· |
On February 1, 2010, Apollo Gold, Inc. (a subsidiary of Apollo Gold Corporation, which became Brigus Gold Corp., “Brigus”) acquired $10,253,878 of the Company’s outstanding notes, including the Broadway Loan, the Congo Chief note, and amounts owed to MFPI Capital Partners and MFPI Partners. On March 12, 2010, the Duffy Group entered into an agreement with Brigus and Calais whereby the Duffy Group received shares of Calais common stock in connection with partial forgiveness of debt to Calais, and the remaining amounts owed to Duffy were assigned to Brigus.
Capital raising activities - Other Private Placements of Units of Common Stock and Warrants We issued units to a number of accredited investors, each unit consisting of one share of restricted common stock and a warrant to purchase one share of common stock. From fiscal 2005 through 2007, the Company issued Units as follows: | | 2007 | | | 2006 | | | 2005 | | | Total | | | | | | | | | | | | | | | Cash consideration | | $ | 50,000 | | | $ | 970,000 | | | $ | 245,000 | | | $ | 1,265,000 | | Number of Units | | | 250,000 | | | | 5,469,845 | | | | 1,200,000 | | | | 6,919,845 | | Unit price | | $ | 0.20 | | | $ | 0.147-$0.20 | | | $ | 0.20-$0.25 | | | | | | Warrant exercise price | | $ | 0.25 | | | $ | 0.25 | | | $ | 0.20-$0.25 | | | | | | Warrant expiration | | 12/07-12/10 | | | 06/10-01/20 | | | 02/10-03/10 | | | | | |
During fiscal 2008, the Company issued 15,736,250 Units for total cash consideration of $1,258,900, with the Unit price being $0.08. The warrants included in the Units, which are exercisable at $0.12 per share, expire at various dates from November 2012 to April 2013.
During fiscal 2009, the Company issued 3,105,000 Units for total cash consideration of $248,400, with the Unit price being $0.08. The warrants included in the Units, which are exercisable at $0.12 per share, expire at various dates from June 2013 to October 2013.
During fiscal 2010, the Company issued 3,150,000 Units for total cash consideration of $177,500, with the Unit prices ranging from $0.05 to $0.0625. The warrants included in the Units, which are exercisable at $0.20 per share, expire at various dates from August 2012 to February 2013.
2011 Fiscal Year Liquidity Events
Cash and Cash Equivalents
At February 28, 2011, we had $775,615 in cash and cash equivalents.
Settlements
During the nine months ended February 28, 2011, we have executed against a plan to settle our trade payables with certain of our vendors as well as wages and other payables owed to current and former employees of ours, either by paying outstanding balances in full or by entering into agreements for mutually agreed-upon settlement amounts. Since May 31, 2010, we have recognized net gains of $2,614,853 related to settlements and releases on our trade payables and wages payable in our Consolidated Statements of Operations. In addition, we have issued 4,370,420 shares of restricted stock related to these settlements.
Debenture Settlements
On December 15, 2010, we entered into two agreements related to the settlement of a total of four convertible debentures in the aggregate principal amount of $4,306,347 in exchange for a total of $259,149 in cash and the issuance of a total of 9,550,368 restricted shares of our common stock.
Note Payable
On January 15, 2011, we received forbearance under the terms of an agreement effectively extending the maturity date of our 8% $10,253,878 debt payable through June 30, 2011. This debt was originally due on February 1, 2011 and is secured by a lien on our Caribou property. On June 8, 2011, Brigus agreed to extend the June 30, 2011 date to October 31, 2011 upon payment of $1,000,000. Funds were remitted on or about June 15, 2011, and were applied to accrued interest on the outstanding balance.
Common Stock
Common Stock Sales – Since May 31, 2007, we have issued a total of 122,779,930 shares of common stock. Since May 31, 2007, we have issued 67,187,620 shares of common stock for total cash proceeds of $5,279,700 and 55,592,310 shares of our common stock in connection with the settlement of debt and accrued liabilities, for services, and as payment for trade accounts payable as further below.
Subsequent to Fiscal 2011- Subsequent to May 31, 2011, we have issued 2,500,000 shares of our common stock at $0.20 per share to an accredited investor for net cash proceeds of $500,000.
Fiscal 2011 Transactions – During the fiscal year ended May 31, 2011, we have issued 72,946,844 shares of our common stock as follows: · | In June 2010, we issued 9,500,000 shares of our common stock valued at $0.08 per share or $760,000 to our Directors as compensation for their services. These amounts had been previously accrued in our balance sheet as accrued salaries and wages. |
· | In August 2010, we sold 650,000 shares of our common stock at $0.08 per share to the wife of our current Chief Executive Officer (“CEO”) for $52,000 as part of a private placement. |
· | In June 2010, we issued 1,000,000 shares of our common stock at $0.05 per share for accounting services provided in May 2010 totaling $50,000. |
· | In June and August 2010 we issued a total of 1,500,000 shares of our common stock at $0.05 per share in connection with the payment of $76,539 in accounts payable. |
· | In September 2010, we issued 4,500,000 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $270,000. |
· | In October 2010 we issued 5,753,334 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $345,200. |
· | In October 2010, we issued 2,270,420 shares of our common stock at $0.10 per share to our Company President in connection with settlement of accrued liabilities owed to him. We have recorded a gain in the amount of $227,042 in connection with this issuance. In addition we issued 2,000,000 shares of our common stock at $0.0762 to our former CFO in connection with the settlement of accrued liabilities owed to him in the amount of $152,468. We have not recorded any gain or loss in connection with this settlement. |
· | In November 2010, we issued 1,066,666 shares of our common stock at $0.075 per share to accredited investors for net cash proceeds of $80,000. In addition we issued 17,651,667 shares of our common stock at $0.06 per share for net cash proceeds of $1,059,100. |
· | In December 2010, we issued 9,550,368 shares of our common stock at $0.15 per share to accredited investors in connection with the settlement of four convertible debentures totaling $1,432,555. |
· | In December 2010, we issued 536,666 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $32,200. In addition we issued 2,666,666 shares of our common stock at $0.08 per share to accredited investors for net cash proceeds of $200,000. |
· | In December 2010, we issued 2,102,500 shares of our common stock at $0.17 per share in connection with fundraising and consulting services valued at $357,425. |
· | In December 2010, we issued 100,000 shares of our common stock at $0.17 per share in connection with the settlement of previously accrued liabilities. |
· | In January 2011 we issued 2,033,333 shares of our common stock valued at $0.17 per share in connection with fundraising and consulting services valued at $345,667 |
· | In January 2011, we issued 66,666 shares of our common stock at $0.06 per share to an accredited investor in for net cash proceeds of $4,000. |
· | In February 2011, we issued 1,764,706 shares of our common stock at $0.17 per share to accredited investors for net cash proceeds of $300,000. |
· | In March 2011, we issued 40,000 shares of our common stock at $0.06 per share to an accredited investor for net cash proceeds of $2,400. |
· | In April 2011, we issued 1,000,000 shares of our common stock at $0.05 per share to an accredited investor for net cash proceeds of $50,000. |
· | In May 2011 we issued 7,000,000 shares of our common stock at $0.10 per share to an accredited investor for net cash proceeds of $700,000. |
· | In May 2011 we issued 193,852 shares of our common stock at $0.18 in connection with consulting services provided to us in fiscal 2006. These amounts had previously been recorded as accrued liabilities on our balance sheet. |
Fiscal 2010 Transactions - During the year ended May 31, 2010, we issued 25,285,340 shares of our common stock as follows: · | In August 2009 and February, April and May 2010, we raised $177,500 in cash from accredited investors for the sale of units comprising 3,150,000 shares of restricted common stock and warrants to purchase 1,450,000 of common shares. The common stock prices ranged from $0.05 to $0.0625 per share and the warrants had an exercise price of $0.20 per share with expiration dates ranging from August 2012 to February 2013. |
· | In August 2009, we issued units to the Duffy Group in connection with extension of Duffy notes. The units consisted of 1,249,900 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.14 per share and the warrants had an exercise price of $0.12 with an expiration date of August 2021. The warrants were valued at $174,985 and have been charged to interest expense. |
· | In August 2009, we issued 511,000 shares of restricted common stock in connection with a settlement of a $42,436 note payable to Walsh Environmental Sciences. In connection with this settlement we have recorded a loss of $44,434. |
· | In September 2009, we issued 5,067,650 shares of restricted common stock in connection with the settlement of a note payable due a shareholder related to our default on an exploration and development |
| agreement, valued at $0.17 per share or $861,501. In connection with the issuance of these shares we have recorded a loss on default of the exploration agreement in the amount of $456,901. |
· | In September 2009, we issued 1,000,000 shares of restricted Common stock in connection with a consulting agreement for investor relation services. The Common stock price was $0.17 per share. We recognized the expense of $170,000 ratably over the term of the three month term of the agreement. |
· | In February 2010, we issued 10,306,790 shares of restricted common stock valued at $0.09 per share or $927,611 to the Duffy Group in connection with the restructuring of $1,088,367 of notes payable to Duffy Group. The Duffy Group entered into an agreement with Brigus and Calais whereby the Duffy group received these shares for the forgiveness of $435,347 in debt, with the remaining balance of $653,021 owed, assigned to Brigus. The Company recorded a gain on the settlement of the Duffy note of $155,779. |
· | In May 2010, we issued 4,000,000 shares of Calaisrestricted common stock to members of our board of directors as compensation, for the period of June 2006 through August 2009. The common stock price was $0.09 per share. |
Fiscal 2009 Transactions - During the year ended May 31, 2009, we issued 4,126,000 shares of our common stock as follows: · | In June, July and October 2008, we raised $248,400 in cash from accredited investors for the sale of units, totaling 3,105,000 shares of restricted Common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with an expiration dates of June, July and October 2013. |
· | In August 2008, we issued units to the Duffy Group in connection with partial forgivenessextension of debtnotes payable. These units consisted of 1,021,000 shares of restricted common stock and warrants to Calais,purchase an equal number of common shares. The warrants were valued at $150,939 were recorded as a charge to interest expense. The common stock price was $0.15 per share and remaining amounts owed to Duffy were assigned to Brigus.the warrants had an exercise price of $0.12 with an expiration date of August 2013. |
Capital raising activitiesFiscal 2008 Transactions - Other Private PlacementsDuring the year ended May 31, 2008 we issued 17,921,746 shares of Units of Commonour common stock and Warrantsas follows: · | In November and December 2007 and in January, February and March 2008, we raised $1,258,900 in cash from accredited investors for the sale of units comprising 15,736,250 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with expiration dates ranging from November 2012 to March 2013. |
· | In December 2007, we entered into a transaction wherein we intended to purchase assets from one of our shareholders in exchange for common stock. The transfer of title to the assets was not completed; however, we issued 750,000 shares restricted common stock at to the purchaser in exchange for a note receivable in the amount of $60,000. In connection with this transaction, we have recorded a loss of $30,000, which represents the value as set forth in the initial agreement and the value of the 750,000 shares of common stock as issued. |
· | In April 2008, we issued units to the Duffy Group in connection with extension of notes. The units consisted of 1,185,496 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.13 per share and the warrants had an exercise price of $0.12 with an expiration date of April 2013. The warrants were valued at $153,754 and have been charged to interest expense. |
· | In April 2008, we issued 250,000 shares of restricted common stock as partial consideration for the purchase of a royalty interest. The common stock price was $0.13 per share. We have valued this transaction at $32,500 and it has been recorded as a component of our properties. |
Warrants – Since May 31, 2007, we have issued Units to a number of accredited investors, each Unit consisting of one share of restricted Common stock and a Warrant32,748,196 warrants to purchase one share of Common stock. From fiscal 2005 through 2010, the Company issued Unitsour common shares as follows:discussed below. | Year Ended May 31, | | 2010 | | 2009 | | 2008 | | 2007 | | 2006 | | 2005 | | Total | | | | | | | | | | | | | | | Cash consideration | $ 177,500 | | $ 248,400 | | $ 1,258,900 | | $ 50,000 | | $ 970,000 | | $ 245,000 | | $ 2,949,800 | | | | | | | | | | | | | | | Number of Units | 3,150,000 | | 3,105,000 | | 15,736,250 | | 250,000 | | 5,469,845 | | 1,200,000 | | 28,911,095 | | | | | | | | | | | | | | | Unit price | $0.05 - $0.0625 | $0.08 | | $0.08 | | $0.20 | | $0.147 - $0.20 | $0.20 - $0.25 | | | | | | | | | | | | | | | | | Warrant exercise price | $0.20 | | $0.12 | | $0.12 | | $0.25 | | $0.25 | | $0.20 - $0.25 | | | | | | | | | | | | | | | | | Warrant expiration | 08/12 - 02/13 | | 06/13 - 08/21 | | 11/12 - 04/13 | | 12/07 - 12/10 | | 06/10 - 01/20 | | 02/10 - 03/10 | | |
Subsequent to May 31, 2011 – In June and July 2011 we issued 1,250,000 warrants to purchase our common stock at $0.30 per share. These warrants were issued in connection with the sale of 2,500,000 common stock units in June and July 2011 and expire in June and July 2012.· | Fiscal 2011 Transactions – During the year ended May, 31, 2011 we issued 7,000,000 warrants to purchase our common shares at $0.12 expiring in May 2012. The warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. |
· | Fiscal 2010 Transactions- During the year ended May 31, 2010, we issued 1,450,000 warrants to purchase our common shares at $0.20 expiring in 2012 and 2013. The warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. |
· | Fiscal 2009 Transactions – During the year ended May 31, 2009, we issued 5,376,450 warrants to purchase our common shares at $0.12 per share. Of the warrant issuances during the period, 3,105,000 were issued in connection with unit sales, each unit consisting of one common share and one warrant. The warrants issued in connection with the unit sales expire in 2013. 2,271,450 warrants were issued in connection with the modification of terms of notes payable due to a related party and these warrants expire in 2013 and 2021. We have recorded a charge of $213,490 in interest expenses related to the issuance of these warrants. |
· | Fiscal 2008 Transactions- During the year ended May 31, 2008, we issued 16,921,746 warrants to purchase our common shares at $0.12 per share. Of the issuances during the period, 15,736,250 warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. The warrants issued in connection with unit sales expire in 2012 and 2013. 1,185,496 warrants were issued in connection with the modification of notes payable due a related party and expire in 2013. We recorded a charge of $153,754 in interest expense relating to the issuance of these warrants. In addition, we recorded $93,089 as a discount on notes payable related to the re-pricing and extension of the original Duffy warrants issued in August 2005. |
Contractual Obligations The following table summarizes aggregate information about our contractual cash obligations as of May 31, 20102007 and the periods in which payments are due: | | Payments due by period | | Contractual obligations | | Total | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | More than 5 years | | Long-term obligations | | $ | 8,049,211 | | | $ | 8,049,211 | | | $ | - | | | $ | - | | | $ | - | | Operating lease obligations | | | 505,942 | | | | 46,749 | | | | 146,758 | | | | 156,435 | | | | 156,000 | | Royalties | | | 286,900 | | | | 4,200 | | | | 61,100 | | | | 71,600 | | | | 150,000 | | Environmental remediation obligation | | | 50,000 | | | | - | | | | - | | | | - | | | | 50,000 | | Total | | $ | 8,892,053 | | | $ 8,100,160 | | | $ | 207,858 | | | $ | 228,035 | | | $ | 356,000 | |
| | Payments due by period | | Contractual obligations | | Total | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | More than 5 years | | Long-term debt obligations | | $ | 10,253,878 | | | $ | 10,253,878 | | | $ | - | | | $ | - | | | $ | - | | Capital lease obligations | | | - | | | | - | | | | - | | | | - | | | | - | | Operating lease obligations | | | 509,066 | | | | 23,200 | | | | 46,783 | | | | 46,000 | | | | 393,083 | | Purchase obligations | | | - | | | | - | | | | - | | | | - | | | | - | | Royalties | | | 150,000 | | | | - | | | | - | | | | - | | | | 150,000 | | Environmental remediation obligation | | | 50,000 | | | | 25,000 | | | | 25,000 | | | | - | | | | - | | Total | | $ | 10,962,944 | | | $ | 10,302,078 | | | $ | 71,783 | | | $ | 46,000 | | | $ | 543,083 | |
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements.
