R
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ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
October 31, 2010
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£
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD OF _________ TO _________.
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Nevada
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91-1766677
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State or other jurisdiction of incorporation or organization
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(I.R.S. Employer Identification No.)
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Title of Each Class
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Name of each exchange on which registered
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Common Stock, $0.01 Par Value
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NYSE Amex
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•
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competition from a large number of companies, many of which are significantly larger than the Company, in the acquisition, exploration, and development of mining properties;
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•
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the Company might not be able raise enough money to pay the fees, taxes and perform labor necessary to maintain its concessions in good force;
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•
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exploration for minerals is highly speculative and involves substantial risks, even when conducted on properties known to contain significant quantities of mineralization, our exploration projects may not result in the discovery of commercially mineable deposits of ore;
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•
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the probability of an individual prospect ever having reserves that meet the requirements of Securities Act Industry Guide 7 is extremely remote, or the properties may not contain any reserves, and any funds spent on exploration may be lost;
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•
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our operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air quality standards, pollution and other environmental protection controls and the Company may not be able to comply with these regulations and controls; and
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•
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a large number of factors beyond the control of the Company, including fluctuations in metal prices, inflation, and other economic conditions, will affect the economic feasibility of mining.
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Concession
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A grant of a tract of land made by a government or other controlling authority in return for stipulated services or a promise that the land will be used for a specific purpose.
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Exploration expenditures
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Costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects that may contain mineral deposit reserves.
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Mineralized Material
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Mineral bearing material such as zinc, silver, copper and lead that has been physically delineated by one or more of a number of methods including drilling, underground work, surface trenching and other types of sampling. This material has been found to contain a sufficient amount of mineralization of an average grade of metal or metals to have economic potential that warrants further exploration evaluation. While this material is not currently or may never be classified as reserves, it is reported as mineralized material only if the potential exists for reclassification into the reserves category. This material cannot be classified in the reserves category until final technical, economic and legal factors have been determined. Under the United States Securities and Exchange Commission’s standards, a mineral deposit does not qualify as a reserve unless the recoveries from the deposit are expected to be sufficient to recover total cash and non-cash costs for the mine and related facilities and make a profit.
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Ore, Ore Reserve, or Mineable Ore Body
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The part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
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Reserves
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Estimated remaining quantities of mineral deposit and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on:
(a) analysis of drilling, geological, geophysical and engineering data;
(b) the use of established technology;
(c) specified economic conditions, which are generally accepted as being reasonable, and which are disclosed; and
(d) permitted and financed for development
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Resources
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Those quantities of mineral deposit estimated to exist originally in naturally occurring accumulations.
Resources are, therefore, those quantities estimated on a particular date to be remaining in known accumulations plus those quantities already produced from known accumulations plus those quantities in accumulations yet to be discovered.
Resources are divided into:
(a) discovered resources, which are limited to known accumulations; and
(b) undiscovered resources.
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Solvent Extraction and Electrowinning (“SXEW”)
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A hydrometallurgical process in which metal is dissolved from the rock by an acid or base, concentrated by organic solvents and recovered from solution by electrolysis.
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Stratigraphic units
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A body of rock established as a distinct entity, geologically classified, based on any of the properties or attributes or combinations thereof that rocks possess.
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Tonne
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A metric ton which is equivalent to 2,204.6 pounds.
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Unproved property
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A property or part of a property to which no reserves have been specifically attributed.
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Fiscal Quarter | High | Low | |||||
Fiscal Year End October 31, 2010
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4
th
Quarter (8/1/2010 – 10/31/2010)
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$0.85
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$0.57
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||||
3
rd
Quarter (5/1/2010 – 7/31/2010)
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$1.02
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$0.52
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|||||
2
nd
Quarter (2/1/2010 – 4/30/2010)
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$1.59 |
$0.62
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|||||
1
st
Quarter (11/1/09 – 1/31/2010)
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$0.95 |
$0.52
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|||||
Fiscal Year End October 31, 2009
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4
th
Quarter (8/1/09 – 10/31/09)
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$0.74
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$0.27
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||||
3
rd
Quarter (5/1/09 – 7/31/09)
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$0.33
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$0.18
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|||||
2
nd
Quarter (2/1/09 – 4/30/09)
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$0.37
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$0.11
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|||||
1
st
Quarter (11/1/08 – 1/31/09)
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$0.51
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$0.20
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●
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The 2000 Equity Incentive Plan (the “2000 Plan”) was adopted by the board of directors and approved by the stockholders in 2001. One million shares of common stock are reserved for issuance under the 2000 Plan. Currently options to acquire 34,000 shares are outstanding pursuant to the 2000 Plan. No additional options or stock awards will be granted under the 2000 Plan.
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●
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The 2006 Stock Option Plan (the “2006 Plan”) was adopted by the board of directors in May 2006, and approved by the stockholders in July 2006. Five million shares of common stock are reserved for issuance under the 2006 Plan. Currently, options to acquire 3,372,692 shares of common stock are outstanding pursuant to the 2006 Plan and only 885,177 shares remain available for issuance under the plan.
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●
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The 2010 Stock Option and Bonus Plan (the “2010 Plan”) was adopted by the board of directors in December 2009 and approved by the stockholders in April 2010. Under the 2010 Plan, the lesser of (i) 30,000,000 shares or (ii) 10% of the total shares outstanding will be reserved to be issued upon the exercise of options or the grant of stock bonuses. Currently, there are 10,300,000 shares reserved for issuance under the 2010 Plan. Options to acquire 3,495,000 shares of common stock are outstanding pursuant to the 2010 plan, and 6,805,000 shares remain available for issuance under the plan.
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Plan Category
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Number of securities to be
issued upon exercise of
outstanding options, warrants
and rights
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Weighted average exercise
price of outstanding
options, warrants and rights
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Number of securities
remaining available for
future issuance
|
|||
Equity compensation
plans approved by
security holders
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6,901,692
(1)
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$1.59
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7,690,177
(2)
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|||
Equity compensation
plans not approved by security holders
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884,781
(3)
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$2.37
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—
|
|||
Total
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7,786,473
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$1.68
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7,690,177
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Includes: (i) options to acquire 34,000 shares of Common Stock under the 2000 Plan; (ii) options to acquire 3,372,692 shares of common stock under the 2006 Plan; and options to acquire 3,495,000 shares of common stock under the 2010 Plan.
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(2)
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Includes: (i) 885,177 shares of common stock available for issuance under the 2006 Plan; and (ii) 6,805,000 shares of common stock available for issuance under the 2010 Plan.
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(3)
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Includes (i) warrants to purchase 6,103 shares of Common Stock as compensation for services to Tomlinson Programs Inc., (ii) warrants to purchase 204,000 shares of Common Stock as compensation for services to Aegis Capital Inc., (iii) warrants to purchase 17,250 shares of Common Stock to an independent director of the Company, (iv) warrants to purchase 12,500 shares of Common Stock as compensation for financial services to Peter Melillo, (v) warrants to purchase 54,928 shares to James Czirr as compensation for financial services, and (vi) warrants to purchase 590,000 shares as compensation for financial services to David Nahmias.
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·
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The amount and nature of future capital, development and exploration expenditures;
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·
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The timing of exploration activities; and
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·
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Business strategies and development of our business plan.
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·
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pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
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·
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provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
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·
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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
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Name
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Position
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Age
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Year Appointed as Officer or Director
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|||
Brian Edgar
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Executive Chairman
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60
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2010
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|||
Gregory Hahn
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Interim Chief Executive Officer, Interim President, and Director
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59
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2007
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|||
Wesley Pomeroy
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Director
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55
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2005
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|||
Robert Kramer
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Director
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64
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2006
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|||
Duncan Hsia
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Director
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45
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2010
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|||
Murray Hitzman
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Director
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57
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2010
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|||
Robert J. Devers
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Chief Financial Officer
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48
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2007
|
|||
Timothy Barry
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Vice President – Exploration
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35
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2010
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●
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Brian Edgar:
The determination was made that Mr. Edgar should serve on our Board of Directors in large part due to his extensive executive level experience working with junior and mid-size level natural resource companies, as well as his experience with and general knowledge of the capital markets.
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●
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Gregory Hahn:
The determination was made that Mr. Hahn should serve on our Board of Directors in large part because Mr. Hahn is a Certified Professional Geologist and a geological engineer with significant experience in exploration, mine development and operation, as well as his experience with junior level natural resources companies.
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●
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Wesley Pomeroy:
The determination was made that Mr. Pomeroy should serve on our Board of Directors in large part because of his experience with various natural resources companies and because of his significant geology knowledge and education.
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●
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Robert Kramer
: The determination was made that Mr. Kramer should serve on our Board of Directors in large part because of his knowledge and experience with early stage companies, the capital markets and capital formation.
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●
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Duncan Hsia
: The determination was made that Mr. Hsia should serve on our Board of Directors in large part because of his knowledge and analytical experience with respect to public and private companies in the mining and commodities sectors.
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●
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Murray Hitzman:
The determination was made that Dr. Hitzman should serve on the Board of Directors in large part because of extensive experience in the mining sector and experience as serving as a director of public companies with international projects.
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Fiscal
|
Salary
|
Stock Awards
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Option Awards
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All Other Compensation
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Total
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|||||||||||||||||||||
Name and Principal Position
|
Year |
($)
|
($)
|
($)
(1)
|
($)
|
($)
|
||||||||||||||||||||
Merlin Bingham,
|
2010 | $ | 123,500 | (3) | $ | - | $ | 92,540 | (4) | $ | 370,500 | (2) | $ | 586,540 | ||||||||||||
Former Chief Executive Officer and President
(2)
|
2009 | 247,000 | (3) | - | 47,091 | (5) | - | 294,091 | ||||||||||||||||||
Gregory Hahn
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2010 | $ | - | $ | 23,184 | (6) | $ | 184,127 | (7) | $ | 84,000 | (8) | $ | 291,311 | ||||||||||||
Interim Chief Executive Officer and President
(6)
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2009 | - | 15,444 | 13,732 | (9) | $ | 36,000 | (10) | 65,176 | |||||||||||||||||
Roger Kolvoord
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2010 | $ | 130,667 | (12) | $ | - | $ | - | $ | 317,333 | (11) | $ | 448,000 | |||||||||||||
Former Executive Vice President
(11)
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2009 | 224,000 | (12) | - | 42,722 | (13) | - | 266,722 | ||||||||||||||||||
Robert Devers
|
2010 | $ | 165,000 | (14) | $ | - | $ | 233,550 | (15) | $ | - | $ | 398,550 | |||||||||||||
Chief Financial Officer
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2009 | 165,000 | (14) | - | 15,735 | (16) | - | 180,735 | ||||||||||||||||||
Terry Brown
|
2010 | $ | 150,000 | (18) | $ | - | $ | 93,420 | (19) | $ | 175,000 | (17) | $ | 418,420 | ||||||||||||
Former Vice President Operations
(17)
|
2009 | 150,000 | (18) | - | 8,344 | (20) | - | 158,344 | ||||||||||||||||||
Timothy Barry
|
2010 | $ | 29,900 | (21) | $ | - | $ | 233,550 | (22) | $ | - | $ | 263,450 | |||||||||||||
Vice President Exploration
(21)
|
2009 | - | - | - | - | - |
(1)
|
Amounts represent the calculated fair value of stock options granted to the named executive officers based on provisions of ASC 718-10,
Stock Compensation.
