Lithium Corp - Quarter Report: 2017 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

Or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  ________________to ________________

Commission File Number 000-54332

 

LITHIUM CORPORATION

(Exact name of registrant as specified in its charter)

(775) 410-5287

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] YES [  ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  [X] YES [  ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) [  ] YES [X] NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. [  ] YES [  ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

84,715,312 common shares issued and outstanding as of May 15, 2017

TABLE OF CONTENTS

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our unaudited interim financial statements for the three month period ended March 31, 2017 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

 

 

 

 

		March 31, 2017				December 31, 2016
ASSETS
CURRENT ASSETS
Cash		$	487,590			$	281,630
Marketable securities			139,835				41,284
Deposits			700				700
Prepaid expenses			63,555				19,348
Total  Current Assets			691,680				342,962
OTHER ASSETS
Mineral properties			231,524				159,859
TOTAL ASSETS		$	923,204			$	502,821
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	20,744			$	15,313
Allowance for optioned properties			616,584				397,601
TOTAL CURRENT LIABILITIES			637,328				412,914
TOTAL LIABILITIES			637,328				412,914
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, 3,000,000,000 shares authorized, par value $0.001; 84,715,312 and 81,704,075 common shares outstanding, respectively			84,716				81,705
Common stock payable			70,000				11,334
Additional paid in capital			3,593,580				3,463,903
Additional paid in capital - options			191,513				191,513
Additional paid in capital - warrants			370,768				308,322
Accumulated deficit			(4,024,701	)			(3,966,870	)
TOTAL STOCKHOLDERS' EQUITY			285,876				89,907
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	923,204			$	502,821

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

		Three Months Ended March 31, 2017				Three Months Ended March 31, 2016
REVENUE		$	-			$	-
OPERATING EXPENSES
Professional fees			9,268				12,440
Exploration expenses			390				17,020
Consulting fees			32,809				18,000
Insurance expense			4,225				4,225
Investor relations			5,249				7,283
Stock based compensation			-				22,034
Transfer agent and filing fees			1,361				2,606
Travel			6,152				2,785
General and administrative expenses			2,945				1,514
TOTAL OPERATING EXPENSES			62,399				87,907
LOSS FROM OPERATIONS			(62,399	)			(87,907	)
OTHER INCOME (EXPENSES)
Change in fair value of marketable securities			4,568				-
Interest income			-				20
TOTAL OTHER INCOME (EXPENSE)			4,568				20
LOSS BEFORE INCOME TAXES			(57,831	)			(87,887	)
PROVISION FOR INCOME TAXES			-				-
NET LOSS		$	(57,831	)		$	(87,887	)
NET LOSS PER SHARE: BASIC AND DILUTED		$	(0.00	)		$	(0.00	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED			82,559,520				77,361,408

 

 

 

 

 

 

														Additional				Additional
										Additional				Paid-in				Paid-in				Common								Total
		Common Stock								Paid-in				Capital -				Capital -				Stock				Accumulated				Stockholders'
		Shares				Amount				Capital				Warrants				Options				Payable				Deficit				Equity
Balance, December 31, 2015			77,361,408				77,362				3,387,780				303,422				159,301				-				(3,467,465	)			460,400
Stock issued for cash			3,376,000				3,377				54,123				-				-				-				-				57,500
Stock issued on stock option exercise			200,000				200				-				-				4,800				-				-				5,000
Stock issued on stock warrant exercise			100,000				100				-				4,900				-				-				-				5,000
Stock issued for services			666,667				666				22,000				-				-				-				-				22,666
Stock based compensation			-				-				-				-				27,412				-				-				27,412
Stock payable for services			-				-				-				-				-				11,334				-				11,334
Net loss			-				-				-				-				-				-				(499,405	)			(499,405	)
Balance, December 31, 2016			81,704,075				81,705				3,463,903				308,322				191,513				11,334				(3,966,870	)			89,907
Stock issued for cash			2,400,000				2,400				117,600				-				-				-				-				120,000
Stock returned to treasury			(1,076,000	)			(1,076	)			1,076				-				-				-				-				-
Stock issued on stock warrant exercise			1,353,904				1,354				-				62,446				-				-				-				63,800
Stock issued for services			333,333				333				11,001				-				-				(11,334	)			-				-
Stock payable on mineral property acquisition			-				-				-				-				-				70,000				-				70,000
Net loss			-				-				-				-				-				-				(57,831	)			(57,831	)
Balance, March 31, 2017			84,715,312			$	84,716			$	3,593,580			$	370,768			$	191,513			$	70,000			$	(4,024,701	)		$	285,876

