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, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 333-148266
LITHIUM CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 98-0530295
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 S. Virginia St. - 8th Floor, Reno, Nevada 89501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 775.398.3047
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
------------------- -----------------------------------------
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
N/A
(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 [ ] 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 30, 2010 was $18,122,660 based on a $0.425 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.
63,311,408 as of April 11, 2011
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Item 1. Business............................................................ 3
Item 1A. Risk Factors........................................................ 6
Item 1B. Unresolved Staff Comments........................................... 9
Item 2. Properties.......................................................... 9
Item 3. Legal Proceedings................................................... 9
Item 4. (Removed and Reserved).............................................. 9
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities................... 9
Item 6. Selected Financial Data............................................. 10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......... 15
Item 8. Financial Statements and Supplementary Data......................... 16
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure............................................ 30
Item 9A. Controls and Procedures............................................. 30
Item 9B. Other Information................................................... 31
Item 10. Directors, Executive Officers and Corporate Governance.............. 31
Item 11. Executive Compensation.............................................. 35
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters..................................... 37
Item 13. Certain Relationships and Related Transactions, and Director
Independence........................................................ 38
Item 14. Principal Accounting Fees and Services.............................. 39
Item 15. Exhibits, Financial Statement Schedules............................. 39
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PART I
ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms "we",
"us" and "our" mean Lithium Corporation, and our wholly owned subsidiary, Nevada
Lithium Corporation, unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on January 30, 2007
under the name "Utalk Communications Inc." At inception, we were a development
stage corporation engaged in the business of developing and marketing a
call-back service using a call-back platform. Because we were not successful in
implementing our business plan, we considered various alternatives to ensure the
viability and solvency of our company.
On August 31, 2009, we entered into a letter of intent with Nevada Lithium
Corporation regarding a business combination which may be effected in one of
several different ways, including an asset acquisition, merger of our company
and Nevada Lithium Corporation, or a share exchange whereby we would purchase
the shares of Nevada Lithium Corporation from its shareholders in exchange for
restricted shares of our common stock.
Effective September 30, 2009, we effected a one (1) old for 60 new forward stock
split of our issued and outstanding common stock. As a result, our authorized
capital increased from 50,000,000 shares of common stock with a par value of
$0.001 to 3,000,000,000 shares of common stock with a par value of $0.001 and
our issued and outstanding shares increased from 4,470,000 shares of common
stock to 268,200,000 shares of common stock.
Also effective September 30, 2009, we have changed our name from "Utalk
Communications, Inc." to "Lithium Corporation", by way of a merger with our
wholly owned subsidiary Lithium Corporation, which was formed solely for the
change of name. The name change and forward stock split becomes effective with
the Over-the-Counter Bulletin Board at the opening for trading on October 1,
2009 under the new stock symbol "LTUM". Our new CUSIP number is 536804 107.
On October 9, 2009, we entered into a share exchange agreement with Nevada
Lithium Corporation, a Nevada corporation, and the shareholders of Nevada
Lithium Corporation. The closing of the transactions contemplated in the share
exchange agreement and the acquisition of all of the issued and outstanding
common stock in the capital of Nevada Lithium Corporation occurred on October
19, 2009. In accordance with the closing of the share exchange agreement, we
issued 12,350,000 shares of our common stock to the former shareholders of
Nevada Lithium Corporation in exchange for the acquisition, by our company, of
all of the 12,350,000 issued and outstanding shares of Nevada Lithium
Corporation. Also, pursuant to the terms of the share exchange agreement, a
director of our company cancelled 220,000,000 restricted shares of our common
stock.
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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 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 Salt Wells.
FISH LAKE VALLEY PROPERTY
Fish Lake Valley is a lithium enriched salar (also known as a Playa, dry lake,
or Salt Pan), which is located in west central Nevada in northern Esmeralda
county, and is roughly centered at 417050E 4195350N (NAD 27 CONUS). The company
staked an additional 12 eighty (80) acre Association Placer claims in 2010
adjacent to the original eighty claims, and the land package here presently
covers approximately 7360 acres. Lithium-enriched Tertiary-era Fish Lake
formation Rhyolitic tuffs or ash flow tuffs have accumulated in a valley or
basinal environment. Over time interstitial formational waters in contact with
these tuffs, have become enriched in lithium, which could possibly be amenable
to the extraction by evaporative methods.
The geological setting at Fish Lake Valley is highly analogous to the salars of
Chile, Bolivia, & Peru. Access is excellent in Fish Lake Valley with all weather
gravel roads leading to the property from State Highways 264, and 265, and
maintained gravel roads ring the Playa. Power is available approximately 15
kilometers from the property, and the village of Dyer is approximately 20
kilometers to the south, while the town of Tonopah Nevada is approximately 75
kilometers to the East.
The company conducted preliminary SP, and Gravity geophysical surveys on the
property in 2010, followed by the drilling of 42 shallow holes on the periphery
of the playa in Fall of 2010. Drilling could not be performed on the playa due
to extremely wet conditions in the Fall of 2010. A number of samples came back
weakly anomalous for lithium, but no economic mineralization was encountered
during the drill program. Surface brine sampling is currently underway, and
drilling is planned on the playa in summer of 2011.
The property is held under mining lease purchase agreement dated June 1, 2009
between Nevada Lithium Corporation, and Nevada Alaska Mining Co. Inc., Robert
Craig, Barbara Craig, and Elizabeth Dickman. Nevada Lithium has agreed to issue
the vendors $350,000 worth of common stock of the company in eight regular
disbursements, the last of which is slated to occur on March 31st 2011. To date
all except the last disbursement has been made of stock worth a total of
$306,250.
SALT WELLS
The Salt Wells property was acquired through staking in the Fall of 2009.
Originally an approximately 12,320 acre parcel was staked, but subsequent to
initial exploration, and due to overlap of existing Fee lands, and Federal
rights of way the parcel was reduced to approximately 8500 acres in 2010. The
claims here cover the Eightmile Basin, a playa, which lies approximately 15
miles to the southeast of Fallon, the county seat of Churchill County, Nevada.
U.S. Highway 50 cuts across the northern portions of the claim block and the
Salt Wells all-weather gravel road traverses the Western portions of the block.