See note 10 to the consolidated financial statements for discussion regarding assumptions used to calculate fair value under the Black-Scholes–Merton valuation model.
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(2)
|
Mr. Bingham retired as the Company’s Chief Executive Officer and President on July 1, 2010. On August 3, 2010, Mr. Bingham and the Company agreed to terminate Mr. Bingham’s employment agreement and entered into an agreement whereby Mr. Bingham received a lump sum severance payment in the amount of $370,500.
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(3)
|
Mr. Bingham earned $247,000 in salary in 2009 and was compensated at this same annual rate in fiscal 2010 for the periods he was employed by the Company. Starting in February 2009 Mr. Bingham agreed to deter 50% of his salary. Mr. Bingham continued his salary deferral through December 2009, when he returned to his full salary. All amounts deferred are included in the salary column of the Executive Compensation Table for the year in which such amounts were earned.
|
(4)
|
Represents the calculated fair value of options to acquire 200,000 shares of the Company’s common stock granted to Mr. Bingham on August 23, 2010. The option was granted to Mr. Bingham in his capacity as a director. The option was exercisable at $0.72 per share for a five year term. Options to acquire 100,000 shares vested upon grant and the remaining 100,000 were scheduled to vest on August 23, 2011.
|
(5)
|
Represents the calculated fair value of options to acquire 185,250 shares of the Company’s common stock granted to Mr. Bingham on February 11, 2009. This option vested in full on the date of grant. This option was granted in consideration for Mr. Bingham agreeing to defer the payment of a portion of his salary.
|
(6)
|
Mr. Hahn was appointed as the Company’s interim Chief Executive Officer and President on July 1, 2010. Prior to his appointment as interim Chief Executive Officer and President (and currently), Mr. Hahn served as a member of the Board of Directors. Mr. Hahn was issued 43,200 shares of common stock in fiscal 2009 in his capacity as an independent director, and issued 28,800 shares of common stock in his capacity as an independent director from November 1, 2010 through June 30, 2010. Upon being appointed as the Company’s interim Chief Executive Officer and President Mr. Hahn ceased receiving separate consideration for serving as a director.
|
(7)
|
Represents the calculated fair value of options to acquire 400,000 shares of the Company’s common stock granted to Mr. Hahn on August 23, 2010. The options are exercisable at $0.72 per share and are exercisable until August 23, 2010. Options to acquire 300,000 shares vested upon grant and the remaining 100,000 vest on August 23, 2011.
|
(8)
|
Consists of (i) $60,000 in consulting fees paid to Greg Hahn Consulting, LLC for his services as interim Chief Executive Officer and President from July 1, 2010 through October 31, 2010; and (ii) $24,000 in fees Mr. Hahn earned in his capacity as an independent director from November 1, 2009 through June 30, 2010.
|
(9)
|
Represents the calculated fair value of options to acquire 54,000 shares of the Company’s common stock granted to Mr. Hahn on February 11, 2009. This option vested in full on the date of grant. This option was granted in consideration for Mr. Hahn agreeing to defer the cash portion his directors’ fees.
|
(10)
|
In fiscal 2009 Mr. Hahn earned $36,000 in fees in capacity as an independent director. However, Mr. Hahn deferred the payment of $27,000 in fees during 2009 which amount was paid on December 22, 2009. All amounts deferred are included in the salary column of the All Other Compensation column for the year in which such amounts were earned.
|
(11)
|
Effective July 31, 2010 Mr. Kolvoord retired as the Company’s Executive Vice President. On August 3, 2010, Mr. Kolvoord and the Company agreed to terminate Mr. Kolvoord’s employment agreement and entered into an agreement whereby Mr. Kolvoord received a lump sum severance payment in the amount $317,333.
|
(12)
|
Mr. Kolvoord earned $224,000 in salary during fiscal 2009. However, effective February 1, 2009 he agreed to defer 50% of his salary. Mr. Kolvoord continued his salary deferral through December 2009, when he returned to his full salary. All amounts deferred are included in the salary column of the Executive Compensation Table for the year in which such amounts were earned.
|
(13)
|
Represents the calculated fair value of options to acquire 168,000 shares of the Company’s common stock granted to Mr. Kolvoord on February 11, 2009. This option vested in full on the date of grant and was granted in consideration for Mr. Kolvoord agreeing to defer a portion of his salary.
|
(14)
|
Mr. Devers earned $165,000 in salary during fiscal 2009 and fiscal 2010. However, effective February 1, 2009 he agreed to defer 25% of his salary. Mr. Devers continued his salary deferral through December 2009, when he returned to his full salary. All amounts deferred are included in the salary column of the Executive Compensation Table for the year in which such amounts were earned.
|
(15)
|
Represents the calculated fair value of options to acquire 500,000 shares of the Company’s common stock granted to Mr. Devers on August 23, 2010. Of these options 1/3 vested upon grant, 1/3 vest on August 23, 2011, and 1/3 vest on August 23, 2012.
|
(16)
|
Represents the calculated fair value of options to acquire 61,875 shares of the Company’s common stock granted to Mr. Devers on February 11, 2009. This option vested in full on the date of grant and was granted in consideration for Mr. Devers agreeing to defer a portion of his salary.
|
(17)
|
Mr. Brown served as the Company’s Vice President of Exploration in both the 2009 and 2010 fiscal years. On or about November 3, 2010 (being after the fiscal year ended October 31, 2010) Mr. Brown and the Company agreed to terminate Mr. Brown’s employment agreement and entered into an agreement whereby Mr. Brown was to be paid severance payments in the aggregate amount of $175,000. The Company has accrued this severance payment as of October 31, 2010.
|
(18)
|
Mr. Brown earned $150,000 in salary during fiscal 2009 and fiscal 2010. However, effective February 1, 2009 he agreed to defer 25% of his salary starting in July 2009. Mr. Brown continued his salary deferral through December 2009, when he returned to his full salary. All amounts deferred are included in the salary column of the Executive Compensation Table for the year in which such amounts were earned.
|
(19)
|
Represents the calculated fair value of options to acquire 200,000 shares of the Company’s common stock granted to Mr. Brown on August 23, 2010. Of these options 1/3 vested upon grant, 1/3 vest on August 23, 2011, and 1/3 vest on August 23, 2012.
|
(20)
|
Represents the calculated fair value of options to acquire 32,813 shares of the Company’s common stock granted to Mr. Brown on February 11, 2009. This option vested in full on the date of grant and was granted in consideration for Mr. Brown agreeing to defer a portion of his salary.
|
(21)
|
Mr. Barry was appointed Vice President Exploration on September 1, 2010. Mr. Barry is compensated at a rate of $650 per day worked and is eligible to earn a bonus of up to $150 per day.
|
(22)
|
Represents the calculated fair value of options to acquire 500,000 shares of the Company’s common stock granted to Mr. Barry on August 23, 2010. Of these options 1/3 vested upon grant, 1/3 vest on August 23, 2011, and 1/3 vest on August 23, 2012.
|
·
|
attracting and retaining highly qualified executives who share our Company values and commitment by designing the total compensation package to be fair and competitive;
|
·
|
providing executives with contractual terms that offer them reasonable security; and
|
·
|
motivating executives to provide excellent leadership and achieve Company goals by linking short-term and long-term incentives to the achievement of business objectives, thereby aligning the interests of executives and stockholders.
|
·
|
the executive’s leadership and operational performance and potential to enhance long-term value to the Company’s shareholders;
|
·
|
the Company’s financial resources;
|
·
|
performance compared to the financial, operational and strategic goals established for the Company;
|
·
|
the nature, scope and level of the executive’s responsibilities;
|
·
|
competitive market compensation paid by other companies for similar positions, experience and performance levels; and
|
·
|
the executive’s current salary, the appropriate balance between incentives for long-term and short-term performance.