Critical Accounting Estimates Our discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as disclosures of contingent assets and liabilities. We base our accounting estimates on historical experience and other factors that we believe to be reasonable under the circumstances. However, actual results may vary materially from these estimates due to factors beyond our control or due to changes in these assumptions or conditions. The following is a summary of our critical accounting estimates we have made in preparing our Consolidated Financial Statements. Income Taxes Deferred income taxes are reported for timing differences between items of income or expense in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes,” which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective taxes bases for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We provide for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not. Impairments We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of an asset or group of assets may not be recoverable, pursuant to the provisions of ASC Topic 360, “Property, Plant and Equipment.” Our evaluations take into consideration historical results, current business conditions and trends in order to identify situations in which the carrying value of assets may not be recoverable. If such reviews indicate that the carrying value of such assets may not be recoverable, we estimate the undiscounted sum of the expected cash flows of such assets to determine if such sum is less than the carrying value of such assets in order to ascertain if an impairment exists. If an impairment exists, then we determine the fair value by using quoted market prices, if available for such assets, or if quoted market prices are not available, we discount the expected future cash flows of such assets.
During the fiscal year ended May 31, 2005, our cash balances declined and we began operating in a net negative cash position. Despite several attempts to raise additional cash through the use of private placements and debt, we were unable to secure enough funding to build adequate infrastructure suitable for mining our properties and bringing minerals to market for sale. Likewise, our mineral assets were not proven at that time and estimates of future cash flows from these mines were zero.
We acquired additional mining properties during the fiscal years ended May 31, 2006 and 2007. During those fiscal years, we were able to secure some debt and equity financing and were actively exploring these properties. However, during our fiscal yearAs such, we have not recorded any impairment charges for the periods ended May 31, 2009, we were affected by tightened credit markets2008 and reduced availability of alternate funding resulting from a global economic downturn. We were also operating in a net negative cash position at that time. Accordingly, we impaired all of our remaining mining interests during the fiscal year ended May 31, 2009, resulting in an impairment charge of $495,573.2007. Share-Based Compensation We use the Black-Scholes option pricing model and the straight-line attribution approach to determine the fair value of stock-based awards in accordance with FASB ASC 718, “Compensation.” The option pricing model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. Our expected term represents the period that stock-based awards are expected to be outstanding and is determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of our stock-based awards. The expected stock price volatility is based on the historical prices of our common stock. Mineral Properties Mineral property acquisition costs are initially capitalized as tangible assets when purchased. When facts and circumstances warrant, or at least once per fiscal year, we evaluate the carrying costs of these assets for impairment, as described previously. Once proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method of the estimated life of the probably reserve. Mineral property exploration costs are expensed as incurred. Estimated future removal and site restoration costs, when determinable, are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred. As of May 31, 2010,2007, we had not established any proven or probablyprobable reserves on our mineral properties and have incurred only acquisition and exploration costs. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required by Form 10-K for Smaller Reporting Companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is set forth in the Consolidated Financial Statements and is hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
On May 24, 2006 (the “KPMG Notification Date”), our certifying accountant, KPMG LLP (“KPMG”), notified the Company that it would not be standing for reappointment as our independent registered public accounting firm for the fiscal year ending May 31, 2006 (FY 2006).
The report of KPMG for the year ended May 31, 2004 (FY 2004) did not contain an adverse opinion or disclaimer of opinion and was not modified as to uncertainty, audit scope or accounting principles, except that KPMG LLP had a separate report on the financial statements as of and for the years ended May 31, 2004 and 2003 titled “Comments by Auditor For U.S. Readers on Canada-U.S. Reporting Difference” which stated:
”In the United States, reporting standards require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements. Our report to the directors dated September 9, 2004 is expressed in accordance with Canadian reporting standards which does not permit a reference to such events and conditions in the auditor’s report when these are adequately disclosed in the financial statements.”
During our two fiscal years preceding the KPMG Notification Date and the period through the KPMG Notification Date, there were no disagreements (as defined in Item 304 of Regulation S-K) with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreement in connection with their reports on the Corporation’s financial statements. In addition, for the same periods, there were no reportable events (as defined in Regulation S-B Item 304 (a)(1)(v)).
At the time of the KPMG Notification Date, the decision to change accountants was not recommended or approved by the board of directors. Hein & Associates, LLP
On May 21, 2007, our board of directors recommended and approved the engagement of Hein & Associates LLP (“Hein”), as our independent registered public accounting firm commencing with our fiscal year endingended May 31, 2005. We engaged Hein on May 25, 2007. Hein commenced work on the audit shortly thereafter but, during 2008, work was ceased because we did not have adequate financial resources available to us to prepare for audit procedures. Accordingly, no audit of our financial statements was ever completed by Hein. On October 18, 2010 (the “Hein Dismissal Date”), our Board of Directors determined to dismiss Hein & Associates, LLP.
During our two fiscal years preceding the Hein Dismissal Date, the subsequent interim periods thereto, and through the Hein Dismissal Date, there were no disagreements (as defined in Item 304 of Regulation S-K) with Hein on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Hein, would have caused it to make reference in connection with its opinion to the subject matter of the disagreement. In addition, for the same periods, there were no reportable events (as defined in Regulation S-B Item 304 (a)(1)(v)).
Eide Bailly
On October 18, 2010 (the “Eide Bailly Engagement Date”), our Board of Directors approved the appointment of Eide Bailly, LLP (“Eide Bailly”) as our independent registered public accounting firm. During our two most recent fiscal years, the subsequent interim periods thereto, and through the Eide Bailly Engagement Date, neither us nor anyone on our behalf consulted with Eide Bailly regarding either: (i) the application of accounting principles to a specified or contemplated transaction or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was either the subject of a “disagreement” or “event” as defined in Item 304(a)(1) of Regulation S-K.
On February 28, 2011 (the “Eide Bailly Dismissal Date”), the registrant dismissed Eide Bailly LLP as its independent registered public accounting firm. Eide Bailly was engaged on October 18, 2010 to audit the registrant’s financial statements commencing with the fiscal year ended May 31, 2005. Eide Bailly has notified the registrant of a violation of a Public Company Accounting Oversight Board independence rule. While Eide Bailly had completed audits of the registrant’s financial statements for the years ended May 31, 2005, 2006, 2007, 2008, 2009 and 2010, none of the audited financial statements were filed with the SEC. The registrant’s board of directors determined that it could not proceed to file its delinquent reports with the SEC unless it dismissed Eide Bailly because of the independence issue.
During the registrant’s two fiscal years preceding the Eide Bailly Dismissal Date and the subsequent interim period preceding the Eide Bailly Dismissal Date, there were no disagreements with Eide Bailly on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Eide Bailly, would have caused it to make reference to the subject matter of the disagreements in connection with its report. Further, during the registrant’s two fiscal years preceding the Eide Bailly Dismissal Date and the subsequent interim period preceding the Eide Bailly Dismissal Date, there were no reportable events (as defined in Item 304 (a)(1)(v) of Regulation S-K.
On March 10, 2011 (the “StarkSchenkein, Engagement Date”), the registrant engaged StarkSchenkein, LLP as its independent registered public accounting firm.
During the registrant’s two fiscal years preceding the StarkSchenkein Engagement Date and the subsequent interim period preceding the StarkSchenkein Engagement Date, neither the registrant nor anyone on its behalf consulted StarkSchenkein regarding either (1) the application of accounting principles to a specified transaction regarding the registrant, either completed or proposed, or the type of audit opinion that might be rendered on the registrant’s financial statements; or (2) any matter regarding the registrant that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as defined Item 304(a)(1)(v) of Regulation S-K).
ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Rule 13a-15 under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2010,2005, 2006 and 2007, being the datedates of our most recently completed fiscal year end.ends. This evaluation was conducted under the supervision and with the participation of R. David Russell and David K. Young.Young (our functioning principal executive officer and principal financial officer). Based on this evaluation, Messrs. Russell andMr. Young concluded that the design and operation of our disclosure controls and procedures were not effective because of the identification of the material weaknesses in internal control over financial reporting described below. In light of the material weaknesses described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”). Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Management's annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
· | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; |
· | Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
· | 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. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive OfficerDavid K. Young (our functioning principal executive officer and Chief Financial Officer,principal financial officer), we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of May 31, 2010.2007.
As a result of our material weaknesses described below, management has concluded that, as of May 31, 2010,2005, 2006 and 2007, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.
Material Weakness in Internal Control over Financial Reporting
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment, management identified the following control deficiencies that represent material weaknesses at May 31, 2010:2005, 2006 and 2007:
· | We have not consistently recorded transactions in our accounting records. |
· | The non-cash components of certain debt and equity transactions were not properly accounted for. |
· | We rely on external consultants for the preparation of our financial statements and reports. As a result, our management may not be able to identify errors and irregularities in the financial statements and reports. |
· | We relied on one of our officers for oversight of the financial reporting process and, therefore, there was an inherent lack of segregation of duties with certain aspects of the financial reporting process, and a limited independent governing board. |
· | We relied on an external consultant for the administration functions, some of which did not have standard procedures in place for formal review by the one officer who was providing financial oversight for us. |
The internal control weaknesses identified above with regard to the failure to consistently record transactions and inadequate segregation of duties with certain aspects of the financial reporting process will only be completely corrected if the Company expands and has the capacity to perform necessary accounting functions and adequately segregate the duties to mitigate the risk in financial reporting. This expansion will depend mostly on the ability of management to fully execute its business operating strategy as outlined in this report and generate enough income to warrant growth in personnel. With regard to the internal control deficiency identified above related to preventative measures to properly and accurately account for the recording of the non-cash aspects of certain debt and equity issuances, management has already taken steps to mitigate such risk going forward by utilizing external financial consulting services prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.
Attestation Report of the Independent Registered Public Accounting Firm
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report. Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal quarterquarters ended May 31, 20102005, 2006 and 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None. PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEANDCORPORATE GOVERNANCE.
The following table lists the names and ages of our directors, executive officers and key employees as of May 2, 2011.the date of this report. Except for R. David Russell, who was appointed as a director, Chief Executive Officer and Chairman effective January 15, 2011, all of officers and directors listed below were officers and/or directors of the Company on May 31, 2010.2007.
Name | Age | Position | R. David Russell | 54 | Director – January 2011 to present and July 2005 to August 2008 Chairman – January 2011 to present Chief Executive Officer – January 2011 to present |
David K. Young | 57 | Director – July 2005 to present President – February 2006 to present Chief Operating Officer – January 2011 to present Chief Executive Officer – February 2006 to January 2011 | Thomas Hendricks | 62 | Director – 1998 to present Vice President of Exploration and Corporate Development February 2006 to present President – 2000 to February 2006 | Art Daher | 78 | Director – 19981995 to present |
The following table lists the names and ages of former directors, executive officers and key employees of the Company who served during the period from May 31, 2005 through May 31, 2010.2007.
Name | Position | Melvin Martin | Director – 1992 to July 2005 | Matthew Witt | Chief Financial Officer – 2003 to February 2005 | Robert Akright | Vice President – 1998 to February 2007 |
None of the current directors and officers is related to any other director or officer of the Company.
While some of our directors and executive officers are involved in other business ventures and do not spend full time on our business and affairs, we believe that each devotes as much time to our business and affairs as are required to satisfactorily carry out their duties.
Set forth below are brief accounts of the business experience of each director, executive officer of the Company.
R. David Russell. Mr. Russell has over 27 years experience in the mining industry including a variety of operating, executive and board of director positions. He served as President, CEO and a director of Apollo Gold Corp. from June 2002 until June 2010 when it merged with Linear Gold and changed its name to Brigus Gold Corp. Mr. Russell was a founder of Nevoro Gold Corporation in January 2002, the predecessor of Apollo Gold Corp. and served as its President from February 2002 through June 2002. Mr. Russell is the Chairman of Pure Nickel Inc., Lead Director for Fire River Gold Corp. and a director of General Moly, Inc. He has also previously served as a director of the Company from July 2005 until August 2008. Mr. Russell received a Bachelor of Science degree in Mining Engineering from the Montana School of Mineral, Science and Technology.
David K. Young. Mr. Young has been a director of the Company since 2005 and an officer of the Company since February 2006. Mr. Young is a mining engineer with over twenty-five years of experience in mine operations, engineering, permitting, development, and corporate management. A graduate of the Colorado School of Mines, he is a registered professional engineer in the State of Idaho with substantial experience in designing, permitting, developing and operating underground mines. Mr. Young is not an officer or a director of any other company whose shares are registered under the Securities Exchange Act of 1934, as amended.
Thomas S. Hendricks. Mr. Hendricks has been a director of the Company since 1988 and an officer since 2006. Mr. Hendricks was the original owner of Hendricks Mining, Inc. (“HMI”) which owned the Cross / Caribou gold and silver mines near Nederland, Colorado. Mr. Hendricks formed HMI in 1974 for the purpose of acquiring and operating the Cross Mine and neighboring mineral interests. Mr. Hendricks has been engaged in exploring and limited mining operations at the Cross Mine and neighboring mineral interests (now referred to as the “Caribou prospect”) on a full time basis since 1971. Mr. Hendricks is not an officer or a director of any other company whose shares are registered under the Securities Exchange Act of 1934, as amended.1934.
Art Daher. Mr. Daher has been secretary and a director of Calais Resources since 1995. Mr. Daher is retired. Mr. Daher sold his Real Estate Company in September of 1996, a company he had owned and operated since May of 1983. Mr. Daher is not an officer or a director of any other company whose shares are registered under the Securities Exchange Act of 1934, as amended.1934.
Significant Employees
We have no significant employees other than our officers described above.
Arrangements & Family Relationships
There are no family relationships between any of our directors and/or executive officers. There are no arrangements or understandings between any person and any of our current directors and/or executive officers pursuant to which any director or executive officer was selected as a director or executive officer.