Power is available locally as a high voltage transmission line runs parallel to
the highway as well as another that originates at the geothermal power plant at
the southern edge of the claim block.
Exploratory sediment sampling of the playa was conducted in the summer and fall
of 2009 and 83% of the samples taken within the claim area have returned
anomalous values in lithium, with the highest value being in the order of 750
ppm Li. In 2010 continued geochemical work, and geophysical studies were
performed on the property.
The strong lithium values coupled with proximity to a geothermal field and
Quaternary faulting indicate that conditions may be favorable for the formation
of a subsurface lithium brine reservoir similar to that currently being
exploited at Silver Peak in Esmeralda County, Nevada.
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The company is presently conducting a final round of geochemical studies, and
has recently submitted a permit application to the BLM in Carson City, as it is
the company's intention to drill on the property this summer.
CORTEZ PROPERTY
The company staked a block of approximately 4960 acres in the fall of 2009 on
this playa situated in Lander County Nevada. The property is situated about 7
miles to the south of Barrick Gold's Cortez Hills mine, and is approximately 47
miles to the southeast of Battle Mountain, the county seat. The prospect is on
the edge of the Caetano trough, where a thick sequence of Tertiary volcanic
rocks with elevated lithium values have accumulated. Past sampling has indicated
that the sediments in the playa are almost ubiquitously enriched in lithium,
with values typically in the 2 - 400 ppm million range. The property is easily
accessed by gravel roads, and power is available on the eastern side of the
playa.
The company conducted geochemical, and geophysical surveys on the property in
2009, and 2010 and are currently conducting a shallow brine geochemistry survey
in preparation for drilling in the summer of 2011.
WEST BIG SMOKY
The West Big Smoky Valley property was acquired through claim staking in the
fall of 2009. Due to mediocre exploration results and a number of overlapping
competitive claims here, it was decided to let the claims lapse in the fall of
2010.
BEOWAWE PROPERTY
The Beowawe property was acquired through staking in fall of 2009. Although
initial exploration results were quite good, due to the fractured land position
it was decided to let the claims here lapse in the fall of 2010.
FISH CREEK CALDERA
The Company terminated its option of the Fish Creek Caldera prospect in August
of 2010.
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.
EMPLOYEES
Currently our only employees are our directors and officers.
We do and will continue to outsource contract employment as needed. With project
advancement and if we are successful in any exploration or drilling programs, we
may retain additional employees.
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SUBSIDIARIES
We have one 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 MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTIES, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, 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.
6
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON ANY OF OUR PROPERTIES IN
A COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
any of our properties, we will be required to expend substantial sums of money
to establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involves many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource properties or from the extraction and sale of lithium ore. The price of
those commodities has fluctuated widely in recent years, and is affected by
numerous factors beyond our control, including international, economic and
political trends, expectations of inflation, currency exchange fluctuations,
interest rates, global or regional consumptive patterns, speculative activities
and increased production due to new extraction developments and improved
extraction and production methods. The effect of these factors on the price of
base and precious metals, and therefore the economic viability of any of our
exploration properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
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
7
operate a mine. We had cash in the amount of $1,398,758 as of December 31, 2010.
At December 31, 2010, we had working capital of $1,414,421. We incurred a net
loss of $852,656 for the year ended December 31, 2010 and $1,093,386 since
inception. We estimate our average monthly operating expenses to be
approximately $20,000 to $40,000, 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 SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
8
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's 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 200 S Virginia St - 8th Floor, Reno,
Nevada, 89501, our monthly rent is $200.
MINERAL PROPERTIES
As of the date of this annual report on Form 10-K, we hold the following
properties: Fish Lake Valley, Salt Wells and Cortez. For detail 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. (REMOVED AND RESERVED)
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:
National Association of Securities Dealers OTC Bulletin Board(1)
Quarter Ended High Low
------------- ---- ---
December 31, 2010 $0.38 $0.30
September 30, 2010 $0.51 $0.30
June 30, 2010 $1.04 $0.35
9
National Association of Securities Dealers OTC Bulletin Board(1)
Quarter Ended High Low
------------- ---- ---
March 31, 2010 $1.41 $0.90
December 31, 2009 $1.40 $0.60
September 30, 2009 $0.113 $0.11
June 30, 2009 N/A (2) N/A (2)
March 31, 2009 N/A (2) N/A (2)
December 31, 2008 N/A (2) N/A (2)
----------
(1) Over-the-counter market quotations reflect inter-dealer prices without
retail mark-up, mark-down or commission, and may not represent actual
transactions.
(2) Our common stock was quoted on the Over-the-Counter Bulletin Boards on July
2, 2008. The first trade did not occur until September 16, 2009.
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 8, 2011, the shareholders' list showed 15 registered shareholders with
62,917,288 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 Directors 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, 2010:
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 -- -- --
Approved by Security
Holders
Equity Compensation Plans Not 1,300,000 $0.255 4,750,000
Approved by Security Holders
Total 1,300,000 $0.255 4,750,000
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
We did not sell any equity securities which were not registered under the
Securities Act during the year ended December 31, 2010 that were not otherwise
disclosed on our quarterly reports on Form 10-Q or our current reports on Form
8-K filed during the year ended December 31, 2010.
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, 2010.
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 7 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, the Cortez
property, and Salt Wells. 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,
2010 was $1,829,653 as compared to $680,197 during the year ended December 31,
2009.
Over the next twelve months we expect to expend funds as follows:
Estimated Net Expenditures During the Next Twelve Months
General, Administrative Expenses $150,000
Exploration Expenses 350,000
--------
TOTAL $500,000
========
10
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, 2010 AND 2009
The following summary of our results of operations should be read in conjunction
with our financial statements for the year ended December 31, 2010, which are
included herein.
