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SECURITIES AND EXCHANGE COMMISSION
UNDER
THE SECURITIES ACT OF 1933
Nevada | 1090 | 30-0363936 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I. R. S. Employer | ||
incorporation or organization) | Classification Code Number) | Identification Number) |
Wickenburg, AZ 85390
(928) 684-2717
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Chief Executive Officer and
Chief Financial Officer
Wickenburg, AZ 85390
(928) 684-2717
FAX: (925) 684-2510
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Harvey Kesner, Esq.
61 Broadway, 32nd Floor
New York, NY 10006
Tel: (212) 930-9700
FAX: (212) 930-9725
From time to time after the effective date of this Registration Statement.
Large accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyþ | |||
(Do not check if smaller reporting company) |
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The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and offers to buy these securities are not being solicited in any jurisdiction where the offer or sale is not permitted.
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Common Stock Offered By the Selling Stockholders | 1,389,645 shares of common stock | |
Common Stock Issued as of June 30, 2009 | 10,631,086 shares of common stock | |
Offering Price | The selling stockholders will be offering and selling our shares of common stock at a price of $0.90 per share until our shares are quoted on the Over-the-Counter Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. | |
Use of Proceeds | We will not receive any of the proceeds of the shares offered by the selling stockholders. We will, however, receive the exercise price upon exercise of the warrants by the selling stockholders if they are exercised for cash. We expect to use the proceeds received from the exercise of the warrants, if any, for general working capital purposes and to conduct further exploration of the Anderson Property. | |
Dividend Policy | We intend to retain all available funds and any future earnings, if any, to operate our business, fund the exploration of the Anderson Property, and to expand our business. Accordingly, we do not anticipate paying any cash dividends on our common stock in the foreseeable future. | |
Fees and Expense | We will pay all of the expenses incident to the registration of such shares, except for sales commissions and other expenses of the selling stockholders. | |
Market Information | There is no current public market for our common stock and there can be no assurances that a public market for our common stock will develop in the future. Our common stock is not currently listed on any national securities exchange and is not quoted on any over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority, Inc. for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. We do not yet have a market maker who has agreed to file such application and there can be no assurance that any market maker will be obtained. | |
Risk Factors | An investment in our common stock is highly speculative and involves a high degree of risk. Investors should carefully consider the risk factors and other uncertainties described in this prospectus before purchasing our common stock. See “Risk Factors” beginning on page 5. |
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• | identification of potential uranium mineralization based on superficial analysis; | ||
• | availability of government-granted exploration permits; | ||
• | quality of our management and our geological and technical expertise; | ||
• | capital available for exploration; and | ||
• | the market price of uranium. | ||
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• | costs of further exploration work, preparation of feasibility studies, and metallurgical test work; | ||
• | costs of development of the mineral reserve prior to production; | ||
• | costs of construction of production facilities; | ||
• | obtaining the necessary permits required to commence production; | ||
• | efficient operation of production facilities; | ||
• | ongoing costs of production; | ||
• | environmental regulations and constraints; | ||
• | availability and cost of financing; | ||
• | adverse changes in uranium prices or market price fluctuations; and | ||
• | availability of buyers of the commodity. |
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• | our ability to raise capital to fund our ongoing operations; | ||
• | our ability to acquire politically secure uranium assets; | ||
• | our ability to obtain the necessary permits, licenses, and other approvals necessary to explore and develop the Anderson Property; | ||
• | unsuccessful exploration at the Anderson Property; | ||
• | passage of legislation or government regulation adversely affecting our business, planned activities, or the mining industry; | ||
• | the timing and extent of changes in uranium and other commodity prices; | ||
• | actual or anticipated changes in the United States economy; | ||
• | our ability to retain our officers, directors, key personnel, and management; | ||
• | the possibility of future litigation or government action; and | ||
• | the other factors set forth under “Risk Factors” included in this prospectus. |
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• | any applicable contractual restrictions limiting our ability to pay dividends; | ||
• | our earnings and cash flows; | ||
• | our capital requirements; | ||
• | our financial condition; and | ||
• | other factors our Board of Directors deems relevant. |
Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities | future issuance under | |||||||||||
to be issued upon | Weighted-average | equity compensation | ||||||||||
exercise of | exercise price of | plans (excluding | ||||||||||
outstanding options, | outstanding options, | securities reflected in | ||||||||||
Plan category | warrants and rights | warrants and rights | column) | |||||||||
Equity compensation plans approved by security holders | — | NA | NA | |||||||||
Equity compensation plans not approved by security holders | 954,625 | $ | 2.98 | 645,375 |
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Grade | Pounds | ||||||||||||
Year | Tons of Ore | (%U3 O8 ) | (U3 O8 ) | ||||||||||
1955 | 9 | 0.56 | 101 | ||||||||||
1956 | 31 | 0.21 | 130 | ||||||||||
1957 | 3,614 | 0.19 | 14,043 | ||||||||||
1958 | 725 | 0.27 | 3,928 | ||||||||||
1959 | 6,379 | 0.12 | 15,028 | ||||||||||
Totals | 10,758 | 0.15 | 33,230 | ||||||||||
Exploration Group | Period | Exploration Activities | ||
Mining Group Led by Mr. T. R. Anderson | 1955-1959 | Aerial scintillometer surveying, ground prospecting, and outcrop mining | ||
Getty Oil Company | 1967-1968 | Limited exploration drilling | ||
Urangesellschaft U.S.A., Inc. | 1973-1979 | Exploration drilling: 344 rotary and 33 core holes over a 1,505-acre area | ||
Minerals Exploration Company | 1974-1978 | Exploration drilling: 1,047 rotary holes and 72 core holes over a 583-acre area |
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• | Certificate of International Standards Organization (ISO)\IEC 17025 | ||
• | Certificate of Laboratory Proficiency PTP-MAL, accredited by Standards Council of Canada | ||
• | Geostats of Australia certificate | ||
• | Society of Mineral Analysts, Round Robin testing. | ||
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Budgetary Range | ||||||||
Low | High | |||||||
Phase I | ||||||||
Geologic Modeling | $ | 50,000 | $ | 250,000 | ||||
Geostatistical Drilling | 500,000 | 1,000,000 | ||||||
Geostatistical Modeling | 50,000 | 150,000 | ||||||
Metallurgical Processing | 200,000 | 750,000 | ||||||
Concept Mine Plan | 100,000 | 300,000 | ||||||
Market Prices | 30,000 | 100,000 | ||||||
Revised Resource Estimate | 50,000 | 150,000 | ||||||
Subtotal | $ | 980,000 | $ | 2,700,000 | ||||
Phase II | ||||||||
Additional drilling | $ | — | $ | 1,000,000 | ||||
Isotopic analysis | 20,000 | 50,000 | ||||||
Subtotal | $ | 20,000 | $ | 1,050,000 | ||||
Total | $ | 1,000,000 | $ | 3,750,000 | ||||
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Name | Age | Position | ||||
Rockell N. Hankin | 62 | Chairman of the Board of Directors, Independent Director | ||||
Andrew K. Simpson | 60 | Chief Executive Officer, Chief Financial Officer and Director | ||||
Lynn F. Oates | 61 | President, Vice President — Finance and Controller | ||||
Ronald L. Parratt | 60 | Independent Director | ||||
Richard P. Graff | 62 | Independent Director |
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Stock | Option | All Other | ||||||||||||||||||||||||||
Bonus | Awards | Awards | Compensation | Total | ||||||||||||||||||||||||
Name | Year | Salary ($) | ($) | ($) | ($)(1) | ($) | ($) | |||||||||||||||||||||
Andrew K. Simpson | 2008 | $ | 210,000 | $ | — | $ | 51,923 | (2) | $ | — | $ | 7,478 | (3) | $ | 269,401 | |||||||||||||
2007 | $ | 150,750 | $ | 200,000 | (4) | — | $ | 330,638 | (5) | $ | 6,898 | (6) | $ | 688,286 | ||||||||||||||
Lynn F. Oates | 2008 | $ | 133,667 | — | $ | 20,769 | (7) | $ | 61,760 | (9) | $ | 10,000 | (8) | $ | 226,196 | |||||||||||||
2007 | $ | 52,917 | — | $ | — | $ | 158,240 | (9) | $ | 89,267 | (10) | $ | 300,424 | |||||||||||||||
Thomas F. Fudge, Jr., P. E.(11) | 2008 | $ | 6,875 | $ | 43,375 | (12) | $ | — | $ | — | $ | 132,974 | (13) | $ | 183,224 | |||||||||||||
2007 | $ | 165,000 | — | $ | — | $ | — | $ | 54,278 | (14) | $ | 219,278 | ||||||||||||||||
Bonita K. Bogaert(15) | 2008 | $ | 133,400 | $ | — | $ | — | $ | 114,375 | (17) | $ | — | $ | 247,775 | ||||||||||||||
2007 | $ | 16,248 | $ | 45,000 | (16) | $ | — | $ | 190,625 | (17) | $ | — | $ | 251,873 | ||||||||||||||
Anita Knipper(18) | 2008 | $ | 78,100 | $ | — | $ | — | $ | — | $ | — | $ | 78,100 | |||||||||||||||
2007 | $ | 16,248 | $ | — | $ | — | $ | 190,625 | (19) | $ | — | $ | 206,873 |
(1) | See Note 8 to the December 31, 2008 and 2007 Financial Statements at F-22 for the assumptions made in determining the value of the option awards. | |
(2) | On October 17, 2008, we made Mr. Simpson a restricted stock grant of 250,000 shares of common stock vesting over the three years from the grant date and valued at $3.00 per share. | |
(3) | Represents reimbursement of medical expenses. | |
(4) | Mr. Simpson became a consultant to us in May 2006. He was hired as our part-time chief financial officer in August 2006 at a salary of $7,000 per month and with bonuses in cash and equity to be determined on the basis of performance. In connection with his efforts in restructuring the Company in late 2006 and the first half of 2007, he was awarded a $200,000 bonus. | |
(5) | On March 3, 2007, we granted Mr. Simpson options to purchase 129,375 shares of common stock at an exercise price of $7.00 per share. These options vested in full at the time of issuance and expire March 7, 2012. | |
(6) | Represents reimbursement of medical expenses. | |
(7) | On October 17, 2008, we made Mr. Oates a restricted stock grant of 100,000 shares of common stock vesting over the three years from the grant date and valued at $3.00 per share. | |
(8) | Mr. Oates received an auto allowance of $10,000. | |
(9) | On July 2, 2007, we granted Mr. Oates options to purchase 35,000 shares of our common stock at an exercise price of $7.00 per share. These option vested 50% on July 2, 2007 and 50% on July 2, 2008. The options expire July 2, 2012. | |
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(10) | Mr. Oates received Other Compensation in 2007 consisting of: (i) $40,000 for moving allowance expenses, (ii) $45,100 for consulting services prior to joining us on August 1, 2007 and (iii) an auto allowance of $4,167. | |
(11) | Mr. Fudge resigned as our chief executive officer in December 2007. In December 2007, we entered into an agreement with Mr. Fudge in connection with his resignation in December 2007. Under that agreement, we granted 60,000 shares of stock, subject to vesting at the time we conduct an initial public offering, warrants to purchase 20,000 shares of common stock at $12.00 per share following an initial public offering, and warrants exercisable to purchase 20,000 shares of our common stock at $7.00 per share if we conduct a successful private placement. Further, we agreed to make cash payments to Mr. Fudge totaling $127,000, as well as additional contingent cash payments of as much as $125,000 in the event that we raise certain private placements during 2008 and $225,000 in the event that we conduct a public financing during 2008. | |
(12) | As a result of our private placement financing during 2008, we have accrued a bonus for Mr. Fudge of $43,375. As we conducted no public financings during 2008, there are no other amount due to Mr. Fudge. | |
(13) | Mr. Fudge received Other Compensation during 2008 consisting of (i) $127,000 in severance payments and (ii) $5,974 from the issuance of 20,000 warrants exercisable to purchase 20,000 shares of our common stock at $7.00 per share which terminate on December 29, 2010. | |
