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 industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to "common shares" refer to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our company", "Wolverine", mean Wolverine Technologies Corp., a Nevada corporation, unless otherwise indicated.
Corporate History
Our company was incorporated in the State of Nevada on February 23, 2006 and is quoted on the OTC Pink under the symbol WOLV.
Since we began operations in 2006, the Company has been focused primarily on the exploration for and development of base and precious metal properties located in North America. In February 2007, we acquired a right to earn a 90% interest in approximately 520 claims through a combination of an upfront cash payment of $34,000, an upfront share payment of 34,000,000 common shares of Wolverine, and by making exploration expenditure commitments totaling $600,000 over three years. From 2007 to the present, we spent approximately US$710,757 to earn our 90% interest in the Cache River Property; Shenin Resources Inc. maintains a 10% carried interest in the project.
The Cache River Property now consists of a total of 53 mineral claims of which 6 claims are held under Licence 013472M and an additional 47 claims were recently staked and are held under Licenses 031643M and 031889M. We are not currently conducting any exploration on the Cache River Property but will return to exploration on the Cache River Property in the summer/fall of 2021.
We have not yet determined whether the Cache River Property contain mineral reserves that are economically recoverable.
Our Current Business
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a focus on base and precious metals. Our current operational focus is to raise sufficient funds to continue exploration activities on our property in Labrador, Canada, known as the Cache River Property. The Cache River Property consists of a total of 53 mineral claims of which 6 claims are held under Licence 013472M and an additional 47 claims were recently staked and are held under Licenses 031643M and 031889M. We are not currently conducting any exploration on the Cache River Property. We intend to conduct further exploration activities on the Cache River when financing is available. We expect to review other potential exploration projects from time to time as they are presented to us.
On April 19, 2016, Wolverine entered into a Share Purchase Agreement with a director, David Chalk, pursuant to which we have agreed to issue in a private placement 400,000,000 shares of our common stock in consideration for one-third of the net proceeds that Mr. Chalk may realize from the sale of Mr. Chalk's 15% equity interest in Decision-Zone Inc., a privately held cyber-security software company based in Ontario, Canada. The Agreement is subject to our Company increasing its authorized capital to allow for the issuance of the consideration shares. As of the date of this filing, the agreement has not yet closed.
Our business is conducted by independent contractors which include our officers and directors, among others. As of May 31, 2021, the company had three consultants PubCo Services Inc. (Richard Haderer), Texada Consulting Inc. (Bruce Costerd), and David Chalk engaged on a non-exclusive, part time basis, and several other IR, administrative, and accounting consultants who are engaged on an intermittent, as needed basis. Our business plan does not anticipate that we will hire a large number of employees or that we will require extensive office space. We have to date, and plan to continue to acquire most of the industry and geological expertise we require through third party contractual relationships with other companies, which will act as operators of our various interests. Although this exposes us to certain risks on behalf of those operators, it also allows us to participate in the often, unique experience and knowledge that local persons have related to certain properties.
The Company's objectives for the next twelve months include:
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With respect to the Cache River Property, prior to launching further deeper drilling, a review of all previous geophysical surveys will be completed by a qualified geophysicist to determine which type of new geophysical survey should be performed to locate deeper seated mineralization on the original 6 claims and on the new additional 47 claims that were staked in November and December of 2020;
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To complete the Share Purchase Agreement with David Chalk.
We have suffered recurring losses from operations and anticipate generating losses for the foreseeable future. The continuation of our business is dependent upon obtaining further financing, completing a successful program of exploration and/or development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.
Mineral Properties
Summary
The Company has one current mineral project known as the Cache River Property. We have not yet determined if the Cache River Property contains mineral reserves that are economically recoverable.
Cache River Property -Labrador, Canada
Technical Report
Wolverine commissioned G Timothy Froude, B.Sc., P. Geo., a licensed member of the Professional Engineers and Geoscientists of Newfoundland and Labrador to complete a Technical Report on the Cache River Property. The Technical Report, a report compliant with National Instrument 43-101, is dated September 21, 2016 and has been filed on SEDAR at www.sedar.com in conjunction with this Prospectus. The following information concerning the Cache River Property is derived from the Technical Report. The scientific and technical information contained in this 10-K relating to the Cache River Property is supported by the Technical Report, which is subject to certain assumptions, qualifications, and procedures described therein.
Property Description and Location
The Cache River Property is located about 120 kilometres (75 miles) west of Goose Bay, Labrador, a small town of 9,000 people on the Atlantic Coast of northern Canada. It takes approximately one and a half to two hours to drive to the Cache River Property from Goose Bay.
