UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
May 31, 2009
[ ]
TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to
[ ]
Commission file number
333
-152343
WOLVERINE EXPLORATION INC.
(Exact name of registrant as specified in its charter)
Nevada
|
98-0569013
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
|
4055 McLean Road, Quesnel, British Columbia, Canada
|
V2J 6V5
|
(Address of principal executive offices)
|
(Zip Code)
|
Registrant's telephone number, including area code:
|
250.992.6972
|
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
|
Name of Each Exchange On Which Registered
|
N/A
|
N/A
|
Securities registered pursuant to Section 12(g) of the Act:
N/A
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act
Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of
the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant
was required to file such reports) and (2) has been
subject to such filing requirements for the last 90 days.
Yes
[X] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if
any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-K (§229.405
of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit
and
post such files).
Yes [ ] No
[ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definition of large accelerated filer,
accelerated filer and smaller reporting company
in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ]
|
Accelerated
filer
[ ]
|
Non-accelerated filer [ ]
|
Smaller reporting company
[X]
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The value of Common Stock held by non-affiliates of the
Registrant on September 29, 2009 was $1,163,400, based
on a deemed price of
$0.03 per share.. For purposes of this computation, all executive officers and
directors have
been deemed to be affiliates. Such determination should not
be deemed to be an admission that such executive
officers and directors are,
in fact, affiliates of the Registrant.
Indicate the number of shares outstanding of each of the
registrants classes of common stock as of the latest
practicable date.
68,630,000 shares of common stock issued & outstanding
as of September 29, 2009
DOCUMENTS INCORPORATED BY REFERENCE
None.
2
TABLE OF CONTENTS
3
PART I
Item
1. Business
This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are stated in United States Dollars
(US$) 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, mean Wolverine Exploration Inc., a Nevada corporation, unless
otherwise indicated.
Corporate History
Our company was incorporated in the State of Nevada on February
23, 2006.
On February 28, 2007, we entered into a vend-in agreement with
Shenin Resources Inc., a private Canadian corporation, for the purchase of a 90%
interest 516 mineral claims located in Labrador Canada. The purchase price paid
to Shenin was $374,000 satisfied by the issuance of 34,000,000 shares of our
common stock at a fair value of $0.01 per share and a note payable of $34,000.
Under the terms of the vend-in agreement we are required to incur the following
expenditures on the claims: (i) CDN $150,000 on or before March 1, 2008; (ii)
CDN $200,000 on or before March 1, 2009, and (iii) CDN $250,000 on or before
March 1, 2010; provided that (iv) any excess amount spent in one year may be
carried forward and applied towards fulfillment of the expenditure required in
the later year. Shenin has also granted our company a first right of refusal to
purchase a 90% interest in all further property in Labrador Canada that Shenin
may obtain an interest in from time to time. As of the date of this annual
report, we have made the first payment of $250,000 and have paid $92,989 towards
the second payment due March 1, 2009.
To date, we have incurred expenditures of $244,593 (Cdn
$242,989) pursuant to the terms of the vend-in agreement.
On August 27, 2009 we signed an amending agreement with Shenin
Resources Inc. which waives all of the remaining work commitments required under
the vend-in agreement subject to us incurring sufficient exploration
expenditures on the claims to keep them in good standing with the Province of
Newfoundland and Labrador.
On May 17, 2007, we acquired six mineral claims from Richard
Haderer for $321 which are contiguous to the Shenin Claims.
On August 15, 2007, we registered our company as an
extra-provincially registered company in the Province of Newfoundland and
Labrador for the purpose of being able to register the Shenin Claims and the
Haderer Claims in the name of our company and for the purpose of being able to
conduct our business in the Province of Newfoundland and Labrador.
4
Our Current Business
We are an exploration stage company engaged in the business of
acquisition and exploration of base and precious metal mineral properties. Our
current exploration is focused on the Shenin Claims and the Haderer Claims,
mineral properties located in Labrador, Canada. We have not yet determined
whether the Labrador Claims contain mineral reserves that are economically
recoverable.
Shenin Claims and Haderer Claims, Located in Labrador,
Canada
Location and Means of Access to the Claims
The Shenin Claims and the Haderer Claims (collectively, the
Labrador Claims
) are 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 Labrador Claims from Goose Bay.
The Labrador Claims lie within NTS map sheets 13E/01 and 13F/04
and extends approximately from 53
o
11 08 N latitude and
62
o
11 56 W longitude to 53
o
06 34 N latitude and
61
o
57 02 W longitude.
Goose Bay features an international airport. From there, the
Labrador Claims can be accessed directly from the Trans-Labrador Highway. The
Labrador Claims are easily accessible by the Trans-Labrador Highway, which runs
through the central portion of the Labrador Claims. 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 Labrador Claims 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).
5
Figure 1. The Claims are located approximately 120
kilometers (75 miles) west of Goose Bay, Labrador.
Description of Labrador Claims
The Labrador Claims are unencumbered and in good standing and
there are no third party conditions which affect the Labrador Claims other than
conditions defined by the Province of Newfoundland and Labrador described below.
The Labrador Claims together make up an aggregate area of 33,482 acres. We have
no insurance covering the Labrador Claims. Management believes that no insurance
is necessary since the Labrador Claims are unimproved and contain no buildings
or improvements. The Labrador Claims cover an area with approximate dimensions
of 20 kilometers east-west (12.5 miles) and 10 kilometers north-south (6.25
miles).
The Labrador Claims consist of a total of 522 mineral claims
covering five separate licenses as described in Table 1 below. A layout of the
Labrador Claims is shown in Figure 2 below.
Table
1. Summary of the Claims.
|
Number
|
# of Claims
|
NTS
|
Area
|
Good to Date
|
|
|
|
(acres)
|
|
013472M
|
6
|
13F/04
|
371
|
17-05-2012
|
012427M
|
20
|
13E/01
|
1,235
|
18-08-2011
|
012425M
|
82
|
13E/01
|
5,065
|
18-08-2011
|
013039M
|
254
|
13E/01
& 13F/04
|
16,927
|
05-02-2012
|
013187M
|
160
|
13E/01
& 13F/04
|
9,884
|
14-03-2012
|
6
Figure 2. The Claims extend for a distance of
approximately 20 kilometers (12.5 miles) along the Trans-Labrador Highway.
There is no assurance that a commercially viable mineral
deposit exists on the Labrador Claims. Further exploration will be required
before an evaluation as to the economic feasibility of the Labrador Claims is
determined. Our consulting geophysicist has written a report and provided us
with recommendations of how we should explore the Labrador Claims. Until
management can validate otherwise, the Labrador Claims are without known
reserves. Management is planning a five phase exploration program as recommended
by its consulting geophysicist. We have completed the first three phases of the
exploration program on the Labrador Claims.
Conditions to Retain Title to the Labrador Claims
The Labrador Claims have varying expiry dates. In order to
maintain the Labrador Claims in good standing it will be necessary for us to
coordinate an agent to perform and record valid exploration work with value of
CDN$200 per claim in anniversary year 1, CDN$250 per claim in anniversary year
2, CDN$300 per claim in anniversary year 3, CDN$350 per claim in anniversary
year 4, CDN$400 per claim in anniversary year 5, CDN$600 per claim in
anniversary years six to ten inclusive, CDN$900 per claim in anniversary years
11 to 15 inclusive and CDN$1,200 per claim in anniversary years 16 to 20
inclusive. Failure to perform and record valid exploration work on the
anniversary dates will result in forfeiture of title to the Labrador Claims.
History of Labrador and the Labrador Claims
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.
7
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.
In 2002 the Labrador Claims were visited by Roderick Mercer on
behalf of Tundra Properties. Mr. Mercer spent several days reviewing mineral
showings along the Trans-Labrador Highway in an attempt to rediscover a
mineralized sub-crop that had been exposed during road construction but later
buried. The sub-crop was described as a gabbro containing pyrite, chalcopyrite
and bornite mineralization. One sample returned 2% Cu and 0.5 g/t Au.
Prospecting by Mr. Mercer did not find any similar mineralized showings in the
area but did uncover several other showings along the Trans-Labrador Highway
that returned significant values for copper when assayed.
During the period October 15, 2004 and October 19, 2004 the
Labrador Claims were revisited by Mr. Mercer on behalf of Tundra Properties.
During this re-visit to the Labrador Claims, a trench was blasted to establish
the extent of copper mineralization that had returned high assay values (3.3%
Cu) during the 2002 program. Trenches were located in outcrop approximately 100
meters from the roadside mineralization. The trench area was grubbed off using
an excavator. Holes were drilled to a maximum 4 meters below surface and were
loaded with explosives and blasted. In total three separate areas were excavated
and blasted. The trenches were inspected and sampled with assays returning up to
0.42% Cu. It could not be determined whether the area sampled was linked to the
mineralization exposed along the roadside.
Mr. Mercer concluded that the trenching program had failed to
prove an extension to the roadside mineralization. It is also apparent, from
reviewing Mr. Mercers Prospecting Report, that the lack of outcrop made it
difficult to advance the prospect through a trenching program.
Present Condition of the Labrador Claims
The mineralization found to date on the Labrador Claims
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 Labrador Claims; 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 malchite 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 Labrador Claims there are no
mapped volcanic rocks, although the known mineralization has been found within
gabbro and diorite.
8
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 Labrador Claims chalcopyrite mineralization was identified in a gabbro and
separately associated with a diorite dyke.
The Labrador Claims 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 Labrador Claims.
There have been no previous airborne surveys in this area that
are within 35 kilometers (22 miles) of the Labrador Claims. 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 Labrador Claims
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
Labrador Claims. The area has little outcrop and is covered by overburden,
generally sand and gravel. Spruces trees are abundant but are not very tall.