(14) | Other compensation represents $32,167 paid in consulting fees to Mr. Fudge and a $22,111 housing allowance paid to Mr. Fudge. | |
(15) | Ms. Bogaert resigned effective March 31, 2009. | |
(16) | We paid Ms. Bogaert a one time $45,000 signing bonus in connection with her joining us and entering into an employment agreement with us. | |
(17) | On September 28, 2007, we granted Ms. Bogaert options to purchase 50,000 shares of our common stock at an exercise price of $7.00 per share. These option vested 50% on September 28, 2007 and 50% on September 28, 2008. All of these options expired following Ms. Bogaert’s resignation. | |
(18) | Ms. Knipper resigned on May 31, 2008 | |
(19) | On September 28, 2007, we granted Ms. Knipper options to purchase 50,000 shares of our common stock at an exercise price of $7.00 per share. These option vested 50% on September 28, 2007 and all expired following Ms. Knipper’s resignation. | |
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Option | Stock | |||||||||||||||||||||||
Awards | Awards | Market | ||||||||||||||||||||||
Number of | Number of | Number of | Value of | |||||||||||||||||||||
Securities | Securities | Shares or | Shares or | |||||||||||||||||||||
Underlying | Underlying | Units of | Units of | |||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Stock that | Stock that | |||||||||||||||||||
Options (#) | Option (#) | Exercise | Expiration | have not | have not | |||||||||||||||||||
Name | Exercisable | Unexercisable | Price ($) | Date | vested (#) | vested ($) | ||||||||||||||||||
Andrew K. Simpson | 50,000 | (1) | — | $ | 3.00 | 08/03/11 | 250,000 | (8) | $ | 750,000 | (9) | |||||||||||||
93,750 | (2) | $ | 3.25 | 12/27/11 | ||||||||||||||||||||
129,375 | (3) | $ | 7.00 | 03/07/12 | ||||||||||||||||||||
Lynn Oates | 15,000 | (4) | — | $ | 3.25 | 12/27/11 | 100,000 | (10) | $ | 300,000 | (11) | |||||||||||||
35,000 | (5) | $ | 7.00 | 07/02/12 | ||||||||||||||||||||
Bonita Bogaert | 50,000 | (6) | $ | 7.00 | 09/28/12 | |||||||||||||||||||
Thomas F. Fudge, Jr. | 20,000 | (7) | $ | 7.00 | 12/27/2010 | |||||||||||||||||||
20,000 | $ | 12.00 | 12/27/2010 |
(1) | These options vested as to 16,667 shares on August 2, 2006 and the remaining options for 33,333 shares vested on December 27, 2006. | |
(2) | These options vested in full on December 31, 2006. | |
(3) | These options vested in full on March 3, 2007. | |
(4) | These options vested in full on December 31, 2006. | |
(5) | These options vested in full on July 2, 2008. | |
(6) | These options vested in full on September 27, 2008. | |
(7) | These warrants vested on December 31, 2008. | |
(8) | On October 17, 2008, we made Mr. Simpson a restricted stock grant of 250,000 shares of common stock vesting over the three years from the grant date. | |
(9) | These shares were valued at $3.00 per share which was the price paid for common stock in our private placement which closed on July 31, 2008. For the year ended December 31, 2008, we recorded an expense of $51,923 associated with the shares awarded to Mr. Simpson. | |
(10) | On October 17, 2008, we made Mr. Oates a restricted stock grant of 100,000 shares of common stock vesting over the three years from the grant date. | |
(11) | These shares were valued at $3.00 per share which was the price paid for common stock in our private placement which closed on July 31, 2008. For the year ended December 31, 2008, we recorded an expense of $20,769 associated with the shares awarded to Mr. Oates. | |
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Fees | ||||||||||||||||
Earned or | ||||||||||||||||
Paid in | Stock | Option | ||||||||||||||
Cash | Awards | Awards | Total | |||||||||||||
Name | ($) | ($)(1) | ($)(1) | ($) | ||||||||||||
Rockell N. Hankin | $ | 70,000 | $ | 387,912 | (2) | — | (2) | $ | 457,912 | |||||||
Ronald L. Parratt | $ | 18,750 | $ | 246,802 | (3) | — | (3) | $ | 265,552 | |||||||
Richard P. Graff | $ | 58,331 | $ | 295,736 | (4) | — | (4) | $ | 354,067 | |||||||
Stewart Hollingsworth(5) | $ | 35,000 | — | — | $ | 35,000 | ||||||||||
Peter Ingersoll(6) | $ | 27,500 | — | — | $ | 27,500 |
(1) | The value of the stock grants was based upon the aggregate grant dated fair value determined in accordance with FASB Statement of Financial Accounting Standard No. 123R. See Note 8 to the December 31, 2008 and 2007 Financial Statements at F-22 for the assumptions made in determining the value of the option awards. | |
(2) | Mr. Hankin was awarded 133,000 shares of our restricted common stock on November 7, 2007 which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and was valued at $7.00 per share when issued. In addition, he was awarded 133,000 shares of our restricted common stock on October 17, 2008, which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and which were valued at $3.00 per share when issued. He was awarded 16,667 shares of our restricted common stock on December 31, 2008 in lieu of the payment of cash director’s fees for a portion of 2008. These restricted shares will vest when our common stock is being traded on a public market and are valued at $3.00 per share. At December 31, 2008, a total of 282,667 shares of our restricted common stock have been awarded to Mr. Hankin, including the 16,667 restricted shares awarded as director’s fees. | |
(3) | Mr. Parratt was awarded 75,000 shares of our restricted common stock on December 12, 2007 which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and which were valued at $7.00 per share when issued. In addition, he was awarded 75,000 shares of our restricted common stock on October 17, 2008, which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and which were valued at $3.00 per share when issued. He was awarded 18,750 shares of our restricted common stock on December 31, 2008 in lieu of the payment of cash director’s fees for a portion of 2008. These restricted shares will vest when our common stock is being traded on a public market and are valued at $3.00 per share. At December 31, 2008 a total of 168,750 shares of our restricted common stock have been awarded to Mr. Parratt, including 16,667 restricted shares awarded as director’s fees. | |
(4) | Mr. Graff was awarded 100,000 shares of our restricted common stock on December 12, 2007 which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and which were valued at $7.00 per share when issued. In addition, he was awarded 100,000 shares of our restricted common stock on October 17, 2008, which vest over the three years from the date of the award or on the date our common stock is being traded in a public market, whichever occurs later and which were valued at $3.00 per share when issued. He was awarded 13,889 shares of our restricted common stock on December 31, 2008 in lieu of the payment of cash director’s fees for a portion of 2008. These restricted shares will vest when our common stock is being traded on a public market and are valued at $3.00 per share. At December 31, 2008 a total of 213,889 shares of our restricted common stock have been awarded to Mr. Graff, including 13,889 restricted shares awarded as director’s fees. | |
(5) | Mr. Hollingsworth resigned as a director in November 2007, but remained as an advisory director until November 15, 2008. | |
(6) | Mr. Ingersoll resigned as a director in November 2007 but remained as an advisory director until November 15, 2008. |
Rockell N. Hankin | Richard P. Graff | Ronald L. Parratt | ||||||||||
Chairman of the | ||||||||||||
Position | Board | Director | Director | |||||||||
Annual Fees | $ | 120,000 | $ | 100,000 | $ | 75,000 | ||||||
Restricted Stock | 266,000 | shares | 200,000 | shares | 150,000 | shares |
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• | each of our directors; | ||
• | each named executive officer; | ||
• | all of our directors and executive officers as a group; and | ||
• | each person known by us to beneficially own more than 5% of the outstanding shares of our common stock. |
Common Stock | ||||||||
Beneficially Owned | ||||||||
Directors and Named Executive Officers | Number | Percentage(1) | ||||||
Directors and Named Executive Officers(2) : | ||||||||
Andrew K. Simpson(3) | 4,099,175 | 39.6 | % | |||||
Lynn F. Oates(4) | 189,017 | 1.8 | % | |||||
Rockell N. Hankin | 331,847 | 3.1 | % | |||||
Richard P. Graff | 254,873 | 2.4 | % | |||||
Ronald L. Parratt | 309,488 | 2.9 | % | |||||
All directors and executive officers as a group (5 persons) | 5,184,400 | 48.8 | % | |||||
Beneficial owners of more than 5%: | ||||||||
Ralph Kettell(5) | 4,071,468 | 38.3 | % | |||||
Traxys North America LLC(6) | 1,406,557 | 13.2 | % | |||||
Laura Kettell(7) | 1,254,399 | 11.8 | % | |||||
Arden Larson(8) | 768,000 | 7.2 | % | |||||
Passport Materials Master Fund, LP(9) | 644,500 | 6.1 | % | |||||
Barbara J. Moriarty(10) | 549,000 | 5.2 | % |
* | Represents less than 1% | |
(1) | Percentage calculations performed without assuming exercise of any of the 4,578,996 warrants and options outstanding on June 30, 2009. | |
(2) | Unless otherwise indicated, the address of each person is c/o Concentric Energy Corp., 3350 Sabin Brown Road, #3, Wickenburg, AZ 85390. | |
(3) | Mr. Simpson has been granted a proxy respecting the voting rights of 3,575,000 shares of common stock under the voting control of Ralph Kettell. Under the terms of the separation agreement between Ralph Kettell and Laura Kettell, Mr. Kettle’s former spouse, Laura Kettell has agreed to enter into voting arrangements that would provide Mr. Simpson with voting control over 3,575,000 shares. In addition, Mr. Simpson owns 1,050 shares directly, has been granted 250,000 restricted shares and has been granted 273,125 shares issuable on exercise of options under our equity compensation plans. |
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(4) | Mr. Oates has been granted 100,000 restricted common shares, directly owns 2,100 common shares and has been granted 50,000 shares issuable on exercise of options under our equity compensation plans. In addition, Mr. Oates holds debentures convertible into 12,306 shares of common stock and warrants for the purchase of 24,611 shares of common stock. | |
(5) | Mr. Kettell has been granted 150,000 shares issuable on exercise of options under our equity compensation plans. In addition, Mr. Kettell owns 40,000 shares of common outside of the voting trust described below and holds debentures convertible into 102,156 shares of common stock and warrants for the purchase of 204,312 shares of common stock. Under the terms of a separation agreement between Mr. Kettell and Laura Kettell, Mr. Kettell directly has beneficial economic ownership of 774,000 shares of common stock. In addition, under the terms of this same agreement, Mr. Kettell will retain the assignable voting interest of all shares owned by his former wife. Mr. Kettell is the direct owner of LARK Enterprises. Ltd. which owns 436,000 shares of common stock. In addition, Mr. Kettell is the donor of and retains the voting power over 300,000 shares of common stock gifted to family members. Mr. Kettell has the contractual right to acquire 465,000 shares of common stock held by his mother. Mr. Kettell has executed an agreement to restrict his future resales of shares for one year from July 31, 2008 to 300,000 shares. Mr. Kettell and Laura Kettell entered into voting arrangements that would provide Mr. Simpson with voting control over 3,575,000 shares. Resales of shares by Mr. Kettell and Laura Kettell are restricted to 300,000 shares for one year from July 31, 2008, with additional restrictions on resales in future years. Mr. Kettell’s address is 3537 Spencerville Road, Ste 4, Burtonsville, MD 20866. | |
(6) | Traxys North America LLC holds debentures convertible into 368,852 shares of common stock and warrants for the purchase of 1,037,705 shares of common stock. Traxy’s address is 825 Third Avenue, 9th Floor, New York, NY 10022 | |
(7) | Ms. Kettell has been granted 30,000 shares issuable on exercise of options under our equity compensation plan. In addition, Ms. Kettell holds debentures convertible into 13,133 shares of common stock and warrants for the purchase of 26,266 shares of common stock. Under the terms of a separation agreement with Mr. Kettell, Ms. Kettell directly has beneficial economic ownership of 1,185,000 shares of common stock. Laura Kettell has the contractual right to acquire 455,000 shares of common stock held by her parents. Mr. Kettell and Laura Kettell have agreed to enter into voting arrangements that would provide Mr. Simpson with voting control over 3,575,000 shares. Upon execution of the voting trust agreement to implement this agreement, resales of shares by Mr. Kettell and Laura Kettell would be restricted to 300,000 shares for one year from July 31, 2008, with additional restrictions on resales in future years. Ms. Kettell’s address is 2905 Greencastle Road, Burtonsville, MD 20866. | |
