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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

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

 

For the quarterly period ended March 31, 2023

 

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)

 

Nevada

98-0530295

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

1031 Railroad St. Ste. 102B, Elko, Nevada

89801

(Address of principal executive offices)

(Zip Code)

 

(775) 410-5287

(Registrant’s telephone number, including area code)

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of exchange on which registered

 

 

 

 

 

Common Stock

 

LTUM

 

N/A

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No

 

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

 

Large accelerated filer 

 

Accelerated filer 

Non-Accelerated filer 

Smaller reporting company 

Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No 

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes      No

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 115,892,441 common shares issued and outstanding as of May 15, 2023

 

 

 

 

 

LITHIUM CORPORATION

 

FORM 10-Q

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

3

 

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

15

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

29

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

29

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

30

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

30

 

 

 

 

 

 

Item 1A.

Risk Factors

 

30

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

30

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

30

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

30

 

 

 

 

 

 

Item 5.

Other Information

 

30

 

 

 

 

 

 

Item 6.

Exhibits

 

31

 

 

 

 

 

 

SIGNATURES

 

32

 

 

 

2

Table of Contents

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Our unaudited interim financial statements for the three month period ended March 31, 2023 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

 

LITHIUM Corporation

Balance Sheets

 

ASSETS

 

 

March 31, 2023
(unaudited)

 

 

December 31, 2022

 

CURRENT ASSETS

 

 

 

 

 

 

Cash

 

$

3,730,381

 

 

$

3,576,911

 

Marketable securities

 

 

271,297

 

 

 

372,972

 

Deposits

 

 

700

 

 

 

700

 

Prepaid expenses

 

 

27,270

 

 

 

37,832

 

Total Current Assets

 

 

4,029,648

 

 

 

3,988,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

 

 

Equipment, net of accumulated depreciation

 

 

26,485

 

 

 

28,318

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

4,056,133

 

 

$

4,016,733

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

11,074

 

 

$

5,598

 

Accounts payable and accrued liabilities - related party

 

 

23,081

 

 

 

25,718

 

Allowance for optioned properties

 

 

1,999,364

 

 

 

1,999,364

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

 

 

2,033,519

 

 

 

2,030,680

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

2,033,519

 

 

 

2,030,680

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Common stock, 3,000,000,000 shares authorized, par value $0.001; 115,892,441 and 113,692,441 common shares outstanding, respectively

 

 

115,893

 

 

 

113,693

 

Additional paid in capital

 

 

8,804,724

 

 

 

8,571,524

 

Additional paid in capital - options

 

 

957,247

 

 

 

887,910

 

Additional paid in capital - warrants

 

 

369,115

 

 

 

369,115

 

Accumulated deficit

 

 

(8,224,365

)

 

 

(7,956,189

)

 

 

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS' EQUITY

 

 

2,022,614

 

 

 

1,986,053

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

4,056,133

 

 

$

4,016,733

 

 

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

 

 

3

Table of Contents

 

LITHIUM Corporation

Statements of Operations

(unaudited)

 

 

 

Three Months Ended
March 31, 2023

 

 

Three Months Ended
March 31, 2022

 

 

 

 

 

 

 

 

REVENUE

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Professional fees

 

 

11,503

 

 

 

9,882

 

Depreciation

 

 

1,833

 

 

 

1,833

 

Exploration expenses - related party

 

 

3,779

 

 

 

6,219

 

Exploration expenses

 

 

-

 

 

 

8,866

 

Consulting fees - related party

 

 

101,984

 

 

 

45,000

 

Consulting fees

 

 

53,153

 

 

 

5,250

 

Transfer agent and filing fees

 

 

8,386

 

 

 

6,593

 

Travel

 

 

1,085

 

 

 

3,133

 

General and administrative expenses

 

 

13,166

 

 

 

3,949

 

TOTAL OPERATING EXPENSES

 

 

194,889

 

 

 

90,725

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

 

(194,889

)

 

 

(90,725

)

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

 

 

 

 

 

 

 

Change in fair value of marketable securities

 

 

(101,675

)

 

 

345,600

 

Other income

 

 

18,388

 

 

 

40,000

 

Other income - related party

 

 

10,000

 

 

 

-

 

TOTAL OTHER INCOME (EXPENSE)

 

 

(73,287

)

 

 

385,600

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

 

 

(268,176

)

 

 

294,875

 

 

 

 

 

 

 

 

 

 

PROVISION FOR INCOME TAXES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$

(268,176

)

 

$

294,875

 

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE: BASIC AND DILUTED

 

$

(0.00

)

 

$

0.00

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED

 

 

105,836,885

 

 

 

104,110,219

 

 

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

 

 

4

Table of Contents

 

LITHIUM Corporation

Statements of Stockholders' Equity

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Paid-in

 

 

Paid-in

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Capital -

 

 

Capital -

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Warrants

 

 

Options

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2021

 

 

103,492,441

 

 

$

103,493

 

 

 

 

$

6,925,724

 

 

$

369,115

 

 

$

191,513

 

 

$

(6,532,665

)

 

$

1,057,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

1,600,000

 

 

 

1,600

 

 

 

 

 

332,400

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

334,000

 

Net income

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

294,875

 

 

 

294,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2022

 

 

105,092,441

 

 

 

105,093

 

 

 

 

 

7,258,124

 

 

 

369,115

 

 

 

191,513

 

 

 

(6,237,790

)

 

 

1,686,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2022

 

 

113,692,441

 

 

 

113,693

 

 

 

 

 

8,571,524

 

 

 

369,115

 

 

 

887,910

 

 

 

(7,956,189

)

 

 

1,986,053

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

2,200,000

 

 

 

2,200

 

 

 

 

 

233,200

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

235,400

 

Stock based compensation

 