Our operating results for the twelve months ended December 31, 2010, for the
twelve months ended December 31, 2009 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, 2010
Ended Ended and
December 31, December 31, December 30,
2010 2009 2009
---------- ---------- ----------
Revenue $ Nil $ Nil $ Nil
Professional fees 44,306 33,431 10,875
Exploration expenses 182,721 66,264 116,457
Consulting fees 178,744 -- 178,744
Insurance Expense 3,303 -- 3,303
Amortization 1,000 504 496
Investor Relations 93,712 16,875 76,837
Interest 3,949 6,916 (2,967)
Management fees 41,800 12,000 29,800
Transfer agent and filing fees 6,224 16,135 (9,991)
Travel 20,403 6,120 14,283
Stock option compensation 244,045 -- 244,045
Website -- 412 (412)
Write-down of website -- 12,000 (12,000)
Write-down of property 15,396 -- 15,393
General and administrative 17,053 19,757 (2,704)
Net loss $(852,656) $(190,414) $(662,242)
Our accumulated losses increased to $1,093,386 as of December 31, 2010. Our
financial statements report a net loss of $852,656 for the twelve month period
ended December 31, 2010 compared to a net loss of $190,414 for the twelve month
period ended December 31, 2009. Our losses have increased primarily as a result
11
of increased exploration activities which have resulted in exploration expense
increases along with increases to consulting, travel, investor relations and
management fees. In addition, the Company issued stock options in the current
year, resulting in an expense of $244,045.
Our total current liabilities as of December 31, 2010 were $47,237 as compared
to total current liabilities of $275,005 as of December 31, 2009. The decrease
was due to the company repaying loans and accounts payable with funds raised
through the issuance of stock.
Our operating expenses for the year ended December 31, 2010 were $852,656
compared to $190,414 as of December 31, 2009. The increase in operating expenses
were primarily a result of increased exploration activities which have resulted
in exploration expense increases along with increases to consulting, travel,
investor relations and management fees. In addition, the Company issued stock
options in the current year, resulting in an operating expense of $244,045.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
December 31, December 31,
2010 2009
---------- ----------
Current assets $1,461,658 $ 387,061
Current liabilities 47,237 275,005
---------- ----------
Working capital $1,414,421 $ 112,056
========== ==========
CASH FLOWS
Year Ended December 31,
December 31, December 31,
2010 2009
---------- ----------
Net cash used in operating activities $ (685,986) $ (102,052)
Net cash used in investing activities (105,420) (224,718)
Net cash provided by financing activities 1,829,653 680,197
---------- ----------
Net increase in cash during period $1,038,247 $ 353,427
========== ==========
OPERATING ACTIVITIES
Net cash used in operating activities was $685,986 for the year ended December
31, 2010 compared with net cash used in operating activities of $102,052 in the
same period in 2009. The increase was primarily due to our operating loss of
$852,656, partially offset by our non-cash expense related to stock option
compensatiin of $244,045.
INVESTING ACTIVITIES
Net cash used in investing activities was $236,670 for the year ended December
31, 2010 compared to net cash used in investing activities of $224,718 in the
same period in 2009. The increase in use of cash of $11,952 in investing
activities is mainly attributable to gaining rights to additional mineral
properties.
FINANCING ACTIVITIES
Net cash provided by financing activities was $1,829,653 for the year ended
December 31, 2010 compared to $680,197 provided by financing activities in the
same period in 2009.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
12
GOING CONCERN
As of December 31, 2010, our company has accumulated losses of $1,093,386 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, 2011. 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.
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.
The accompanying unaudited interim financial statements of Lithium Corp., have
been prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto contained in Lithium Corp.'s Annual Report filed
with the SEC on Form 10-K. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for fiscal 2009 as
reported in the form 10-K have been omitted.
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.
CASH AND CASH EQUIVALENTS
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
COMPUTER EQUIPMENT
Computer 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.
13
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, accounts
payable and accrued liabilities, due to director, and loans payable. 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.
RECENTLY ADOPTED PRONOUNCEMENTS
VARIABLE INTEREST ENTITIES
In June 2009, the FASB issued changes to require an enterprise to perform an
analysis to determine whether the enterprise's variable interest or interests
give it a controlling financial interest in a variable interest entity; to
require ongoing reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity; to eliminate the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity; to add an additional reconsideration event for
determining whether an entity is a variable interest entity when any changes in
facts and circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly
impact the entity's economic performance; and to require enhanced disclosures
that will provide users of financial statements with more transparent
information about an enterprise's involvement in a variable interest entity. The
guidance became effective for the Company on February 1, 2010. The adoption of
the guidance did not have an impact on the Company's consolidated financial
statements.
CODIFICATION OF GAAP
In June 2009, the FASB issued guidance to establish the Accounting Standards
Codification TM ("Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. The FASB will no longer
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead, the FASB will issue Accounting Standards
Updates ("ASU"). ASUs will not be authoritative in their own right as they will
only serve to update the Codification. The issuance of SFAS 168 and the
Codification does not change GAAP. The guidance became effective for the Company
for the period ending October 31, 2009. The adoption of the guidance did not
have an impact on the Company's consolidated financial statements.
SUBSEQUENT EVENTS
On July 31, 2009, the Company adopted changes issued by the FASB that
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. Specifically, the guidance sets forth the period
after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and the disclosures that an entity should make
about events or transactions that occurred after the balance sheet date. The
Company has evaluated subsequent events through the date the financial
statements were issued.
14
BUSINESS COMBINATIONS
The Company adopted the changes issued by the FASB that requires the acquiring
entity in a business combination to recognize all (and only) the assets acquired
and liabilities assumed in the transaction; establishes the acquisition-date
fair value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose additional information needed to
evaluate and understand the nature and financial effect of the business
combination.
The Company also adopted the changes issued by the FASB which requires assets
and liabilities assumed in a business combination that arise from contingencies
be recognized on the acquisition date at fair value if it is more likely than
not that they meet the definition of an asset or liability; and requires that
contingent consideration arrangements of the target assumed by the acquirer be
initially measured at fair value.
NON-CONTROLLING INTERESTS
In December 2007, the FASB issued changes to establish accounting and reporting
standards for all entities that prepare consolidated financial statements that
have outstanding non-controlling interests, sometimes called minority interest.
These standards require that ownership interests in subsidiaries held by outside
parties be clearly identified, labelled and presented in equity separate from
the parent's equity; the amount of net income attributable to the parent and the
non-controlling interest be separately presented on the consolidated statement
of income; accounting standards applied to changes in a parent's interest be
consistently applied; fair value measurement upon deconsolidation of a
non-controlling interest be used; and the interests of the non-controlling
owners be already identified and distinguished. The adoption of this guidance
had no impact on the Company's consolidated financial statements.