(8) | Mr. Larson controls 600,000 shares, 95,000 shares issued in his name, 5,000 shares issued in his wife’s name, 400,000 issued to E-VAT and 100,000 issued to Nevada Silver. In addition, he has 126,000 options granted in his name and 42,000 options granted in his son’s name. Mr. Larson’s address is PO Box 1893, Grand Junction, CO 81502. | |
(9) | Passport Materials Master Fund, LP’s address is c/o Passport Management LLC, 30 Hotaling Place, Ste 300, San Francisco, CA 94111 | |
(10) | Ms. Moriarity’s address is 6884 North Kendall Drive, Apt C-301, Miami, FL 33156. | |
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Shares | Total Shares to be | |||||||||||||||
Beneficially | Owned and Percent | |||||||||||||||
Owned | of Total | |||||||||||||||
Prior | Number of | Outstanding After | ||||||||||||||
Name of Selling | to this | Shares to be | Completion of this | |||||||||||||
Shareholder | Offering | Offered | Offering(1) | |||||||||||||
Blue Sky Securities Limited(2) | 90,427 | (3) | 70,427 | 20,000 | * | |||||||||||
John Averett | 198,450 | (4) | 198,450 | — | — | |||||||||||
John O’Shea | 139,984 | (5) | 120,630 | 19,354 | * | |||||||||||
David R. Holbrooke | 50,244 | (6) | 40,244 | 10,000 | * | |||||||||||
Jonathan B. Dangar | 14,747 | (7) | 14,747 | — | — | |||||||||||
John T. and Peggy M. Cella | 108,533 | (8) | 108,533 | — | — | |||||||||||
Herbert Arnold Duke | 33,475 | (9) | 23,475 | 10,000 | * | |||||||||||
Holmes Revocable Trust(10) | 88,478 | (11) | 88,478 | — | — | |||||||||||
Armand E. and Dicky L. Balsano | 58,985 | (12) | 58,985 | — | — | |||||||||||
Timothy M. and Rosemary A. Schmidt | 20,057 | (13) | 20,057 | — | — | |||||||||||
Thomas D. and Mary M. Miller | 58,985 | (14) | 58,985 | — | — | |||||||||||
Daniel Harper Meek | 10,061 | (15) | 10,061 | — | — | |||||||||||
Mere Lane Investment Fund LP(16) | 32,981 | (17) | 32,981 | — | — | |||||||||||
J. Wayne Hill IRA(18) | 20,061 | (19) | 10,061 | 10,000 | * | |||||||||||
James R. Echols | 29,492 | (20) | 29,492 | — | — |
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Total | ||||||||||||||||
Shares | Number of | Total Shares to be | ||||||||||||||
Beneficially | Shares to be | Owned and Percent | ||||||||||||||
Owned | Offered for | of Total | ||||||||||||||
Prior | Selling | Outstanding After | ||||||||||||||
Name of Selling | to this | Stockholders | Completion of this | |||||||||||||
Shareholder | Offering | Account | Offering(1) | |||||||||||||
Michael Harvey Revocable Trust(21) | 34,492 | (22) | 29,492 | 5,000 | * | |||||||||||
Richard & Eleanor C. Trevison | 29,492 | (23) | 29,492 | — | — | |||||||||||
Scott Bowman | 29,492 | (24) | 29,492 | — | — | |||||||||||
Theodore E. & Theresa M. Kwiatkowski | 29,492 | (25) | 29,492 | — | — | |||||||||||
Gail Flynn | 5,030 | (26) | 5,030 | — | — | |||||||||||
Judith Phillips | 14,747 | (27) | 14,747 | — | — | |||||||||||
Judith Phillips IRA 6UA001294(28) | 14,747 | (29) | 14,747 | — | — | |||||||||||
Richard Louise | 38,627 | (30) | 33,627 | 5,000 | * | |||||||||||
AWM Holding LLC(31) | 121,266 | (32) | 121,266 | — | — | |||||||||||
Nicholas Hammond | 60,244 | (33) | 40,244 | 20,000 | * | |||||||||||
Richard Price | 90,074 | (34) | 84,749 | 5,325 | * | |||||||||||
Joe Wolfe | 9,642 | (35) | 9,642 | — | — | |||||||||||
Michael Strauss | 9,861 | (36) | 9,861 | — | — | |||||||||||
Todd Kice | 10,452 | (37) | 10,452 | — | — | |||||||||||
Jason Lagomarsino | 1,706 | (38) | 1,706 | — | — | |||||||||||
Ralph Kettell | 4,071,468 | (39) | 40,000 | 4,031,468 | 38.3 | % |
* | Less than 1% | |
(1) | Based on 10,631,086 shares issued as of June 30, 2009. The number and percentage of shares beneficially owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the selling stockholders has sole or shared voting power or investment power and also any shares, which the selling stockholders has the right to acquire within 60 days from the current date. | |
(2) | Michel Clemence, as Director of Blue Sky Securities Limited, has voting and dispositive power over these securities. | |
(3) | Includes 427 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(4) | Includes 86,717 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 44,445 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(5) | Includes 34,588 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, and 28 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. |
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(6) | Includes 244 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(7) | Includes 6,444 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 3,303 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(8) | Includes 3,955 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44, 47,104 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 24,141 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(9) | Includes 131 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 11 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(10) | Gordon Holmes, as Trustee of Holmes Revocable Trust, has voting and dispositive power over these securities. | |
(11) | Includes 38,662 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 19,816 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(12) | Includes 25,775 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 13,210 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(13) | Includes 57 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(14) | Includes 25,775 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 13,210 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(15) | Includes 61 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(16) | Hugh Cohen, as Managing Member of the General Partner of Mere Lane Investment Fund, LP, has voting and dispositive power over these securities. | |
(17) | Includes 12,981 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(18) | James Wayne Hill, as control person of the J. Wayne Hill IRA, has voting and dispositive power over these securities. | |
(19) | Includes 61 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(20) | Includes 12,887 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 6,605 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(21) | Michael and Lyn Harvey, as Trustees of the Michael Harvey Revocable Trust, have voting and dispositive power over these securities. | |
(22) | Includes 12,887 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 6,605 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(23) | Includes 12,887 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 6,605 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. |
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(24) | Includes 12,887 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 6,605 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(25) | Includes 12,887 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 6,605 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(26) | Includes 30 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(27) | Includes 6,444 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 3,303 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(28) | Judith Phillips, as control person of the Judith Phillips IRA, has voting and dispositive power over these securities. | |
(29) | Includes 6,444 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 3,303 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(30) | Includes 11,083 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, 14,258 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share, and 3,286 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(31) | Anna McNeur, as Member of AWM Holding LLC, has voting and dispositive power over these securities. | |
(32) | Includes 31,265 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(33) | Includes 244 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(34) | Includes 14,353 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share and 71 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share. | |
(35) | Includes 3,729 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, 3,909 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share and 2,004 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(36) | Includes 3,814 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, 3,998 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share and 2,049 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(37) | Includes 4,043 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, 4,237 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share and 2,172 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(38) | Includes 660 shares of our common stock issuable upon exercise of warrants having an exercise price of $2.44 per share, 692 shares of our common stock issuable upon exercise of warrants having an exercise price of $3.50 per share and 354 shares of our common stock issuable upon exercise of warrants having an exercise price of $4.55 per share. | |
(39) | Mr. Kettell has been granted 150,000 shares issuable on exercise of options under our equity compensation plans. In addition, Mr. Kettell owns 40,000 shares of common outside of the voting trust described below and holds debentures convertible into 102,156 shares of common stock and warrants for the purchase of 204,312 shares of common stock. Under the terms of a separation agreement between Mr. Kettell and Laura Kettell, Mr. Kettell directly has beneficial economic ownership of 774,000 shares of common stock. In addition, under the terms of this same agreement, Mr. Kettell will retain the assignable voting interest of all shares owned by his former wife. Mr. Kettell is the direct owner of LARK Enterprises. Ltd. which owns 436,000 shares of common stock. In addition, Mr. Kettell is the donor of and retains the voting power over 300,000 shares of common stock gifted to family members. Mr. Kettell has the contractual right to acquire 465,000 shares of common stock held by his mother. Mr. Kettell has executed an agreement to restrict his future resales of shares for one year from July 31, 2008 to 300,000 shares. Mr. Kettell and Laura Kettell entered into voting arrangements that would provide Mr. Simpson with voting control over 3,575,000 shares. Resales of shares by Mr. Kettell and Laura Kettell are restricted to 300,000 shares for one year from July 31, 2008, with additional restrictions on resales in future years. See SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS. | |
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• | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | ||
• | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; | ||
• | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | ||
• | an exchange distribution in accordance with the rules of the applicable exchange; | ||
• | privately negotiated transactions; | ||
• | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; | ||
• | broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; | ||
• | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | ||
• | a combination of any such methods of sale; or | ||
• | any other method permitted pursuant to applicable law. |
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• | Our failure to timely pay any State of Nevada (or other applicable state) filing fees or fees owed to the Federal Bureau of Land Management, when required to be paid, other than those fees being disputed in good faith. | ||
• | Our withdrawal of a registration statement registering both the shares of common stock issued and underlying the warrants issued in our July 2008 private placement. | ||
• | Subject to our obligation to use commercially reasonable efforts to have our common stock traded on a trading market, if, while this debenture remains outstanding, and subsequent to attaining an initial listing or quotation on a trading market, our common stock ceases to be traded on a trading market for 10 consecutive business days or more during any 12 month period. | ||
• | We will at all time reserve a number of shares equal to the number of shares of our common stock issuable upon conversion of the debentures. | ||
• | We shall use commercially reasonable efforts to have our common stock listed for trading on a trading market within 180 calendar days after December 31, 2008. | ||
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• | We will not enter into any transaction with any affiliate of ours that would be required to be disclosed in any public filing with the Securities and Exchange Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of our disinterested directors (even if less than a quorum otherwise required for board approval); | ||
• | We will not issue or agree to issue any securities at a price of less than $0.10 per share. | ||
