjunction
with merger 12,350,000 12,350 537,355 -- -- -- 549,705
Shares cancelled 220,000,000) (220,000) 220,000 -- -- -- --
Net loss for the year ended
December 31, 2009 -- -- -- -- -- (190,414) (190,414)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2009 60,550,000 60,550 556,155 -- -- (240,730) 375,975
Shares issued with respect to
Fish Lake 367,288 368 174,632 -- -- -- 175,000
Common stock issued for cash
@ $1.00 per share 2,000,000 2,000 745,757 1,252,243 -- -- 2,000,000
Stock options issued -- -- -- -- 244,045 -- 244,045
Net loss for the year ended
December 31, 2010 -- -- -- -- -- (852,656) (852,656)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2010 62,917,288 62,918 1,476,544 1,252,243 244,045 (1,093,386) 1,942,364
Shares issued with respect
to Fish Lake 394,120 394 87,106 -- -- -- 87,500
Forgiveness of debt -- -- 6,335 -- -- -- 6,335
Options exercised 350,000 350 148,108 -- (64,458) -- 84,000
Net loss for the year ended
December 31, 2011 -- -- -- -- -- (590,911) (590,911)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2011 63,661,408 63,662 1,718,093 1,252,243 179,587 (1,684,297) 1,525,248
Stock options issued -- -- -- -- 23,891 -- 23,891
Modification of previously
issued stock options -- -- -- -- 11,524 -- 11,524
Issuance of common stock
and warrants for cash 11,000,000 11,000 281,051 257,949 -- -- 550,000
Expiration of stock options
and stock warrants -- -- 1,293,204 (1,252,243) (40,961) -- 0
Net loss for the year ended
December 31, 2012 -- -- -- -- -- (755,565) (755,565)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2012 74,661,408 $ 74,662 $3,292,348 $ 257,949 $174,041 $(2,439,862) $1,359,138
=========== ========= ========== ========== ======== =========== ==========
See the accompanying notes to the consolidated financial statements
24
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
For the years ended December 31, 2012 and 2011
For the period from January 30, 2007 (Inception) to December 31, 2012
Period from
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2012 2011 2012
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period $ (755,565) $ (590,911) $ (2,439,862)
Adjustment for non-cash items:
Write-down of software development -- -- 12,000
Write-down of mineral properties 369,139 134,213 518,747
Stock-based compensation 35,415 -- 279,460
Depreciation 215 552 2,271
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 674 (674) --
(Increase) decrease in prepaid expenses 11,034 (10,521) (62,387)
Increase (decrease) in accounts payable
and accrued liabilities 31,471 (20,157) 53,201
------------ ------------ ------------
Net Cash Used in Operating Activities (307,617) (487,498) (1,636,570)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment -- (431) (2,433)
Purchase of software development -- -- (12,000)
Interest in mineral properties (25,762) (25,783) (419,386)
------------ ------------ ------------
Net Cash Used in Investing Activities (25,762) (26,214) (433,819)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment to) director -- 984 6,335
Proceeds from sale of stock and warrants 550,000 84,000 3,250,705
------------ ------------ ------------
Net Cash Provided by Financing Activities 550,000 84,984 3,257,040
------------ ------------ ------------
Increase (decrease) in cash 216,621 (428,728) 1,186,651
Cash, beginning of period 970,030 1,398,758 --
------------ ------------ ------------
Cash, end of period $ 1,186,651 $ 970,030 $ 1,186,651
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 0 $ 0 $ 10,451
============ ============ ============
Cash paid for income taxes $ 0 $ 0 $ 0
============ ============ ============
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for mineral properties $ 0 $ 87,500 $ 262,500
============ ============ ============
Shareholder debt converted to contributed capital $ 0 $ 6,335 $ 6,335
============ ============ ============
See the accompanying notes to the consolidated financial statements
25
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lithium Corporation (formerly Utalk Communications Inc.) was incorporated on
January 30, 2007 under the laws of Nevada. On September 30, 2009, Utalk
Communications Inc. changed its name to Lithium Corporation.
Nevada Lithium Corporation was incorporated on March 16, 2009 under the laws of
Nevada under the name Lithium Corporation. On September 10, 2009, the Company
amended its articles of incorporation to change its name to Nevada Lithium
Corporation. By agreement dated October 09, 2009 Nevada Lithium Corporation and
Lithium Corporation amalgamated as Lithium Corporation. Lithium Corporation is
engaged in the acquisition and development of certain lithium interests in the
state of Nevada, and is currently in the exploration stage. These consolidated
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles.
