UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
Or
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________to ________________
Commission File Number
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
|
|
|
| ||
(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of exchange on which registered |
|
|
|
|
|
|
| N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
LITHIUM CORPORATION
FORM 10-Q
TABLE OF CONTENTS
4 | ||
4 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 | |
30 | ||
30 | ||
31 | ||
31 | ||
31 | ||
31 | ||
31 | ||
31 | ||
31 | ||
32 | ||
33 | ||
| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited interim financial statements for the three month period ended June 30, 2022 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
LITHIUM Corporation | ||||||||
Balance Sheets | ||||||||
|
|
|
|
|
|
| ||
ASSETS | ||||||||
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Marketable securities |
|
|
|
|
|
| ||
Deposits |
|
|
|
|
|
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OTHER ASSETS |
|
|
|
|
|
|
|
|
Equipment, net of accumulated depreciation |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Accounts payable and accrued liabilities - related party |
|
|
|
|
|
| ||
Allowance for optioned properties |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Common stock, |
|
|
|
|
|
| ||
Additional paid in capital |
|
|
|
|
|
| ||
Additional paid in capital - options |
|
|
|
|
|
| ||
Additional paid in capital - warrants |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
TOTAL STOCKHOLDERS' EQUITY |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | ||||||||
| 3 |
| Table of Contents |
LITHIUM Corporation Statements of Operations | ||||||||||||||||
| ||||||||||||||||
|
| Three Months Ended June 30, 2022 |
|
| Three Months Ended June 30, 2021 |
|
| Six Months Ended June 30, 2022 |
|
| Six Months Ended June 30, 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
REVENUE |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exploration expenses - related party |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Exploration expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Consulting fees - related party |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Consulting fees |
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||
Transfer agent and filing fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Travel |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of marketable securities |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| ||
Other income |
|
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL OTHER INCOME (EXPENSE) |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME TAXES |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS PER SHARE: BASIC AND DILUTED |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
| 4 |
| Table of Contents |
LITHIUM Corporation | |||||||||||||||||||||||||||||
Statements of Stockholders' Equity | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
| Additional |
|
| Additional |
|
|
|
|
| |||||||||||||
|
|
|
|
|
| Additional |
|
| Paid-in |
|
| Paid-in |
|
|
|
| Total |
| |||||||||||
|
| Common Stock |
|
| Paid-in |
|
| Capital - |
|
| Capital - |
|
| Accumulated |
|
| Stockholders' |
| |||||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Warrants |
|
| Options |
|
| Deficit |
|
| Equity |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Balance, December 31, 2020 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shares issued for services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Shares issued for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance, December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Shares issued for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Stock based compensation |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Balance, June 30, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these financial statements. | |||||||||||||||||||||||||||||
| 5 |
| Table of Contents |
LITHIUM Corporation | ||||||||
Statements of Cash Flows | ||||||||
|
|
|
|
|
|
| ||
|
| Six Months Ended June 30, 2022 |
|
| Six Months Ended June 30, 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net income (loss) for the period |
| $ | ( | ) |
| $ | ( | ) |
Adjustment to reconcile net income (loss) to net cash used in operating activities |
|
|
|
|
|
|
|
|
Shares issued for services |
|
|
|
|
|
| ||
Change in fair value of marketable securities |
|
|
|
|
|
| ||
Depreciation |
|
|
|
|
|
| ||
Stock based compensation |
|
|
|
|
|
| ||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
(Increase) Decrease in prepaid expenses |
|
|
|
|
|
| ||
Increase (decrease) in accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Net Cash Used in Operating Activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITY: |
|
|
|
|
|
|
|
|
Cash from properties |
|
|
|
|
|
| ||
Purchase of equipment |
|
| ( | ) |
|
|
| |
Net Cash Used in Investing Activity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITY: |
|
|
|
|
|
|
|
|
Shares issued for cash |
|
|
|
|
|
| ||
Net Cash Provided by Financing Activity |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash |
|
|
|
|
|
| ||
Cash, beginning of period |
|
|
|
|
|
| ||
Cash, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements. | ||||||||
| 6 |
| Table of Contents |
Lithium Corporation
Notes to the Financial Statements
June 30, 2022
(unaudited)
Note 1 - Summary of Significant Accounting Policies
Lithium Corporation (formerly Utalk Communications Inc.) (the “Company”) was incorporated on January 30, 2007 under the laws of Nevada.
Nevada Lithium Corporation was incorporated on March 16, 2009 under the laws of Nevada under the name Lithium Corporation. On September 10, 2009, the Company amended its articles of incorporation to change its name to Nevada Lithium Corporation. By agreement dated October 9, 2009 Nevada Lithium Corporation and Lithium Corporation amalgamated as Lithium Corporation. Lithium Corporation is engaged in the acquisition and development of certain lithium interests in the state of Nevada.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). The Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
Cash includes cash on account, demand deposits, and short-term instruments with maturities of three months or less.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.
Income per Share
Basic income per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the period. 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. The Company did not have any dilutive securities for the periods ended June 30, 2022 and 2021.
| 7 |
| Table of Contents |
Income Taxes
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.
Financial Instruments
The Company's financial instruments consist of cash, deposits, prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair value of these financial instruments approximate their carrying values, unless otherwise noted.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount.
Optioned Properties
Properties under the Company’s ownership which have been optioned to a third party are deemed the Company’s property until all obligations under an option agreement are met, at which point the ownership of the property transfers to the third party. All non-refundable payments received prior to all obligations under an option agreement being met are considered liabilities until such time all obligations have been met, at which time ownership of the property transfers to the third party and the Company includes option payments into its statement of operations.
Equipment
Equipment is stated at cost, less accumulated depreciation and is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Depreciation of equipment is provided utilizing the straight-line method over the estimated useful lives, being
Upon sale or retirement of equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its financial position or results of operations upon adoption.
Note 2 – Going Concern
As reflected in the accompanying financial statements, the Company has a working capital of $
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
| 8 |
| Table of Contents |
Note 3 – Fair Value of Financial Instruments
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
| - | Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. |
| - | Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). |
| - | Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability. |
|
|
|
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2022 and December 31, 2021, respectively:
|
| Fair Value Measurements at June 30, 2022 |
| |||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
Assets |
|
|
|
|
|
|
|
|
| |||
Cash |
| $ |
|
| $ |
|
| $ |
| |||
Marketable securities |
|
|
|
|
|
|
|
|
| |||
Total Assets |
|
|
|
|
|
|
|
|
| |||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
|
|
|
|
|
|
| |||
|
| $ |
|
| $ |
|
| $ |
| |||
|
| Fair Value Measurements at December 31, 2021 |
| |||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
Assets |
|
|
|
|
|
|
|
|
| |||
Cash |
| $ |
|
| $ |
|
| $ |
| |||
Marketable securities |
|
|
|
|
|
|
|
|
| - |
| |
Total Assets |
|
|
|
|
|
|
|
|
| |||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
|
|
|
|
|
|
| |||
|
| $ |
|
| $ |
|
| $ |
| |||
| 9 |
| Table of Contents |
Note 4 – Marketable Securities
The Company owns marketable securities (common stock) as outlined below:
Balance, December 31, 2021 |
| $ |
| |
Additions |
|
|
| |
Fair value adjustment |
|
| ( | ) |
|
|
|
|
|
Balance, June 30, 2022 |
| $ |
|
The Company classifies it’s marketable securities as available for sale.