• | Our failure to timely pay any State of Nevada (or other applicable state) filing fees or fees owed to the Federal Bureau of Land Management, when required to be paid, other than those fees being disputed in good faith. | ||
• | Our withdrawal of a registration statement registering both the shares of common stock issued and underlying the warrants issued in our July 2008 private placement. | ||
• | Subject to our obligation to use commercially reasonable efforts to have our common stock traded on a trading market, if, while this debenture remains outstanding, and subsequent to attaining an initial listing or quotation on a trading market , our common stock ceases to be traded on a trading market for 10 consecutive business days or more during any 12 month period. | ||
• | We will at all time reserve a number of shares equal to the number of shares of our common stock issuable upon conversion of the debentures. | ||
• | We shall use commercially reasonable efforts to have our common stock listed for trading on a trading market within 180 calendar days after December 31, 2008. | ||
• | We will not enter into any transaction with any affiliate of ours that would be required to be disclosed in any public filing with the Securities and Exchange Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of our disinterested directors (even if less than a quorum otherwise required for board approval); | ||
• | We will not issue or agree to issue any securities at a price of less than $0.10 per share. | ||
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F-2 | ||
F-3 | ||
F-5 | ||
F-6 | ||
F-8 | ||
F-10 | ||
F-35 | ||
F-37 | ||
F-38 | ||
F-40 | ||
F-42 |
F-1
Table of Contents
Concentric Energy Corporation
(An Exploration Stage Company)
July 23, 2009
F-2
Table of Contents
(An Exploration Stage Company)
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 24,750 | $ | 825,908 | ||||
Certificates of deposit | — | 507,822 | ||||||
Receivable from debenture offering | 471,339 | — | ||||||
Trading securities | 29,604 | 374,654 | ||||||
Receivables from related parties | 716 | 235 | ||||||
Receivable — other | 4,596 | 10,607 | ||||||
Deposits | — | 7,065 | ||||||
Prepaid expenses | 5,794 | 142,873 | ||||||
Asset held for sale | — | 2,309,048 | ||||||
Total current assets | 536,799 | 4,178,212 | ||||||
Property and equipment: | ||||||||
Mineral rights | 100,000 | 100,000 | ||||||
Leasehold improvements | 13,044 | 13,044 | ||||||
Office equipment | 45,835 | 44,335 | ||||||
Field equipment | 35,469 | 35,469 | ||||||
Vehicles | 148,531 | 148,531 | ||||||
342,879 | 341,379 | |||||||
Less accumulated depreciation | (107,122 | ) | (59,073 | ) | ||||
Total property and equipment, net | 235,757 | 282,306 | ||||||
Deferred charges — financing costs | 207,035 | — | ||||||
Drilling bonds | 6,021 | — | ||||||
Deposits | 1,991 | 1,991 | ||||||
215,047 | 1,991 | |||||||
Total assets | $ | 987,603 | $ | 4,462,509 | ||||
the Consolidated Financial Statements
F-3
Table of Contents
(An Exploration Stage Company)
Consolidated Balance Sheets
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Current liabilities: | ||||||||
Accounts payable | $ | 335,646 | $ | 308,729 | ||||
Accounts payable — related parties | 22,436 | — | ||||||
Accrued expenses | 255,665 | 359,656 | ||||||
Current portion of notes payable | 17,792 | 2,325,435 | ||||||
Convertible note payable — related party | — | 45,000 | ||||||
Total current liabilities | 631,539 | 3,038,820 | ||||||
Long-term debt, less discounts of $633,601 and $9,686 at December 31, 2008 and 2007, respectively | 30,983 | 48,775 | ||||||
Total liabilities | 662,522 | 3,087,595 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ Equity | ||||||||
Preferred stock; $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding | — | — | ||||||
Common stock; $0.001 par value; 150,000,000 shares authorized; 10,510,184 and 9,085,410, shares issued and 9,377,378 and 8,717,410 shares outstanding, respectively, at December 31, 2008 and 2007 | 10,510 | 9,085 | ||||||
Additional paid-in capital | 15,869,598 | 11,919,947 | ||||||
Deficit accumulated during exploration stage | (15,555,027 | ) | (10,554,118 | ) | ||||
Total stockholders’ equity | 325,081 | 1,374,914 | ||||||
Total liabilities and stockholders’ equity | $ | 987,603 | $ | 4,462,509 | ||||
the Consolidated Financial Statements
F-4
Table of Contents
(An Exploration Stage Company)
Inception | ||||||||||||
Year Ended | Year Ended | (July 20, 2001) | ||||||||||
December 31, | December 31, | to December 31, | ||||||||||
2008 | 2007 | 2008 | ||||||||||
Revenue | $ | — | $ | — | $ | — | ||||||
Operating expenses: | ||||||||||||
General and administrative | 4,360,877 | 5,858,527 | 12,743,881 | |||||||||
Geological and geophysical costs | 403,001 | 571,101 | 2,756,638 | |||||||||
Total operating expenses | 4,763,878 | 6,429,628 | 15,500,519 | |||||||||
Loss from operations | (4,763,878 | ) | (6,429,628 | ) | (15,500,519 | ) | ||||||
Other income (expense): | ||||||||||||
Interest income | 4,785 | 55,898 | 65,477 | |||||||||
Interest expense | (19,165 | ) | (102,327 | ) | (123,475 | ) | ||||||
Recognized gain (loss) on investments | (224,517 | ) | 193,924 | 16,846 | ||||||||
Recognized loss on transfer of securities from available for sale to trading | — | — | (18,776 | ) | ||||||||
Other income (expense) | 1,866 | (6,372 | ) | 5,420 | ||||||||
Total other income (expense) | (237,031 | ) | 141,123 | (54,508 | ) | |||||||
Net Loss | (5,000,909 | ) | (6,288,505 | ) | (15,555,027 | ) | ||||||
Other Comprehensive Income: | ||||||||||||
Unrealized losses on available-for-sale securities | — | — | (18,776 | ) | ||||||||
Reclassification adjustment for losses recognized on transfer from available- for-sale to trading | — | — | 18,776 | |||||||||
Comprehensive loss | $ | (5,000,909 | ) | $ | (6,288,505 | ) | $ | (15,555,027 | ) | |||
Net loss per share | ||||||||||||
Basic and diluted | $ | (0.55 | ) | $ | (0.76 | ) | $ | (2.36 | ) | |||
Weighted average number of common shares outstanding — basic and diluted | 9,075,888 | 8,237,781 | 6,593,600 | |||||||||
the Consolidated Financial Statements
F-5
Table of Contents
(An Exploration Stage Company)
Number of | Accumulated | Accumulated | ||||||||||||||||||||||||||
Shares of | Additional | Other | Deficit During | |||||||||||||||||||||||||
Common | Members’ | Common | Paid-in | Comprehensive | Exploration | Total | ||||||||||||||||||||||
Stock | Equity | Stock | Capital | Loss | Stage | Equity | ||||||||||||||||||||||
Members’ contributions inception, July 20, 2001 to December 31, 2003 | — | $ | 71,315 | $ | — | $ | — | $ | — | $ | — | $ | 71,315 | |||||||||||||||
Net loss inception, July 20, 2001, to December 31, 2003 | — | (111,066 | ) | — | — | — | — | (111,066 | ) | |||||||||||||||||||
Balance, December 31, 2003 | — | (39,751 | ) | — | — | — | — | (39,751 | ) | |||||||||||||||||||
Members’ contributions | — | 12,000 | — | — | — | — | 12,000 | |||||||||||||||||||||
Conversion from LLC to C Corporation on June 1, 2004 | 5,000,000 | 27,751 | 5,000 | 78,315 | — | (111,066 | ) | — | ||||||||||||||||||||
Issuance of common stock for services | 534,280 | — | 534 | 303,566 | — | — | 304,100 | |||||||||||||||||||||
Sale of common stock, net | 1,044,000 | — | 1,044 | 1,088,606 | — | — | 1,089,650 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (608,638 | ) | (608,638 | ) | |||||||||||||||||||
Balance, December 31, 2004 | 6,578,280 | — | 6,578 | 1,470,487 | — | (719,704 | ) | 757,361 | ||||||||||||||||||||
Sale of common stock, net | 85,200 | — | 85 | 187,915 | — | — | 188,000 | |||||||||||||||||||||
Issuance of stock options | — | — | — | 33,880 | — | — | 33,880 | |||||||||||||||||||||
Exercise of stock options | 80,000 | — | 80 | 99,920 | — | — | 100,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (736,945 | ) | (736,945 | ) | |||||||||||||||||||
Other comprehensive loss | — | — | — | — | (18,776 | ) | — | (18,776 | ) | |||||||||||||||||||
Balance, December 31, 2005 | 6,743,480 | — | 6,743 | 1,792,202 | (18,776 | ) | (1,456,649 | ) | 323,520 | |||||||||||||||||||
Sale of common stock, net | 907,000 | — | 907 | 2,176,743 | — | — | 2,177,650 | |||||||||||||||||||||
Issuance of common stock for services | 45,940 | — | 46 | 137,185 | — | — | 137,231 | |||||||||||||||||||||
Exercise of stock options | 12,000 | — | 12 | 14,988 | — | — | 15,000 | |||||||||||||||||||||
Issuance of stock options for services | — | — | — | 535,189 | — | — | 535,189 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (2,808,964 | ) | (2,808,964 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | 18,776 | — | 18,776 | |||||||||||||||||||||
Balance, December 31, 2006 | 7,708,420 | $ | — | $ | 7,708 | $ | 4,656,307 | $ | — | $ | (4,265,613 | ) | $ | 398,402 | ||||||||||||||
the Consolidated Financial Statements
F-6
Table of Contents
(An Exploration Stage Company)
Consolidated Statements of Stockholders’ Equity (Continued)
Number of | Accumulated | Accumulated | ||||||||||||||||||||||||||
Shares of | Additional | Other | Deficit During | |||||||||||||||||||||||||
Common | Members’ | Common | Paid-in | Comprehensive | Exploration | Total | ||||||||||||||||||||||
Stock | Equity | Stock | Capital | Loss | Stage | Equity | ||||||||||||||||||||||
Balance, December 31, 2006 | 7,708,420 | $ | — | $ | 7,708 | $ | 4,656,307 | $ | — | $ | (4,265,613 | ) | $ | 398,402 | ||||||||||||||
Sale of common stock, net | 850,000 | — | 850 | 5,367,096 | — | — | 5,367,946 | |||||||||||||||||||||
Issuance of common stock for services | 488,660 | — | 489 | 438,833 | — | — | 439,322 | |||||||||||||||||||||
Issuance of stock options for services | — | — | — | 827,216 | — | — | 827,216 | |||||||||||||||||||||
Extension of expiry of previously issued stock options | — | — | — | 256,838 | — | — | 256,838 | |||||||||||||||||||||
Issuance of warrants for services | — | — | — | 159,776 | — | — | 159,776 | |||||||||||||||||||||
Conversion of notes payable | 38,330 | — | 38 | 213,881 | — | — | 213,919 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (6,288,505 | ) | (6,288,505 | ) | |||||||||||||||||||
Balance, December 31, 2007 | 9,085,410 | — | 9,085 | 11,919,947 | — | (10,554,118 | ) | 1,374,914 | ||||||||||||||||||||
Issuance of common stock for services | 764,806 | — | 765 | 1,013,562 | — | — | 1,014,327 | |||||||||||||||||||||
Conversion of stock options to warrants | — | — | — | 166,060 | — | — | 166,060 | |||||||||||||||||||||
Amortization of stock options | — | — | — | 144,997 | — | — | 144,997 | |||||||||||||||||||||
Issuance of warrants for services | — | — | — | 265,474 | — | — | 265,474 | |||||||||||||||||||||
Issuance of warrants in conjunction with debenture offering | — | — | — | 11,325 | — | — | 11,325 | |||||||||||||||||||||
Discount on issuance of debentures | — | — | — | 346,148 | — | — | 346,148 | |||||||||||||||||||||
Discount on beneficial conversion feature | — | — | — | 245,549 | — | — | 245,549 | |||||||||||||||||||||
Sale of common stock, net | 541,666 | — | 542 | 1,401,748 | — | — | 1,402,290 | |||||||||||||||||||||
Conversion of notes payable | 118,302 | — | 118 | 354,788 | — | — | 354,906 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (5,000,909 | ) | (5,000,909 | ) | |||||||||||||||||||
Balance, December 31, 2008 | 10,510,184 | $ | — | $ | 10,510 | $ | 15,869,598 | $ | — | $ | (15,555,027 | ) | $ | 325,081 | ||||||||||||||
the Consolidated Financial Statements
F-7
Table of Contents
(An Exploration Stage Company)
Inception | ||||||||||||
Year Ended | Year Ended | (July 20, 2001) to | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | ||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net loss | $ | (5,000,909 | ) | $ | (6,288,505 | ) | $ | (15,555,027 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
Depreciation and amortization | 48,949 | 52,979 | 144,215 | |||||||||
Recognized loss from the transfer from available-for-sale securities to trading securities | — | — | 18,776 | |||||||||
Recognized (gain) loss on securities | 224,517 | (193,924 | ) | (16,846 | ) | |||||||
Amortization of stock options issued for services | 144,997 | 827,216 | 1,541,282 | |||||||||
Extension of expiry of previously issued warrants | — | 256,838 | 256,838 | |||||||||
Issuance of stock for services | 1,014,327 | 439,322 | 1,894,980 | |||||||||
Issuance of warrants for services | 122,108 | 159,776 | 281,884 | |||||||||
Loss on sale of fixed assets | 1,415 | 147,322 | 148,737 | |||||||||
Amortization of debt discount | 4,461 | 4,769 | 10,158 | |||||||||
Interest paid through conversion to stock | 4,906 | 13,919 | 18,825 | |||||||||
Professional fees paid with debt | 50,000 | — | 50,000 | |||||||||
Conversion of stock options to warrants | 166,060 | — | 166,060 | |||||||||
Changes in assets and liabilities | ||||||||||||
Trading securities | 147,721 | 27,128 | 129,849 | |||||||||
Receivables from related parties | (481 | ) | 90,095 | (716 | ) | |||||||
Receivable — other | (10 | ) | 20,890 | (10,617 | ) | |||||||
Prepaid expenses | 137,079 | (135,200 | ) | (5,794 | ) | |||||||
