This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States generally accepted
accounting principles.
In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States Dollars and all references to common
shares refer to the common shares in our capital stock.
As used in this annual report, the terms we, us, our
company, Wolverine, mean Wolverine Technologies Corp., a Nevada corporation,
unless otherwise indicated.
Corporate History
Our company was incorporated in the State of Nevada on February
23, 2006 and is quoted on the OTC Pink under the symbol WOLV.
Since we began operations in 2006, the Company has been focused
primarily on the exploration for and development of base and precious metal
properties located in North America. In February, 2007, we acquired a right to
earn a 90% interest in approximately 520 claims through a combination of an
upfront cash payment of $34,000, an upfront share payment of 34,000,000 common
shares of Wolverine, and by making exploration expenditure commitments totaling
$600,000 over three years. From 2007 to the present, we spent approximately
US$710,757 to earn our 90% interest in the Cache River Property; Shenin
Resources Inc. maintains a 10% carried interest in the project.
We have not yet determined whether the Cache River Property
contain mineral reserves that are economically recoverable.
Enigma Mobil Transaction
In the fall of 2013, due to ongoing stagnation in the
commodities sector, our management began identifying opportunities to increase
shareholder value through merger and acquisition. On September 5, 2013 Wolverine
entered into a Letter of Intent with the cyber security corporation ENIGMAMobil
Inc. (Enigma) to acquire a 25% interest in Enigma for a cash payment of
$10,000,000, however the transaction was not completed. On January 22, 2014, we
entered into an Amended Letter of Intent with Enigma to acquire a 25% interest
in Enigma for the purchase price of $5,000,000 to be paid with $3,000,000 shares
of our common stock at a deemed price of $0.01 per share and $2,000,000 in cash.
The LOI expired on June 30, 2014.
On April 14, 2015 Wolverine entered into a Share Exchange and
Royalty Agreement with Enigma and Dr. David Chalk pursuant to which Wolverine is
seeking to acquire from Dr. Chalk 25% of the issued and outstanding securities of Enigma. for the purchase price of USD $3,000,000,
to be paid by the issuance of 300,000,000 common shares of Wolverine at a deemed
price of USD$0.01 per share. Dr. Chalk is a Director of Enigma.
4
Enigma is a private corporation incorporated in the Province of
Alberta on September 6, 2013. Enigmas operations are based in Vancouver,
British Columbia. Enigma is engaged in the business of developing security
applications for cyber systems focusing on the mobile smartphone markets. Under
the terms of the Share Exchange and Royalty Agreement, Wolverine will also
receive a royalty equal to 25% of gross revenue received by Enigma from the
exploitation of Enigmas planned Enigma SECURE mobile security application for
the protection against unauthorized computer intrusion and fraud on wireless
devices and mobile smartphones.
The closing of the Share Exchange and Royalty Agreement is
subject to Enigma completing a financing of USD$2,500,000, and to Wolverine
increasing its authorized capital of common stock to allow for the issuance of
the 300,000,000 consideration shares. As at the date of this 10-K, neither the
contemplated financing nor the authorized capital increase has been completed,
and the Share Exchange and Royalty Agreement has not closed. However, if the
agreement were to close, based on the number of the Companys current issued and
outstanding shares, Enigma would acquire 46% of the Companys voting
securities.
The Enigma SECURE application is not yet commercially
available and remains in development. The application is built using
proprietary, patent protected fifth generation programming language (5GL) and is
compatible with Apple iOS, Android and Blackberry operating systems. As of the
date of this 10-K, third party testing of the application has been completed and
Wolverine anticipates that the application will be available for commercial
download within 10 months following completion of the USD$2,500,000 private
placement contemplated by the Share Exchange and Royalty Agreement.
The Share Exchange and Royalty Agreement may be terminated if
the transaction does not close by December 31, 2017, unless extended by mutual
agreement of the parties.