Limited prospecting and surface trenching in 2002 and again in
2004 failed to define a source of the copper mineralization, although additional
sub-crop samples were identified containing some copper and gold values. 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.
Competition
The mining industry is intensely competitive. We 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 funds.
There are other competitors that have operations in the area 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
Mining operations and exploration activities are subject to
various national, state, provincial and local laws and regulations in Canada and
the United States, as well as other jurisdictions, 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 believe that we are and will continue to be in compliance in
all material respects with applicable statutes and the regulations passed in
Canada and the United States. There are no current orders or directions relating
to our company with respect to the foregoing laws and regulations.
9
Employees
Currently our only employees are our directors, officers,
office administrator and an investor relations consultant. We do not expect any
material changes in the number of employees over the next 12 month period. We do
and will continue to outsource contract employment as needed.
Going Concern
We anticipate that additional funding will be required in the
form of equity financing from the sale of our common stock. At this time, we
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the sale of our common stock or through a loan from our
directors to meet our obligations over the next twelve months. We do not have
any arrangements in place for any future equity financing.
Subsidiaries
We do not have any subsidiaries.
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 SEC's
website at http://www.sec.gov.
The public may read and copy any materials filed by us with the
SEC at the SEC's 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
.
Item
1A. Risk Factors
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.
10
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 recently begun 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.
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.
11
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
or by the vend-in agreement with Shenin Resources Inc. 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.
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 financial statements, our company was incorporated on February 23,
2006, and does not have a history of earnings, and as a result, our companys
auditor have 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.
12
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.
Without a public market there is no liquidity for our shares
and our shareholders may never be able to sell their shares which would result
in a total loss of their investment.
Our common shares are not list on any exchange or quotation
system. We have identified a market maker who has filed a Form 211 for us. At
the present time, none of our security holders are able to sell their shares
other than through private transactions. Selling shares privately might result
in our selling security holders not receiving the price per share that they
might have obtained if the shares were quoted on the OTCBB. This will occur as
follows:
-
The market maker has filed a Form 211 for us with FINRA which will
hopefully lead to us obtaining a quotation on the OTCBB; and
-
We will have to be current in our financial statements to be quoted on the
OTCBB and hence we will be responsible for filing Forms 10-K and 10-Q on a
periodic basis as required.
We have identified a market maker and have commenced the
process of being quoted on the OTCBB. The length of time this will take is
unknown to us but we estimate approximately two to four weeks. There is the
distinct possibility that our company will never be quoted on the OTCBB.
Item
1B. Unresolved Staff
Comments
None.
Item
2.
Properties
We do not own any real property. Our principal business offices
are located at 4055 McLean Road, Quesnel, British Columbia Canada V2J 6V5. Our
office space is currently provided by a relative of a director of our company at
a cost of Cdn$25 per month. We believe that our current lease arrangements
provide adequate space for our foreseeable future needs. In addition, Cdn $1,000
per month is paid to Texada Consulting Inc. for an administrative office located
in Richmond, BC. Texada Consulting Inc. is controlled by a major shareholder of
the Company.
13
Item
3. Legal Proceedings
Other than as set out below, our company is not a party to any
pending legal proceeding and no legal proceeding is contemplated or threatened
as of the date of this annual report.
Item
4. Submissions of
Matters to a Vote of Security Holders
There were no matters submitted to a vote of our security
holders either through solicitation of proxies or otherwise in the fourth
quarter of the fiscal year ended May 31, 2009.
PART II
Item
5. Market for Common
Equity and Related Stockholder Matters
No Public Market for Common Stock
There is presently no public market for our common stock. We
have identified a market maker and have commenced the process of being quoted on
the OTCBB. However, we can provide no assurance that our shares will be traded
on the OTCBB or, if traded, that a public market will materialize.
Stockholders of Our Common Shares
As of the date of this annual report, we have 132 registered
shareholders.
Stock Option Grants
To date, we have not granted any stock options.
Warrants
We have not issued and do not have outstanding any warrants to
purchase shares of our common stock.
Dividends
There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:
1.
|
we would not be able to pay our debts as they become due
in the usual course of business; or
|
|
|
2.
|
our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving the
distribution.
|
We have not declared any dividends, and we do not plan to
declare any dividends in the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation
Plans
We currently do not have any stock option or equity compensation
plans or arrangements.
Transfer Agent
Our common shares are issued in registered form. Empire Stock
Transfer, Inc. (Telephone: (702) 818-5898; Facsimile: (702) 974-1444 is the
registrar and transfer agent for our common shares.
14
On September 29, 2009, the list of stockholders for our shares
of common stock showed 132 registered stockholders and 68,630,000 shares of
common stock outstanding.
Purchase of Equity Securities by the Issuer and Affiliated
Purchasers
We did not purchase any of our shares of common stock or other
securities during the year ended May 31, 2009.
Recent Sales of Unregistered Securities
On June 25, 2008, Wolverine issued an aggregate of 1,100,000
shares of common stock to eight (8) non-affiliate non U.S. persons (as that
term is defined in Regulation S of the Securities Act of 1933) in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act
of 1933 and three (3) non-affiliate U.S. persons (as that term is defined in
Regulation S of the Securities Act of 1933) in reliance upon the exemptions
from registration provided by Section 4(2) of the Securities Act of 1933 and
upon Rule 506 of Regulation D of the Securities Act of 1933, at a price of $0.10
per share for aggregate cash proceeds of $110,000.
Purchase of Equity Securities by the Issuer and Affiliated
Purchasers
We did not purchase any of our shares of common stock or other
securities during our fourth quarter of our fiscal year ended May 31, 2009.
Item
6. Selected
Financial Data
As a smaller reporting company, we are not required to
provide the information required by this Item.
Item
7. Managements
Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our
audited financial statements and the related notes for the years ended May 31,
2009 and May 31, 2008 that appear elsewhere in this annual 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 annual report, particularly in the section entitled "Risk Factors"
beginning on page 10 of this annual report.
Our audited financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
Cash Requirements
There is limited historical financial information about us upon
which to base an evaluation of our performance. We are an exploration stage
company and have not generated any revenues from activities. We cannot guarantee
we will be successful in our business activities. Our business is subject to
risks inherent in the establishment of a new business enterprise, including
limited capital resources, possible delays in the exploration of our properties,
and possible cost overruns due to price and cost increases in services.
Over the next twelve months we intend to use any funds that we
may have available to fund our operations and conduct exploration on our Shenin
and Haderer Claims. We expect to review other potential exploration projects
from time to time as they are presented to us.
Not accounting for our working capital deficit of $352,421
as of May 31, 2009, we require additional funds of approximately $496,000 at
a minimum to proceed with our plan of operation over the next twelve months,
exclusive of any acquisition costs. As we do not have the funds necessary to
cover our projected operating expenses for the next twelve month period, we will
be required to raise additional funds through the issuance of equity securities,
through loans or through debt financing. There can be no assurance that we will
be successful in raising the required
15
capital or that actual cash requirements will not exceed our
estimates. We intend to fulfill any additional cash requirement through the sale
of our equity securities.
Our auditors have issued a going concern opinion for our year
ended May 31, 2009. This means that there is substantial doubt that we can
continue as an on-going business for the next twelve months unless we obtain
additional capital to pay our bills. This is because we have not generated any
revenues and no revenues are anticipated until we begin removing and selling
minerals. As we had cash in the amount of $673
and a working capital
deficit in the amount of $352,421 as of May 31, 2009, we do not have sufficient
working capital to enable us to carry out our stated plan of operation for the
next twelve months. We plan to complete debt financings and/or private placement
sales of our common stock in order to raise the funds necessary to pursue our
plan of operation and to fund our working capital deficit in order to enable us
to pay our accounts payable and accrued liabilities. We currently do not have
any arrangements in place for the completion of any debt financings or private
placement financings and there is no assurance that we will be successful in
completing any debt financing or private placement financing. Our success or
failure will be determined by what we find under the ground.
Exploration Plan
Our plan of operation for the next 12 months is to complete the
following five phase exploration program within the time periods specified,
subject to our company obtaining the additional funding necessary for the
continued exploration of the Labrador Claims. Currently, our company does not
have enough funds to complete Phase Four of our proposed exploration program in
the fall of 2009. The following is a brief summary of our five phase exploration
program.
|
1.
|
Phase One This phase of our companys exploration
program was completed in October 2007 at a cost of $7,012 (CDN$7,500).
Phase one consisted of prospecting, rock sampling, and assaying the rock
samples. As a result of the favorable results from this phase of the
exploration program, management decided to proceed with phase
two.
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|
|
|
|
2.
|
Phase Two - This phase of our companys exploration
program was completed in October 2007 at a cost of $187,915 (CDN$201,000).
Phase two consisted of an airborne survey of the Labrador Claims. As a
result of the favorable results from this phase of the exploration
program, management decided to proceed with phase three.
|
|
|
|
|
3.
|
Phase Three This phase of our company exploration
program consisted of a preliminary ground review completed in August 2008
by the project geologist, Ed Montague and a member of the Innu Development
Limited Partnership. A second year assessment report was completed and
filed with the Department of Natural Resources of the Province of
Newfoundland and Labrador. As a result of favorable results from this
phase of the exploration program, management has decided to proceed with
phase four.
|
|
|
|
|
4.
|
Phase Four This phase of our companys exploration
program will consist of prospecting, sampling, excavating and trenching as
outlined below at a total estimated cost of approximately $146,000 (Cdn
$166,000).
|
|
|
|
|
5.
|
Phase Five- Subject to positive results in phase four
this phase of our companys exploration program will consist of an IP
survey (Induced Polarization Survey) over anomalies identified in the
phase two airborne survey to determine drill locations for a drill program
at a total estimated cost of $350,000 (Cdn
$400,000).
|
The project consists of a detailed prospecting and sampling
program to be carried out on our mineral licenses during the fall of 2009.