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Name
|
Number of Options
|
||
Merlin Bingham
|
185,250 | ||
Roger Kolvoord
|
168,000 | ||
Robert Devers
|
61,875 | ||
Terry Brown
|
32,813 |
Name
|
Number of Options
|
||
Gregory Hahn
|
400,000
|
||
Merlin Bingham
|
200,000
|
||
Robert Devers
|
500,000
|
||
Terry Brown
|
200,000
|
||
Timothy Barry
|
500,000
|
Option Awards
|
|||||||||||||
Number of Securities
|
|||||||||||||
Underlying Unexercised
|
|||||||||||||
Options
(1)
|
Option
|
Option
|
|||||||||||
Name and Principal Position
|
Exercisable
|
Un-
exercisable
|
Exercise
Price ($)
|
Expiration
Date
|
|||||||||
Merlin Bingham,
|
1,000,000 | - | $2.59 |
1/5/2011
|
|||||||||
Former Chief Executive Officer and President
(2)
|
150,000 | - | $2.18 |
1/5/2011
|
|||||||||
100,000 (3) | 100,000 | $0.72 | 1/5/2011 | ||||||||||
Gregory Hahn
|
250,000 | - | $2.85 |
10/1/2017
|
|||||||||
Interim Chief Executive Officer and President | 54,000 | - | $0.34 |
2/11/2019
|
|||||||||
300,000 (4) | 100,000 | $0.72 |
8/23/2015
|
||||||||||
Roger Kolvoord,
|
- | - | - | - | |||||||||
Former Executive Vice President
(5)
|
|||||||||||||
Robert Devers,
|
166,667 (6) | 333,333 | $0.72 |
8/23/2015
|
|||||||||
Chief Financial Officer
|
61,875 | - | $0.34 |
2/11/2019
|
|||||||||
|
250,000 | - | $4.30 |
6/18/2017
|
|||||||||
100,000 | - | $2.18 |
1/18/2018
|
||||||||||
Terry Brown,
|
66,667 (8) | 133,333 | $0.72 |
1/31/2011
|
|||||||||
Former Vice President, Operations
(7)
|
32,813 | - | $0.34 |
1/31/2011
|
|||||||||
250,000 | - | $2.59 |
1/31/2011
|
||||||||||
10,000 | - | $2.00 |
1/31/2011
|
||||||||||
50,000 | $2.18 |
1/31/2011
|
|||||||||||
Timothy Barry,
|
166,667 (9) | 333,333 | $0.72 |
8/23/2015
|
|||||||||
Vice President Exploration
|
(1)
|
Includes options granted under 2000 Equity Incentive Plan, the 2006 Stock Option Plan, and the 2010 Stock Option Plan.
|
(2)
|
On October 7, 2010 Mr. Bingham resigned from the Company’s Board of Directors. As of that date he no longer was an affiliate of the Company. In accordance with the terms of Mr. Bingham’s options unless exercised his options will terminate 90 days after he ceased serving as a director or January 5, 2011.
|
(3)
|
On August 23, 2010, Mr. Bingham was granted options to acquire 200,000 shares of common stock; 100,000 of the options vested upon grant and the remaining 100,000 were scheduled to vest on August 23, 2011.
|
(4)
|
On August 23, 2010 Mr. Hahn was granted options to acquire an aggregate of 400,000 shares of common stock; 300,000 of the options vested upon grant and the remaining 100,000 vest on August 23, 2011.
|
(5)
|
On August 3, 2010 Mr. Kolvoord ceased serving as the Company’s Executive Vice President and as of that date was no long an affiliate of the Company. In accordance with the terms of Mr. Kolvoord’s options on October 29, 2010 all of Mr. Kolvoord’s options were forfeited.
|
(6)
|
On August 23, 2010 Mr. Devers was granted an option to acquire 500,000 shares of common stock; 166,667 vested upon grant; 166,667 vest on August 23, 2011; and 166,666 vest on August 23, 2012.
|
(7)
|
On November 2, 2010 Mr. Brown ceased serving as the Company’s Vice President – Exploration. As of that date he no longer was an affiliate of the Company. In accordance with the terms of Mr. Brown’s options unless exercised his options will terminate 90 days after he ceased serving as an executive officer or January 31, 2011.
|
(8)
|
On August 23, 2010, Mr. Brown was granted options to acquire 200,000 shares of common stock; 66,667 of the options vested upon grant; and the remainder were to vest on August 23, 2011; and August 23, 2012.
|
Brian Edgar (Executive Chairman)
(1)
|
Merlin Bingham
(2)
|
Roger Kolvoord
(3)
|
Gregory Hahn
(4)
|
Wesley Pomeroy
(4)
|
Robert Kramer
(4)
|
Duncan Hsia
(1)
|
Murray Hitzman
(1)
|
(1)
|
Elected to the Board of Directors effective as of April 16, 2010.
|
(2)
|
Mr. Bingham resigned from the Board of Directors on October 7, 2010.
|
(3)
|
Mr. Kolvoord did not stand for reelection at the Company’s meeting of shareholders and ceased serving as a director on April 16, 2010.
|
(4)
|
Messrs. Hahn, Pomeroy, and Kramer served on the Board of Directors throughout the 2010 fiscal year.
|
Name
|
Fees earned or paid in cash ($)
|
Stock awards
($)
|
Option awards
($)
(1)
|
All other compensation ($)
|
Total
($)
|
|||||||||||||||
Brian Edgar
(2)
|
$ | 48,750 | (2) | $ | - | $ | 277,620 | (3) | $ | 1,361 | $ | 327,731 | ||||||||
Wesley Pomeroy
|
$ | 33,500 | (4) | $ | 26,028 | (5) | $ | 92,540 | (5) | $ | - | $ | 152,068 | |||||||
Robert Kramer
|
$ | 33,500 | (6) | $ | 26,028 | (7) | $ | 92,540 | (7) | $ | - | $ | 152,068 | |||||||
Duncan Hsia
|
$ | 15,500 | $ | 10,296 | (8) | $ | 92,540 | (8) | $ | - | $ | 118,336 | ||||||||
Murray Hitzman
|
$ | 15,500 | $ | 10,296 | (9) | $ | 92,540 | (9) | $ | - | $ | 118,336 |
(1)
|
Amounts represent the calculated fair value of stock options granted to the named directors based on provisions of ASC 718-10,
Stock Compensation.
See note 10 to the consolidated financial statements for discussion regarding assumptions used to calculate fair value under the Black-Scholes–Merton valuation model.
|
(2)
|
Effective April 16, 2010 Mr. Edgar was appointed as the Company’s Executive Chairman. Starting that day the Company agreed to compensate Mr. Edgar at the rate of $7,500 per month.
|
(3)
|
On August 23, 2010 Mr. Edgar was granted an option to acquire 600,000 shares of the Company’s common stock. The option is exercisable at $0.72 per share for a term of five years. 300,000 shares underlying the option vested on the date of grant and the remaining 300,000 vest on August 23, 2011 (or in full upon a change of control event).
|
(4)
|
Mr. Pomeroy was paid fees equal to $33,500 during the fiscal year ended October 31, 2010 including $750 for serving as the Chair of the Corporate Governance and Nominating Committee, and $750 for serving as the Chair of the Compensation Committee.
|
(5)
|
During the fiscal year ended October 31, 2010 Mr. Pomeroy was issued 32,400 shares of common stock in consideration for services provided in his capacity as a director. Mr. Pomeroy holds options to purchase 504,000 shares of the Company’s common stock, of which 404,000 are vested. During the fiscal year ended October 31, 2010, Mr. Pomeroy was issued an aggregate of 200,000 options pursuant to the 2010 Stock Option Plan for director compensation.
|
(6)
|
Mr. Kramer was paid fees equal to $33,500 during the fiscal year ended October 31, 2010 including $1,500 for serving as the Chair of the Audit Committee.
|
(7)
|
During the fiscal year ended October 31, 2010 Mr. Kramer was issued 32,400 shares of common stock in consideration for services provided in his capacity as a director. Mr. Kramer holds options to purchase 754,000 shares of the Company’s common stock, of which 654,000 are vested. During the fiscal year ended October 31, 2010, Mr. Kramer was issued an aggregate of 200,000 options pursuant to the 2010 Stock Option Plan for director compensation.
|
(8)
|
During the fiscal year ended October 31, 2010 Mr. Hsia was issued 12,600 of common stock in consideration for services provided in his capacity as a director. Mr. Hsia holds options to purchase 200,000 shares of the Company’s common stock of which 100,000 are vested. Ms. Hsia was granted options to acquire 200,000 shares of common stock pursuant to the 2010 Stock Option Plan for director compensation.
|
(9)
|
During the fiscal year ended October 31, 2010 Dr. Hitzman was issued 12,600 of common stock in consideration for services provided in his capacity as a director. Dr. Hitzman holds options to purchase 200,000 shares of the Company’s common stock of which 100,000 are vested. Dr. Hitzman was granted options to acquire 200,000 shares of common stock pursuant to the 2010 Stock Option Plan for director compensation. Dr. Hitzman also was granted an option to acquire 100,000 of common stock from certain Company shareholders and affiliates; however this option is not exercisable until April 15, 2012.
|
Name and Address of
Beneficial Owner
|
Amount and Nature of Metalline
Beneficial Ownership
(1)
|
Percent of Metalline
Common stock
|
||
Sprott Asset Management LP
South Tower, Royal Bank Plaza
Suite 2700,
Toronto, ON M5J 2J1
|
5,912,185
|
5.6%
|
||
John C. Barrett
PO Box 10433
Pompano Beach FL 33061
|
6,861,750
(2)
|
6.4%
|
(1)
|
Calculated in accordance with rule 13d-3 under the Securities Exchange Act of 1934.
|
(2)
|
Includes warrants to acquire 1,100,000 shares of common stock held by John C. Barrett and John C. Barrett Revocable Trust.
|
Name and Address of
Beneficial Owner
|
Position
|
Amount and Nature of Metalline
Beneficial Ownership
(1)
|
Percent of Metalline
Common stock
|
|||
Brian Edgar
885 W. Georgia Street
Suite 2200
Vancouver B.C., V6C 3E8
|
Executive Chairman
|
4,869,952
(2)
|
4.5%
|
|||
Gregory Hahn
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Interim Chief Executive Officer, President, Director
|
729,500
(3)
|
0.7%
|
|||
Wesley Pomeroy
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Director
|
848,000
(4)
|
0.8%
|
Robert Kramer
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Director
|
843,750
(5)
|
0.8%
|
|||
Duncan Hsia
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Director
|
1,741,300
(6)
|
1.6%
|
|||
Murray Hitzman
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Director
|
236,820
(7)
|
0.2%
|
|||
Robert J. Devers
6400 S. Fiddlers Green Circle
Suite 950
Greenwood Village, CO 80111
|
Chief Financial Officer
|
588,542
(8)
|
0.6%
|
|||
Timothy Barry
885 W. Georgia Street
Suite 2200
Vancouver B.C., V6C 3E8
|
Vice President - Exploration
|
854,667
(9)
|
0.8%
|
|||
All current directors, executive officers and named executive officers as a group (eight persons)
|
10,655,370
(10)
|
9.7%
|
|
*
|
Indicates less than one percent.
|
(1)
|
Calculated in accordance with rule 13d-3 under the Securities Exchange Act of 1934.
|
(2)
|
Includes: (i) 4,512,792 shares of common stock; (ii) 57,160 shares of common stock held by Mr. Edgar’s spouse; and (iii) vested options to acquire 300,000 shares of common stock.
|
(3)
|
Includes: (i) 125,500 shares of common stock; and (ii) vested options to acquire 604,000 shares of common stock.
|
(4)
|
Includes: (i) 294,000 shares of common stock; and (ii) vested options to acquire 404,000 shares of common stock; and (iii) warrants to acquire 150,000 shares of common stock.