Exploration Stage Company
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration stage companies. An exploration stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
26
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned
subsidiary. All material inter-company transactions have been eliminated.
Loss per Share
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per share assumes the conversion,
exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on earnings per share. The
dilutive effect of convertible securities is reflected in diluted earnings per
share by application of the "if converted" method. In the periods in which a
loss is incurred, the effect of potential issuances of shares under options and
warrants would be anti-dilutive, and therefore basic and diluted losses per
share are the same.
Property and Equipment
Property and equipment is stated on the basis of historical cost less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets which has been estimated as
2 years. Impairment losses are recorded on computer equipment 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.
Income Taxes
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
Financial Instruments
The Company's financial instruments consist of cash, prepaid expenses, and
accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. Because of
the short maturity and capacity of prompt liquidation of such assets and
liabilities, the fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impairment of $369,137 and $134,213 was recorded in the years ended December 31,
2012 and 2011, respectively, relating to the abandonment of some mineral claims.
Recent Accounting Pronouncements
Lithium does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
27
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 2 - PREPAID EXPENSES
Prepaid expenses consisted of the following at December 31, 2012 and 201:
2012 2011
-------- --------
Professional fees $ 3,310 $ 0
Exploration costs 8,964 9,000
Bonds 28,644 39,754
Transfer fees 1,800 0
Insurance 13,844 12,395
Office 800 6,102
Investor relations 5,025 6,170
-------- --------
Total Prepaid Expenses $ 62,387 $ 73,421
======== ========
NOTE 3 - PROPERTY AND EQUIPMENT
2012 2011
-------- --------
Computer Equipment $ 2,433 $ 2,433
Less: Accumulated depreciation (2,217) (2,056)
-------- --------
Property and equipment, net $ 162 $ 377
======== ========
Depreciation expense was $215 and $552 for the years ended December 31, 2012 and
2011, respectively.
NOTE 4 - MINERAL PROPERTIES
Fish Lake Property
The Company has purchased a 100% interest in the Fish Lake property by making
staged payments of $350,000 worth of common stock. Title to the pertinent claims
was transferred to the Company through quit claim deed dated June 1st 2011, and
this quitclaim was recorded at the county level on August 3, 2011, and at the
BLM on August 4, 2011. Quarterly stock disbursements were made on the following
schedule:
1st Disbursement: Within 10 days of signing agreement (paid)
2nd Disbursement: within 10 days of June 30, 2009 (paid)
3rd Disbursement: within 10 days of December 30, 2009 (paid)
4th Disbursement: within 10 days of March 31, 2010 (paid)
5th Disbursement: within 10 days of June 30, 2010 (paid)
6th Disbursement: within 10 days of September 30, 2010 (paid)
7th Disbursement: within 10 days of December 31, 2010 (paid)
8th Disbursement: within 10 days of March 31, 2011 (paid)
As of December 31, 2012, the Company has recorded $434,328 in acquisition costs
related to the Fish Lake Property and associated impairment of $276,908 related
to abandonments of claims. The carrying value of the Fish Lake Property was
$157,420 as of December 31, 2012.
28
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 4 - MINERAL PROPERTIES (CONTINUED)
Staked Properties
The Company has staked claims with various registries as summarized below:
Name Claims (Area in Acres) Cost Impairment Net Carrying Value
---- ---------------------- ---- ---------- ------------------
Salt Wells 156 (12,480) $86,510 $(86,510) $ 0
San Emidio 20 (1,600) $11,438 $(5,719) $5,719
The Company performs an impairment test on an annual basis to determine whether
a write-down is necessary with respect to the properties. The Company believes
no circumstances have occurred and no evidence has been uncovered that warrant a
write-down of the mineral properties other than those abandoned by management
and thus included in write-down of mineral properties. Impairment of $369,137
and $134,213 was recorded in the years ended December 31, 2012 and 2011,
respectively, relating to the abandonment of some mineral claims.
NOTE 5 - CAPITAL STOCK
The Company is authorized to issue 300,000,000 shares of it $0.001 par value
common stock. On September 30, 2009, the Company effected a 60-for-1 forward
stock split of its $0.001 par value common stock.
All share and per share amounts have been retroactively restated to reflect the
splits discussed above.
Common Stock
On January 30, 2007, the Company issued 240,000,000 shares of its common stock
to founders for proceeds of $20,000.