Deposits | 7,065 | (6,145 | ) | (1,991 | ) | |||||||
Accounts payable | 26,917 | 178,916 | 335,646 | |||||||||
Accounts payable — related parties | 22,436 | — | 22,436 | |||||||||
Accrued expenses | (140,670 | ) | 231,425 | 218,986 | ||||||||
Net cash used in operating activities | (3,019,112 | ) | (4,173,179 | ) | (10,352,319 | ) | ||||||
Cash Flows from Investing Activities | ||||||||||||
Purchase of fixed assets | (3,815 | ) | (231,582 | ) | (350,521 | ) | ||||||
Purchase of mineral rights | — | — | (100,000 | ) | ||||||||
(Purchase) Sale of certificates of deposit | 507,822 | (507,822 | ) | — | ||||||||
Purchase of available-for-sale securities | — | — | (134,195 | ) | ||||||||
Net cash provided (used) by investing activities | 504,007 | (739,404 | ) | (584,716 | ) | |||||||
Cash Flows from Financing Activities | ||||||||||||
Net proceeds from the sale of common stock | 1,402,290 | 5,367,946 | 10,225,536 | |||||||||
Exercise of stock options | — | — | 115,000 | |||||||||
Sale of warrants | 11,325 | — | 11,325 | |||||||||
Proceeds from members contributions | — | — | 83,315 | |||||||||
Proceeds from notes payable, net | 366,180 | 245,000 | 657,506 | |||||||||
Repayment of notes payable | (65,848 | ) | (16,329 | ) | (130,897 | ) | ||||||
Net cash provided by financing activities | 1,713,947 | 5,596,617 | 10,961,785 | |||||||||
Net increase (decrease) in cash and cash equivalents | (801,158 | ) | 684,034 | 24,750 | ||||||||
Cash and cash equivalents at beginning of period | 825,908 | 141,874 | — | |||||||||
Cash and cash equivalents at end of period | $ | 24,750 | $ | 825,908 | $ | 24,750 | ||||||
the Consolidated Financial Statements
F-8
Table of Contents
(An Exploration Stage Company)
Consolidated Statements of Cash Flows (continued)
Inception | ||||||||||||
Year Ended | Year Ended | (July 20, 2001) to | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2008 | 2007 | 2008 | ||||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||
Cash paid during the year for interest | $ | 68,422 | $ | 25,000 | $ | 94,477 | ||||||
Cash paid during the year for income taxes | $ | — | $ | — | $ | — | ||||||
Non-Cash Investing and Financing Activities | ||||||||||||
Purchase of a vehicle with a note payable | $ | — | $ | 39,195 | $ | 78,188 | ||||||
Conversion of debt to equity | $ | 350,000 | $ | 200,000 | $ | 550,000 | ||||||
Purchase of building with a note payable | $ | — | $ | 2,309,048 | $ | 2,309,048 | ||||||
Resale of building and extinguishment of note payable | $ | 2,309,048 | $ | — | $ | 2,309,048 | ||||||
Transfer of investments from available-for-sale to trading | $ | — | $ | — | $ | 110,419 | ||||||
Unrecognized loss on available-for-sale investments | $ | — | $ | — | $ | 18,776 | ||||||
Trading securities exchanged for debt | $ | 27,188 | $ | — | $ | 27,188 | ||||||
Subscriptions receivable exchanged for debt | $ | 471,339 | $ | — | $ | 471,339 | ||||||
Debt discount | $ | 628,376 | $ | — | $ | 628,376 | ||||||
Professional fees paid with debt | $ | 50,000 | $ | — | $ | 50,000 | ||||||
Warrants issued as deferred financing costs | $ | 143,366 | $ | — | $ | 143,366 | ||||||
Warrants issued classified as a liability | $ | 36,679 | $ | — | $ | 36,679 | ||||||
the Consolidated Financial Statements
F-9
Table of Contents
(An Exploration Stage Company)
Leasehold improvements | 1 - 3 years | |
Office equipment | 3 - 7 years |
F-10
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Vehicles | 5 years | |
Field equipment | 3 - 7 years |
2008 | 2007 | |||||||
Options | 954,625 | 1,340,985 | ||||||
Warrants | 3,396,901 | 1,097,480 | ||||||
Convertible debentures | 698,196 | — | ||||||
Total potentially dilutive securities | 5,049,722 | 2,438,465 | ||||||
F-11
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-12
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
At and For The | ||||
Year Ended | ||||
December 31, 2008 | ||||
Trading securities | $ | 29,604 | ||
Quoted prices in active market for identical securities (Level 1) | $ | 29,604 | ||
Significant other observable inputs (Level 2) | $ | — | ||
Significant unobservable inputs (Level 3) | $ | — | ||
Total losses attributable to net unrealized losses included in Other Income or Expense | $ | (126,832 | ) | |
F-13
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-14
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Gross | Gross | Gross | Gross | |||||||||||||||||
Unrecognized | Unrecognized | Recognized | Recognized | |||||||||||||||||
Gain | Loss | Gain | Loss | Fair Value | ||||||||||||||||
2008 | ||||||||||||||||||||
Trading securities: | ||||||||||||||||||||
Common stock | $ | — | $ | — | $ | — | $ | 224,517 | $ | 29,604 | ||||||||||
2007 | ||||||||||||||||||||
Trading securities: | ||||||||||||||||||||
Common stock | $ | — | $ | — | $ | 242,500 | $ | 48,576 | $ | 374,654 | ||||||||||
F-15
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
15% convertible debentures | $ | 628,376 | $ | — | ||||
Office condo promissory note | — | 2,309,048 | ||||||
Installment notes payable | 54,000 | 74,848 | ||||||
682,376 | 2,383,896 | |||||||
Less: | ||||||||
Discounts | (633,601 | ) | (9,686 | ) | ||||
Current portion of long-term debt | (17,792 | ) | (2,325,435 | ) | ||||
Long-term debt | $ | 30,983 | $ | 48,775 | ||||
F-16
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-17
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Period ended December 31, | Amount | |||
2009 | $ | 20,951 | ||
2010 | 21,054 | |||
2011 | 11,995 | |||
2012 | 628,376 | |||
682,376 | ||||
Less: Discount | (633,601 | ) | ||
48,775 | ||||
Less: Current portion | (17,792 | ) | ||
$ | 30,983 | |||
F-18
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-19
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Federal tax benefit of net operating losses | $ | (1,593,000 | ) | $ | (2,004,000 | ) | ||
(Decrease) increase in taxes resulting from: | ||||||||
Permanent differences | 5,000 | 2,000 | ||||||
State income tax | (353,000 | ) | (443,000 | ) | ||||
Increase in valuation allowance | 1,941,000 | 2,445,000 | ||||||
Income tax expense | $ | — | $ | — | ||||
F-20
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Deferred tax assets | ||||||||
Cash basis accounting differences, net | $ | 204,000 | $ | 203,000 | ||||
Capital loss | 2,000 | 2,000 | ||||||
Unrealized loss on trading securities | 49,000 | — | ||||||
Share based payments | 790,000 | 742,000 | ||||||
Net operating loss carryforwards | 4,945,000 | 3,152,000 | ||||||
5,990,000 | 4,099,000 | |||||||
Deferred tax liabilities | ||||||||
Depreciation | (10,000 | ) | — | |||||
Unrealized gain on trading securities | — | (60,000 | ) | |||||
5,980,000 | 4,039,000 | |||||||
Less: valuation allowance | (5,980,000 | ) | (4,039,000 | ) | ||||
Total deferred tax assets | $ | — | $ | — | ||||
Net | ||||||
Federal | State | Operating | ||||
Expiration | Expiration | Loss Carryforwards | ||||
2024 | 2009 | $ | 618,000 | |||
2025 | 2010 | 653,000 | ||||
2026 | 2011 | 2,025,000 | ||||
2027 | 2012 | 4,860,000 | ||||
2028 | 2013 | 3,482,000 | ||||
$ | 11,638,000 | |||||
F-21
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
2008 | 2007 | |||||||
Risk-free interest rate | 0.82% - 4.45 | % | 4.23% - 4.90 | % | ||||
Expected volatility | 79% - 142 | % | 127% - 131 | % | ||||
Expected life (in years) | 2-4 | 5 | ||||||
Expected dividends | $ | — | $ | — |
• | Expected term is determined using the contractual term which management believes approximates the actual expected term; | ||
• | Expected volatility is measured using the average historical daily changes in the market price of comparable publicly traded mining companies’ common stock over the expected term of the award; | ||
• | Risk-free interest rate is equivalent to the implied yield on zero-coupon U.S. Treasury bonds with a remaining maturity equal to the expected term of the awards; and, | ||
• | Forfeitures are based on the history of cancellations of similar awards granted by the Company and management’s analysis of potential forfeitures. |
F-22
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Stock Options | Price | |||||||
Granted Options | ||||||||
Outstanding, December 31, 2007 | 1,340,985 | $ | 3.22 | |||||
Exercised | — | — | ||||||
Granted | — | — | ||||||
Converted to warrants | (48,860 | ) | 4.32 | |||||
Forfeited | (337,500 | ) | 3.73 | |||||
Outstanding, December 31, 2008 | 954,625 | $ | 2.98 | |||||
Weighted | ||||||||
Average | ||||||||
Grant Date | ||||||||
Stock Options | Fair Value | |||||||
Non-Vested Options | ||||||||
Non-vested options, December 31, 2007 | 81,750 | $ | 5.37 | |||||
Granted | — | — | ||||||
Vested | (49,250 | ) | 5.51 | |||||
Converted to warrants | (7,500 | ) | 1.96 | |||||
Forfeited | (25,000 | ) | 6.10 | |||||
Non-vested options, December 31, 2008 | — | $ | — | |||||
F-23
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
As of December 31, 2008 | ||||||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||||||
Remaining | Weighted | Remaining | Weighted | |||||||||||||||||||||||||
Range of | Contractual | Average | Contractual | Average | ||||||||||||||||||||||||
Exercise | Number of | Life (in | Exercise | Number of | Life (in | Exercise | ||||||||||||||||||||||
Prices | Shares | years) | Price | Shares | years) | Price | ||||||||||||||||||||||
$ | 1.25 - 7.00 | 954,625 | 2.74 | $ | 2.98 | 954,625 | 2.74 | $ | 2.98 | |||||||||||||||||||
F-24
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-25
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Warrants Outstanding at December 31, 2008 | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Weighted | |||||||||||||||
Contractual | Average | |||||||||||||||
Exercise | Number of | Expiration | Life | Exercise | ||||||||||||
Prices | Shares | Date | (in years) | Price | ||||||||||||
$ | 0.90 | 68,116 | 12/31/12 | 4.00 | $ | 0.90 | ||||||||||
$ | 1.00 | 1,532,624 | 12/31/12 | 4.00 | $ | 1.00 | ||||||||||
$ | 1.75 | 908,280 | 4/30/09 | 0.33 | $ | 1.75 | ||||||||||
$ | 2.64 | 70,451 | 5/29/12 | 3.41 | $ | 2.64 | ||||||||||
$ | 3.00 | 53,400 | Various through 8/3/11 | 0.96 | $ | 3.00 | ||||||||||
$ | 3.25 | 48,860 | Various through 12/27/11 | 1.78 | $ | 3.25 | ||||||||||
$ | 3.86 | 344,198 | 5/29/11 | 3.41 | $ | 3.86 | ||||||||||
$ | 4.50 | 85,000 | Various through 7/16/12 | 2.36 | $ | 4.50 | ||||||||||
$ | 5.07 | 150,172 | 5/29/11 | 3.41 | $ | 5.07 | ||||||||||
$ | 7.00 | 115,800 | Various through 7/15/12 | 3.22 | $ | 7.00 | ||||||||||
$ | 12.00 | 20,000 | 12/28/10 | 2.00 | $ | 12.00 | ||||||||||
3,396,901 | 2.76 | $ | 2.12 | |||||||||||||
F-26
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-27
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-28
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Number of | ||||||||||||
Shares of | Cash Price | Value Assigned | ||||||||||
Common | Per Share | Per Share | ||||||||||
Stock | Received | For Services | ||||||||||
Conversion from LLC to C Corporation (1) | 5,000,000 | $ | 0.01 - $0.02 | — | ||||||||
Issuance of common stock for services (2) | 485,000 | — | $ | 0.50 | ||||||||
Private placement of common stock (3) | 205,000 | $ | 0.50 | — | ||||||||
Private placement of common stock (4) | 839,000 | $ | 1.25 | — | ||||||||
Issuance of common stock for services (5) | 49,280 | — | $ | 1.25 | ||||||||
Balance, December 31, 2004 | 6,578,280 | |||||||||||
Private placement of common stock (6) | 20,000 | $ | 1.25 | — | ||||||||
Private placement of common stock (7) | 65,200 | $ | 2.50 | — | ||||||||
Exercise of stock options (8) | 80,000 | $ | 1.25 | — | ||||||||
Balance, December 31, 2005 | 6,743,480 | |||||||||||
Exercise of stock options (9) | 12,000 | $ | 1.25 | — | ||||||||
Private placement of common stock (10) | 907,000 | $ | 2.50 | — | ||||||||
Issuance of common stock for services (11) | 45,940 | — | $ | 2.50 | ||||||||
Balance, December 31, 2006 | 7,708,420 | |||||||||||
Private placement of common stock (12) | 10,000 | $ | 2.50 | — | ||||||||
Private placement of common stock (13) | 840,000 | $ | 7.00 | — | ||||||||
Issuance of common stock for services (14) | 120,660 | — | $ | 2.50 - $7.00 | ||||||||
Note payable conversion (15) | 38,330 | $ | 5.00 | — | ||||||||
Issuance of restricted stock for services (16) | 368,000 | $ | 7.00 | |||||||||
Balance, December 31, 2007 | 9,085,410 | |||||||||||
Private placement of common stock (17) | 501,666 | $ | 3.00 | — | ||||||||
Note payable conversion (18) | 118,302 | $ | 3.00 | — | ||||||||
Private placement of common stock (19) | 40,000 | $ | 3.00 | — | ||||||||
Issuance of restricted stock for services (20) | 715,500 | — | $ | 3.00 | ||||||||
Issuance of restricted stock for services (21) | 49,306 | — | $ | 3.00 | ||||||||
Balance, December 31, 2008 | 10,510,184 | |||||||||||
(1) | On June 1, 2004, the Company converted from an LLC to a C corporation and issued 5,000,000 shares of common stock for LLC members’ cash contributions of $83,315. 2,500,000 common shares were issued at $0.01 per share and 2,500,000 common shares were issued at $0.02 per share. | |