Access to the area would be by the Trans Labrador Highway with personnel working
out of Goose Bay and would consist of a geologist and four experienced
prospectors. Under supervision of the geologist, the prospectors would work in 2
man teams and cover selected areas each day to avoid excessive overlap as
traverses would be controlled by GPS. Particular attention will be focused on
anomalous areas that were identified by the airborne survey completed in 2007.
Each prospector would be equipped with a scientillometer as some areas are known
to contain uranium, however gold and base metals would remain the principal
targets at present. As no
16
ground disturbance such as test pits or trenching is
contemplated, no government permits would be required for this prospecting
program.
The project also consists of excavating several trenches
located on 6 anomalous areas that were defined previously by airborne
geophysics. The number and locations of trenches will be defined by the
geologist. All trench locations will be located in close proximity to the Trans
Labrador Highway (Route 500) near Cache River, 110 to 140 kilometers west of
Goose Bay.
Excavation of the trenches will be done by an excavator. Once
the rock is exposed, a pressure washer will clean the surface and then examined
and sampled by a geologist. Sampling would ideally be a continuous linear v
cut with a rock saw to get a composite sample. A small, packsack type drill will
also be available to get core samples at depth.
The exposed bedrock will be mapped and photographed by the
geologist. Sampling of the linear cuts will be in meter length sections. IDLP is
purchasing a small packsack drill that will be utilized to get core samples at a
depth of a few feet to get below any weathering and into the fresh rock. Core
samples sections will be as directed by the geologist. All samples will be
numbered and packaged and sent to a laboratory for analysis. All samples will be
tested for IPC 30 elements as well as gold and PGEs. All of the samples will be
scanned with a scintillometer for uranium content.
The equipment and personnel required to implement the work will
be contracted out of Goose Bay, the nearest community to the project.
Government regulations stipulate that all exploration trenches
be backfilled as soon as possible after examination. This will be done prior to
demobilization of the heavy equipment.
As at May 31, 2009, we had a cash balance of $673. We will need
to raise additional financing to fund phase four of the proposed exploration
program to commence in fall 2009 and subject to positive results in phase four
additional financing for phase five of the proposed exploration program to
commence in 2010.
The continuation of our business is dependent upon obtaining
further financing, 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.
Purchase of Significant Equipment
We do intend to purchase mineral ore processing equipment over
the twelve months ending May 31, 2010.
Results of Operations for the Years Ended May 31, 2009 and
2008
The following summary of our results of operations should be
read in conjunction with our audited financial statements for the years ended
May 31, 2009 and 2008.
Our operating results for the years ended May 31, 2009 and 2008
are summarized as follows:
17
|
|
Year Ended
|
|
|
|
May 31
|
|
|
|
2009
|
|
|
2008
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
Operating Expenses
|
$
|
(583,400
|
)
|
$
|
(623,768
|
)
|
Net Loss
|
$
|
(583,400
|
)
|
$
|
(623,768
|
)
|
Revenues
We have not earned any revenues since our inception and we do
not anticipate earning revenues in the near future.
Operating Expenses
Our operating expenses for the year ended May 31, 2009 and May
31, 2008 are outlined in the table below:
|
|
Year Ended
|
|
|
|
May 31
|
|
|
|
2009
|
|
|
2008
|
|
Foreign exchange loss (gain)
|
$
|
(1,571
|
)
|
$
|
7,805
|
|
General and administrative
|
$
|
231,581
|
|
$
|
392,435
|
|
Mineral exploration costs
|
$
|
5,169
|
|
$
|
223,528
|
|
Write-down of mineral property costs
|
$
|
348,221
|
|
$
|
-
|
|
The decrease in operating expenses comprised of general and
administrative expenses and mineral exploration costs, for the year ended May
31, 2009, compared to the same period in fiscal 2008, was mainly due to a lack
of funds available which can be attributed to the current economic conditions.
The Company also wrote-off all of its mineral property costs which had been
incurred since inception due to the uncertainty of establishing proven and
probable reserves.
Liquidity and Financial Condition
Working Capital
|
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At
|
|
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At
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Current assets
|
$
|
3,862
|
|
$
|
25,418
|
|
Current liabilities
|
|
356,283
|
|
|
141,986
|
|
Working capital (deficit)
|
$
|
(352,421
|
)
|
$
|
(116,568
|
)
|
Cash Flows
|
|
Year Ended
|
|
|
|
May 31
|
|
|
|
2009
|
|
|
2008
|
|
Net Cash Used in Operating Activities
|
$
|
(56,643
|
)
|
$
|
(576,036
|
)
|
Net Cash Used in investing activities
|
|
-
|
|
|
-
|
|
Net Cash Provided by Financing Activities
|
|
36,000
|
|
|
583,986
|
|
Net increase (decrease) in cash during period
|
$
|
(18,317
|
)
|
$
|
8,624
|
|
18
Operating Activities
Net cash used in operating activities during the year ended May
31, 2009, was $53,643 compared to $576,036
during the year ended May 31,
2008.
Investing Activities
We did not have any investing activities during the years ended
May 31, 2009 and May 31, 2008.
Financing Activities
During the year ended May 31, 2009, we received a $36,000 loan.
During the year ended May 31, 2008, we received net proceeds of $612,400 from
share subscriptions and repaid $28,414 to a related party.
Contractual Obligations
As a smaller reporting company, we are not required to
provide tabular disclosure obligations.
Off-Balance Sheet Arrangements
We have no significant 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.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our audited financial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles used in the
United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financials.
Mineral Property Costs
Our company has been in the exploration stage since its
inception on February 23, 2006 and has not yet realized any revenues from its
planned operations. It is primarily engaged in the acquisition and exploration
of mining properties. Mineral property exploration costs are expensed as
incurred. Mineral property acquisition costs are initially capitalized when
incurred using the guidance in EITF 04-02, Whether Mineral Rights Are Tangible
or Intangible Assets. Our company assesses the carrying costs for impairment
under SFAS No. 144, Accounting for Impairment or Disposal of Long Lived Assets
at each fiscal quarter end. When it has been determined that a mineral property
can be economically developed as a result of establishing proven and probable
reserves, the costs then incurred to develop such property, are capitalized.
Such costs will be amortized using the units-of-production method over the
estimated life of the probable reserve. If mineral properties are subsequently
abandoned or impaired, any capitalized costs will be charged to operations.
Long-lived Assets
In accordance with SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, our company tests long-lived assets or asset
groups for recoverability when events or changes in circumstances indicate that
their carrying amount may not be recoverable. Circumstances which could trigger
a review include, but are not limited to: significant decreases in the market
price of the asset; significant adverse changes in the business climate or legal
factors; accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period cash
flow or operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and current expectation
that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life. Recoverability is assessed based on
19
the carrying amount of the asset and its fair value which is
generally determined based on the sum of the undiscounted cash flows expected to
result from the use and the eventual disposal of the asset, as well as specific
appraisal in certain instances. An impairment loss is recognized when the
carrying amount is not recoverable and exceeds fair value.
Stock-based Compensation
Our company records stock-based compensation in accordance with
SFAS No. 123R, Share Based Payments, 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.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2009, the Financial Accounting Standards Board (FASB)
issued SFAS No. 168, The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles a replacement of FASB
Statement No. 162. The FASB Accounting Standards Codification (Codification)
will become the source of authoritative U.S. generally accepted accounting
principles (GAAP) recognized by FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange
Commission SEC under authority of federal securities laws are also sources of
authoritative GAAP for SEC registrants. On the effective date of this statement,
the Codification will supersede all then-existing non-SEC accounting and
reporting standards. All other non-grandfathered non-SEC accounting literature
not included in the Codification will become non-authoritative. This statement
is effective for financial statements issued for interim and annual periods
ending after September 30, 2009. The adoption of this statement is not expected
to have a material effect on our companys financial statements.
In June 2009, the FASB issued SFAS No. 167, Amendments to FASB
Interpretation No. 46(R). The objective of this statement is to improve
financial reporting by enterprises involved with variable interest entities.
This statement addresses (1) the effects on certain provisions of FASB
Interpretation No. 46 (revised December 2003), Consolidation of Variable
Interest Entities, as a result of the elimination of the qualifying
special-purpose entity concept in SFAS No. 166, Accounting for Transfers of
Financial Assets, and (2) concern about the application of certain key
provisions of FASB Interpretation No. 46(R), including those in which the
accounting and disclosures under the Interpretation do not always provide timely
and useful information about an enterprises involvement in a variable interest
entity. This statement is effective as of the beginning of each reporting
entitys first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. Earlier application is prohibited. The
adoption of this statement is not expected to have a material effect on our
companys financial statements.
In June 2009, the FASB issued SFAS No. 166, Accounting for
Transfers of Financial Assets an amendment of FASB No. 140. The object of
this statement is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferors continuing involvement, if any, in transferred financial assets.
This statement addresses (1) practices that have developed since the issuance of
SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, that are not consistent with the original
intent and key requirements of that statement and (2) concerns of financial
statement users that many of the financial assets (and related obligations) that
have been derecognized should continue to be reported in the financial
statements of transferors. SFAS No. 166 must be applied as of the beginning of
each reporting entitys first annual reporting period that begins after November
15, 2009, for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. This statement must be applied to transfers occurring on or after
the effective date. Additionally, on and after the effective date, the concept
of a qualifying special-purpose entity is no longer relevant for accounting
purposes. The disclosure provisions of this statement should be applied to
transfers that occurred both before and after the effective date of this
statement. The adoption of this statement is not expected to have a material
effect on our companys financial statements.
In May 2009, the FASB issued SFAS No. 165, Subsequent Events.