Legal Proceedings
We are not aware of any material proceedings to which any of the non-directorour executive officers, directors or any associate of any such officer or director, is a party adverse to us or has a material interest adverse to us or to any of our subsidiaries. During the last five years, none of the non-director officers or directors of the Company has (i) had any bankruptcy petition filed by or against any business of which such person was an officer; (ii) had any conviction in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, insurance or banking activities; (iv) been found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law; (v) been subject to any order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of securities or commodities laws or regulations, laws or regulations relating to financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (vi) been subject to any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Audit Committee Financial Expert
We do not have an audit committee financial expert at this time.
Audit Committee
Calais does not have a formal audit committee and, therefore, its Board of Directors serves as its audit committee.
Procedures by which security holders may recommend nominees to the board of directors
The board of directors has not adopted procedures by which security holders may recommend nominees to the board of directors.
Code of Ethics
We have not yet adopted a codeCode of ethicsBusiness Conduct and Ethics that applies to our principal executive officer and principal financial officer, controller, orand persons performing similar functions. We have not done so because other business activities, including, but not limited to, the remedyThe text of the financial difficulties discussed in Part I, Item 1, have taken precedent inCode of Business Conduct and Ethics is posted on our Internet website athttp://www.calaisresources.com/en/financials.htm. In the short term. We expectevent that the Boardan amendment to, or a waiver from, a provision of Directors will considerthis code is necessary, we intend to post such a code in the future.information on our website.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors, and persons who beneficially own more than 10% of our common stock to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission (“SEC”). Officers, directors and greater than 10% beneficial owners are also required by rules promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.
The table below sets forth the last known Section 16 filings made by current and former officers, directors and persons beneficially owning 10% or more of our common stock. Based upon this information, we believe that
certain of certainour current and former shareholders, officers and directors have been delinquent or failed to file reports required by Section 16.
Name | Form | Date of Filing | R. David Russell | Form 4 | June 13, 2008 | David K. Young | Form 3 | June 12, 2008 | Thomas Hendricks | Form 4 Amendment | September 14, 2004 | Art Daher | Form 4 Amendment | September 10, 2004 | Matthew Witt | Form 3 | September 26, 2003 | Melvin Martin | Form 4 | June 6, 2005 | Robert Akright | Form 4 Amendment | September 10, 2005 | RCA III GP LLC | Form 4 | June 14, 2005 | Steve Benaske | Form 3 | September 29, 2003 |
ITEM 11. EXECUTIVE COMPENSATION. Executive Compensation
The following table sets forth information about the remuneration of our executive officers during the fiscal years ended May 31, 2005 through May 31, 2010.2007.
Summary Compensation Table Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($)(6) | All Other Compensation ($) | Total ($) | David K. Young(1) | 2005 2006 2007 | - 42,290 175,000 | - - - | - - - | - - - | - 42,290 175,000 | Thomas Hendricks(2) | 2005 2006 2007 | 150,000 150,000 150,000 | - - - | - - - | - - - | 150,000 150,000 150,000 | Matthew Witt(3) | 2005 | 130,000 | - | - | - | 130,000 |
Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($)(5)(6) | All Other Compensation ($) | Total ($) |
David K. YoungRobert Akright(1)(4)
| 2005 2006 2007 2008
2009
2010
| -25,471
42,29049,221
175,000
175,000
175,000
175,000
28,181 | -
-
-
-
45,000
45,000
| -
-
-
- - - | - - - | - - - | 25,471 49,221 28,181 | Art Daher(5) | 2005 2006 2007 | - - - | - 42,290-
175,000-
175,000
| - 220,000-
220,000-
| - - - | - - - |
Thomas Hendricks(2) | 2005 2006 2007 2008 2009 2010 | 150,000 150,000 150,000 150,000 150,000 150,000 | - - - - 45,000 45,000 | - - - - - - | - - - - - - | 150,000 150,000 150,000 150,000 195,000 195,000 | Matthew Witt(3) | 2005 | 130,000 | - | - | - | 130,000 | Robert Akright(4) | 2005 2006 2007 | 25,471 49,221 28,181 | - - - | - - - | - - - | 25,471 49,221 28,181 |
________________________________________________
(1) | Mr. Young has served as a director since July 2005. He was subsequently appointed as President and Chief Executive Officer in February 2006. Mr. Young was appointed Chief Operating Officer when Mr. Russell was appointed Chief Executive Officer in January 2011. |
(2) | Mr. Hendricks has served as a director since 1998 and was President of the Company from 2000 to February 2006. Mr. Hendricks has served as Vice President of Exploration and Corporate Development since February 2006. |
(3) | Mr. Witt served as Chief Financial Officer from 2003 to February 2005. Mr. Witt received 1,000,000 options upon his employment with the Company. |
(4) | Mr. Akright is a self-employed consulting geologist and acted as Vice President of the Company from 1998 to 2007. |
(5) | Mr. Daher has served as a director and as Secretary of the Company since 1995. |
(6) | Stock options granted during the fiscal years ended May 31, 2004 and for all periods prior were accounted for under APB 25, and therefore no fair value has been recorded. For the fiscal periods subsequent to May 31, 2005, our board of directors had contemplated the grant of options and or the re-pricing of existing options, but none of the actions contemplated were ever completed. |
Employment and Compensation Arrangements
In July 2006, the Company entered into an employment agreement with David K. Young, as its President and Chief Executive Officer. The agreement had no expiration and provided for compensation to Mr. Young of $175,000 annually, and a monthly automobile allowance. In the event that Mr. Young is terminated without cause, the agreement provides for severance equal to 36 months of salary, plus 50% of entitled bonuses. In addition, upon termination described above, health coverage for Mr. Young will continue for a period of 36 months. The agreement also includes a provision pursuant to an Effective Change in Control, whereby Mr. Young will have been deemed terminated without cause, and the provisions discussed above will become effective.
In July 2006, the Company entered into an employment agreement with Thomas Hendricks, as its Vice President for Exploration and Corporate Development. The agreement had no expiration and provided for compensation to Mr. Hendricks of $150,000 annually, and a monthly automobile allowance. In the event that Mr. Hendricks is terminated without cause, the agreement provides for severance equal to 36 months of salary, plus 50% of entitled bonuses. In addition, upon termination described above, health coverage for Mr. Hendricks will continue for a period of 36 months. The agreement also includes a provision pursuant to an Effective Change in Control, whereby Mr. Hendricks will have been deemed terminated without cause, and the provisions discussed above will become effective, as well as other provisions regarding vesting of certain stock options due to Mr. Hendricks.
The Company had an employment agreement with Matt Witt, the Company’s former our chief financial officer, during 2004 through August 2005. The employment agreement was a two-year agreement expiring in October 2005, and provided for compensation to Mr. Witt of $130,000 annually.
Due to the financial difficulties we faced during the 2005 to 2010 fiscal years, we were unable to pay the wages of certain of our executive officers. We have entered into agreements and settlements with various officers and directors relating to compensation payable to them. See “Item 13. Certain Relationships and Related Transactions, and Director Independence – Wages and Other Payables.”
Outstanding Equity Awards at Fiscal Year-End
All of the stock awards shown above in the Summary Compensation table were fully vested upon grant. Accordingly, at May 31, 2010,2007, there were no stock awards that had not vested. Director Compensation
We have no formal plan for compensating our directors for their service in their capacity as directors. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board. The Board may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. Other than indicated below no director received any compensation for his services as a director, including committee participation and/or special assignments.
The following table sets forth the compensation paid to members of our Board of Directors, who were not executive officers, during each fiscal year from May 31, 2005 through May 31, 2010.2007.
Director Compensation Name | Year | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | R. David Russell (1) | 2006 2007 2008
2009
2010
| -
-
-
- - | 30,000 30,000 30,000
-
-
| -
-
-
- - | - - -
| - - | - - -
-
-
| -
-
-
-
-
| 30,000 30,000 30,000
-
-
| Melvin Martin (2) | 2005 | - | - | - | - | - | - | - | Art Daher (3) | 2005
2006
2007
2008
2009
2010
| -
-
-
-
-
-
| -
-
-
-
45,000
45,000
| -
-
-
-
-
-
| -
-
-
-
-
-
| -
-
-
-
-
-
| -
-
-
-
-
-
| -
-
-
-
45,000
45,000
|
______________
________________ (1) | Mr. Russell served as a director from July 2005 to August 2008. He was subsequently appointed as a director, Chairman and Chief Executive Officer on in January 2011. |
(2) | Mr. Martin served as a director from 1992 until June 28, 2005. |
(3) | Mr. Daher has served as a director since 1995. |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan Information
At May 31, 2010,2007, there were no outstanding options.options to purchase 1,100,000 common shares. These options expired during the fiscal year ended May 31, 2010.
Beneficial Ownership
Set forth below is information regarding the beneficial ownership of our common stock, as of May 1,June 30, 2011 by (i) each person whom we know owned, beneficially, more than 5% of the outstanding shares of our common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all of the current directors and executive officers as a group. We believe that, except as otherwise noted below, each named beneficial owner has sole voting and investment power with respect to the shares listed. Unless otherwise indicated herein, beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting or investment power with respect to shares beneficially owned. Shares of common stock subject to convertible instruments or warrants currently exercisable or exercisable within 60 days of May 1,June 30, 2011 are deemed outstanding for purposes of computing the percentage ownership of the person holding such instruments or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
Beneficial Ownership Information
Beneficial Owner & Address | Number of Shares Beneficially Owned as of May 1, 2011(1) | Percent of Class(2) | | Number of Shares Beneficially Owned as of June 30, 2011(1) | | | Percent of Class(2) | R. David Russell(3) | 5,562,500 | 3.9% | | 11,715,650 | | | | | 7.7 | % | David K. Young | 6,270,420 | 4.4% | | 6,270,420 | | | | | 4.2 | % | Thomas Hendricks(4) | 4,785,667 | 3.4% | | 4,785,667 | | | | | 3.2 | % | Art Daher(5) | 2,340,450 | 1.7% | | 2,340,450 | | | | | 1.6 | % | Officers and Directors as a group (4 persons)(6) | 18,959,037 | 13.14% | | 25,112,187 | | | | | 16.6 | % | Marlowe and Judy Harvey(7) | 9,550,368 | 6.7% | | Glenn Duffy(8) | 8,316,725 | 5.8% | |
Beneficial Owner & Address | | Number of Shares Beneficially Owned as of June 30, 2011(1) | | | Percent of Class(2) |
Marlowe and Judy Harvey(7) | | 9,550,368 | | | | | 6.4 | % | Glenn Duffy(8) | | 8,316,725 | | | | | 5.5 | % |
____________ | (1) | To the best of the Company’s knowledge, none of the shares listed for these officers and directors has been pledged as security. Except for Glenn Duffy, the address of those listed is c/o Calais Resources Inc., P.O. Box 653, 4415 Caribou Road, Nederland, Colorado 80466. |
| (2) | If a stockholder holds options or other securities that are exercisable or otherwise convertible into our Commoncommon stock within 60 days following May 1,June 30, 2011, we treat the shares of Commoncommon stock underlying those securities as owned by that stockholder and as outstanding shares when we calculate that stockholder’s percentage ownership of our Commoncommon stock. We do not consider those shares to be outstanding when we calculate the percentage ownership of any other stockholder. |
| (3) | Includes 650,000 shares held of record by Mr. Russell’s wife and 2,312,5001,562,500 shares issuable upon exercise of warrants held by Mr. Russell. |
| (4) | Includes 619,000 shares held of record by Hendricks Mining Co. |
| (5) | Includes 2,500 shares held of record by Mr. Daher’s wife and 55,000 shares held of record by 575061BC Ltd., a company controlled by Mr. Daher. |
| (6) | Includes 2,312,500 shares issuable upon exercise of warrants held by Mr. Russell. |
| (7) | Mr. and Mrs. Marlowe’s address is 47015 Extrom Road, Chiliwack, British Columbia, Canada V2R 4V1. Includes 659,730 shares held of record by Argus Resources, a company of which Mr. Harvey is an officer and significant shareholder. |
| (8) | Mr. Duffy’s address is 5679 Old Ranch Road, Sarasota, Florida 34241. Includes 6,420,903 shares held of record by Pensco Trust Company Cust FBO Glenn E Duffy Roth IRA and 1,895,822 shares issuable upon exercise of warrants. Mr. Duffy has been identified with other shareholders referred to in this report as the “Duffy Group”. The Duffy Group beneficially owns 14,889,174, or 10.2%9.6%, which includes 6,420,903 shares held of record by Pensco Trust Company Cust FBO Glenn E Duffy Roth IRA, 4,161,325 shares held of record by Equity Trust Co Cust FBO Duane A Duffy Roth IRA, and 4,306,946 shares issuable upon exercise of warrants. |
Changes in Control
There are no agreements known to management that may result in a change of control of our company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Conflicts of Interest and Related Party Transactions
Several of the Company’s officers and directors are also directors, officers or shareholders of other companies. Some of the directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in direct competition with the Company. Such associations may give rise to conflicts of interest from time to time. Such a conflict poses the risk that the Company may enter into a transaction on terms which could place the Company in a worse position than if no conflict existed. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia) (the “BCBCA”). The directors of the Company are required by law to act honestly and in good faith with a view to the best interest of the Company and to disclose any interest which they many have in any project or opportunity of the Company. However, each director has a similar obligation to other companies for which such director serves as an officer or director.
Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions. Consulting Fees
We paid consulting fees and expense reimbursements of $58,300, (unaudited), $12,500, (unaudited),and $13,750 in fiscal years 2007, 2006, and 2005, respectively, to Herbert Hendricks, the brother of Thomas Hendricks, an officer and director of the Company, as compensation for overseeing certain exploration activities in Panama and other various consulting activities.
Wages and Other Payables
Due to the financial difficulties we faced during the 2005 – 2010 fiscal years, we were unable to pay the wages of certain of our executive officers. As such, we had significant amounts payable to executive officers as of May 31, as follows:
| | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | | | | | | | | | | | | | | | | | | | | | David K. Young (1) | | $ | 417,833 | | | $ | 279,333 | | | $ | 160,416 | | | $ | 181,988 | | | $ | 137,404 | | | $ | 120,821 | | Thomas Hendricks (2) | | | 366,820 | | | | 216,820 | | | | 91,821 | | | | 4,000 | | | | 1,500 | | | | 1,500 | | Matthew Witt (3) | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | $ | 912,403 | | | $ | 623,903 | | | $ | 379,987 | | | $ | 313,738 | | | $ | 266,654 | | | $ | 250,071 | |
| | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | | | | | | | | | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | | David K. Young (1) | | $ | 417,833 | | | $ | 279,333 | | | $ | 160,416 | | | $ | 106,667 | | | $ | 18,154 | | | $ | - | | Thomas Hendricks (2) | | | 366,820 | | | | 216,820 | | | | 91,821 | | | | 89,321 | | | | 134,321 | | | | 132,321 | | Matthew Witt (3) | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | $ | 912,403 | | | $ | 623,903 | | | $ | 379,987 | | | $ | 323,738 | | | $ | 280,225 | | | $ | 260,071 | |
_______________
(1) David K. Young has served on our Board since July 30, 2005 and as our President and Chief Executive Officer since February 10, 2006. In January 2011, Mr. Young relinquished his CEO title and was appointed as our Chief Operating Officer. He remains our President. On October 27, 2010, we and Mr. Young entered into a Settlement Agreement wherein Mr. Young agreed to relinquish and waive $227,042 in wages owed to him, which constituted 50% of the total wages he was owed as of August 31, 2010. Mr. Young agreed to accept as full payment for the remaining 50% 2,270,420 restricted shares of our common stock.stock valued at $0.10 per share or $227,042. See also “Item 11. Executive Compensation – Employment and Compensation Arrangements.”
