UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to ___________
Commission file number 000-54332
LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11380 S. Virginia St. #2011, Reno, Nevada 89521
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (775) 410-5287
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
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N/A N/A
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of Common Stock held by non-affiliates of the Registrant on June 29, 2012 was $3,012,637 based on a $0.069 average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date. 74,661,408 common shares as of April 3, 2013.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Item 1. Business 3
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 11
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. Mine Safety Disclosures 11
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 11
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure 33
Item 9A. Controls and Procedures 33
Item 9B. Other Information 34
Item 10. Directors, Executive Officers and Corporate Governance 34
Item 11. Executive Compensation 39
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 41
Item 13. Certain Relationships and Related Transactions, and Director
Independence 42
Item 14. Principal Accounting Fees and Services 43
Item 15. Exhibits, Financial Statement Schedules 43
2
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PART I
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ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms "we", "us" and "our" mean Lithium Corporation, and our wholly owned subsidiary, Nevada Lithium Corporation, unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on January 30, 2007 under the name "Utalk Communications Inc." At inception, we were a development stage corporation engaged in the business of developing and marketing a call-back service using a call-back platform. Because we were not successful in implementing our business plan, we considered various alternatives to ensure the viability and solvency of our company.
On August 31, 2009, we entered into a letter of intent with Nevada Lithium Corporation regarding a business combination which may be effected in one of several different ways, including an asset acquisition, merger of our company and Nevada Lithium Corporation, or a share exchange whereby we would purchase the shares of Nevada Lithium Corporation from its shareholders in exchange for restricted shares of our common stock.
Effective September 30, 2009, we effected a one (1) old for 60 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 50,000,000 shares of common stock with a par value of $0.001 to 3,000,000,000 shares of common stock with a par value of $0.001 and our issued and outstanding shares increased from 4,470,000 shares of common stock to 268,200,000 shares of common stock.
Also effective September 30, 2009, we changed our name from "Utalk Communications, Inc." to "Lithium Corporation", by way of a merger with our wholly owned subsidiary Lithium Corporation, which was formed solely for the change of name. The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on October 1, 2009 under the stock symbol "LTUM". Our CUSIP number is 536804 107.
On October 9, 2009, we entered into a share exchange agreement with Nevada Lithium Corporation, a Nevada corporation, and the shareholders of Nevada Lithium Corporation. The closing of the transactions contemplated in the share exchange agreement and the acquisition of all of the issued and outstanding common stock in the capital of Nevada Lithium Corporation occurred on October 19, 2009. In accordance with the closing of the share exchange agreement, we issued 12,350,000 shares of our common stock to the former shareholders of Nevada Lithium Corporation in exchange for the acquisition, by our company, of all of the 12,350,000 issued and outstanding shares of Nevada Lithium Corporation. Also, pursuant to the terms of the share exchange agreement, a then director of our company cancelled 220,000,000 restricted shares of our common stock.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a focus on lithium mineralization on properties located in Nevada.
Our current operational focus is to conduct exploration activities on our properties in Nevada, known as the Fish Lake Valley property and the San Emidio prospect.
FISH LAKE VALLEY PROPERTY
Fish Lake Valley is a lithium enriched playa (also known as a salar, or salt pan), which is located in northern Esmeralda county in west central Nevada, and the property is roughly centered at 417050E 4195350N (NAD 27 CONUS). We currently hold forty - eighty (80) acre Association Placer claims that cover approximately 3200 acres (1280 hectares). Lithium-enriched Tertiary-era Fish Lake formation Rhyolitic tuffs or ash flow tuffs have accumulated in a valley or basinal environment. Over time interstitial formational waters in contact with these tuffs, have become enriched in lithium, boron and potassium which could possibly be amenable to extraction by evaporative methods. Our company allowed 56 claims to lapse on September 01, 2012 that covered the southern playa area. These claims were allowed to lapse as it was determined through the course of work over the past three years that they are not overly prospective for hosting lithium brine resources, nor is it strategically advantageous to continue to hold them.
The property was originally held under mining lease purchase agreement dated June 1, 2009 between Nevada Lithium Corporation, and Nevada Alaska Mining Co. Inc., Robert Craig, Barbara Craig, and Elizabeth Dickman. Nevada Lithium had agreed to issue the vendors $350,000 worth of common stock of our company in eight regular disbursements. To date all disbursements have been made of stock worth a total of $350,000, and claim ownership has been transferred to our company.
The geological setting at Fish Lake Valley is highly analogous to the salars of Chile, Bolivia, & Peru, and more importantly Clayton Valley, where Chemetall has its Silver Peak lithium-brine operation. Access is excellent in Fish Lake Valley with all-weather gravel roads leading to the property from State Highways 264, and 265, and maintained gravel roads ring the Playa. Power is available approximately 10 miles from the property, and the village of Dyer is approximately 12 miles to the south, while the town of Tonopah Nevada is approximately 50 miles to the East.
Our company has completed a number of geochemical and geophysical studies on the property, and conducted a short drill program on the periphery of the playa in the fall of 2010. Near-surface brine sampling during the Spring of 2011 outlined a boron/lithium/potassium anomaly on the northern portions of the northern playa, that is roughly 1.3 x 2 miles long, which has a smaller higher grade core where lithium mineralization ranges from 100 to 150 mg/L (Average 122.5 mg/L), with boron ranging from 1,500 to 2,670 mg/L (Average 2219 mg/L), and potassium from 5,400 to 8,400 mg/L (Average 7030 mg/L. Wet conditions on the playa precluded drilling there in 2011, and for a good portion of 2012, however a window of opportunity presented itself in late fall 2012. In November/December 2012 we conducted a short direct push drill program on the northern end of the playa, wherein a total of 1,240.58 feet (378.09 meters) was drilled in 20 holes at 17 discrete sites, and an area of 3,356 feet (1,023 meters) by 2,776 feet (846 meters) was systematically explored by grid drilling. The deepest hole was 81 feet (24.69 meters), and the shallowest hole that produced brine was 34 feet (10.36 meters). The average depth of the holes drilled during the program was 62 feet (18.90). The program successfully demonstrated that lithium-boron-potassium-enriched brines exist to at least 62 feet (18.9 meters) depth in sandy or silty aquifers that vary from approximately three to ten feet (one to three meters) in thickness. Lithium values range from 7.6 mg/L to 151.3 mg/L, whereas boron ranges from 146 to 2,160.7 mg/L, and potassium ranged from 0.1 to 1.3%. Average lithium, boron and potassium contents of all samples are 47.05 mg/L, 992.7 mg/L, and 0.535% respectively. The anomaly outlined by the drill program is 1,476 by 2,461 feet (450 meters by 750 meters), and is not fully delimited, as the area available for drilling was restricted due to soft ground conditions to the east and to the south. A 50 mg/L lithium cutoff is used to define this anomaly and within this zone average lithium, boron and potassium contents are 90.97 mg/L, 1,532.92 mg/L, and 0.88% respectively.
Our company is very pleased with the results here, and believes that the playa at Fish Lake Valley may be conducive to the formation of a "Silver Peak" style lithium brine deposit. Our company is reviewing the results in regards to the overall geological interpretation of the lithium, boron and potassium bearing strata. The results confirm the presence of targeted mineralization and further evaluation programs will focus on determining the extent and depth of mineralization.
SAN EMIDIO
The San Emidio property was acquired through the staking of claims in September 2011. The twenty - eighty (80) acre Association Placer claims currently held here cover an area of approximately 1600 acres (640 hectares). Ten claims in the southern portions of the original claim block that was staked in 2011 were allowed to lapse on September 01, 2012, and a further ten claims were then staked and recorded. These new claims are north of, and contiguous to the surviving claims from our earlier block. The property is approximately 65 miles north-northeast of Reno, Nevada, and has excellent infrastructure.
We developed this prospect during 2009, and 2010 through surface sampling, and the early reconnaissance sampling determined that anomalous values for Lithium occur in the playa sediments over a good portion of the playa. This sampling appeared to indicate that the most prospective areas on the playa may be on the newly staked block proximal to the southern margin of the basin, where it is possible the structures that are responsible for the geothermal system here may also have influenced lithium deposition in sediments.