SFAS No. 165 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are
20
issued or are available to be issued. SFAS No. 165 is to be
applied to interim and annual financial periods ending after June 15, 2009. The
adoption of this statement is not expected to have a material effect on our
companys financial statements.
In May 2008, the FASB issued SFAS No. 163, Accounting for
Financial Guarantee Insurance Contracts An interpretation of FASB Statement
No. 60. SFAS No. 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default when there is evidence that credit
deterioration has occurred in an insured financial obligation. It also clarifies
how Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement to be used to account for premium revenue and
claim liabilities, and requires expanded disclosures about financial guarantee
insurance contracts. It is effective for financial statements issued for fiscal
years beginning after December 15, 2008, except for some disclosures about the
insurance enterprises risk-management activities. SFAS No. 163 requires that
disclosures about the risk-management activities of the insurance enterprise be
effective for the first period beginning after issuance. Except for those
disclosures, earlier application is not permitted. The adoption of this
statement is not expected to have a material effect on our companys financial
statements.
In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the
United States. SFAS No. 162 became effective on November 13, 2008 following the
SECs approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles. The adoption of this statement did not have a
material effect on our companys financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities an amendment to FASB Statement
No. 133. SFAS No. 161 is intended to improve financial standards for derivative
instruments and hedging activities by requiring enhanced disclosures to enable
investors to better understand their effects on an entity's financial position,
financial performance, and cash flows. Entities are required to provide enhanced
disclosures about: (a) how and why an entity uses derivative instruments; (b)
how derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations; and (c) how derivative
instruments and related hedged items affect an entitys financial position,
financial performance, and cash flows. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008, with early adoption
encouraged. The adoption of this statement is not expected to have a material
effect on our companys financial statements.
In December 2007, FASB issued SFAS No. 141 (revised 2007),
Business Combinations. This statement replaces SFAS No. 141 and defines the
acquirer in a business combination as the entity that obtains control of one or
more businesses in a business combination and establishes the acquisition date
as the date that the acquirer achieves control. SFAS No. 141 (revised 2007)
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date. SFAS No. 141 (revised 2007) also
requires the acquirer to recognize contingent consideration at the acquisition
date, measured at its fair value at that date. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 and earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on our company's financial
statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements Liabilities an Amendment of ARB
No. 51. This statement amends ARB 51 to establish accounting and reporting
standards for the Noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008 and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on our company's financial statements.
Item
7A. Quantitative and
Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to
provide the information required by this Item.
21
Item
8. Financial
Statements and Supplementary Data
Our audited financial statements are stated in United States
dollars (US$) and are prepared in accordance with United States Generally
Accepted Accounting Principles.
The following audited financial statements are filed as part of
this annual report:
22
Wolverine Exploration Inc.
(An Exploration Stage Company)
May 31, 2009
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Wolverine
Exploration Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheet of Wolverine
Exploration Inc. (An Exploration Stage Company) as of May 31, 2009, and the
related statements of operations, stockholders equity (deficit), and cash flows
for the year then ended and accumulated from June 1, 2008 to May 31, 2009. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial
reporting. An audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of May 31, 2009, and the results of its operations and its cash flows for the
year then ended and accumulated from June 1, 2008 to May 31, 2009, in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has not generated any revenues, has a
working capital deficit, and has incurred operating losses since inception.
These factors raise substantial doubt about the Companys ability to continue as
a going concern. Managements plans in regard to these matters are also
discussed in Note 1 to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ SATURNA GROUP CHARTERED ACCOUNTANTS LLP
Saturna Group Chartered Accountants LLP
Vancouver, Canada
September 18, 2009
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
Wolverine Exploration Inc.
We have audited the accompanying balance sheet of Wolverine
Exploration Inc. (an exploration stage company) as of May 31, 2008, and the
related statements of operations, stockholders equity and cash flows for the
year then ended and for the period from inception (February 23, 2006) through
May 31, 2008. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Wolverine
Exploration Inc. as of May 31, 2008, and the results of its operations and its
cash flows for the year then ended and for the period from inception (February
23, 2006) through May 31, 2008 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 1, the Company has incurred recurring operating losses and has
an accumulated deficit. These conditions raise substantial doubt about the
Companys ability to continue as a going concern. Managements plans in regard
to these matters are also described in Note 1. The financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
Mendoza Berger & Company, LLP
/s/ Mendoza Berger & Company, LLP
Irvine, California
September 5, 2008
F-2
Wolverine Exploration Inc.
(An Exploration Stage Company)
Balance Sheets
(Expressed in U.S. dollars)
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
673
|
|
|
18,990
|
|
Amounts receivable
|
|
3,189
|
|
|
6,428
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
3,862
|
|
|
25,418
|
|
|
|
|
|
|
|
|
Mineral property
costs (Note 3)
|
|
|
|
|
348,221
|
|
|
|
|
|
|
|
|
Total Assets
|
|
3,862
|
|
|
373,639
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
246,513
|
|
|
91,911
|
|
Accrued liabilities
|
|
58,855
|
|
|
50,075
|
|
Loans payable (Note 4)
|
|
36,000
|
|
|
|
|
Due to related party (Note 5)
|
|
14,915
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
356,283
|
|
|
141,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nature of Operations and Continuance of Business (Note 1)
|
|
|
|
|
|
|
Commitments (Notes 3 and 7)
|
|
|
|
|
|
|
Subsequent Events(Note 9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, 200,000,000 shares authorized,
$0.001 par value
|
|
|
|
|
|
|
68,630,000 and 67,530,000
shares issued and outstanding, respectively
|
|
68,630
|
|
|
67,530
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
1,030,770
|
|
|
921,870
|
|
|
|
|
|
|
|
|
Common stock subscribed (Note
6)
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
Deficit accumulated during the
exploration stage
|
|
(1,451,821
|
)
|
|
(868,421
|
)
|
|
|
|
|
|
|
|
Accumulated other comprehensive income
|
|
|
|
|
674
|
|
|
|
|
|
|
|
|
Total Stockholders Equity (Deficit)
|
|
(352,421
|
)
|
|
231,653
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity (Deficit)
|
|
3,862
|
|
|
373,639
|
|
(The accompanying notes are an integral part of these financial
statements)
F-3
Wolverine Exploration Inc.
(An Exploration Stage Company)
Statements of Operations
(Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
Accumulated from
|
|
|
|
|
|
|
|
|
|
February 23, 2006
|
|
|
|
Year ended
|
|
|
Year ended
|
|
|
(Date of Inception)
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
to May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
$
|
|
|
$
|
|
|
$4
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange loss (gain)
|
|
(1,571
|
)
|
|
7,805
|
|
|
8,898
|
|
General and administrative
|
|
231,581
|
|
|
392,435
|
|
|
850,109
|
|
Mineral exploration costs
|
|
5,169
|
|
|
223,528
|
|
|
244,593
|
|
Write-down of mineral property costs
|
|
348,221
|
|
|
|
|
|
348,221
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
583,400
|
|
|
623,768
|
|
|
(1,451,821
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
(583,400
|
)
|
|
(623,768
|
)
|
|
(1,451,821
|
)
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share
Basic and Diluted
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding
|
|
68,554,658
|
|
|
65,086,639
|
|
|
|
|
(The accompanying notes are an integral part of these financial
statements)
F-4
Wolverine Exploration Inc.