(2) Subsequent to May 31, 2010, we have paid Mr. Hendricks $319,220 against both current and aged wages payable balances as well as convertible debenture balances due. See also “Item 11. Executive Compensation – Employment and Compensation Arrangements.”
(3) Matthew Witt served as our Chief Financial Officer from August 2003 until February 7, 2005. On March 31, 2005, we, Thomas Hendricks (an officer and director of the Company) and Mr. Witt entered into a Settlement and Release Agreement wherein, among other things, we agreed to pay Mr. Witt (a) $127,750 for all wages, including vacation, paid personal leave, bonus or otherwise, which were due, owing and accrued through February 7, 2005 and (b) all amounts owed to Mr. Witt for any of our business expenses incurred by Witt as an employee of ours (at the
time, an additional $49,718), in exchange for release of certain claims and liabilities of ours. This Settlement and Release agreement was later superseded by a Settlement Agreement entered into on October 28, 2010 (the “October Settlement”) by and between us and Mr. Witt. Under the October Settlement, Mr. Witt agreed to accept as full payment for all amounts owed to him under the earlier Settlement and Release Agreement 2,000,000 restricted shares of our common stock valued at $0.0762 per share or $152,468 and $25,000 in cash. These shares were issued and cash released in November 2010.
Debentures
As of May 31, 2005 through 2010, the Company had outstanding convertible debentures payable to shareholders, current officers, and former officers and directors of the Company as set forth below: | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | | | | | | | | | | | | | | | | | | | | | Debentures (a) | | $ | 4,809,649 | | | $ | 4,644,900 | | | $ | 5,110,759 | | | $ | 4,723,979 | | | $ | 4,600,798 | | | $ | 4,036,090 | | | | | | | | | | | | | | | | | | | | | | | | | | | Debentures (b) | | | 45,500 | | | | 105,500 | | | | 225,000 | | | | 225,000 | | | | 250,000 | | | | 250,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total debentures payable | | $ | 4,855,149 | | | $ | 4,750,400 | | | $ | 5,335,759 | | | $ | 4,948,979 | | | $ | 4,850,798 | | | $ | 4,286,090 | | Less: Current portion | | | (4,855,149 | ) | | | (105,500 | ) | | | (175,000 | ) | | | (125,000 | ) | | | (100,000 | ) | | | (50,000 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Long-term portion | | $ | - | | | $ | 4,644,900 | | | $ | 5,160,759 | | | $ | 4,823,979 | | | $ | 4,750,798 | | | $ | 4,236,090 | |
________________ | | 2010 | | | 2009 | | | 2008 | | | 2007 | | | 2006 | | | 2005 | | | | | | | | | | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | | | Debentures (a) | | $ | 4,809,649 | | | $ | 4,644,900 | | | $ | 5,110,759 | | | $ | 4,723,979 | | | $ | 4,600,798 | | | $ | 4,036,090 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Debentures (b) | | | 45,500 | | | | 105,500 | | | | 225,000 | | | | 225,000 | | | | 250,000 | | | | 250,000 | | | Total debentures payable | | $ | 4,855,149 | | | $ | 4,750,400 | | | $ | 5,335,759 | | | $ | 4,948,979 | | | $ | 4,850,798 | | | $ | 4,286,090 | | | Less: Current portion | | | (4,855,149 | ) | | | (105,500 | ) | | | (175,000 | ) | | | (125,000 | ) | | | (100,000 | ) | | | (50,000 | ) | | Long-term portion | | $ | - | | | $ | 4,644,900 | | | $ | 5,160,759 | | | $ | 4,823,979 | | | $ | 4,750,798 | | | $ | 4,236,090 | | |
(a)These debentures are unsecured, non-interest bearing, and initially matured in May 2011. These debentures are owned by Marlowe Harvey whomwho was the President and a director of oursthe Company until he resigned as President in 2000 and as a director in November 2003. Mr. Harvey is the President of2003; Argus Resources, Inc., a holderthe president of one of the debentures,which is Mr. Harvey; Judy Harvey whomwho is Mr. Harvey’s spousespouse; and Lynne Martin. Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005. The debentures are convertible into common stock at $1.23 in Canadian Dollars at the holders’ discretion and contain no restrictive covenants.
In December 2010, $4,306,347 of the debentures were converted into 9,550,368 shares of common stock valued at $0.15 per share or $1,432,555 and in exchange for $259,149 in cash as described more fully below. The remaining debenture, totaling $743,765,Cdn$747,728, will mature in May 2011.
(b) This debenture is owed to Thomas S. Hendricks, an officer, director and shareholder of the Company. The debenture is non interest-bearing, convertible into common stock at $0.85 per share in $50,000 annual increments, contains no restrictive covenants and matured on July 8, 2008. As of May 31, 2007, 2006, and 2005 the unpaid balance on this note amounted to $225,000, $250,000, and $250,000 respectively. We repaid $25,000 of this debenture in 2007. We repaid $119,500 of this debenture in 2009, $60,000 in 2010 and the remaining $45,500 in 2011. Lynne Martin Settlement
We entered into a Settlement Agreement with Lynne Martin regarding a debenture payable to her in the principal amount of $1,097,367. Ms. Martin is the spouse of Melvin Martin, who was a director of oursthe Company until he resigned on July 28, 2005. We and Ms. Martin agreed that Ms. Martin would accept as full payment for the debenture the amount of $109,781 in cash which is to be paid by us in four quarterly payments of $27,445, with the first payment due on December 15, 2010 and the three remaining payments due on March 15, 2011, June 15, 2011, and September 15, 2011. We made the first payment on December 15, 2010 and the second payment of $27,470.59$27,470 on March 18, 2011.2011, On or about June 15, 2011 we made an additional payment of 28,347.
The Harvey Settlement
We entered into a Settlement Agreement with Marlowe and Judy Harvey and Argus Resources, Inc. regarding the following three debentures:
1. Judy Harvey $ 2,038,840
2. Judy Harvey $ 949,417
3. Argus Resources, Inc. 1. Judy Harvey | $ 2,038,840 | 2. Judy Harvey | $ 949,417 | 3. Argus Resources, Inc. | $ 220,723 |
Marlowe Harvey was the President and a director of oursthe Company until he resigned as President in 2000 and as a director in November 2003. Mr. Harvey is the President of Argus Resources, Inc. Judy Harvey is Mr. Harvey’s spouse. After the closing of this transaction, Mr. Harvey beneficially holds more than 5% percent of our outstanding shares.
We and Judy Harvey agreed that Ms. Harvey would accept as full payment for her two debentures the total amount of $149,368 in cash and a total of 8,890,638 restricted shares of our common stock. The cash was paid on December 15, 2010 and the shares were issued on December 20, 2010 to an escrow agent to hold the shares until the Cease Trade Order in British Columbia has been revoked. We and Argus Resources agreed that Argus Resources would accept as full payment for its debenture 659,730 restricted shares of our common stock.stock valued at $0.15 per share or $98,960. The shares were issued on December 20, 2010.
(b) This debenture is owed to Thomas S. Hendricks, an officer, director and shareholder of the Company. The debenture is non interest-bearing, convertible into common stock at $0.85 per share in $50,000 annual increments, contains no restrictive covenants and matured on July 8, 2008. We repaid $25,000 of this debenture in 2007, $119,500 in 2009, and $60,000 in 2010. At May 31, 2010, the balance of the unpaid debenture was $45,500. This debenture has subsequently been paid in full.
Debt
The Duffy Notes
On August 1, 2005, we issued a note payable (the “Duffy Note”) to a group of shareholders (the “Duffy Group”) The Duffy Group (Duane Duffy, Glenn Duffy, Luke Garvey and James Ober) independent qualified investors and shareholders of Calais for $807,650, in exchange for $681,000 originally accounted for as Share Capital, and interest accrued from the date of
each cash infusion totaling $126,650. The Duffy Group (Duane Duffy, Glenn Duffy, Luke Garvey and James Ober) are independent qualified investors and shareholders of Calais. The Duffy Note was secured by a trust deed on the Caribou Townsite and Mine. The Duffy Note bore interest at 15.9% and was payable in two installments: the first due on October 31, 2005 for $166,000 and the remaining principal and interest due October 31, 2006. In addition, in consideration for the financing of the note, the Duffy Group received warrants to purchase 1,000,000 shares of our common stock for $0.40 per share in August 2005. The warrants were valued at $105,890 and have been recorded as a debt discount. Initially, in the event that any scheduled payments were not made, a penalty representing 5% of the payment amount was to be added to the principal amount of the note. In the event that the note holders provided written notification of default and the default was not cured within 10 days, the default interest rate would increase to 24% per annum on the entire principal amount and accrued interest. On October 31, 2005, we defaulted on our obligation to pay $166,000. Under the terms of the note, a late fee penalty of 5%, or $8,300, was added to the principal amount of the note. On December 15, 2005, we made a payment on the note of $169,070.
On October 31, 2006, we defaulted on the payment due at the note’s maturity and, under the terms of the note, a late fee penalty of 5%, or $39,129, was added to the principal amount of the note. In addition, the default rate under the terms of the note was increased to 24% per annum.
The note was restructured on March 26, 2007. The principal balance was set at $910,677, consisting of the original balance of the note, plus late fees and interest. The payment terms specified an initial payment of $200,000 and payments of $75,000 per month until the note was repaid in full. The interest rate was reset from the default rate of 24% to 15.9%. We issued 500,000 shares of stock to the Duffy Group valued at $0.18 per share or $90,000 and extended the exercise date on warrants owned by the Duffy Group to purchase 875,000 shares of common stock from April 2008 to March 2012. We defaulted on the $75,000 payment due April 15, 2007. The note was restructured again on December 31, 2007. The principal balance of the note was set at $900,537, consisting of the principal balance established at March 26, 2007, plus additional late fees and interest. The maturity date was extended to April 1, 2008. Warrants to purchase 1,000,000 shares of stock at $0.40 per share, expiring April 14, 2011, and warrants to purchase 875,000 shares of stock at $0.25, expiring March 15, 2012, owned by the Duffy Group, were modified, with the exercise price set at $0.25 and the expiration date extended to January 1, 2020.1,2020. The note was restructured again on March 31, 2008. The principal balance of the note was set at $948,397 consisting of the principal balance established at December 31, 2007 andplus interest. The payment terms specified an initial payment of $100,000 and five monthly payments of $50,000 each beginning May 1, 2008. The remaining principal and interest arewere due October 1, 2008. We issued to the Duffy Group 1,185,496 shares of Commoncommon stock at $0.13 per share and warrants to purchase 1,185,496 shares of Commoncommon stock at $0.12 per share, expiring April 1, 2013. The warrants were valued at $153,754 and have been recorded as a charge to interest expense.
In May 2008, as a result of the failure to pay scheduled interest payment in accordance with the March 31, 2008 loan modification, the note holders were issued 1,021,000 shares of Commoncommon stock at $0.15 per share and warrants to purchase 1,021,000 shares of common stock at $0.12 per share expiring in August 2013. The warrants were valued at $150,939 and have been recorded as a charge to interest expense.
In May 2009, the note holders were issued 1,249,900 shares of Commoncommon stock at $0.14 per share and warrants to purchase 1,249,900 shares of common stock at $0.12 per share expiring in May 2020 in connection with the execution of a trust deed modification. The warrants were valued at $62,490 and have been recorded as a charge to interest expense.
As a result of these transactions, the Duffy Group became holders of a significant percentage of the Company’s outstanding common stock. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Debt Restructure
On February 1, 2010, we, Elkhorn Goldfields, LLC (“Elkhorn”), and Brigus Gold Corporation (“Brigus”) entered into a purchase agreement which provided for the assignment to Brigus of principal, accrued interest and penalties owed to MFPI Partners, LLC (“MFPI”) in connection with the mortgage note of $7,755,622, principal and accrued interest in the amount of $386,653 owed in connection with the Congo Chief Note, and $1,458,582 owed to MFPI.MFPI Capital Partners, LLC. On February 19, 2010, the Duffy Group entered into an agreement with Brigus and us whereby the Duffy groupGroup received 10,306,790 shares of Calais common stock valued at $0.09 per share or $927,611 in exchange for the forgiveness of $453,347 in our debt to Duffy, the assignment to Brigus of the remaining balance of $653,021 owed by us, and the assignment by the Duffy Group of its right to title and interest to the “Caribou” loan property to Brigus. The terms of the agreement allowed for additional consideration to be conveyed to the Duffy group from a third party, Elkhorn,Brigus, in consideration for the consummation of the transaction.
Immediately following the debt restructure, we owed $10,253,878 in principal accruing interest at 8% per annum to Brigus. The debt initially matured on February 1, 2011. On January 15, 2010,2011, we received a forbearance under the terms of this agreement effectively extending the maturity date of the debt through June 30, 2011. AsOn June 8, 2011, Brigus agreed to extend the June 30, 2011 date to October 31, 2011 in exchange for the payment of May 31, 2010,$1,000,000 cash. The funds will be applied to accrued but unpaid interest of $269,691 had been accrued on this note.the debt.
At the time of the Brigus transaction, our current R. David Russell, our current Chairman, CEO and a director of the Company, was President and CEO of Apollo Gold Group,Corporation, a predecessor of Brigus. Mr. Russell also beneficially owns approximately 3.9% of our outstanding common stock. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
Shareholder Note
In connection with an Exploration Agreement dated December 31, 2008 (the “Exploration Agreement”) between the Company and DRDMJ, LLC, a company owned and controlled by R. David Russell, on December 20, 2008, the Company issued a one-year note payable to R. David Russell, who at the time was a shareholder of the Company and is currently the Company’s Chief Executive Officer and Chairman of the Board, in the amount of $405,410 in consideration for cash of approximately $300,000. The cash was to be used for development at the Cross Gold mine with ore processing at the Gold Hill mine. In August 2009 the Company defaulted on it’sits agreement with Mr. Russell and issued 5,067,650 shares of our common stock valued at $861,501 as consideration for our default on the Exploration Agreement and recorded losses of $456,905 in connection with this.
Stock
On numerous occasions, we sold common stock to then-related parties, including our current Chief Executive Officer, R. David Russell.
On July 1, 2005 we sold 750,000 common share units to R. David R. Russell for proceeds of $150,000. Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.25 per share. The warrants expired in June 2010.
On November 30, 2007 we sold 6,450,000 common share units to R. David R. Russell and parties related to him to him for proceeds of $516,000. Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.12 per share. The warrants expire in November 2012.