Our company conducted near-surface brine sampling in the Spring of 2011, and a high resolution gravity geophysical survey in Summer/Fall 2011. Our company then permitted a 7 hole drilling program with the Bureau of Land management in late Fall 2011, and a direct push drill program was commenced in early February 2012. Drilling here delineated a narrow elongated shallow brine reservoir which is greater than 2.5 miles length, and which is adjacent to a basinal feature outlined by the earlier gravity survey. Two values of over 20 milligrams/liter lithium were obtained from two holes located centrally in this brine anomaly.
Most recently we drilled this prospect in late October 2012, further testing the area of the property in the vicinity where prior exploration by our company discovered elevated lithium levels in subsurface brines. During the recent program a total of 856 feet (260.89 meters) was drilled at 8 discrete sites. The deepest hole was 160 feet (48.76 meters), and the shallowest hole that produced brine was 90 feet (27.43 meters). The average depth of the seven hole program was 107 feet (32.61 meters). The program better defined a lithium-in-brine anomaly that was discovered in early 2012. This anomaly is approximately 0.6 miles (370 meters) wide at its widest point by more than 3 miles (2 kilometers) long. The peak value seen within the anomaly is 23.7 mg/l lithium, which is 10 to 20 times background levels outside the anomaly. Our company believes that much like Fish Lake Valley the playa at San Emidio may be conducive to the formation of a "Silver Peak" style lithium brine deposit, and the recent drilling indicates that the anomaly occurs at or near the intersection of several faults that may have provided the structural setting necessary for the formation of a lithium-in-brine deposit at depth.
Our company is compiling all data, and intends to amend its permits with the Bureau of Land Management, and to commence a deeper drilling program here in our second quarter or possibly early in our third quarter of 2013.
OTHER
Our company allowed all 62 Association Placer Claims held at our Cortez Prospect in Lander County Nevada to lapse in September of 2011 as, although drilling there in the Summer of 2011 determined that a considerable volume of brine can be found locally, lithium contents were below anomalous thresholds, and our company concluded that it would perhaps be more prudent to focus resources elsewhere.
Similarly the Salt Wells property was acquired through staking a 12,320 acre parcel that covers the Eightmile Basin, in Churchill County, Nevada in 2009 and 2010. In September 2011 the property was reduced as we allowed a number of non-prospective, non-strategic claims to lapse. Exploratory drilling in the Fall of 2011 was disappointing and the remaining eighty (80) claims here were allowed to lapse in September 2012.
There are no further commitments or contingencies related to any of these mineral properties.
We are currently exploring other locations which are felt to be prospective for hosting lithium mineralization, as well as evaluating opportunities brought to the company by third parties.
COMPETITION
The mining industry is intensely competitive. We compete with numerous individuals and companies, including many major mining companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for access to funds. There are other competitors that have operations in the area and the presence of these competitors could adversely affect our ability to compete for financing and obtain the service providers, staff or equipment necessary for the exploration and exploitation of our properties.
COMPLIANCE WITH GOVERNMENT REGULATION
Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in United States, as well as other jurisdictions, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.
We believe that we are and will continue to be in compliance in all material respects with applicable statutes and the regulations passed in the United States. There are no current orders or directions relating to our company with respect to the foregoing laws and regulations.
RESEARCH AND DEVELOPMENT
We have incurred $Nil in research and development expenditures over the last two fiscal years.
EMPLOYEES
We have no employees. Our officers and directors provide their services to our company as independent contractors.
SUBSIDIARIES
We have one (1) wholly owned subsidiary, Nevada Lithium Corporation, a Nevada corporation.
ITEM 1A. RISK FACTORS
Our business operations are subject to a number of risks and uncertainties, including, but not limited to those set forth below:
RISKS ASSOCIATED WITH MINING
ALL OF OUR PROPERTIES ARE IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON ANY OF OUR PROPERTIES IN COMMERCIALLY EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral properties, we have not established that any of them contain any mineral reserve, nor can there be any assurance that we will be able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/about/forms/industryguides.pdf) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a "reserve" that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any 'reserve' and any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINER AL RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON OUR PROPERTIES, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance. Current laws and regulations could be amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON ANY OF OUR PROPERTIES IN A COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS. WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involves many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral resource properties or from the extraction and sale of lithium and/or associated byproducts. The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of mineral products. Therefore, we will likely be able to sell any mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.
RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and we build and operate a mine. We had cash in the amount of $1,186,683 as of December 31, 2012. At December 31, 2012, we had working capital of $1,195,837. We incurred a net loss of $755,565 for the year ended December 31, 2012 and $2,439,862 since inception. We estimate our average monthly operating expenses to be approximately $45,000, including property costs, management services and administrative costs. Should the results of our planned exploration require us to increase our current operating budget, we may have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months. As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity securities, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these were to occur, there is a substantial risk that our business would fail.
Management has plans to seek additional capital through a private placement of its capital stock. These conditions raise substantial doubt about our company's ability to continue as a going concern. Although there are no assurances that management's plans will be realized, management believes that our company will be able to continue operations in the future. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event our company cannot continue in existence." We continue to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SECURITIES AND EXCHANGE COMMISSION'S PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission ("SEC") has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the SEC, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company", we are not required to provide the information required by this Item.
ITEM 2. PROPERTIES
Our corporate head office is located at 11380 S Virginia St., # 2011, Reno, Nevada, 89511, our monthly rent is $500. Additionally our company rents storage space in Reno for field equipment for $71 per month.
MINERAL PROPERTIES
As of the date of this annual report on Form 10-K, we hold the following properties: Fish Lake Valley and San Emidio. For detailed description of these properties, please see the section entitled "Business" above.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares are quoted on the Over-the-Counter Bulletin Board under the symbol "LTUM." The following quotations, obtained from Stockwatch, reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
The high and low bid prices of our common stock for the periods indicated below are as follows:
OTC Bulletin Board(1)
Quarter Ended High Low
------------- ---- ---
December 31, 2012 $ 0.08 $ 0.04
September 30, 2012 $ 0.079 $ 0.0553
June 30, 2012 $ 0.13 $ 0.055
March 31, 2012 $ 0.17 $ 0.102
December 31, 2011 $ 0.32 $ 0.12
September 30, 2011 $ 0.38 $ 0.151
June 30, 2011 $ 1.92 $ 0.18
March 31, 2011 $ 0.30 $ 0.165
December 31, 2010 $ 0.40 $ 0.25
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(1) Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.
Our shares are issued in registered form. Nevada Agency and Transfer Company, 50 West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone: (775) 322-0626; Facsimile: (775) 322-5623 is the registrar and transfer agent for our common shares.
On April 3, 2013, the shareholders' list showed 11 registered shareholders with 74,661,408 common shares outstanding.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.
EQUITY COMPENSATION PLAN INFORMATION
On December 29, 2009, our board of approved the adoption of the 2009 Stock Plan which permits our company to issue up to 6,050,000 shares of our common stock to directors, officers, employees and consultants. This plan has not been approved by our security holders.
The following table summarizes certain information regarding our equity compensation plans as at December 31, 2012:
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Number of Securities to be Remaining Available for
Issued Upon Exercise of Weighted-Average Exercise Future Issuance Under
Outstanding Options, Price of Outstanding Options, Equity Compensation Plans
Plan Category Warrants and Rights Warrants and Rights (excluding column (a))
------------- ------------------- ------------------- ----------------------
Equity Compensation Plans Nil Nil Nil
Approved by Security
Holders
Equity Compensation Plans Not 1,050,000 (1) $0.07 5,000,000
Approved by Security Holders
Total 1,050,000 $0.07 4,650,000
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CONVERTIBLE SECURITIES
As of December 31, 2012, we had outstanding options to purchase 1,050,000 shares of our common stock exercisable at $0.07.
On May 31, 2012, the directors of our company determined that due to current adverse market conditions it would be in the best interests of our company to re-price an aggregate of 500,000 incentive stock options granted to directors and officers of our company on September 23, 2010 with an exercise price of $0.28, and an aggregate of 450,000 incentive stock options granted to directors and officers of our company on September 23, 2010 with an exercise price of $0.25 to reflect the closing price for our company's common shares quoted on the OTC Bulletin Board on May 29, 2012 of $0.07.
Also on May 31, 2012, our company granted an aggregate of 400,000 incentive stock options to certain directors and consultants of our company at an exercise price of $0.07, exercisable for a period of five years from the date of grant.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES
Effective November 19, 2012, we closed a private placement wherein we issued 11,000,000 units at a price of $0.05 per unit, for gross proceeds of $550,000. Each unit consisted of one share of common stock and one common share purchase warrant. Each common share purchase warrant is exercisable into one share of common stock for a period of 12 months from the closing date at a price of $0.10 per share and at a price of $0.15 per share for a period of a further 12 months thereafter. We issued the securities to one non U.S. person relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended December 31, 2012.