The Cache River Property lie within NTS map sheets 13E/01 and 13F/04 and extends approximately from 53o 11' 08'' N latitude and 62o 11' 56'' W longitude to 53o 06' 34'' N latitude and 61o 57' 02'' W longitude.
Goose Bay features an international airport. From there, the Cache River Property can be accessed directly from the Trans-Labrador Highway. The Cache River Property are easily accessible by the Trans-Labrador Highway, which runs through the central portion of the Cache River Property. The Trans-Labrador Highway is a well-maintained Provincial Highway with a gravel surface. There are no gas stations between Goose Bay and Churchill Falls, the next major community located 290 kilometres (180 miles) to the west of Goose Bay and 160 kilometres (105 miles) to the west of the Labrador Claims.
Access to the Cache River Property is possible for most of the year given the proximity to Goose Bay and the fact that the highway is well maintained. Airborne geophysical surveys are best performed either in late winter (March-April) or during the summer (June-August). Ground geophysical surveys should be scheduled to avoid freeze-up (November-December) and breakup (late April to early June). Ground geological surveys are best conducted with no snow cover (mid June to mid November).
Figure 1. Cache River Property Location
Description of Claims
The Cache River Property consists of a total of 53 mineral claims of which 6 claims are held under Licence 013472M and an additional 47 claims were recently staked and are held under Licenses 031643M and 031889M as described in the table below. A layout of the claims is shown in Figure 2 below.
Summary of the Claims
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|
Number
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# of Claims
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NTS
|
Area
|
Good to Date
|
|
|
|
(hectares)
|
|
013472M
|
6
|
13F/04
|
150
|
05-17-2022
|
031643M
|
29
|
13F/04
|
725
|
12-13-2025
|
031889M
|
18
|
13F/04
|
450
|
01-21-2026
|
In the Province of Newfoundland and Labrador a mineral claim consists of a 25-hectare square measuring 500 meters per side. A single license can contain from one to 256 claims. The claims are unencumbered and in good standing and there are no third-party conditions which affect the claims other than conditions defined by the Province of Newfoundland and Labrador described below. The claims together make up an aggregate area of 2,825 hectares. We have no insurance covering the claims. Management believes that no insurance is necessary since the claims are unimproved and contain no buildings or improvements.
Figure 2 Cache River Property Claims Location
There is no assurance that a commercially viable mineral deposit exists on the Cache River Property. Further exploration will be required before an evaluation as to the economic feasibility of the Cache River Property is determined. Our consulting geophysicist has written a report and provided us with recommendations of how we should explore the property. Until management can validate otherwise, the property is without known reserves.
History of Labrador and the Cache River Property
According to the report prepared by our consulting geophysicist, the geologic setting is based on information available from the Geological Survey of Canada (DNR Open File 013F/0055) and the Government of Newfoundland and Labrador (Open File 013F/0061). The regional geology as described by both government reports contains very little detail because the Trans-Labrador Highway was under construction during much of the mapping initiative, opening in 1992.
Also, the area has seen only limited geologic mapping on a regional scale, in part due to the remoteness of the area and the timing of the Federal and Provincial mapping initiatives that preceded construction of the Trans-Labrador Highway. The mapped geology within the area is part of a regional 1:500,000 compilation undertaken by the Newfoundland and Labrador Provincial Government during the early 1990's. 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.
Exploration History
In October 2007 we completed a 1493- line km helicopter borne, AeroTEM electromagnetic, magnetic and radiometric survey over the Cache River property at a line spacing of 100 meters. The airborne survey identified 8 conductive targets which warranted ground follow-up.
In the fall of 2009, geological reconnaissance, along with prospecting and (rock) sampling, was completed on three of our eleven licenses on the Cache River Property. Some, but not all of the known mineralized (copper and gold) zones were sampled as this was more of a reconnaissance exercise until a more systematic program is put in place. In addition, to the usual base metal sampling, scintillometer surveys were done on the exposed rock cuts along the highway and selected areas of the southern portions of the three licenses (to test for potential radioactive and rare earth element mineralization).
Work on the property during June of 2010 consisted of prospecting, sampling and geological reconnaissance on, and around, electro-magnetic and radiometric anomalies that were identified during the 2007 airborne survey. Earlier sampling on rock cuts along the highway had shown copper and gold values up to 6.4% copper and 108 ppb gold, that warranted further exploration.
Continued prospecting during July 2010 on other areas of the property has revealed additional outcrops containing malachite (oxidized copper mineral) alteration on the western end of the property near anomaly number one.
In August and September of 2010, a follow up program of diamond drilling was contracted to an Ontario, Canada, drilling company and a total of 522.5 meters was drilled in 6 holes.