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

		Three Months Ended March 31, 2017				Three Months Ended March 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period		$	(57,831	)		$	(87,887	)
Adjustment to reconcile net loss to net cash used in operating activities
Stock based compensation			-				22,034
Change in fair value of marketable securities			(4,568	)			-
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses			(44,207	)			6,472
Increase (decrease) in accounts payable and accrued liabilities			5,431				4,407
Net Cash Used in Operating Activities			(101,175	)			(54,974	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash call on long term investment			-				(5,000	)
Cash to acquire properties			(1,665	)			-
Cash from properties			125,000				-
Net Cash Used in Investing Activities			123,335				(5,000	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Subscriptions received			-				50,600
Shares issued for warrants/options exercise			63,800				-
Shares issued for cash			120,000				-
Net Cash Used in Financing Activities			183,800				50,600
Increase in cash			205,960				(9,374	)
Cash, beginning of period			281,630				191,465
Cash, end of period		$	487,590			$	182,091
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
NON-CASH TRANSACTIONS:
Marketable securities received as consideration for mineral property option		$	93,983			$	-
Shares issuable for purchase of mineral property		$	70,000			$	-
Shares for services issued from stock payable		$	11,334			$	-
Shares returned to treasury		$	1,076			$	-
Cashless exercise of warrants		$	78			$	-

 

 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

		Fair Value Measurements at March 31, 2017
		Level 1				Level 2				Level 3
Assets
Cash		$	487,590			$	-			$	-
Marketable securities			139,835				-				-
Total Assets			627,425				-				-
Liabilities
Total Liabilities			-				-				-
		$	627,425			$	-			$	-

		Fair Value Measurements at December 31, 2016
		Level 1				Level 2				Level 3
Assets
Cash		$	281,630			$	-			$	-
Marketable securities			41,284				-				-
Total Assets			322,914				-				-
Liabilities
Total Liabilities			-				-				-
		$	322,914			$	-			$	-

Balance, December 31, 2016		$	41,284
Additions			93,983
Unrealized loss on mark down to fair value			4,568
Balance, March 31, 2017		$	139,835

		March 31, 2017				December 31, 2016
Bonds		$	1,214			$	2,181
Transfer agent fees			1,594				2,125
Insurance			-				4,226
Office Misc.			350				350
Consulting			52,430				-
Investor relations			7,967				10,466
Total prepaid expenses		$	63,555			$	19,348

Name		Claims		Cost				Impairment				Net Carry Value
San Emidio		20 (1,600 acres)		$	11,438			$	(11,438	)		$	0
Cherryville/BC Sugar		8019.41 (hectares)		$	21,778				(21,778	)		$	0

		Number
Balance, December 31, 2015			2,700,000
Granted			3,376,000
Exercised			(100,000	)
Balance, December 31, 2016			5,976,000
Granted			2,400,000
Exercised			(1,436,000	)
Cancelled			(1,076,000	)
Balance, March 31, 2017			5,864,000

Grant Date		Number				Exercise Price			Expiry Date
October 15, 2015			2,000,000			$	0.075		October 15, 2017
April 12, 2016			140,000			$	0.050		April 12, 2018
May 24, 2016			1,324,000			$	0.050		May 24, 2018
March 27, 2017			2,400,000			$	0.050		March 27, 2019
Total			5,864,000

	Modification		New Options
Risk free interest rate	0.35%		0.67%
Expected dividend yield	0%		0%
Expected stock price volatility	129%		129%
Expected life of options	3 years		5 years

Risk free interest rate	1.65%
Expected dividend yield	0%
Expected stock price volatility	150%
Expected life of options	5 years

Risk free interest rate	1.15%
Expected dividend yield	0%
Expected stock price volatility	163%
Expected life of options	4.90 years

Issue Date		Number				Price			Expiry Date		Outstanding at March 31, 2017
May 31, 2012			100,000			$	0.045		May 31, 2017			100,000
March 15, 2013			200,000			$	0.045		March 15, 2018			200,000
November 12, 2014			700,000			$	0.045		November 12, 2019			700,000
February 10, 2016			650,000			$	0.025		January 8, 2022			650,000

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

FORWARD LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

 

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Lithium Corporation, unless otherwise indicated.