During the year ended December 31, 2021, the Company received
During the year ended December 31, 2021, the Company received
Note 5 - Prepaid Expenses
Prepaid expenses consisted of the following at June 30, 2022 and December 31, 2021:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Professional fees |
| $ |
|
| $ |
| ||
Transfer agent fees |
|
|
|
|
|
| ||
Total prepaid expenses |
| $ |
|
| $ |
| ||
Note 6 – Equipment
Equipment, net of depreciation, consisted of the following:
|
|
| Balance |
| ||||||
Description |
| Useful Life |
| June 30, 2022 |
|
| December 31, 2021 |
| ||
Exploration Equipment |
|
| $ |
|
| $ |
| |||
Less accumulated depreciation |
|
|
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Total Equipment |
|
|
| $ |
|
| $ |
| ||
Depreciation expense was $
Note 7 - Capital Stock
During the year-ended December 31, 2021, the Company issued
During the six months ended June 30, 2022, the Company issued
| 10 |
| Table of Contents |
Note 8 – Stock Options
On May 26, 2022, the Company granted
The following table summarizes the stock options outstanding at June 30, 2022:
Issue Date |
| Number |
|
| Price |
|
| Expiry Date |
| Outstanding at June 30, 2022 |
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
| $ |
|
|
|
|
| |||||
Note 9 – Mineral Properties
Fish Lake Valley
On April 29, 2021 the Company signed a Letter Of Intent (LOI) with Morella Corporation (formerly Altura Mining Limited) an Australian Lithium explorer and developer, and related party, whereby Morella can earn a
San Emidio
On September 16th 2021 Lithium Corporation signed an agreement with Surge Battery Metals whereby Surge may earn an
Make cash payments and share issuances to the Optionor in the following manner:
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
| · | US$ |
Incur a minimum in Expenditures for exploration and development work on the Property of US$
| · | US$ |
| · | a cumulative total of US$ |
| · | a cumulative total of US$ |
| · | a cumulative total of US$ |
| · | a cumulative total of US$ |
Once all conditions are met
| 11 |
| Table of Contents |
North Big Smoky
On May 24, 2022 the Company signed a Letter Of Intent (LOI) with Morella Corporation, an Australian Lithium explorer and developer, and related party, whereby Morella can earn a
The Letter of Intent was signed with a purchaser that has a common director as the Company.
Note 10 – Allowance for Optioned Properties
Fish Lake Valley
On April 29, 2021, the Company signed a Letter Of Intent (LOI) with Altura Mining Limited an Australian Lithium explorer and developer and related party, whereby the Altura can earn a
As of March 31, 2022, the Company has received $
The Letter of Intent was signed with a purchaser that has a common director as the Company.
San Emidio
On September 16, 2021, the Company entered into a Letter of Intent with respect to the San Emidio Property whereby the optionor will pay $
As of December 31, 2021, the Company has received $
| 12 |
| Table of Contents |
Note 11 – Related Party Transactions
The Company paid consulting fees totaling $
The Company paid rent fees totaling $
The Company paid exploration expenses totaling $
As at June 30, 2022, the Company had $
During the three and six months ended June 30, 2022, the company received $
During the three and six months ended June 30, 2022, the Company has received $
On May 26, 2022, the Company issued
During the year ended December 31, 2021, the Company has received $
Note 12 – Commitments and Contingencies
On July 1, 2021, the Company signed a rental agreement for office and storage space. The rental agreement is on a month-to-month basis for a monthly fee of $
Note 13 – Subsequent Events
The Company has analyzed its operations subsequent to June 30, 2022 through the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose other than those below.
Subsequent to June 30, 2022, the Company issued
| 13 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this quarterly 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 quarterly report, the terms “we”, “us”, “our” and “our company” mean Lithium Corporation and our now defunct wholly-owned subsidiary Lithium Royalty Corp., a Nevada company, 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 could be effected in one of several different ways, including an asset acquisition, merger of our company and Nevada Lithium, or a share exchange whereby we would purchase the shares of Nevada Lithium from its shareholders in exchange for restricted shares of our common stock.
Effective September 30, 2009, we effected a 1 old for 60 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 50,000,000 shares of common stock with a par value of $0.001 to 3,000,000,000 shares of common stock with a par value of $0.001 and our then 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 536804107.
| 14 |
| Table of Contents |
On October 9, 2009, we entered into a share exchange agreement with Nevada Lithium and the shareholders of Nevada Lithium. The closing of the transactions contemplated in the share exchange agreement and the acquisition of all of the issued and outstanding common stock in the capital of Nevada Lithium occurred on October 19, 2009. In accordance with the closing of the share exchange agreement, we issued 12,350,000 shares of our common stock to the former shareholders of Nevada Lithium in exchange for the acquisition, by our company, of all of the 12,350,000 issued and outstanding shares of Nevada Lithium. Also, pursuant to the terms of the share exchange agreement, a director of our company cancelled 220,000,000 restricted shares of our common stock. Nevada Lithium’s corporate status was allowed to lapse and the company’s status with the Nevada Secretary of State has been revoked.
In April of 2016 our company established a wholly owned subsidiary called Lithium Royalty Corp. The subsidiary was a Nevada Corporation in which we had planned to build a portfolio of lithium mineral property royalties. Also in April of 2016 Lithium Royalty Corp staked the North Big Smoky block of mineral claims in Nye County Nevada. On May 13th, 2016 Lithium Royalty Corp sold the North Big Smoky property to 1069934 Nevada Ltd., for $10,000.00, reimbursement of staking and filing fees, and 300,000 shares in the "Purchaser Parent". Lithium Royalty Corp retained a 2.5% Net Smelter Royalty ("NSR") on the North Big Smoky Property and the Purchaser had the right to purchase up to one-half (50%) of the NSR for $1,000,000 to reduce the NSR to 1.25%. On April 28, 2017, the Company entered into an Assignment Agreement with Lithium Royalty Corp. for the assignment of the residual interest in the North Big Smoky Property and the subsidiary was subsequently voluntarily dissolved with the Nevada Secretary of State effectively on April 28, 2017. By agreement dated September 13th, 2017 Lithium Corporation agreed to sell back the shares of 1069934 Nevada Ltd. to San Antone Minerals Corp. (successor of 1069934) for $3,000. Lithium Corporation was compensated on November 02, 2017.
Our Current Business
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a primary focus on lithium mineralization on properties located in Nevada, and Graphite and Rare Earth Element properties in British Columbia.
Our current operational focus is to judiciously conduct exploration activities on all our mineral properties and generate additional prospects for our exploration portfolio.
In March of 2022 we staked a block of claims covering approximately 3400 acres which roughly corresponds to the North Big Smoky lands previously held by Lithium Corporation’s subsidiary Lithium Royalty Corp. in 2016/2017. On May 13, 2022 we signed a Letter of Intent (LOI) with Morella Corporation (a related party) whereby Morella can earn a 60% interest in the property by paying $65,000 US (done) to the Company on the signing of the LOI, and issuing $100,000 worth of Morella shares at the time of signing the formal agreement, and issuing $100,000 worth of shares at each anniversary of the signing of the formal agreement over the next four years. Additionally Morella must incur exploration expenditures of $100,000, $200,000, $300,000 and $400,000 in years one through four of the option agreement. Should they fulfill these obligations they will have earned an undivided 60% interest in the property and may purchase a further 20% interest within 1 year for $750,000, and purchase the remaining 20% interest within the following year for $750,000. Should Morella buy Lithium Corporation’s undivided working interest in the property, the Company will revert to a 2.5 % Net Smelter Royalty interest, ½ of which would be purchasable by Morella for $1,000,000. Morella is currently doing due diligence, and preparing the final contract.