(An Exploration Stage Company)
Statements of Stockholders Equity (Deficit)
For the Period from
February 23, 2006 (Date of Inception) to May 31, 2009
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
During the
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Exploration
|
|
|
Comprehensive
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Subscribed
|
|
|
Stage
|
|
|
Income
|
|
|
Total
|
|
|
|
#
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance, February 23, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Date of Inception)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
|
|
4,000,000
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
Common stock subscribed
|
|
|
|
|
|
|
|
|
|
|
33,500
|
|
|
|
|
|
|
|
|
33,500
|
|
Net
loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,727
|
)
|
|
|
|
|
(19,727
|
)
|
Balance, May 31, 2006
|
|
4,000,000
|
|
|
4,000
|
|
|
|
|
|
33,500
|
|
|
(19,727
|
)
|
|
|
|
|
17,773
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscriptions refunds
|
|
|
|
|
|
|
|
|
|
|
(9,000
|
)
|
|
|
|
|
|
|
|
(9,000
|
)
|
Common stock issued from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscriptions
|
|
2,450,000
|
|
|
2,450
|
|
|
22,050
|
|
|
(24,500
|
)
|
|
|
|
|
|
|
|
|
|
Common stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
|
|
11,750,000
|
|
|
11,750
|
|
|
105,750
|
|
|
|
|
|
|
|
|
|
|
|
117,500
|
|
Common stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
purchase of interest in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
mineral properties
|
|
34,000,000
|
|
|
34,000
|
|
|
306,000
|
|
|
|
|
|
|
|
|
|
|
|
340,000
|
|
Common stock subscribed
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
1,000
|
|
Net
loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(224,926
|
)
|
|
|
|
|
(224,926
|
)
|
Balance, May 31, 2007
|
|
52,200,000
|
|
|
52,200
|
|
|
433,800
|
|
|
1,000
|
|
|
(244,653
|
)
|
|
|
|
|
242,347
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subscriptions refunds
|
|
|
|
|
|
|
|
|
|
|
(1,000
|
)
|
|
|
|
|
|
|
|
(1,000
|
)
|
Common stock issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cash
|
|
15,330,000
|
|
|
15,330
|
|
|
488,070
|
|
|
|
|
|
|
|
|
|
|
|
503,400
|
|
Common stock subscribed
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
854,747
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(623,768
|
)
|
|
|
|
|
(623,768
|
)
|
Foreign currency exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
674
|
|
|
674
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(623,094
|
)
|
Balance, May 31, 2008
|
|
67,530,000
|
|
|
67,530
|
|
|
921,870
|
|
|
110,000
|
|
|
(868,421
|
)
|
|
674
|
|
|
231,653
|
|
Common stock issued
|
|
1,100,000
|
|
|
1,100
|
|
|
108,900
|
|
|
(110,000
|
)
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(583,400
|
)
|
|
|
|
|
(583,400
|
)
|
Foreign currency exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(674
|
)
|
|
(674
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(582,726
|
))
|
Balance, May 31, 2009
|
|
68,630,000
|
|
|
68,630
|
|
|
1,030,770
|
|
|
|
|
|
(1,451,821
|
)
|
|
|
|
|
(352,421
|
)
|
(The accompanying notes are an integral part of these financial
statements)
F-5
Wolverine Exploration Inc.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in U.S. dollars)
|
|
|
|
|
|
|
|
Accumulated from
|
|
|
|
|
|
|
|
|
|
February 23, 2006
|
|
|
|
Year ended
|
|
|
Year ended
|
|
|
(Date of Inception)
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
to May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
(583,400
|
)
|
|
(623,768
|
)
|
|
(1,451,821
|
)
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net
loss to net cash used in operating
|
|
|
|
|
|
|
|
|
|
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-down of mineral properties
|
|
348,221
|
|
|
|
|
|
348,221
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts receivable
|
|
3,239
|
|
|
(6,428
|
)
|
|
(3,189
|
)
|
Prepaid expenses
and deposits
|
|
|
|
|
27,674
|
|
|
26,100
|
|
Accounts payable
|
|
154,602
|
|
|
66,600
|
|
|
238,625
|
|
Accrued
liabilities
|
|
8,780
|
|
|
50,075
|
|
|
58,855
|
|
Due to related parties
|
|
14,915
|
|
|
(90,189
|
)
|
|
22,803
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used In
Operating Activities
|
|
(53,643
|
)
|
|
(576,036
|
)
|
|
(760,406
|
)
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of mineral properties
|
|
|
|
|
|
|
|
(321
|
)
|
Net Cash Used In Investing Activities
|
|
|
|
|
|
|
|
(321
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from loans payable
|
|
36,000
|
|
|
|
|
|
36,000
|
|
Repayment of note payable to related party
|
|
|
|
|
(28,414
|
)
|
|
(34,000
|
)
|
Proceeds from common stock
issued or subscribed
|
|
|
|
|
613,400
|
|
|
771,400
|
|
Repayment of common stock subscribed
|
|
|
|
|
(1,000
|
)
|
|
(12,000
|
)
|
Net Cash Provided by Financing Activities
|
|
36,000
|
|
|
583,986
|
|
|
761,400
|
|
Effects of
exchange rate changes on cash
|
|
(674
|
)
|
|
674
|
|
|
|
|
Increase (Decrease) in Cash
|
|
(18,317
|
)
|
|
8,624
|
|
|
673
|
|
Cash - Beginning
of Period
|
|
18,990
|
|
|
10,366
|
|
|
|
|
Cash - End of Period
|
|
673
|
|
|
18,990
|
|
|
673
|
|
Non-cash Investing and Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party pursuant to
mineral property vend-
|
|
|
|
|
|
|
|
|
|
in agreement
|
|
|
|
|
|
|
|
34,000
|
|
Refundable staking security deposits received
pursuant to
|
|
|
|
|
|
|
|
|
|
mineral property
vend-in agreement
|
|
|
|
|
|
|
|
26,100
|
|
Shares issued pursuant to mineral property vend-in agreement
|
|
|
|
|
|
|
|
340,000
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
|
|
|
|
|
|
|
(The accompanying notes are an integral part of these financial
statements)
F-6
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
1.
|
Nature of Operations and Continuance of
Business
|
|
|
|
|
The Company was incorporated in the State of Nevada on
February 23, 2006. The Company is an Exploration Stage Company, as defined
by Statement of Financial Accounting Standard (SFAS) No. 7, Accounting
and Reporting by Development Stage Enterprises. The Companys principal
business is the acquisition and exploration of mineral resources. The
Company has not presently determined whether its properties contain
mineral reserves that are economically recoverable.
|
|
|
|
|
These financial statements have been prepared on a going
concern basis, which implies the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. The
Company has never generated revenues since inception and is unlikely
generate earnings in the immediate or foreseeable future. The continuation
of the Company as a going concern is dependent upon the continued
financial support from its shareholders, the ability of the Company to
obtain necessary equity financing to continue operations, and the
attainment of profitable operations. As at May 31, 2009, the Company has a
working capital deficiency of $352,421 and has accumulated losses of
$1,451,821 since inception. These factors raise substantial doubt
regarding the Companys 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.
|
|
|
|
|
In addition to funding our working capital deficit, we
require additional funds of $496,000 to proceed with our plan of operation
over the next twelve months. Management is currently seeking additional
financing through the sale of equity and from borrowings from private
lenders to cover its operating expenditures. There can be no certainty
that these sources will provide the additional funds required for the next
twelve months.
|
|
|
|
2.
|
Summary of Significant Accounting Policies
|
|
|
|
|
a)
|
Basis of Presentation
|
|
|
|
|
|
These financial statements and related notes are
presented in accordance with accounting principles generally accepted in
the United States, and are expressed in U.S. dollars. The Companys fiscal
year-end is May 31.
|
|
|
|
|
b)
|
Use of Estimates
|
|
|
|
|
|
The preparation of financial statements in accordance
with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses in the
reporting period. The Company regularly evaluates estimates and
assumptions related to the recoverability of mineral property costs 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 Companys estimates. To the extent there are material
differences between the estimates and the actual results, future results
of operations will be affected.
|
|
|
|
|
c)
|
Cash and Cash Equivalents
|
|
|
|
|
|
The Company considers all highly liquid instruments with
maturity of three months or less at the time of issuance to be cash
equivalents.
|
|
|
|
|
d)
|
Mineral Property Costs
|
|
|
|
|
|
The Company has been in the exploration stage since its
inception on February 23, 2006 and has not yet realized any revenues from
its planned operations. It is primarily engaged in the acquisition and
exploration of mining properties. Mineral property exploration costs are
expensed as incurred. Mineral property acquisition costs are initially
capitalized when incurred using the guidance in EITF 04-02, Whether
Mineral Rights Are Tangible or Intangible Assets. The Company assesses
the carrying costs for impairment under SFAS No. 144, Accounting for
Impairment or Disposal of Long Lived Assets at each fiscal quarter end.
When it has been determined that a mineral property can be economically
developed as a result of establishing proven and probable reserves, the
costs then incurred to develop such property, are capitalized. Such costs
will be amortized using the units-of-production method over the estimated
life of the probable reserve. If mineral properties are subsequently
abandoned or impaired, any capitalized costs will be charged to
operations.
|
F-7
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
e)
|
Long-lived Assets
|
|
|
|
|
|
In accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the Company tests long-lived
assets or asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited
to: significant decreases in the market price of the asset; significant
adverse changes in the business climate or legal factors; accumulation of
costs significantly in excess of the amount originally expected for the
acquisition or construction of the asset; current period cash flow or
operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and current
expectation that the asset will more likely than not be sold or disposed
significantly before the end of its estimated useful life. Recoverability
is assessed based on the carrying amount of the asset and its fair value
which is generally determined based on the sum of the undiscounted cash
flows expected to result from the use and the eventual disposal of the
asset, as well as specific appraisal in certain instances. An impairment
loss is recognized when the carrying amount is not recoverable and exceeds
fair value.
|
|
|
|
|
f)
|
Asset Retirement Obligations
|
|
|
|
|
|
The Company follows the provisions of SFAS No. 143,
Accounting for Asset Retirement 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.
|
|
|
|
|
g)
|
Income Taxes
|
|
|
|
|
|
The Company accounts for income taxes using the asset and
liability method in accordance with SFAS No. 109, 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. The Company records a valuation
allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.
|
|
|
|
|
|
On June 1, 2007, the Company adopted the provision of the
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes
(FIN 48), an interpretation of the FASB Statement No. 109, Accounting
for Income Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return. The interpretation requires the Company recognize the impact of a
tax position in the financial statements if that position is more likely
than not of being sustained on audit, based on the technical merits of the
position. FIN 48 also provides guidance on de-recognition, classification,
interest and penalties, and accounting in interim periods and disclosure.