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company", we are not required to provide the information required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 8 of this annual report.
Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
OVERVIEW
We were incorporated under the laws of the State of Nevada on January 30, 2007 under the name "Utalk Communications Inc." At inception, we were a development stage corporation engaged in the business of developing and marketing a call-back service using a call-back platform. Because we were not successful in implementing our business plan, we considered various alternatives to ensure the viability and solvency of our company.
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a focus on lithium mineralization on properties located in Nevada.
PLAN OF OPERATIONS AND CASH REQUIREMENTS
CASH REQUIREMENTS
Our current operational focus is to conduct exploration activities on our properties in Nevada, known as the Fish Lake Valley Property and the San Emidio Property. We expect to review other potential exploration projects from time to time as they are presented to us.
Our net cash provided by financing activities during the year ended December 31, 2012 was $550,000 as compared to $84,984 during the year ended December 31, 2011.
Over the next twelve months we expect to expend funds as follows:
ESTIMATED NET EXPENDITURES DURING THE NEXT TWELVE MONTHS
General, Administrative Expenses $235,000
Exploration Expenses 270,000
Travel 40,000
--------
TOTAL $545,000
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We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.
The continuation of our business is dependent upon obtaining further financing, a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
RESULTS OF OPERATIONS - TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011
The following summary of our results of operations should be read in conjunction with our financial statements for the year ended December 31, 2012, which are included herein.
Our operating results for the twelve months ended December 31, 2012, for the twelve months ended December 31, 2011 and the changes between those periods for the respective items are summarized as follows:
Change Between
Twelve Month
Period Ended
Twelve Months Twelve Months December 31, 2012
Ended Ended and
December 31, December 31, December 30,
2012 2011 2011
---------- ---------- ----------
Revenue $ Nil $ Nil $ Nil
Professional fees 74,106 27,903 46,203
Amortization 215 552 (337)
Exploration expenses 102,839 264,379 (161,540)
Consulting fees 70,328 49,120 21,208
Insurance expense 16,038 15,601 437
Investor relations 49,420 71,406 (21,986)
Stock Option Compensation 35,415 Nil 35,415
Transfer agent and filing fees 11,102 12,536 (1,434)
Travel 17,824 18,805 (981)
Write-down of mineral properties 369,137 134,213 234,924
General and administrative 10,638 14,668 (4,031)
Other income Nil (17,952) (17,952)
Interest (income) (1,497) (1,305) (192)
Interest expense Nil (985) (985)
---------- ---------- ----------
Net loss $ 755,565 $ 590,911 $ 164,654
========== ========== ==========
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Our accumulated losses increased to $2,439,862 as of December 31, 2012. Our financial statements report a net loss of $755,565 for the twelve month period ended December 31, 2012 compared to a net loss of $590,911 for the twelve month period ended December 31, 2011. Our losses have increased, primarily as a result of an increase in the write down of our mineral properties, offset by a decrease in exploration expenses In addition to an increase in professional fees, stock option compensation expense and consulting fees, offset by a decrease investor relation fees.
Our operating expenses for the year ended December 31, 2012 were $757,062 compared to $609,183 as of December 31, 2011. The increase in operating expenses was primarily as a result an increase in the write down of our mineral properties, offset by a decrease in exploration expenses. In addition to an increase in professional fees, stock option compensation expense and consulting fees, offset by a decrease investor relation fees.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, December 31,
2012 2011
---------- ----------
Current assets $1,249,038 $1,044,125
Current liabilities 53,201 21,730
---------- ----------
Working capital $1,195,837 $1,022,395
========== ==========
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CASH FLOWS
Year Ended
December 31,
2012 2011
---------- ----------
Net cash (used in) operating activities $(307,617) $(487,498)
Net Cash (used in) investing activities (25,762) (26,214)
Net cash provided by financing activities 550,000 84,984
--------- ---------
Net increase (decrease) in cash during period $ 216,621 $(428,728)
========= =========
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Our total current liabilities as of December 31, 2012 were $53,201 as compared to total current liabilities of $21,730 as of December 31, 2011. The increase was due to accumulated drilling expenses related to our recent drilling program at Fish Lake Valley in December, 2012.
OPERATING ACTIVITIES
Net cash used in operating activities was $307,617 for the year ended December 31, 2012 compared with net cash used in operating activities of $487,498 in the same period in 2011.
INVESTING ACTIVITIES
Net cash used in investing activities was $25,762 for the year ended December 31, 2012 compared to net cash used in investing activities of $26,214 in the same period in 2011.
FINANCING ACTIVITIES
Net cash provided by financing activities was $550,000 for the year ended December 31, 2012 compared to $84,984 provided by financing activities in the same period in 2011.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular disclosure obligations.
GOING CONCERN
As of December 31, 2012, our company has accumulated losses of $2,439,862 since inception and has earned no revenues since inception. Our company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2013. The ability of our company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of our business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings. These factors, among others, raise substantial doubt about our company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
EXPLORATION STAGE COMPANY
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration stage companies. An exploration stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from.
ACCOUNTING BASIS
Our company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). Our company has adopted a December 31 fiscal year end.
CASH AND CASH EQUIVALENTS
Cash includes cash on account, demand deposits, and short-term instruments with maturities of three months or less.
CONCENTRATIONS OF CREDIT RISK
Our company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. Our company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. Our company believes it is not exposed to any significant credit risk on cash and cash equivalents.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Our company is in the exploration stage and has yet to realize revenues from operations. Once our company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of our wholly-owned subsidiary. All material inter-company transactions have been eliminated.
LOSS PER SHARE
Basic loss per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the "if converted" method. In the periods in which a loss is incurred, the effect of potential issuances of shares under options and warrants would be anti-dilutive, and therefore basic and diluted losses per share are the same.
PROPERTY AND EQUIPMENT
Property and equipment is stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets which has been estimated as 2 years. Impairment losses are recorded on computer equipment used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount.
INCOME TAXES
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.
FINANCIAL INSTRUMENTS
Our company's financial instruments consist of cash, accounts receivable, prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that our company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair value of these financial instruments approximate their carrying values, unless otherwise noted.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although our company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee our company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Impairment of $369,137 and $134,213 was recorded in the years ended December 31, 2012 and 2011, respectively, relating to the abandonment of some mineral claims.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our company's results of operations, financial position or cash flow.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LITHIUM CORP.
(AN EXPLORATION STAGE COMPANY)
TABLE OF CONTENTS
DECEMBER 31, 2012
Report of Independent Registered Public Accounting Firm 21
Consolidated Balance Sheets as of December 31, 2012 and 2011 22
Consolidated Statements of Operations for the years ended
December 31, 2012 and 2011 and for the period from
January 30, 2007 (Date of Inception) to December 31, 2012 23
Consolidated Statement of Stockholders' Equity as of
December 31, 2012 24
Consolidated Statements of Cash Flows for the years ended
December 31, 2012 and 2011 and for the period from
January 30, 2007 (Date of Inception) to December 31, 2012 25
Notes to the Consolidated Financial Statements 26
20
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Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
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30600 Telegraph Road, Suite 2175 Bingham Farms, MI 48025-4586 www.sucpas.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Lithium Corporation
Reno, Nevada
We have audited the accompanying consolidated balance sheets of Lithium Corporation (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended and the period from January 30, 2007 (Inception) to December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lithium Corporation as of December 31, 2012 and 2011 and the results of its operations and its cash flows for the years then ended and for the period from January 30, 2007 (inception) through December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.