On September 16th 2021 Lithium Corporation signed an agreement with Surge Battery Metals whereby Surge may earn an 80% interest in the Company’s San Emidio lithium-in-brine prospect in Washoe County Nevada, by paying an initial $50,000 and issuing 200,000 shares of Surge (TSX-V:Nili). Surge has undertaken to incur expenditures on the property of:
Year 1 – $100,000
Year 2 – cumulative total of, $250,000
Year 3 – cumulative total of, $400,000
Year 4 – cumulative total of, $700,000
Year 5 – cumulative total of, $1,000,000
| 15 |
| Table of Contents |
And make annual payments on the agreement anniversary of:
Year 1 – $70,000, and $30,000 worth of Surge common stock
Year 2 – $70,000, and $30,000 worth of Surge common stock
Year 3 – $70,000, and $50,000 worth of Surge common stock
Year 4 – $70,000, and $70,000 worth of Surge common stock
Year 5 – $70,000, and $90,000 worth of Surge common stock
Upon fulfillment of the aforementioned commitments Surge will be deemed to have earned their undivided 80% interest and will form a joint venture with the Company. Should either company default on funding further development of the property their interest will revert to a 2.5% Net Smelter royalty should they be diluted below a 10% interest. Surge has recently announced that they have completed geochemical work on the prospect block, and are contemplating geophysics and eventually drilling for our claims here. Lithium Corporation had staked this block of claims in 2010 and conducted geochemical, geophysical and drilling work prior to signing an agreement effective May 3, 2016, wherein our company entered in to an Exploration Earn-In arrangement with 1067323 B.C. Ltd. with respect to the property. The terms of the formal agreement were; payment of $100,000, issuance of 300,000 common shares of 1067323 B.C. Ltd., or of the publicly traded company (American Lithium Corp) that resulted from a Going Public Transaction, and work performed on the property by the Optionee in the amount of $600,000 over the next three years to earn an 80% interest in the property. American Lithium then had a subsequent option to purchase Lithium Corporation's remaining 20% working interest within three years of earning the 80% by paying our company a further $1,000,000, at which point our company would retain a 2.5% Net Smelter Royalty, half of which could have been purchased by American Lithium. The Company waived the work requirement for the first year and received 100,000 shares of American Lithium Corp. in May of 2017. During the period ended June 30, 2018, the Company received notification that the purchaser wished to relinquish all interest.
On April 29, 2021 we signed a Letter Of Intent (LOI) with Altura Mining Limited (now Morella Corporation after a name change) an Australian Lithium explorer and developer, and related party whereby Morella can earn a 60% interest in the Fish Lake Valley lithium-in-brine property in Esmeralda County, Nevada by paying the Company $675,000, issuing the equivalent of $500,000 worth of Morella stock, and expending $2,000,000 of exploration work over the next four years. To date Morella is current with its obligations under the formal agreement ratified on October 12th 2021, having paid the initial $50,000 on signing the LOI, the $100,000 due on signing the formal agreement, and has issued 28,176,951 shares of Morella (1MC:ASX, Altaf:OTC-QB) common stock. Recently Morella has indicated that they have completed phase I of both passive seismic and magnetotelluric (MT) surveys, and are looking to progress onto phase II. The Company had originally acquired this property through a June 2009 Option Agreement, and conducted geochemical, geological, geophysical and drilling work on it over the next several years eventually announcing via press release on February 16, 2016, that our company has entered into a letter of intent with 1032701 B.C. Ltd. On March 10, 2016 we issued a news release announcing the signing of the Fish Lake Valley Earn-In Agreement. The terms of the Earn-In Agreement allowed 1032701 to earn an 80% interest in Fish Lake Valley for payments over three years totaling $300,000 and issuance of 400,000 common shares of the publicly traded company anticipated to result from a Going Public Transaction, and work performed on the property over three years in the amount of $1,100,000. 1032701 then had a subsequent option to purchase Lithium Corporation's remaining 20% working interest, which would have left the Company with a 2.5% Net Smelter Royalty, half of which could have been purchased. Menika Mining, a publicly traded company on the TSX Venture Exchange subsequently acquired 1032701 B.C. Ltd and changed their name to American Lithium Corp. The Company received formal relinquishment of the Purchasers right to earn the interest in the property on April 30th 2019.
On March 2, 2017 we issued a news release announcing that we had signed a letter of intent with Bormal Resources Inc. with respect to three Tantalum-Niobium properties (Michael, Yeehaw, and Three Valley Gap) located in British Columbia, Canada.
The Michael property in the Trail Creek Mining Division was originally staked to cover one of the most compelling tantalum (Ta) in stream sediment anomalies as seen in the government RGS database in British Columbia. Bormal conducted a stream sediment sampling program in 2014, and determined that the tantalum-niobium in stream sediment anomaly here is bona fide, and in the order of 6 kilometers in length. In November of 2016 Lithium Corporation conducted a short soil geochemistry orientation program on the property as part of its due diligence, and determined that there are elevated levels of Niobium-Tantalum in soils here.
| 16 |
| Table of Contents |
Also in the general area of the Michael property the Yeehaw property had been staked over a similar but lower amplitude Tantalum/rare earth elements in stream sediment anomaly. Both properties are situated in the Eocene Coryell Batholith, and it is thought that these anomalies may arise from either Carbonatite or Pegmatite type deposits. The Company conducted a helicopter borne bio-geochemical survey on these two properties in June 2017, which did return anomalous results. This was followed up by a geological and geochemical examination of the Yeehaw property in early July 2017, and additional work of a similar nature subsequently in July 2017, and in early October 2017. The examination uncovered a zone roughly 30 meters wide which includes an interval that is mineralized with approximately 0.75% Total Rare Earth Elements (TREE’s). Preliminary geological, and geochemical work were performed on the Michael property in October of 2016, followed by a brief airborne biogeochemical survey in June of 2017, and additional ground geological and geochemical assessment work in early October, 2017, follow-up work in May of 2018, and more work in 2019, and 2020.
The third property – Three Valley Gap, is in the Revelstoke Mining Division and is situated in a locale where several Nb-Ta enriched carbonatites have been noted to occur. A brief field program by Bormal in 2015 located one of these carbonatites, and concurrent soil sampling determined that the soils here are enriched with Nb-Ta over the known carbonatite, and indicated that there are other geochemical anomalies locally that may indicate that more carbonatites exist here and are shallowly buried.
On February 23, 2018 we issued a news release announcing that we had dropped any interest in the Michael and Three Valley Gap properties, and had renegotiated the final share payment as required in the agreement from 750,000 to 400,000 shares. The final consideration shares were issued and the Yeehaw property was transferred by Bormal. During 2017 the Company conducted initial stream, rock and magnetometer surveys on the property, and discovered a 30 meter wide structure (Horseshoe Bend showing) that exhibits anomalous Titanium/REE mineralization. The company staked an additional 5227 acre (2115.51 hectares) mineral claim and conducted a brief exploration program in Spring 2018 of geological mapping and rock and soil sampling on the property. This program discovered a slightly stronger zone of similar mineralization approximately 660 feet (200 meters) to the northwest of the Horseshoe Bend, and similar float mineralization another 0.75 miles (1.2 kms) further to the northwest. Work in 2019 discovered the extension to the west of the mineralized structure, and also similar mineralized float was found to the east that possibly indicates it strikes under cover in that direction also. Field work was done on this property in 2020 2021, and recently the company has increased the size of its block here and has recently started the 2022 field season on this property.
On February 16, 2017 we issued a news release announcing that we had signed a letter of intent with Nevada Sunrise Gold Corp. with respect to our Salt Wells lithium in brine prospect located in Churchill County Nevada.