In November and December 2010 an induced polarization (IP) Survey was completed on two grids located on the property. Grid 1 consisted of 19, 1.6 km lines oriented at 360 degrees. Five of those lines were cut short (1.2 km) due to a large lake that was not completely frozen at the time of the survey and was considered unsafe. A 1.8 km base line oriented at 090 degrees crossed the centre of the grid. Grid 2 consisted of 13 lines that varied from ~750 m, in the south to 1500 m in the north. The lines were oriented at 090 degrees with a baseline 1.2 km long, oriented at 360 degrees.
In June of 2011 we conducted a prospecting program which defined the eleven drill targets in the anomalous areas which were identified by the Induced Polarization Survey completed in late 2010.
In the fall of 2011, a follow up program of diamond drilling was contracted to an Ontario, Canada drilling company and a total of 271 meters was drilled in 4 holes.
In the fall of 2012, a follow up program of diamond drilling consisting of two holes was drilled by Innu-Cartwright Drilling Limited Partnership.
Exploration Results
Disseminated mineralization consisting mainly of pyrite, pyrrhotite and chalcopyrite were detected in several areas of the property. Mineralization was first noted in roadside rock cuts, samples were taken but the GPS location was not recorded as none were available, only a generalized location within several metres was given to the geologist.
After acquiring the property, an airborne electromagnetic, magnetic and radiometric survey was completed, and several anomalies were detected. Wolverine then engaged a geologist to supervise the prospecting, trenching and drilling program. Prospecting revealed other zones of disseminated copper and gold mineralization, mainly in rock cuts along the highway which had the best exposure as most of the property is covered by marsh and forested overburden.
Diamond drilling on two airborne anomalous areas revealed disseminated mineralization in four of the six drill holes.
An induced polarization (IP) survey was completed on two selected areas that detected 23 anomalous zones.
Of the four holes drilled in the fall of 2011, two had minor indications of sulphide mineralization with magnetite, while one contained disseminated mineralization consisting of blebs of chalcopyrite and pyrite for approximately 37 metres (121 feet).
The two anomalies drilled in the fall of 2012 at approximately 50-degree angles did not intersect sufficient amounts of mineralization to account for the magnitude of that picked up by the IP survey. There are very minor amounts of pyrite and the rock is slightly magnetic with only background radioactivity.
Quality Assurance/Quality Control
All drill core samples were cut lengthwise with a rock saw. Half of the sample was retained for future reference and the other was sent by Canada Post, insured and delivered to the laboratory. Sample sections were measured by depth markers in the core boxes and confirmed by the geologist. Results were mailed back to the geologist and confirmed by the chief chemist's signature. A portion of the laboratory sample was retained at the laboratory for a period of one year.
Surface bedrock sample sites were selected by geologists and prospectors. GPS readings recorded the locations. Samples were stored in new industrial plastic sample bags with the sample number which was also recorded in note books. Samples were again sent by Canada Post with the same procedure noted above.
Present Condition of the Cache River Property
The mineralization found to date on the Cache River Property consists primarily of copper and gold mineralization in sulphide with associated pyrite (a non-economic sulphide mineral). There are also a number of malachite veins (and malachite-stained outcrops).
The country rocks have been identified as meta-sedimentary gneiss. Locally, gabbros and diorites have been identified by surface prospecting.
Based on the mineralization and the known geologic rock types, there appear to be three possible deposit types that could host mineralization within the Cache River Property; 1) porphyry copper-gold in sulphide, 2) volcanogenic (Cu-Pb-Zn) massive sulphide, or 3) magmatic nickel-copper sulphide.
Copper-gold (Cu-Au) deposits occur within sedimentary rocks when a stock intrudes into the sediments and heats up the ground water. The heated fluids pick up copper and other metals as they percolate through fractures opened up within the sediments. Mineralization is mostly disseminated, but significant veins of chalcopyrite, rich in gold, are also present. The presence of chalcopyrite in meta-sediment and malachite staining are excellent indicators for a copper-gold system.
VMS deposits are commonly formed by deposition of hot metals into seawater from volcanic vents on the seafloor. The main metals include copper, zinc, lead, gold and silver. Within the Cache River Property there are no mapped volcanic rocks, although the known mineralization has been found within gabbro and diorite.
Magmatic nickel-copper sulphide deposits are hosted in mafic to ultramafic rocks such as gabbro, norite, and troctolite. Other rock types commonly associated with these host rocks are diorites and anorthosites. Within the Cache River Property chalcopyrite mineralization was identified in a gabbro and separately associated with a diorite dyke.
The Cache River Property are almost completely covered by overburden and tree cover. Rock outcrops are best observed along the highway where they have been uncovered.
The climate within the area is typically northern with short hot summers and long cold winters. Winter temperatures can range from -15o C to -35o C and occasionally fall to below -42o C.
There is no equipment, infrastructure or electricity currently on the property.