During the year-ended December 31, 2008, the Company issued 28,200,000 shares of
its common stock for total proceeds of 47,000.
On October 9, 2009, the Company cancelled 220,000,000 shares of its common
stock. Also on October 9, 2009, the Company issued 12,350,000 shares of its
common stock for 100 percent of the issued and outstanding stock of Nevada
Lithium Corp.
On January 10, 2010, the Company issued 53,484 shares of its common stock as
part of the Fish Lake Property acquisition. On April 30, 2010, the Company
issued 38,068 shares of its common stock as part of the Fish Lake Property
acquisition. On July 10, 2010, the Company issued 104,168 shares of its common
stock as part of the Fish Lake Property acquisition. On October 10, 2010, the
Company issued 171,568 of its common stock as part of the Fish Lake Property
acquisition. The total shares issued for the Fish Lake property during the year
ended December 31, 2010 was 367,288 valued at $175,000.
On March 24, 2010, the Company issued 2,000,000 units in a private placement,
raising gross proceeds of $2,000,000, or $1.00 per unit. Each unit consists of
one common share in the capital of our company and one non-transferable common
share purchase warrant. Each whole common share purchase warrant
non-transferable entitles the holder thereof to purchase one share of common
stock in the capital of our company, for a period of twelve months commencing
the closing, at a purchase price of $1.20 per warrant share and at a purchase
price of $1.35 per warrant share for a period of twenty-four months thereafter.
29
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 5 - CAPITAL STOCK (CONTINUED)
On January 10, 2011, the Company issued 163,856 shares of its common stock as
part of the Fish Lake Property acquisition. On April 10, 2011, the Company
issued 230,264 shares of its common stock as part of the Fish Lake Property
acquisition. The total shares issued for the Fish Lake property during the year
ended December 31, 2011 was 394,120 valued at $87,500.
On April 28, 2011, the Company issued 150,000 shares of its common stock as part
of a stock option exercise. On May 5, 2011, the Company issued 200,000 shares of
its common stock as part of a stock option exercise. The Company received
proceeds totaling $84,000 for the exercise of the 350,000 stock options.
On November 19, 2012, the Company issued 11,000,000 shares of its common stock
and stock warrants as part of private placement for total proceeds of $550,000.
There were 74,661,408 shares of common stock issued and outstanding as of
December 31, 2012.
WARRANTS
Outstanding at
Issue Date Number Price Expiry Date December 31, 2012
---------- ------ ----- ----------- -----------------
Nov. 19, 2012 11,000,000 $0.10 Nov. 18, 2014 11,000,000
The Company issued 11,000,000 warrants in connections with a private placement
during the year ended December 31, 2012. The warrants were valued using the
Black-Scholes option pricing model using the following assumptions: term of 5
years, dividend yield of 0%, risk free interest rates of 0.67% and volatility of
129%. The fair value of the warrants was adjusted against additional paid in
capital.
Additionally, during the year ended December 31, 2012, 2,000,000 warrants
expired and the value was reclassified to additional paid-in capital.
STOCK BASED COMPENSATION
During the year ended December 31, 2010, the Company granted 500,000 options at
an exercise price of $0.28 and 400,000 options at an exercise price of $0.24 to
consultants in exchange for various professional services. On May 31, 2012, the
options granted with exercise prices of $0.28 and $0.24 were modified to
exercise prices of $0.07. The modification resulted in stock-based compensation
of $11,524. Also on May 31, 2012, the Company granted an additional 400,000
options to consultants for management services with an exercise price of $0.07.
These options were vested on the date of grant and resulted in stock-based
compensation of $23,891. The Company uses the Black-Scholes option valuation
model to value stock options. The Black- Scholes model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. The model requires management to make estimates,
which are subjective and may not be representative of actual results.
Assumptions used to determine the fair value of the remaining stock options are
as follows:
Modifications New options
------------- -----------
Risk free interest rate 0.35% 0.67%
Expected dividend yield 0% 0%
Expected stock price volatility 129% 129%
Expected life of options 3.33 years 5 years
30
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 5 - CAPITAL STOCK (CONTINUED)
Weighted Total
Average Weighted
Total Remaining Average
Exercise Options Life Exercise Options
Prices Outstanding (Years) Price Exercisable
------ ----------- ------- ----- -----------
$0.07 1,050,000 2.17 $0.07 1,050,000
Total stock-based compensation for the year- ended December 31, 2011 was $35,415
(2011: Nil).