Significant Acquisitions and Dispositions
Cache River Property
The Cache River property is located on NTS Map Sheet 13F/04 in the Electoral District of Lake Melville in south central Labrador, Canada, approximately 120 road kilometers west of the community of Happy Valley-Goose Bay, the regional hub and business center. The 90% owned Cache River property was originally acquired by Wolverine Exploration in 2007 through a combination of optioning third party claims and by staking. The property, which originally consisted of 522 claims, was downsized in 2012 to a single mineral license 013472M comprising 6 claims or 150 hectares. The property is in currently in good standing and additional exploration expenditures of $392.96 are required to be incurred on or before May 17, 2020. The next assessment report on the property is due July 16, 2018 and a renewal fee of $300.00 is due May 17, 2022.
5
We are
not currently conducting any exploration on the Cache River Property.
Our Current Business
We are an exploration stage mining company engaged in the
identification, acquisition, and exploration of metals and minerals with a focus
on base and precious metals. Our current operational focus is to raise
sufficient funds to continue exploration activities on our property in Labrador,
Canada, known as the Cache River Property. We expect to review other potential
exploration projects from time to time as they are presented to us.
Concurrent with our exploration activities we will continue to
evaluate opportunities to diversify our business through merger or acquisition,
and to assist Enigma to raise the $2,500,000 in financing required to complete
our reverse acquisition pursuant to the Share Exchange and Royalty
Agreement.
On April 19, 2016, Wolverine entered into a Share Purchase
Agreement with our Director, David Chalk, pursuant to which we have agreed to
issue in a private placement 400,000,000 shares of our common stock in
consideration for one-third of the net proceeds that Mr. Chalk may realize from
the sale of Mr. Chalks 15% equity interest in Decision-Zone Inc., a privately
held cyber-security software company based in Ontario, Canada. The Agreement is
subject to our Company increasing its authorized capital to allow for the
issuance of the consideration shares. As of the date of this filing, the
agreement has not yet closed.
Our business is conducted by independent contractors which
include our officers and directors, among others. As of May 31, 2017, the
company had three consultants (PubCo Services Inc. (Richard Haderer), Texada
Consulting Inc. (Bruce Costerd), and David Chalk engaged on a non-exclusive,
part time basis, and several other IR, administrative, and accounting
consultants who are engaged on an intermittent, as needed basis. Our business
plan does not anticipate that we will hire a large number of employees or that
we will require extensive office space. We have to date, and plan to continue to
acquire most of the industry and geological expertise we require through third
party contractual relationships with other companies, which will act as
operators of our various interests. Although this exposes us to certain risks on
behalf of those operators, it also allows us to participate in the often unique
experience and knowledge that local persons have related to certain
properties.
The Companys objectives for the next twelve months include:
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with respect to the Cache River Property, a program of
prospecting, followed by trenching (if warranted) is recommended to field
check all remaining IP anomalies prior to outlining additional diamond
drill holes;
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Investigation of joint venture opportunities or other
financing mechanisms to provide funding for continuing exploration of our
mineral properties and for our transaction with Enigma.
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6
We have suffered recurring losses from operations and
anticipate generating loses for the foreseeable future. The continuation of our
business is dependent upon obtaining further financing, completing a successful
program of exploration and/or development, and, finally, achieving a profitable
level of operations. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations.
Mineral Properties
Summary
The Company has one current mineral project known as the Cache
River Property. We have not yet determined if the Cache River Property contains
mineral reserves that are economically recoverable.
Cache River Property Labrador, Canada
Technical Report
Wolverine commissioned G Timothy Froude, B.Sc., P. Geo.., a
licensed member of the Professional Engineers and Geoscientists of Newfoundland
and Labrador to complete a Technical Report on the Cache River Property. The
Technical Report, a report compliant with National Instrument 43-101, is dated
March 18, 2015 and has been filed on SEDAR at www.sedar.com in conjunction with
this Prospectus. The following information concerning the Cache River Property
is derived from the Technical Report. The scientific and technical information
contained in this 10-K relating to the Cache River Property is supported by the
Technical Report, which is subject to certain assumptions, qualifications, and
procedures described therein.