On February 8, 2008 and again on March 24, 2008 we sold a total of 1,375,000 common share units to R. David Russell and parties related to him for proceeds of $110,000. Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.12 per share. The warrants expire in February and March 2013.
On April 26, 2010 we sold 100,000 shares of our common stock to R. David Russell for proceeds of $5,000.
On August 24, 2010, we sold 650,000 shares of our common stock to the wife of R. David Russell for proceeds of $52,000. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Principal Accountants Fees
As disclosed in “Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure,” the Board has appointed StarkSchenkein, LLP (“StarkSchenkein”) as our independent registered public accounting firm to examine our financial statements for the fiscal years ending May 31, 2004, through May 31, 2011 and to perform other appropriate accounting services. StarkSchenkein has served as our independent registered public accounting firm since March 10, 2011, and has no relationship with us other than that arising from their employment as our independent registered public accounting firm.
Fees paid to our auditors during the fiscal years ended May 31, 2005 through May 31, 20102007 are as follows:
Fiscal Year | Audit Firm | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | Audit Firm | Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | 2005 | KPMG LLP | $52,362 | - | - | - | KPMG LLP | $52,362 | - | - | - | 2006 | KPMG LLP | $50,690 | - | - | - | KPMG LLP | $50,690 | - | - | - | 2007 | Hein & Associates LLP | $5,000 | - | - | - | Hein & Associates LLP | $5,000 | - | - | - | 2008 | Hein & Associates LLP | $190,000 | - | - | - | | 2009 | Hein & Associates LLP | - | - | - | - | | 2010 | Hein & Associates LLP | - | - | - | - | |
To the best of our knowledge, during the fiscal years listed above, fifty percent or less of the hours expended on the audit of our financial statements by our auditors were attributed to work performed by persons other than the auditor’s full-time permanent employees.
Pre-Approval Policies and Procedures
Our board of directors does not currently have an audit committee and has not adopted a formal pre-approval policy. Therefore, our full board of directors is functioning as the Company’s audit committee. The Board has considered whether the provision of the non-audit services described above by an external auditor is compatible with maintaining the auditor’s independence, and determined that these non-audit services are compatible with the required independence. The Board pre-approves all services to be provided to our company by the independent auditors. This includes the pre-approval of (i) all audit services, and (ii) any significant (i.e., not de minimis) non-audit services. Before granting any approval, the Board gives due consideration to whether approval of the proposed service will have a detrimental impact on the auditor’s independence. All services provided by and fees paid to our independent auditors during the fiscal years ended May 31, 20042005 through May 31, 20102007 were pre-approved by the Board.
Report of Board of Directors
The Board reviewed and discussed the audited financial statements with management and discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended. The Board received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Board concerning independence, and has discussed with the independent accountant the independent accountant’s independence. Based on the review and discussions referred to above, the Board approved the inclusion of the audited financial statements in our annual report on Form 10-K.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The financial statements filed as part of this report are listed on the index to financial statements on page F-1
(2) | Financial Statement Schedules |
All financial statement schedules have been omitted because they are not required, are not applicable or the information is included in the Financial Statements or Notes thereto.
(3) Exhibit List Exhibit Number | | Title | | | | 3.01 | | Memorandum forming Millennium Resources, Inc. dated December 22, 1986 (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 3.02 | | Articles of Incorporation (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 3.03 | | Special Resolution filed March 19, 1992 (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.01 | | Loan agreement dated August 1, 2003 by and between Calais Resources Inc., Calais Resources Colorado, Inc., Aardvark Agencies, Inc., and Broadway Mortgage Corporation (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.02+10.02 | | Option Agreement, dated November 29, 2005, by and between the Broadway Group, Calim Private Equity, LLC and Mendel Blumenfeld, LLP related to the purchase and sale of the Broadway Loan Agreement dated August 1, 2003.2003(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.03+10.03 | | Allonge to Promissory Note dated December 15, 2005, related to the increase in principal amount payable under Loan Agreement with MFPI Partners, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.04+10.04 | | Second Allonge to Promissory Note dated December 15, 2006, related to the increase in principal amount payable under Loan Agreement with MFPI Partners, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.05+10.05 | | Letter Agreement with Calim Private Equity, LLC dated September 22, 20052005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). |
10.06+10.06 | | Letter Agreement with MFPI Partners, LLC dated July 27, 20062006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.07 | | Mutual Release effective July 18, 2000, between Marlowe Harvey, Aardvark Agencies, Inc., Calais Resources Colorado, Inc., Calais Resources Inc., on the one part and Thomas S. Hendricks (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.08 | | Form of convertible debentures (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). |
10.09 | | Purchase Option Agreement dated February 28, 2003 by and between Calais Resources Inc. and Golden Cycle of Panama, Inc. and Manama Mining of Golden Cycle, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.10 | | Grant of RoyalyRoyalty Interest for Fixed Term, Modification of Prior Royalty Grants and Assignment of Royalty Buyout Rights Under Prior Grants dated March 1998 by Calais Resources Colorado Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks, and John R. Henderson (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.11 | | Right to Redeem and Re-Acquire Agreement dated March 26, 1999 between Aardvark Agencies, Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). |
Exhibit
Number
| Title | | | | 10.12 | | Right to Redeem and Re-Acquire Agreement dated July 20, 2000 between Aardvark Agencies, Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.13 | | Grant of Royalty Interest for Fixed Term by Calais Resources Colorado, Inc. and Aardvark Agencies, Inc. dated July 2000 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks and John R. Henderson (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended). | 10.14 | | Settlement Agreement and General Mutual Release between Calais Resources Inc., Marlowe Harvey, and others, dated March 8, 2004. (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004). | 10.15 | | Purchase Option Agreement between Calais Resources Inc. and Golden Cycle of Panama, Inc. and Panama Mining of Golden Cycle, Inc., dated February 28, 2003. (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004). | 10.16 | | Extension of Purchase Option Agreement and Partial Acknowledgement of Performance by and between Calais Resources Inc., Golden Cycle of Panama, Inc. and Panama Mining of Golden Cycle, Inc. dated January 31, 2004 (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004). | 10.17+10.17 | | Further Extension and Restatement of Purchase Option Agreement btweenbetween Calais Resources Inc., Panama Mining of Golden Cycle and Golden CucleCycle of Panama Mining dated September 15, 20052005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.18+10.18 | | Note payable between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated August 1, 2005.2005 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). |
10.19+10.19 | | Grace Period Letter between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated March 13, 2007.2007 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.20+10.20 | | Note and Trust Deed Modification Agreement between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated December 21, 2007.2007 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.21+10.21 | | Note and Trust Deed Modification Agreement between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated June 12, 2008.2008 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). |
10.22 | | Note and Trust Deed Modification Agreement of August 2008 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated August 22, 2008.2008 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). | 10.23*10.23 | | Note and Trust Deed Modification Agreement of January 2009 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated January 22, 2009.2009 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). | 10.24*10.24 | | Note and Trust Deed Modification Agreement of May 2009 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated May 26, 2009.2009 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). | 10.25+10.25 | | Promissory Note between MFPI Partners, LLC and Calais Resources Inc. for purchase of Congo Chief, dated December 16, 2005.2005 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.26+10.26 | | Vacant Land Contract to Buy and Sell Real Estate dated September 21, 2005 related to Congo Chief.Chief(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.27+10.27 | | Amendment and Extension Agreement by and between Calais Resources Inc. and the Estate of John W. Snyder, dated November 10, 2005.2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.28* | | Deed of Trust from Calais Resources Inc. to MFPI Partners, LLC dated December 16, 2005. | 10.29+10.29 | | Endorsement to Promissory Note transferring rights to Apollo Gold, Inc. from Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.30+10.30 | | Assignment of Loan Property by Duane A. Duffy, Glenn E. Duffy, Luke Garvey and James Ober, and Calais Resources Inc., Calais Resources Colorado, Inc. f/b/o Apollo gold, Inc. dated March 12, 2010. |
Exhibit
Number
| Title2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | | | | 10.31+10.31 | | Purchase Agreement by and among Apollo Gold Corportaion,Corporation, Calais Resources Colorado, Inc. Calais Resources Inc. and Duane A. Duffy, Glenn, E. Duffy, Luke Garvey and James Ober dated March 12, 2010.2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). |
10.32+10.32 | | Promissory Note between Calais Resources Inc. and Walsh Environmental Scientists and Engineers, LLC dated March 23, 2009.2009(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.33+10.33 | | Stock Pledge Agreement by and between Walsh Environmental Scientists and Engineers, LLC and Calais Resources Inc. dated March 23, 20092009(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.34+10.34 | | Agreement by Calais Resources Colorado Inc. to Purchase Perpetual Independent Royalty Interest from Tusco, Incorporated dated June 1, 1988.1988(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.35+10.35 | | Purchase Documents related to acquisition of land by Calais Resources Colorado, Inc. from John Spencer Folawn.Folawn (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.36+10.36 | | Bill of Sale related to Stringtown MillMill(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). |
10.37 | | Purchase Agreement by and among Elkhorn Goldfields, LLC, Calais Resources Inc., Calais Resources Colorado, Inc. and Apollo Gold, Inc. made as of February 1, 2010.2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.38+10.38 | | Forbearance Agreement dated as of January 15, 2011 by and among Brigus Gold Corp., Brigus Gold, Inc., Calais Resources Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). | 10.39+10.39 | | Exploration Agreement dated as of December 31, 2008 between Calais Resources Colorado, Inc. and DRDMJ, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.40+10.40 | | Letter re: Payment of Promissory Note dated August 20, 2009 between Calais Resources Colorado, Inc. and R. David Russell Russell(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.41+10.41 | | Settlement Agreement for Certain Debentures dated December 10, 2010 by and among Calais Resources Inc., Marlowe and Judy Harvey and Argus Resources Inc. Inc(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.50#+10.50# | | Employment Agreement with Thomas S. Hendricks, dated July 12, 2006.2006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.51#+10.51# | | Employment Agreement with David K. Young, dated July 5, 2006.2006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.52#+10.52# | | Settlement and Release Agreement by and among Calais Resources Inc., Thomas S. Hendricks, and Matthew C. Witt dated March 31, 2005.2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.53#+10.53# | | Settlement Agreement by and between Calais Resources Inc. and Matt Witt dated October 28, 2010.2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 10.54#+10.54# | | Settlement Agreement by and between Calais Resources Inc. and David Young dated October 27, 2010.2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 21+10.55 | | Promissory Note dated February 1, 2010 between Calais Resources Inc., Calais Resources Colorado, Inc. and Apollo Gold Corporation (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). |
10.56 | | Extension Agreement dated as of June 8, 2011 by and among Brigus Gold Corp., Brigus Gold, Inc., Calais Resources Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the Company’s Form 8-K dated June 8, 2011 and filed June 10, 2011). | 14 | | Code of Business Conduct and Ethics (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). | 21 | | List of subsidiariessubsidiaries(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). | 31+ | | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. | 32+ | | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act. |
99.1 | | Caribou Property Claims List | 99.2+99.2 | | Manhattan Property Claims List | | | | | | + - Filed herewith. | | | # - Compensatory arrangement. | | | * - To be filed by amendment. |
+ Filed herewith.
# Compensatory arrangement.
* To be filed by amendment.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | Calais Resources Inc.CALAIS RESOURCES INC. | | | | | | Date: May 6,July 14, 2011 | By: | /s/ R. DavidD. Russell | | | | R. David Russell | | | | Chief Executive Officer and Executive Chairman of the Board
| | | | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | Date | | Name and Title | | Signature | May 6,July 14, 2011 | | R. David Russell Chief Executive Officer and Executive Chairman of the Board | | /s/ R. DavidD. Russell | | | | | | May 6,July 14, 2011 | | David K. Young President, Chief Operating Officer and Director (Principal Executive Officer and Principal Financial Officer) | | /s/ David K. Young | | | | | | May __,July 14, 2011 | | Thomas S. Hendricks Vice President of Exploration and Corporate Development, and Director | | /s/ Thomas S. Hendricks | | | | | | May 6, 2011 | | Art Daher Director | | /s/ Art Daher
____________________________ | | | | | |
CALAIS RESOURCES INC. (A Mining Company in the Exploration Stage)
INDEX TO THE FINANCIAL STATEMENTS
Description | Page Number | Report of the Independent Registered Public Accounting Firm | 81 | 70 | Consolidated Balance Sheets as of May 31, 20102007, 2006 and 20092005 | 7182 | Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended May 31, 20102007, 2006 and 2009,2005, and for the period from December 30, 1986 (inception) through May 31, 2010.2007. | 7283 | Consolidated Statement of Changes in Shareholders’ Equity (Deficit) for the period from December 30, 1986 (inception) to May 31, 20102007 | 73-7784 | Consolidated Statements of Cash Flows for the fiscal years ended May 31, 20102007, 2006 and 2009,2005, and for the period from December 30, 1986 (inception) through May 31, 2010.2007. | 78-7988 | Notes to the Consolidated Financial Statements | 8090 |
[STARKSCHENKEIN, LLP LETTERHEAD]
[LETTERHEAD OF STARKSCHENKEIN, LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors Calais Resources, Inc.
