Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation
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.
Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all
references to “common stock” refer to shares of our common stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean U.S. Lithium Corp., unless
otherwise indicated.
Corporate History
We were incorporated as Rostock Ventures Corp. on November 2, 2006, under the laws of the State of Nevada. We are a
natural resource exploration and development company engaged in the exploration, acquisition, and development of mineral properties in North America. Our business also includes a technology venture, iWeedz.com, our planned internet e-commerce
platform and search engine designed to connect consumers with cannabis vendors.
Effective March 12, 2014, we entered into a patent, technical information and trade mark license agreement with
Windward International LLC pursuant to which our company acquired an exclusive license to use exploit certain patents, technical information and trademarks comprising the iWeedz.com platform, an e-commerce and marketing platform. We paid
4,000,000 shares of our company’s common stock in consideration of the license and granted a 2% royalty on all net sales derived from the use of the patents, technical information and trademark. However, due to a lack of financing, we have not
fully developed or launch the iWeedz.com platform. We continue hold our license in the iWeedz.com platform and to evaluate opportunities to monetize this intellectual property.
On September 30, 2015, our board of directors and a majority of our stockholders approved an increase of our
authorized capital from 100,000,000 shares of common stock, par value $0.0001 to 500,000,000 shares of common stock, par value $0.0001. A Certificate of Amendment to effect the increase to our authorized capital was filed with the Nevada
Secretary of State on October 20, 2015, with an effective date of October 20, 2015.
On April 4, 2016, our company entered into a letter of intent with Rangefront Consulting LLC (“
Rangefront
”).
Further to the letter of intent, on April
25, 2016, we entered into a definitive agreement with Rangefront whereby Rangefront granted us the option to acquire 100% of the title, interest and right in and to four mineral claims, known as the Elon claims, located in Esmerelda County,
Nevada. In exchange for the grant of the Option by Rangefront, we
paid $3,500 to Rangefront on signing of the agreement and issued an aggregate of 200,000 restricted common shares of our company to Brian Goss as the authorized
representative of Rangefront.
On April 25, 2016, our board of directors approved an agreement and plan of merger to merge with our wholly-owned
subsidiary U.S. Lithium, Corp., a Nevada corporation, to effect a name change from “Rostock Ventures Corp.” to “U.S. Lithium, Corp.”. Our company remains the surviving company. U.S. Lithium, Corp. was formed solely for the change of name.
Articles of Merger to effect the merger and change of name were filed with the Nevada Secretary of State on May 9,
2016, with an effective date of May 11, 2016. In connection with the change of name, effective June 13, 2016, our trading symbol changed to LITH and we adopted the new CUSIP number 90351E 105.
On February 24, 2017, the Company entered into an Option/Purchase Agreement dated February 23, 2017 (the
“Agreement”) with Diamond Hunter Ltd. (the “Optionor”) pursuant to which we acquired an exclusive option to purchase a 100% interest in the Gochagar Lake Nickel-Copper-Cobalt project claims. The project consists of four claims covering 3,759
hectares, is located in northern Saskatchewan approximately 75 km north of the town of La Ronge.
In consideration of the option, on February 23, 2017, the Company issued 8,000,000 shares of its common stock to the
principals of the Optionor with a fair value of $361,600. To complete the acquisition, the Company was to incur expenditures of not less than USD $50,000 on or before June 1, 2017, and not less than USD $225,000 on or before July 12, 2018.
Thereafter the claims would be subject to a royalty equal to two percent (2%) Net Smelter Return (NSR) for as long as the Company holds any interest in the claims, subject to a right to repurchase a 1% NSR for $1,250,000 at any time up to when
a production decision is made.
On March 7, 2018 the Company entered into a Mineral Property Option Agreement with Cameo Resources Corp. regarding
our option to purchase the Cochagar Lake Nickel –Copper-Cobalt project claims.