/s/ Silberstein Ungar, PLLC -------------------------------------- Bingham Farms, Michigan April 11, 2013 |
Lithium Corporation
(An Exploration Stage Company)
Consolidated Balance Sheets
As of December 31, 2012 and 2011
December 31, December 31,
2012 2011
------------ ------------
ASSETS
Current Assets
Cash $ 1,186,651 $ 970,030
Accounts receivable 0 674
Prepaid expenses 62,387 73,421
------------ ------------
Total Current Assets 1,249,038 1,044,125
------------ ------------
Other Assets
Property and equipment, net 162 377
Mineral properties 163,139 506,516
------------ ------------
Total Other Assets 163,301 506,893
------------ ------------
TOTAL ASSETS $ 1,412,339 $ 1,551,018
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Accounts payable and accrued liabilities $ 53,201 $ 21,730
------------ ------------
TOTAL LIABILITIES 53,201 21,730
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, 3,000,000,000 shares authorized, par value
$0.001; 74,661,408 common shares issued and outstanding
(2011 - 63,661,408) 74,662 63,662
Additional paid in capital 3,292,348 1,718,093
Additional paid in capital - options 174,041 179,587
Additional paid in capital - warrants 257,949 1,252,243
Deficit accumulated during the exploration stage (2,439,862) (1,684,297)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,359,138 1,529,288
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,412,339 $ 1,551,018
============ ============
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See the accompanying notes to the consolidated financial statements
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Operations
For the years ended December 31, 2012 and 2011 For the period from January 30, 2007 (Inception) to December 31, 2012
Period from
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2012 2011 2012
------------ ------------ ------------
REVENUE $ -- $ -- $ --
------------ ------------ ------------
OPERATING EXPENSES
Professional fees 74,106 27,903 212,625
Depreciation 215 552 2,272
Exploration expenses 102,839 264,379 616,203
Consulting fees 70,328 49,120 298,192
Insurance expense 16,038 15,601 34,942
Investor relations 49,420 71,406 231,413
Management fees -- -- 53,800
Transfer agent and filing fees 11,102 12,536 45,997
Travel 17,824 18,805 63,152
Stock option compensation 35,415 -- 279,460
Website development costs -- -- 3,912
Write-down of website costs -- -- 12,000
Write-down of mineral properties 369,137 134,213 518,746
General and administrative 10,638 14,668 76,052
------------ ------------ ------------
TOTAL OPERATING EXPENSES 757,062 609,183 2,448,766
------------ ------------ ------------
LOSS BEFORE FROM OPERATIONS (757,062) (609,183) (2,448,766)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Other income -- 17,952 17,952
Interest income 1,497 1,305 2,802
Interest expense -- (985) (11,850)
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSE) 1,497 18,272 8,904
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (755,565) (590,911) (2,439,862)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (755,565) $ (590,911) $ (2,439,862)
============ ============ ============
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.01) $ (0.01)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 65,314,413 63,244,913
============ ============
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See the accompanying notes to the consolidated financial statements
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statement of Stockholders' Equity From January 30, 2007 (Inception) to December 31, 2012
Deficit
Additional Additional Accumulated
Common Stock Additional Paid in Paid in during the
-------------------- Paid in Capital- Capital- Exploration
Shares Amount Capital Warrants Options Stage Total
------ ------ ------- -------- ------- ----- -----
Balance, January 30, 2007
(date of inception) -- $ -- $ -- $ -- $ -- $ -- $ --
Shares issued to founder on
January 30, 2007 @ $0.001
per share (par value $0.001
per share) 240,000,000 240,000 (220,000) -- -- -- 20,000
Net loss for the period ended
December 31, 2007 -- -- -- -- -- (23,448) (23,448)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2007 240,000,000 240,000 (220,000) -- -- (23,448) (3,448)
Common stock issued for cash
@ $0.10 per share 28,200,000 28,200 18,800 -- -- -- 47,000
Net loss for the year ended
December 31, 2008 -- -- -- -- -- (26,868) (26,868)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2008 268,200,000 268,200 (201,200) -- -- (50,316) 16,684
Shares issued in conjunction
with merger 12,350,000 12,350 537,355 -- -- -- 549,705
Shares cancelled 220,000,000) (220,000) 220,000 -- -- -- --
Net loss for the year ended
December 31, 2009 -- -- -- -- -- (190,414) (190,414)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2009 60,550,000 60,550 556,155 -- -- (240,730) 375,975
Shares issued with respect to
Fish Lake 367,288 368 174,632 -- -- -- 175,000
Common stock issued for cash
@ $1.00 per share 2,000,000 2,000 745,757 1,252,243 -- -- 2,000,000
Stock options issued -- -- -- -- 244,045 -- 244,045
Net loss for the year ended
December 31, 2010 -- -- -- -- -- (852,656) (852,656)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2010 62,917,288 62,918 1,476,544 1,252,243 244,045 (1,093,386) 1,942,364
Shares issued with respect
to Fish Lake 394,120 394 87,106 -- -- -- 87,500
Forgiveness of debt -- -- 6,335 -- -- -- 6,335
Options exercised 350,000 350 148,108 -- (64,458) -- 84,000
Net loss for the year ended
December 31, 2011 -- -- -- -- -- (590,911) (590,911)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2011 63,661,408 63,662 1,718,093 1,252,243 179,587 (1,684,297) 1,525,248
Stock options issued -- -- -- -- 23,891 -- 23,891
Modification of previously
issued stock options -- -- -- -- 11,524 -- 11,524
Issuance of common stock
and warrants for cash 11,000,000 11,000 281,051 257,949 -- -- 550,000
Expiration of stock options
and stock warrants -- -- 1,293,204 (1,252,243) (40,961) -- 0
Net loss for the year ended
December 31, 2012 -- -- -- -- -- (755,565) (755,565)
----------- --------- ---------- ---------- -------- ----------- ----------
Balance, December 31, 2012 74,661,408 $ 74,662 $3,292,348 $ 257,949 $174,041 $(2,439,862) $1,359,138
=========== ========= ========== ========== ======== =========== ==========
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See the accompanying notes to the consolidated financial statements
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
For the years ended December 31, 2012 and 2011 For the period from January 30, 2007 (Inception) to December 31, 2012
Period from
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2012 2011 2012
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period $ (755,565) $ (590,911) $ (2,439,862)
Adjustment for non-cash items:
Write-down of software development -- -- 12,000
Write-down of mineral properties 369,139 134,213 518,747
Stock-based compensation 35,415 -- 279,460
Depreciation 215 552 2,271
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 674 (674) --
(Increase) decrease in prepaid expenses 11,034 (10,521) (62,387)
Increase (decrease) in accounts payable
and accrued liabilities 31,471 (20,157) 53,201
------------ ------------ ------------
Net Cash Used in Operating Activities (307,617) (487,498) (1,636,570)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment -- (431) (2,433)
Purchase of software development -- -- (12,000)
Interest in mineral properties (25,762) (25,783) (419,386)
------------ ------------ ------------
Net Cash Used in Investing Activities (25,762) (26,214) (433,819)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment to) director -- 984 6,335
Proceeds from sale of stock and warrants 550,000 84,000 3,250,705
------------ ------------ ------------
Net Cash Provided by Financing Activities 550,000 84,984 3,257,040
------------ ------------ ------------
Increase (decrease) in cash 216,621 (428,728) 1,186,651
Cash, beginning of period 970,030 1,398,758 --
------------ ------------ ------------
Cash, end of period $ 1,186,651 $ 970,030 $ 1,186,651
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ 0 $ 0 $ 10,451
============ ============ ============
Cash paid for income taxes $ 0 $ 0 $ 0
============ ============ ============
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for mineral properties $ 0 $ 87,500 $ 262,500
============ ============ ============
Shareholder debt converted to contributed capital $ 0 $ 6,335 $ 6,335
============ ============ ============
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See the accompanying notes to the consolidated financial statements
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lithium Corporation (formerly Utalk Communications Inc.) was incorporated on January 30, 2007 under the laws of Nevada. On September 30, 2009, Utalk Communications Inc. changed its name to Lithium Corporation.
Nevada Lithium Corporation was incorporated on March 16, 2009 under the laws of Nevada under the name Lithium Corporation. On September 10, 2009, the Company amended its articles of incorporation to change its name to Nevada Lithium Corporation. By agreement dated October 09, 2009 Nevada Lithium Corporation and Lithium Corporation amalgamated as Lithium Corporation. Lithium Corporation is engaged in the acquisition and development of certain lithium interests in the state of Nevada, and is currently in the exploration stage. These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles.
Exploration Stage Company
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration stage companies. An exploration stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation
The consolidated financial statements include the accounts of our wholly-owned
subsidiary. All material inter-company transactions have been eliminated.
Loss per Share
Basic loss per share is computed by dividing loss available to common
shareholders by the weighted average number of common shares outstanding during
the year. The computation of diluted earnings per share assumes the conversion,
exercise or contingent issuance of securities only when such conversion,
exercise or issuance would have a dilutive effect on earnings per share. The
dilutive effect of convertible securities is reflected in diluted earnings per
share by application of the "if converted" method. In the periods in which a
loss is incurred, the effect of potential issuances of shares under options and
warrants would be anti-dilutive, and therefore basic and diluted losses per
share are the same.