(2) | On June 1, 2004, the Company issued 285,000 shares of common stock at $0.50 per share for directors’ fees and 200,000 shares of common stock for consulting services. | |
(3) | On June 1, 2004, the Company completed a private placement of 205,000 shares of common stock at a price of $0.50 per share. | |
(4) | At December 31, 2004, the Company had sold 839,000 shares of common stock at $1.25 per share in a private placement that commenced on October 29, 2004 and subsequently closed on April 5, 2005. | |
(5) | At December 31, 2004, the Company issued 49,280 shares of common stock as sales commissions for the private placement that commenced on October 29, 2004. | |
(6) | On April 5, 2005, the Company completed the private placement initiated on October 29, 2004 and sold an additional 20,000 shares of common stock at $1.25 per share. | |
(7) | At December 31, 2005, the Company had sold 65,200 shares of common stock at a price of $2.50 per share in a private placement that commenced on October 11, 2005. | |
(8) | On November 15, 2005, a holder exercised 80,000 stock options issued on April 21, 2005 at an exercise price of $1.25 per share. | |
(9) | On January 12, 2006, a holder exercised 12,000 stock options issued on April 21, 2005 at an exercise price of $1.25 per share. | |
(10) | On November 14, 2006, the Company completed a private placement of common stock that commenced on January 20, 2006 selling 907,000 shares of common stock at a price of $2.50 per share. |
F-29
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(11) | At December 31, 2006, the Company issued 45,940 shares of common stock valued at $2.50 per share as sales commissions for the private placement that closed on November 14, 2006. | |
(12) | On May 3, 2007, the Company issued 10,000 shares of common stock at a price of $2.50 to a subscriber to the private placement that closed on November 14, 2006 who had inadvertently failed to pay the subscription price. | |
(13) | On July 16, 2007, the Company closed a private placement for 840,000 shares of common stock at a price of $7.00 per share. | |
(14) | During the year ended December 31, 2007, the Company issued the following common shares for services as follows: |
a. | On January 11, 2007, the Company issued 100,000 shares of common stock valued at $3.25 per share for financial advisory and consulting services. | ||
b. | On February 22, 2007, the Company issued 10,000 shares of common stock valued at $2.50 per share to an employee as compensation expense for services which were accrued as of December 31, 2006. | ||
c. | On March 8, 2007, the Company issued 3,060 shares of common stock valued at $2.50 per share as an adjustment of sales commissions associated with the private placement that closed on November 14, 2006. | ||
d. | On July 2, 2007, the Company issued 5,600 shares of common stock valued at $5.00 per share to employees as compensation expense for services completed on April 30, 2007. | ||
e. | On July 2, 2007, the Company issued 2,000 shares of common stock valued at $7.00 per share as sales commissions associated with the private placement that closed on July 16, 2007. |
(15) | On November 1, 2007, the Company issued 38,330 shares of common stock ranging from $5.00 to $7.00 per share in conversion of principal and interest on convertible notes which were issued on January 1, 2007. See Note 5 Long-term debt. | |
(16) | On November 16, 2007, the Company issued 133,000 restricted shares of common stock valued at $7.00 per share to a director for services. On December 12, 2007, the Company issued 175,000 restricted shares of common stock valued at $7.00 to directors for services. On December 27, 2007, the Company issued 60,000 restricted shares of common stock valued at $7.00 per share to a former officer. See Note 10 Commitments and Contingencies. | |
(17) | On July 31, 2008, the Company issued 501,666 shares of common stock at a price of $3.00 per share to subscribers to a private placement. | |
(18) | On July 31, 2008, the Company issued 118,302 shares of common stock at a price of $3.00 per share to convert notes payable with an aggregate principal and accrued interest balance of $354,906. | |
(19) | On September 3, 2008, the Company issued 40,000 shares of common stock at a price of $3.00 to a subscriber in a private placement. | |
(20) | On October 17, 2008, the Company issued 715,500 restricted shares of common stock valued at $3.00 per share to directors, officers and employees for services. | |
(21) | On December 31, 2008, the Company issued 49,306 restricted shares of common stock valued at $3.00 per share to directors in lieu of the payment of cash director’s fees. |
F-30
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
2008 | 2007 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Cash and cash equivalents | $ | 24,750 | $ | 24,750 | $ | 825,908 | $ | 825,908 | ||||||||
Receivable from debenture offering | 471,339 | 471,339 | — | — | ||||||||||||
Certificates of deposit | — | — | 507,822 | 507,822 | ||||||||||||
Trading securities | 29,604 | 29,604 | 374,654 | 374,654 | ||||||||||||
Receivables from related parties | 716 | 716 | 235 | 235 | ||||||||||||
Receivable — other | 4,596 | 4,596 | 10,607 | 10,607 | ||||||||||||
Deposits | — | — | 7,065 | 7,065 | ||||||||||||
Prepaid expenses | 5,794 | 5,794 | 142,873 | 142,873 | ||||||||||||
Accounts payable | 335,646 | 335,646 | 308,729 | 308,729 | ||||||||||||
Accounts payable — related parties | 22,436 | 22,436 | — | — | ||||||||||||
Accrued expenses | 255,665 | 225,665 | 359,656 | 359,656 | ||||||||||||
Current portion of notes payable | 17,792 | 17,792 | 2,325,435 | 2,325,435 | ||||||||||||
Convertible note payable - related party | — | — | 45,000 | 45,000 | ||||||||||||
Long-term debt | 30,983 | 30,983 | 48,775 | 48,775 |
F-31
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(i) | Separation fees and allowances of $127,000 were paid during the year ended December 31, 2008. | ||
(ii) | 60,000 shares of restricted common stock will be issued which will vest on the completion of certain financing transactions. | ||
(iii) | Contingent on the completion of certain financing transactions, 20,000 three year warrants with an exercise price of $12 per share will vest for this individual. During the year ended December 31, 2008, contingencies on 20,000 three year warrants with an exercise price of $7 per share were met and such warrants were issued. | ||
(iv) | On the completion of a successful private placement on July 31, 2008, a bonus of $43,375 was earned by this individual and this bonus has been accrued as of December 31, 2008. |
(i) | The Company will pay aggregate directors’ fees of $295,000, annually. Subsequent to July 31, 2008, the directors have agreed to receive their director’s fees in common stock through November 30, 2009. As a result, during the year ended December 31, 2008, directors received cash director’s fees of $147,082 and 49,306 shares of the Company’s common stock valued at $3 per share, or $147,918 in non-cash director’s fees. | ||
(ii) | During the years ended December 31, 2008 and 2007, the Company issued a total of 616,000 restricted shares of its common stock to these directors with a purchase price of $0.001 per share that will vest over a three-year period from the date of issue. | ||
(iii) | The Company has entered into indemnification agreements with these directors under which it will indemnify the directors during their service to the Company. |
F-32
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(i) | Separation fees of $91,000 will be paid over the eight months beginning on July 1, 2009, and | ||
(ii) | 50,000 shares of restricted common stock will be issued which will vest when the Company’s common stock begins to trade publicly. |
F-33
Table of Contents
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
F-34
Table of Contents
(An Exploration Stage Company)
March 31, | ||||||||
2009 | December 31, | |||||||
(Unaudited) | 2008 | |||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 38,160 | $ | 24,750 | ||||
Receivable from debenture offering | — | 471,339 | ||||||
Trading securities | 33,957 | 29,604 | ||||||
Receivables from related parties | 710 | 716 | ||||||
Drilling bonds — current | 4,596 | 4,596 | ||||||
Prepaid expenses | 1,697 | 5,794 | ||||||
Total current assets | 79,120 | 536,799 | ||||||
Property and equipment: | ||||||||
Mineral rights | 100,000 | 100,000 | ||||||
Leasehold improvements | 13,044 | 13,044 | ||||||
Office equipment | 45,835 | 45,835 | ||||||
Field equipment | 35,469 | 35,469 | ||||||
Vehicles | 148,531 | 148,531 | ||||||
342,879 | 342,879 | |||||||
Less: accumulated depreciation | (120,169 | ) | (107,122 | ) | ||||
Total property and equipment, net | 222,710 | 235,757 | ||||||
Deferred charges — debentures | 200,425 | 207,035 | ||||||
Drilling bonds | 6,021 | 6,021 | ||||||
Deposits | 1,991 | 1,991 | ||||||
208,437 | 215,047 | |||||||
Total assets | $ | 510,267 | $ | 987,603 | ||||
F-35
Table of Contents
(An Exploration Stage Company)
Condensed Consolidated Balance Sheets
March 31, | December 31, | |||||||
2009 | 2008 | |||||||
(Unaudited) | (as restated)* | |||||||
Current liabilities: | ||||||||
Accounts payable | $ | 366,158 | $ | 335,646 | ||||
Accounts payable — related parties | 380 | 22,436 | ||||||
Accrued expenses | 266,810 | 218,986 | ||||||
Current portion of notes payable | 18,161 | 17,792 | ||||||
Total current liabilities | 651,509 | 594,860 | ||||||
Warrant liability | 1,098,392 | 1,211,979 | ||||||
Long-term debt, less discounts of $603,840 and $ 633,601 at March 31, 2009 and December 31, 2008, respectively | 55,273 | 30,983 | ||||||
Total liabilities | 1,805,174 | 1,837,822 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ Equity | ||||||||
Preferred stock; $0.001 par value; 50,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock; $0.001 par value; 150,000,000 shares authorized; 10,570,635 and 10,510,184 shares issued and 9,377,378 and 9,377,378 shares outstanding, at March 31, 2009 and December 31, 2008, respectively | 10,571 | 10,510 | ||||||
Additional paid-in capital | 15,738,709 | 15,306,564 | ||||||
Deficit accumulated during exploration stage | (17,044,187 | ) | (16,167,293 | ) | ||||
Total stockholders’ equity | (1,294,907 | ) | (850,219 | ) | ||||
Total liabilities and stockholders’ equity | $ | 510,267 | $ | 987,603 | ||||
* | See Notes 2 and 3 |
F-36
Table of Contents
(An Exploration Stage Company)
Inception | ||||||||||||
(July 20, 2001) to | ||||||||||||
March 31, | ||||||||||||
Three Months Ended March 31, | 2009 | |||||||||||
2009 | 2008 | (as restated)* | ||||||||||
Revenue | $ | — | $ | — | $ | — | ||||||
Operating expenses: | ||||||||||||
General and administrative | 918,337 | 1,353,895 | 13,662,218 | |||||||||
Geological and geophysical costs | 11,013 | 102,163 | 2,767,651 | |||||||||
Total operating expenses | 929,350 | 1,456,058 | 16,429,869 | |||||||||
Loss from operations | (929,350 | ) | (1,456,058 | ) | (16,429,869 | ) | ||||||
Other income (expense): | ||||||||||||
Interest income | 289 | 2,471 | 65,766 | |||||||||
Interest expense | (60,012 | ) | (10,930 | ) | (212,150 | ) | ||||||
Gain (Loss) on investments | 13,573 | (96,050 | ) | 30,419 | ||||||||
Change in fair value of warrants | 113,587 | — | (470,016 | ) | ||||||||
Recognized loss on transfer of securities from available-for-sale to trading | — | — | (18,776 | ) | ||||||||
Other income (expense) | (14,981 | ) | 2,960 | (9,561 | ) | |||||||
Total other income (expense) | 52,456 | (101,549 | ) | (614,318 | ) | |||||||
Net Loss | (876,894 | ) | (1,557,607 | ) | (17,044,187 | ) | ||||||
Other comprehensive income: | ||||||||||||
Unrealized losses on available-for-sales securities | — | — | (18,776 | ) | ||||||||
Reclassification adjustment for losses recognized on transfer from available- for-sale to trading | — | — | 18,776 | |||||||||
Comprehensive loss | $ | (876,894 | ) | $ | (1,557,607 | ) | $ | (17,044,187 | ) | |||
Net loss per share Basic and diluted | $ | (0.09 | ) | $ | (0.17 | ) | $ | (2.55 | ) | |||
Weighted average number of common shares — basic and diluted | 9,377,378 | 9,085,410 | 6,682,729 | |||||||||
* | See Notes 2 and 3 |
F-37
Table of Contents
(An Exploration Stage Company)
Number of | Accumulated | Accumulated | ||||||||||||||||||||||||||
Shares of | Additional | Other | Deficit During | |||||||||||||||||||||||||
Common | Members’ | Common | Paid-in | Comprehensive | Exploration | Total | ||||||||||||||||||||||
Stock | Equity | Stock | Capital | Loss | Stage | Equity | ||||||||||||||||||||||
Members’ contributions inception, July 20, 2001 to December 31, 2003 | — | $ | 71,315 | $ | — | $ | — | $ | — | $ | — | $ | 71,315 | |||||||||||||||
Net loss inception, July 20, 2001, to December 31, 2003 | — | (111,066 | ) | — | — | — | — | (111,066 | ) | |||||||||||||||||||