The following table summarizes the stock options outstanding at December 31,
2012:
Outstanding at
Issue Date Number Price Expiry Date December 31, 2012
---------- ------ ----- ----------- -----------------
September 23, 2010 500,000 $0.07 September 23, 2015 500,000
September 23, 2010 150,000 $0.07 September 23, 2015 150,000
May 31, 2012 300,000 $0.07 March 13, 2013 300,000
May 31, 2012 100,000 $0.07 May 31, 2017 100,000
--------- ---------
Total 1,050,000 1,050,000
========= =========
NOTE 6 - INCOME TAXES
As of December 31, 2012, the Company had net operating loss carry forwards of
approximately $2,439,862 that may be available to reduce future years' taxable
income in varying amounts through 2031. Future tax benefits which may arise as a
result of these losses have not been recognized in these financial statements,
as their realization is determined not likely to occur and accordingly, the
Company has recorded a valuation allowance for the deferred tax asset relating
to these tax loss carry-forwards.
The provision for Federal income tax consists of the following for the years
ended December 31, 2012 and 2011:
2012 2011
---------- ----------
Federal income tax benefit attributable to:
Current operations $ 256,892 $ 200,910
Less: valuation allowance (256,892) (200,910)
---------- ----------
Net provision for Federal income taxes $ 0 $ 0
========== ==========
The cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows at December 31, 2012 and
2011:
2012 2011
---------- ----------
Deferred tax asset attributable to:
Net operating loss carryover $ 829,553 $ 572,661
Less: valuation allowance (829,553) (572,661)
---------- ----------
Net deferred tax asset $ 0 $ 0
========== ==========
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry forwards of approximately $2,439,862 for Federal income tax
reporting purposes are subject to annual limitations. Should a change in
ownership occur net operating loss carry forwards may be limited as to use in
future years.
31
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2012
NOTE 7 - RELATED PARTY TRANSACTIONS
An officer and shareholder of the Company was paid $96,600 and $101,350 for
consulting and exploration related fees during the years ended December 31, 2012
and 2011, respectively.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer
has provided office services without charge. There is no obligation for the
officer to continue this arrangement. Such costs are immaterial to the financial
statements and accordingly are not reflected herein. The officers and directors
are involved in other business activities and most likely will become involved
in other business activities in the future.
NOTE 9 - SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations
subsequent to December 31, 2012 to the date these financial statements were
issued, and has determined that it does not have any material subsequent events
to disclose in these financial statements.
32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements related to accounting principles or practices,
financial statement disclosure, internal controls or auditing scope or procedure
during the two fiscal years and interim periods, including the interim period up
through the date the relationship ended.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to our management,
including our president (our principal executive officer, principal financial
officer and principle accounting officer) to allow for timely decisions
regarding required disclosure.
As of December 31, 2012, the end of our fiscal year covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (our principal executive officer, principal financial officer and
principle accounting officer), of the effectiveness of the design and operation
of our disclosure controls and procedures. Based on the foregoing, our president
(our principal executive officer, principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this annual report.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control include providing
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United
States. Our management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2012. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") in INTERNAL CONTROL-INTEGRATED
FRAMEWORK. Our management has concluded that, as of December 31, 2012, our
internal control over financial reporting is effective. Our management reviewed
the results of their assessment with our board of directors.
This annual report does not include an attestation report of our company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit our company to provide only management's report in this annual report.
33
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Internal control over financial reporting has inherent limitations which include
but is not limited to the use of independent professionals for advice and
guidance, interpretation of existing and/or changing rules and principles,
segregation of management duties, scale of organization, and personnel factors.
Internal control over financial reporting is a process which involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the year ended December 31, 2012 that have materially or
are reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 9B. OTHER INFORMATION
Effective April 11, 2012, John Webster resigned as a director of our company.
Mr. Webster's resignation was not the result of any disagreements with our
company regarding our operations, policies, practices or otherwise.
On May 31, 2012, Henry Tonking resigned as a director of our company. Mr.
Tonking's resignation was not the result of any disagreements with our company
regarding our operations, policies, practices or otherwise.
Effective December 19, 2012, Stephen Goss resigned as a director of our company
and James Brown was appointed a director of our company. Mr. Goss' resignation
was not the result of any disagreements with our company regarding our
operations, policies, practices or otherwise
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All directors of our company hold office until the next annual meeting of the
security holders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
Position Held Date First Elected
Name with the Company Age or Appointed
---- ---------------- --- ------------
Tom Lewis President, Treasurer, 58 August 25, 2009
Secretary and Director
John Hiner Vice President of 65 October 25, 2009
Exploration and Director
James Brown Director 49 December 19, 2012
34
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience during
at least the past five years of each director, executive officer and key
employee of our company, indicating the person's principal occupation during
that period, and the name and principal business of the organization in which
such occupation and employment were carried out.
