1. Organization and Nature of Operations
U.S. Lithium, Corp (the “Company”) was incorporated in the State of Nevada on November 2, 2006 and is a natural resource exploration and production company engaged in the
exploration, acquisition, and development of mineral properties in the United States. On April 27, 2016, the Company incorporated and merged with its wholly-owned subsidiary, U.S. Lithium Corp. for the sole purpose of enacting a name change and
acquired 100% of the titles, interest, and rights to four mineral claims in Esmeralda County, Nevada.
These interim condensed financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge
its liabilities in the normal course of business. As at September 30, 2019, the Company has not earned any revenue, has negative cash flows from operating activities, and has an accumulated deficit of $1,918,598. The continuation of the Company
as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the
Company’s future operations. Management’s plan is to obtain such resources for our company by obtaining capital from significant shareholders to meet our operating expenses through equity or debt financing. However, there are no assurances that
the Company will be successful in accomplishing any of our plans. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the
recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed
in U.S. dollars. The Company’s fiscal year end is December 31.
The accompanying interim condensed consolidated financial statements of the Company should be read in conjunction with the financial statements and accompanying notes filed with the U.S. Securities and Exchange
Commission for the year ended December 31, 2018. These interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which
include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the
results expected for a full year or for any future period.
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. The Company regularly evaluates estimates and assumptions related to the recoverability of mineral
properties, share based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes 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 the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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 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.
The Company’s financial instruments consist principally of cash, marketable securities, 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.
Equipment is comprised of a camera and computer equipment and is recorded at the lower of cost or net book value and amortized on a straight-line basis over an estimated useful life of three years.
In February 2016, the FASB issued new lease accounting guidance in ASU No. 2016-02, “Leases”. This new guidance was initiated as a joint project with the International Accounting Standards Board to simplify lease
accounting and improve the quality of and comparability of financial information for users. This new guidance would eliminate the concept of off-balance sheet treatment for “operating leases” for lessees for the vast majority of lease contracts.
Under ASU No. 2016-02, at inception, a lessee must classify all leases with a term of over one year as either finance or operating, with both classifications resulting in the recognition of a defined “right-of-use” asset and a lease liability on
the balance sheet. However, recognition in the income statement will differ depending on the lease classification, with finance leases recognizing the amortization of the right-of-use asset separate from the interest on the lease liability and
operating leases recognizing a single total lease expense. Lessor accounting under ASU No. 2016-02 would be substantially unchanged from the previous lease requirements under GAAP. ASU No. 2016-02 will take effect for public companies in fiscal
years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted and for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the
financial statements, lessees and lessors must apply a modified retrospective transition approach.
The Company adopted the standard on January 1, 2019 and there was no material impact on the Company’s financial statements
The 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 the 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.
3. Marketable Securities
On April 1, 2018, the Company received 3,000,000 split-adjusted common shares of Cameo Cobalt Corp. (formerly Cameo Resources Inc.) (“Cameo”) with a fair value of $977,004.
In December 2018, the Company sold 5,550 Cameo shares for proceeds of $266, which was applied against brokerage fees.
During the period ended September 30, 2019. the Company sold 2,498,500 Cameo shares for proceeds of $120,100 resulting in a realized loss on sale of marketable securities of $12,413. As at September 30, 2019, the
Company held 496,000 (December 31, 2018 – 2,994,450) common shares of Cameo with a fair value of $7,491 (December 31, 2018 - $120,876. During the period ended September 30, 2019, the Company recorded an unrealized loss on marketable securities of
$11,463 (2018 - $440,358 loss).
4. Mineral Property
On April 27, 2016, the Company acquired a 100% interest in four mineral claims located in Esmeralda County, Nevada in exchange for $3,500 and the issuance of 200,000 common shares of the Company with a fair value
of $10,000. As at September 30, 2019 and December 31, 2018, the carrying value of the property is $15,065.
6. Notes Payable
7. Related Party Transactions
At September 30, 2019, the Company owed $26,580 (December 31, 2018 - $54,317) to the President of the Company. During the period ended September 30, 2019, the Company recorded management fees
of $18,000 (2018 - $18,000) to the President of the Company. The amount owing is unsecured, non-interest bearing, and due on demand.