 

-

 

 

 

-

 

 

#

 

 

-

 

 

 

-

 

 

 

69,337

 

 

 

-

 

 

 

69,337

 

Net income

 

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(268,176

)

 

 

(268,176

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2023

 

 

115,892,441

 

 

$

115,893

 

 

 

 

$

8,804,724

 

 

$

369,115

 

 

$

957,247

 

 

$

(8,224,365

)

 

$

2,022,614

 

 

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

 

 

5

Table of Contents

 

LITHIUM Corporation

Statements of Cash Flows

(unaudited)

 

 

 

Three Months Ended
March 31, 2023

 

 

Three Months Ended
March 31, 2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss) for the period

 

$

(268,176

)

 

$

294,875

 

Adjustment to reconcile net income (loss) to net cash used in operating activities

 

 

 

 

 

 

 

 

Change in fair value of marketable securities

 

 

101,675

 

 

 

(345,600

)

Depreciation

 

 

1,833

 

 

 

1,833

 

Stock based compensation

 

 

69,337

 

 

 

-

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

(Increase) Decrease in prepaid expenses

 

 

10,562

 

 

 

(1,572

)

Increase (decrease) in accounts payable and accrued liabilities

 

 

2,839

 

 

 

(713

)

Net Cash (Used in) Operating Activities

 

 

(81,930

)

 

 

(51,177

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITY:

 

 

 

 

 

 

 

 

Purchase of equipment

 

 

-

 

 

 

(35,650

)

Net Cash Provided by Investing Activities

 

 

-

 

 

 

(35,650

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITY:

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

235,400

 

 

 

334,000

 

Net Cash Provided by Financing Activity

 

 

235,400

 

 

 

334,000

 

 

 

 

 

 

 

 

 

 

Increase (Decrease) in cash

 

 

153,470

 

 

 

247,173

 

Cash, beginning of period

 

 

3,576,911

 

 

 

2,243,121

 

Cash, end of period

 

$

3,730,381

 

 

$

2,490,294

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

-

 

 

$

-

 

Cash paid for income taxes

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

NON CASH TRANSACTIONS

 

 

 

 

 

 

 

 

Marketable securities received as consideration for mineral property

 

$

-

 

 

$

-

 

 

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

 

 

6

Table of Contents

 

Lithium Corporation

Notes to the Financial Statements

March 31, 2023

 

Note 1 - Summary of Significant Accounting Policies

 

Lithium Corporation (formerly Utalk Communications Inc.) (the “Company”) was incorporated on January 30, 2007 under the laws of Nevada. On September 30, 2009, Utalk Communications Inc. changed its name to Lithium Corporation.

 

Nevada Lithium Corporation was incorporated on March 16, 2009 under the laws of Nevada under the name Lithium Corporation. On September 10, 2009, the Company amended its articles of incorporation to change its name to Nevada Lithium Corporation. By agreement dated October 9, 2009 Nevada Lithium Corporation and Lithium Corporation amalgamated as Lithium Corporation. Lithium Corporation is engaged in the acquisition and development of certain lithium interests in the state of Nevada, and battery or Tech metals prospects in British Columbia and is currently in the exploration stage.

 

Accounting Basis

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

 

Cash and Cash Equivalents

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

 

Concentrations of Credit Risk

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

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Such estimates include the useful life of equipment and inputs related to the calculation of the fair value of stock options.  Actual results could differ from those estimates.

 

Revenue Recognition

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

 

Research and Development

Research and development costs are expensed as incurred. During the three months ended March 31, 2023 and 2022, the Company did not have any research and development costs.

 

 

7

Table of Contents

 

Advertising Costs

Advertising costs are expensed as incurred. During three months ended March 31, 2023 and 2022, the Company did not have any advertising costs.

 

Income per Share

Basic income per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities, represented by 3,700,000 stock options outstanding at March 31, 2023 (December 31, 2022: 3,700,000), is excluded in diluted earnings per share by application of the “if converted” method. In the periods in which a loss is incurred, the effect of potential issuances of shares under options and warrants would be anti-dilutive, and therefore basic and diluted losses per share are the same. 

 

Income Taxes

The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities.

 

Financial Instruments

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

 

Mineral Properties

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

 

Optioned Properties

Properties under the Company’s ownership which have been optioned to a third party are deemed the Company’s property until all obligations under an option agreement are met, at which point the ownership of the property transfers to the third party.  All non-refundable payments received prior to all obligations under an option agreement being met are considered liabilities until such time all obligations have been met, at which time ownership of the property transfers to the third party and the Company includes option payments into its statement of operations.

 

Recent Accounting Pronouncements

In January  2016, the Financial  Accounting  Standards  Board (“FASB”),  issued Accounting  Standards Update (“ASU”)  2016-01,  “Financial  Instruments-Overall (Subtopic 825-10): Recognition  and Measurement of Financial Assets and Financial Liabilities,” which amends the guidance in U.S. generally accepted accounting principles on the classification  and measurement  of financial instruments.  Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.  In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities.

 

The Company does not expect that recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, are of significance or potential significance to the Company.

 

 

8

Table of Contents

 

Note 2 – Going Concern

 

As reflected in the accompanying financial statements, the Company has used $81,930(2022: $51,177) of cash in operations for the three months ended March 31, 2023. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. 

 

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

Note 3 – Fair Value of Financial Instruments

 

Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

 

The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

 

 

-

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

 

 

 

 

-

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

 

 

 

 

-

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

 

 

9

Table of Contents

 

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2023 and December 31, 2022, respectively:

 

 

 

Fair Value Measurements at March 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets

 

 

 

 

 

 

 

 

 

Cash

 

$

3,730,381

 

 

$

-

 

 

$

-

 

Marketable securities

 

 

271,297