TOM LEWIS - PRESIDENT, TREASURER, SECRETARY AND DIRECTOR
Mr. Lewis has more than 38 years experience in the oil and gas and mineral
exploration industries. He has held various positions including project
geologist, project manager, senior project geologist, and vice president
exploration. He also was an integral member of the development team that
explored, and developed the Cortez Hills deposit in Crescent Valley Nevada.
In 1974 Mr. Lewis started his career in the oil fields, and worked in the
geophysical, and drilling industries until 1981, when he became a petroleum
landman for Westburne Petroleum & Minerals. While there he was responsible for
the acquisition and disposition of interests and maintaining title to petroleum
lands in various locales in the United States, and Western Canada. In 1989 he
started his own business as a consulting geologist and has worked in numerous
locations over the past 20 years, including the United States, Mexico, Canada,
Portugal, Chile, Africa, India and Honduras. Some of the positions he held
include: working with Teck Cominco in 1996 evaluating and exploring precious
metal deposits in Southern Mexico; project manager on the Farim phosphate
deposit for Champion Resources in Guinea Bissau, West Africa in 1998; project
geologist in 2001 and 2002 for Crystal Graphite Corporation, project geologist
on the Midway Gold project in Tonopah Nevada, followed by two years as senior
geologist at the Cortez Joint Venture in Crescent Valley, Nevada. By August 2005
he was named vice president of exploration in Portugal for St Elias Mines,
working on the Jales project, and developing grass roots projects in Nevada.
Following his experience in Portugal and Nevada he consulted to Selkirk Metals
and New World Resource Corp. on projects in western Canada and Nevada. Most
recently he consulted to Kinross Gold USA evaluating possible acquisitions.
JOHN HINER - VICE PRESIDENT OF EXPLORATION AND DIRECTOR
Mr. Hiner is a geologist who has over 33 years of experience in the mineral
exploration, and oil and gas industries, and has considerable experience in this
capacity, and also has been an officer or director of several public companies.
Mr. Hiner brings a great deal of depth and insight to the board of directors of
our company.
JAMES BROWN - DIRECTOR
Mr. Brown is a mining engineer with more than 25 years experience in the coal
mining and exploration industry in Australia and Indonesia, including 22 years
at Australian based coal producer New Hope Corporation. During this time he has
held positions from front line mine planning and supervision, land acquisition,
government approvals and mine and business development. Mr. Brown is also the
managing director of Altura Mining Limited (ASX: AJM) an Australian listed
company focused on coal, lithium and iron ore exploration. Since his appointment
as general manager in 2008 and subsequently managing director of Altura in
September 2010, Mr. Brown has overseen the growth of Altura from $10 million to
$80 million in market capitalization via successful capital raisings and
acquisition of near term production projects such as Tabalong Coal (Indonesia),
Altura Lithium (Western Australia) and Mt Webber Iron Ore (Western Australia).
James is a member of the Australian Institute of Company Directors (MAICD).
EMPLOYMENT AGREEMENTS
We have no formal employment agreements with any of our directors or officers.
35
FAMILY RELATIONSHIPS
There are no family relationships between any of our directors, executive
officers and proposed directors or executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, none of our directors or executive officers has,
during the past ten years:
1. been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
2. had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer,
either at the time of the bankruptcy filing or within two years prior
to that time;
3. been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type
of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with
persons engaged in any such activity;
4. been found by a court of competent jurisdiction in a civil action or
by the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated;
5. been the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
6. been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26)), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
36
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the SEC initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our shares of common stock and other
equity securities, on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by our company,
or written representations from certain reporting persons that no Form 5s were
required for those persons, we believe that, during the fiscal year ended
December 31, 2012, all filing requirements applicable to our officers, directors
and greater than 10% beneficial owners as well as our officers, directors and
greater than 10% beneficial owners of our subsidiaries were complied with, with
the exception of the following:
Number of
Transactions Not
Number of Late Reported on a Timely Failure to File
Name Reports Basis Requested Forms
---- ------- ----- ---------------
James Brown (1) 1 1 0
----------
(1) the insider was late filing a Form 3, Initial Statement of Beneficial
Ownership.