Balance, December 31, 2003 | — | (39,751 | ) | — | — | — | — | (39,751 | ) | |||||||||||||||||||
Members’ contributions | — | 12,000 | — | — | — | — | 12,000 | |||||||||||||||||||||
Conversion from LLC to C Corporation on June 1, 2004 | 5,000,000 | 27,751 | 5,000 | 78,315 | — | (111,066 | ) | — | ||||||||||||||||||||
Issuance of common stock for services | 534,280 | — | 534 | 303,566 | — | — | 304,100 | |||||||||||||||||||||
Sale of common stock, net | 1,044,000 | — | 1,044 | 1,088,606 | — | — | 1,089,650 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (608,638 | ) | (608,638 | ) | |||||||||||||||||||
Balance, December 31, 2004 | 6,578,280 | — | 6,578 | 1,470,487 | — | (719,704 | ) | 757,361 | ||||||||||||||||||||
Sale of common stock, net | 85,200 | — | 85 | 187,915 | — | — | 188,000 | |||||||||||||||||||||
Issuance of stock options | — | — | — | 33,880 | — | — | 33,880 | |||||||||||||||||||||
Exercise of stock options | 80,000 | — | 80 | 99,920 | — | — | 100,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (736,945 | ) | (736,945 | ) | |||||||||||||||||||
Other comprehensive loss | — | — | — | — | (18,776 | ) | — | (18,776 | ) | |||||||||||||||||||
Balance, December 31, 2005 | 6,743,480 | — | 6,743 | 1,792,202 | (18,776 | ) | (1,456,649 | ) | 323,520 | |||||||||||||||||||
Sale of common stock, net | 907,000 | — | 907 | 2,176,743 | — | — | 2,177,650 | |||||||||||||||||||||
Issuance of common stock for services | 45,940 | — | 46 | 137,185 | — | — | 137,231 | |||||||||||||||||||||
Exercise of stock options | 12,000 | — | 12 | 14,988 | — | — | 15,000 | |||||||||||||||||||||
Issuance of stock options for services | — | — | — | 535,189 | — | — | 535,189 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (2,808,964 | ) | (2,808,964 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | 18,776 | — | 18,776 | |||||||||||||||||||||
Balance, December 31, 2006 | 7,708,420 | — | 7,708 | 4,656,307 | — | (4,265,613 | ) | 398,402 | ||||||||||||||||||||
Sale of common stock, net | 850,000 | — | 850 | 5,367,096 | — | — | 5,367,946 | |||||||||||||||||||||
Equity component of convertible debt* | — | — | — | 26,924 | — | — | 26,924 | |||||||||||||||||||||
Issuance of common stock for services | 488,660 | — | 489 | 438,833 | — | — | 439,322 | |||||||||||||||||||||
Issuance of stock options for services | — | — | — | 827,216 | — | — | 827,216 | |||||||||||||||||||||
Extension of expiry of previously issued stock options | — | — | — | 256,838 | — | — | 256,838 | |||||||||||||||||||||
Issuance of warrants for services | — | — | — | 159,776 | — | — | 159,776 | |||||||||||||||||||||
Conversion of notes payable | 38,330 | — | 38 | 206,446 | — | — | 206,484 | |||||||||||||||||||||
Net loss, as restated* | — | — | — | — | — | (6,307,994 | ) | (6,307,994 | ) | |||||||||||||||||||
Balance, December 31, 2007 | 9,085,410 | $ | — | $ | 9,085 | $ | 11,939,436 | $ | — | $ | (10,573,607 | ) | $ | 1,374,914 | ||||||||||||||
* | See Notes 2 and 3 |
F-38
Table of Contents
(An Exploration Stage Company)
Condensed Consolidated Statements of Stockholders’ Equity
For the Period from Inception (July 20, 2001) to March 31, 2009 (continued)
Number of | Accumulated | Accumulated | ||||||||||||||||||||||||||
Shares of | Additional | Other | Deficit During | |||||||||||||||||||||||||
Common | Members’ | Common | Paid-in | Comprehensive | Exploration | Total | ||||||||||||||||||||||
Stock | Equity | Stock | Capital | Loss | Stage | Equity | ||||||||||||||||||||||
Balance, December 31, 2007 | 9,085,410 | $ | — | $ | 9,085 | $ | 11,939,436 | $ | — | $ | (10,573,607 | ) | $ | 1,374,914 | ||||||||||||||
Issuance of common stock for services | 764,806 | — | 765 | 1,013,562 | — | — | 1,014,327 | |||||||||||||||||||||
Conversion of stock options to warrants | — | — | — | 166,060 | — | — | 166,060 | |||||||||||||||||||||
Equity component of convertible debt* | — | — | — | 48,102 | — | — | 48,102 | |||||||||||||||||||||
Amortization of stock options | — | — | — | 144,997 | — | — | 144,997 | |||||||||||||||||||||
Issuance of warrants for services | — | — | — | 265,474 | — | — | 265,474 | |||||||||||||||||||||
Issuance of warrants | — | — | — | 11,325 | — | — | 11,325 | |||||||||||||||||||||
Sale of common stock, net | 541,666 | — | 542 | 1,401,748 | — | — | 1,402,290 | |||||||||||||||||||||
Conversion of notes payable | 118,302 | — | 118 | 315,860 | — | — | 315,978 | |||||||||||||||||||||
Net loss, as restated* | — | — | — | — | — | (5,593,686 | ) | (5,593,686 | ) | |||||||||||||||||||
Balance, December 31, 2008 | 10,510,184 | — | 10,510 | 15,306,564 | — | (16,167,293 | ) | (850,219 | ) | |||||||||||||||||||
Issuance of common stock for services | 60,451 | — | 61 | 432,145 | — | — | 432,206 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (876,894 | ) | (876,894 | ) | |||||||||||||||||||
Balance, March 31, 2009 | 10,570,635 | $ | — | $ | 10,571 | $ | 15,738,709 | $ | — | $ | (17,044,187 | ) | $ | (1,294,907 | ) | |||||||||||||
* | See Notes 2 and 3 |
F-39
Table of Contents
(An Exploration Stage Company)
Inception | ||||||||||||
Three | Three | (July 20, 2001) to | ||||||||||
Months Ended | Months Ended | March 31, | ||||||||||
March 31, | March 31, | 2009 | ||||||||||
2009 | 2008 | (as restated)* | ||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net loss | $ | (876,894 | ) | $ | (1,557,607 | ) | $ | (17,044,187 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
Depreciation and amortization | 13,047 | 12,797 | 157,262 | |||||||||
Recognized loss from the transfer from available-for-sale securities to trading securities | — | — | 18,776 | |||||||||
Change in fair value of warrants | (113,587 | ) | — | 470,016 | ||||||||
Recognized (gain) loss on investments | (13,573 | ) | 96,050 | (30,419 | ) | |||||||
Amortization of stock options issued for services | — | 109,701 | 1,541,282 | |||||||||
Extension of expiry of previously issued stock options | — | — | 256,838 | |||||||||
Conversion of stock options to warrants | — | 166,060 | 166,060 | |||||||||
Issuance of stock for services | 432,206 | 179,149 | 2,327,186 | |||||||||
Issuance of warrants for services | — | — | 281,884 | |||||||||
Loss on sale of fixed assets | — | — | 148,737 | |||||||||
Amortization of debt discount | 29,761 | — | 39,919 | |||||||||
Amortization of deferred charges on debentures | 6,610 | — | 6,610 | |||||||||
Interest paid through conversion to stock | — | — | 18,825 | |||||||||
Professional fees paid with debt | — | — | 50,000 | |||||||||
Changes in assets and liabilities | ||||||||||||
Trading securities | 24,051 | 62,255 | 153,900 | |||||||||
Receivables from related parties | 6 | 100 | (710 | ) | ||||||||
Receivable — other | — | — | (10,617 | ) | ||||||||
Prepaid expenses | 4,097 | (12,339 | ) | (1,697 | ) | |||||||
Deposits | — | — | (1,991 | ) | ||||||||
Acccounts payable | 30,512 | (89,016 | ) | 366,158 | ||||||||
Acccounts payable — related parties | (22,056 | ) | — | 380 | ||||||||
Accrued liabilities | 47,824 | (210,483 | ) | 266,810 | ||||||||
Net cash used in operating activities | (437,996 | ) | (1,243,333 | ) | (10,818,978 | ) | ||||||
Cash Flows from Investing Activities | ||||||||||||
Purchase of fixed assets | — | (2,500 | ) | (350,521 | ) | |||||||
Purchase of mineral rights | — | — | (100,000 | ) | ||||||||
Purchase of certificates of deposit | — | — | (507,822 | ) | ||||||||
Redemption of certificates of deposit | — | 507,822 | 507,822 | |||||||||
Purchase of available-for-sale securities | — | — | (134,195 | ) | ||||||||
Net cash provided (used) by investing activities | — | 505,322 | (584,716 | ) | ||||||||
Cash Flows from Financing Activities | ||||||||||||
Net proceeds from the sale of common stock/member contributions | — | — | 10,225,536 | |||||||||
Exercise of stock options | — | — | 115,000 | |||||||||
Sale of warrants | — | — | 11,325 | |||||||||
Proceeds from member contributions | — | — | 83,315 | |||||||||
Proceeds from notes payable | — | 150,000 | 611,143 | |||||||||
Equity component of convertible debt | — | — | 75,026 | |||||||||
Proceeds from debentures | 456,508 | — | 456,508 | |||||||||
Repayment of notes payable | (5,102 | ) | (48,976 | ) | (135,999 | ) | ||||||
Net cash provided by financing activities | 451,406 | 101,024 | 11,441,854 | |||||||||
Net increase (decrease) in cash and cash equivalents | 13,410 | (636,987 | ) | 38,160 | ||||||||
Cash and cash equivalents at beginning of period | 24,750 | 825,908 | — | |||||||||
Cash and cash equivalents at end of period | $ | 38,160 | $ | 188,921 | $ | 38,160 | ||||||
F-40
Table of Contents
(An Exploration Stage Company)
Inception | ||||||||||||
Three Months | Three Months | (July 20, 2001) to | ||||||||||
Ended | Ended | March 31, | ||||||||||
March 31, | March 31, | 2009 | ||||||||||
2009 | 2008 | (as restated)* | ||||||||||
Supplemental Disclosure of Cash Flow Information | ||||||||||||
Cash paid during the period for interest | $ | 400 | $ | 1,312 | $ | 94,877 | ||||||
Cash paid during the period for income taxes | $ | — | $ | — | $ | — | ||||||
Non-Cash Investing and Financing Activities | ||||||||||||
Purchase of a vehicle with a note payable | $ | — | $ | — | $ | 78,188 | ||||||
Conversion of debt to equity | $ | — | $ | — | $ | 550,000 | ||||||
Purchase of building with a note payable | $ | — | $ | — | $ | 2,309,048 | ||||||
Resale of building and extinguishment of note payable | $ | — | $ | 2,309,048 | $ | 2,309,048 | ||||||
Transfer of investments from available-for-sale to trading | $ | — | $ | — | $ | 110,419 | ||||||
Unrecognized loss on available-for-sale investments | $ | — | $ | — | $ | 18,776 | ||||||
Trading securities exchanged for debt | $ | 14,831 | $ | — | $ | 42,019 | ||||||
Subscriptions receivable exchanged for debt | $ | — | $ | — | $ | 471,339 | ||||||
Professional fees paid with debt | $ | — | $ | — | $ | 50,000 | ||||||
Warrants issued as deferred financing costs | $ | — | $ | — | $ | 143,366 | ||||||
Warrants issued classified as a liability | $ | — | $ | — | $ | 36,679 | ||||||
Debt discount | $ | — | $ | — | $ | 628,376 | ||||||
* | See Notes 2 and 3 |
F-41
Table of Contents
(An Exploration Stage Company)
F-42
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2009 | 2008 | |||||||
Options | 954,625 | 1,004,625 | ||||||
Warrants | 3,396,901 | 1,146,340 | ||||||
Convertible debentures/notes | 698,196 | 50,041 | ||||||
Total potentially dilutive securities | 5,049,722 | 2,201,006 | ||||||
F-43
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
At and For the | ||||
Three Months | ||||
Ended | ||||
March 31, 2009 | ||||
Trading securities | $ | 33,957 | ||
Quoted prices in active market for identical securities (Level 1) | $ | 33,957 | ||
Significant other observable inputs (Level 2) | $ | — | ||
Significant unobservable inputs (Level 3) | $ | — | ||
Total gains attributable to net unrealized gains included in Other Income or Expense | $ | 8,511 | ||
At and For the | ||||
Three Months | ||||
Ended | ||||
March 31, 2009 | ||||
Warrant liability | $ | 1,098,392 | ||
Quoted prices in active market for identical securities (Level 1) | $ | — | ||
Significant other observable inputs (Level 2) | $ | — | ||
Significant unobservable inputs (Level 3) | $ | 1,098,392 | ||
Change in fair value of warrants included in Other Income or Expense | $ | 113,587 | ||
F-44
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2009 | January 1, 2009 | |||||||
Annual dividend yield | — | — | ||||||
Risk-free interest rate | 1.1 - 1.3 | % | 1.3 - 1.4 | % | ||||
Expected life (years) | 3.15 - 3.75 | 3.4 - 4 | ||||||
Expected volatility | 111 | % | 123 | % |
F-45
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
F-46
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Stock Options | Price | |||||||
Outstanding, December 31, 2008 | 954,625 | $ | 2.98 | |||||
Exercised | — | — | ||||||
Forfeited or converted | — | — | ||||||
Granted | — | — | ||||||
Outstanding, March 31, 2009 | 954,625 | $ | 2.98 | |||||
As of March 31, 2009 | ||||||||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||
Remaining | Weighted | Remaining | Weighted | |||||||||||||||||||||
Range of | Contractual | Average | Contractual | Average | ||||||||||||||||||||
Exercise | Number of | Life (in | Exercise | Number of | Life (in | Exercise | ||||||||||||||||||
Prices | Shares | years) | Price | Shares | years) | Price | ||||||||||||||||||
$1.25 - - $7.00 | 954,625 | 2.49 | $ | 2.98 | 954,625 | 2.49 | $ | 2.98 | ||||||||||||||||
F-47
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Warrants Outstanding and Exercisable at March 31, 2009 | ||||||||||||
Weighted | ||||||||||||
Average | ||||||||||||
Remaining | Weighted | |||||||||||
Range of | Contractual | Average | ||||||||||
Exercise | Number of | Life | Exercise | |||||||||
Prices | Shares | (in years) | Price | |||||||||
$1.00 — 12.00 | 3,396,901 | 2.52 | $ | 2.12 | ||||||||
(i) | Separation fees of $91,000 will be paid over the eight months beginning on July 1, 2009, and | ||