 

General Overview

 

We were incorporated under the laws of the State of Nevada on January 30, 2007 under the name “Utalk Communications Inc.”. At inception, we were a development stage corporation engaged in the business of developing and marketing a call-back service using a call-back platform. Because we were not successful in implementing our business plan, we considered various alternatives to ensure the viability and solvency of our company.

 

On August 31, 2009, we entered into a letter of intent with Nevada Lithium Corporation regarding a business combination which could be effected in one of several different ways, including an asset acquisition, merger of our company and Nevada Lithium, or a share exchange whereby we would purchase the shares of Nevada Lithium from its shareholders in exchange for restricted shares of our common stock.

 

Effective September 30, 2009, we effected a 1 old for 60 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 50,000,000 shares of common stock with a par value of $0.001 to 3,000,000,000 shares of common stock with a par value of $0.001 and our then issued and outstanding shares increased from 4,470,000 shares of common stock to 268,200,000 shares of common stock.

 

Also effective September 30, 2009, we changed our name from “Utalk Communications, Inc.” to “Lithium Corporation”, by way of a merger with our wholly owned subsidiary Lithium Corporation, which was formed solely for the change of name. The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on October 1, 2009 under the stock symbol “LTUM”. Our CUSIP number is 536804 107.

 

 

On October 9, 2009, we entered into a share exchange agreement with Nevada Lithium and the shareholders of Nevada Lithium. The closing of the transactions contemplated in the share exchange agreement and the acquisition of all of the issued and outstanding common stock in the capital of Nevada Lithium occurred on October 19, 2009. In accordance with the closing of the share exchange agreement, we issued 12,350,000 shares of our common stock to the former shareholders of Nevada Lithium in exchange for the acquisition, by our company, of all of the 12,350,000 issued and outstanding shares of Nevada Lithium. Also, pursuant to the terms of the share exchange agreement, a director of our company cancelled 220,000,000 restricted shares of our common stock. Nevada Lithium’s corporate status was allowed to lapse and the company’s status with the Nevada Secretary of State has been revoked.

 

On June 6, 2013, we entered into a mining claim sale agreement with Herb Hyder to purchase a 50.829 acre (20.57 hectare) claim known as the Sugar Property, located in the Cherryville area of British Columbia. We issued 250,000 shares to the seller in consideration for the claim.  Since that time we have expanded the claim block considerably, and expended approximately $75,000 exploring the property for flake graphite deposits. In January, 2014, we agreed to buy back the shares issued to the seller for $2,500.

 

Effective  April 23,  2014,  we entered  into an  operating  agreement  with All American Resources,  L.L.C and TY & Sons Investments Inc. with respect to Summa, LLC, a Nevada  limited  liability  company  incorporated  on December  12, 2013, wherein we hold a 25% membership.  Our company's capital contribution to Summa, LLC was $125,000, of which $100,000 was in cash and the balance in services. To date we have contributed an additional $16,700 to Summa, LLC.

 

Effective  August 15, 2014,  we entered into an asset  purchase  agreement  with Pathion, Inc.,  a Delaware  corporation,  and Pathion Mining  Inc.,  a Nevada corporation.  Pursuant to the Agreement, we agreed to sell to Pathion, Inc. and Pathion Mining, our rights,  interests  and assets  relating to our Fish Lake Valley, San Emidio and BC Sugar properties. The asset purchase agreement was set to close at the end of September 2014, but was extended to October 17, 2014 by mutual agreement, and was further extended until January 19, 2015. After Pathion failed to close the agreement within the agreed upon extended timeframe, we gave notice on January 27, 2015 of the termination of the asset purchase agreement entered into on August 15, 2014.