CODE OF ETHICS
Effective March 25, 2011, our company's board of directors adopted a Code of
Business Conduct and Ethics that applies to, among other persons, our company's
principal executive officer and our principal financial and accounting officer,
as well as persons performing similar functions. As adopted, our Code of
Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:
1. honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional
relationships;
2. full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public
communications made by us;
3. compliance with applicable governmental laws, rules and regulations;
4. the prompt internal reporting of violations of the Code of Business Conduct
and Ethics to an appropriate person or persons identified in the Code of
Business Conduct and Ethics; and
5. accountability for adherence to the Code of Business Conduct and Ethics.
37
Our Code of Business Conduct and Ethics requires, among other things, that all
of our company's personnel shall be accorded full access to our president and
secretary with respect to any matter which may arise relating to the Code of
Business Conduct and Ethics. Further, all of our company's personnel are to be
accorded full access to our company's board of directors if any such matter
involves an alleged breach of the Code of Business Conduct and Ethics by our
president or secretary.
In addition, our Code of Business Conduct and Ethics emphasizes that all
employees, and particularly managers and/or supervisors, have a responsibility
for maintaining financial integrity within our company, consistent with
generally accepted accounting principles, and federal, provincial and state
securities laws. Any employee who becomes aware of any incidents involving
financial or accounting manipulation or other irregularities, whether by
witnessing the incident or being told of it, must report it to his or her
immediate supervisor or to our company's president or secretary. If the incident
involves an alleged breach of the Code of Business Conduct and Ethics by the
president or secretary, the incident must be reported to any member of our board
of directors. Any failure to report such inappropriate or irregular conduct of
others is to be treated as a severe disciplinary matter. It is against our
company policy to retaliate against any individual who reports in good faith the
violation or potential violation of our company's Code of Business Conduct and
Ethics by another.
Our Code of Business Conduct and Ethics is filed herewith with the SEC as
Exhibit 14.1 to this annual report. We will provide a copy of the Code of
Business Conduct and Ethics to any person without charge, upon request. Requests
can be sent to: Lithium Corporation, 11380 S. Virginia St. #2011, Reno, Nevada,
89511.
BOARD AND COMMITTEE MEETINGS
Our board of directors held no formal meetings during the year ended December
31, 2012. All proceedings of the board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the Nevada General Corporate Law and our Bylaws, as
valid and effective as if they had been passed at a meeting of the directors
duly called and held.
NOMINATION PROCESS
As of December 31, 2012, we did not effect any material changes to the
procedures by which our shareholders may recommend nominees to our board of
directors. Our board of directors does not have a policy with regards to the
consideration of any director candidates recommended by our shareholders. Our
board of directors has determined that it is in the best position to evaluate
our company's requirements as well as the qualifications of each candidate when
the board considers a nominee for a position on our board of directors. If
shareholders wish to recommend candidates directly to our board, they may do so
by sending communications to the president of our company at the address on the
cover of this annual report.
AUDIT COMMITTEE
Currently our audit committee consists of our entire board of directors. We do
not have a standing audit committee as we currently have limited working capital
and no revenues. With our recent management change however, we have positioned
ourselves with an audit committee financial expert and independent director
should we be able to raise sufficient funding to execute our business plan. With
success we will form an audit, compensation committee and other applicable
committees utilizing our directors' expertise.
AUDIT COMMITTEE FINANCIAL EXPERT
Currently our audit committee consists of our entire board of directors. We do
not currently have a director who is qualified to act as the head of the audit
committee.
38
ITEM 11. EXECUTIVE COMPENSATION
The particulars of the compensation paid to the following persons:
(a) our principal executive officer;
(b) each of our two most highly compensated executive officers who were
serving as executive officers at the end of the years ended December
31, 2012 and 2011; and
(c) up to two additional individuals for whom disclosure would have been
provided under (b) but for the fact that the individual was not
serving as our executive officer at the end of the years ended
December 31, 2012 and 2011, who we will collectively refer to as the
named executive officers of our company, are set out in the following
summary compensation table, except that no disclosure is provided for
any named executive officer, other than our principal executive
officers, whose total compensation did not exceed $100,000 for the
respective fiscal year:
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Tom Lewis(1) 2012 Nil Nil Nil Nil Nil Nil 96,600 96,600
President, 2011 Nil Nil Nil Nil Nil Nil 101,350(2) 101,350
Treasurer,
Secretary and
Director
----------
(1) Mr. Lewis was appointed the president, treasurer, secretary and a director
of our company on August 25, 2009.