INTANGIBLE ASSETS
In April 2008, the FASB adopted changes to require companies estimating the
useful life of a recognized intangible asset to consider their historical
experience in renewing or extending similar arrangements or, in the absence of
historical experience, to consider assumptions that market participants would
use about renewal or extension as adjusted for entity-specific factors. The
guidance is effective for fiscal years beginning after December 15, 2008 and is
to be applied prospectively to intangible assets whether acquired before or
after the effective date. The Company adopted the guidance on February 1, 2009.
The adoption had no impact on the Company's consolidated financial statements.
HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")
In May 2008, the FASB issued changes to identify the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP (the GAAP hierarchy). The guidance is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU section 411, THE MEANING OF PRESENT FAIRLY IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Management is
currently evaluating the guidance and assessing the impact, if any, on the
Company's consolidated financial statements.
REVENUE RECOGNITION
In September 2009, the FASB issued new revenue recognition guidance on multiple
deliverable arrangements. It updates the existing multiple-element revenue
arrangements guidance currently included under the Accounting Standards
Codification ("ASC") 605-25. The revised guidance primarily provides two
significant changes: 1) eliminates the need for objective and reliable evidence
of the fair value for the undelivered element in order for a delivered item to
be treated as a separate unit of accounting, and 2) requires the use of the
relative selling price method to allocate the entire arrangement consideration.
In addition, the guidance also expands the disclosure requirements for revenue
recognition. ASU 2009-13 will be effective for the first annual reporting period
beginning on or after fiscal 2011, with early adoption permitted provided that
the revised guidance is retroactively applied to the beginning of the year of
adoption. Management is currently evaluating the impact of adopting this
guidance on the Company's consolidated financial statements.
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.
15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Lithium Corporation
(An Exploration Stage Company)
Table of Contents
December 31, 2010
Report of Independent Registered Public Accounting Firm 17
Consolidated Balance Sheets as of December 31, 2010 and 2009 18
Consolidated Statements of Operations for the years ended
December 31, 2010 and 2009 and the period from January 30, 2007
(date of inception) to December 31, 2010 19
Consolidated Statement of Stockholders' Equity as of December 31, 2010 20
Consolidated Statements of Cash Flows for the years ended
December 31, 2010 and 2009 and the period from January 30, 2007
(date of inception) to December 31, 2010 21
Consolidated Notes to the Financial Statements 22
16
Silberstein Ungar, PLLC CPAs and Business Advisors
--------------------------------------------------------------------------------
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.sucpas.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Lithium Corporation
Reno, Nevada
We have audited the accompanying consolidated balance sheets of Lithium
Corporation (the "Company") as of December 31, 2010 and 2009, 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, 2010. 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, 2010 and 2009 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, 2010 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has received no revenue from sales of products
or services and has incurred losses from operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans with regard to these matters are described in Note 2. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Silberstein Ungar, PLLC
------------------------------------
Bingham Farms, Michigan
March 31, 2011
17
Lithium Corporation
(An Exploration Stage Company)
Consolidated Balance Sheets
As of December 31, 2010 and December 31, 2009
December 31, December 31,
2010 2009
------------ ------------
ASSETS
Current Assets
Cash $ 1,398,758 $ 360,511
Prepaid expenses 62,900 26,550
------------ ------------
Total Current Assets 1,461,658 387,061
------------ ------------
Other Assets
Computer equipment, net of amortization 498 1,498
Mineral properties 527,445 262,421
------------ ------------
Total Other Assets 527,943 263,919
------------ ------------
TOTAL ASSETS $ 1,989,601 $ 650,980
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 41,887 $ 99,308
Due to directors, net 5,350 6,234
Loans payable -- 169,463
------------ ------------
Total Current Liabilities 47,237 275,005
------------ ------------
TOTAL LIABILITIES 47,237 275,005
------------ ------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, 3,000,000,000 shares authorized, par value $0.001;
62,917,288 common shares issued and outstanding (2009 - 60,550,000) 62,918 60,550
Additional paid in capital 1,476,544 556,155
Additional paid in capital - options 244,045 --
Additional paid in capital - warrants 1,252,243 --
Deficit accumulated during the exploration stage (1,093,386) (240,730)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,942,364 375,975
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,989,601 $ 650,980
============ ============
The accompanying notes are an integral part of
these consolidated financial statements
18
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Operations
For the Years Ended December 31, 2010 and 2009
For the Period from January 30, 2007 (Inception) to December 31, 2010
From
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2010 2009 2010
------------ ------------ ------------
REVENUE $ -- $ -- $ --
------------ ------------ ------------
EXPENSES
Professional fees 44,306 33,431 110,616
Amortization 1,000 504 1,504
Exploration expenses 182,721 66,264 248,985
Consulting fees 178,744 -- 178,744
Insurance expense 3,303 -- 3,303
Investor relations 93,712 16,875 110,587
Interest (income) 3,949 6,916 10,865
Management fees 41,800 12,000 53,800
Rent (239) 1,663 1,424
Transfer agent and filing fees 6,224 16,135 22,359
Travel 20,403 6,120 26,523
Stock option compensation 244,045 -- 244,045
Website development costs -- 412 3,912
Write-down of website costs -- 12,000 12,000
Write-down of mineral properties 15,396 -- 15,396
General and administrative 17,053 19,757 50,747
------------ ------------ ------------
TOTAL EXPENSES 852,656 190,414 1,093,386
------------ ------------ ------------
LOSS BEFORE INCOME TAXES (852,656) (190,414) (1,093,386)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (852,656) $ (190,414) $ (1,093,386)
============ ============ ============
NET LOSS PER SHARE: BASIC AND DILUTED $ (0.01) $nil
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 62,267,465 226,670,000
============ ============
The accompanying notes are an integral part of
these consolidated financial statements
19
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statement of Stockholders' Equity
For the Period from January 30, 2007 (Inception) to December 31, 2010
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
=========== ========= ========== ========== ======== =========== ==========
The accompanying notes are an integral part of
these consolidated financial statements
20
Lithium Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2010 and 2009
For the Period from January 30, 2007 (Inception) to December 31, 2010
From
January 30, 2007
Year ended Year ended (Inception) to
December 31, December 31, December 31,
2010 2009 2010
------------ ------------ ------------
Cash Flows from Operating Activities:
Net loss for the period $ (852,656) $ (190,414) $ (1,093,386)
Adjustment for non-cash items:
Write-down of software development -- 12,000 12,000
Write-down of mineral properties 15,396 -- 15,396
Stock option compensation expense 244,045 -- 244,045
Amortization 1,000 504 1,504