We have audited the accompanying consolidated balance sheets of Calais Resources, Inc. (an exploration stage Company) as of May 31, 20102007, 2006 and 2009,2005, and the related consolidated statements of operations, shareholders' (deficit) and comprehensive income (loss), and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The Company'sCompany’s financial statements for the period from inception (December 30, 1986) to May 31, 2004, were audited by other auditors whose report expressed an unqualified opinion and included a going concern paragraph on those financial statements.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Calais Resources, Inc. as of May 31, 20102007, 2006 and 2009,2005, the results of its consolidated operations and its consolidated cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered a loss from operations and anticipates further losses in the development of its business. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ StarkSchenkein, LLP
Denver, Colorado May 6,July 14, 2011
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) CONSOLIDATED BALANCE SHEETS | | As of May 31, | | | As of May 31, | | | | 2010 | | | 2009 | | | 2007 | | | 2006 | | | 2005 | | ASSETS | | | | | | | | | | | | | | | | Current Assets | | | | | | | | | | | | | | | | Cash and cash equivalents | | $ | 27,919 | | | $ | - | | | $ | - | | | $ | 76,330 | | | $ | 752 | | Assets held for sale | | | | - | | | | - | | | | 26,500 | | Prepaid financing fees | | | | - | | | | 54,246 | | | | 96,750 | | Prepaid expenses and other assets | | | 15,063 | | | | 12,437 | | | | 25,174 | | | | 14,921 | | | | 976 | | Total current assets | | | 42,982 | | | | 12,437 | | | | 25,174 | | | | 145,497 | | | | 124,978 | | | | | | | | | | | | | | | | | | | | | | | Deferred and prepaid financing fees | | | | - | | | | - | | | | 398,842 | | Restricted cash | | | 15,400 | | | | 15,400 | | | | 15,400 | | | | 15,400 | | | | 15,400 | | Note receivable | | | 60,000 | | | | 60,000 | | | Mineral interests | | | | 313,073 | | | | 279,956 | | | | - | | Total assets | | $ | 118,382 | | | $ | 87,837 | | | $ | 353,647 | | | $ | 440,853 | | | $ | 539,220 | | | | | | | | | | | | | | | | | | | | | | | LIABILITIES | | | | | | | | | | | | | | | | | | | | | Current Liabilities | | | | | | | | | | | | | | | | | | | | | Accounts payable and accrued liabilities | | $ | 2,669,242 | | | $ | 2,490,622 | | | $ | 1,288,631 | | | $ | 1,477,134 | | | $ | 763,574 | | Convertible debentures, current portion | | | 4,809,649 | | | | - | | | Convertible debentures - employee, current portion | | | 45,500 | | | | 105,500 | | | | 125,000 | | | | 100,000 | | | | 50,000 | | Notes payable and current portion of long-term debt | | | 10,253,878 | | | | 8,814,925 | | | | 7,403,302 | | | | 270,458 | | | | 9,281 | | Note payable - shareholders, net | | | - | | | | 1,160,356 | | | Note payable - shareholders | | | | 645,909 | | | | 606,839 | | | | 681,000 | | Total current liabilities | | | 17,778,269 | | | | 12,571,403 | | | | 9,462,842 | | | | 2,454,431 | | | | 1,503,855 | | | | | | | | | | | | �� | | | | | | | | | | | Royalty interest | | | 150,000 | | | | 150,000 | | | Long-term debt | | | | - | | | | 5,502,996 | | | | 4,516,576 | | Convertible debentures | | | - | | | | 4,644,900 | | | | 4,723,979 | | | | 4,600,798 | | | | 4,036,090 | | Convertible debentures - related party | | | | 100,000 | | | | 150,000 | | | | 200,000 | | Environmental remediation liabilities | | | 50,000 | | | | 50,000 | | | | 50,000 | | | | 50,000 | | | | 50,000 | | Total liabilities | | | 17,978,269 | | | | 17,416,303 | | | | 14,336,821 | | | | 12,758,225 | | | | 10,306,521 | | | | | | | | | | | | | | | | | | | | | | | Shareholders' Deficit | | | | | | | | | | | | | | | | | | | | | Common stock, no par value, unlimited shares authorized, 76,278,142 and 50,992,802 shares issued and outstanding as of May 31, 2010 and 2009, respectively | | | 29,299,883 | | | | 26,541,417 | | | Common stock, no par value, unlimited shares authorized, 28,945,056, 24,333,351 and 21,114,702 shares issued and outstanding as of May 31, 2007, 2006 and 2005 respectively | | | | 24,143,998 | | | | 23,431,095 | | | | 22,655,254 | | Deficit accumulated during the exploration stage | | | (45,781,468 | ) | | | (42,656,319 | ) | | | (36,834,528 | ) | | | (34,579,005 | ) | | | (31,817,800 | ) | Accumulated other comprehensive loss | | | (1,378,302 | ) | | | (1,213,564 | ) | | | (1,292,644 | ) | | | (1,169,462 | ) | | | (604,755 | ) | Total Shareholders' Deficit | | | (17,859,887 | ) | | | (17,328,466 | ) | | | (13,983,174 | ) | | | (12,317,372 | ) | | | (9,767,301 | ) | | | | | | | | | | | | | | | | | | | | | | Total Liabilities and Shareholders' Deficit | | $ | 118,382 | | | $ | 87,837 | | | $ | 353,647 | | | $ | 440,853 | | | $ | 539,220 | |
See accompanying notes to consolidated financial statements.
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) FOR THE FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20102005 AND FOR THE PERIOD FROM DECEMBER 20, 1986 (inception) THROUGH MAY 31, 20102007
| | | | | | | | | | | | December 30, 1986 | | | | For the years ended May 31, | | | December 30, 1986 (inception) through | | | For the years ended May 31, | | | (inception) through | | | | 2010 | | | 2009 | | | May 31, 2010 | | | 2007 | | | 2006 | | | 2005 | | | May 31, 2007 | | | | | | | | | | | | | | | | | | | | | | | | Expenses | | | | | | | | | | | | | | | | | | | | | | General and administrative expense | | $ | 1,060,289 | | | $ | 1,013,858 | | | $ | 10,164,006 | | | $ | 1,069,686 | | | $ | 860,332 | | | $ | 918,131 | | | $ | 6,715,042 | | Exploration and business development expenses | | | 64,541 | | | | 61,979 | | | | 12,217,867 | | | | 80,263 | | | | 84,207 | | | | 334,658 | | | | 11,984,183 | | Depreciation and amortization expense | | | - | | | | - | | | | 202,403 | | | | - | | | | - | | | | 20,241 | | | | 202,403 | | Total operating expenses | | | 1,124,830 | | | | 1,075,837 | | | | 22,584,276 | | | | 1,149,949 | | | | 944,539 | | | | 1,273,030 | | | | 18,901,628 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other (income) and expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss on impairments | | | - | | | | 495,573 | | | | 9,808,572 | | | Loss on impairment | | | | - | | | | - | | | | - | | | | 9,312,999 | | (Gain) on settlement of debts | | | (313,549 | ) | | | (5,184 | ) | | | (460,957 | ) | | | - | | | | - | | | | (54,544 | ) | | | (172,224 | ) | Interest and financing fees | | | 1,957,778 | | | | 1,351,038 | | | | 13,603,575 | | | | 1,105,017 | | | | 1,809,389 | | | | 3,114,050 | | | | 8,895,527 | | Other (income) expense | | | 356,090 | | | | (1,558 | ) | | | 246,002 | | | | 557 | | | | 7,277 | | | | 32,613 | | | | (103,402 | ) | Total other income and expenses | | | 2,000,319 | | | | 1,839,869 | | | | 23,197,192 | | | Total other (income) and expenses | | | | 1,105,574 | | | | 1,816,666 | | | | 3,092,119 | | | | 17,932,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss before income taxes | | | 3,125,149 | | | | 2,915,706 | | | | 45,781,468 | | | | (2,255,523 | ) | | | (2,761,205 | ) | | | (4,365,149 | ) | | | (36,834,528 | ) | Income tax expense (benefit) | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | Net loss | | $ | 3,125,149 | | | $ | 2,915,706 | | | $ | 45,781,468 | | | $ | (2,255,523 | ) | | $ | (2,761,205 | ) | | $ | (4,365,149 | ) | | $ | (36,834,528 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other comprehensive loss (income) - foreign currency translation adjustments | | | 164,738 | | | | (465,859 | ) | | | 1,378,302 | | | | 123,181 | | | | 564,708 | | | | 314,290 | | | | 1,292,644 | | Comprehensive loss | | $ | 3,289,887 | | | $ | 2,449,847 | | | $ | 47,159,770 | | | $ | (2,378,704 | ) | | $ | (3,325,913 | ) | | $ | (4,679,439 | ) | | $ | (38,127,172 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Basic weighted-average number of common shares outstanding | | | 64,660,175 | | | | 50,469,135 | | | | | | | | | | | | | | | | | | | | | Diluted weighted-average number of common shares outstanding | | | 86,958,371 | | | | 50,469,135 | | | | | | | Basic and diluted weighted-average number of common shares outstanding | | | | 30,149,884 | | | | 22,569,138 | | | | 20,361,535 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Basic and diluted net loss per common share | | $ | 0.05 | | | $ | 0.06 | | | | | | | $ | (0.08 | ) | | $ | (0.12 | ) | | $ | (0.21 | ) | | | | |
See accompanying notes to consolidated financial statements.
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) AND OTHER COMPREHENSIVE INCOME (LOSS) INCOME FOR THE PERIOD FROM DECEMBER 30, 1986 (Inception) TO MAY 31, 20102007
| | Common Stock | | | | | | | | | | | | | Shares | | | Amount | | | Accumulated Deficit During the Development Stage | | | Comprehensive(Loss) Income | | | Total Stockholders Deficit | | Balance at Inception: December 30, 1986 | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 1 | | | | 1 | | | | | | | | | | | | 1 | | Shares issued for cash | | | 80,000 | | | | 73,346 | | | | | | | | | | | | 73,346 | | Shares issued for cash | | | 150,000 | | | | 5,501 | | | | | | | | | | | | 5,501 | | Net loss | | | | | | | | | | | (79,688 | ) | | | | | | | (79,688 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1987 | | | 230,001 | | | | 78,848 | | | | (79,688 | ) | | | - | | | | (840 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 11,600 | | | | 10,635 | | | | | | | | | | | | 10,635 | | Shares issued for cash | | | 100,000 | | | | 110,019 | | | | | | | | | | | | 110,019 | | Net loss | | | | | | | | | | | (31,108 | ) | | | | | | | (31,108 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1988 | | | 341,601 | | | | 199,502 | | | | (110,796 | ) | | | - | | | | 88,706 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 31,000 | | | | 39,790 | | | | | | | | | | | | 39,790 | | Shares issued upon exercise of warrants | | | 20,000 | | | | 29,338 | | | | | | | | | | | | 29,338 | | Shares issued upon exercise of warrants | | | 5,000 | | | | 7,335 | | | | | | | | | | | | 7,335 | | Net loss | | | | | | | | | | | (136,400 | ) | | | | | | | (136,400 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1989 | | | 397,601 | | | | 275,965 | | | | (247,196 | ) | | | - | | | | 28,769 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 40,000 | | | | 99,751 | | | | | | | | | | | | 99,751 | | Shares issued upon exercise of options | | | 20,000 | | | | 55,010 | | | | | | | | | | | | 55,010 | | Net loss | | | | | | | | | | | (39,985 | ) | | | | | | | (39,985 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1990 | | | 457,601 | | | | 430,726 | | | | (287,181 | ) | | | - | | | | 143,545 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for acquisition of Cineonix LTD | | | 1,000,000 | | | | 550,095 | | | | | | | | | | | | 550,095 | | Shares issued for finder's fee | | | 30,000 | | | | 66,011 | | | | | | | | | | | | 66,011 | | Net loss | | | | | | | | | | | (865,413 | ) | | | | | | | (865,413 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1991 | | | 1,487,601 | | | | 1,046,832 | | | | (1,152,594 | ) | | | - | | | | (105,762 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for acquisition of mineral interests | | | 50,000 | | | | 14,669 | | | | | | | | | | | | 14,669 | | Net loss | | | | | | | | | | | (52,591 | ) | | | | | | | (52,591 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1992 | | | 1,537,601 | | | | 1,061,501 | | | | (1,205,185 | ) | | | - | | | | (143,684 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 1,000,000 | | | | 110,019 | | | | | | | | | | | | 110,019 | | Shares issued for cash | | | 600,000 | | | | 96,817 | | | | | | | | | | | | 96,817 | | Shares issued under debt settlement | | | 115,468 | | | | 16,939 | | | | | | | | | | | | 16,939 | | Shares issued for finder's fee | | | 30,000 | | | | 19,143 | | | | | | | | | | | | 19,143 | | Net loss | | | | | | | | | | | (86,648 | ) | | | | | | | (86,648 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1993 | | | 3,283,069 | | | | 1,304,419 | | | | (1,291,833 | ) | | | - | | | | 12,586 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for acquisition of mineral interests | | | 50,000 | | | | 22,371 | | | | | | | | | | | | 22,371 | | Shares issued upon exercise of warrants | | | 1,000,000 | | | | 110,019 | | | | | | | | | | | | 110,019 | | Shares issued upon exercise of warrants | | | 145,000 | | | | 23,397 | | | | | | | | | | | | 23,397 | | Shares issued for cash | | | 170,000 | | | | 74,813 | | | | | | | | | | | | 74,813 | | Net loss | | | | | | | | | | | (241,437 | ) | | | | | | | (241,437 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1994 | | | 4,648,069 | | | $ | 1,535,019 | | | $ | (1,533,270 | ) | | $ | - | | | $ | 1,749 | |
See accompanying notes to consolidated financial statements. CALAIS RESOURCES INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) AND OTHER COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD FROM DECEMBER 30, 1986 (Inception) TO MAY 31, 20102007 (continued) | | | Common Stock | | | | | | | | | | | | | | | | | Shares | | | | Amount | | | | Accumulated Deficit During the Development Stage | | | | Comprehensive (Loss) Income | | | | Total Stockholders Deficit | | Balance at May 31, 1994 | | | 4,648,069 | | | $ | 1,535,019 | | | $ | (1,533,270 | ) | | $ | - | | | $ | 1,749 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 200,000 | | | | 110,019 | | | | | | | | | | | | 110,019 | | Shares issued upon exercise of warrants | | | 205,000 | | | | 40,340 | | | | | | | | | | | | 40,340 | | Shares issued upon exercise of warrants | | | 40,000 | | | | 7,628 | | | | | | | | | | | | 7,628 | | Shares issued upon exercise of warrants | | | 215,000 | | | | 41,000 | | | | | | | | | | | | 41,000 | | Shares issued upon exercise of warrants | | | 3,000 | | | | 1,650 | | | | | | | | | | | | 1,650 | | Cancellation of shares | | | (905,209 | ) | | | (1 | ) | | | | | | | | | | | (1 | ) | Net loss | | | | | | | | | | | (485,428 | ) | | | | | | | (485,428 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1995 | | | 4,405,860 | | | | 1,735,655 | | | | (2,018,698 | ) | | | - | | | | (283,043 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 700,000 | | | | 513,422 | | | | | | | | | | | | 513,422 | | Shares issued for cash | | | 209,200 | | | | 583,939 | | | | | | | | | | | | 583,939 | | Shares issued for cash | | | 285,750 | | | | 800,620 | | | | | | | | | | | | 800,620 | | Shares issued for cash | | | 359,300 | | | | 1,006,694 | | | | | | | | | | | | 1,006,694 | | Shares issued for acquisition of mineral interests | | | 100,000 | | | | 220,038 | | | | | | | | | | | | 220,038 | | Shares issued upon exercise of warrants | | | 81,500 | | | | 44,833 | | | | | | | | | | | | 44,833 | | Shares issued upon exercise of warrants | | | 141,500 | | | | 71,611 | | | | | | | | | | | | 71,611 | | Shares issued upon exercise of warrants | | | 8,000 | | | | 4,988 | | | | | | | | | | | | 4,988 | | Shares issued upon exercise of warrants | | | 73,500 | | | | 48,566 | | | | | | | | | | | | 48,566 | | Shares issued upon exercise of warrants | | | 300,000 | | | | 220,038 | | | | | | | | | | | | 220,038 | | Shares issued upon exercise of warrants | | | 43,500 | | | | 27,120 | | | | | | | | | | | | 27,120 | | Shares issued upon exercise of warrants | | | 36,500 | | | | 22,756 | | | | | | | | | | | | 22,756 | | Shares issued for finder's fee | | | 4,364 | | | | - | | | | | | | | | | | | - | | Net loss | | | | | | | | | | | (1,576,237 | ) | | | | | | | (1,576,237 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1996 | | | 6,748,974 | | | | 5,300,280 | | | | (3,594,935 | ) | | | - | | | | 1,705,345 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 199,820 | | | | 1,494,912 | | | | | | | | | | | | 1,494,912 | | Shares issued for finder's fee | | | 5,962 | | | | - | | | | | | | | | | | | - | | Shares issued upon exercise of options | | | 10,000 | | | | 9,535 | | | | | | | | | | | | 9,535 | | Shares issued upon exercise of options | | | 3,000 | | | | 2,860 | | | | | | | | | | | | 2,860 | | Shares issued upon exercise of options | | | 1,000 | | | | 953 | | | | | | | | | | | | 953 | | Shares issued upon exercise of options | | | 1,000 | | | | 953 | | | | | | | | | | | | 953 | | Shares issued upon exercise of options | | | 7,000 | | | | 12,117 | | | | | | | | | | | | 12,117 | | Shares issued upon exercise of options | | | 500 | | | | 477 | | | | | | | | | | | | 477 | | Shares issued upon exercise of options | | | 75,900 | | | | 72,371 | | | | | | | | | | | | 72,371 | | Shares issued upon exercise of options | | | 81,000 | | | | 77,233 | | | | | | | | | | | | 77,233 | | Shares issued upon exercise of warrants | | | 27,500 | | | | 17,145 | | | | | | | | | | | | 17,145 | | Shares issued upon exercise of warrants | | | 285,750 | | | | 1,047,932 | | | | | | | | | | | | 1,047,932 | | Shares issued upon exercise of warrants | | | 222,700 | | | | 816,708 | | | | | | | | | | | | 816,708 | | Net loss | | | | | | | | | | | (2,147,983 | ) | | | | | | | (2,147,983 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1997 | | | 7,670,106 | | | | 8,853,476 | | | | (5,742,918 | ) | | | - | | | | 3,110,558 | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash | | | 537,200 | | | | 1,970,075 | | | | | | | | | | | | 1,970,075 | | Shares issued upon exercise of options | | | 1,400 | | | | 1,335 | | | | | | | | | | | | 1,335 | | Shares issued upon exercise of options | | | 1,000 | | | | 953 | | | | | | | | | | | | 953 | | Shares issued upon exercise of options | | | 7,000 | | | | 6,674 | | | | | | | | | | | | 6,674 | | Shares issued upon exercise of options | | | 39,562 | | | | 45,345 | | | | | | | | | | | | 45,345 | | Shares issued upon exercise of options | | | 207,000 | | | | 44,030 | | | | | | | | | | | | 44,030 | | Shares issued for acquisition of mineral interests | | | 11,250 | | | | 71,540 | | | | | | | | | | | | 71,540 | | Shares issued for acquisition of mineral interests | | | 619,000 | | | | 3,123,238 | | | | | | | | | | | | 3,123,238 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (9,379 | ) | | | (9,379 | ) | Net loss | | | | | | | | | | | (8,375,209 | ) | | | | | | | (8,375,209 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 1998 | | | 9,093,518 | | | $ | 14,116,666 | | | $ | (14,118,127 | ) | | $ | (9,379 | ) | | $ | (10,840 | ) |