Property and Equipment
Property and equipment is stated on the basis of historical cost less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets which has been estimated as
2 years. Impairment losses are recorded on computer equipment used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount.
Income Taxes
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities.
Financial Instruments
The Company's financial instruments consist of cash, prepaid expenses, and
accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. Because of
the short maturity and capacity of prompt liquidation of such assets and
liabilities, the fair value of these financial instruments approximate their
carrying values, unless otherwise noted.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Impairment of $369,137 and $134,213 was recorded in the years ended December 31,
2012 and 2011, respectively, relating to the abandonment of some mineral claims.
Recent Accounting Pronouncements
Lithium does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 2 - PREPAID EXPENSES
Prepaid expenses consisted of the following at December 31, 2012 and 201:
2012 2011
-------- --------
Professional fees $ 3,310 $ 0
Exploration costs 8,964 9,000
Bonds 28,644 39,754
Transfer fees 1,800 0
Insurance 13,844 12,395
Office 800 6,102
Investor relations 5,025 6,170
-------- --------
Total Prepaid Expenses $ 62,387 $ 73,421
======== ========
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NOTE 3 - PROPERTY AND EQUIPMENT
2012 2011
-------- --------
Computer Equipment $ 2,433 $ 2,433
Less: Accumulated depreciation (2,217) (2,056)
-------- --------
Property and equipment, net $ 162 $ 377
======== ========
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Depreciation expense was $215 and $552 for the years ended December 31, 2012 and 2011, respectively.
NOTE 4 - MINERAL PROPERTIES
Fish Lake Property
The Company has purchased a 100% interest in the Fish Lake property by making
staged payments of $350,000 worth of common stock. Title to the pertinent claims
was transferred to the Company through quit claim deed dated June 1st 2011, and
this quitclaim was recorded at the county level on August 3, 2011, and at the
BLM on August 4, 2011. Quarterly stock disbursements were made on the following
schedule:
1st Disbursement: Within 10 days of signing agreement (paid) 2nd Disbursement: within 10 days of June 30, 2009 (paid) 3rd Disbursement: within 10 days of December 30, 2009 (paid) 4th Disbursement: within 10 days of March 31, 2010 (paid) 5th Disbursement: within 10 days of June 30, 2010 (paid) 6th Disbursement: within 10 days of September 30, 2010 (paid) 7th Disbursement: within 10 days of December 31, 2010 (paid) 8th Disbursement: within 10 days of March 31, 2011 (paid)
As of December 31, 2012, the Company has recorded $434,328 in acquisition costs related to the Fish Lake Property and associated impairment of $276,908 related to abandonments of claims. The carrying value of the Fish Lake Property was $157,420 as of December 31, 2012.
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 4 - MINERAL PROPERTIES (CONTINUED)
Staked Properties
The Company has staked claims with various registries as summarized below:
Name Claims (Area in Acres) Cost Impairment Net Carrying Value ---- ---------------------- ---- ---------- ------------------ Salt Wells 156 (12,480) $86,510 $(86,510) $ 0 San Emidio 20 (1,600) $11,438 $(5,719) $5,719 |
The Company performs an impairment test on an annual basis to determine whether a write-down is necessary with respect to the properties. The Company believes no circumstances have occurred and no evidence has been uncovered that warrant a write-down of the mineral properties other than those abandoned by management and thus included in write-down of mineral properties. Impairment of $369,137 and $134,213 was recorded in the years ended December 31, 2012 and 2011, respectively, relating to the abandonment of some mineral claims.
NOTE 5 - CAPITAL STOCK
The Company is authorized to issue 300,000,000 shares of it $0.001 par value common stock. On September 30, 2009, the Company effected a 60-for-1 forward stock split of its $0.001 par value common stock.
All share and per share amounts have been retroactively restated to reflect the splits discussed above.
Common Stock
On January 30, 2007, the Company issued 240,000,000 shares of its common stock
to founders for proceeds of $20,000.
During the year-ended December 31, 2008, the Company issued 28,200,000 shares of its common stock for total proceeds of 47,000.
On October 9, 2009, the Company cancelled 220,000,000 shares of its common stock. Also on October 9, 2009, the Company issued 12,350,000 shares of its common stock for 100 percent of the issued and outstanding stock of Nevada Lithium Corp.
On January 10, 2010, the Company issued 53,484 shares of its common stock as part of the Fish Lake Property acquisition. On April 30, 2010, the Company issued 38,068 shares of its common stock as part of the Fish Lake Property acquisition. On July 10, 2010, the Company issued 104,168 shares of its common stock as part of the Fish Lake Property acquisition. On October 10, 2010, the Company issued 171,568 of its common stock as part of the Fish Lake Property acquisition. The total shares issued for the Fish Lake property during the year ended December 31, 2010 was 367,288 valued at $175,000.
On March 24, 2010, the Company issued 2,000,000 units in a private placement, raising gross proceeds of $2,000,000, or $1.00 per unit. Each unit consists of one common share in the capital of our company and one non-transferable common share purchase warrant. Each whole common share purchase warrant non-transferable entitles the holder thereof to purchase one share of common stock in the capital of our company, for a period of twelve months commencing the closing, at a purchase price of $1.20 per warrant share and at a purchase price of $1.35 per warrant share for a period of twenty-four months thereafter.
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 5 - CAPITAL STOCK (CONTINUED)
On January 10, 2011, the Company issued 163,856 shares of its common stock as part of the Fish Lake Property acquisition. On April 10, 2011, the Company issued 230,264 shares of its common stock as part of the Fish Lake Property acquisition. The total shares issued for the Fish Lake property during the year ended December 31, 2011 was 394,120 valued at $87,500.
On April 28, 2011, the Company issued 150,000 shares of its common stock as part of a stock option exercise. On May 5, 2011, the Company issued 200,000 shares of its common stock as part of a stock option exercise. The Company received proceeds totaling $84,000 for the exercise of the 350,000 stock options.
On November 19, 2012, the Company issued 11,000,000 shares of its common stock and stock warrants as part of private placement for total proceeds of $550,000.
There were 74,661,408 shares of common stock issued and outstanding as of December 31, 2012.
WARRANTS
Outstanding at
Issue Date Number Price Expiry Date December 31, 2012
---------- ------ ----- ----------- -----------------
Nov. 19, 2012 11,000,000 $0.10 Nov. 18, 2014 11,000,000
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The Company issued 11,000,000 warrants in connections with a private placement during the year ended December 31, 2012. The warrants were valued using the Black-Scholes option pricing model using the following assumptions: term of 5 years, dividend yield of 0%, risk free interest rates of 0.67% and volatility of 129%. The fair value of the warrants was adjusted against additional paid in capital.
Additionally, during the year ended December 31, 2012, 2,000,000 warrants expired and the value was reclassified to additional paid-in capital.
STOCK BASED COMPENSATION
During the year ended December 31, 2010, the Company granted 500,000 options at an exercise price of $0.28 and 400,000 options at an exercise price of $0.24 to consultants in exchange for various professional services. On May 31, 2012, the options granted with exercise prices of $0.28 and $0.24 were modified to exercise prices of $0.07. The modification resulted in stock-based compensation of $11,524. Also on May 31, 2012, the Company granted an additional 400,000 options to consultants for management services with an exercise price of $0.07. These options were vested on the date of grant and resulted in stock-based compensation of $23,891. The Company uses the Black-Scholes option valuation model to value stock options. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. Assumptions used to determine the fair value of the remaining stock options are as follows:
Modifications New options
------------- -----------
Risk free interest rate 0.35% 0.67%
Expected dividend yield 0% 0%
Expected stock price volatility 129% 129%
Expected life of options 3.33 years 5 years
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Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 5 - CAPITAL STOCK (CONTINUED)
Weighted Total
Average Weighted
Total Remaining Average
Exercise Options Life Exercise Options
Prices Outstanding (Years) Price Exercisable
------ ----------- ------- ----- -----------
$0.07 1,050,000 2.17 $0.07 1,050,000
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Total stock-based compensation for the year- ended December 31, 2011 was $35,415 (2011: Nil).