Concurrently, the Company entered into an amendment agreement with Diamond Hunter Ltd. and Robert Seeley (as
vendors) and Cameo Resources Corp. to amend the February 23, 2017 Option/Purchase Agreement. As a result of the two agreements, the Company has granted to Cameo Resources Corp. the option to acquire a 100% undivided right, title and interest
in the Gochagar Lake claims, subject to a 2% NSR royalty (payable to the royalty holder), in consideration for 1,000,000 common shares of Cameo Resources Corp. payable to the Company, $60,000 to be paid to the Company within 5 business days
following the agreement (which amount has been paid), $225,000 to be incurred in exploration of the claims by July 2, 2019, and the issuance of 100,000 common shares to each of the vendors. Pursuant to the agreements, Cameo will act as
operator of the claims, and will have the option to purchase one percent of the NSR royalty at any time by paying $1,250,000 to the royalty holder.
Financing History
The Company has entered into the following financing transactions:
On September 22, 2015, the Company entered into a loan agreement with a non-related party for proceeds of $25,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on demand, and is convertible into shares of common stock of the Company at $0.40 per share. During the year ended December 31, 2015, the Company recorded a beneficial conversion
feature of $25,000. As at March 31, 2019, the carrying value of the note payable is $25,000 (December 31, 2018 - $25,000) and accrued interest of $8,808 (December 31, 2018 - $8,192) has been recorded in accounts payable and accrued liabilities.
On May 11, 2016, the Company entered into a loan agreement with a non-related party for proceeds of $40,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on May 11, 2017, and is convertible into shares of common stock of the Company at $1.40 per share. On July 31, 2017, the loan agreement was amended to change the conversion price
to $0.60 per share and due date to November 11, 2017. The loan is currently in default. As at March 31, 2019, the carrying value of the note payable is $40,000 (December 31, 2018 - $40,000) and accrued interest of $11,548 (December 31, 2018 -
$10,562) has been recorded in accounts payable and accrued liabilities.
On December 1, 2016, the Company entered
into a loan agreement with a non-related party for proceeds of $20,000. The amount owing is unsecured, bears interest at 10% per annum, is due on December 1, 2017, and is convertible into shares of common stock of the Company at $1.20 per
share. On July 31, 2017, the loan agreement was amended to change the conversion price to $0.60 per share and due date to June 1, 2018. The loan is currently in default. During the period ended March 31, 2019, the Company recorded accretion
expense of $nil (2018 - $3,290). As at March 31, 2019, the carrying value of the note payable is $20,000 (December 31, 2018 - $20,000) and accrued interest of $4,657 (December 31, 2018 - $4,164) has been recorded in accounts payable and accrued
liabilities.
On March 3, 2017, the Company entered into a loan agreement with a non-related party for proceeds of $8,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on March 3, 2018, and is convertible into shares of common stock of the Company at $1.20 per share. On July 31, 2017, the loan agreement was amended to change the conversion
price to $0.60 per share and the due date to September 3, 2018. The loan is in default. During the period ended March 31, 2019, the Company recorded accretion expense of $nil (2018 - $1,317). As at March 31, 2019, the carrying value of the note
payable is $8,000 (December 31, 2018 - $8,000) and accrued interest of $1,661 (December 31, 2018 - $1,464) has been recorded in accounts payable and accrued liabilities.
On May 23, 2017, the Company entered into a loan agreement with a non-related party for proceeds of $25,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on May 23, 2018, and is convertible into shares of common stock of the Company at $1.20 per share. On July 31, 2017, the loan agreement was amended to change the conversion price
to $0.60 per share and the due date to November 23, 2018. The loan is in default. During the period ended March 31, 2019, the Company recorded accretion expense of $nil (2018 - $5,753). As at March 31, 2019, the carrying value of the note
payable is $25,000 (December 31, 2018 - $25,000) and accrued interest of $4,635 (December 31, 2018 - $4,019) has been recorded in accounts payable and accrued liabilities.
On June 15, 2017, the Company entered into a loan agreement with a non-related party for proceeds of $40,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on June 15, 2018, and is convertible into shares of common stock of the Company at $1.20 per share. On July 31, 2017, the loan agreement was amended to change the conversion
price to $0.60 per share and the due date to December 15, 2018. The loan is in default. During the period ended March 31, 2019, the Company recorded accretion expense of $nil (2018 - $6,575). As at March 31, 2019, the carrying value of the
note payable is $40,000 (December 31, 2018 - $40,000) and accrued interest of $7,165 (December 31, 2018 - $6,180) has been recorded in accounts payable and accrued liabilities.