8. Common Stock
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology
such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) 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, which were all settled with the issuance of common shares during the period ended June 30, 2019:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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, 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, 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.
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, 2019September 30, 2019, the Company still
held 496,000 common shares of Cameo with a fair value of $7,491.
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 and nine month periods ended September 30, 2019 and 2018 are outlined in the table below:
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Three months
ended
September 30, 2019
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Three months
ended
September 30, 2018
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Nine months
ended
September 30, 2019
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Nine months
ended
September 30, 2018
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
1,152
|
|
|
$
|
-
|
|
|
$
|
1,495
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|
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$
|
-
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|
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General and administrative
|
|
$
|
6,272
|
|
|
$
|
3,178
|
|
|
$
|
20,573
|
|
|
$
|
8,733
|
|
|
Management fees
|
|
$
|
6,000
|
|
|
$
|
6,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
Professional fees
|
|
$
|
7,375
|
|
|
$
|
7,554
|
|
|
$
|
28,765
|
|
|
$
|
24,850
|
|
|
Interest and accretion expense
|
|
$
|
-
|
|
|
$
|
13,541
|
|
|
$
|
12,152
|
|
|
$
|
72,936
|
|
|
Foreign exchange loss (gain)
|
|
$
|
(11,199
|
)
|
|
$
|
(9,799
|
)
|
|
$
|
(30,591
|
)
|
|
$
|
8,093
|
|
|
Gain on sale of mineral property
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
(675,404
|
)
|
|
Realized loss (gain) on marketable securities
|
|
$
|
12,502
|
|
|
$
|
-
|
|
|
$
|
12,413
|
|
|
$
|
-
|
|
|
Unrealized loss (gain) on marketable securities
|
|
$
|
26,308
|
|
|
$
|
(58,133
|
)
|
|
$
|
11,463
|
|
|
$
|
364,333
|
|
|
Net Loss (Income)
|
|
$
|
48,410
|
|
|
$
|
(37,659
|
)
|
|
$
|
74,270
|
|
|
$
|
(178,459
|
)
|
Three months ended September 30, 2019 compared to the three months ended September 30, 2018
During the three months ended September 30, 2019, our company incurred operating expenses of $20,799 compared to $16,732 during the three months ended September 30, 2018. The increase in operating expenses was
attributed to an increase in general and administrative costs of $3,094 due to an increase in transfer agent fees due to the conversion of outstanding common shares during the current year, and $1,152 of depreciation expense for depreciation of
equipment that was purchased during the current year.
Net loss for the three months ended September 30, 2019 was $48,410 compared to a net income of $37,659 during the three months ended September 30, 2018. In addition to operating expenses, we incurred an unrealized
loss of $26,308 on the fair value of our holdings of Cameo Industries Corp. (“Cameo”). During the three months ended September 30, 2018, we recorded an unrealized gain of $58,133 due to the fair value differences for the common shares of Cameo
between the acquisition date (sale of the Gochager Lake property) and the September 30, 2018 period end date. We also incurred interest and accretion expense of $13,541 during the three months ended September 30, 2018 and the increase compared
to September 30, 2019 was due to the fact that we converted all convertible debentures during Q2 of fiscal 2019 resulting in no further interest or accretion expense in the current period. Finally, the Company recorded a gain on foreign exchange
of $11,199 due mainly to the foreign exchange effects of the change in fair value of the Cameo common shares which are traded in Canadian dollars and on a Canadian listing exchange.
For the three months ended September 30, 2019 the Company had a loss of $0.01 per share compared to earnings per share of $0.01 for the three months ended September 30, 2018.
Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018
During the nine months ended September 30, 2019, our company incurred operating expenses of $69,833 compared to $51,583 during the nine months ended September 30, 2018. The increase in operating expenses was due
to an increase in general and administrative expense of $11,840 as we had more day-to-day operating costs, $3,915 increase in professional fees due to an increase in legal fees for the conversion of notes payable during the current year, and
$1,495 in depreciation expense as we acquired equipment during the year that was subject to depreciation over a straight-line basis over three years.