See accompanying notes to consolidated financial statements. CALAIS RESOURCES INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) AND OTHER COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD FROM DECEMBER 30, 1986 (Inception) TO MAY 31, 20102007 (continued) | | | Common Stock | | | | | | | | | | | | | | | | Common Stock | | | | | | | | | | | | | | | | | Shares | | | | Amount | | | | Accumulated Deficit During the Development Stage | | | | Comprehensive (Loss) Income | | | | Total Stockholders Deficit | | | | Shares | | | | Amount | | | | Accumulated Deficit During the Development Stage | | | | Comprehensive (Loss) Income | | | | Total Stockholders Deficit | | Balance at May 31, 1998 | | | 9,093,518 | | | $ | 14,116,666 | | | $ | (14,118,127 | ) | | $ | (9,379 | ) | | $ | (10,840 | ) | | | 9,093,518 | | | $ | 14,116,666 | | | $ | (14,118,127 | ) | | $ | (9,379 | ) | | $ | (10,840 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares returned to Treasury | | | (22,039 | ) | | | - | | | | | | | | | | | | - | | | | (22,039 | ) | | | - | | | | | | | | | | | | - | | Shares issued for debt settlement @ $1.10 per share | | | 180,125 | | | | 198,172 | | | | | | | | | | | | 198,172 | | | | 180,125 | | | | 198,172 | | | | | | | | | | | | 198,172 | | Shares issued for acquisition of mineral interests @ $4.36 per share | | | 80,364 | | | | 350,716 | | | | | | | | | | | | 350,716 | | | | 80,364 | | | | 350,716 | | | | | | | | | | | | 350,716 | | Shares issued for acquisition of mineral interests @ $6.36 per share | | | 288,750 | | | | 1,836,190 | | | | | | | | | | | | 1,836,190 | | | | 288,750 | | | | 1,836,190 | | | | | | | | | | | | 1,836,190 | | Shares issued for acquisition of mineral interests @ $4.36 per share | | | 10,000 | | | | 43,641 | | | | | | | | | | | | 43,641 | | | | 10,000 | | | | 43,641 | | | | | | | | | | | | 43,641 | | Shares issed upon exercise of options @ $0.98 per share | | | 25,000 | | | | 24,571 | | | | | | | | | | | | 24,571 | | | | 25,000 | | | | 24,571 | | | | | | | | | | | | 24,571 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | - | | | | - | | | | | | | | | | | | | | | | - | | | | - | | Net loss | | | | | | | | | | | (4,986,037 | ) | | | | | | | (4,986,037 | ) | | | | | | | | | | | (4,986,037 | ) | | | | | | | (4,986,037 | ) | Balance at May 31, 1999 | | | 9,655,718 | | | | 16,569,956 | | | | (19,104,164 | ) | | | (9,379 | ) | | | (2,543,587 | ) | | | 9,655,718 | | | | 16,569,956 | | | | (19,104,164 | ) | | | (9,379 | ) | | | (2,543,587 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net loss | | | | | | | | | | | (1,546,541 | ) | | | | | | | (1,546,541 | ) | | | | | | | | | | | (1,546,541 | ) | | | | | | | (1,546,541 | ) | Balance at May 31, 2000 | | | 9,655,718 | | | | 16,569,956 | | | | (20,650,705 | ) | | | (9,379 | ) | | | (4,090,128 | ) | | | 9,655,718 | | | | 16,569,956 | | | | (20,650,705 | ) | | | (9,379 | ) | | | (4,090,128 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued under settlement for services @ $0.33 per share | | | 100,000 | | | | 33,006 | | | | | | | | | | | | 33,006 | | | | 100,000 | | | | 33,006 | | | | | | | | | | | | 33,006 | | Shares issed upon exercise of options @ $0.15 per share | | | 100,000 | | | | 11,002 | | | | | | | | | | | | 11,002 | | | | 100,000 | | | | 11,002 | | | | | | | | | | | | 11,002 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | 172,512 | | | | 172,512 | | | | | | | | | | | | | | | | 172,512 | | | | 172,512 | | Net loss | | | | | | | | | | | (585,235 | ) | | | | | | | (585,235 | ) | | | | | | | | | | | (585,235 | ) | | | | | | | (585,235 | ) | Balance at May 31, 2001 | | | 9,855,718 | | | | 16,613,964 | | | | (21,235,940 | ) | | | 163,133 | | | | (4,458,843 | ) | | | 9,855,718 | | | | 16,613,964 | | | | (21,235,940 | ) | | | 163,133 | | | | (4,458,843 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for debt settlement @ $0.22 per share | | | 250,000 | | | | 55,010 | | | | | | | | | | | | 55,010 | | | | 250,000 | | | | 55,010 | | | | | | | | | | | | 55,010 | | Shares issued under settlement for services @ $.22 per share | | | 471,000 | | | | 103,638 | | | | | | | | | | | | 103,638 | | | | 471,000 | | | | 103,638 | | | | | | | | | | | | 103,638 | | Shares issued for acquisition of mineral interests @ $0.22 per share | | | 100,000 | | | | 22,004 | | | | | | | | | | | | 22,004 | | | | 100,000 | | | | 22,004 | | | | | | | | | | | | 22,004 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (33,641 | ) | | | (33,641 | ) | | | | | | | | | | | | | | | (33,641 | ) | | | (33,641 | ) | Net loss | | | | | | | | | | | (732,152 | ) | | | | | | | (732,152 | ) | | | | | | | | | | | (732,152 | ) | | | | | | | (732,152 | ) | Balance at May 31, 2002 | | | 10,676,718 | | | | 16,794,616 | | | | (21,968,092 | ) | | | 129,492 | | | | (5,043,984 | ) | | | 10,676,718 | | | | 16,794,616 | | | | (21,968,092 | ) | | | 129,492 | | | | (5,043,984 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @ $1.14 per share | | | 62,500 | | | | 57,775 | | | | | | | | | | | | 57,775 | | | | 62,500 | | | | 57,775 | | | | | | | | | | | | 57,775 | | Shares issued for debt settlement @ $0.42 per share | | | 67,500 | | | | 28,458 | | | | | | | | | | | | 28,458 | | | | 67,500 | | | | 28,458 | | | | | | | | | | | | 28,458 | | Shares issued under settlement for services @ $0.40 per share | | | 261,667 | | | | 105,056 | | | | | | | | | | | | 105,056 | | | | 261,667 | | | | 105,056 | | | | | | | | | | | | 105,056 | | Shares issued for acquisition of mineral interests @ $0.60 per share | | | 100,000 | | | | 60,144 | | | | | | | | | | | | 60,144 | | | | 100,000 | | | | 60,144 | | | | | | | | | | | | 60,144 | | Shares issed upon exercise of options @ $0.33 per share | | | 25,000 | | | | 8,251 | | | | | | | | | | | | 8,251 | | | | 25,000 | | | | 8,251 | | | | | | | | | | | | 8,251 | | Warrants issued for services | | | | | | | 150,832 | | | | | | | | | | | | 150,832 | | | | | | | | 150,832 | | | | | | | | | | | | 150,832 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (411,846 | ) | | | (411,846 | ) | | | | | | | | | | | | | | | (411,846 | ) | | | (411,846 | ) | Net loss | | | | | | | | | | | (761,138 | ) | | | | | | | (761,138 | ) | | | | | | | | | | | (761,138 | ) | | | | | | | (761,138 | ) | Balance at May 31, 2003 | | | 11,193,385 | | | $ | 17,205,132 | | | | (22,729,230 | ) | | $ | (282,354 | ) | | $ | (5,806,452 | ) | | | 11,193,385 | | | $ | 17,205,132 | | | $ | (22,729,230 | ) | | $ | (282,354 | ) | | $ | (5,806,452 | ) |
See accompanying notes to consolidated financial statements.
CALAIS RESOURCES INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) AND OTHER COMPREHENSIVE (LOSS) INCOME FOR THE PERIOD FROM DECEMBER 30, 1986 (Inception) TO MAY 31, 20102007 (continued) | | Common Stock | | | | | | | | | | | | Common Stock | | | | | | | | | | | | | Shares | | | Amount | | | Accumulated Deficit During the Development Stage | | | Comprehensive (Loss) Income | | | Total Stockholders Deficit | | | Shares | | | Amount | | | Accumulated Deficit During the Development Stage | | | Comprehensive (Loss) Income | | | Total Stockholders Deficit | | Balance at May 31, 2003 | | | 11,193,385 | | | $ | 17,205,132 | | | | (22,729,230 | ) | | $ | (282,354 | ) | | $ | (5,806,452 | ) | | | 11,193,385 | | | $ | 17,205,132 | | | $ | (22,729,230 | ) | | $ | (282,354 | ) | | $ | (5,806,452 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @ $1.14 per share | | | 80,000 | | | | 91,493 | | | | | | | | | | | | 91,493 | | | | 80,000 | | | | 91,493 | | | | | | | | | | | | 91,493 | | Shares issued for cash @ $0.96 per share | | | 125,000 | | | | 120,618 | | | | | | | | | | | | 120,618 | | | | 125,000 | | | | 120,618 | | | | | | | | | | | | 120,618 | | Shares issued for financing @ $0.56 per share | | | 8,181,818 | | | | 4,606,309 | | | | | | | | | | | | 4,606,309 | | | | 8,181,818 | | | | 4,606,309 | | | | | | | | | | | | 4,606,309 | | Shares issued for services @ $1.67 per share | | | 245,750 | | | | 409,649 | | | | | | | | | | | | 409,649 | | | | 245,750 | | | | 409,649 | | | | | | | | | | | | 409,649 | | Shares issued for acquisition of mineral interests @ $1.80 per share | | | 2,000 | | | | 3,594 | | | | | | | | | | | | 3,594 | | | | 2,000 | | | | 3,594 | | | | | | | | | | | | 3,594 | | Shares issued upon exercise of warrants @ $0.82 per share | | | 62,500 | | | | 51,185 | | | | | | | | | | | | 51,185 | | | | 62,500 | | | | 51,185 | | | | | | | | | | | | 51,185 | | Shares issued upon exercise of options @ $0.33 per share | | | 340,000 | | | | 112,219 | | | | | | | | | | | | 112,219 | | | | 340,000 | | | | 112,219 | | | | | | | | | | | | 112,219 | | Shares issuable for subscriptions received | | | - | | | | 428,963 | | | | | | | | | | | | 428,963 | | | | - | | | | 428,963 | | | | | | | | | | | | 428,963 | | Shares cancelled previously issued for services @ $0.32 per share | | | (87,000 | ) | | | (28,077 | ) | | | | | | | | | | | (28,077 | ) | | | (87,000 | ) | | | (28,077 | ) | | | | | | | | | | | (28,077 | ) | Warrants cancelled previously issued for services | | | | | | | (150,831 | ) | | | | | | | | | | | (150,831 | ) | | | | | | | (150,831 | ) | | | | | | | | | | | (150,831 | ) | Other comprehensive income (loss) | | | | | | | | | | | | | | | (8,111 | ) | | | (8,111 | ) | | | | | | | | | | | | | | | (8,111 | ) | | | (8,111 | ) | Net Loss | | | | | | | | | | | (4,723,421 | ) | | | | | | | (4,723,421 | ) | | | | | | | | | | | (4,723,421 | ) | | | | | | | (4,723,421 | ) | Balance at May 31, 2004 | | | 20,143,453 | | | | 22,850,254 | | | | (27,452,651 | ) | | | (290,465 | ) | | | (4,892,862 | ) | | | 20,143,453 | | | | 22,850,254 | | | | (27,452,651 | ) | | | (290,465 | ) | | | (4,892,862 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Conversion of subscriptions received in prior periods to note payable | | | - | | | | (440,000 | ) | | | | | | | | | | | (440,000 | ) | | | - | | | | (440,000 | ) | | | | | | | | | | | (440,000 | ) | Cancellation of shares | | | (228,751 | ) | | | - | | | | | | | | | | | | - | | | | (228,751 | ) | | | - | | | | | | | | | | | | - | | Shares issued for cash @ $0.25 per share | | | 100,000 | | | | 25,000 | | | | | | | | | | | | 25,000 | | | | 100,000 | | | | 25,000 | | | | | | | | | | | | 25,000 | | Shares issued for cash @ $0.20 per share | | | 1,100,000 | | | | 220,000 | | | | | | | | | | | | 220,000 | | | | 1,100,000 | | | | 220,000 | | | | | | | | | | | | 220,000 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (314,290 | ) | | | (314,290 | ) | | | | | | | | | | | | | | | (314,290 | ) | | | (314,290 | ) | Net loss | | | | | | | | | | | (4,365,149 | ) | | | | | | | (4,365,149 | ) | | | | | | | | | | | (4,365,149 | ) | | | | | | | (4,365,149 | ) | Balance at May 31, 2005 | | | 21,114,702 | | | | 22,655,254 | | | | (31,817,800 | ) | | | (604,755 | ) | | | (9,767,301 | ) | | | 21,114,702 | | | | 22,655,254 | | | | (31,817,800 | ) | | | (604,755 | ) | | | (9,767,301 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @ $0.20 per share. | | | 750,000 | | | | 150,000 | | | | | | | | | | | | 150,000 | | | | 750,000 | | | | 150,000 | | | | | | | | | | | | 150,000 | | Shares issued for cash @ $0.20 per share | | | 1,500,000 | | | | 300,000 | | | | | | | | | | | | 300,000 | | | | 1,500,000 | | | | 300,000 | | | | | | | | | | | | 300,000 | | Shares issued for cash @ $0.20 per share | | | 875,000 | | | | 175,000 | | | | | | | | | | | | 175,000 | | | | 875,000 | | | | 175,000 | | | | | | | | | | | | 175,000 | | Shares issued for services @ $0.48 per share | | | 93,649 | | | | 44,951 | | | | | | | | | | | | 44,951 | | | | 93,649 | | | | 44,951 | | | | | | | | | | | | 44,951 | | Warrants issued | | | | | | | 105,890 | | | | | | | | | | | | 105,890 | | | | | | | | 105,890 | | | | | | | | | | | | 105,890 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (564,707 | ) | | | (564,707 | ) | | | | | | | | | | | | | | | (564,707 | ) | | | (564,707 | ) | Net loss | | | | | | | | | | | (2,761,205 | ) | | | | | | | (2,761,205 | ) | | | | | | | | | | | (2,761,205 | ) | | | | | | | (2,761,205 | ) | Balance at May 31, 2006 | | | 24,333,351 | | | | 23,431,095 | | | | (34,579,005 | ) | | | (1,169,462 | ) | | | (12,317,372 | ) | | | 24,333,351 | | | | 23,431,095 | | | | (34,579,005 | ) | | | (1,169,462 | ) | | | (12,317,372 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @$ 0.20 per share | | | 250,000 | | | | 50,000 | | | | | | | | | | | | 50,000 | | | | 250,000 | | | | 50,000 | | | | | | | | | | | | 50,000 | | Shares issued in conjunction with purchase of mortgage | | | 3,782,955 | | | | 556,590 | | | | | | | | | | | | 556,590 | | | | 3,782,955 | | | | 556,590 | | | | | | | | | | | | 556,590 | | Shares issued in connection with investor relations @ $0.27 per share | | | 23,750 | | | | 6,413 | | | | | | | | | | | | 6,413 | | | | 23,750 | | | | 6,413 | | | | | | | | | | | | 6,413 | | Shares issued in connection with trust deed modification @ $0.18 per share | | | 500,000 | | | | 90,000 | | | | | | | | | | | | 90,000 | | | | 500,000 | | | | 90,000 | | | | | | | | | | | | 90,000 | | Shares issued in connection with settlement agreement @ $0.18 per share | | | 55,000 | | | | 9,900 | | | | | | | | | | | | 9,900 | | | | 55,000 | | | | 9,900 | | | | | | | | | | | | 9,900 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (123,182 | ) | | | (123,182 | ) | | | | | | | | | | | | | | | (123,182 | ) | | | (123,182 | ) | Net loss | | | | | | | | | | | (2,255,523 | ) | | | | | | | (2,255,523 | ) | | | | | | | | | | | (2,255,523 | ) | | | | | | | (2,255,523 | ) | Balance at May 31, 2007 | | | 28,945,056 | | | $ | 24,143,998 | | | | (36,834,528 | ) | | $ | (1,292,644 | ) | | | (13,983,174 | ) | | | 28,945,056 | | | $ | 24,143,998 | | | $ | (36,834,528 | ) | | $ | (1,292,644 | ) | | $ | (13,983,174 | ) |
See accompanying notes to consolidated financial statements.