On September 13, 2017, the Company entered into a loan agreement with a non-related party for proceeds of $20,000.
The amount owing is unsecured, bears interest at 10% per annum, is due on September 13, 2018, and is convertible into shares of common stock of the Company at $1.16 per share. The loan is in default. During the year period March 31, 2019, the
Company recorded accretion expense of $nil (2018 - $1,871). As at March 31, 2019, the carrying value of the note payable is $20,000 (December 31, 2018 - $20,000) and accrued interest of $3,090 (December 31, 2018 - $2,597) has been recorded in
accounts payable and accrued liabilities.
On November 13, 2017, the Company entered into a loan agreement with a non-related party for proceeds of $22,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on November 13, 2018, and is convertible into shares of common stock of the Company at $0.84 per share. The loan is in default. During the period ended March 31, 2019, the
Company recorded accretion expense of $nil (2018 - $2,325). As at March 31, 2019, the carrying value of the note payable is $22,000 (December 31, 2018 - $22,000) and accrued interest of $3,031 (December 31, 2018 - $2,489) has been recorded in
accounts payable and accrued liabilities.
On February 5, 2018, the Company entered into a loan agreement with a non-related party for proceeds of $20,000. The
amount owing is unsecured, bears interest at 10% per annum, is due on February 5, 2019, and is convertible into shares of common stock of the Company at $0.84 per share. The loan is in default. As at March 31, 2019, the carrying value of the
note payable is $20,000 (December 31, 2018 - $19,342) and accrued interest of $2,296 (December 31, 2018 - $1,803l) has been recorded in accounts payable and accrued liabilities.
As at March 31, 2019, the Company owes $9,500 (December 31, 2018 - $9,500) of notes payable to shareholders of the
Company. The amounts owing are unsecured, due interest at 10% per annum, and is due on demand. As at March 31, 2019, accrued interest of $11,199 (December 31, 2018 - $10,965) has been recorded in accounts payable and accrued liabilities.
As at March 31, 2019, the Company owes $3,015 (December 31, 2018 - $3,015) of notes payable to a non-related party.
The amount owing is unsecured, due interest at 10% per annum, is due on demand, and is convertible into shares of common stock of the Company at $0.20 per share. As at March 31, 2019, accrued interest of $11,119 (December 31, 2018 - $11,045) has
been recorded in accounts payable and accrued liabilities.
As at March 31, 2019, the Company owes $47,705 (December 31, 2018 - $47,705) of notes payable to non-related parties.
The amounts owing are unsecured, due interest between 6-10% per annum, are due on demand, and are convertible into shares of common stock of the Company at $0.20 per share. As at March 31, 2019, accrued interest of $52,280 (December 31, 2018 -
$51,162) has been recorded in accounts payable and accrued liabilities.
Current Business
iWeedz.com
On November 29, 2016 we issued a news release announcing our intention to relaunch our proprietary iWeedz.com search
engine and e-commerce platform which was originally launched in February 2014. The iWeedz.com search engine is a cannabis information resource that connects consumers with vendors or likeminded individuals. iWeedz.com for vendors will be a cloud
based solution to manage inventory, post daily deals, attract new customer with proximity marketing via mobile phones, engage with customers via email & text messaging and offer payment processing. We intend to operate this technology
platform through a relaunched Website located at www.iWeedz.com, and through mobile application for Apple iPhone operating system (iOS) and Android operating systems. As of the date of this report, our website is not fully functional and our
application for Apple iOS and Android operating systems has not been released.
Our decision to revitalize the iWeedz platform comes at a time when several U.S. States have legalized and regulated,
or are in the process of legalizing and regulating, medical marijuana. The states of Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington have also legalized marijuana for recreational use. Additionally, the
Government of Canada has been engaged in an ongoing process of regulating medical marijuana, and is expected to introduce legislation for the legalization of recreational marijuana in the spring of 2017.
iWeedz will generate revenue by charging member cannabis vendors a monthly fee and by selling banner space on its
website and application to these vendors. The banners will be viewable by iWeedz consumer members who are within the vendor’s geographic location and who indicate an interest in the vendor or its products, based on the member’s profile or
specific user information gathered by the iWeedz technology. We believe iWeedz’s targeted market intelligence will allow us to charge a premium for ad space. As of the date of this report, we have not yet determined the cost to our vendors for
banner space.