Property Description and Location
The Cache River Property is located about 120 kilometres (75
miles) west of Goose Bay, Labrador, a small town of 9,000 people on the Atlantic
Coast of northern Canada. It takes approximately one and a half to two hours to
drive to the Cache River Property from Goose Bay.
The Cache River Property lie within NTS map sheets 13E/01 and
13F/04 and extends approximately from 53o 11 08 N latitude and 62o 11 56 W
longitude to 53o 06 34 N latitude and 61o 57 02 W longitude.
Goose Bay features an international airport. From there, the
Cache River Property can be accessed directly from the Trans-Labrador Highway.
The Cache River Property are easily accessible by the Trans-Labrador Highway,
which runs through the central portion of the Cache River Property. The
Trans-Labrador Highway is a well maintained Provincial Highway with a gravel
surface. There are no gas stations between Goose Bay and Churchill Falls, the
next major community located 290 kilometres (180 miles) to the west of Goose Bay
and 160 kilometres (105 miles) to the west of the Labrador Claims.
Access to the Cache River Property is possible for most of the
year given the proximity to Goose Bay and the fact that the highway is well
maintained. Airborne geophysical surveys are best performed either in late
winter (March-April) or during the summer (June-August). Ground geophysical
surveys should be scheduled to avoid freeze-up (November-December) and breakup
(late April to early June). Ground geological surveys are best conducted with no
snow cover (mid June to mid November).
7
Figure 1. Cache River Property Location
Description of Claims
The Cache River Property consists of a total of 6 mineral
claims held under a single Licence (13472M) as described in Table 1 below. A
layout of the claims is shown in Figure 2 below.
Table 1. Summary of the Claims.
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Number
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# of Claims
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NTS
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Area
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Good to Date
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(hectares)
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013472M
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6
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13F/04
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150
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05-17-2020
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In the Province of Newfoundland and Labrador a mineral claim
consists of a 25 hectare square measuring 500 meters per side. A single license
can contain from one to 256 claims. The claims are unencumbered and in good
standing and there are no third party conditions which affect the claims other
than conditions defined by the Province of Newfoundland and Labrador described
below. The claims together make up an aggregate area of 2,825 hectares. We have
no insurance covering the claims. Management believes that no insurance is
necessary since the claims are unimproved and contain no buildings or
improvements.
8
Figure 2 Cache River Property Claims Location
There is no assurance that a commercially viable mineral
deposit exists on the Cache River Property. Further exploration will be required
before an evaluation as to the economic feasibility of the Cache River Property
is determined. Our consulting geophysicist has written a report and provided us
with recommendations of how we should explore the property. Until management can
validate otherwise, the property is without known reserves.
Conditions to Retain Title to the Cache River Property
The claims are currently in good standing with the Department
of Natural Resources and no exploration expenditures are required until May 17,
2020. The fifteen year renewal fee of $50 per claim is due on May 17, 2020.
History of Labrador and the Cache River Property
According to the report prepared by our consulting
geophysicist, the geologic setting is based on information available from the
Geological Survey of Canada (DNR Open File 013F/0055) and the Government of
Newfoundland and Labrador (Open File 013F/0061). The regional geology as
described by both government reports contains very little detail because the
Trans-Labrador Highway was under construction during much of the mapping
initiative, opening in 1992.
Also, the area has seen only limited geologic mapping on a
regional scale, in part due to the remoteness of the area and the timing of the
Federal and Provincial mapping initiatives that preceded construction of the
Trans-Labrador Highway. The mapped geology within the area is part of a regional
1:500,000 compilation undertaken by the Newfoundland and Labrador Provincial
Government during the early 1990s. The survey area is located outside of the
area of detailed mapping, in which case geologic mapping has been taken from
previous publications, most notably a Federal Government regional mapping program from
1990-1994. During the period 1990 to 1994 the area was regionally mapped by the
Geological Survey of Canada and by the Mines and Energy Branch of the
Newfoundland and Labrador Government. Geologic mapping was performed on a very
regional scale, due in part to the remoteness of the area (away from the
Trans-Labrador Highway) and the lack of outcrop. In summary there is very little
geological mapping within the survey area and there has never been a detailed
mapping program.