|
(5)
|
Includes: (i) 165,000 shares of common stock; (ii) 7,500 shares of common stock held by Mr. Kramer’s spouse; (iii) vested options to acquire 654,000 shares of common stock; and (iv) warrants to acquire 17,250 shares of common stock.
|
(6)
|
Includes: (i) 647,550 shares of common stock held by Mr. Hsia; (ii) 300,000 shares of common stock held in trust by Mr. Hsia’s spouse; (iii) 370,000 shares of common stock held in trust for the benefit of Mr. Hsia’s children; (iv) 6,000 shares of common stock held by Mr. Hsia’s children; (v) warrants to acquire 87,500 shares of common stock; (vi) warrants to acquire 180,000 shares of common stock held by Mr. Hsia’s spouse; (vii) warrants to acquire 50,250 shares of common stock held in trust for the benefit of Mr. Hsia’s children; and (viii) vested options to acquire 100,000 shares of common stock.
|
(7)
|
Includes: (i) 36,820 shares of common stock; and (ii) vested options to acquire 200,000 shares of common stock.
|
(8)
|
Includes: (i) 10,000 shares of common stock; and (ii) vested options to acquire 578,542 shares of common stock.
|
(9)
|
Includes: (i) 688,000 shares of common stock; and (ii) vested options to acquire 166,667 shares of common stock.
|
(10)
|
Includes securities reflected in footnotes 2 - 9.
|
|
·
|
Pre-approve all audit services that the auditor may provide to us or any subsidiary (including, without limitation, providing comfort letters in connection with securities underwritings or statutory audits) as required by §10A(i)(1)(A) of the Exchange Act (as amended by the Sarbanes-Oxley Act of 2002).
|
|
·
|
Pre-approve all non-audit services (other than certain
de minimis
services described in §10A(i)(1)(B) of the Exchange Act (as amended by the Sarbanes-Oxley Act of 2002)) that the auditors propose to provide to us or any of our subsidiaries.
|
Incorporated by Reference
|
||||||||||
Exhibit Number
|
Exhibit Description
|
Form
|
Date of Report
|
Exhibit
|
Filed Herewith
|
|||||
2.1
|
Agreement and Plan of Merger and Reorganization
|
8-K
|
02/03.2010
|
10.1
|
||||||
3.1.1
|
Restated Articles of Incorporation.
|
X
|
||||||||
3.1.2
|
Amended and Restated Bylaws
|
X
|
||||||||
4.1
|
Rights Agreement
|
8-A
|
06/11/2007
|
1
|
||||||
10.1
|
2000 Equity Incentive Plan.
|
10-KSB
|
10/31/2006
|
4.1
|
||||||
10.2
|
2006 Stock Option Plan.
|
10-KSB
|
10/31/2006
|
4.2
|
||||||
10.3
|
2010 Stock Option Plan.
|
8-K
|
02/03/2010
|
10.3
|
||||||
10.4
|
Employment agreement with Robert Devers
|
8-K
|
01/17/2008
|
10.1
|
||||||
10.5
|
Consulting agreement with Greg Hahn Consulting LLC
|
8-K
|
08/02/2010
|
10.1
|
||||||
10.6
|
Employment agreement with Brian Edgar
|
8-K
|
10/06/2010
|
10.1
|
||||||
10.7
|
Employment agreement with Timothy Barry
|
10-Q
|
07/31/2010
|
10.2
|
||||||
14
|
Code of Ethics
|
10-KSB
|
01/31/07
|
14
|
||||||
21.1
|
Subsidiaries of the Registrant
|
X
|
||||||||
23.1
|
Consent of Hein & Associates LLP
|
X
|
||||||||
31.1
|
Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
X
|
||||||||
31.2
|
Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
X
|
||||||||
32.1
|
Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
X
|
32.2
|
Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
X
|
||||||||
99.1
|
Sierra Mojada location map.
(1)
|
X
|
||||||||
99.2
|
Gabon location map.
(1)
|
X
|
METALLINE MINING COMPANY
|
|||
Date: January 14, 2011
|
By:
|
/s/ Gregory Hahn | |
Gregory Hahn, | |||
President and Principal Executive Officer
|
|||
Date: January 14, 2011
|
By:
|
/s/ Robert Devers | |
Robert Devers,
|
|||
Chief Financial Officer and Principal Accounting Officer | |||
Date: January 14, 2011
|
By:
|
/s/ Brian Edgar | |
Brian Edgar, Director
|
|||
Date: January 14, 2011
|
By:
|
/s/ Gregory Hahn | |
Gregory Hahn, Director
|
|||
Date: January 14, 2011
|
By:
|
/s/ Wesley Pomeroy | |
Wesley Pomeroy, Director
|
|||
Date: January 14, 2011
|
By:
|
/s/ Robert Kramer | |
Robert Kramer, Director
|
|||
Date: January 14, 2011
|
By:
|
/s/ Duncan Hsia | |
Duncan Hsia, Director
|
|||
Date: January 14, 2011
|
By:
|
/s/ Murray Hitzman | |
Murray Hitzman, Director
|
|||
PAGE NO.
|
||
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated Financial Statements:
|
||
Consolidated Balance Sheets
|
F-3
|
|
Consolidated Statements of Operations
|
F-4
|
|
Consolidated Statements of Cash Flows
|
F-5 - F-6
|
|
Consolidated Statements of Changes in Stockholders’ Equity
|
F-7 - F-12
|
|
Notes to Consolidated Financial Statements
|
F-13 - F-40
|
Years Ended
October 31,
|
Period from
November 8,
1993 (Inception)
to October 31,
|
|||||||||||
2010
|
2009
|
2010 | ||||||||||
REVENUES
|
$ | — | $ | — | $ | — | ||||||
EXPLORATION AND PROPERTY HOLDING COSTS
|
||||||||||||
Exploration and property holding costs
|
4,295,052 | 1,206,178 | 21,219,550 | |||||||||
Depreciation and asset write-off
|
271,724 | 174,927 | 1,147,620 | |||||||||
TOTAL EXPLORATION AND PROPERY HOLDING
COSTS
|
4,566,776 | 1,381,105 | 22,367,170 | |||||||||
GENERAL AND ADMINISTRATIVE EXPENSES
|
||||||||||||
Personnel costs
|
2,297,129 | 1,494,244 | 15,679,855 | |||||||||
Office and administrative expenses
|
633,897 | 255,297 | 3,348,486 | |||||||||
Professional services
|
1,646,218 | 943,384 | 12,688,218 | |||||||||
Directors fees
|
749,891 | 302,332 | 3,911,642 | |||||||||
Provision for uncollectible value-added taxes
|
928,877 | 56,102 | 1,205,395 | |||||||||
Depreciation
|
15,175 | 20,539 | 235,495 | |||||||||
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES
|
6,271,187 | 3,071,898 | 37,069,091 | |||||||||
LOSS FROM OPERATIONS
|
(10,837,963 | ) | (4,453,003 | ) | (59,436,261 | ) | ||||||
OTHER INCOME (EXPENSES)
|
||||||||||||
Interest and investment income
|
60,954 | 1,542 | 898,363 | |||||||||
Foreign currency translation gain (loss)
|
1,364,555 | (264,919 | ) | (2,488,419 | ) | |||||||
Miscellaneous income (loss)
|
4,764 | — | (67,873 | ) | ||||||||
TOTAL OTHER INCOME (EXPENSE)
|
1,430,273 | (263,377 | ) | (1,657,929 | ) | |||||||
LOSS BEFORE INCOME TAXES
|
(9,407,690 | ) | (4,716,380 | ) | (61,094,190 | ) | ||||||
INCOME TAX EXPENSE (BENEFIT) (Note 13)
|
(2,200 | ) | 7,730 | 102,225 | ||||||||
NET LOSS
|
$ | (9,405,490 | ) | $ | (4,724,110 | ) | $ | (61,196,415 | ) | |||
OTHER COMPREHENSIVE INCOME (LOSS) – Foreign currency translation adjustments
|
(1,090,707 | ) | 165,556 | 1,430,889 | ||||||||
COMPREHENSIVE LOSS
|
$ | (10,496,197 | ) | $ | (4,558,554 | ) | $ | (59,765,526 | ) | |||
NET LOSS
|
$ | (9,405,490 | ) | $ | (4,724,110 | ) | ||||||
DEEMED DIVIDEND ON EXERCISE OF WARRANTS (Note 11)
|
— | (126,090 | ) | |||||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS
|
$ | (9,405,490 | ) | $ | (4,850,200 | ) | ||||||
BASIC AND DILUTED NET LOSS PER COMMON SHARE
|
$ | (0.12 | ) | $ | (0.12 | ) | ||||||
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
81,432,631 | 41,482,728 | ||||||||||
Years Ended
October 31,
|
Period from
November 8,
1993 (Inception)
to October 31,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net loss
|
$ | (9,405,490 | ) | $ | (4,724,110 | ) | $ | (61,196,415 | ) | |||
Adjustments to reconcile net loss to net cash used by operating activities:
|
||||||||||||
Depreciation and equipment write-off
|
311,336 | 195,455 | 1,409,988 | |||||||||
Provision for uncollectible value-added taxes
|
923,288 | 54,716 | 1,198,420 | |||||||||
Noncash expenses
|
— | — | 126,864 | |||||||||
Foreign currency transaction (gain) loss
|
(1,352,817 | ) | 236,129 | 2,654,346 | ||||||||
Common stock issued for services
|
— | — | 1,237,047 | |||||||||
Common stock issued for compensation
|
— | — | 1,059,946 | |||||||||
Stock options issued for compensation
|
927,999 | 693,588 | 8,015,208 | |||||||||
Common stock issued for directors fees
|
95,832 | 46,332 | 693,276 | |||||||||
Stock options and warrants issued for directors fees
|
— | — | 1,665,705 | |||||||||
Stock options issued for services
|
— | — | 849,892 | |||||||||
Stock options issued for financing fees
|
— | — | 276,000 | |||||||||
Common stock issued for payment of expenses
|
— | — | 326,527 | |||||||||
Stock warrants issued for services
|
— | 43,686 | 1,978,243 | |||||||||
(Increase) decrease in, net of merger transaction:
|
||||||||||||
Value added tax receivable
|
(759,575 | ) | (201,061 | ) | (1,869,606 | ) | ||||||
Other receivables
|
18,749 | 12,500 | (5,798 | ) | ||||||||
Prepaid expenses
|
(94,040 | ) | (107,013 | ) | (225,159 | ) | ||||||
Prepaid income taxes
|
(21,562 | ) | — | (21,562 | ) | |||||||
Deposits
|
(4,746 | ) | — | (4,746 | ) | |||||||
Increase (decrease) in, net of merger transaction:
|
||||||||||||
Accounts payable
|
409,014 | (78,280 | ) | 464,016 | ||||||||
Income tax payable
|
(9,544 | ) | (7,809 | ) | 2,889 | |||||||
Accrued liabilities and expenses
|
(125,419 | ) | 158,378 | 255,226 | ||||||||