The following table summarizes the stock options outstanding at December 31, 2012:
Outstanding at
Issue Date Number Price Expiry Date December 31, 2012
---------- ------ ----- ----------- -----------------
September 23, 2010 500,000 $0.07 September 23, 2015 500,000
September 23, 2010 150,000 $0.07 September 23, 2015 150,000
May 31, 2012 300,000 $0.07 March 13, 2013 300,000
May 31, 2012 100,000 $0.07 May 31, 2017 100,000
--------- ---------
Total 1,050,000 1,050,000
========= =========
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NOTE 6 - INCOME TAXES
As of December 31, 2012, the Company had net operating loss carry forwards of approximately $2,439,862 that may be available to reduce future years' taxable income in varying amounts through 2031. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision for Federal income tax consists of the following for the years ended December 31, 2012 and 2011:
2012 2011
---------- ----------
Federal income tax benefit attributable to:
Current operations $ 256,892 $ 200,910
Less: valuation allowance (256,892) (200,910)
---------- ----------
Net provision for Federal income taxes $ 0 $ 0
========== ==========
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The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows at December 31, 2012 and 2011:
2012 2011
---------- ----------
Deferred tax asset attributable to:
Net operating loss carryover $ 829,553 $ 572,661
Less: valuation allowance (829,553) (572,661)
---------- ----------
Net deferred tax asset $ 0 $ 0
========== ==========
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Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $2,439,862 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements December 31, 2012
NOTE 7 - RELATED PARTY TRANSACTIONS
An officer and shareholder of the Company was paid $96,600 and $101,350 for consulting and exploration related fees during the years ended December 31, 2012 and 2011, respectively.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
NOTE 9 - SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 2012 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the SECURITIES EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
As of December 31, 2012, the end of our fiscal year covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in INTERNAL CONTROL-INTEGRATED FRAMEWORK. Our management has concluded that, as of December 31, 2012, our internal control over financial reporting is effective. Our management reviewed the results of their assessment with our board of directors.
This annual report does not include an attestation report of our company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our company's registered public accounting firm pursuant to temporary rules of the SEC that permit our company to provide only management's report in this annual report.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting that occurred during the year ended December 31, 2012 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B. OTHER INFORMATION
Effective April 11, 2012, John Webster resigned as a director of our company. Mr. Webster's resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.
On May 31, 2012, Henry Tonking resigned as a director of our company. Mr. Tonking's resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.
Effective December 19, 2012, Stephen Goss resigned as a director of our company and James Brown was appointed a director of our company. Mr. Goss' resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
Position Held Date First Elected
Name with the Company Age or Appointed
---- ---------------- --- ------------
Tom Lewis President, Treasurer, 58 August 25, 2009
Secretary and Director
John Hiner Vice President of 65 October 25, 2009
Exploration and Director
James Brown Director 49 December 19, 2012
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BUSINESS EXPERIENCE
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person's principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
TOM LEWIS - PRESIDENT, TREASURER, SECRETARY AND DIRECTOR
Mr. Lewis has more than 38 years experience in the oil and gas and mineral exploration industries. He has held various positions including project geologist, project manager, senior project geologist, and vice president exploration. He also was an integral member of the development team that explored, and developed the Cortez Hills deposit in Crescent Valley Nevada.
In 1974 Mr. Lewis started his career in the oil fields, and worked in the geophysical, and drilling industries until 1981, when he became a petroleum landman for Westburne Petroleum & Minerals. While there he was responsible for the acquisition and disposition of interests and maintaining title to petroleum lands in various locales in the United States, and Western Canada. In 1989 he started his own business as a consulting geologist and has worked in numerous locations over the past 20 years, including the United States, Mexico, Canada, Portugal, Chile, Africa, India and Honduras. Some of the positions he held include: working with Teck Cominco in 1996 evaluating and exploring precious metal deposits in Southern Mexico; project manager on the Farim phosphate deposit for Champion Resources in Guinea Bissau, West Africa in 1998; project geologist in 2001 and 2002 for Crystal Graphite Corporation, project geologist on the Midway Gold project in Tonopah Nevada, followed by two years as senior geologist at the Cortez Joint Venture in Crescent Valley, Nevada. By August 2005 he was named vice president of exploration in Portugal for St Elias Mines, working on the Jales project, and developing grass roots projects in Nevada. Following his experience in Portugal and Nevada he consulted to Selkirk Metals and New World Resource Corp. on projects in western Canada and Nevada. Most recently he consulted to Kinross Gold USA evaluating possible acquisitions.
JOHN HINER - VICE PRESIDENT OF EXPLORATION AND DIRECTOR
Mr. Hiner is a geologist who has over 33 years of experience in the mineral exploration, and oil and gas industries, and has considerable experience in this capacity, and also has been an officer or director of several public companies. Mr. Hiner brings a great deal of depth and insight to the board of directors of our company.
JAMES BROWN - DIRECTOR
Mr. Brown is a mining engineer with more than 25 years experience in the coal mining and exploration industry in Australia and Indonesia, including 22 years at Australian based coal producer New Hope Corporation. During this time he has held positions from front line mine planning and supervision, land acquisition, government approvals and mine and business development. Mr. Brown is also the managing director of Altura Mining Limited (ASX: AJM) an Australian listed company focused on coal, lithium and iron ore exploration. Since his appointment as general manager in 2008 and subsequently managing director of Altura in September 2010, Mr. Brown has overseen the growth of Altura from $10 million to $80 million in market capitalization via successful capital raisings and acquisition of near term production projects such as Tabalong Coal (Indonesia), Altura Lithium (Western Australia) and Mt Webber Iron Ore (Western Australia). James is a member of the Australian Institute of Company Directors (MAICD).
EMPLOYMENT AGREEMENTS
We have no formal employment agreements with any of our directors or officers.
FAMILY RELATIONSHIPS
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
1. been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
2. had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
3. been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
4. been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5. been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6. been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our shares of common stock and other equity securities, on Forms 3, 4 and 5, respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by our company, or written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended December 31, 2012, all filing requirements applicable to our officers, directors and greater than 10% beneficial owners as well as our officers, directors and greater than 10% beneficial owners of our subsidiaries were complied with, with the exception of the following:
Number of
Transactions Not
Number of Late Reported on a Timely Failure to File
Name Reports Basis Requested Forms
---- ------- ----- ---------------
James Brown (1) 1 1 0
----------
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(1) the insider was late filing a Form 3, Initial Statement of Beneficial Ownership.
CODE OF ETHICS
Effective March 25, 2011, our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, our company's principal executive officer and our principal financial and accounting officer, as well as persons performing similar functions. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1. honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2. full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us;
3. compliance with applicable governmental laws, rules and regulations;
4. the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5. accountability for adherence to the Code of Business Conduct and Ethics.
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's personnel shall be accorded full access to our president and secretary with respect to any matter which may arise relating to the Code of Business Conduct and Ethics. Further, all of our company's personnel are to be accorded full access to our company's board of directors if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our president or secretary.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company's president or secretary. If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the president or secretary, the incident must be reported to any member of our board of directors. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.
Our Code of Business Conduct and Ethics is filed herewith with the SEC as Exhibit 14.1 to this annual report. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Lithium Corporation, 11380 S. Virginia St. #2011, Reno, Nevada, 89511.
BOARD AND COMMITTEE MEETINGS
Our board of directors held no formal meetings during the year ended December 31, 2012. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
NOMINATION PROCESS
As of December 31, 2012, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our company's requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our company at the address on the cover of this annual report.
AUDIT COMMITTEE
Currently our audit committee consists of our entire board of directors. We do not have a standing audit committee as we currently have limited working capital and no revenues. With our recent management change however, we have positioned ourselves with an audit committee financial expert and independent director should we be able to raise sufficient funding to execute our business plan. With success we will form an audit, compensation committee and other applicable committees utilizing our directors' expertise.
AUDIT COMMITTEE FINANCIAL EXPERT
Currently our audit committee consists of our entire board of directors. We do not currently have a director who is qualified to act as the head of the audit committee.