9
Exploration History
In October, 2007 we completed an airborne survey of the Cache
River Property. The airborne survey identified 8 conductive targets which
warranted ground follow-up.
In the fall of 2009 we carried out geological reconnaissance
along with prospecting and sampling on three of our eleven licenses on the Cache
River Property. Some, but not all of the known mineralized zones were sampled as
this was more of a reconnaissance exercise until a more systematic program is
put in place. In addition, to the usual base metal sampling, scintillometer
surveys were done on the exposed rock cuts along the highway and selected areas
of the southern portions of the three licenses.
Work on the property during June of 2010 consisted of
prospecting, sampling and geological reconnaissance on and around
electro-magnetic and radiometric anomalies that were identified during the 2007
airborne survey. Earlier sampling on rock cuts along the highway had shown
copper and gold values that warranted further exploration.
Continued prospecting during July 2010 on other areas of the
property has revealed additional outcrops containing malachite alteration on the
western end of the property near anomaly number one.
In August and September 2010 a follow up program of diamond
drilling was contracted to an Ontario, Canada, drilling company and a total of
522.5 meters was drilled in 6 holes.
In November and December 2010 an induced polarization (IP)
Survey was completed on two grids located on the property. Grid 1 consisted of
19, 1.6 km lines oriented at 360 degrees. 5 of those lines were cut short (1.2
km) due to a large lake that was not completely frozen at the time of the survey
and was considered unsafe. A 1.8 km base line oriented at 090 Degrees crossed
the centre of the grid. Grid 2 consisted of 13 lines that varied from ~750 m, in
the south to 1500 m in the north. The lines were oriented at 090 degrees with a
baseline 1.2 km long, oriented at 360 Degrees.
In June of 2011 we conducted a prospecting program which marked
the eleven drill locations in the anomalous areas which were identified by the
Induced Polarization Survey completed in late 2010.
In the fall of 2011 a follow up program of diamond drilling was
contracted to an Ontario, Canada drilling company and a total of 271 meters was
drilled in 4 holes.
In the fall of 2012 a follow up program of diamond drilling
consisting of two holes was drilled by Innu-Cartwright Drilling Limited
Partnership.
Exploration Results
Disseminated mineralization consisting mainly of pyrite,
pyrrhotite and chalcopyrite were detected in several areas of the property.
Mineralization was first noted in roadside rock cuts, samples were taken but the
GPS location was not recorded as none were available, only a generalized
location within several metres was given to the geologist.
After we acquired the property an airborne survey was completed
and several anomalies were detected. Wolverine then engaged a geologist to
supervise the prospecting, trenching and drilling program. Prospecting revealed
other zones of disseminated mineralization, mainly in rock cuts along the
highway which had the best exposure as most of the property is covered by marsh
and forested overburden.
10
Diamond drilling on two airborne anomalous areas revealed
disseminated mineralization in four of the six drill holes.
We then conducted an induced polarization (IP) survey on two
selected areas that detected 23 anomalous zones. Plans are underway to conduct
an additional drill program to test the strongest areas later this spring.
Of the four holes drilled in the fall of 2011, two had minor
indications of sulphide mineralization with magnetite while one contained
disseminated mineralization consisting of blebs of chalcopyrite and pyrite for
approximately 37 metres (121 feet).
The two anomalies drilled in the fall of 2012 at approximately
50 degree angles did not intersect sufficient amounts of mineralization to
account for the magnitude of that picked up by the IP survey. There are very
minor amounts of pyrite and the rock is slightly magnetic with only background
radioactivity.
Quality Assurance/Quality Control
All drill core samples were cut lengthwise with a rock saw.
Half of the sample was retained for future reference and the other was sent by
Canada Post, insured and delivered to the laboratory. Sample sections were
measured by depth markers in the core boxes and confirmed by the geologist.
Results were mailed back to the geologist and confirmed by the chief chemists
signature. A portion of the laboratory sample was retained at the laboratory for
a period of one year.