Accrued liabilities and expenses
|
184,000 | — | 184,000 | |||||||||
Deferred salaries and costs
|
(393,903 | ) | 393,903 | — | ||||||||
Other liabilities
|
— | (35,627 | ) | 7,649 | ||||||||
Net cash used by operating activities
|
(9,296,878 | ) | (3,319,213 | ) | (40,918,044 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase of investments
|
— | — | (21,609,447 | ) | ||||||||
Proceeds from investment sales
|
— | — | 21,609,447 | |||||||||
Cash acquired in merger with Dome Ventures (Note 3)
|
2,618,548 | — | 2,618,548 | |||||||||
Equipment purchases
|
(550,986 | ) | (5,814 | ) | (2,875,174 | ) | ||||||
Proceeds from sale of equipment
|
8,900 | — | 8,900 | |||||||||
Proceeds from sale of mining concessions
|
100,000 | — | 100,000 | |||||||||
Acquisition of mining concessions
|
(373,479 | ) | — | (5,005,516 | ) | |||||||
Net cash provided by (used by) investing activities
|
1,802,983 | (5,814 | ) | (5,153,242 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds from sales of common stock
|
15,071,516 | 1,322,988 | 49,773,710 | |||||||||
Proceeds from exercise of warrants
|
953,595 | 1,249,380 | 5,650,942 | |||||||||
Payable to joint venture partner
|
582,372 | — | 582,372 | |||||||||
Proceeds from sales of options and warrants
|
— | — | 949,890 | |||||||||
Proceeds from shareholder loans
|
— | — | 30,000 | |||||||||
Payment of note payable
|
— | — | (15,783 | ) | ||||||||
Net cash provided by financing activities:
|
16,607,483 | 2,572,368 | 56,971,131 | |||||||||
Effect of exchange rates on cash and cash equivalents
|
(25,933 | ) | 6,824 | (329,247 | ) | |||||||
Net increase (decrease) in cash and cash equivalents
|
9,087,655 | (745,835 | ) | 10,570,598 | ||||||||
Cash and cash equivalents beginning of period
|
1,482,943 | 2,228,778 | — | |||||||||
Cash and cash equivalents end of period
|
$ | 10,570,598 | $ | 1,482,943 | $ | 10,570,598 |
Years Ended
October 31,
|
Period from
November 8,
1993 (Inception)
to October 31,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES:
|
||||||||||||
Income taxes paid
|
$ | 27,074 | $ | 14,523 | $ | 117,008 | ||||||
Interest paid
|
$ | — | $ | — | $ | 286,771 | ||||||
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||||||
Common stock issued in merger with Dome
|
$ | 24,840,886 | $ | — | $ | 24,840,886 | ||||||
Warrants issued in merger with Dome
|
$ | 1,895,252 | $ | — | $ | 1,895,252 | ||||||
Common stock issued for equipment
|
$ | — | $ | — | $ | 25,000 | ||||||
Common stock options issued for financing fees
|
$ | — | $ | — | $ | 276,000 | ||||||
Common stock options issued for non-cash options
|
$ | — | $ | — | $ | 59,220 |
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
|
|||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||
Common stock issuance prior to inception (no value)
|
576,480 | $ | 5,765 | $ | (5,765 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Net loss for the year ended October 31, 1994
|
— | — | — | — | (8,831 | ) | — | (8,831 | ) | |||||||||||||||||||
Balances, October 31, 1994
|
576,480 | 5,765 | (5,765 | ) | — | (8,831 | ) | — | (8,831 | ) | ||||||||||||||||||
Net loss for the year ended October 31, 1995
|
— | — | — | — | (7,761 | ) | — | (7,761 | ) | |||||||||||||||||||
Balances, October 31, 1995
|
576,480 | 5,765 | (5,765 | ) | — | (16,592 | ) | — | (16,592 | ) | ||||||||||||||||||
Issuances of common stock as follows: - for par value at transfer of ownership
|
2,000 | 20 | — | — | — | — | 20 | |||||||||||||||||||||
- for cash at an average of $0.11 per share
|
1,320,859 | 13,209 | 133,150 | — | — | — | 146,359 | |||||||||||||||||||||
- for services at an average of $0.08 per share
|
185,000 | 1,850 | 12,600 | — | — | — | 14,450 | |||||||||||||||||||||
- for computer equipment at $0.01 per share
|
150,000 | 1,500 | 13,500 | — | — | — | 15,000 | |||||||||||||||||||||
- for mineral property at $0.01 per share
|
900,000 | 9,000 | — | — | — | — | 9,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 1996
|
— | — | — | — | (40,670 | ) | — | (40,670 | ) | |||||||||||||||||||
Balances, October 31, 1996
|
3,134,339 | 31,344 | 153,485 | — | (57,262 | ) | — | 127,567 | ||||||||||||||||||||
Issuances of common stock as follows: - for cash at an average of $0.61 per share
|
926,600 | 9,266 | 594,794 | — | — | — | 604,060 | |||||||||||||||||||||
- for services at an average of $0.74 per share
|
291,300 | 2,913 | 159,545 | — | — | — | 162,458 | |||||||||||||||||||||
- for payment of a loan at $0.32 per share
|
100,200 | 1,002 | 30,528 | — | — | — | 31,530 | |||||||||||||||||||||
Options issued as follows:
- 300,000 options for cash
|
— | — | 3,000 | — | — | — | 3,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 1997
|
— | — | — | — | (582,919 | ) | — | (582,919 | ) | |||||||||||||||||||
Balances, October 31, 1997
|
4,452,439 | 44,525 | 941,352 | — | (640,181 | ) | — | 345,696 | ||||||||||||||||||||
Issuances of common stock as follows: - for cash at an average of $1.00 per share
|
843,500 | 8,435 | 832,010 | — | — | — | 840,445 | |||||||||||||||||||||
- for cash and receivables at $1.00 per share
|
555,000 | 5,550 | 519,450 | (300,000 | ) | — | — | 225,000 | ||||||||||||||||||||
- for services at an average of $0.53 per share
|
41,800 | 418 | 21,882 | — | — | — | 22,300 | |||||||||||||||||||||
- for mine data base at $1.63 per share
|
200,000 | 2,000 | 323,000 | — | — | — | 325,000 | |||||||||||||||||||||
Options issued or granted as follows: - 1,200,000 options for cash
|
— | — | 120,000 | — | — | — | 120,000 | |||||||||||||||||||||
- for financing fees
|
— | — | 60,000 | — | — | — | 60,000 | |||||||||||||||||||||
- for consulting fees
|
— | — | 117,000 | — | — | — | 117,000 | |||||||||||||||||||||
Warrants issued for services
|
— | — | 488,980 | — | (488,980 | ) | — | — | ||||||||||||||||||||
Net loss for the year ended October 31, 1998
|
— | — | — | — | (906,036 | ) | — | (906,036 | ) | |||||||||||||||||||
Balance, October 31, 1998
|
6,092,739 | $ | 60,928 | $ | 3,423,674 | $ | (300,000 | ) | $ | (2,035,197 | ) | $ | — | $ | 1,149,405 |
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income (Loss)
|
Total
|
||||||||||||||||||||||
Balance, October 31, 1998
|
6,092,739 | $ | 60,928 | $ | 3,423,674 | $ | (300,000 | ) | $ | (2,035,197 | ) | $ | — | $ | 1,149,405 | |||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average of $1.04 per share
|
818,800 | 8,188 | 842,712 | — | — | — | 850,900 | |||||||||||||||||||||
- for drilling fees at $0.90 per share
|
55,556 | 556 | 49,444 | — | — | — | 50,000 | |||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- exercise of options at $0.90 per share
|
250,000 | 2,500 | 222,500 | — | — | — | 225,000 | |||||||||||||||||||||
- issuance of options for financing fees
|
— | — | 216,000 | — | — | — | 216,000 | |||||||||||||||||||||
Stock subscription received
|
— | — | — | 300,000 | — | — | 300,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 1999
|
— | — | — | — | (1,423,045 | ) | — | (1,423,045 | ) | |||||||||||||||||||
Balance, October 31, 1999
|
7,217,095 | 72,172 | 4,754,330 | — | (3,458,242 | ) | — | 1,368,260 | ||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- Exercise of options at $0.86 per share
|
950,000 | 9,500 | 802,750 | — | — | — | 812,250 | |||||||||||||||||||||
- Warrants issued for services
|
— | — | 55,000 | — | — | — | 55,000 | |||||||||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average of $2.77 per share
|
1,440,500 | 14,405 | 3,972,220 | — | — | — | 3,986,625 | |||||||||||||||||||||
- for services at $1.28 per share
|
120,000 | 1,200 | 152,160 | — | — | — | 153,360 | |||||||||||||||||||||
- for equipment at $1.67 per share
|
15,000 | 150 | 24,850 | — | — | — | 25,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 2000
|
— | — | — | — | (882,208 | ) | — | (882,208 | ) | |||||||||||||||||||
Balances, October 31, 2000
|
9,742,595 | 97,427 | 9,761,310 | — | (4,340,450 | ) | — | 5,518,287 | ||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- Warrants exercised at $0.75 per share
|
20,000 | 200 | 14,800 | — | — | — | 15,000 | |||||||||||||||||||||
- Options issued for consulting fees
|
— | — | 740,892 | — | — | — | 740,892 | |||||||||||||||||||||
- Warrants issued for consulting fees
|
— | — | 144,791 | — | — | — | 144,791 | |||||||||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at $2.00 per share
|
250,000 | 2,500 | 497,500 | — | — | — | 500,000 | |||||||||||||||||||||
- for cash of $210 and services at $2.07 per share
|
21,000 | 210 | 43,260 | — | — | — | 43,470 | |||||||||||||||||||||
- for cash of $180 and services at $2.05 per share
|
18,000 | 180 | 36,720 | — | — | — | 36,900 | |||||||||||||||||||||
- for services at $2.45 per share
|
6,000 | 60 | 14,640 | — | — | — | 14,700 | |||||||||||||||||||||
- for services at $1.50 per share