ITEM 11. EXECUTIVE COMPENSATION
The particulars of the compensation paid to the following persons:
(a) our principal executive officer;
(b) each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2012 and 2011; and
(c) up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2012 and 2011, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Tom Lewis(1) 2012 Nil Nil Nil Nil Nil Nil 96,600 96,600
President, 2011 Nil Nil Nil Nil Nil Nil 101,350(2) 101,350
Treasurer,
Secretary and
Director
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There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
2012 GRANTS OF PLAN-BASED AWARDS
The following table provides information about equity and non-equity awards granted to the named executives in 2012:
GRANTS OF PLAN-BASED AWARDS
All
Other
Stock Grant
Awards: All Other Exercise Date
Number Option or Fair
of Awards: Base Value
Estimated Future Payouts Estimated Future Payouts Shares Number Price of
Under Non-Equity Incentive Under Equity Incentive of of of Stock
Plan Awards Plan Awards Stocks Securities Option and
Grant ----------------------------------- ----------------------------------- or Underlying Awards Option
Name Date Threshold($) Target($) Maximum($) Threshold($) Target($) Maximum($) Units(#) Options(#) ($/Sh) Awards
---- ---- ------------ --------- ---------- ------------ --------- ---------- -------- ---------- ------ ------
None -- -- -- -- -- -- -- -- -- -- --
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The particulars of unexercised options, stock that has not vested and equity incentive plan awards for our named executive officers are set out in the following table:
Option Awards Stock Awards
---------------------------------------------------------------- ------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- -------- ---- --------- --------- --------- ---------
Tom Lewis 250,000 Nil Nil $0.07 Sept. 23, 2015 Nil Nil Nil Nil
John Hiner 250,000 Nil Nil $0.07 Sept. 23, 2015 Nil Nil Nil Nil
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OPTION EXERCISES AND STOCK VESTED
During our fiscal year ended December 31, 2012 there were no options exercised by our named officers.
COMPENSATION OF DIRECTORS
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
The following table sets forth a summary of the compensation paid to our non-employee directors in 2012:
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
John Hiner Nil Nil Nil Nil Nil Nil Nil
John Webster(1) Nil Nil Nil Nil Nil Nil Nil
Henry Tonking(2) Nil Nil Nil Nil Nil Nil Nil
Stephen Goss(3) Nil Nil Nil Nil Nil Nil Nil
James Brown(4) Nil Nil Nil Nil Nil Nil Nil
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PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
INDEBTEDNESS OF DIRECTORS, SENIOR OFFICERS, EXECUTIVE OFFICERS AND OTHER MANAGEMENT
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of April 3, 2013, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of Amount and Nature of Percentage Beneficial Owner Beneficial Ownership of Class (1) ---------------- -------------------- ------------ Tom Lewis 10,250,000 (2) PO Box 2053 Common Shares 13.72864% Richland, WA 99352 John Hiner 10,250,000 (3) 13.72864% 9443 Axlund Road Common Shares Lynden, WA 98264 James Brown Nil 0% Apartment Pearl Garden, Unit No. Wp00606 Jl. Jen. Gatot Subroto Kav 5-7 Jakarta 12930 Indonesia Directors and Executive Officers 20,500,000 27.457% as a Group(1) Common Shares Altura Lithium Pty. Ltd. P.O. Box 4088 Springfield Qld., 4300 11,000,000 Australia Common Shares 14.73% ---------- |
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes
the power to vote, or to direct the voting of shares; and (ii) investment
power, which includes the power to dispose or direct the disposition of
shares. Certain shares may be deemed to be beneficially owned by more than
one person (if, for example, persons share the power to vote or the power
to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares (for example, upon exercise of an option) within 60 days of the date
as of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed to
include the amount of shares beneficially owned by such person (and only
such person) by reason of these acquisition rights. As a result, the
percentage of outstanding shares of any person as shown in this table does
not necessarily reflect the person's actual ownership or voting power with
respect to the number of shares of common stock actually outstanding on
April 3, 2013. As of April 3, 2013 there were 74,661,408 shares of our
company's common stock issued and outstanding.
(2) Includes options to acquire 250,000 shares of common stock by Mr. Lewis.
(3) Includes options to acquire 250,000 shares of common stock by Mr. Hiner.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2012, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
DIRECTOR INDEPENDENCE
We currently act with three directors, consisting of Tom Lewis, John Hiner and James Brown.
We have determined that James Brown is an independent director, as that term is used in Rule 4200(a)(15) of the Rules of National Association of Securities Dealers.
Currently our audit committee consists of our entire board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.
From inception to present date, we believe that the members of our audit committee and the board of directors have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed for the most recently completed fiscal year ended December 31, 2012 and for fiscal year ended December 31, 2011 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Year Ended
December 31, 2012 December 31, 2011
----------------- -----------------
Audit Fees $ 8,500 $ 8,500
Audit Related Fees $ 1,000 $ 5,250
Tax Fees $ Nil $ Nil
All Other Fees $ Nil $ Nil
Total $ 9,500 $13,750
|
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors' independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) Financial statements for our company are listed in the index under Item 8 of this document
(2) All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
(b) Exhibits
Exhibit No. Description
----------- -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement on Form SB-2 filed on December 21, 2007).
3.2 Bylaws (Incorporated by reference to our Registration Statement on
Form SB-2 filed on December 21, 2007).
3.3 Articles of Merger (Incorporated by reference to our Current Report
on Form 8-K filed on October 2, 2009).
43
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3.4 Certificate of Change (Incorporated by reference to our Current
Report on Form 8-K filed on October 2, 2009).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 2009 Stock Option Plan (Incorporated by reference to our Current
Report on Form 8-K filed on December 30, 2009).
(10) MATERIAL CONTRACTS
10.1 Share Exchange Agreement dated October 9, 2009, between our
company, Nevada Lithium Corporation and the selling shareholders of
Nevada Lithium Corporation (Incorporated by reference to our
Current Report on Form 8-K filed on October 26, 2009).
10.2 Lease Purchase Agreement dated June 1, 2009 between Nevada Lithium
Corporation, Nevada Mining Co., Inc., Robert Craig, Barbara Craig
and Elizabeth Dickman. (Incorporated by reference to our Current
Report on Form 8-K filed on October 26, 2009).
10.3 Lease Agreement dated March 16, 2009 between Nevada Lithium
Corporation and Cerro Rico Ventures LLC (incorporated by reference
to our Current Report on Form 8-K filed on October 26, 2009).
(14) CODE OF ETHICS
14.1* Code of Business Conduct and Ethics
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Nevada Lithium Corporation, a Nevada corporation
(31) RULE 13A-14 (D)/15D-14D) CERTIFICATIONS
31.1* Section 302 Certification by the Principal Executive Officer and
Principal Financial Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification by the Principal Executive Officer and
Principal Financial Officer.
101** INTERACTIVE DATA FILE
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
----------
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* Filed herewith.
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the
Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of any registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, are deemed not filed for purposes of
Section 18 of the Securities and Exchange Act of 1934, and otherwise are
not subject to liability under those sections.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
LITHIUM CORPORATION
(Registrant)
Dated: April 15, 2013
/s/ Tom Lewis
------------------------------------------
Tom Lewis
President, Treasurer, Secretary and
Director (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: April 15, 2013 /s/ Tom Lewis
------------------------------------------
Tom Lewis
President, Treasurer, Secretary and
Director (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Dated: April 15, 2013 /s/ John Hiner
------------------------------------------
John Hiner
Vice President of Exploration and Director
Dated: April 15, 2013 /s/ James Brown
------------------------------------------
James Brown
Director
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Exhibit 14.1
LITHIUM CORPORATION
(the "Corporation")
CODE OF ETHICS AND BUSINESS CONDUCT
FOR DIRECTORS, SENIOR OFFICERS AND EMPLOYEES OF THE CORPORATION
(the "Code")
This Code applies to the Chief Executive Officer, President, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions (collectively, the "Senior Officers") along with all directors and employees within the Corporation (the Senior Officers, directors and employees are hereinafter collectively referred to as the "Employees"). This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all Employees of the Corporation. All Employees should conduct themselves accordingly and seek to avoid the appearance of improper behaviour in any way relating to the Corporation.
Any Employee who has any questions about the Code should consult with the Chief Executive Officer, the President, the Corporation's board of directors (the "Board") or the Corporation's audit committee (the "Audit Committee").
The Corporation has adopted the Code for the purpose of promoting:
* honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
* full, fair, accurate, timely and understandable disclosure in all reports and documents that the Corporation files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Corporation that are within the Senior Officer's area of responsibility;
* compliance with applicable governmental laws, rules and regulations;
* the prompt internal reporting of violations of the Code; and
* accountability for adherence to the Code.