Target Market
Our target market includes both businesses and consumers in the local marijuana industry. iWeedz is intended for all
types of cannabis consumers including those new to cannabis, medical marijuana patients, or recreational consumers, if recreational use is legally permitted in the consumer’s state of residence. iWeedz also targets both medicinal and recreational
dispensaries, depending on whether the specific geographical location legally permits recreational marijuana use.
Our target market further includes consumers who are frequent users of the internet, mobile phones and other mobile
devices to locate retailers, conduct online research and act on promotions such as daily deals, coupons or discounts.
Our Mineral Exploration Business
Our mineral exploration strategy is focused on the acquisition, and development of Cobalt, nickel, and lithium
resources properties to capitalize on the growing energy storage (battery) market associated with the popularization of electric vehicles.
On February 24, 2017, we entered into an Option/Purchase Agreement dated February 23, 2017 with Diamond Hunter Ltd.
(the “Optionor”) pursuant to which we acquired an exclusive option to purchase a 100% interest in the Gochagar Lake Nickel-Copper-Cobalt project claims. The project consists of four claims covering 3,759 hectares, is located in northern
Saskatchewan approximately 75 km north of the town of La Ronge.
In consideration of the option, the Company issued 8,000,000 shares of its common stock to the principals of the
Optionor. Pursuant to the February 23, 2017 agreement, to complete the acquisition, the Company must incur expenditures of not less than USD$50,000 on or before June 1, 2017, and not less than USD $225,000 on or before July 12, 2018. Thereafter
the claims will be subject to a royalty equal to two percent (2%) Net Smelter Return (NSR) for as long as the Company holds any interest in the claims, subject to a right to repurchase a 1% NSR for $1,250,000 at any time up to when a production
decision is made.
On March 7, 2018 the Company entered into a Mineral Property Option Agreement with Cameo Resources Corp. (now Cameo
Cobalt Corp. regarding our option to purchase the Cochagar Lake Nickel –Copper-Cobalt project claims. Concurrently, the Company entered into an amendment agreement with Diamond Hunter Ltd. and Robert Seeley (as vendors) and Cameo Resources
Corp. to amend the February 23, 2017 Option/Purchase Agreement. As a result of the two agreements, the Company has granted to Cameo Resources Corp. the option to acquire a 100% undivided right, title and interest in the Gochagar Lake claims,
subject to a 2% NSR royalty (payable to the royalty holder), in consideration for 1,000,000 common shares of Cameo Resources Corp. payable to the Company, $60,000 to be paid to the Company within 5 business days following the agreement (which
amount has been paid), $225,000 to be incurred in exploration of the claims by July 2, 2019, and the issuance of 100,000 common shares to each of the vendors. Pursuant to the agreements, Cameo will act as operator of the claims, and will have
the option to purchase one percent of the NSR royalty at any time by paying $1,250,000 to the royalty holder.
On April 1, 2018 the Company sold its
rights to the to the Gochagar Lake property to Cameo Cobalt Corp., a company listed on the Canadian Securities Exchange, receiving proceeds of $60,000 and 3,000,000
split-adjusted common shares of Cameo with a fair value of $977,004.
During the period ended March 31, 2019, the Company sold 994,500 common shares for proceeds of $55,108. As at March 31, 2019, the Company still held 2,000,000 common shares of Cameo with a fair value of $179,600.
Elon Claims,
Esmeralda County Nevada
On April 25, 2016, we entered into a
definitive agreement with Rangefront whereby Rangefront granted us the option to acquire 100% of the title, interest and right in and to four mineral claims, known as the Elon claims, located in Esmerelda County, Nevada. In exchange for the
grant of the Option by Rangefront, we
paid $3,500 to Rangefront on signing of the agreement and issued an aggregate of 200,000 restricted common shares of our company to Brian Goss as the authorized representative of Rangefront.