In accordance with the provisions of FIN 48, any cumulative effect
resulting from a change in accounting principle is recorded as an
adjustment to the opening deficit balance. As of May 31, 2008 and 2007,
the Company did not have any amounts recorded pertaining to uncertain tax
positions. The adoption of FIN No. 48 did not impact the Companys tax
provision or the amounts recorded in the financial statements.
|
|
|
|
|
|
The Company files federal and provincial income tax
returns in Canada and federal, state and local income tax returns in the
U.S., as applicable. The Company may be subject to a reassessment of
federal and provincial income taxes by Canadian tax authorities for a
period of three years from the date of the original notice of assessment
in respect of any particular taxation year. For Canadian and U.S. income
tax returns, the open taxation years range from 2007 to 2009. In certain
circumstances, the U.S. federal statute of limitations can reach beyond
the standard three year period. U.S. state statutes of limitations for
income tax assessment vary from state to state. Tax authorities of Canada
and U.S. have not audited any of the Companys, or its subsidiaries,
income tax returns for the open taxation years noted above.
|
|
|
|
|
|
The Company recognizes interest and penalties related to
uncertain tax positions in tax expense. During the years ended May 31,
2009 and 2008, there were no charges for interest or
penalties.
|
F-8
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
h)
|
Foreign Currency Translation
|
|
|
|
|
|
The Companys functional and reporting currency is the
United States dollar. Occasional transactions may occur in Canadian
dollars and management has adopted SFAS No. 52, Foreign Currency
Translation. Monetary assets and liabilities denominated in foreign
currencies are translated using the exchange rate prevailing at the
balance sheet date. Non-monetary assets and liabilities denominated in
foreign currencies are translated at rates of exchange in effect at the
date of the transaction. Average monthly rates are used to translate
revenues and expenses. Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are
included in the determination of income.
|
|
|
|
|
i)
|
Financial Instruments and Fair Value Measures
|
|
|
|
|
|
SFAS No. 157, Fair Value Measurements requires an
entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. SFAS No. 157 establishes a
fair value hierarchy based on the level of independent, objective evidence
surrounding the inputs used to measure fair value. A financial
instruments categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value
measurement. SFAS No. 157 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.
|
|
The Companys financial instruments consist principally
of cash, amounts receivable, accounts payable, accrued liabilities, loans
payable, and amount due to related party. Pursuant to SFAS No. 157, 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.
|
|
|
|
|
j)
|
Stock-based Compensation
|
|
|
|
|
|
The Company records stock-based compensation in
accordance with SFAS No. 123R, Share Based Payments, 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.
|
|
|
|
|
k)
|
Earnings (Loss) Per Share
|
|
|
|
|
|
The Company computes earnings (loss) per share in
accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires
presentation of both basic and diluted earnings per share (EPS) on the
face of the income statement. Basic EPS is computed by dividing earnings
(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.
|
F-9
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
l)
|
Comprehensive Income
|
|
|
|
|
|
SFAS No. 130, Reporting Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss
and its components in the financial statements. As at May 31, 2009 and
2008, the Companys only component of comprehensive income (loss) was
foreign currency translation adjustments.
|
|
|
|
|
m)
|
Recent Accounting Pronouncements
|
|
|
|
|
|
In June 2009, the Financial Accounting Standards Board
(FASB) issued SFAS No. 168, The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles a
replacement of FASB Statement No. 162. The FASB Accounting Standards
Codification (Codification) will become the source of authoritative U.S.
generally accepted accounting principles (GAAP) recognized by FASB to be
applied by nongovernmental entities. Rules and interpretive releases of
the Securities and Exchange Commission SEC under authority of federal
securities laws are also sources of authoritative GAAP for SEC
registrants. On the effective date of this statement, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards. All other non-grandfathered non-SEC accounting literature not
included in the Codification will become non-authoritative. This statement
is effective for financial statements issued for interim and annual
periods ending after September 30, 2009. The adoption of this statement is
not expected to have a material effect on the Companys financial
statements.
|
|
|
|
|
|
In June 2009, the FASB issued SFAS No. 167, Amendments
to FASB Interpretation No. 46(R). The objective of this statement is to
improve financial reporting by enterprises involved with variable interest
entities. This statement addresses (1) the effects on certain provisions
of FASB Interpretation No. 46 (revised December 2003), Consolidation of
Variable Interest Entities, as a result of the elimination of the
qualifying special-purpose entity concept in SFAS No. 166, Accounting for
Transfers of Financial Assets, and (2) concern about the application of
certain key provisions of FASB Interpretation No. 46(R), including those
in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprises
involvement in a variable interest entity. This statement is effective as
of the beginning of each reporting entitys first annual reporting period
that begins after November 15, 2009, for interim periods within that first
annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The adoption of this
statement is not expected to have a material effect on the Companys
financial statements.
|
|
|
|
|
|
In June 2009, the FASB issued SFAS No. 166, Accounting
for Transfers of Financial Assets an amendment of FASB No. 140. The
object of this statement is to improve the relevance, representational
faithfulness, and comparability of the information that a reporting entity
provides in its financial statements about a transfer of financial assets;
the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing involvement, if
any, in transferred financial assets. This statement addresses (1)
practices that have developed since the issuance of SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, that are not consistent with the original
intent and key requirements of that statement and (2) concerns of
financial statement users that many of the financial assets (and related
obligations) that have been derecognized should continue to be reported in
the financial statements of transferors. SFAS No. 166 must be applied as
of the beginning of each reporting entitys first annual reporting period
that begins after November 15, 2009, for interim periods within that first
annual reporting period and for interim and annual reporting periods
thereafter. Earlier application is prohibited. This statement must be
applied to transfers occurring on or after the effective date.
Additionally, on and after the effective date, the concept of a qualifying
special-purpose entity is no longer relevant for accounting purposes. The
disclosure provisions of this statement should be applied to transfers
that occurred both before and after the effective date of this statement.
The adoption of this statement is not expected to have a material effect
on the Companys financial statements.
|
|
|
|
|
|
In May 2009, the FASB issued SFAS No. 165, Subsequent
Events. SFAS No. 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS No.
165 is to be applied to interim and annual financial periods ending after
June 15, 2009. The adoption of this statement is not expected to have a
material effect on the Companys financial
statements.
|
F-10
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
2.
|
Summary of Significant Accounting Policies
(continued)
|
|
m)
|
Recent Accounting Pronouncements (continued)
|
|
|
|
|
|
In May 2008, the FASB issued SFAS No. 163, Accounting
for Financial Guarantee Insurance Contracts An interpretation of FASB
Statement No. 60. SFAS No. 163 requires that an insurance enterprise
recognize a claim liability prior to an event of default when there is
evidence that credit deterioration has occurred in an insured financial
obligation. It also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement
to be used to account for premium revenue and claim liabilities, and
requires expanded disclosures about financial guarantee insurance
contracts. It is effective for financial statements issued for fiscal
years beginning after December 15, 2008, except for some disclosures about
the insurance enterprises risk-management activities. SFAS No. 163
requires that disclosures about the risk-management activities of the
insurance enterprise be effective for the first period beginning after
issuance. Except for those disclosures, earlier application is not
permitted. The adoption of this statement is not expected to have a
material effect on the Companys financial statements.
|
|
|
|
|
|
In May 2008, the FASB issued SFAS No. 162, The Hierarchy
of Generally Accepted Accounting Principles. SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the
principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States. SFAS No. 162 became
effective on November 13, 2008 following the SECs approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles. The adoption of this statement did not have a material effect
on the Companys financial statements.
|
|
|
|
|
|
In March 2008, the FASB issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities an amendment to FASB
Statement No. 133. SFAS No. 161 is intended to improve financial
standards for derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash
flows. Entities are required to provide enhanced disclosures about: (a)
how and why an entity uses derivative instruments; (b) how derivative
instruments and related hedged items are accounted for under Statement 133
and its related interpretations; and (c) how derivative instruments and
related hedged items affect an entitys financial position, financial
performance, and cash flows. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008, with early
adoption encouraged. The adoption of this statement is not expected to
have a material effect on the Companys financial statements.
|
|
|
|
|
|
In December 2007, FASB issued SFAS No. 141 (revised
2007), Business Combinations. This statement replaces SFAS No. 141 and
defines the acquirer in a business combination as the entity that obtains
control of one or more businesses in a business combination and
establishes the acquisition date as the date that the acquirer achieves
control. SFAS No. 141 (revised 2007) requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any noncontrolling interest
in the acquiree at the acquisition date, measured at their fair values as
of that date. SFAS No. 141 (revised 2007) also requires the acquirer to
recognize contingent consideration at the acquisition date, measured at
its fair value at that date. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after
December 15, 2008 and earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on the Company's
financial statements.
|
|
|
|
|
|
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements Liabilities
an Amendment of ARB No. 51. This statement amends ARB 51 to establish
accounting and reporting standards for the Noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 and earlier adoption is
prohibited. The adoption of this statement is not expected to have a
material effect on the Company's financial statements.
|
|
|
|
|
n)
|
Reclassifications
|
|
|
|
|
|
Certain of the figures presented for comparative purposes
have been reclassified to conform to the presentation adopted in the
current period.
|
F-11
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
3.
|
Mineral Properties
|
|
|
|
|
a)
|
On February 27, 2007, the Company entered into a vend-in
agreement whereby they agreed to acquire a 90% interest in four mineral
licenses in central Labrador, Canada, comprised of 516 mineral claims
covering an area of 33,111 acres. On February 28, 2007 the Company issued
a $34,000 promissory note and 34,000,000 in common shares with a fair
value of $340,000 to acquire this 90% interest. The purchase price
included a total of $26,100 in refundable staking security deposits. These
deposits were refunded to the Company in February 2008. As at May 31,
2009, the Company wrote off the mineral property acquisition costs of
$348,000 due to the uncertainty of establishing proven and probable
reserves.
|
|
|
|
|
|
Under the terms of the vend-in agreement, the Company is
committed to incurring mineral exploration expenditures of approximately
$151,000 (Cdn$150,000) on or before March 1, 2008 (spent), $157,200
(Cdn$171,615) on or before March 1, 2009, and $196,500 (Cdn$214,519) on or
before March 1, 2010 with the provision that any excess amount spent in
one year may be carried forward and applied towards fulfilment of the
expenditure requirements of a later year. As at May 31, 2009, the Company
has spent $244,593 (Cdn$267,022) on exploration expenditures. These
expenditures also qualify as exploration expenditures under the terms of
the Companys mineral exploration licenses. Refer to Note 9(b).
|
|
|
|
|
b)
|
On May 17, 2007, the Company purchased a 90% interest in
one mineral license in central Labrador, Canada, comprised of 6 claims
covering an area of 371 acres for $321 (Cdn$360). As at May 31, 2009, the
Company wrote off the mineral property acquisition costs of $321 due to
the uncertainty of establishing proven and probable reserves.