HONEST AND ETHICAL CONDUCT
Each Senior Officer and member of the Board owes a duty to the Corporation to act with integrity. Integrity requires, among other things, being honest and candid. Employees must adhere to a high standard of business ethics and are expected to make decisions and take actions based on the best interests of the Corporation, as a whole, and not based on personal relationships or benefits. Generally, a "conflict of interest" occurs when an Employee's personal interests is, or appears to be, inconsistent with, interferes with or is opposed to the best interests of the Corporation or gives the appearance of impropriety.
Business decisions and actions must be made in the best interests of the Corporation and should not be influenced by personal considerations or relationships. Relationships with the Corporation's stakeholders - for example suppliers, competitors and customers - should not in any way affect an Employee's responsibility and accountability to the Corporation. Conflicts of interest can arise when an Employee or a member of his or her family receive improper gifts, entertainment or benefits as a result of his or her position in the Corporation.
Specifically, each Employee must:
1. act with integrity, including being honest and candid while still maintaining the confidentiality of information when required or consistent with the Corporation's policies;
2. avoid violations of the Code, including actual or apparent conflicts of interest with the Corporation in personal and professional relationships;
3. disclose to the Board or the Audit Committee any material transaction or relationship that could reasonably be expected to give rise to a breach of the Code, including actual or apparent conflicts of interest with the Corporation;
4. obtain approval from the Board or Audit Committee before making any decisions or taking any action that could reasonably be expected to involve a conflict of interest or the appearance of a conflict of interest;
5. observe both the form and spirit of laws and governmental rules and regulations, accounting standards and Corporation policies;
6. maintain a high standard of accuracy and completeness in the Corporation's financial records;
7. ensure full, fair, timely, accurate and understandable disclosure in the Corporation's periodic reports;
8. report any violations of the Code to the Board or Audit Committee;
9. proactively promote ethical behaviour among peers in his or her work environment; and
10. maintain the skills appropriate and necessary for the performance of his or her duties.
DISCLOSURE OF CORPORATION INFORMATION
As a result of the Corporation's status as a public company, it is required to file periodic and other reports with the SEC. The Corporation takes its public disclosure responsibility seriously to ensure that these reports furnish the marketplace with full, fair, accurate, timely and understandable disclosure regarding the financial and business condition of the Corporation. All disclosures contained in reports and documents filed with or submitted to the
SEC, or other government agencies, on behalf of the Corporation or contained in other public communications made by the Corporation must be complete and correct in all material respects and understandable to the intended recipient.
The Senior Officers, in relation to his or her area of responsibility, must be committed to providing timely, consistent and accurate information, in compliance with all legal and regulatory requirements. It is imperative that this disclosure be accomplished consistently during both good times and bad and that all parties in the marketplace have equal or similar access to this information.
All of the Corporation's books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Corporation's transactions, and must conform both to applicable legal requirements and to the Corporation's system of internal controls. Unrecorded or "off the book" funds, assets or liabilities should not be maintained unless permitted by applicable law or regulation. Senior Officers involved in the preparation of the Corporation's financial statements must prepare those statements in accordance with generally accepted accounting principles, consistently applied, and any other applicable accounting standards and rules so that the financial statements materially, fairly and completely reflect the business transactions and financial statements and related condition of the Corporation. Further, it is important that financial statements and related disclosures be free of material errors.
Specifically, each Senior Officer must:
1. familiarize himself or herself with the disclosure requirements generally applicable to the Corporation;
2. not knowingly misrepresent, or cause others to misrepresent, facts about the Corporation to others, including the Corporation's independent auditors, governmental regulators, self-regulating organizations and other governmental officials;
3. to the extent that he or she participates in the creation of the Corporation's books and records, promote the accuracy, fairness and timeliness of those records; and
4. in relation to his or her area of responsibility, properly review and critically analyse proposed disclosure for accuracy and completeness.
CONFIDENTIAL INFORMATION
Employees must maintain the confidentiality of confidential information entrusted to them by the Corporation of its customers, suppliers, joint venture partners, or others with whom the Corporation is considering a business or other transaction except when disclosure is authorized by an executive officer or required or mandated by laws or regulations. Confidential information includes all non-public information that might be useful or helpful to competitors or harmful to the Corporation or its customers or suppliers, if disclosed. It also includes information that suppliers, customers and other parties have entrusted to the Corporation. The obligation to preserve confidential information continues even after employment ends.
Records containing personal data about employees or private information about customers and their employees are confidential. They are to be carefully safeguarded, kept current, relevant and accurate. They should be disclosed only to authorized personnel or as required by law.
All inquiries regarding the Corporation from non-employees, such as financial analysts and journalists, should be directed to the Board or the Audit Committee. The Corporation's policy is to cooperate with every reasonable request of government investigators for information. At the same time, the Corporation is entitled to all the safeguards provided by law for the benefit of persons under investigation or accused of wrongdoing, including legal representation. If a representative of any government or government agency seeks an interview or requests access to data or documents for the purposes of an investigation, the Employee should refer the representative to the Board or the Audit Committee. Employees also should preserve all materials, including documents and e-mails that might relate to any pending or reasonably possible investigation.
COMPLIANCE WITH LAWS
The Employees must respect and obey all applicable foreign, federal, state and local laws, rules and regulations applicable to the business and operations of the Corporation.
Employees who have access to, or knowledge of, material nonpublic information from or about the Corporation are prohibited from buying, selling or otherwise trading in the Corporation's stock or other securities. "Material nonpublic" information includes any information, positive or negative, that has not yet been made available or disclosed to the public and that might be of significance to an investor, as part of the total mix of information, in deciding whether to buy or sell stock or other securities.
Employees also are prohibited from giving "tips" on material nonpublic information, that is directly or indirectly disclosing such information to any other person, including family members, other relatives and friends, so that they may trade in the Corporation's stock or other securities.
Furthermore, if, during the course of an Employee's service with the Corporation, he or she acquires material nonpublic information about another company, such as one of our customers or suppliers, or you learn that the Corporation is planning a major transaction with another company (such as an acquisition), the Employee is restricted from trading in the securities of the other company.
REPORTING ACTUAL AND POTENTIAL VIOLATIONS OF THE CODE AND ACCOUNTABILITY FOR COMPLIANCE WITH THE CODE
The Corporation, through the Board or the Audit Committee, is responsible for applying this Code to specific situations in which questions may arise and has the authority to interpret this Code in any particular situation. This Code is not intended to provide a comprehensive guideline for Senior Officers in relation to their business activities with the Corporation. Any Employee may seek clarification on the application of this Code from the Board or the Audit Committee.
Each Employee must:
1. notify the Corporation of any existing or potential violation of this Code, and failure to do so is itself a breach of the Code; and
2. not retaliate, directly or indirectly, or encourage others to do so, against any Employee for reports, made in good faith, of any misconduct or violations of the Code solely because that Employee raised a legitimate ethical issue.
The Board or the Audit Committee will take all action it considers appropriate to investigate any breach of the Code reported to it. All Employees are required to cooperate fully with any such investigations and to provide truthful and accurate information. If the Board or the Audit Committee determines that a breach has occurred, it will take or authorize disciplinary or preventative action as it deems appropriate, after consultation with the Corporation's counsel if warranted, up to and including termination of employment. Where appropriate, the Corporation will not limit itself to disciplinary action but may pursue legal action against the offending Employee involved. In some cases, the Corporation may have a legal or ethical obligation to call violations to the attention of appropriate enforcement authorities.
Compliance with the Code may be monitored by audits performed by the Board, Audit Committee, the Corporation's counsel and/or by the Corporation's outside auditors. All Employees are required to cooperate fully with any such audits and to provide truthful and accurate information.
Any waiver of this Code for any Employee may be made only by the Board or the Audit Committee and will be promptly disclosed to stockholders and others, as required by applicable law. The Corporation must disclose changes to and waivers of the Code in accordance with applicable law.
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SS 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tom Lewis, certify that:
1. I have reviewed this annual report on Form 10-K of Lithium Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: April 15, 2013 /s/ Tom Lewis ------------------------------------------------- Tom Lewis President, Treasurer, Secretary and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Tom Lewis, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Annual Report on Form 10-K of Lithium Corporation for the period ended December 31, 2012 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Lithium Corporation.
Dated: April 15, 2013
/s/ Tom Lewis
---------------------------------------------
Tom Lewis
President, Treasurer, Secretary and Director
(Principal Executive Officer,
Principal Financial Officer
and Principal Accounting Officer)
Lithium Corporation
|
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Lithium Corporation and will be retained by Lithium Corporation and furnished to the Securities and Exchange Commission or its staff upon request.