There have been no previous airborne surveys in this area that are within 35 kilometers (22 miles) of the Cache River Property. The area would have been covered as part of the Federal Government regional airborne magnetic survey, but this survey would not have the sufficient resolution to identify magnetic units less than 1 kilometer in size and could not detect any conductive mineralization.
Geology of the Cache River Property
Geologically the area is mapped as early to late Proterozoic meta-sediments that have been metamorphosed to gneisses. Major gabbroic and anorthositic intrusives have intruded the gneisses several kilometers to the east and local gabbros and diorites occur throughout the area along with several quartz veins. Large tourmaline crystals have also been identified on the property. The area has little outcrop and is covered by overburden, generally sand and gravel. Spruces trees are abundant but are not very tall.
The presence of several copper showings and malachite staining in the limited outcrop suggests that a mineralizing event of copper and gold has intruded into the meta-sedimentary rocks. The nature of the mineralization is likely to be copper veins and disseminations with associated gold. It is also possible that magmatic nickel and copper mineralization could be present with associated platinum group elements within gabbros.
Environmental Liabilities
Management is not aware of any environmental liabilities, which may have effect on the Company. The Company intends to fully comply with all environmental regulations.
Recommendations
The work recently completed on the Cache River Property has identified an area that could host significant copper and gold mineralization in a previously unexplored area. Exploration programs conducted between 2006 and 2012 consisting of prospecting, trenching and diamond drilling did not return significant results. However airborne and ground geophysical surveys identified numerous anomalies. Much of the previous drilling was limited in depth and many anomalies remain untested. Prior to launching further deeper drilling, a review of all previous geophysical surveys will be completed by a qualified geophysicist to determine which type of new geophysical survey should be performed to locate deeper seated mineralization on the original 6 claims and on the new additional 47 claims that were staked in November and December of 2020.
A proposed $100,000 program is recommended to complete Phase 1.
Phase 1 Program Proposed Expenditures
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|
$CDN
|
|
Project Management/Staff Costs
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$
|
10,000
|
|
Geophysicist (review of previous geophysics/work; recommend new program)
|
$
|
15,000
|
|
Geophysical survey - to be determined
|
$
|
55,000
|
|
Report revision/miscellaneous
|
$
|
7,500
|
|
Subtotal
|
$
|
87,500
|
|
Contingency 13%
|
$
|
12,500
|
|
Phase 1 Total
|
$
|
100,000
|
|
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.
Because we have only recently commenced business operations, we face a high risk of business failure and this could result in a total loss of your investment.
We are not currently conducting any exploration and are in the initial stages of exploration of the Labrador Claims, and thus have 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.
Because access to our company's 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 company's inability to meet deadlines for exploration expenditures as defined by the Province of Newfoundland and Labrador. This could cause the business venture to fail and the loss of your entire investment unless our company can meet the deadlines.
As our company undertakes exploration of the Labrador Claims, we will be subject to compliance with government regulation that may increase the anticipated time and cost of its exploration program.
There are several governmental regulations that materially restrict the exploration of minerals. Our company will be subject to the mining laws and regulations as contained in the Mineral Act of the Province of Newfoundland and Labrador as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these regulations. While our company's 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 company's ability to continue as a going concern.
The accompanying financial statements have been prepared assuming that our company will continue as a going concern. As discussed in Note 1 to the May 31, 2021, financial statements, our company was incorporated on February 23, 2006, and has never generated any revenue, has a working capital deficiency, and has incurred operating losses since inception. As a result, our company's auditor has expressed substantial doubt about the ability of our company to continue as a going concern. Continued operations are dependent on our ability to complete equity or debt financings or generate profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.
Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's 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 customer's 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 customer's 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 purchaser's 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.
OTC Markets has placed a "Shell Risk" identifier on the Company's page on OTC Markets website.
OTC Markets has placed a "Shell Risk" identifier on the Company's page on OTC Markets website. The Company is not in agreement that it is a "Shell Company" as defined in Rule 12b-2 of the Exchange Act due to the operations conducted by the Company in the past few years in the technology sector, and that such operations have been more than nominal. If advisable or beneficial for the Company or its shareholders, the Company may elect to pursue the appeal process with OTC Markets to have the "Shell Risk" identifier removed.
The Company is subject to a cease trade order issued by the Alberta Securities Commission ("ASC")
On October 5, 2020, the ASC issued a cease trade order against the Company for failure to file the annual financial statements and MD&A for the year ended May 31, 2020. A cease trade order has the effect of preventing the Company from raising capital and impairing the Company's operations until the cease order has been revoked by the ASC. The Company has filed all of its outstanding filings and applied for a full revocation of the cease trade order but this no assurance that the ASC will grant a revocation.