Net loss for the nine months ended September 30, 2019 was $74,270 compared to net income of $178,459 during the nine months ended September 30, 2018. In addition to operating expenses, we recorded a realized loss
on marketable securities of $12,413 an unrealized loss of $11,463 in our marketable securities for the change in the share price of the Cameo common shares compared to December 31, 2018,. Furthermore, we incurred interest and accretion expense of
$12,152, which includes the effects of the conversion of all convertible debentures in June 2019. For fiscal 2018, we recorded a gain of $675,404 on the sale of the Gochager Lake property offset by an unrealized loss of $364,333 for the decrease
in the Cameo share price between the date of acquisition and as at September 30, 2019. Furthermore, we recorded interest and accretion expense of $72,936 during the nine months ended September 30, 2018 which was higher than the period ended
September 30, 2019 as we converted all convertible debentures in June 2019. We also had a gain of $30,591 for foreign exchange for the nine months ended September 30, 2019 compared to a loss of $8,093 for foreign exchange for the nine months
ended September 30, 2018. The foreign exchange amounts are due primarily to the differences in foreign exchange rates between the US dollar (reporting currency) and the Canadian dollar (foreign currency) relating to the fair value of the
Company’s holdings of Cameo shares, which are traded on a Canadian exchange in Canadian dollars.
For the nine months ended September 30, 2019, the Company had a loss per share of $0.02 compared to earnings per share of $0.07per share for the nine months ended September 30, 2018.
Operating Revenues
For the nine months ended September 30, 2019 and 2018, our company did not record any revenues.
Liquidity and Capital Resources
Working Capital
|
|
|
As at
|
|
|
As at
|
|
|
|
|
September 30, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
22,247
|
|
|
$
|
124,941
|
|
|
Current Liabilities
|
|
$
|
40,954
|
|
|
$
|
465,166
|
|
|
Working Capital (deficiency)
|
|
$
|
(18,707
|
)
|
|
$
|
(340,225
|
)
|
Cash Flows
|
|
|
Nine Months
|
|
|
Nine Months
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
September 30, 2019
|
|
|
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
$
|
(97,345
|
)
|
|
$
|
(57,379
|
)
|
|
Net cash provided by (used in) investing activities
|
|
$
|
108,036
|
|
|
$
|
59,380
|
|
|
Net cash provided by financing activities
|
|
$
|
-
|
|
|
$
|
20,000
|
|
|
Net increase (decrease) in cash
|
|
$
|
10,691
|
|
|
$
|
22,001
|
|
As at September 30, 2019, our cash balance was $14,756 and total assets were $47,881 comprised of $15,065 of mineral properties, equipment of $10,569, and $7,491 of marketable securities. 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 of $120,100 from the sale of the
Cameo common shares which is being used for operating activities during the year. The decrease in the fair value of marketable securities was due to the sale of Cameo shares during the year as the Company sold 2,498,500 common shares during
fiscal 2019 and currently holds 496,000 Cameo common shares as at September 30, 2019.
As at September 30, 2019, we had total liabilities of $40,954 compared with total liabilities of $465,166 as at December 31, 2018. The decrease was due to the settlement of outstanding notes payable of $280,221
and accrued interest of $126,136 and a decrease of $27,737 owed to our Chief Executive Officer for the payment of management fees.
As at September 30, 2019, we had a working capital deficit of $18,707 compared with a working capital deficit of $340,225 as at December 31, 2018. The increase in working capital is due to the conversion and
settlement of outstanding notes payable and the accrued interest during the current year which was offset by a decrease in marketable securities from the sale of Cameo shares during the current year.
Cashflow from Operating Activities
During the nine months ended September 30, 2019, we used $97,345 of cash for operating activities compared to the use of $57,379 of cash for operating activities during the nine months ended September 30, 2018. The
increase in the cash used for operating activities was due to an increase in day-to-day costs as the Company continues to search for new investment opportunities.
Cashflow from Investing Activities
During the nine months ended September 30, 2019, we received $120,100 from the sale of Cameo shares offset by purchase of equipment of $12,064. During the nine months ended September 30, 2018, we received $60,000
from the sale of the Gochager Lake property and spent $620 on mineral exploration costs.
Cashflow from Financing Activities
During the nine months ended September 30, 2019, we did not have any financing activities compared to the nine months ended September 30, 2018 where we received $20,000 from notes payable.
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 September 30, 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, marketable securities, 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 September 30,
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 September 30, 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.