Changes in assets and liabilities:
Decreasein prepaid expenses (36,350) (19,250) (62,900)
Increase (decrease) in accounts payable
and accrued liabilities (57,421) 95,108 41,887
------------ ------------ ------------
Cash used in operating activities (685,986) (102,052) (841,454)
------------ ------------ ------------
Cash Flows from Investing Activities:
Purchase of equipment -- (2,002) (2,002)
Purchase of software development -- -- (12,000)
Interest in mineral properties (105,420) (222,716) (367,841)
------------ ------------ ------------
Cash used in investing activities (105,420) (224,718) (381,843)
------------ ------------ ------------
Cash Flows from Financing Activities:
Proceeds from (repayment) of loan payable (169,463) 169,463 --
Proceeds from (repayment to) director (884) 734 5,350
Proceeds from sale of stock 2,000,000 510,000 2,616,705
------------ ------------ ------------
Cash provided by financing activities 1,829,653 680,197 2,622,055
------------ ------------ ------------
Increase in cash 1,038,247 353,427 1,398,758
Cash, beginning of period 360,511 7,084 --
------------ ------------ ------------
Cash, end of period $ 1,398,758 $ 360,511 $ 1,398,758
============ ============ ============
Supplemental Cash Flow Information:
Cash paid for interest $ -- $ -- $ --
============ ============ ============
Cash paid for income taxes $ -- $ -- $ --
============ ============ ============
Supplemental Non-Cash Investing and Financing Information:
Common stock issued for mineral properties $ 175,000 $ -- $ 175,000
============ ============ ============
The accompanying notes are an integral part of
these consolidated financial statements
21
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
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 Corp. was incorporated on March 16, 2009 under the laws of Nevada
under the name Lithium Corp. On September 10, 2009, the Company amended its
articles of incorporation to change its name to Nevada Lithium Corp. Lithium
intends to engage in the exploration of certain lithium interests in the state
of Nevada. The Company is in the exploration stage. These consolidated financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles.
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.
The accompanying unaudited interim financial statements of Lithium Corp., have
been prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission, and should be read in conjunction with the audited financial
statements and notes thereto contained in Lithium Corp.'s Annual Report filed
with the SEC on Form 10-K. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for fiscal 2009 as
reported in the form 10-K have been omitted.
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.
CASH AND CASH EQUIVALENTS
Cash includes cash on account, demand deposits, and short-term instruments with
maturities of three months or less.
COMPUTER EQUIPMENT
Computer 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.
22
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts payable and
accrued liabilities, interest payable, and loans payable. 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.
VARIABLE INTEREST ENTITIES
In June 2009, the FASB issued changes to require an enterprise to perform an
analysis to determine whether the enterprise's variable interest or interests
give it a controlling financial interest in a variable interest entity; to
require ongoing reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity; to eliminate the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity; to add an additional reconsideration event for
determining whether an entity is a variable interest entity when any changes in
facts and circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly
impact the entity's economic performance; and to require enhanced disclosures
that will provide users of financial statements with more transparent
information about an enterprise's involvement in a variable interest entity. The
guidance became effective for the Company on February 1, 2010. The adoption of
the guidance did not have an impact on the Company's consolidated financial
statements.
CODIFICATION OF GAAP
In June 2009, the FASB issued guidance to establish the Accounting Standards
Codification TM ("Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. The FASB will no longer
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead, the FASB will issue Accounting Standards
Updates ("ASU"). ASUs will not be authoritative in their own right as they will
only serve to update the Codification. The issuance of SFAS 168 and the
Codification does not change GAAP. The guidance became effective for the Company
for the period ending October 31, 2009. The adoption of the guidance did not
have an impact on the Company's consolidated financial statements.
SUBSEQUENT EVENTS
On July 31, 2009, the Company adopted changes issued by the FASB that
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. Specifically, the guidance sets forth the period
after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and the disclosures that an entity should make
about events or transactions that occurred after the balance sheet date. The
Company has evaluated subsequent events through the date the financial
statements were issued.
23
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
BUSINESS COMBINATIONS
The Company adopted the changes issued by the FASB that requires the acquiring
entity in a business combination to recognize all (and only) the assets acquired
and liabilities assumed in the transaction; establishes the acquisition-date
fair value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose additional information needed to
evaluate and understand the nature and financial effect of the business
combination.
The Company also adopted the changes issued by the FASB which requires assets
and liabilities assumed in a business combination that arise from contingencies
be recognized on the acquisition date at fair value if it is more likely than
not that they meet the definition of an asset or liability; and requires that
contingent consideration arrangements of the target assumed by the acquirer be
initially measured at fair value. The guidance is effective for the Company's
acquisitions occurring on or after February 1, 2009. The Company applied these
new provisions to two acquisitions that occurred during the year, Rock Coast
Media, Inc. and Pixel Bridge, Inc. These acquisitions are more fully disclosed
in Note 5 in our Consolidated Financial Statements.
NON-CONTROLLING INTERESTS
In December 2007, the FASB issued changes to establish accounting and reporting
standards for all entities that prepare consolidated financial statements that
have outstanding non-controlling interests, sometimes called minority interest.
These standards require that ownership interests in subsidiaries held by outside
parties be clearly identified, labelled and presented in equity separate from
the parent's equity; the amount of net income attributable to the parent and the
non-controlling interest be separately presented on the consolidated statement
of income; accounting standards applied to changes in a parent's interest be
consistently applied; fair value measurement upon deconsolidation of a
non-controlling interest be used; and the interests of the non-controlling
owners be already identified and distinguished. The adoption of this guidance
had no impact on the Company's consolidated financial statements.
INTANGIBLE ASSETS
In April 2008, the FASB adopted changes to require companies estimating the
useful life of a recognized intangible asset to consider their historical
experience in renewing or extending similar arrangements or, in the absence of
historical experience, to consider assumptions that market participants would
use about renewal or extension as adjusted for entity-specific factors. The
guidance is effective for fiscal years beginning after December 15, 2008 and is
to be applied prospectively to intangible assets whether acquired before or
after the effective date. The Company adopted the guidance on February 1, 2009.