 

On  February  20, 2015, our company  signed a letter of intent with Kingsmere Mining  Ltd., which is the  preliminary  step  whereby  Kingsmere,  or  their appointee, may choose to buy or option our company's lithium brine properties in Nevada.  The letter allowed for a due diligence and election period until April 1, 2015 with closing by April 15,  2015.  The terms of the letter of intent with Kingsmere were subsequently extended to May 31, 2015. Our company and Kingsmere were not able to reach an agreement and a press release notifying the public was issued on June 23, 2015.

 

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, and Graphite properties in British Columbia.

 

Our current operational focus is to conduct exploration activities on the tantalum-niobium properties we are optioning, and the BC Sugar property – all in British Columbia, and to verify and validate exploration activities conducted by our partners at Fish Lake Valley, San Emidio, and Salt Wells, and generate additional prospects for our exploration portfolio.

 

On February 16, 2017 we issued a news release announcing that we had signed a letter of intent with Nevada Sunrise Gold Corp. with respect to our Salt Wells lithium in brine prospect located in Churchill County Nevada.

 

Under the terms of the  agreement NEV (TSX-V - NEV, OTC - NVSGF) may earn a 100% interest in the  Property  subject to a 2% Net Smelter  Royalty  (NSR) by making staged  payments  of cash and shares  over the next two years.  The terms are;

 

 

·	$10,000 non-refundable deposit on signing the LOI

·	$15,000 & issue 400,000 common shares of NEV on the later of TSX-V approval or the signing of a formal definitive agreement

·	$50,000 & 500,000 shares - 1st anniversary

·	$75,000 & 600,000 shares - 2nd anniversary

NEV will pay all claim and other property  related fees during the earn-in phase of the  agreement,  and will also retain the right to purchase  one half (1%) of the NSR at any time up until the third  anniversary of the signing of the formal agreement  for  $1,000,000.

 

We conducted exploration on the Property that culminated in a multiple phase - shallow direct push drilling program in 2011.  Results from that program were inconclusive, and with the then looming substantial increase of Federal claim fees, it was decided to put the Property in abeyance and concentrate our efforts elsewhere. The Company is looking forward to assisting Nevada Sunrise Gold Corp. in developing this prospect in any way that we can, and look forward to a continuing association with them.

 

On March 2, 2017 we issued a news release announcing that we had signed a letter of intent with Bormal Resources Inc. with respect to three Tantalum-Niobium properties (Michael, Yeehaw, and Three Valley Gap) located in British Columbia, Canada.

 

The Michael property in the Trail Creek Mining Division was originally staked to cover one of the most compelling tantalum (Ta) in stream sediment anomalies as seen in the government RGS database in British Columbia.  Bormal conducted a stream sediment sampling program in 2014, and determined that the tantalum-niobium in stream sediment anomaly here is bona fide, and in the order of 6 kilometers in length.  In November of 2016 Lithium Corporation conducted a short soil geochemistry orientation program on the property as part of its due diligence, and determined that there are elevated levels of Niobium-Tantalum in soils here.

 

Also in the general area of the Michael property the Yeehaw property has been staked over a similar but lower amplitude Tantalum/rare earth elements in stream sediment anomaly.  Both properties are situated in the Eocene Coryell Batholith, and it is thought that these anomalies may arise from either Carbonatite or Pegmatite type deposits.

 

The third property – Three Valley Gap, is in the Revelstoke Mining Division and is situated in a locale where several Nb-Ta enriched carbonatites have been noted to occur.  A brief field program by Bormal in 2015 located one of these carbonatites, and concurrent soil sampling determined that the soils here are enriched with Nb-Ta over the known carbonatite, and indicated that there are other geochemical anomalies locally that may indicate that more carbonatites exist here and are shallowly buried.

 