The Elon claim block consists of four 20-acre placer claims and is located in Esmerelda County, Nevada. Clayton Valley
is home to the only mine producing lithium from brine in North America. As at the date of this report, we have not conducted any exploration on the Elon Claims. We have renewed the Elon claims as they came due and are current in payments for
these claims. We plan to maintain the claims for the foreseeable future but have no plans to conduct exploration on the property during 2019.
Competition
The mining industry is intensely competitive. We aim to 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 investment funds to support acquisition, exploration and
development. There are other competitors that have operations in the areas in which our properties are located, 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
Regulation related to iWeedz.com
We are subject to general business regulations and laws as well as regulations and laws specifically governing the
Internet and e-commerce. Existing and future regulations and laws could impede the growth of the Internet or other online services. These regulations and laws may involve taxation, tariffs, subscriber privacy, anti-spam, data protection, content,
copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services and the characteristics and quality of services. It is not clear how existing laws governing issues such as
sales and other taxes, libel and personal privacy apply to the Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the unique issues raised by the Internet or e-commerce.
In addition, it is possible that government entities or public interest groups may seek to censor content available on our website and application or may even attempt to completely block our emails or access to our websites. Adverse legal or
regulatory developments could substantially harm our business. In particular, in the event that we are restricted, in whole or in part, from operating in certain locations, our ability to increase our customer base may be adversely affected.
Currently, we believe we are in compliance with such government regulations and laws.
Additionally, a variety of federal and state laws and regulations govern the collection, use, retention, sharing and
security of consumer data. The existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations. In addition, various federal and state legislative and regulatory bodies may expand current or enact
new laws regarding privacy matters. For example, recently there have been Congressional hearings and increased attention to the capture and use of location-based information relating to users of smartphones and other mobile devices. We intend to
post privacy policies and practices concerning the collection, use and disclosure of member data on our website and application. Several Internet companies have incurred substantial penalties for failing to abide by the representations made in
their privacy policies and practices. In addition, several states have adopted legislation that requires businesses to implement and maintain reasonable security procedures and practices to protect sensitive personal information and to provide
notice to consumers in the event of a security breach. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, Federal Trade Commission requirements or orders or other federal
or state privacy or consumer protection-related laws, regulations or industry self-regulatory principles, could result in claims, proceedings or actions against us by governmental entities or others or other liabilities, which could adversely
affect our business. In addition, a failure or perceived failure to comply with industry standards or with our own privacy policies and practices could result in a loss of consumer members or vendors and adversely affect our business. Federal and
state governmental authorities also continue to evaluate the privacy implications inherent in the use of third party web “cookies” for behavioral advertising. The regulation of these “cookies” and other current online advertising practices could
adversely affect our business.
Marijuana Regulation
At least 24 States in the USA, and the federal government of Canada have passed some form of legislation related to
the permission to grow, cultivate, sell or use marijuana either for medical purposes or for recreational or “adult use” purposes; or both. The various state legislation is not necessarily harmonious with one another, leading to potential
conflicts between state laws. It is most often not legal to transport cannabis-related products across state lines and national borders.
We do not intend to directly hold, handle, or distribute any marijuana products in any location within or outside of
the USA. We intend to comply with federal law that provides for certain exemptions for agricultural (industrial) hemp and certain byproducts to be manufactured and sold in the US. Our technology may have applications within the legal marijuana
sector and we may seek to license that technology to companies that have met and comply with state regulations for the sale or distribution of cannabis related products in any particular jurisdiction.
Mineral Exploration
Any operations at our mineral exploration properties will be subject to various federal, state, or provincial laws and
regulations in the US or Canada 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 will be required to obtain those licenses, permits or other authorizations currently required to conduct exploration and other programs. There are no current orders or directions relating to us or to our lithium properties with respect to the
foregoing laws and regulations. Such compliance may include feasibility studies on the surface impact of our proposed operations, costs associated with minimizing surface impact, water treatment and protection, reclamation activities, including
rehabilitation of various sites, on-going efforts at alleviating the mining impact on wildlife and permits or bonds as may be required to ensure our compliance with applicable regulations. It is possible that the costs and delays associated with
such compliance could become so prohibitive that we may decide to not proceed with exploration, development, or mining operations on any of our mineral properties. We are not presently aware of any specific material environmental constraints
affecting our properties that would preclude the economic development or operation of our optioned property.