The adoption had no impact on the Company's consolidated financial statements.
HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") In May 2008, the
FASB issued changes to identify the sources of accounting principles and the
framework for selecting the principles used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with
GAAP (the GAAP hierarchy). The guidance is effective 60 days following the SEC's
approval of the Public Company Accounting Oversight Board amendments to AU
section 411, THE MEANING OF PRESENT FAIRLY IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. Management is currently evaluating the guidance and
assessing the impact, if any, on the Company's consolidated financial
statements.
24
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
In September 2009, the FASB issued new revenue recognition guidance on multiple
deliverable arrangements. It updates the existing multiple-element revenue
arrangements guidance currently included under the Accounting Standards
Codification ("ASC") 605-25. The revised guidance primarily provides two
significant changes: 1) eliminates the need for objective and reliable evidence
of the fair value for the undelivered element in order for a delivered item to
be treated as a separate unit of accounting, and 2) requires the use of the
relative selling price method to allocate the entire arrangement consideration.
In addition, the guidance also expands the disclosure requirements for revenue
recognition. ASU 2009-13 will be effective for the first annual reporting period
beginning on or after fiscal 2011, with early adoption permitted provided that
the revised guidance is retroactively applied to the beginning of the year of
adoption. Management is currently evaluating the impact of adopting this
guidance on the Company's consolidated financial statements.
NOTE 2 - GOING CONCERN
Lithium's financial statements are prepared using generally accepted accounting
principles applicable to a going concern, which contemplates that the Company
will continue in operation for the foreseeable future and will realize its
assets and liquidate its liabilities in the normal course of business. However,
Lithium has no current source of revenue,recurring losses and a deficit
accumulated during the exploration stage of $1,093,386 as of December 31, 2010.
These factors, among others, raise, substantial doubt about the Company's
ability to continue as a going concern. Lithium's management plans on raising
cash from public or private debt or equity financing, on an as-needed basis and
in the longer term, revenues from the acquisition, exploration and development
of mineral interests, if found. Lithium's ability to continue as a going concern
is dependent on these additional cash financings and, ultimately, upon achieving
profitable operations through the development of mineral interests. The
successful outcome of future activities cannot be determined at this time. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
NOTE 3 - ACQUISITION OF NEVADA LITHIUM CORP.
On October 9, 2009, Lithium Corporation completed the acquisition of Nevada
Lithium Corp. whereby it issued 12,350,000 common shares in exchange for 100% of
the issued and outstanding common shares of Nevada Lithium Corp. This
acquisition has been accounted for using the acquisition method (purchase
method?).
The deemed value of the acquisition was $549,705 based upon the fair value of
consideration received.
Assets Purchased:
Cash $ 506,213
Prepaid expenses 25,000
Equipment 1,514
Mineral Properties 197,775
Liabilities Assumed:
Accounts payable (750)
Due to related parties (6,628)
Loans payable (169,463)
---------
Consideration Paid $ 553,661
=========
Consideration was paid through the issuance of 12,350,000 share of common stock.
25
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 4 - PREPAID EXPENSES
Prepaid expenses consisted of the following as of December 31:
2010 2009
-------- --------
Professional fees $ 10,275 $ 4,419
Exploration costs 47,327 20,000
Rent 298 2,131
Consulting 5,000 0
-------- --------
Total prepaid expenses $ 62,900 $ 26,550
======== ========
NOTE 4 - COMPUTER EQUIPMENT
Accumulated Net Book
Cost Amortization Value
---- ------------ -----
Computer Equipment $2,002 $1,504 $ 498
====== ====== =====
NOTE 5 - MINERAL PROPERTIES
Fish Lake Property
The Company has purchased a 100% interest in the Fish Lake property $350,000
worth of equity whereby title shall be transferred to the Company through quit
claim deed upon the final stock disbursement. Stock disbursements shall be made
quarterly upon 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)
In addition, the Company will be required to expend $250,000 on the property
over the term of the lease.
26
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 5 - MINERAL PROPERTIES (CONTINUED)
Staked Properties
The Company has staked claims with various registries as summarized below:
Name Claims (Area in Acres) Amount
---- ---------------------- ------
Salt Wells 156 (12,480) $73,318
Cortez 62 (4,960) $32,029
Other $ 6,800
NOTE 6 - 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. Refer to Note 3.
On January 10, 2010, the Company issued 53,484 shares of its common stock as
part of the Fish Lake Property acquisition.
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.
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.
There were 62,917,288 shares of common stock issued and outstanding as of
December 31, 2010.
27
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 6 - CAPITAL STOCK (CONTINUED)
WARRANTS
Outstanding at
Issue Date Number Price Expiry Date December 31, 2010
---------- ------ ----- ----------- -----------------
March 24, 2010 2,000,000 $1.20 March 24, 2011 2,000,000
March 24, 2011 2,000,000 $1.35 March 24, 2013 --
The warrants were valued using the black scholes option pricing model using the
following assumptions: term of 1 and years, dividend yield of 0%, risk free
interest rates of 0.03% and 1.60%% and volatility of 110%. The fair value of the
warrants was adjusted against additional paid in capital.
STOCK BASED COMPENSATION
The Company granted 500,000 options at an exercise price of $0.28 to consultants
in exchange for various professional services. The Company granted another
800,000 options to consultants for management services at exercise price of
$0.24. These options were vested on the date of grant. The Company uses the
Black-Scholes option valuation model to value stock options granted. 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 stock based compensation is as follows:
Risk free interest rate 2.40%
Expected dividend yield 0%
Expected stock price volatility 93%
Expected life of options 5 years
Weighted Total
Average Weighted
Total Remaining Average
Exercise Options Life Exercise Options
Prices Outstanding (Years) Price Exercisable
------ ----------- ------- ----- -----------
$0.28 500,000 4.75 $0.28 500,000
$0.24 800,000 4.75 $0.24 800,000
Total stock-based compensation for the year-ended December 31, 2010 was
$244,045.