|
12,000 | 120 | 17,880 | — | — | — | 18,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 2001
|
— | — | — | — | (2,069,390 | ) | — | (2,069,390 | ) | |||||||||||||||||||
Balance, October 31, 2001
|
10,069,595 | 100,697 | 11,271,793 | — | (6,409,840 | ) | — | 4,962,650 | ||||||||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at $2.00 per share
|
50,000 | 500 | 99,500 | — | — | — | 100,000 | |||||||||||||||||||||
- for cash and warrants at $1.50 per share
|
96,000 | 960 | 143,040 | — | — | — | 144,000 | |||||||||||||||||||||
- for cash and warrants at $1.50 per share
|
66,667 | 667 | 99,333 | — | — | — | 100,000 | |||||||||||||||||||||
- for compensation at an average of $1.23 per share
|
86,078 | 861 | 104,014 | — | — | — | 104,875 | |||||||||||||||||||||
Stock option activity as follows:
|
||||||||||||||||||||||||||||
- for compensation at $0.61 per share
|
— | — | 61,000 | — | — | — | 61,000 | |||||||||||||||||||||
Net loss for the year ended October 31, 2002
|
— | — | — | — | (765,765 | ) | — | (765,765 | ) | |||||||||||||||||||
Balance, October 31, 2002
|
10,368,340 | $ | 103,685 | $ | 11,778,680 | $ | — | $ | (7,175,605 | ) | $ | — | $ | 4,706,760 |
|
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
|
||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||
Balance, October 31, 2002
|
10,368,340 | $ | 103,685 | $ | 11,778,680 | $ | — | $ | (7,175,605 | ) | $ | — | $ | 4,706,760 | ||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at $2.00 per share
|
100,000 | 1,000 | 199,000 | — | — | — | 200,000 | |||||||||||||||||||||
- for cash at an average of $0.98 per share
|
849,000 | 8,489 | 821,510 | — | — | — | 829,999 | |||||||||||||||||||||
- for cash and warrants at $1.50 per share
|
7,000 | 70 | 10,430 | — | — | — | 10,500 | |||||||||||||||||||||
- for compensation at an average of $1.25 per share
|
391,332 | 3,913 | 487,275 | — | — | — | 491,188 | |||||||||||||||||||||
- for services at an average of $1.23 per share
|
91,383 | 914 | 119,320 | — | — | — | 120,234 | |||||||||||||||||||||
- for subscriptions receivable at $1.00 per share
|
38,000 | 380 | 37,620 | (38,000 | ) | — | — | — | ||||||||||||||||||||
Net loss for the year ended October 31, 2003
|
— | — | — | — | (1,107,228 | ) | — | (1,107,228 | ) | |||||||||||||||||||
Balance, October 31, 2003
|
11,845,055 | 118,451 | 13,453,835 | (38,000 | ) | (8,282,833 | ) | — | 5,251,453 | |||||||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at $1.00 per share, less issuance costs of $698,863
|
7,580,150 | 75,801 | 6,805,485 | — | — | — | 6,881,286 | |||||||||||||||||||||
- for compensation at an average of $1.26 per share
|
120,655 | 1,207 | 151,064 | — | — | — | 152,271 | |||||||||||||||||||||
- for services at various prices
|
141,286 | 1,413 | 153,801 | — | — | — | 155,214 | |||||||||||||||||||||
Stock subscription received
|
— | — | — | 38,000 | — | — | 38,000 | |||||||||||||||||||||
Miscellaneous corrections and adjustments
|
64,263 | 643 | (643 | ) | — | — | — | — | ||||||||||||||||||||
Net loss for the year ended October 31, 2004
|
— | — | — | — | (5,036,805 | ) | — | (5,036,805 | ) | |||||||||||||||||||
Balance, October 31, 2004
|
19,751,409 | 197,515 | 20,563,542 | — | (13,319,638 | ) | — | 7,441,419 | ||||||||||||||||||||
Issuances of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average of $0.98 per share with attached warrants
|
476,404 | 4,764 | 461,965 | — | — | — | 466,729 | |||||||||||||||||||||
- for compensation at an average of $1.00 per share
|
176,772 | 1,768 | 175,005 | — | — | — | 176,773 | |||||||||||||||||||||
Net loss for the year ended October 31, 2005
|
— | — | — | — | (3,302,161 | ) | — | (3,302,161 | ) | |||||||||||||||||||
Balance, October 31, 2005
|
20,404,585 | $ | 204,047 | $ | 21,200,512 | $ | — | $ | (16,621,799 | ) | $ | — | $ | 4,782,760 | ||||||||||||||
|
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
|||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||
Balance, October 31, 2005
|
20,404,585 | $ | 204,047 | $ | 21,200,512 | $ | — | $ | (16,621,799 | ) | $ | — | $ | 4,782,760 | ||||||||||||||
Issuance of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average price of $.80 per share with attached warrants
|
13,374,833 | 133,748 | 11,077,879 | — | — | — | 11,211,627 | |||||||||||||||||||||
- for services at an average price of $.80 per share with attached warrants
|
73,650 | 736 | 58,213 | — | — | — | 58,949 | |||||||||||||||||||||
- for compensation at an average price of $.80 per share
|
248,593 | 2,486 | 154,389 | — | — | — | 156,875 | |||||||||||||||||||||
- for adjustment of private placement selling price
|
81,251 | 812 | (812 | ) | — | — | — | — | ||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- stock based compensation for options issued to officers and independent directors at an average fair value of $2.18 per share
|
— | — | 4,360,000 | 4,360,000 | ||||||||||||||||||||||||
- options & warrants for directors fees at an average fair value of $2.17 per share
|
— | — | 1,665,705 | — | — | — | 1,665,705 | |||||||||||||||||||||
- modification of options
|
— | — | 48,000 | — | — | — | 48,000 | |||||||||||||||||||||
- exercise of warrants at an average price of $1.25 per share
|
25,000 | 250 | 31,000 | — | — | — | 31,250 | |||||||||||||||||||||
Net loss for the year ended October 31, 2006
|
— | — | — | — | (11,193,037 | ) | — | (11,193,037 | ) | |||||||||||||||||||
Balance, October 31, 2006
|
34,207,912 | $ | 342,079 | $ | 38,594,886 | $ | — | $ | (27,814,836 | ) | $ | — | $ | 11,122,129 | ||||||||||||||
Issuance of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average price of $2.35 per share with attached warrants
|
2,413,571 | 24,136 | 5,647,757 | — | — | — | 5,671,893 | |||||||||||||||||||||
- for services at an average price of $4.31 per share
|
49,120 | 491 | 211,069 | — | — | — | 211,560 | |||||||||||||||||||||
- for directors fees at an average price of $2.71 per share
|
108,000 | 1,080 | 305,100 | — | — | — | 306,180 | |||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- exercise of warrants at an average price of $1.30 per share
|
2,240,374 | 22,404 | 2,917,750 | — | — | — | 2,940,154 | |||||||||||||||||||||
- warrants issued for financial services at an average fair value of $1.82 per share
|
— | — | 1,094,950 | 1,094,950 | ||||||||||||||||||||||||
- stock based compensation for options issued to officer and independent director
|
— | — | 434,189 | 434,189 | ||||||||||||||||||||||||
- for cashless exercise of options
|
126,000 | 1,260 | (1,260 | ) | — | — | — | — | ||||||||||||||||||||
- extension of warrant for services
|
— | — | 68,999 | — | — | — | 68,999 | |||||||||||||||||||||
Other Comprehensive Income – Foreign Currency translation adjustment
|
— | — | — | — | — | (86,642 | ) | (86,642 | ) | |||||||||||||||||||
Net loss for the year ended October 31, 2008
|
— | — | — | — | (6,931,557 | ) | — | (6,931,557 | ) | |||||||||||||||||||
Balance, October 31, 2007
|
39,144,977 | $ | 391,450 | $ | 49,273,440 | $ | — | $ | (34,746,393 | ) | $ | (86,642 | ) | $ | 14,831,855 | |||||||||||||
|
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
|||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||||
Balance, October 31, 2007
|
39,144,977 | $ | 391,450 | $ | 49,273,440 | $ | — | $ | (34,746,393 | ) | $ | (86,642 | ) | $ | 14,831,855 | |||||||||||||
Issuance of common stock as follows:
|
||||||||||||||||||||||||||||
- for directors fees at an average price of $1.69 per share
|
145,200 | 1,452 | 243,480 | — | — | — | 244,932 | |||||||||||||||||||||
- for services at an average price of $2.18 per share
|
38,000 | 380 | 82,460 | — | — | — | 82,840 | |||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- exercise of warrants at an average price of $1.25 per share
|
381,250 | 3,812 | 472,751 | — | — | — | 476,563 | |||||||||||||||||||||
- warrants issued for financial services at an average fair value of $.82 per share
|
— | — | 81,838 | 81,838 | ||||||||||||||||||||||||
- stock based compensation for options issued to officer and independent directors during prior periods
|
— | — | 693,362 | 693,362 | ||||||||||||||||||||||||
- stock based compensation for options issued to officers
|
— | — | 475,018 | 475,018 | ||||||||||||||||||||||||
- stock based compensation for options issued to employees
|
— | — | 164,435 | 164,435 | ||||||||||||||||||||||||
- stock based compensation for options issued to consultant
|
— | — | 266,616 | 266,616 | ||||||||||||||||||||||||
Other Comprehensive Income – Foreign Currency Translation Adjustment
|
— | — | — | — | — | 2,442,682 | 2,442,682 | |||||||||||||||||||||
Net loss for the year ended October 31, 2008
|
— | — | — | — | (12,320,422 | ) | — | (12,320,422 | ) | |||||||||||||||||||
Balance, October 31, 2008