|
|
|
|
|
c)
|
The mineral exploration licenses on the Companys
properties are for a term of five years commencing at various dates from
August 18, 2006 to May 17, 2007. These licenses may be renewed every five
years for up to a maximum of twenty years provided annual assessment work
is completed and reported, and license renewal fees of $20 (Cdn$22), $39
(Cdn$43) and $79 (Cdn$86) per claim are paid after five, ten and fifteen
years, respectively. In order to maintain the property in good standing
the Company is required to spend from $157 (Cdn$171) per claim in the
first year to $943 (Cdn$1,029) per claim in the twentieth year.
|
|
|
|
4.
|
Loans Payable
|
|
|
|
|
a)
|
As at May 31, 2009, the Company owes $21,000 (2008 -
$nil) for cash advances received which are non-interest bearing, unsecured
and due on demand.
|
|
|
|
|
b)
|
As at May 31, 2009, the Company owes $15,000 (2008
$nil) for a cash advance received which is non-interest bearing, unsecured
and due on demand. Refer to Note 9.
|
|
|
|
5.
|
Related Party Transactions
|
|
|
|
|
As at May 31, 2009, the Company owes $14,915 (Cdn$16,283)
(2008 - $nil) to the President of the Company which is non- interest
bearing, unsecured and due on demand.
|
|
|
|
6.
|
Common Stock
|
|
|
|
|
a)
|
Between February and May 2008, 1,100,000 common shares at
$0.10 per share for proceeds of $110,000 were subscribed for. The shares
were issued in June 2008.
|
|
|
|
|
b)
|
On November 2, 2007, the Company repaid share
subscriptions of $1,000 which were received in March 2007.
|
|
|
|
|
c)
|
On October 5, 2007, the Company issued 1,000,000 common
shares at $0.10 per share for proceeds of $100,000.
|
|
|
|
|
d)
|
On September 8, 2007, the Company issued 2,890,000 common
shares at $0.10 per share for proceeds of $289,000.
|
|
|
|
|
e)
|
On September 7, 2007, the Company issued 2,000,000 common
shares at $0.10 per share for proceeds of $20,000.
|
|
|
|
|
f)
|
On July 31, 2007, the Company issued 2,550,000 common
shares at $0.01 per share for proceeds of $25,500.
|
|
|
|
|
g)
|
On June 30, 2007, the Company issued 6,890,000 common
shares at $0.01 per share for proceeds of $68,900.
|
F-12
Wolverine Exploration Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
Years Ended May 31, 2009 and 2008
(Expressed in U.S. dollars)
7.
|
Commitment
|
|
|
|
On January 31, 2007, the Company entered into a
consulting agreement with a company whereby it has agreed to pay $10,000
per month and issue a bonus of 5% of the common shares in the event of the
discovery of a major commercially viable mineral resource deposit. The
contract does not terminate until minimum term ending on February 28,
2010.
|
|
|
8.
|
Income Taxes
|
|
|
|
The Company has net operating losses carried forward of
$859,007 available to offset taxable income in future years which expires
beginning in fiscal 2026.
|
|
|
|
The Company is subject to United States federal and state
income taxes at an approximate rate of 34%. The reconciliation of the
provision for income taxes at the United States federal statutory rate
compared to the Companys income tax expense as reported is as
follows:
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Income tax recovery at statutory rate
|
|
(198,356
|
)
|
|
(212,081
|
)
|
|
|
|
|
|
|
|
|
|
Valuation allowance change
|
|
198,356
|
|
|
212,065
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
|
|
|
The significant components of deferred
income tax assets and liabilities at May 31, 2009 and 2008, are as follows:
|
|
|
2009
|
|
|
2008
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Mineral property costs
|
|
201,557
|
|
|
81,404
|
|
|
Net operating
losses carried forward
|
|
292,062
|
|
|
213,859
|
|
|
|
|
|
|
|
|
|
|
Gross deferred income tax assets
|
|
493,619
|
|
|
295,263
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
(493,619
|
)
|
|
(295,263
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred
income tax asset
|
|
|
|
|
|
|
|
a)
|
Subsequent to year end, the Company received stock
subscriptions of $45,000. The Company is to issue 1,500,000 shares at
$0.03 per share. The proceeds were used for working capital purposes and
to repay the $15,000 loan payable as disclosed in Note 4(b).
|
|
|
|
|
b)
|
On August 27, 2009, the vend-in agreement described in
Note 3(a) was amended in that the optionor has agreed to waive the
remaining required work commitments on the mineral properties subject to
the Company incurring sufficient exploration expenditures on the
properties to keep them in good standing with the local
government.
|
F-13
Item
9. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements related to accounting principles or
practices, financial statement disclosure, internal controls or auditing scope
or procedure during the two fiscal years and interim periods, including the
interim period up through the date the relationship ended with Mendoza Berger
& Company, LLP.
Item 9A (T). Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management to allow for timely decisions
regarding required disclosures.
As at May 31, 2009, the end of the year covered by this annual
report, our Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
were not effective as of the end of the period covered by this annual report.
There have been no changes in our internal control over
financial reporting during the year ended May 31, 2009 that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting.
Managements Report on Internal Control over Financial
Reporting
This annual report does not include a report of management's
assessment regarding internal control over financial reporting or an attestation
report of the Company's independent registered public accounting firm due to a
transition period established by rules of the Securities and Exchange Commission
for newly public companies.
Material Weaknesses Identified
Based on our managements evaluation required by paragraph (d)
of Rule 13a-15 and of Rule 15d-15 of the Exchange Act, certain significant
deficiencies in internal control became evident to management that our
management believes represent material weaknesses, including:
|
(1)
|
lack of a functioning audit committee and lack of a
majority of outside directors on our board of directors, resulting in
ineffective oversight in the establishment and monitoring of required
internal controls and procedures;
|
|
|
|
|
(2)
|
inadequate segregation of duties consistent with control
objectives;
|
|
|
|
|
(3)
|
insufficient written policies and procedures for
accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and
|
|
|
|
|
(4)
|
ineffective controls over period end financial disclosure
and reporting processes.
|
Management believes that the material weaknesses set forth in
items (2), (3) and (4) above did not have an affect on our financial results.
However, management believes that the lack of a functioning audit committee and
lack of a majority of outside directors on our board of directors, resulting in
ineffective
25
oversight in the establishment and monitoring of required
internal controls and procedures can result in our detriment to our financial
statements for the future years.
We are committed to improving our financial organization. As
part of this commitment, we intend to create a position when funds are available
to us to segregate duties consistent with control objectives and will increase
our personnel resources and technical accounting expertise within the accounting
function: i) appointing one or more outside directors to our board of directors
who will also be appointed to the audit committee of our company resulting in a
fully functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures; and
ii) preparing and implementing sufficient written policies and checklists that
will set forth procedures for accounting and financial reporting with respect to
the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside
directors, who will also be appointed to a fully functioning audit committee,
will remedy the lack of a functioning audit committee and a lack of a majority
of outside directors on our board of directors. In addition, management believes
that preparing and implementing sufficient written policies and checklists will
remedy the following material weaknesses: (i) insufficient written policies and
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure requirements; and
(ii) ineffective controls over period end financial close and reporting
processes. Further, management believes that the hiring of additional personnel
who have the technical expertise and knowledge will result proper segregation of
duties and provide more checks and balances within the department. Additional
personnel will also provide the cross training needed to support our company if
personnel turn over issues within the department occur. This coupled with the
appointment of additional outside directors will greatly decrease any control
and procedure issues we may encounter in the future.
Management will continue to monitor and evaluate the
effectiveness of our internal controls over financial reporting on an ongoing
basis and are committed to taking further action and implementing additional
enhancements or improvements, as necessary and as funds allow.
Inherent limitations on effectiveness of controls
Internal control over financial reporting has inherent
limitations which include but is not limited to the use of independent
professionals for advice and guidance, interpretation of existing and/or
changing rules and principles, segregation of management duties, scale of
organization, and personnel factors. Internal control over financial reporting
is a process which involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or
improper management override. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements on a
timely basis, however these inherent limitations are known features of the
financial reporting process and it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Item
9B. Other Information
None
26
PART III
Item
10. Directors,
Executive Officers and Corporate Governance
All of the directors of our company hold office until the next
annual meeting of the stockholders or until their successors have been elected
and qualified. Our officers are appointed by our board of directors and hold
office until their death, resignation or removal from office. Our directors and
executive officers, their ages, positions held, and duration as such, are as
follows:
|
|
|
Date First Elected
|
Name
|
Position Held
with the Company
|
Age
|
or Appointed
|
|
|
|
|
Lee Costerd
|
President, Chief Executive Officer, Chief
|
56
|
February 23, 2006
|
|
Financial Officer and Director
|
|
|
Business Experience
The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he was employed.
Lee Costerd
Mr. Costerd has acted as Wolverines sole Director and Officer
since its inception on February 23, 2006. Mr. Costerd has been involved in the
mining industry for the past 20 years. Mr. Costerd was the mine manager for
a placer mining operation in British Columbia and a supervisor at a hard rock
mining operation also in British Columbia.
Family Relationships
There are no family relationships among our directors or
officers.
Involvement in Certain Legal Proceedings
Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:
1.
any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
2.
any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor offences);
3.
being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
4.
being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors and persons who own more than 10% of our
common stock to file with the Securities and Exchange
27
Commission initial statements of beneficial ownership, reports
of changes in ownership and annual reports concerning their ownership of our
common stock and other equity securities, on Forms 3, 4 and 5 respectively.
Executive officers, directors and greater than 10% shareholders are required by
the SEC regulations to furnish us with copies of all Section 16(a) reports that
they file.
Based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons, we believe
that during fiscal year ended May 31, 2009, all filing requirements applicable
to our officers, directors and greater than 10% percent beneficial owners were
complied with.