The following table summarizes the stock options outstanding at December 31,
2010:
Outstanding at
Issue Date Number Price Expiry Date December 31, 2010
---------- ------ ----- ----------- -----------------
September 23, 2011 500,000 $0.28 September 23, 2011 500,000
September 23, 2011 800,000 $0.24 September 23, 2011 800,000
28
Lithium Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2010
NOTE 7 - INCOME TAXES
The Company did not provide any current or deferred United States federal, state
or foreign income tax provision or benefit for the period presented because it
has experienced operation losses since inception. The Company has provided a
full valuation allowance on the deferred tax asset, consisting primarily of net
operating loss carry-forwards, because of uncertainty regarding its realization.
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the net deferred taxes at December 31, 2010 are as follows:
2010 2009
---------- ----------
Deferred tax asset attributable to:
Net operating losses carried forward $ 240,545 $ 52,960
Valuation allowance (240,545) (52,960)
---------- ----------
Total net deferred tax asset $ -- $ --
========== ==========
Lithium follows Statement of Financial Accounting Standards Number 109 (SFAS
109) (ASC 740-10), "Accounting for Income Taxes." SFAS No. 109 (ASC 740-10)
requires a valuation allowance, if any, to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Management has determined that a valuation allowance of $240,545 at December 31,
2010 is necessary to reduce the deferred tax assets to the amount that will more
likely not be realized.
At December 31, 2010, the Company had net operating loss carry-forwards
amounting to approximately $1,093,386 that expire in various amounts through
2030 in the U.S.
NOTE 8 - SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to December 31, 2010 and
through March 31, 2011, the date these financial statements were issued, and has
determined that it does not have any other material subsequent events to
disclose.
29
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 Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (our principal executive
officer, principal financial officer and principle accounting officer) to allow
for timely decisions regarding required disclosure.
As of December 31, 2010, 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, 2010. 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, 2010, 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 Securities
and Exchange Commission 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.
30
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, 2010 that have materially or
are reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
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, 56 August 25, 2009
Secretary and Director
John Hiner Vice President of 63 October 25, 2009
Exploration and Director
Henry (Kip) Tonking Director 56 November 17, 2009
Stephen Goss Director 60 February 8, 2010
John Webster Director 54 July 19, 2010
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 35 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 1973 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
31
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 30 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.
HENRY (KIP) TONKING - DIRECTOR
Mr. Tonking is a graduate of the Mackay School of Mines at the University of
Nevada in Reno, Nevada, graduating with a B.Sc. in Geology in 1979. Currently
based in Reno, Kip has provided exploration and management services to a number
of major and junior mining firms throughout the western Unites States, with his
principal focus being the State of Nevada. He has over 30 years of experience in
minerals exploration and real estate development. Mr. Tonking is currently the
owner and President of T & T Exploration, a mineral exploration consulting firm,
Vice President of Golden Crescent Corporation, and Manager of All American
Resources, all of which are Nevada based companies.
STEPHEN GOSS - DIRECTOR
Mr. Goss has over twenty years experience as a mineral landman, and has worked
for The Bunker Hill Company, U.S. Borax and Chemical Corporation and Kennecott
Exploration Company. He has been involved with several start-up mineral
exploration companies, most notably Timberline Resources Corporation, where he
was a co-founder and acted as its CEO from January 2004 to May 2006. Mr. Goss
received a M.S. degree in Geography from the University of Idaho and is licensed
as a Certified General real estate appraiser in the State of Washington.
JOHN WEBSTER - DIRECTOR
Mr. Webster has been a CPA since 1987. He graduated Summa Cum Laude from Gonzaga
University in Spokane, Washington, with a BA in Economics and Accounting. John
has extensive experience in S.E.C. reporting and auditing, governmental audits,
tax issues and consulting for closely held business enterprises. John is a
life-long resident of Spokane and has served as member of a number of community
planning and development boards. He has also served as an officer and director
of several local arts organizations. From 1996 to 2006, John was one of the
founding senior principals and Vice-President of Williams & Webster, P.S., a
Spokane based regional CPA firm specializing in the auditing of small public
companies and consulting for emerging public companies. John served as the
firm's technical principal and assisted in all merger and acquisitions
transactions for both accounting and tax issues.
EMPLOYMENT AGREEMENTS
We have no formal employment agreements with any of our employees, 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
None of our directors, executive officers, promoters or control persons has been
involved in any of the following events during the past five years:
1. A petition under the Federal bankruptcy laws or any state insolvency law was
filed by or against, or a receiver, fiscal agent or similar officer was
appointed by a court for the business or property of such person, or any
32
partnership in which he was a general partner at or within two years before the
time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
3. Such person was the subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from, or otherwise
limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer
in securities, or as an affiliated person, director or employee of any
investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with such activity
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of
any security or commodity or in connection with any violation of
Federal or State securities laws or Federal commodities laws;
4. Such person was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any Federal or State authority
barring, suspending or otherwise limiting for more than 60 days the right of
such person to engage in any activity described in paragraph (f)(3)(i) of this
section, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction in a civil action
or by the Commission to have violated any Federal or State securities law, and
the judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action
or by the Commodity Futures Trading Commission to have violated any Federal
commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated;
7. Such person was 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, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. 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
iii. Any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
8. Such person was 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 requires our executive
officers and directors and persons who own more than 10% of our common stock to
file with the Securities and Exchange Commission initial statements of
beneficial ownership, reports of changes in ownership and annual reports
concerning their ownership of our common stock and other equity securities, on
Forms 3, 4 and 5 respectively. Executive officers, directors and greater than
33
10% shareholders are required by the SEC regulations to furnish us with copies
of all Section 16(a) reports that they file.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that during
fiscal year ended December 31, 2010, all filing requirements applicable to our
officers, directors and greater than 10% percent beneficial owners were complied
with.
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 Securities and Exchange
Commission 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 Securities
and Exchange Commission 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, 200 S. Virginia
Street - 8th Floor, Reno, Nevada 89501.
BOARD AND COMMITTEE MEETINGS
Our board of directors held no formal meetings during the year ended December
31, 2010. 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.
34
NOMINATION PROCESS
As of December 31, 2010, 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
Our board of directors has determined that John Webster qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K.