(2) Mr. Lewis provides consulting services to our company as needed in relation
to administration, project generation, and exploration of our company's
properties.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. Our directors and
executive officers may receive share options at the discretion of our board of
directors in the future. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that share options may be granted at the
discretion of our board of directors.
2012 GRANTS OF PLAN-BASED AWARDS
The following table provides information about equity and non-equity awards
granted to the named executives in 2012:
39
GRANTS OF PLAN-BASED AWARDS
All
Other
Stock Grant
Awards: All Other Exercise Date
Number Option or Fair
of Awards: Base Value
Estimated Future Payouts Estimated Future Payouts Shares Number Price of
Under Non-Equity Incentive Under Equity Incentive of of of Stock
Plan Awards Plan Awards Stocks Securities Option and
Grant ----------------------------------- ----------------------------------- or Underlying Awards Option
Name Date Threshold($) Target($) Maximum($) Threshold($) Target($) Maximum($) Units(#) Options(#) ($/Sh) Awards
---- ---- ------------ --------- ---------- ------------ --------- ---------- -------- ---------- ------ ------
None -- -- -- -- -- -- -- -- -- -- --
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The particulars of unexercised options, stock that has not vested and equity
incentive plan awards for our named executive officers are set out in the
following table:
Option Awards Stock Awards
---------------------------------------------------------------- ------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- -------- ---- --------- --------- --------- ---------
Tom Lewis 250,000 Nil Nil $0.07 Sept. 23, 2015 Nil Nil Nil Nil
John Hiner 250,000 Nil Nil $0.07 Sept. 23, 2015 Nil Nil Nil Nil
OPTION EXERCISES AND STOCK VESTED
During our fiscal year ended December 31, 2012 there were no options exercised
by our named officers.
COMPENSATION OF DIRECTORS
We do not have any agreements for compensating our directors for their services
in their capacity as directors, although such directors are expected in the
future to receive stock options to purchase shares of our common stock as
awarded by our board of directors.
The following table sets forth a summary of the compensation paid to our
non-employee directors in 2012:
40
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
John Hiner Nil Nil Nil Nil Nil Nil Nil
John Webster(1) Nil Nil Nil Nil Nil Nil Nil
Henry Tonking(2) Nil Nil Nil Nil Nil Nil Nil
Stephen Goss(3) Nil Nil Nil Nil Nil Nil Nil
James Brown(4) Nil Nil Nil Nil Nil Nil Nil
----------
(1) John Webster resigned as a director of our company on April 11, 2012;
(2) Henry Tonking resigned as a director of our company on May 31, 2012;
(3) Stephen Goss resigned as a director of our company on December 19, 2012;
(4) James Brown was appointed as a director of our company on December 19,
2012.
PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. We have no material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers, except that stock options
may be granted at the discretion of the board of directors or a committee
thereof.
INDEBTEDNESS OF DIRECTORS, SENIOR OFFICERS, EXECUTIVE OFFICERS AND OTHER
MANAGEMENT
None of our directors or executive officers or any associate or affiliate of our
company during the last two fiscal years, is or has been indebted to our company
by way of guarantee, support agreement, letter of credit or other similar
agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of April 3, 2013, certain information with
respect to the beneficial ownership of our common shares by each shareholder
known by us to be the beneficial owner of more than 5% of our common shares, as
well as by each of our current directors and executive officers as a group. Each
person has sole voting and investment power with respect to the shares of common
stock, except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.
41
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class (1)
---------------- -------------------- ------------
Tom Lewis 10,250,000 (2)
PO Box 2053 Common Shares 13.72864%
Richland, WA 99352
John Hiner 10,250,000 (3) 13.72864%
9443 Axlund Road Common Shares
Lynden, WA 98264
James Brown Nil 0%
Apartment Pearl Garden,
Unit No. Wp00606
Jl. Jen. Gatot Subroto Kav 5-7
Jakarta 12930 Indonesia
Directors and Executive Officers 20,500,000 27.457%
as a Group(1) Common Shares
Altura Lithium Pty. Ltd.
P.O. Box 4088
Springfield Qld., 4300 11,000,000
Australia Common Shares 14.73%
----------
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes
the power to vote, or to direct the voting of shares; and (ii) investment
power, which includes the power to dispose or direct the disposition of
shares. Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of common stock actually outstanding on
April 3, 2013. As of April 3, 2013 there were 74,661,408 shares of our
company's common stock issued and outstanding.