Environmental
Regulations
We are not aware of any material violations of environmental permits, licenses or approvals that have been issued with
respect to our operations. We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental
regulations or other requirements.
While our intended projects and business activities do not currently violate any laws, any regulatory changes that
impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our
results of operations.
Research and Development
We have not incurred any research and development expenditures over the last two fiscal years.
Intellectual Property
Our company acquired an exclusive license to use certain patents, technical information and trademarks for a term of
500 years, pursuant to the license agreement with Windward dated March 12, 2014, including the domain names www.iWeeds.com, www.iWeedz.com and the platform that powers iWeeds.com.
Employees
We have no employees. Our officers and directors provide their services to our company as independent consultants.
REPORTS TO SECURITY HOLDERS
We are required to file annual, quarterly
and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov. The
public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, at
http://www.sec.gov
.
Results of Operations
Our operating expenses for the three month periods ending March 31, 2019 and 2018 are outlined in the table below:
|
Depreciation
|
|
$
|
47
|
|
|
$
|
-
|
|
|
General and administrative
|
|
$
|
9,138
|
|
|
$
|
2,892
|
|
|
Management fees
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
Professional fees
|
|
$
|
10,900
|
|
|
$
|
7,182
|
|
|
Interest and accretion expense
|
|
$
|
7,507
|
|
|
$
|
34,025
|
|
|
Foreign exchange gain
|
|
$
|
(3,130
|
)
|
|
$
|
-
|
|
|
Gain on sale of marketable securities
|
|
$
|
(13,473
|
)
|
|
$
|
-
|
|
|
Unrealized gain on marketable securities
|
|
$
|
(97,284
|
)
|
|
$
|
-
|
|
|
Net Loss (Income)
|
|
$
|
(80,295
|
)
|
|
$
|
50,099
|
|
Three months ended March 31, 2019 compared to the three months ended March 31, 2018
During the three months ended March 31, 2019, our company incurred operating expenses of $26,085 compared to $16,074
during the three months ended March 31, 2018. The increase in operating expenses was attributed to a general increase in general and administrative expenses and professional fees.
Net income for the three months ended March 31, 2019 was $80,295 compared to a net loss of $50,099 during the three
months ended March 31, 2018. During the three months ended March 31, 2019, our company recorded a realized gain on the sale of marketable securities, an unrealized gain on marketable securities, and a foreign exchange gain. We held no marketable
securities during the three months ended March 31, 2018.
For the three months ended March 31, 2019 the Company had a basic and diluted earnings per share of $0.03 compared to
a loss per share of $0.02 for the three months ended March 31, 2018.
Operating Revenues
For the three months ended March 31, 2019 and 2018, our company did not record any revenues.
Liquidity and Capital Resources
Working Capital
|
|
|
As at
|
|
|
As at
|
|
|
|
|
March 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
201,217
|
|
|
$
|
124,941
|
|
|
Current Liabilities
|
|
$
|
464,308
|
|
|
$
|
465,166
|
|
|
Working Capital (deficiency)
|
|
$
|
(263,091
|
)
|
|
$
|
(340,225
|
)
|
Cash Flows
|
|
|
Three Months
|
|
|
Three Months
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
March 31, 2019
|
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(34,421
|
)
|
|
$
|
(20,239
|
)
|
|
Net cash provided by (used in) investing activities
|
|
$
|
51,929
|
|
|
$
|
60,000
|
|
|
Net cash provided by financing activities
|
|
$
|
0
|
|
|
$
|
20,000
|
|
|
Net increase (decrease) in cash
|
|
$
|
17,508
|
|
|
$
|
59,761
|
|
As at March 31, 2019, our cash balance was $21,573 and total assets were $219,443 comprised of $15,065 of mineral
properties, $179,644 of marketable securities, and $3,161 of equipment. As at December 31, 2018, our cash balance was $4,065 and total assets were $140,006, which included mineral properties of $15,065 and marketable securities of $120,876. The
increase in cash was due to the fact that we received proceeds from the sale of marketable securities.