Under the terms of the agreement NEV (TSX-V - NEV, OTC - NVSGF) could have earned a 100% interest in the Property subject to a 2% Net Smelter Royalty (NSR) by making staged payments of cash and shares over the next two years. The terms are;
| · | $10,000 non-refundable deposit on signing the LOI |
| · | $15,000 issue 400,000 common shares of NEV on the later of TSX-V approval or the signing of a formal definitive agreement |
| · | $50,000 500,000 shares - 1st anniversary |
| · | $75,000 600,000 shares - 2nd anniversary |
|
|
|
NEV was to pay all claim and other property related fees during the earn-in phase of the agreement, and would have also retained the right to purchase one half (1%) of the NSR at any time up until the third anniversary of the signing of the formal agreement for $1,000,000. Issues arose with respect to the claim block and Nevada Sunrise’s understanding of the placement of the block, and ultimately it was determined that the Company would be best served by cancelling the agreement and refunding the money (minus bank fees) that Nevada Sunrise had sent. An informal letter agreement releasing the parties of all obligations save for the Area of Mutual Interest clause, was executed by both parties on May 5, 2017.
| 17 |
| Table of Contents |
Effective April 23, 2014, we entered into an operating agreement with All American Resources, L.L.C and TY Sons Investments Inc. with respect to Summa, LLC, a Nevada limited liability company incorporated on December 12, 2013, wherein we hold a 25% membership. Summa was formed to acquire and administer the residual lands that originated in the 60’s and 70’s through Howard Hughes’s – Hughes Corporation, which went on a mining property buying spree at that time. Our company's capital contribution to Summa, LLC was $125,000, of which $100,000 was in cash and the balance in services. To date we have contributed an additional $31,700 in cash, and also over the years an indeterminate amount of casual geological and land expertise to Summa, LLC. In recognition, Summa transferred five urban lots in Tonopah of indeterminate value in 2020, and since Jan 2021 have issued checks to the company for $157,500. The Tonopah property was optioned in early 2020, and the Optionee has earned a 100% interest in the property. Summa still retains a 1% (LTUM’s share 0.25%) Net Smelter Royalty on the property. Recently Summa entered into an agreement with North American Silver Corporation (TSX-V:NSC) whereby NSC can earn a 100% interest with respect to Summa’s Belmont Nevada claims (not to be confused with the Belmont mine in Tonopah) by paying $200,000 in cash or at Optionor’s discretion shares over 5 years, and election must be made by the sixth agreement anniversary to purchase the lands (69.96 acres) at $10,000 per acre. Should NSC earn their interest Summa, LLC would retain a 1% Net Smelter Royalty – 50% of which may be subsequently purchased by the Optionor. Summa, LLC still retains a 100% interest (subject to a 2% NSR in favor of Summa Corp. (the successor entity to the Hughes Corporation) in a further five project areas in the state of Nevada, and Lithium Corporation remains committed to casually helping them move the projects along so that they may be optioned eventually.
Our company intends to continue identifying additional lithium properties in Nevada and to conduct exploration on our British Columbia properties. We will continue assessing our options with respect to our 25% interest in Summa, LLC, a private Nevada company, which holds the residue of Howard Hughes’s Summa Corporation, while generating new prospects and evaluating property submittals for option or purchase.
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 eighteen, 80-acre Association Placer claims that cover approximately 1,440 acres (582.75 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 claim block here has expanded and contracted twice, at times when the lithium market has contracted, and the prudent thing to do would be to only maintain essential claims, in order to preserve capital.
The property was originally held under mining lease purchase agreement dated June 1, 2009, between Nevada Lithium Corporation, and Nevada Alaska Mining Co. Inc., Robert Craig, Barbara Craig, and Elizabeth Dickman. Nevada Lithium issued to the vendors $350,000 worth of common stock of our company in eight regular disbursements. All disbursements were made of stock worth a total of $350,000, and claim ownership was transferred to our company.
The geological setting at Fish Lake Valley is highly analogous to the salars of Chile, Bolivia, and Peru, and more importantly Clayton Valley, where Albemarle has its Silver Peak lithium-brine operation. Access is excellent in Fish Lake Valley with all-weather gravel roads leading to the property from state highways 264, and 265, and maintained gravel roads ring the playa. Power is available approximately 10 miles from the property, and the village of Dyer is approximately 12 miles to the south, while the town of Tonopah, Nevada is approximately 50 miles to the east.
Our company completed a number of geochemical and geophysical studies on the property, and conducted a short drill program on the periphery of the playa in the fall of 2010. Near-surface brine sampling during the spring of 2011 outlined a boron/lithium/potassium anomaly on the northern portions of the northern playa, that is roughly 1.3 x 2 miles long, which has a smaller higher grade core where lithium mineralization ranges from 100 to 150 mg/L (average 122.5 mg/L), with boron ranging from 1,500 to 2,670 mg/L (average 2,219 mg/L), and potassium from 5,400 to 8,400 mg/L (average 7,030 mg/L). Wet conditions on the playa precluded drilling there in 2011, and for a good portion of 2012, however a window of opportunity presented itself in late fall 2012. In November/December 2012 we conducted a short direct push drill program on the northern end of the playa, wherein a total of 1,240.58 feet (378.09 meters) was drilled in 20 holes at 17 discrete sites, and an area of 3,356 feet (1,023 meters) by 2,776 feet (846 meters) was systematically explored by grid probing. The deepest hole was 81 feet (24.69 meters), and the shallowest hole that produced brine was 34 feet (10.36 meters). The average depth of the holes drilled during the program was 62 feet (18.90 meters). The program successfully demonstrated that lithium-boron-potassium-enriched brines exist to at least 62 feet (18.9 meters) depth in sandy or silty aquifers that vary from approximately three to ten feet (one to three meters) in thickness. Average lithium, boron and potassium contents of all samples are 47.05 mg/L, 992.7 mg/L, and 0.535% respectively, with lithium values ranging from 7.6 mg/L to 151.3 mg/L, boron ranging from 146 to 2,160.7 mg/L, and potassium ranging from 0.1 to 1.3%. The anomaly outlined by the program is 1,476 by 2,461 feet (450 meters by 750 meters), and is not fully delimited, as the area available for probing was restricted due to soft ground conditions to the east and to the south. A 50 mg/L lithium cutoff is used to define this anomaly and within this zone average lithium, boron and potassium contents are 90.97 mg/L, 1,532.92 mg/L, and 0.88% respectively. On September 3, 2013, we announced that drilling had commenced at Fish Lake Valley. Due to storms and wet conditions in the area which our company hoped to concentrate on, the playa was not passable, and so the program concentrated on larger step-out drilling well off the playa. This 11 hole, 1,025 foot program did prove that mineralization does not extend much, if at all, past the margins of the playa, as none of the fluids encountered in this program were particularly briny, and returned values of less than 5 mg/L lithium.
| 18 |
| Table of Contents |
Our company is very pleased with the results here, and believes that the playa at Fish Lake Valley may be conducive to the formation of a “silver peak” style lithium brine deposit. Our company reviewed the results in regards to the overall geological interpretation of the lithium, boron and potassium bearing strata. The results confirm the presence of targeted mineralization and further evaluation programs will focus on determining the extent and depth of mineralization. Our company is currently assessing options on how best to further explore here.
We signed an Exploration Earn-In Agreement in February 2016 with 1032701 B.C. Ltd., a private British Columbia company with respect to our Fish Lake Valley lithium brine property.
1032701 B.C. Ltd., had the option to acquire an initial 80% undivided interest in the Fish Lake Valley property through the payment of an aggregate of US$300,000 in cash, completing a Going Public Transaction on or before May 6, 2016, and subject to the completion of the Going Public Transaction, arranging for the issuance of a total of 400,000 common shares in the capital of the Resulting Issuer as follows: (i) within five Business Days following the effective date,
| · | Pay $100,000 to our company and issue 200,000 common shares of the TSX-V listed public company. |
| · | On or before the first anniversary of the signing of the Definitive Agreement pay $100,000 to our company and issue 100,000 common shares of the Optionee/TSX-V listed public company. |
| · | On or before the second anniversary of the signing of the definitive agreement pay $100,000 to our company and issue 100,000 common shares of the Optionee/TSX-V listed public company. |
|
|
|
The Optionee had to make qualified exploration or development expenditures on the property of $200,000 before the first anniversary, an additional $300,000 before the second anniversary, an additional $600,000 prior to the third anniversary, and make all payments and perform all other acts to maintain the Property in good standing before fully earning their 80% interest. Additionally, terms were to be negotiated for the Optionee to purchase our 20% interest in the property for $1,000,000, at which point our interest would revert to a 2 1/2% Net Smelter Royalty (NSR). The Optionee may then elect at any time to purchase one half of our NSR for $1,000,000.