(2) Includes options to acquire 250,000 shares of common stock by Mr. Lewis.
(3) Includes options to acquire 250,000 shares of common stock by Mr. Hiner.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement the operation of which may
at a subsequent date result in a change in control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Except as disclosed herein, no director, executive officer, shareholder holding
at least 5% of shares of our common stock, or any family member thereof, had any
material interest, direct or indirect, in any transaction, or proposed
transaction since the year ended December 31, 2012, in which the amount involved
in the transaction exceeded or exceeds the lesser of $120,000 or one percent of
the average of our total assets at the year-end for the last three completed
fiscal years.
DIRECTOR INDEPENDENCE
We currently act with three directors, consisting of Tom Lewis, John Hiner and
James Brown.
We have determined that James Brown is an independent director, as that term is
used in Rule 4200(a)(15) of the Rules of National Association of Securities
Dealers.
42
Currently our audit committee consists of our entire board of directors. We
currently do not have nominating, compensation committees or committees
performing similar functions. There has not been any defined policy or procedure
requirements for shareholders to submit recommendations or nomination for
directors.
From inception to present date, we believe that the members of our audit
committee and the board of directors have been and are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed for the most recently completed fiscal year ended
December 31, 2012 and for fiscal year ended December 31, 2011 for professional
services rendered by the principal accountant for the audit of our annual
financial statements and review of the financial statements included in our
quarterly reports on Form 10-Q and services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:
Year Ended
December 31, 2012 December 31, 2011
----------------- -----------------
Audit Fees $ 8,500 $ 8,500
Audit Related Fees $ 1,000 $ 5,250
Tax Fees $ Nil $ Nil
All Other Fees $ Nil $ Nil
Total $ 9,500 $13,750
Our board of directors pre-approves all services provided by our independent
auditors. All of the above services and fees were reviewed and approved by the
board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by
our independent auditors and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining our independent
auditors' independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) Financial statements for our company are listed in the index under
Item 8 of this document
(2) All financial statement schedules are omitted because they are not
applicable, not material or the required information is shown in the
financial statements or notes thereto.
(b) Exhibits
Exhibit No. Description
----------- -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement on Form SB-2 filed on December 21, 2007).
3.2 Bylaws (Incorporated by reference to our Registration Statement on
Form SB-2 filed on December 21, 2007).
3.3 Articles of Merger (Incorporated by reference to our Current Report
on Form 8-K filed on October 2, 2009).
43
3.4 Certificate of Change (Incorporated by reference to our Current
Report on Form 8-K filed on October 2, 2009).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 2009 Stock Option Plan (Incorporated by reference to our Current
Report on Form 8-K filed on December 30, 2009).
(10) MATERIAL CONTRACTS
10.1 Share Exchange Agreement dated October 9, 2009, between our
company, Nevada Lithium Corporation and the selling shareholders of
Nevada Lithium Corporation (Incorporated by reference to 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, Nevada Mining Co., Inc., Robert Craig, Barbara Craig
and Elizabeth Dickman. (Incorporated by reference to our Current
Report on Form 8-K filed on October 26, 2009).
10.3 Lease Agreement dated March 16, 2009 between Nevada Lithium
Corporation and Cerro Rico Ventures LLC (incorporated by reference
to our Current Report on Form 8-K filed on October 26, 2009).
(14) CODE OF ETHICS
14.1* Code of Business Conduct and Ethics
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Nevada Lithium Corporation, a Nevada corporation
(31) RULE 13A-14 (D)/15D-14D) CERTIFICATIONS
31.1* Section 302 Certification by the Principal Executive Officer and
Principal Financial Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification by the Principal Executive Officer and
Principal Financial Officer.
101** INTERACTIVE DATA FILE
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
----------
* Filed herewith.
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the
Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of any registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, are deemed not filed for purposes of
Section 18 of the Securities and Exchange Act of 1934, and otherwise are
not subject to liability under those sections.
44
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
LITHIUM CORPORATION
(Registrant)
Dated: April 15, 2013
/s/ Tom Lewis
------------------------------------------
Tom Lewis
President, Treasurer, Secretary and
Director (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: April 15, 2013 /s/ Tom Lewis
------------------------------------------
Tom Lewis
President, Treasurer, Secretary and
Director (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Dated: April 15, 2013 /s/ John Hiner
------------------------------------------
John Hiner
Vice President of Exploration and Director
Dated: April 15, 2013 /s/ James Brown
------------------------------------------
James Brown
Director
45