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, 2010 and 2009; 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, 2010 and 2009,
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) 2010 nil nil nil $46,041 nil nil $101,700 $147,741
President, 2009 nil nil nil nil nil nil $ 40,380 $ 40,380
Treasurer,
Secretary and
Director
Mazen Hleiss(2) 2010 N/A N/A N/A N/A N/A N/A N/A N/A
Former President, 2009 nil nil nil nil nil nil nil nil
Chief Executive
Officer, Chief
Financial Officer,
and Director
35
----------
(1) Mr. Lewis was appointed the president, treasurer, secretary and a director
of our company on August 25, 2009.
(2) Mr. Hleiss resigned as president, treasurer, secretary of our company on
August 25, 2009 and as a director on November 17, 2009.
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.
2010 GRANTS OF PLAN-BASED AWARDS
The following table provides information about equity and non-equity awards
granted to the named executives in 2010:
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
---- ---- ------------ --------- ---------- ------------ --------- ---------- -------- ---------- ------ ------
Tom Lewis Sept nil nil nil nil nil nil nil 250,000 $0.28 $46,041
President, 23/10
Treasurer,
Secretary
and Director
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The particulars of unexercised options, stock that has not vested and equity
incentive plan awards for our named executive officers are set out in the
following table:
Option Awards Stock Awards
----------------------------------------------------------------- -------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- -------- ---- --------- --------- --------- ---------
Tom Lewis 250,000 nil nil $0.28 September nil nil nil nil
23, 2015
36
OPTION EXERCISES AND STOCK VESTED
During our Fiscal year ended December 31, 2010 there were no options exercised
by our named officers.
COMPENSATION OF DIRECTORS
We do not have any agreements for compensating our directors for their services
in their capacity as directors, although such directors are expected in the
future to receive stock options to purchase shares of our common stock as
awarded by our board of directors.
The following table sets forth a summary of the compensation paid to our
non-employee directors in 2010:
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ------- --------- --------- --------------- ----------- --------------- --------
Henry Tonking Nil Nil $47,488 Nil Nil Nil $47,488
John Webster Nil Nil $ 9,497 Nil Nil Nil $ 9,497
John Hiner Nil Nil $47,488 Nil Nil Nil $47,488
Stephen Goss Nil Nil $28,491 Nil Nil Nil $28,491
OPTION EXERCISES AND STOCK VESTED
During our Fiscal year ended December 31, 2010 there were no options exercised
by our named officers.
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 March 31, 2011, 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.
37
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class(1)
---------------- -------------------- -----------
Tom Lewis 10,000,000 Common Shares 15.89%
PO Box 2053
Richland, WA 99352
John Hiner 10,000,000 Common Shares 15.89%
9443 Axlund Road
Lynden, WA 98264
Henry Tonking
PO Box 6945
Incline Village, NV 89450 Nil 0%
Stephen Goss
36 W. 16th Ave
Spokane, WA 99203 Nil 0%
John Webster
224 W. 16th Avenue,
Spokane, WA 99203] Nil 0%
Directors and Executive
Officers as a Group(1) 20,000,000 Common Shares 31.78%
----------
(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
March 25, 2011. As of April 8, 2011 there were 63,311,408 shares of our
company's common stock issued and outstanding
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, 2010, 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 five (5) directors, consisting of Tom Lewis, John Hiner,
Henry Tonking, Stephen Goss and John Webster.
We have determined that Henry Tonking, Stephen Goss and John Webster are
independent directors, as that term is used in Rule 4200(a)(15) of the Rules of
National Association of Securities Dealers.
38
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.
Our board of directors has determined that John Webster qualifies as an "audit
committee financial expert" as defined in as defined in Item 407(d)(5)(ii) of
Regulation S-K.
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, 2010 and for fiscal year ended December 31, 2009 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, 2010 December 31, 2009
----------------- -----------------
Audit Fees $ 8,000 $ 8,000
Audit Related Fees $ 5,250 $ Nil
Tax Fees $ 1,800 $ Nil
All Other Fees $ Nil $ 4,250
Total $15,050 $12,250
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
Number Description
------ -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on December 21, 2007).
3.2 By-laws (incorporated by reference from our Registration Statement on
Form SB-2 filed on December 21, 2007).
39
3.3 Articles of Merger (incorporated by reference from our Current Report
on Form 8-K filed on October 2, 2009).
3.4 Certificate of Change (incorporated by reference from our Current
Report on Form 8-K filed on October 2, 2009).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 2009 Stock Option Plan (incorporated by reference from our Current
Report on Form 8-K filed on December 30, 2009)
(10) MATERIAL CONTRACTS
10.1 Share exchange agreement dated October 9, 2009, among our company,
Nevada Lithium Corporation and the selling shareholders of Nevada
Lithium Corporation as set out in the share exchange agreement
(incorporated by reference from our Current Report on Form 8-K filed on
October 26, 2009).
10.2 Lease Purchase Agreement dated June 1, 2009 between Nevada Lithium
Corporation as purchaser and Nevada Mining Co., Inc., Robert Craig,
Barbara Craig and Elizabeth Dickman as vendors. (incorporated by
reference from our Current Report on Form 8-K filed on October 26,
2009).
10.3 Lease Agreement dated March 16, 2009 between Nevada Lithium Corporation
as Lessee and Cerro Rico Ventures LLC as Lessor (incorporated by
reference from our Current Report on Form 8-K filed on October 26,
2009).
(14) CODE OF ETHICS
14.1* Code of Ethics and Business Conduct
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Nevada Lithium Corporation, a Nevada corporation
(31) RULE 13A-14(D)/15D-14(D) CERTIFICATIONS
31.1* Section 302 Certification of Principal Executive Officer and Principal
Financial Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification of Principal Executive Officer and Principal
Financial Officer.
----------
* Filed herewith.
40
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 11, 2011 /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 11, 2011 /s/ Tom Lewis
-------------------------------------------------
Tom Lewis
President, Treasurer, Secretary and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
Dated: April 11, 2011 /s/ John Hiner
-------------------------------------------------
John Hiner
Director
Dated: April 11, 2011 /s/ Henry Tonking
-------------------------------------------------
Henry Tonking
Director
Dated: April 11, 2011 /s/ Stephen Goss
-------------------------------------------------
Stephen Goss
Director
Dated: April 11, 2011 /s/ John Webster
-------------------------------------------------
John Webster
Director
41