Surface bedrock sample sites were selected by geologists and
prospectors. GPS readings recorded the locations. Samples were stored in new
industrial plastic sample bags with the sample number which was also recorded in
note books. Samples were again sent by Canada Post with the same procedure noted
above.
Present Condition of the Cache River Property
The mineralization found to date on the Cache River Property
consists primarily of copper and gold mineralization in sulphide with
associated pyrite (a non-economic sulphide mineral). There are also a number of
malachite veins (and malachite stained outcrops).
The country rocks have been identified as meta-sedimentary
gneiss. Locally, gabbros and diorites have been identified by surface
prospecting.
Based on the mineralization and the known geologic rock types,
there appear to be three possible deposit types that could host mineralization
within the Cache River Property; 1) porphyry copper-gold in sulphide, 2)
volcanogenic (Cu-Pb-Zn) massive sulphide, or 3) magmatic nickel-copper sulphide.
Copper-gold (Cu-Au) deposits occur within sedimentary rocks
when a stock intrudes into the sediments and heats up the ground water. The
heated fluids pick up copper and other metals as they percolate through
fractures opened up within the sediments. Mineralization is mostly disseminated,
but significant veins of chalcopyrite, rich in gold, are also present. The
presence of chalcopyrite in meta-sediment and malachite staining are excellent
indicators for a copper-gold system.
VMS deposits are commonly formed by deposition of hot metals
into seawater from volcanic vents on the seafloor. The main metals include
copper, zinc, lead, gold and silver. Within the Cache River Property there are
no mapped volcanic rocks, although the known mineralization has been found
within gabbro and diorite.
Magmatic nickel-copper sulphide deposits are hosted in mafic to
ultramafic rocks such as gabbro, norite, and troctolite. Other rock types
commonly associated with these host rocks are diorites and anorthosites. Within
the Cache River Property chalcopyrite mineralization was identified in a gabbro
and separately associated with a diorite dyke.
11
The Cache River Property are almost completely covered by
overburden and tree cover. Rock outcrops are best observed along the highway
where they have been uncovered.
The climate within the area is typically northern with short
hot summers and long cold winters. Winter temperatures can range from -15
o
C to -35
o
C and occasionally fall to below -42
o
C.
There is no equipment, infrastructure or electricity currently
on the property.
There have been no previous airborne surveys in this area that
are within 35 kilometers (22 miles) of the Cache River Property. The area would
have been covered as part of the Federal Government regional airborne magnetic
survey, but this survey would not have the sufficient resolution to identify
magnetic units less than 1 kilometer in size and could not detect any conductive
mineralization.
Geology of the Cache River Property
Geologically the area is mapped as early to late Proterozoic
meta-sediments that have been metamorphosed to gneisses. Major gabbroic and
anorthositic intrusives have intruded the gneisses several kilometers to the
east and local gabbros and diorites occur throughout the area along with several
quartz veins. Large tourmaline crystals have also been identified on the
property. The area has little outcrop and is covered by overburden, generally
sand and gravel. Spruces trees are abundant but are not very tall.
The presence of several copper showings and malachite staining
in the limited outcrop suggests that a mineralizing event of copper and gold has
intruded into the meta-sedimentary rocks. The nature of the mineralization is
likely to be copper veins and disseminations with associated gold. It is also
possible that magmatic nickel and copper mineralization could be present with
associated platinum group elements within gabbros.
Environmental Liabilities
Management is not aware of any environmental liabilities, which
may have effect on the Company. The Company intends to fully comply with all
environmental regulations.
Recommendations
The work completed to date on the Cache River property has
identified an area that could host significant copper and gold mineralization in
a previously unexplored area. A program of prospecting, followed by trenching
(if warranted) is recommended to field check all remaining IP anomalies prior to
outlining additional diamond drill holes. Drill holes will be prioritized based
on the results of the ground surveys noted above. A proposed $100,000 program is
recommended to complete the entire program including 300 meters of diamond
drilling
Phase 1 Program Proposed Expenditures
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$
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CDN
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Project
Management/Staff Costs
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$
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7,500
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Geologists/technicians (mapping, prospecting
compilation, reporting)
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$
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18,000
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|
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Geochemistry - Assaying
rock/core (approx. 200 samples)
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$
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6,000
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Field Costs (transportation, accommodation,
fuel, etc.)