On February 16, 2016, we issued a news release announcing that our company has entered into a letter of intent with 1032701 B.C.  Ltd. with respect to our Fish Lake Valley lithium brine property in Esmeralda County, Nevada.  On March 10, 2016 we issued a news release announcing the signing of the Fish Lake Valley Earn-In Agreement.  The terms of the Earn-In Agreement allow 1032701 to earn an 80% interest in Fish Lake Valley for payments over two years  totaling  $300,000 and issuance of 400,000 common shares of the publicly traded company anticipated to result from a Going Public  Transaction,  and work  performed on the property over three  years in the amount of  $1,100,000.  1032701  then has a  Subsequent Earn-In option to purchase Lithium Corporation's  remaining 20% working interest within one year of earning the 80% by paying the  Company a further  $1,000,000, at that point the Company would retain a 2.5% Net Smelter Royalty, half of which may be purchased by 1032701 for an additional  $1,000,000.  Should the Purchaser elect  not  to  exercise  the  Subsequent  Earn-In,  a  joint  venture  will  be established.  During the Joint Venture, should either party be diluted below a 10% working interest - their interest in the property will revert to a 7.5% Net Smelter Royalty. The first tranche of cash and shares are to be issued within 60 days of the signing of the formal agreement.  Menika Mining, a publicly traded company on the TSX Venture Exchange trading under the symbol MML announced on March 8, 2016 that it intended to acquire  1032701 B.C.  Ltd and the right to acquire the Fish Lake Valley Property.  Menika Mining completed the acquisition of 1032701 B.C. and changed their name to American Lithium Corp.  They fulfilled the initial obligations of the Fish Lake  Valley Earn-In-Agreement in April of 2016, and all year 1 anniversary obligations have been met.  To date, we have received $200,000 and 300,000 common shares in relation to the Fish Lake option agreement.

 

 

In April of 2016 our company established a wholly owned subsidiary  called Lithium  Royalty Corp. The subsidiary is a Nevada Corporation and is the entity in which we plan to build a portfolio of lithium mineral  property  royalties. Also in April of 2016 Lithium Royalty Corp. gained 100% control of a lithium property consisting  of a block of  mineral  claims  named the North Big Smoky Property.

 

Effective May 3, 2016, our company entered in to an Exploration Earn-In Agreement with 1067323 B.C. Ltd. with respect to our San Emidio property.  The terms of the formal agreement are;  payment of  $100,000,  issuance of 300,000  common  shares of 1067323 B.C. Ltd.,  or of the  publicly  traded  company  anticipated  to result from a Going Public  Transaction,  and work  performed on the property by the Optionee in the amount of  $600,000  over the next three  years to earn an 80%  interest  in the property.  1067323  then has a  subsequent  Earn-In  option to purchase  Lithium Corporation's  remaining 20% working  interest within three years of earning the 80% by paying our company a further $1,000,000,  at that point our company would retain a 2.5% Net Smelter Royalty, half of which may be purchased by 1067323 for an  additional  $1,000,000.  Should the Purchaser elect not to exercise the Subsequent  Earn-In,  a joint venture will be established.  1067323 B.C. Ltd. merged with American Lithium Corp., and the first tranche of cash and shares were issued in June of 2016.

 

On May 13, 2016 our wholly  owned  subsidiary  sold 100% of the  interest in the North Big Smoky  Property  through a Property  Acquisition  Agreement  with the private company 1069934 Nevada Ltd. ("Purchaser"). Consideration paid to Lithium Royalty Corp. consisted of $10,000.00, reimbursement of staking and filing fees, 300,000 shares in the "Purchaser Parent", 1069934 B.C. Ltd., Lithium Royalty Corp. retained a 2.5% Net Smelter Royalty ("Vendor NSR") on the North Big Smoky Property and the Purchaser has the right to purchase up to one-half (50%) of the Vendor NSR for $1,000,000 to reduce the Vendor NSR to 1.25%.

 

Results of Operations

 

Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

 

We had a net loss of $57,831 for the three month period ended March 31, 2017, which was $30,056 less than the net loss of $87,887 for the three month period ended March 31, 2016. The change in our results over the two periods is a result of a decrease in exploration expenses and stock option expense in 2017.

 

The following table summarizes key items of comparison and their related increase (decrease) for the three month periods ended March 31, 2017 and 2016:

 

 

Revenue

 

We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.

 

 

Liquidity and Capital Resources

 

Our balance sheet as of March 31, 2017 reflects current assets of $691,680.  We had cash in the amount of $487,590 and working capital in the amount of $54,352 as of March 31, 2017. We have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.

 

Working Capital

 

 

We anticipate generating losses and, therefore, may be unable to continue operations further in the future.

 

Cash Flows

 

 

Operating Activities

 

Net cash used in operating activities during the three months ended March 31, 2017 was $101,175, an increase of $46,201 from the $54,974 net cash outflow during the three months ended March 31, 2016.