As at March 31, 2019, we had total
liabilities of $464,308
compared with total liabilities of $465,166
as at
December 31, 2018. Overall, our total liabilities were consistent.
As at March 31, 2019, we had a working
capital deficit of $263,091
compared with a working capital deficit of $340,225
as at December 31, 2018. The
increase in working capital is due to the fact that we enjoyed an increase in the value of marketable securities we hold as proceeds from the sale of
the Gochager Lake Property.
Cashflow from Operating Activities
During the three months ended March 31,
2019, we used $34,421
of cash for operating activities compared to the use of $
20,239
of cash for operating activities during the three months ended March 31, 2018. The increase
in the cash used for operating activities was due to increased general administrative expenses and professional fees.
Cashflow from Investing Activities
During the three months ended September 30, 2018, we received $55,137 from the sale of marketable securities and
invested $3,208 in the purchase of equipment, compared to the receipt of $60,000 from the sale of the Gochager Lake Property during the three months ended March 31, 2018.
Cashflow from Financing Activities
During the three months ended March 31, 2018, we received $20,000 from the issuance of convertible notes payable,
which are unsecured and bear interest at 10% per annum. There were no cashflows from investing activities during the three months ended March 31, 2019.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive
acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
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 are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations.
Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other
activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. In
general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ
from those estimates made by management. Our fiscal year end is December 31.
Use of Estimates
The preparation of financial statements in conformity with US GAAP 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 amounts of revenues and expenses during the reporting period. Our
company regularly evaluates estimates and assumptions related to the recoverability of mineral properties, share based compensation, and deferred income tax asset valuation allowances. Our company bases our estimates and assumptions on current
facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs
and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and
the actual results, future results of operations will be affected.
Cash and Cash Equivalents
Our company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to
be cash equivalents. As of March 31, 2019 and December 31, 2018, there were no cash equivalents.
Asset Retirement Obligations
Our company follows the provisions of ASC 410,
Asset Retirement and Environmental Obligations
, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of
long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets.
Basic and Diluted Net Loss per Share
Our company computes net income (loss) per share in accordance with ASC 260,
Earnings per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by
dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the
period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the
exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
Foreign Currency Translation
Our company’s functional and reporting currency is the United States dollar. Foreign currency transactions are
primarily undertaken in Canadian dollars. Foreign currency transactions are translated to United States dollars in accordance with ASC 830,
Foreign
Currency Translation Matters
, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination
of income.
Financial Instruments
Pursuant to ASC 820,
Fair
Value Measurements and Disclosures
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of
independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
|
Level 1
:
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
|
Level 2
:
|
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted
prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which
significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
|
|
Level 3
:
|
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the
fair value of the assets or liabilities.
|
Our company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, note
payables, and amounts due to related party. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The recorded values of all other financial
instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Marketable Securities
Marketable securities consist of common shares of a publicly-traded company and are available-for-sale. The
marketable securities are recorded at its fair value, with any corresponding unrealized gains and losses recorded in the statement of operations.
Impairment of Long-Lived Assets
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever
events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its
eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable
intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Income Taxes
Our company accounts for income taxes using the asset and liability method in accordance with ASC 740,
Accounting for Income Taxes
. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently
enacted tax rates and laws that will be in effect when the differences are expected to reverse. Our company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Comprehensive Loss
ASC 220,
Comprehensive
Income
, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at March 31, 2019 and December 31, 2018, our company has no items representing comprehensive income or
loss.
Stock-based Compensation
Our company records stock-based compensation in accordance with ASC 718,
Compensation – Stock Compensation
using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as
consideration are measured and recognized based on the fair value of the equity instruments issued. As at March 31, 2019 and December 31, 2018, our company did not grant any stock options.
Recently Issued Accounting Pronouncements
Our company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have
any material impact on the financial statements unless otherwise disclosed, and our company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position
or results of operations.