On April 7, 2016, 1032701 B.C. Ltd. was acquired by Menika Mining Ltd., which subsequently changed its name to American Lithium Corp.(TSXV: LI) In connection with the acquisition of 1032701 and in accordance with the Exploration Earn-In Agreement, 200,000 common shares were issued to our company. In addition, we received payment of $130,000. In March of 2017 American Lithium Corp. issued 100,000 common shares and paid the company $100,000 to satisfy their option commitment. In March of 2018 issued 10,000 common shares (as they had recently rolled their stock back on a 1 for 10 basis), and paid the company $100,000. In addition it was agreed that Lithium Corporation would extend the deadline for the year two exploration expenditure until September 30th 2018 for consideration of a further 80,000 shares.
American Lithium Corporation conducted confirmation shallow brine sampling on the property, and drilled two exploratory wells off the playa area in 2016. In Summer 2018 they reportedly completed a short seismic survey adjacent to the Company’s claims here, and attempted to drill a hole on the Company’s claims but were unsuccessful due to wet ground conditions. On April 30th 2019 American Lithium issued formal relinquishment of Purchasers right to earn the interest under the agreement.
| 19 |
| Table of Contents |
On April 29, 2021 we signed a Letter Of Intent (LOI) with Altura Mining Limited a related party, and an Australian Lithium explorer and developer, Under the formal agreement which was signed in October 2021 Morella can earn a 60% interest in the Fish Lake Valley property by paying the Company $675,000, issuing the equivalent of $500,000 worth of Morella stock, and expending $2,000,000 of exploration work in the next four years. To date Morella is current with all conditions and commitments with respect to the agreement, and has been conducting geophysical surveys on a phased basis on the property, and has indicated it is anticipating drilling sometime in the second half of 2022. The Company does casually provide expertise with respect to exploration, development, and materials processing as this option moves forward.
San Emidio Property
The San Emidio property, located in Washoe County in northwestern Nevada, was acquired through the staking of claims in September 2011. The four, 80-acre, Association Placer claims currently held here cover an area of approximately 320 acres (129.50 hectares). The claim block has expanded and contracted a couple of times, in accordance with the state of the Lithium market. 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.
Most recently we drilled this prospect in late October 2012, further testing the area of the property in the vicinity where prior exploration by our company discovered elevated lithium levels in subsurface brines. During the 2012 program a total of 856 feet (260.89 meters) was drilled at 8 discrete sites. The deepest hole was 160 feet (48.76 meters), and the shallowest hole that produced brine was 90 feet (27.43 meters). The average depth of the seven hole program was 107 feet (32.61 meters). The program better defined a lithium-in-brine anomaly that was discovered in early 2012. This anomaly is approximately 0.6 miles (370 meters) wide at its widest point by more than 2 miles (3 kilometers) long. The peak value seen within the anomaly is 23.7 mg/l lithium, which is 10 to 20 times background levels outside the anomaly. Our company believes that, much like Fish Lake Valley, the playa at San Emidio may be conducive to the formation of a “Silver Peak” style lithium brine deposit, and the recent drilling indicates that the anomaly occurs at or near the intersection of several faults that may have provided the structural setting necessary for the formation of a lithium-in-brine deposit at depth.
In 2016 we signed an Exploration Earn-In Agreement with 1067323 B.C. Ltd. with respect to our San Emidio property.
1067323 B.C. Ltd., could have acquired an initial 80% undivided interest in the San Emidio property through the payment of an aggregate of US$100,000 in cash, completing a Going Public Transaction and subject to the completion of the Going Public Transaction, arranging for the issuance of a total of 300,000 common shares in the capital of the Resulting Issuer as follows:
| · | Within 30 days of the Effective Date pay $100,000 to our company and issue 100,000 common shares of the TSX-V listed public company. |
| · | On or before the first anniversary of the signing of the Definitive Agreement issue 100,000 common shares of the Optionee/TSX-V listed public company. |
| · | On or before the second anniversary of the signing of the definitive agreement issue 100,000 common shares of the Optionee/TSX-V listed public company. |
| 20 |
| Table of Contents |
The Optionee had to have made qualified exploration or development expenditures on the property of $100,000 before the first anniversary, an additional $200,000 before the second anniversary, an additional $300,000 prior to the third anniversary, and make all payments and perform all other acts to maintain the Property in good standing before fully earning their 80% interest. Additionally, Optionee has the right to purchase our 20% interest in the property for $1,000,000, at which point the our interest would revert to a 2 1/2% Net Smelter Royalty (NSR). The Optionee may then elect at any time to purchase one half of our NSR for $1,000,000.
On May 24, 2016, 1067323 B.C. Ltd. was acquired by American Lithium Corp.(TSXV: LI) In connection with the acquisition of 1067323 and in accordance with the Exploration Earn-In Agreement, 100,000 common shares were issued to our company. In addition, we received payment of $100,000. To date the Company has received 200,000 shares of American Lithium as consideration under this option agreement.
American Lithium Corp did not conduct any appreciable exploration work on this prospect, and the Company waived the $100,000 exploration expenditure provision for Year 1 of the option agreement. In early June 2018 the Company was notified that American Lithium was allowing the option earn-in to lapse. The Company received a drilling permit from the BLM in Winnemucca, for up to 3 RC drill holes here, and the Company was intent on drilling these in 2019, however with the downturn in the Lithium market at that point exploration here was put on hold.
On September 16th 2021 Lithium Corporation signed an agreement with Surge Battery Metals whereby Surge may earn an 80% interest in the Company’s San Emidio lithium-in-brine prospect in Washoe County Nevada, by paying an initial $50,000 and issuing 200,000 shares of Surge (TSX-V:Nili). Surge has undertaken to incur expenditures on the property of:
Year 1 – $100,000
Year 2 – cumulative total of, $250,000
Year 3 – cumulative total of, $400,000
Year 4 – cumulative total of, $700,000
Year 5 – cumulative total of, $1,000,000
And make annual payments on the agreement anniversary of:
Year 1 – $70,000, and $30,000 worth of Surge common stock
Year 2 – $70,000, and $30,000 worth of Surge common stock
Year 3 – $70,000, and $50,000 worth of Surge common stock
Year 4 – $70,000, and $70,000 worth of Surge common stock
Year 5 – $70,000, and $90,000 worth of Surge common stock
Upon fulfillment of the aforementioned commitments Surge will be deemed to have earned their undivided 80% interest and will form a joint venture with the Company. Should either company default on funding further development of the property their interest will revert to a 2.5% Net Smelter royalty should they be diluted below a 10% interest. Surge has recently announced that they have completed geochemical work on the prospect block, and are anticipating drilling at San Emidio sometime in Q2 2022.
BC Sugar Flake Graphite Property
On June 6, 2013, we entered into a mining claim sale agreement with Herb Hyder wherein Mr. Hyder agreed to sell to our company a 50.829 acre (20.57 hectare) claim located in the Cherryville area of British Columbia. As consideration for the purchase of the property, we issued 250,000 shares of our company’s common stock to Mr. Hyder. In addition to the acquired claim, our company staked or acquired another 13 claims at various times over the subsequent months, to bring the total area held under tenure to approximately 19,816 acres (8,020 hectares). The flake graphite mineralization of interest here is hosted predominately in graphitic quartz/biotite, and lesser graphitic calc-silicate gneisses. The rocks in the general area of the BC Sugar prospect are similar to the host rocks in the area of the Crystal Graphite deposit 55 miles (90 kms) to the southeast. Over the past three years the claim block here has been strategically decreased, and the Company currently holds one tenure encompassing 203 acres (82.23 hectares).