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$
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7,500
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Trenching
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$
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7,500
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Diamond Drilling 300 meters all inclusive
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$
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42,000
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Subtotal:
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$
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88,500
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Contingency ~ 13%
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$
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11,500
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Phase 1 Total
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$
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100,000
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Subsidiaries
We do not have any subsidiaries.
12
Intellectual Property
We do not own, either legally or beneficially, any patent or
trademark.
REPORTS TO SECURITY HOLDERS
We are not required to deliver an annual report to our
stockholders but will voluntarily send an annual report, together with our
annual audited financial statements upon request. We are required to file
annual, quarterly and current reports, proxy statements, and other information
with the Securities and Exchange Commission. Our Securities and Exchange
Commission filings are available to the public over the Internet at the SECs
website at
http://www.sec.gov
.
The public may read and copy any materials filed by us with the
SEC at the SECs Public Reference Room at 100 F Street, NE, Washington DC 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. We are an electronic filer. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The Internet address of the site is
http://www.sec.gov
.
Much of the information included in this annual report includes
or is based upon estimates, projections or other forward looking statements.
Such forward looking statements include any projections and estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other forward looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward looking statements.
If we do not obtain additional financing, the business plan
will fail.
Our current operating funds are insufficient to complete the
next phases of our proposed exploration program on our Labrador mineral claims.
We will need to obtain additional financing in order to complete our business
plan and our proposed exploration program. Our business plan calls for
significant expenses in connection with the exploration of the Labrador Claims.
We have not made arrangements to secure any additional financing.
Because we have only recently commenced business operations,
we face a high risk of business failure and this could result in a total loss of
your investment.
We are not currently conducting any exploration and are in the
initial stages of exploration of the Labrador Claims, and thus has no way to
evaluate the likelihood whether our company will be able to operate our business
successfully. Our Company was incorporated on February 23, 2006 and to date we
have been involved primarily in organizational activities, obtaining financing
and preliminary exploration of the Labrador Claims. We have not earned any
revenues and we have never achieved profitability as of the date of this annual
report. Potential investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in the light of
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that our company plans
to undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration and additional costs and expenses
that may exceed current estimates. We have no history upon which to base any
assumption as to the likelihood that its business will prove successful, and we
can provide no assurance to investors that our company will generate any
operating revenues or ever achieve profitable operations. If our company is
unsuccessful in addressing these risks its business will likely fail and you
will lose your entire investment in this offering.
13
Because our company has only recently commenced business
operations, we expect to incur operating losses for the foreseeable future.
Our company has never earned any revenue and our company has
never been profitable. Prior to completing exploration on the Labrador Claims,
we may incur increased operating expenses without realizing any revenues from
the Labrador Claims, this could cause our company to fail and you will lose your
entire investment in this offering.
If we do not find a joint venture partner for the continued
development of our mineral claims, we may not be able to advance exploration
work.
If the results of the exploration program are successful, we
may try to enter into a joint venture agreement with a partner for the further
exploration and possible production of the Labrador Claims. Our company would
face competition from other junior mineral resource exploration companies who
have properties that they deem to be attractive in terms of potential return and
investment cost. In addition, if our company entered into a joint venture
agreement, our company would likely assign a percentage of our interest in the
Labrador Claims to the joint venture partner. If our company is unable to enter
into a joint venture agreement with a partner, our company may fail and you may
lose your entire investment in this offering.
Because of the speculative nature of mineral property
exploration, there is substantial risk that no commercially viable deposits will
be found and our business will fail.
Exploration for base and precious metals is a speculative
venture involving substantial risk. We can provide investors with no assurance
that the Labrador Claims contain commercially viable mineral deposits. The
exploration program that our company will conduct on the Labrador Claims may not
result in the discovery of commercial viable mineral deposits. Problems such as
unusual and unexpected rock formations and other conditions are involved in base
and precious metal exploration and often result in unsuccessful exploration
efforts. In such a case, we may be unable to complete our business plan and you
could lose your entire investment.