|
39,709,427 | $ | 397,094 | $ | 51,753,400 | $ | — | $ | (47,066,815 | ) | $ | 2,356,040 | $ | 7,439,719 | ||||||||||||||
Issuance of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average price of $0.25 per share with attached warrants
|
5,291,952 | 52,920 | 1,270,068 | — | — | — | 1,322,988 | |||||||||||||||||||||
- for directors fees at an average price of $0.36 per share
|
129,600 | 1,296 | 45,036 | — | — | — | 46,332 | |||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- exercise of warrants at an average price of $0.34 per share
|
3,703,450 | 37,034 | 1,212,346 | — | — | — | 1,249,380 | |||||||||||||||||||||
- warrants issued for financial services at an average fair value of $0.43 per share
|
— | — | 39,022 | 39,022 | ||||||||||||||||||||||||
- extension of warrant for services
|
— | — | 4,664 | — | — | — | 4,664 | |||||||||||||||||||||
- stock based compensation for options issued to officers, employees, and independent directors during prior periods
|
— | — | 514,152 | 514,152 | ||||||||||||||||||||||||
- stock based compensation for options issued to officers and independent directors
|
— | — | 179,436 | 179,436 | ||||||||||||||||||||||||
Deemed dividend on exercise of warrants (Note 10)
|
126,090 | (126,090 | ) | — | ||||||||||||||||||||||||
Other Comprehensive Income – Foreign Currency Translation Adjustment
|
— | — | — | — | — | 165,556 | 165,556 | |||||||||||||||||||||
Net loss for the year ended October 31, 2009
|
— | — | — | — | (4,724,110 | ) | — | (4,724,110 | ) | |||||||||||||||||||
Balance, October 31, 2009
|
48,834,429 | $ | 488,344 | $ | 55,144,214 | $ | — | $ | (51,917,015 | ) | $ | 2,521,596 | $ | 6,237,139 | ||||||||||||||
|
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
|
|
Common Stock
|
Additional
|
Stock
|
Deficit
Accumulated
During
|
Other
|
|||||||||||||||||||||||
|
Number of
Shares
|
Amount
|
Paid-in
Capital
|
Subscriptions
Receivable
|
Exploration
Stage
|
Comprehensive
Income
|
Total
|
|||||||||||||||||||||
Balance, October 31, 2009
|
48,834,429 | $ | 488,344 | $ | 55,144,214 | $ | — | $ | (51,917,015 | ) | $ | 2,521,596 | $ | 6,237,139 | ||||||||||||||
Issuance of common stock as follows:
|
||||||||||||||||||||||||||||
- for cash at an average price of $0.46 per share with attached warrant
|
6,700,000 | 67,000 | 3,043,000 | — | — | — | 3,110,000 | |||||||||||||||||||||
- for special warrant offering at an average price of $0.46 per share less offering costs of $1,048,484
|
28,009,594 | 280,096 | 11,681,420 | — | — | — | 11,961,516 | |||||||||||||||||||||
- for Dome merger consideration at $1.26 per share with attached warrant (Note3)
|
19,714,989 | 197,150 | 24,643,736 | — | — | — | 24,840,886 | |||||||||||||||||||||
- for directors fees at an average price of $0.81 per share
|
118,800 | 1,188 | 94,644 | — | — | — | 95,832 | |||||||||||||||||||||
Stock option and warrant activity as follows:
|
||||||||||||||||||||||||||||
- warrants issued to replace Dome warrants as of Merger Date (Note 3)
|
— | — | 1,895,252 | — | — | — | 1,895,252 | |||||||||||||||||||||
- warrants issued at an average price of $0.41 per share
|
2,308,281 | 23,082 | 930,512 | — | — | — | 953,594 | |||||||||||||||||||||
- for cashless exercise of options
|
243,669 | 2,437 | (2,437 | ) | — | |||||||||||||||||||||||
- stock based compensation for options issued to officers, employees, and independent directors during prior periods
|
— | — | 67,065 | — | — | — | 67,065 | |||||||||||||||||||||
- stock based compensation for options issued to officers and independent directors
|
— | — | 860,934 | — | — | — | 860,934 | |||||||||||||||||||||
Other Comprehensive Income – Foreign Currency Translation Adjustment
|
— | — | — | — | — | (1,090,707 | ) | (1,090,707 | ) | |||||||||||||||||||
Net loss for the year ended October 31, 2010
|
— | — | — | — | (9,405,490 | ) | — | (9,405,490 | ) | |||||||||||||||||||
Balance, October 31, 2010
|
105,929,762 | $ | 1,059,297 | $ | 98,358,340 | $ | — | $ | (61,322,505 | ) | $ | 1,430,889, | $ | 39,526,021 |
Mexico
|
Gabon
|
|||||||
Cash and cash equivalents
|
$ | 183,454 | $ | 497,654 | ||||
Other receivables
|
9,826 | 8,139 | ||||||
Prepaid expenses
|
134,985 | 121,068 | ||||||
Mining concessions
|
4,318,292 | 4,396,915 | ||||||
Office & mining equipment, net
|
1,297,714 | 29,181 | ||||||
Value-added tax receivable, net
|
430,151 | 199,187 | ||||||
Other assets
|
- | 9,435 | ||||||
$ | 6,374,422 | $ | 5,261,579 | |||||
Allowance for uncollectible taxes – November 1, 2008
|
$ | 220,416 | ||
Provision for Uncollectible IVA Taxes
|
56,102 | |||
Foreign currency translation adjustment
|
(2,757 | ) | ||
Allowance for uncollectible taxes – October 31, 2009
|
273,761 | |||
Provision for Uncollectible IVA Taxes
|
928,877 | |||
Foreign currency translation adjustment
|
39,238 | |||
Allowance for uncollectible taxes – October 31, 2010
|
$ | 1,241,876 | ||
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
Level 2
|
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
|
Level 3
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
|
Conversion Calculation
|
Estimated Fair Value
|
|||||||
Dome common stock outstanding on the Merger Date
|
49,260,624 | |||||||
Less: Dome common stock issued in connection with the special warrant offering (a)
|
(28,911,111 | ) | ||||||
Dome common stock outstanding on the Merger Date attributable to the merger consideration
|
20,349,513 | |||||||
Multiplied by Metalline’s stock price as of the Merger Date multiplied by the exchange ratio of 0.968818 ($1.26 x 0.968818)
|
$ | 1.2207 | $ | 24,840,886 | ||||
Fair value of the Metalline warrants issued to replace Dome warrants as of the Merger Date (b)
|
1,895,252 | |||||||
Merger consideration transferred
|
$ | 26,736,138 |
(a)
|
In accordance with ASC Topic 805-10,
Business Combinations — Overall
(“ASC 805-10”), transactions entered into primarily for the benefit of the combined entity, rather than primarily for the benefit of the acquired company should be accounted for as a separate transaction. The special warrant offering described above was completed for the benefit of the combined entity and therefore the value of the Metalline common shares issued in exchange for the shares acquired upon the conversion of the special warrants was treated as a separate financing transaction and not included as part of the merger consideration.
|
(b)
|
Represents the fair value of warrants to acquire 2,228,281 shares of Company common stock issued to replace Dome warrants outstanding as of the Merger Date. ASC 805-10 requires that the fair value of replacement warrants be included in the consideration transferred. The fair value of the Metalline equivalent warrants was estimated using the Black-Scholes valuation model utilizing the assumptions noted below.
|
Stock price
|
|
$1.26
|
Post conversion strike price
|
|
$0.41
|
Average expected volatility
|
|
98%
|
Dividend yield
|
|
None
|
Average risk-free interest rate
|
|
0.12%
|
Average contractual term
|
|
.19 years
|
Black-Scholes average value per warrant
|
|
$0.8505
|
Estimated Fair Value
|
||||
Cash and cash equivalents
|
$ | 2,618,548 | ||
Other receivables
|
17,942 | |||
Prepaid expenses
|
6,404 | |||
Property Concessions – Gabon, Africa
|
4,496,915 | |||
Equipment
|
59,331 | |||
Value-added tax receivable
|
65,129 | |||
Other assets
|
4,294 | |||
Accounts payable
|
(251,577 | ) | ||
Accrued expenses
|
(6,436 | ) | ||
Payable to joint venture partner
|
(13,274 | ) | ||
Total identifiable net assets
|
6,997,276 | |||
Goodwill
|
19,738,862 | |||
Merger consideration transferred
|
$ | 26,736,138 |
Fiscal year Ended October 31,
|
||||||||
2010
|
2009
|
|||||||
Revenues
|
$ | — | $ | — | ||||
Net loss
|
(10,258,000 | ) | (5,854,000 | ) | ||||
Loss per share
|
$ | (0.10 | ) | $ | (0.06 | ) |
•
|
Record additional depreciation of $15,000 for estimated fair value of fixed assets identified in the merger using an estimated remaining life of two years.
|
||
•
|
Eliminate historical compensation costs for Dome officers/directors incurred during the period and record additional director’s fees for the chairman and two additional independent directors added in conjunction with the merger.
|
||
•
|
Credit for actual transactions costs incurred of $650,000 to consummate the merger during the fiscal year ended October 31, 2010.
|
•
|
Recorded additional depreciation of $30,000 for the fiscal year ended October 31, 2009 for estimated fair value of fixed assets identified in the merger using an estimated remaining life of two years.
|
||
•
|
Eliminated historical compensation costs for Dome officers/directors incurred during the period and record additional directors’ fees for the chairman and two additional independent directors added in conjunction with the merger.