The BC Sugar property is within in the Shushwap Metamorphic Complex, in a geological environment favorable for the formation of flake graphite deposits, and is in an area of excellent logistics, with a considerable network of logging roads within the project area. Additionally the town of Lumby is approximately 19 miles (30 kms) to the south of the property, while the City of Vernon is only 30 miles (50 kms) to the southwest of the western portions of the claim block.
| 21 |
| Table of Contents |
We received final assays from the October 2013 prospecting and geological program at the BC Sugar property in December of 2013. That work increased the area known to be underlain by graphitic bearing gneisses, and further evaluations were made in the area of the Sugar Lake, Weather Station, and Taylor Creek showings. In the general vicinity of the Weather Station showing, a further 13 samples were taken, and hand trenching was performed at one of several outcrops in the area. In the trench a 5.2 meter interval returned an average of 3.14% graphitic carbon, all in an oxidized relatively friable gneissic host rock. Additionally a hydrothermal or vein type mineralized graphitic quartz boulder was discovered in the area which graded up to 4.19% graphitic carbon. The source of this boulder was not discovered during this program, but it is felt to be close to its point of origin. Samples representative of the mineralization encountered here were taken for petrographic study, which was received in late 2013. A brief assessment work program was performed in September 2014 to ensure all claims in the package were in good standing prior to the anticipated sale of this asset to Pathion Inc. Recommendations were made by the consulting geologist who wrote the assessment report with respect to trenching, and eventually drilling the Weather Station showing. Our company submitted a Notice of Work to the BC Government in early May 2015 to enable our company to conduct a program of excavator trenching, sampling and geological mapping on the Weather Station showing. In May of 2015 we signed an agreement with KLM Geosciences LLC of Las Vegas to conduct a short Ground Penetrating Radar (GPR) survey on the property in the Weather Station – Taylor Creek areas. The GPR survey as well as a GEM-2 electromagnetic (EM) survey took place in approximately mid-May 2015. The GPR survey did not provide useful data because of the moisture saturation in the shallow subsurface. The EM survey successfully generated an anomaly over known mineralization as well as extended the anomaly to the west under an area of cover consisting of glacial/fluvial till. Lithium Corporation is pleased with the results of the EM survey and has modified our work plans to include additional work that builds on the results of this survey.
In August of 2015 our Notice of Work for trenching was approved by the BC Government and in October we commenced work. A trench of 265.76 feet (81 meters) was excavated and graphitic gneiss was mapped and sampled. In all 23 samples were taken over the 69 meters of exposed mineralization that could be safely sampled. Trench depths varied from 1.2 meters in areas of semi-consolidated rock to 4.8 meters in areas of mainly decomposed material. There was an approximately 12 meter section of the trench of sand, and fluvial till in an ancient stream bed where the excavator could not reach the graphitic material that is inferred to exist at depths greater than 5 meters. Also there was a 4 meter section at depths from 4.8 to 5 meters where graphite mineralization could be seen at depth, but could not be safely sampled.
The entire 69 meter interval that was sampled averaged 1.997% graphitic carbon, and mineralization remains open in all directions. Within that interval there was a 30 meter section that averaged 2.73% graphitic carbon, and within that interval there was a 12 meter section that averaged 2.99% graphitic carbon. The best mineralization, and most friable material is proximal to the aforementioned abandoned creek channel, and it appears that proximity to this feature gave rise to the deep weathering profile encountered here. Determining the tenor, and extent of the friable material were the two major objectives of this program as this material, which is very similar to that mined at Eagle Graphite’s operation is very easy/economical to be mined and processed, and typically contains the highest percentages of graphite over consistent widths.
The Company revised its trenching permit in 2017 and conducted a program of 12 mechanized test pits in May 2018. This work was done in an area ranging from 1 to 1.5 kilometers to the east of the Weather Station Zone in a zone of numerous discrete conductors detected during the 2015 FDEM geophysical survey. Three of these pits intercepted weathered weak to moderately mineralized graphitic material with the best assay being 2.62% graphitic, carbon, and six test pits bottomed in non-mineralized bedrock. The remaining three did not reach bedrock or intercept graphitic material prior to reaching the maximum digging capability of the excavating equipment used. The Company reduced its acreage holdings here to approximately 203 acres ( 82 hectares) to facilitate applying 5 years assessment credit to the property, and placed it on the “back burner” in favor of developing other prospects that are of greater commercial interest, but recently we have re-acquired claims in the area covering the three most prospective areas, with approximately 1626 acres (657.95 hectares) of claims covering the Sugarland prospect to the east, and approximately 1321 acres (534.66 hectares) of claims covering the Weather Station and Taylor Creek showings to the west. The Company is currently in the planning stages with respect to the work to be done on these prospects later this summer.
| 22 |
| Table of Contents |
North Big Smoky Property
During the period 2011 through 2012 the Company conducted geophysical, and geochemical work on BLM lands in North Big Smoky Valley, Nye County Nevada, in an area that proved to be geochemically anomalous, both in sediment and brines. The geological setting in this area is quite similar to that at our other brine prospects, and Clayton Valley to the southwest of here, and had experienced some geothermal and petroleum exploration in the past. In April of 2016 Lithium Royalty Corp (a wholly owned subsidiary through which we had planned to build a portfolio of lithium mineral properties) acquired the prospect through staking a block of placer mineral claims here. On May 13, 2016 our wholly owned subsidiary sold 100% of the interest in the property to 1069934 Nevada Ltd. ("Purchaser") a private company. Consideration paid to Lithium Royalty Corp. consisted of mainly of 300,000 shares in the "Purchaser Parent", 1069934 B.C. Ltd, and retained a royalty on the property. No appreciable work was done and by agreement dated September 13, 2017 Lithium Corporation agreed to sell back the shares of 1069934 Nevada Ltd. to San Antone Minerals Corp (successor corporation) who subsequently allowed the claims here to lapse. On May 11, 2022 we signed a letter of agreement with Morella Corporation a related party whereby Morella can earn a 60% interest in our North Big Smoky lithium-in-brine property by paying $65,000 US to the Company on the signing of the LOI, and issuing $100,000 worth of Morella shares at the time of signing the formal agreement, and issue a similar dollar value of shares at the anniversary of the signing of the formal agreement over the next four years. Additionally Morella must make exploration expenditures of $100,000, $200,000, $300,000 and $400,000 in years one through four of the option agreement. Should they fulfill these obligations they will have earned an undivided 60% interest in the property and may purchase a further 20% interest within 1 year for $750,000, and purchase the remaining 20% interest within the following year for $750,000. Should Morella buy Lithium Corporation’s undivided working interest in the property, the Company will revert to a 2.5 % Net Smelter Royalty interest, ½ of which would be purchasable by Morella for $1,000,000. This area was subsequently re-staked by Lithium Corporation in early 2022. Morella Corporation is planning geochemical and geophysical work on the property during 2022.
The Hughes Claims
Effective April 23, 2014, we entered into an operating agreement with All American Resources, L.L.C and TY Sons Investments Inc. with respect to Summa, LLC, a Nevada limited liability company incorporated on December 12, 2013, wherein we hold a 25% membership in a number of patented mining claims that spring from the once vast holdings of Howard Hughes. Our company’s initial capital contribution paid to Summa, LLC was $125,000, of which $100,000 was in cash and the balance in services.
Our company participated in the formation of Summa, which holds 88 fee-title patented lode claims, which cover approximately 1,191.3 acres of prospective mineral lands. Our company has recently signed a joint operating agreement with the other participants to govern the conduct of Summa, and the development of the lands. Our company’s president, Tom Lewis, has been named as a managing member of Summa.
The Hughes lands are situated in six discrete prospect areas in Nevada, the most notable of which being the Tonopah block in Nye County where Summa holds 56 claims that cover approximately 770 acres in the heart of the historic mining camp where over 1.8 million ounces of gold and 174 million ounces of silver were produced predominately in the early 1900’s. The Hughes claims include a number of the prolific past producers in Tonopah, such as the Belmont, the Desert Queen, and the Midway mines. In addition there are also claims in the area of the past producing Klondyke East mining district, which is to the south of Tonopah, and at the town of Belmont (not to be confused with the Belmont claim in Tonopah), Nevada, another notable silver producer from the 1800’s, which is roughly 40 miles to the northeast of Tonopah.