Audit Committee and Audit Committee Financial Expert
We do not have an audit committee; our entire board of
directors performs the function of an audit committee. Our board of directors
has determined that it does not have a member that qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K,
and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A
under the Securities Exchange Act of 1934, as amended.
We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.
Code of Ethics
We adopted a Code of Ethics applicable to all of our directors,
officers, employees and consultants, which is a "code of ethics" as defined by
applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our
registration statement on Form S-1 filed on July 15, 2008. If we make any
amendments to our Code of Ethics other than technical, administrative, or other
non-substantive amendments, or grant any waivers, including implicit waivers,
from a provision of our Code of Ethics to our chief executive officer, chief
financial officer, or certain other finance executives, we will disclose the
nature of the amendment or waiver, its effective date and to whom it applies in
a Current Report on Form 8-K filed with the SEC.
Item
11. Executive
Compensation
The particulars of the compensation paid to the following
persons:
-
our principal executive officer;
-
each of our two most highly compensated executive officers who were serving
as executive officers at the end of the years ended May 31, 2009 and 2008; and
-
up to two additional individuals for whom disclosure would have been
provided under (b) but for the fact that the individual was not serving as our
executive officer at the end of the years ended May 31, 2009 and 2008,
who we will collectively refer to as the named executive
officers of our company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:
28
SUMMARY COMPENSATION TABLE
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensati
on
($)
|
Total
($)
|
Lee Costerd
Chief Executive
Officer, Chief
Financial Officer
and
Director
)
|
2009
2008
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
27,145
(1)
28,222
(2)
|
27,145
28,222
|
|
(1)
|
Consulting fees of $27,145 have been paid and/or accrued
to Mr. Costerd.
|
|
|
|
|
(2)
|
Mr. Costerd received an aggregate of $28, 222 in
management fees.
|
Stock Options/SAR Grants
During the period from inception (February 23, 2006) to May 31,
2009, we did not grant any stock options to our executive officers.
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Values
There were no options exercised during our fiscal year ended
May 31, 2009 or May 31, 2008 by any officer or director of our company.
Outstanding Equity Awards at Fiscal Year End
No equity awards were outstanding as of the year ended May 31,
2009.
Compensation of Directors
We reimburse our directors for expenses incurred in connection
with attending board meetings. We have not paid any director's fees or other
cash compensation for services rendered as a director since our inception to May
31, 2009.
We have no formal plan for compensating our directors for their
service in their capacity as directors, although such directors are expected in
the future to receive stock options to purchase common shares as awarded by our
board of directors or (as to future stock options) a compensation committee
which may be established. Directors are entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. Our board of directors may award special
remuneration to any director undertaking any special services on our behalf
other than services ordinarily required of a director. No director received
and/or accrued any compensation for their services as a director, including
committee participation and/or special assignments.
Employment Contracts and Termination of Employment and
Change in Control Arrangements
We have not entered into any employment agreement or consulting
agreement with our directors and executive officers.
There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. Our
directors and executive officers may receive stock options at the
29
discretion of our board of directors in the future. We do not
have any material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to our directors or executive officers,
except that stock options may be granted at the discretion of our board of
directors.
We have no plans or arrangements with respect to remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $60,000 per
executive officer.
Item
12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The following table sets forth, as of September 29, 2009,
certain information with respect to the beneficial ownership of our common stock
by each stockholder known by us to be the beneficial owner of more than 5% of
our common stock and by each of our current directors and executive officers.
Each person has sole voting and investment power with respect to the shares of
common stock, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the shares of common stock, except as otherwise indicated.
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial
Ownership
|
Percentage
of
Class
(1)
|
Lee Costerd
4055 McLean Road
Quesnel,
British Columbia
|
4,000,000
|
5.8%
|
Directors and Officers as a Group
|
4,000,000
|
5.8%
|
Ralph Biggar
2015 Fraserview Drive
Vancouver, BC
V5P 2N2
|
5,000,000
|
7.3%
|
Art Den Duyf
7194 Nancy Green Drive
Whistler, BC
V0N 1B0
|
5,375,000
|
7.8%
|
Deirdre Lynch
#119-1363 Clyde Ave
West Vancouver, BC
V7T 2W9
|
5,250,000
|
7.6%
|
Prote Poker
35 Katshinak Street
P.O.
Box 57
Natuashish, NL
A0P 1A0
|
5,000,000
|
7.3%
|
Thian Yew Ng
4462 Cambie Street
Vancouver, BC
V6B 2Z6
|
5,225,000
|
7.6%
|
(1)
|
Under Rule 13d-3, a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares: (i)
voting power, which includes the power to vote, or to direct the voting of
shares; and (ii) investment power, which includes the power to dispose or
direct the disposition of shares. Certain shares may be deemed to be
beneficially owned
|
30
by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise of an
option) within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the persons actual ownership or voting power
with respect to the number of shares of common stock actually outstanding on
September 29, 2009. As of September29, 2009, there were 68,630,000 shares of our
companys common stock issued and outstanding.
Changes in Control
We are unaware of any contract or other arrangement or
provisions of our Articles or Bylaws the operation of which may at a subsequent
date result in a change of control of our company. There are not any provisions
in our Articles or Bylaws, the operation of which would delay, defer, or prevent
a change in control of our company.
Item
13. Certain
Relationships and Related Transactions, and Director Independence
Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest.
The promoter of our company is our sole directors and officer.
Director Independence
We currently act with one director, consisting of Mr. Lee
Costerd. We have determined that we do not have a director that qualifies as an
independent director as defined in NASDAQ Marketplace Rule 4200(a)(15).
We do not have a standing audit, compensation or nominating
committee, but our entire board of directors act in such capacity. We believe
that our directors are capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. Our directors do not believe that it is necessary to have an audit
committee because we believe that the functions of an audit committee can be
adequately performed by the board of directors. In addition, we believe that
retaining additional independent directors who would qualify as an audit
committee financial expert would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development.
Item
14. Principal
Accountants Fees and Services
The aggregate fees billed for the most recently completed
fiscal year ended May 31, 2009 and for fiscal year ended May 31, 2008 for
professional services rendered by the principal accountant for the audit of our
annual financial statements and review of the financial statements included in
our quarterly reports on Form 10-Q and services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for these fiscal periods were as follows:
31
|
Year
Ended
May 31
|
2009
($)
|
2008
($)
|
Audit Fees
|
$10,000
(1)
CDN$8,400
(2)
|
$22,007
|
Audit Related Fees
|
Nil
|
Nil
|
Tax Fees
|
Nil
|
Nil
|
All Other Fees
|
Nil
|
Nil
|
Total
|
$10,000
CDN$8,400
|
$22,007
|
|
(1)
|
Paid to Mendoza Berger & Company LLP.
|
|
|
|
|
(2)
|
Paid to Saturna Group Chartered Accountants
LLP.
|
Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.
Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.
PART IV
Item
15. Exhibits,
Financial Statement Schedules
Exhibits required by Item 601 of Regulation S-K
Exhibit
|
|
Number
|
Description
|
|
|
(3)
|
(i) Articles of Incorporation; and (ii) Bylaws
|
|
|
3.1
|
Articles of Incorporation of Wolverine Exploration Inc.
filed as an Exhibit to our Form S-1 (Registration Statement) on July 15,
2008, and incorporated herein by reference.
|
|
|
3.2
|
Bylaws of Wolverine Exploration Inc., filed as an Exhibit
to our Form S-1 (Registration Statement) on July 15, 2008, and
incorporated herein by reference.
|
|
|
3.3
|
Certificate of Amendment of Wolverine Exploration Inc.,
filed as an Exhibit to our Form S-1 (Registration Statement) filed on July
15, 2008 and incorporated herein by reference.
|
|
|
3.4
|
Certificate of Registration of Extra-Provincial
Corporation, filed as an Exhibit to our Form S-1 (Registration Statement)
filed on July 15, 2008 and incorporated herein by reference.
|
32
Exhibit
|
|
Number
|
Description
|
|
|
(10)
|
Material
Contracts
|
|
|
10.1
|
Vend-In Agreement
dated February 28, 2007 between Wolverine and Shenin Resources Inc., filed
as an Exhibit to our Form S-1 (Registration Statement) filed on July 15,
2008 and incorporated herein by reference.
|
|
|
10.2
|
Consulting Agreement
dated January 31, 2007 between Wolverine and Texada Consulting Inc., filed
as an Exhibit to our Form S-1 (Registration Statement) filed on July 15,
2008 and incorporated herein by reference.
|
|
|
10.3
|
Additional Property
Agreement dated May 17, 2007 among Wolverine, Shenin Resources Inc. and
Richard Haderer, filed as an Exhibit to our Form S-1 (Registration Statement)
filed on July 15, 2008 and incorporated herein by reference.
|
|
|
(14)
|
Code of Ethics
|
|
|
14.1
|
Code of Ethics,
filed as an Exhibit to our Form S-1 (Registration Statement) filed on
July 15, 2008 and incorporated herein by reference.
|
|
|
(31)
|
Rule 13a-14(a)/15d-14(a)
Certifications
|
|
|
31.1*
|
Section
302 Certifications under Sarbanes-Oxley Act of 2002
|
|
|
(32)
|
Section 1350
Certifications
|
|
|
32.1*
|
Section
906 Certifications under Sarbanes-Oxley Act of 2002
|
*Filed herewith.
33
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
WOLVERINE EXPLORATION INC.
|
|
(Registrant)
|
|
|
|
|
Dated: October 8, 2009
|
/s/
Lee Costerd
|
|
Lee Costerd
|
|
Chief Executive Officer, Chief Financial
|
|
Officer and Director
|
|
(Principal Executive Officer, Principal
|
|
Financial Officer and Principal Accounting
|
|
Officer)
|
34
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