|
October 31,
|
October 31,
|
|||||||
2010
|
2009
|
|||||||
Mining equipment
|
$ | 1,639,726 | $ | 1,209,471 | ||||
Well equipment
|
41,762 | 31,239 | ||||||
Communication equipment
|
9,957 | 7,288 | ||||||
Buildings and structures
|
193,257 | 139,679 | ||||||
Vehicles
|
181,040 | 114,369 | ||||||
Computer equipment and software
|
192,927 | 160,629 | ||||||
Office equipment
|
44,470 | 10,238 | ||||||
Assets under construction
|
— | 12,479 | ||||||
2,303,139 | 1,685,392 | |||||||
Less: Accumulated depreciation
|
(941,781 | ) | (679,659 | ) | ||||
$ | 1,361,358 | $ | 1,005,733 |
Fiscal Year Ended
October 31,
|
||||||||
Options
|
2010
|
2009
|
||||||
Expected volatility
|
101% -114% | 83% | ||||||
Risk-free interest rate
|
0.63% – 0.93% | 2.2% | ||||||
Dividend yield
|
— | — | ||||||
Expected term (in years)
|
2.50 – 3.50 | 7.0 |
Options
|
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (Years)
|
Aggregate Intrinsic Value
|
||||||||||||
Outstanding at October 31, 2008
|
4,400,004 | $2.56 | ||||||||||||||
Granted
|
705,619 | .34 | ||||||||||||||
Exercised
|
— | — | ||||||||||||||
Forfeited
|
— | — | ||||||||||||||
Expired
|
(100,000) | 1.25 | ||||||||||||||
Outstanding at October 31, 2009
|
5,005,623 | $2.27 | ||||||||||||||
Granted
|
3,495,000 | 0.72 | ||||||||||||||
Exercised
|
(243,669) | 0.34 | ||||||||||||||
Forfeited
|
(1,055,262) | 2.11 | ||||||||||||||
Expired
|
(300,000) | 1.87 | ||||||||||||||
Outstanding at October 31, 2010
|
6,901,692 | $1.59 | 5.52 | $74,440 | ||||||||||||
Vested or Expected to Vest at October 31, 2010
|
6,901,692 | $1.59 | 5.52 | $74,440 | ||||||||||||
Exercisable at October 31, 2010
|
4,938,355 | $1.92 | 5.77 | $74,440 |
Options Outstanding |
Options Exercisable
|
|||||||||||||||||||||
Exercise Price
|
Number Outstanding
|
Weighted Ave. Remaining Contractual Life (Years)
|
Weighted Average Exercise Price
|
Number Exercisable
|
Weighted Average Exercise Price
|
|||||||||||||||||
$ | 0.34-0.73 | 3,751,688 | 5.05 | $ | 0.69 | 1,855,019 | $ | 0.67 | ||||||||||||||
2.18-2.25 | 650,004 | 7.28 | 2.20 | 583,336 | 2.20 | |||||||||||||||||
2.18 - 2.85 | 2,250,000 | 5.66 | 2.62 | 2,250,000 | 2.62 | |||||||||||||||||
4.30 | 250,000 | 6.64 | 4.30 | 250,000 | 4.30 | |||||||||||||||||
$ | 0.34 - 4.30 | 6,901,692 | 5.52 | $ | 1.59 | 4,938,355 | $ | 1.92 |
Nonvested Shares
|
Shares
|
Weighted-Average Grant-Date Fair Value
|
||||||
Nonvested at October 31, 2008
|
666,671 | $ | 2.01 | |||||
Granted
|
705,619 | .25 | ||||||
Vested
|
(1,105,620 | ) | 0.97 | |||||
Forfeited
|
— | — | ||||||
Nonvested at October 31, 2009
|
266,670 | $ | 1.69 | |||||
Granted
|
3,495,000 | 0.46 | ||||||
Vested
|
(1,798,333 | ) | 0.59 | |||||
Forfeited
|
— | — | ||||||
Nonvested at October 31, 2010
|
1,963,337 | $ | 0.51 |
Warrants
|
Shares
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life (Years)
|
Aggregate Intrinsic Value
|
||||||||||||
Outstanding at October 31, 2008
|
13,946,564 | $ | 1.45 | |||||||||||||
Issued with private placement
|
2,645,976 | 0.50 | ||||||||||||||
Issued for services
|
90,000 | 0.34 | ||||||||||||||
Exercised
|
(3,703,450 | ) | 1.50 | |||||||||||||
Forfeited or expired
|
— | — | ||||||||||||||
Outstanding at October 31 2009
|
12,979,090 | $ | 1.23 | |||||||||||||
Issued with private placement
|
3,450,000 | 0.58 | ||||||||||||||
Issued in merger with Dome
|
2,228,281 | 0.41 | ||||||||||||||
Exercised
|
(2,308,281 | ) | 0.41 | |||||||||||||
Forfeited or expired
|
(4,033,413 | ) | 0.75 | |||||||||||||
Outstanding at October 31, 2010
|
12,315,677 | $ | 1.21 | 0.62 | $ | 359,677 | ||||||||||
Exercisable at October 31, 2010
|
12,315,677 | $ | 1.21 | 0.62 | $ | 359,677 | ||||||||||
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||||||
Exercise Price
|
Number Outstanding
|
Weighted Ave. Remaining Contractual Life (Years)
|
Weighted Average Exercise Price
|
Number Exercisable
|
Weighted Average Exercise Price
|
|||||||||||||||||
$ | 0.34 | 90,000 | 2.28 | $ | 0.34 | 90,000 | $ | 0.34 | ||||||||||||||
0.50 | 2,565,976 | 1.71 | 0.50 | 2,565,976 | 0.50 | |||||||||||||||||
0.70 | 200,000 | 0.82 | 0.70 | 200,000 | 0.70 | |||||||||||||||||
1.25 | 8,501,756 | 0.25 | 1.25 | 8,501,756 | 1.25 | |||||||||||||||||
2.13 | 59,610 | 0.99 | 2.13 | 59,610 | 2.13 | |||||||||||||||||
2.42 | 398,335 | 0.35 | 2.42 | 398,335 | 2.42 | |||||||||||||||||
3.40 | 500,000 | 1.18 | 3.40 | 500,000 | 3.40 | |||||||||||||||||
$ | 0.34 - $3.40 | 12,315,677 | 0.62 | $ | 1.21 | 12,315,677 | $ | 1.21 |
For the year ended
|
||||||||
October 31,
|
||||||||
2010
|
2009
|
|||||||
Foreign
|
||||||||
Current tax expense (benefit)
|
$ | (2,200 | ) | $ | 7,730 | |||
Deferred tax expense (benefit)
|
— | — | ||||||
$ | (2,200 | ) | $ | 7,730 |
For the year ended
|
||||||||
October 31,
|
||||||||
2010
|
2009
|
|||||||
Income tax benefit calculated at U.S. Federal Income tax rate
|
$ | (3,292,000 | ) | $ | (1,653,000 | ) | ||
Differences arising from:
|
||||||||
Permanent differences
|
259,000 | 174,000 | ||||||
State income taxes
|
(157,000 | ) | (51,000 | ) | ||||
Benefit from lower foreign income tax rate
|
240,000 | 107,000 | ||||||
Adjustment for foreign flat tax
|
— | 3,000 | ||||||
Decrease (increase) in state tax rates
|
(360,000 | ) | 102,000 | |||||
Adjustment to prior year taxes
|
68,000 | 93,000 | ||||||
Inflation adjustment foreign net operating loss
|
(138,000 | ) | (176,000 | ) | ||||
Foreign currency fluctuations
|
(240,000 | ) | 30,000 | |||||
Increase in valuation allowance
|
3,618,000 | 1,374,000 | ||||||
Other
|
— | 4,000 | ||||||
Net income tax provision
|
$ | (2,000 | ) | $ | 7,000 |
October 31,
|
||||||||
2010
|
2009
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards – U.S.
|
$ | 10,710,000 | $ | 7,482,000 | ||||
Net operating loss carryforwards – Mexico
|
4,645,000 | 3,674,000 | ||||||
Stock-based compensation – U.S.
|
3,352,000 | 3,820,000 | ||||||
Exploration costs
|
299,000 | — | ||||||
Other – U.S.
|
68,000 | 158,000 | ||||||
Other - Mexico
|
385,000 | 103,000 | ||||||
19,459,000 | 15,237,000 | |||||||
Deferred tax liability
|
||||||||
Mining Concessions
|
(1,539,000 | ) | — | |||||
Total net deferred tax assets
|
17,920,000 | 15,237,000 | ||||||
Less: valuation allowance
|
(17,920,000 | ) | (15,237,000 | ) | ||||
Net deferred tax asset
|
$ | — | $ | — |
United States: | 1993 and all following years | ||
Mexico: | 1997 and all following years | ||
Canada: | 1999 and all following years | ||
Gabon, Africa: | 2008 and all following years |
October 31 , | ||||||||
2010 | 2009 | |||||||
Identifiable assets | ||||||||
Mexico | $ | 6,374,000 | $ | 5,566,000 | ||||
Canada | 117,000 | - | ||||||
Gabon, Africa
|
5,262,000 | - | ||||||
United States | 9,821,000 | 1,476,000 | ||||||
21,574,000 | $ | 7,042,000 |
For the year ended October 31 , |
Nov. 8 1993
(Inception) to
October 31,
|
||||||||||
2010 | 2009 | 2010 | |||||||||
Identifiable assets | |||||||||||
Mexico | $ | (4,157,000 | ) | $ | (1,957,000 | ) | $ | (22,077,000 | ) | ||
Canada | (42,000 | ) | - | (42,000 | ) | ||||||
Gabon, Africa
|
31,000 | - | 31,000 | ||||||||
United States | (5,237,000 | ) | (2,767,000 | ) | (39,108,000 | ) | |||||
(9,405,000 | ) | $ | 4,724,000 | ) | $ | (61,196,000 | ) |
Name
|
Jurisdiction of Incorporation or Organization
|
Ownership Percentage
|
Minera Metalin S.A. de C.V.
|
Mexico
|
100% by Metalline
|
Contratistas de Sierra Mojada S.A. de C.V.
|
Mexico
|
100% by Metalline
|
Metalline, Inc.
|
Colorado, USA
|
100% by Metalline
|
Dome Ventures Corporation (“Dome”)
|
Delaware, USA
|
100% by Metalline
|
Dome Asia Inc.
|
British Virgin Islands
|
100% by Dome
|
Dome International Global Inc.
|
British Virgin Islands
|
100% by Dome
|
Dome Minerals Nigeria Limited
|
Nigeria
|
99.99% by Dome International Global Inc.
|
Dome Ventures SARL Gabon
|
Gabon
|
100% by Dome International Global, Inc.
|
Dated: January 14, 2011
|
By
|
/s/ Greg Hahn
|
Greg Hahn, Chief Executive Officer
|
Dated: January 14, 2011
|
By
|
/s/ Robert J. Devers
|
Robert J. Devers, Chief Financial Officer
|
Dated: January 14, 2011
|
By
|
/s/ Gregory Hahn
|
Gregory Hahn, Chief Executive Officer
|
Dated: January 14, 2011
|
By
|
/s/ Robert J. Devers
|
Robert J. Devers, Chief Financial Officer
|