(ii) | 50,000 shares of restricted common stock will be issued which will vest when the Company’s common stock begins to trade publicly. |
F-48
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
F-49
Table of Contents
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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Amount | ||||
SEC registration fee | $ | 63.95 | ||
Legal expenses* | $ | 100,000.00 | ||
Accounting expenses* | $ | 20,000.00 | ||
Printing expenses* | $ | 5,000.00 | ||
Miscellaneous expenses* | $ | 4,936.05 | ||
Total* | $ | 130,000.00 | ||
* | Estimated |
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Number | ||||||||||||||||||||||||||||
Principal | of | |||||||||||||||||||||||||||
Convertible | Date of | Date | Principal | Interest | & Interest | Conversion | Shares | |||||||||||||||||||||
Note Holder | Note | Converted | Amount | Rate | Converted | Rate/Share | Issued | |||||||||||||||||||||
Thomas Fudge* | 1/1/2007 | N/A | $ | 45,000 | 6 | % | — | $ | 5.00 | — | ||||||||||||||||||
Andrew Simpson | 1/1/2007 | 11/1/2007 | $ | 5,000 | 6 | % | $ | 5,250.68 | $ | 5.00 | 1,050 | |||||||||||||||||
Stew Hollingsworth | 1/1/2007 | 11/1/2007 | $ | 5,000 | 6 | % | $ | 5,250.68 | $ | 5.00 | 1,050 | |||||||||||||||||
Pete Ingersoll | 1/1/2007 | 11/1/2007 | $ | 45,000 | 6 | % | $ | 47,256.16 | $ | 5.00 | 9,451 | |||||||||||||||||
Lynn Oates | 1/1/2007 | 11/1/2007 | $ | 10,000 | 6 | % | $ | 10,501.37 | $ | 5.00 | 2,100 | |||||||||||||||||
John O’Shea | 2/28/2007 | 11/1/2007 | $ | 100,000 | 10 | % | $ | 108,383.56 | $ | 5.60 | 19,354 | |||||||||||||||||
Dick Price | 5/8/2007 | 11/1/2007 | $ | 35,000 | 10 | % | $ | 37,272.60 | $ | 7.00 | 5,325 |
* | Note was paid in January 2008. |
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Exhibit No. | Description | |
3.1* | Articles of Incorporation of Concentric Energy Corp., a Nevada corporation | |
3.2* | By-Laws of Concentric Energy Corp., a Nevada corporation | |
3.3* | Articles of Incorporation for the Anderson Mining Company, an Arizona corporation | |
3.4* | By-Laws of the Anderson Mining Company, an Arizona corporation | |
5.1† | Form of Legal Opinion of Sichenzia Ross Friedman Ference LLP | |
9.1† | Voting Trust Agreement dated as of September 30, 2008 among Concentric Energy Corp., Ralph Kettell, II, Laura Kettell, Chloe Kettell UGM Trust, Collin Kettell UGM Trust, Ralph Kettell, III UGM Trust, George Ollinger, Helen Ollinger, Nadine Osborn, LARK Enterprises, Ltd., and Andy Simpson as the Voting Trustee | |
10.1† | Concentric Energy Corp. Stock Option Plan | |
10.2* | Form of $1.75 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.3* | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser, dated July 31, 2008 | |
10.4* | Form of Registration Rights Agreement between Concentric Energy Corp. and Purchaser, dated July 31, 2008 | |
10.5* | Form of $4.50 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.6* | Form of $6.00 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.7* | Lock-up Agreement, dated May 31, 2008, between Concentric Energy Corp. and Ralph Kettell | |
10.8* | Warrant Agreement dated December 28, 2007 between Concentric Energy Corp. and Thomas F. Fudge, Jr. | |
10.9* | Indemnification Agreement dated November 15, 2007 by and between Concentric Energy Corp. and Rockell N. Hankin | |
10.10* | Indemnification Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Richard P. Graff | |
10.11* | Indemnification Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.12* | Retention Agreement dated November 7, 2007 by and between Concentric Energy Corp. and Rockell N. Hankin | |
10.13* | Retention Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Richard P. Graff | |
10.14* | Retention Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.15* | Restricted Stock Purchase Agreement dated November 15, 2007 by and between Concentric Energy Corp. and The Rockell Nathan Hankin Living Trust | |
10.16* | Restricted Stock Purchase Agreement dated February 14, 2008 by and between Concentric Energy Corp. and Richard P. Graff | |
10.17* | Restricted Stock Purchase Agreement dated January 2, 2008 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.18* | Employment Agreement dated November 2, 2007 by and between Concentric Energy Corp. and Bonita Bogaert | |
10.19* | Employment Agreement entered into in November 1, 2006 by and between Concentric Energy Corp. and Andrew Simpson | |
10.20* | Employment Agreement between Concentric Energy Corp. and Lynn Oates | |
10.21* | Consulting Agreement dated January 15, 2007 by and between Concentric Energy Corp. and Arden Larson | |
10.22* | Severance and Consulting Agreement dated December 27, 2007 by and between Concentric Energy Corp. and Thomas F. Fudge | |
10.23* | Restricted Stock Purchase Agreement dated January 4, 2008 by and between Concentric Energy Corp. and Thomas F. Fudge | |
10.24* | Quitclaim Transfer of Title and Claims dated July 30, 2007, executed by Concentric Energy Corp. to benefit Nevada Fluorspar, Inc., effective as of July 29, 2005 | |
10.25* | Quitclaim Deed dated April 13, 2007 executed by Ralph W. Kettell to the benefit of Concentric Energy Corp. | |
10.26** | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser, dated December 31, 2008 | |
10.27** | Form of 15% Cumulative Convertible Debenture due December 31, 2012 | |
10.28** | Form of $1.00 Warrant to Purchase Common Stock dated December 31, 2008 | |
10.29** | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser, dated May 21, 2009 | |
10.30** | Form of 15% Cumulative Convertible Debenture due May 21, 2013 | |
10.31** | Form of $1.00 Warrant to Purchase Common Stock dated May 21, 2009 | |
10.32† | Exclusive Marketing Agreement dated May 21, 2009 between Concentric Energy Corp. and Traxys North America LLC | |
10.33** | Amendment to Employment Agreement between Concentric Energy Corp. and Andrew K. Simpson dated October 17, 2008 | |
23.1** | Consent of Semple, Marchal & Cooper, LLP |
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Exhibit No. | Description | |
23.2† | Consent of Sichenzia Ross Friedman Ference LLP (included in Exhibit 5.1). | |
24.1* | Power of Attorney (included on signature page) |
* | Previously filed. | |
** | Filed herein. | |
† | To be filed by Amendment. |
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(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: | |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | ||
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | ||
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. | ||
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
(4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: | |
(a) | If the Company is relying on Rule 430B: | |
i. Each prospectus filed by the Company pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and | ||
ii. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or |
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(b) | If the Company is subject to Rule 430C: | |
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.. | ||
(5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of securities: The undersigned registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer and sell such securities to the purchaser: (i) any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. | |
(6) | Insofar as Indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provision, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
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CONCENTRIC ENERGY CORP. | ||||
By: | /s/ Andrew K. Simpson | |||
Name: | Andrew K. Simpson | |||
Title: | Chief Executive Officer | |||
Signature | Title | Date | ||
/s/ Andrew K. Simpson | Chief Executive Officer, Chief Financial Officer and Director (Principal Executive Officer and Principal Financial and Accounting Officer) | August 10, 2009 | ||
By: /s/ Andrew K. Simpson | President, Vice President — Finance, | August 10, 2009 | ||
Andrew K. Simpson | ||||
Attorney-in-fact | ||||
Lynn F. Oates | Controller | |||
By: /s/ Andrew K. Simpson | Chairman of the Board | August 10, 2009 | ||
Andrew K. Simpson | ||||
Attorney-in-fact | ||||
By: /s/ Andrew K. Simpson | Director | August 10, 2009 | ||
Andrew K. Simpson | ||||
Attorney-in-fact | ||||
By: /s/ Andrew K. Simpson | Director | August 10, 2009 | ||
Andrew K. Simpson | ||||
Attorney-in-fact |
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Exhibit No. | Description | |
3.1* | Articles of Incorporation of Concentric Energy Corp., a Nevada corporation | |
3.2* | By-Laws of Concentric Energy Corp., a Nevada corporation | |
3.3* | Articles of Incorporation for the Anderson Mining Company, an Arizona corporation | |
3.4* | By-Laws of the Anderson Mining Company, an Arizona corporation | |
5.1† | Form of Legal Opinion of Sichenzia Ross Friedman Ference LLP | |
9.1† | Voting Trust Agreement dated as of September 30, 2008 among Concentric Energy Corp., Ralph Kettell, II, Laura Kettell, Chloe Kettell UGM Trust, Collin Kettell UGM Trust, Ralph Kettell, III UGM Trust, George Ollinger, Helen Ollinger, Nadine Osborn, LARK Enterprises, Ltd., and Andy Simpson as the Voting Trustee | |
10.1† | Concentric Energy Corp. Stock Option Plan | |
10.2* | Form of $1.75 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.3* | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser | |
10.4* | Form of Registration Rights Agreement between Concentric Energy Corp. and Purchaser | |
10.5* | Form of $4.50 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.6* | Form of $6.00 Warrant Agreement between Concentric Energy Corp. and Purchaser | |
10.7* | Lock-up Agreement, dated May 31, 2008, between Concentric Energy Corp. and Ralph Kettell | |
10.8* | Warrant Agreement dated December 28, 2007 between Concentric Energy Corp. and Thomas F. Fudge, Jr. | |
10.9* | Indemnification Agreement dated November 15, 2007 by and between Concentric Energy Corp. and Rockell N. Hankin | |
10.10* | Indemnification Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Richard P. Graff | |
10.11* | Indemnification Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.12* | Retention Agreement dated November 7, 2007 by and between Concentric Energy Corp. and Rockell N. Hankin | |
10.13* | Retention Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Richard P. Graff | |
10.14* | Retention Agreement dated December 12, 2007 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.15* | Restricted Stock Purchase Agreement dated November 15, 2007 by and between Concentric Energy Corp. and The Rockell Nathan Hankin Living Trust | |
10.16* | Restricted Stock Purchase Agreement dated February 14, 2008 by and between Concentric Energy Corp. and Richard P. Graff | |
10.17* | Restricted Stock Purchase Agreement dated January 2, 2008 by and between Concentric Energy Corp. and Ronald L. Parratt | |
10.18* | Employment Agreement dated November 2, 2007 by and between Concentric Energy Corp. and Bonita Bogaert | |
10.19* | Employment Agreement entered into in November 1, 2006 by and between Concentric Energy Corp. and Andrew Simpson | |
10.20* | Employment Agreement between Concentric Energy Corp. and Lynn Oates | |
10.21* | Consulting Agreement dated January 15, 2007 by and between Concentric Energy Corp. and Arden Larson | |
10.22* | Severance and Consulting Agreement dated December 27, 2007 by and between Concentric Energy Corp. and Thomas F. Fudge | |
10.23* | Restricted Stock Purchase Agreement dated January 4, 2008 by and between Concentric Energy Corp. and Thomas F. Fudge | |
10.24* | Quitclaim Transfer of Title and Claims dated July 30, 2007, executed by Concentric Energy Corp. to benefit Nevada Fluorspar, Inc., effective as of July 29, 2005 | |
10.25* | Quitclaim Deed dated April 13, 2007 executed by Ralph W. Kettell to the benefit of Concentric Energy Corp. | |
10.26** | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser, dated December 31, 2008 | |
10.27** | Form of 15% Cumulative Convertible Debenture due December 31, 2012 | |
10.28** | Form of $1.00 Warrant to Purchase Common Stock dated December 31, 2008 | |
10.29** | Form of Securities Purchase Agreement between Concentric Energy Corp. and Purchaser, dated May 21, 2009 | |
10.30** | Form of 15% Cumulative Convertible Debenture due May 21, 2013 | |
10.31** | Form of $1.00 Warrant to Purchase Common Stock dated May 21, 2009 | |
10.32† | Exclusive Marketing Agreement dated May 21, 2009 between Concentric Energy Corp. and Traxys North America LLC | |
10.33** | Amendment to Employment Agreement between Concentric Energy Corp. and Andrew K. Simpson dated October 17, 2008 | |
23.1** | Consent of Semple Marchal & Cooper, LLP |
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Exhibit No. | Description | |
23.2† | Consent of Sichenzia Ross Friedman Ference LLP (included in Exhibit 5.1). | |
24.1* | Power of Attorney (included on signature page) |
* | Previously filed. | |
** | Filed herein. | |
† | To be filed by Amendment. |