Because of the inherent dangers involved in base and
precious metal exploration, there is a risk that our company may incur liability
or damages as we conducts our business.
The search for base and precious metals involves numerous
hazards. As a result, our company may become subject to liability for such
hazards, including pollution, cave-ins and other hazards against which we cannot
insure or against which we may elect not to insure. Our company currently has no
such insurance nor do we expect to get such insurance in the foreseeable future.
If a hazard were to occur, the costs of rectifying the hazard may exceed our
asset value and cause our company to liquidate all of our assets resulting in
the loss of your entire investment.
Because access to our companys mineral claims is often
restricted by inclement weather, we will be delayed in exploration and any
future mining efforts.
Access to the Labrador mineral claims is restricted to the
period between May and November of each year due to snow in the area. As a
result, any attempts to visit, test, or explore the property are largely limited
to these few months of the year when weather permits such activities. These
limitations can result in significant delays in exploration efforts, as well as
mining and production in the event that commercial amounts of minerals are
found. Such delays can result in our companys inability to meet deadlines for
exploration expenditures as defined by the Province of Newfoundland and
Labrador. This could cause the business venture to fail and the loss of your
entire investment unless our company can meet the deadlines.
As our company undertakes exploration of the Labrador
Claims, we will be subject to compliance with government regulation that may
increase the anticipated time and cost of its exploration program.
There are several governmental regulations that materially
restrict the exploration of minerals. Our company will be subject to the mining
laws and regulations as contained in the Mineral Act of the Province of
Newfoundland and Labrador as we carry out our exploration program. We may be
required to obtain work permits, post bonds and perform remediation work for any
physical disturbance to the land in order to comply with these regulations.
While our companys planned exploration program budgets for
regulatory compliance, there is a risk that new regulations could increase our
time and costs of doing business and prevent our company from carrying out our
exploration program.
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Because market factors in the mining business are out of our
control, our company may not be able to market any minerals that may be found.
The mining industry, in general, is intensely competitive and
we can provide no assurance to investors even if minerals are discovered that a
ready market will exist from the sale of any base or precious metals found.
Numerous factors beyond our control may affect the marketability of base or
precious metals. These factors include market fluctuations, the proximity and
capacity of natural resource markets and processing equipment, government
regulations, including regulations relating to prices, taxes, royalties, land
tenure, land use, importing and exporting of minerals and environmental
protection. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may result in our company not receiving an
adequate return on invested capital and you may lose your entire investment.
Because our company holds a significant portion of our cash
reserves in United States dollars, we may experience weakened purchasing power
in Canadian dollar terms.
Our company holds a significant portion of our cash reserves in
United States dollars. Due to foreign exchange rate fluctuations, the value of
these United States dollar reserves can result in both translation gains or
losses in Canadian dollar terms. If there was to be a significant decline in the
United States dollar versus the Canadian Dollar, our US dollar purchasing power
in Canadian dollars would also significantly decline. Our company has not
entered into derivative instruments to offset the impact of foreign exchange
fluctuations.
Our auditors have expressed substantial doubt about our
companys ability to continue as a going concern.
The accompanying financial statements have been prepared
assuming that our company will continue as a going concern. As discussed in Note
1 to the May 31, 2017 financial statements, our company was incorporated on
February 23, 2006, and has never generated any revenue, has a working capital
deficiency, and has incurred operating losses since inception. As a result, our
companys auditor has expressed substantial doubt about the ability of our
company to continue as a going concern. Continued operations are dependent on
our ability to complete equity or debt financings or generate profitable
operations. Such financings may not be available or may not be available on
reasonable terms. Our financial statements do not include any adjustments that
may result from the outcome of this uncertainty.
Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations which may limit a stockholders
ability to buy and sell our stock.
Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in
the secondary market for the stock that is subject to these penny stock rules.
Consequently, these penny stock rules may affect the ability of broker-dealers
to trade our securities. We believe that the penny stock rules discourage
investor interest in and limit the marketability of our common stock.
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