The ongoing litigation with respect to Summa’s Tonopah holdings had precluded investing time or money into the property immediately after the court awarded Summa ownership in 2013, however in 2018 Summa won a “quiet title” case in the Fifth Judicial Court in Tonopah, which determined that Summas’ title is superior to all other claimants. The subsequent appeal of this verdict was quashed later in 2018, and there has been no further action on that account. Summa signed a Letter of Intent on January 14, 2020 with respect to the Tonopah property whereby 1237025 BC Ltd, could earn a 100% interest in the property (subject to a 1.0% Net Smelter Royalty or NSR) by paying $400,000 in cash, issuing $400,000 in shares, and incurring $1.5 million in exploration expenditures in stages over the next 5 years. The Optionee also has the right to purchase ¼ of the NSR for $1,500,000, and the future right to purchase a further ¼ of the NSR for $2,500,000. The definitive agreement was signed in March of 2020, and 1237025 BC Ltd subsequently merged with Pinnacle North Gold Corp., who then changed their name to Summa Silver Corp. Summa Silver actively explored the property in the second half of 2020, drilling roughly 14,000 meters in 29 drill holes. Additionally more work was performed on the Belmont tailings portion of the project aided by Lithium Corporation personnel, who have been actively promoting and advancing this aspect of the Tonopah holdings since acquisition. In 2021 Summa Silver accelerated the earn-in provisions of the option agreement and was transferred a 100% interest in the property. Summa still retains a 1% (LTUM’s undivided share 0.25%) Net Smelter Royalty on the property. Recently Summa entered into an agreement with North American Silver Corporation (TSX-V:NSC) with respect to Summa’s Belmont Nevada claims whereby NSC can earn a 100% interest by paying $200,000 in cash or at Optionor’s discretion shares over 5 years, and election must be made by the sixth agreement anniversary to purchase the lands (69.96 acres) at $10,000 per acre. Should NSC earn their interest Summa, LLC would retain a 1% Net Smelter Royalty – 50% of which may be subsequently purchased by the Optionor. Summa, LLC still retains a 100% interest (subject to a 2% NSR in favor of Summa Corp. (the successor entity to the Hughes Corporation) in a further five project areas in the state of Nevada, and Lithium Corporation remains committed to casually helping them move the projects along so that they may be optioned eventually.
| 23 |
| Table of Contents |
We are currently pursuing other properties which are believed to be prospective for hosting lithium, graphite, nickle - cobalt and Rare Earth Element mineralization, as well as evaluating a wide range of opportunities brought to our company by third parties.
Additionally our company continues its generative program exploring for new deposits of next generation battery related materials.
Results of Operations
Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
We had net loss of $1,254,154 for the three month period ended June 30, 2022, which was $1,223,138 more than the net loss of $31,016 for the three month period ended June 30, 2021. The change in our results over the two periods is primarily the result of an increase in consulting fees, stock-based compensation, exploration expenses and one-time charge for a change in the fair value of marketable securities held by the Company.
The following table summarizes key items of comparison and their related increase (decrease) for the three month periods ended June 30, 2022 and 2021:
|
| Three Months Ended June 30, 2022 |
|
| Three Months Ended June 30, 2021 |
|
| Change Between Three Month Period Ended June 30, 2022 and June 30, 2021 |
| |||
Professional fees |
| $ | 32,431 |
|
| $ | 18,418 |
|
| $ | 14,013 |
|
Depreciation |
|
| 1,833 |
|
|
| - |
|
|
| 1,833 |
|
Exploration expenses – related party |
|
| 3,078 |
|
|
| 5,255 |
|
|
| (2,177 | ) |
Exploration expenses |
|
| 62,355 |
|
|
| 3,181 |
|
|
| 59,174 |
|
Consulting fees – related party |
|
| 397,967 |
|
|
| 30,000 |
|
|
| 367,967 |
|
Consulting fees |
|
| 384,480 |
|
|
| (15,587 | ) |
|
| 400,067 |
|
Transfer agent and filing fees |
|
| 10,634 |
|
|
| 8,375 |
|
|
| 2,259 |
|
Travel |
|
| 3,692 |
|
|
| 3,131 |
|
|
| 561 |
|
General and administrative |
|
| 6,579 |
|
|
| 4,243 |
|
|
| 2,336 |
|
Other loss (income) |
|
| 381,105 |
|
|
| (26,000 | ) |
|
| 407,105 |
|
Net loss (income) |
| $ | 1,254,154 |
|
| $ | 31,016 |
|
| $ | 1,223,138 |
|
| 24 |
| Table of Contents |
Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021
We had net loss of $959,279 for the six month period ended June 30, 2022, which was $267,328 more than the net loss of $691,951 for the six month period ended June 30, 2021. The change in our results over the two periods is primarily the result of an increase in consulting fees, stock-based compensation, exploration expenses and one-time charge for a change in the fair value of marketable securities held by the Company.
The following table summarizes key items of comparison and their related increase for the six month periods ended June 30, 2022 and 2021:
|
| Six Months Ended June 30, 2022 |
|
| Six Months Ended June 30, 2021 |
|
| Change Between Six Month Period Ended June 30, 2022 and June 30, 2021 |
| |||
Professional fees |
| $ | 42,313 |
|
| $ | 54,527 |
|
| $ | (12,214 | ) |
Depreciation |
|
| 3,666 |
|
|
| - |
|
|
| 3,666 |
|
Exploration expenses – related party |
|
| 9,297 |
|
|
| 5,255 |
|
|
| 4,042 |
|
Exploration expenses |
|
| 71,221 |
|
|
| 29,813 |
|
|
| 41,408 |
|
Consulting fees – related party |
|
| 412,967 |
|
|
| 60,000 |
|
|
| 352,967 |
|
Consulting fees |
|
| 389,730 |
|
|
| 557,468 |
|
|
| (167,738 | ) |
Stock option compensation |
|
| 709,881 |
|
|
| - |
|
|
| 709,881 |
|
Transfer agent and filing fees |
|
| 17,227 |
|
|
| 16,156 |
|
|
| 1,071 |
|
Travel |
|
| 6,825 |
|
|
| 3,173 |
|
|
| 3,652 |
|
General and administrative |
|
| 10,528 |
|
|
| 6,559 |
|
|
| 3,969 |
|
Other loss (income) |
|
| (4,495 | ) |
|
| (41,000 | ) |
|
| 36,505 |
|
Net loss (income) |
| $ | 972,763 |
|
| $ | 691,951 |
|
| $ | 267,328 |
|
Revenue
We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.
Liquidity and Capital Resources
Our balance sheet as of June 30, 2022 reflects current assets of $3,217,497. We had cash in the amount of $2,860,902 and working capital in the amount of $1,539,514 as of June 30, 2022. We have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
Working Capital
|
| At June 30, 2022 |
|
| At Dec 31, 2021 |
| ||
Current assets |
| $ | 3,217,497 |
|
| $ | 2,659,106 |
|
Current liabilities |
|
| 1,677,983 |
|
|
| 1,601,926 |
|
Working capital |
| $ | 1,539,514 |
|
| $ | 1,057,180 |
|
We anticipate generating losses and, therefore, may be unable to continue operations further in the future.
| 25 |
| Table of Contents |
Cash Flows
|
| Nine Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Net cash (used in) operating activities |
| $ | (188,769 | ) |
| $ | (121,491 | ) |
Net cash provided by investing activities |
|
| 29,350 |
|
|
| 50,000 |
|
Net cash provided by financing activities |
|
| 777,200 |
|
|
| 857,799 |
|
Net increase (decrease) in cash during period |
| $ | 617,781 |
|
| $ | 786,308 |
|
Operating Activities
Net cash used in operating activities during the six months ended June 30, 2022 was $1887,69, an increase of $67,278 from the $121,491 net cash outflow during the six months ended June 30, 2021.