 

Investing Activities

 

The primary driver of cash used in investing activities was continued expenditures related to the acquisition and maintenance of resource properties.

 

Cash from investing activities during the three months ended March 31, 2017 was $123,335, which was a $128,335 increase from the $5,000 cash used in investing activities during the three months ended March 31, 2016.   The increase was a result of cash received from optioned properties.

 

Financing Activities

 

Cash from financing activities during the three months ended March 31, 2017 was $183,800 as compared to $50,600 in cash provided by financing activities during the three months ended March 31, 2016.

We estimate that our operating expenses and working capital requirements for the next 12 months to be as follows:

Estimated Net Expenditures During The Next Twelve Months

 

To date we have relied on proceeds from the sale of our shares and on loans from our sole officer in order to sustain our basic, minimum operating expenses; however, we cannot guarantee that we will secure any further sales of our shares or that our sole officer and director with provide us with any future loans.  We estimate that the cost of maintaining basic corporate operations (which includes the cost of satisfying our public reporting obligations) will be approximately $2,000 per month.   Due to our current cash position of approximately as of March 31, 2017, we estimate that we have sufficient cash to sustain our basic operations for the next twelve months.

 

We are not aware of any known trends, demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in our liquidity increasing or decreasing in any material way.

 

Future Financings

 

We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities.

 

We presently do not have any arrangements for additional financing for the expansion of our exploration operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration stage companies.  An  exploration  stage  company  is one in which planned  principal  operations  have not  commenced  or if its  operations  have commenced, there has been no significant revenues there from.

The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). The Company has adopted a December 31 fiscal year end.

Cash includes cash on account, demand deposits, and short-term instruments with maturities of three months or less.

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

 

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.

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.

The Company's financial instruments consist of cash, deposits, prepaid expenses, and accounts payable and accrued liabilities. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair value of these financial instruments approximate their carrying values, unless otherwise noted.

Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Impairment of $0 and $0 was recorded during the periods ended September 30, 2016 and 2015, respectively.

In January  2016, the Financial  Accounting  Standards  Board ("FASB"),  issued Accounting  Standards Update ("ASU")  2016-01,  "Financial  Instruments-Overall (Subtopic 825-10): Recognition  and Measurement of Financial Assets and Financial Liabilities," which amends the guidance in U.S. generally accepted accounting principles on the classification  and measurement  of financial instruments.  Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.  In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and are to be adopted by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this standard.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

 

Item 4. Controls and Procedures

 

Management’s Report on Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

 

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

 

Changes in Internal Control Over Financial Reporting

 

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business.  We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us, except for the following:

 

In December, 2015 two cases were filed against our company; the first was filed in the United States District Court, District of Nevada by Jablonski Enterprises, Ltd. against several defendants, including our company, Summa, LLC, Henry Tonking, GIS Land Services, Greg Ekins, the Nye County Assessor, the Mapping Administrator for Nye County, the Nye County District Attorney and the Nye County Deputy District Attorney with respect to Summa, LLC’s efforts to change the record name on the assessor’s tax rolls from Jablonski Enterprises to Summa, LLC pursuant to a prior court order issued by the Clark County District Court. The second identical case was filed in the 5^th Judicial District Court of Nevada against the same defendants, including our company, and is regarding the same issues.

 

On May 3, 2016, the case in the 5^th Judicial District Court of Nevada was dismissed against the appearing defendants with prejudice, and those defendants, including our company, were awarded legal fees and costs to be paid by the plaintiff.

 

On February 6, 2017 Chief Judge Gloria M. Navarro of the United States District Court, District of Nevada dismissed with predjudice the  case against Lithium Corporation and the other defendants.

 

On March 8, 2017 in the Fifth Judicial District Court of Nevada, Judge Wanker dismissed the appeal stemming from May 3, 2016, and upheld the defendant’s right to costs, and pending submittal of additional costs for council to attend that hearing will make a written final ruling shortly with respect to costs, and possible Anti-Slapp sanctions.  At the same time a trial date was set for May 8^th 2018 where the court will hear Summa’s petition for “Quiet Title” with respect to its Tonopah properties.

 

Our company believes that the remaining case in U.S. Federal Court is baseless, without merit and is purely a nuisance lawsuit.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

 

 

 

 

 

* Filed herewith.

 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.