Investing Activities
Cash used in investing activities during the six months ended June 30, 2022 was $29,350, which was a decrease of $20,650 from the $50,000 cash provided by investing activities during the six months ended June 30, 2021.
Financing Activities
Cash provided by financing activities during the nine months ended June 30, 2022 was $777,200 as compared to $857,799 in cash provided by financing activities during the nine months ended June 30, 2021.
We estimate that our operating expenses and working capital requirements for the next 12 months to be as follows:
Estimated Net Expenditures During The Next Twelve Months |
| |||
|
|
|
| |
General and administrative expenses |
| $ | 461,000 |
|
Exploration expenses |
|
| 500,000 |
|
Travel |
|
| 30,000 |
|
Total |
| $ | 891,000 |
|
To date we have relied on proceeds from the sale of our shares in order to sustain our basic, minimum operating expenses; however, we cannot guarantee that we will secure any further sales of our shares or that our sole officer and/or directors will provide us with any future loans. We estimate that the cost of maintaining basic corporate operations (which includes the cost of satisfying our public reporting obligations) will be approximately $4,500 per month. Due to our current cash position of approximately $2,860,902 as of June 30, 2022, we estimate that we do have sufficient cash to sustain our basic operations for the next twelve months.
We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.
Equity Financings
On January 25, 2021 we entered into a purchase agreement (the "Purchase Agreement"), and a registration rights agreement, (the "Registration Rights Agreement"), with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which Lincoln Park has committed to purchase up to $10,300,000 of the Company's common stock, $0.001 par value per share (the "Common Stock"). In connection with the execution of the Purchase Agreement, the Company sold, and Lincoln Park purchased, 380,952 shares of Common Stock for a purchase price of $160,000 (“Original Purchase”), and then another 357,995 shares (“Initial Purchase”) for $150,000 after SEC approval of the S-1 document in April 2021.
| 26 |
| Table of Contents |
Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to $10,300,000 worth of shares of Common Stock. Such sales of Common Stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company's sole discretion, over the 36-month period commencing on the date that a registration statement covering the resale of shares of Common Stock that have been and may be issued under the Purchase Agreement, which the Company agreed to file with the Securities and Exchange Commission (the "SEC") pursuant to the Registration Rights Agreement, is declared effective by the SEC and a final prospectus in connection therewith is filed and the other conditions set forth in the Purchase Agreement are satisfied, all of which are outside the control of Lincoln Park (such date on which all of such conditions are satisfied, the "Commencement Date"). The Company shall also have the right, but not the obligation to sell to Lincoln Park up to $150,000 of shares of Common Stock on the Commencement Date at the Purchase Price (as defined below).
Under the Purchase Agreement, on any business day over the term of the Purchase Agreement, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (each, a "Purchase Notice") directing Lincoln Park to purchase up to 100,000 shares of Common Stock per business day, which increases to up to 150,000 shares in the event the price of the Company’s Common Stock is not below $0.25 per share; up to 200,000 shares in the event the price of the Company’s Common Stock is not below $0.35 per share and up to 250,000 shares in the event the price of the Company’s Common Stock is not below $0.50 (the "Regular Purchase") (subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the Purchase Agreement). In each case, Lincoln Park's maximum commitment in any single Regular Purchase may not exceed $500,000. The Purchase Agreement provides for a purchase price per Purchase Share (the "Purchase Price") equal to 93% of the lesser of:
· | the lowest sale price of the Company's Common Stock on the purchase date; and |
· | the average of the three lowest closing sale prices for the Company's Common Stock during the twelve consecutive business days ending on the business day immediately preceding the purchase date of such shares. |
In addition, on any date on which the Company submits a Purchase Notice to Lincoln Park, the Company also has the right, in its sole discretion, to present Lincoln Park with an accelerated purchase notice (each, an "Accelerated Purchase Notice") directing Lincoln Park to purchase an amount of stock (the "Accelerated Purchase") equal to up to the lesser of (i) three times the number of shares of Common Stock purchased pursuant to such Regular Purchase; and (ii) 30% of the aggregate shares of the Company's Common Stock traded during all or, if certain trading volume or market price thresholds specified in the Purchase Agreement are crossed on the applicable Accelerated Purchase Date, the portion of the normal trading hours on the applicable Accelerated Purchase Date prior to such time that any one of such thresholds is crossed (such period of time on the applicable Accelerated Purchase Date, the "Accelerated Purchase Period"). The purchase price per share of Common Stock for each such Accelerated Purchase will be equal to 93% of the lesser of:
· | the volume weighted average price of the Company's Common Stock during the applicable Accelerated Purchase Period on the applicable Accelerated Purchase Date; and |
· | the closing sale price of the Company's Common Stock on the applicable Accelerated Purchase Date. |
Lincoln Park has no right to require the Company to sell any shares of Common Stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to certain conditions. There are no upper limits on the price per share that Lincoln Park must pay for shares of Common Stock.
The Company issued to Lincoln Park 1,375,779 shares of Common Stock as commitment shares in consideration for entering into the Purchase Agreement on the Execution Date.
| 27 |
| Table of Contents |
Actual sales of shares of Common Stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. Lincoln Park has no right to require any sales by the Company but is obligated to make purchases from the Company as it directs in accordance with the Purchase Agreement. Lincoln Park has covenanted not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of the Company's shares.
To June 30, 2022 the Company has sold 13,914,726 shares to Lincoln Park for gross proceeds of $2,867,800.
Future Financings
We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.
Other than the Lincoln Park agreement we currently have no other arrangement for future financings. While this arrangement should enable us to continue with our current business plan, it is possible that unforeseeable market fluctuations in the price of the Company’s common stock could periodically render future sales of the Company’s stock under the terms of the agreement undesirable, hence affecting our ability to continue financing utilizing that instrument.
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, and capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
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 we are not exposed to any significant credit risk on cash and cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
| 28 |
| Table of Contents |
Revenue Recognition
Our company has yet to realize revenues from operations. Once our company has commenced operations, we will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
Loss per Share
Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the "if converted" method. In the periods in which a loss is incurred, the effect of potential issuances of shares under options and warrants would be anti-dilutive, and therefore basic and diluted losses per share are the same.
Income Taxes
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.
Financial Instruments
Our company's financial instruments consist of cash, deposits, prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that our company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair value of these financial instruments approximate their carrying values, unless otherwise noted.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although our company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee our company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Impairment of $0 and $0 was recorded during the periods ended June 30, 2022 and 2021, respectively.
Recent Accounting Pronouncements
In January 2016, the Financial Accounting Standards Board ("FASB"), issued Accounting Standards Update ("ASU") 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Our company is currently evaluating the impact of adopting this standard.
| 29 |
| Table of Contents |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter 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 quarterly report.
Changes in Internal Control Over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 30 |
| Table of Contents |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us, except for the following:
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
No Unregistered sales of Equity Securities.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
| 31 |
| Table of Contents |
Item 6. Exhibits
Exhibit Number |
| Description |
(3) |
| Articles of Incorporation and Bylaws |
| ||
| ||
| ||
| ||
(4) |
| Instruments Defining the Rights of Security Holders, Including Indentures |
| ||
(10) |
| Material Contracts |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
| |
| ||
| ||
(14) |
| Code of Ethics |
| ||
(21) |
| Subsidiaries of the Registrant |
21.1 |
| Lithium Royalty Corp, a Nevada corporation |
(31) |
| Rule 13a-14 (d)/15d-14d) Certifications |
| ||
(32) |
| Section 1350 Certifications |
| ||
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.
| 32 |
| Table of Contents |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
| LITHIUM CORPORATION |
|
|
| (Registrant) |
|
|
|
|
|
Dated: August 19, 2022 |
|
|
|
|
| Tom Lewis |
|
|
| President, Treasurer, Secretary and Director |
|
|
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
|
| 33 |