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(DEFICIT) AND OTHER COMPREHENSIVE (LOSS) INCOME
FOR THE PERIOD FROM DECEMBER 30, 1986 (Inception) TO MAY 31, 2009 (continued)
| | Common Stock | | | | | | | | | | | | | Shares | | | Amount | | | Accumulated Deficit During the Development Stage | | | Comprehensive (Loss) Income | | | Total Stockholders Deficit | | Balance at May 31, 2007 | | | 28,945,056 | | | $ | 24,143,998 | | | $ | (36,834,528 | ) | | $ | (1,292,644 | ) | | $ | (13,983,174 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @ $.08 per share | | | 7,775,000 | | | | 622,000 | | | | | | | | | | | | 622,000 | | Shares issued for cash @ $.08 per share | | | 1,950,000 | | | | 156,000 | | | | | | | | | | | | 156,000 | | Shares issued for note receivable @ $0.12 per share | | | 750,000 | | | | 90,000 | | | | | | | | | | | | 90,000 | | Shares issued for cash @$.08 per share | | | 2,211,250 | | | | 176,900 | | | | | | | | | | | | 176,900 | | Shares issued for cash @$.08 per share | | | 2,550,000 | | | | 204,000 | | | | | | | | | | | | 204,000 | | Shares issued for cash @$.08 per share | | | 1,250,000 | | | | 100,000 | | | | | | | | | | | | 100,000 | | Shares issued for note payable restructure @ $ 0.13 per share | | | 1,185,496 | | | | 154,114 | | | | | | | | | | | | 154,114 | | Shares issued for mineral interest and royalties | | | 250,000 | | | | 32,500 | | | | | | | | | | | | 32,500 | | Warrants issued in connection with debt modification | | | | | | | 93,089 | | | | | | | | | | | | 93,089 | | Warrants issued in connection with debt modifciation | | | | | | | 153,754 | | | | | | | | | | | | 153,754 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (386,779 | ) | | | (386,779 | ) | Net loss | | | | | | | | | | | (2,906,085 | ) | | | | | | | (2,906,085 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 2008 | | | 46,866,802 | | | | 25,926,355 | | | | (39,740,613 | ) | | | (1,679,423 | ) | | | (15,493,681 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued for cash @ $.08 per share | | | 1,062,500 | | | | 85,000 | | | | | | | | | | | | 85,000 | | Shares issued for cash @ $.08 per share | | | 1,562,500 | | | | 125,000 | | | | | | | | | | | | 125,000 | | Shares issued for note payable restructure @ $ 0.15 per share | | | 1,021,000 | | | | 153,233 | | | | | | | | | | | | 153,233 | | Shares issued for cash @ $ 0.08 per share | | | 480,000 | | | | 38,400 | | | | | | | | | | | | 38,400 | | Warrants issued in connection with debt modification | | | | | | | 150,939 | | | | | | | | | | | | 150,939 | | Warrants issued in connection with debt modification | | | | | | | 62,490 | | | | | | | | | | | | 62,490 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | 465,858 | | | | 465,858 | | Net loss | | | | | | | | | | | (2,915,706 | ) | | | | | | | (2,915,706 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 2009 | | | 50,992,802 | | | | 26,541,417 | | | | (42,656,319 | ) | | | (1,213,565 | ) | | | (17,328,467 | ) | | | | | | | | | | | | | | | | | | | | | | Shares issued to Directors @ $ 0.09 per share | | | 4,000,000 | | | | 360,000 | | | | | | | | | | | | 360,000 | | Shares issued for settlement of debt @ $0.17 per share | | | 511,000 | | | | 86,870 | | | | | | | | | | | | 86,870 | | Shares issued for note payable restructure @ $ 0.14 per share | | | 1,249,900 | | | | 174,985 | | | | | | | | | | | | 174,985 | | Shares issued for cash @ $.05 per share | | | 1,200,000 | | | | 60,000 | | | | | | | | | | | | 60,000 | | Shares issued in connnection with settlement agreement @ $0.17 per share | | | 5,067,650 | | | | 861,500 | | | | | | | | | | | | 861,500 | | Shares issued for services @ $0.17 per share | | | 1,000,000 | | | | 170,000 | | | | | | | | | | | | 170,000 | | Shares issued for payment of note @ $ 0.09 per share | | | 10,306,790 | | | | 927,611 | | | | | | | | | | | | 927,611 | | Shares issued for cash @ $.05 per share | | | 250,000 | | | | 12,500 | | | | | | | | | | | | 12,500 | | Shares issued for cash @ $.05 per share | | | 100,000 | | | | 5,000 | | | | | | | | | | | | 5,000 | | Shares issued for cash @ $.0625 per share | | | 1,600,000 | | | | 100,000 | | | | | | | | | | | | 100,000 | | Other comprehensive income (loss) | | | | | | | | | | | | | | | (164,737 | ) | | | (164,737 | ) | Net loss | | | | | | | | | | | (3,125,149 | ) | | | | | | | (3,125,149 | ) | | | | | | | | | | | | | | | | | | | | | | Balance at May 31, 2010 | | | 76,278,142 | | | $ | 29,299,883 | | | $ | (45,781,468 | ) | | $ | (1,378,302 | ) | | $ | (17,859,887 | ) |
See accompanying notes to consolidated financial statements.
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | For the Years Ended May 31, | | | December 30, 1968 (Inception) through | | | | 2010 | | | 2009 | | | May 31, 2010 | | Cash flows from operating activities: | | | | | | | | | | Net loss | | $ | (3,125,149 | ) | | $ | (2,915,706 | ) | | $ | (45,781,468 | ) | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | Accretion expense | | | - | | | | - | | | | 105,655 | | Amortization of deferred financing costs | | | - | | | | - | | | | 3,369,936 | | Depreciation and depletion | | | - | | | | - | | | | 200,736 | | Non-cash interest expense | | | 854,517 | | | | 1,149,673 | | | | 11,019,230 | | Loss on impairment of mineral properties | | | - | | | | 495,573 | | | | 8,824,989 | | Loss on impairment of investment | | | - | | | | - | | | | 983,583 | | Common shares issued in connection with trust deed modification | | | - | | | | - | | | | 90,000 | | Common shares issued in connection with debt settlement | | | 1,102,597 | | | | - | | | | 1,048,053 | | Common shares issued for services | | | 170,000 | | | | - | | | | 771,349 | | Warrants cancelled for services | | | - | | | | - | | | | (18,173 | ) | Warrants issued in connection with debt restructure | | | - | | | | - | | | | 155,007 | | Losses (gains) recognized in connection with debt settlement | | | (313,549 | ) | | | (5,184 | ) | | | (171,061 | ) | Gain on sale of property, plant and equipment | | | - | | | | - | | | | 4,873 | | Loss on disposal of property, plant and equipment | | | - | | | | - | | | | 8,040,143 | | Loss on abandonment of mineral properties | | | - | | | | - | | | | 300,600 | | Loss on default of exploration development agreement | | | 456,090 | | | | - | | | | 456,090 | | Loss on foreign exchange | | | - | | | | - | | | | 318,770 | | Environmental remediation liability | | | - | | | | - | | | | 50,000 | | Changes in operating assets and liabilities: | | | - | | | | - | | | | - | | (Increase) decrease in prepaid expenses | | | (2,625 | ) | | | 37,068 | | | | (58,350 | ) | Increase (decrease) in accounts payable and other current liabilities | | | 813,931 | | | | 667,506 | | | | 2,811,310 | | (Increase) decrease in other operating assets and liabilities | | | (307,225 | ) | | | 147,762 | | | | (154,938 | ) | | | | | | | | | | | | | | Net cash used in operating activities | | $ | (351,413 | ) | | $ | (423,308 | ) | | $ | (7,633,666 | ) | | | | | | | | | | | | | | Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of mineral properties & equipment | | | - | | | | - | | | | (17,481,692 | ) | Dispositions of equipment | | | - | | | | - | | | | 161,352 | | Net additions to equipment | | | - | | | | - | | | | (167,929 | ) | Deferred exploration expenditures | | | - | | | | - | | | | (143,071 | ) | Deposit on equipment | | | - | | | | - | | | | (17,880 | ) | Acquisition of shares of subsidiary | | | - | | | | - | | | | (715,932 | ) | Advance to subsidiary | | | - | | | | - | | | | (177,875 | ) | Payable under option agreement | | | - | | | | - | | | | 716,481 | | Refundable deposit on purchase of shares of subsidiary | | | - | | | | - | | | | (73,847 | ) | Net cash provided by (used in) investing activities | | | - | | | | - | | | $ | (17,900,393 | ) |
See accompanying notes to consolidated financial statements
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENTS OF CASH FLOWS | | For the Years Ended May 31, | | | December 30, 1986 (Inception) through | | | | 2007 | | | 2006 | | | 2005 | | | May 31, 2007 | | Cash flows from operating activities: | | | | | | | | | | | | | Net loss | | $ | (2,255,523 | ) | | $ | (2,761,205 | ) | | $ | (4,365,149 | ) | | | (36,834,528 | ) | Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | | | | | Accretion expense | | | - | | | | - | | | | - | | | | 105,655 | | Amortization of deferred financing costs | | | - | | | | - | | | | - | | | | 3,369,936 | | Depreciation and depletion | | | - | | | | - | | | | 20,241 | | | | 200,736 | | Non-cash interest expense | | | 986,649 | | | | 1,729,050 | | | | 3,106,462 | | | | 8,328,035 | | Loss on impairment of mineral properties | | | - | | | | - | | | | - | | | | 8,329,416 | | Loss on impairment of investment | | | - | | | | - | | | | - | | | | 983,583 | | Common shares issued in connection with trust deed modification | | | 90,000 | | | | - | | | | - | | | | 90,000 | | Common shares issued for services | | | 6,413 | | | | 44,951 | | | | - | | | | 556,300 | | Warrants cancelled for services | | | - | | | | - | | | | - | | | | (18,173 | ) | Warrants issued in connection with debt restructure | | | - | | | | - | | | | - | | | | 155,007 | | Losses (gains) recognized in connection with debt settlement | | | - | | | | - | | | | (54,544 | ) | | | 63,128 | | Gain on sale of property, plant and equipment | | | - | | | | - | | | | - | | | | 4,873 | | Loss on disposal of property, plant and equipment | | | - | | | | - | | | | - | | | | 7,946,844 | | Loss on abandonment of mineral properties | | | - | | | | - | | | | - | | | | 300,600 | | Loss on foreign exchange | | | - | | | | - | | | | - | | | | 318,770 | | Environmental remediation liability | | | - | | | | - | | | | 50,000 | | | | 50,000 | | Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | | (Increase) decrease in prepaid expenses | | | (10,253 | ) | | | (13,945 | ) | | | (15,400 | ) | | | (68,462 | ) | Increase (decrease) in accounts payable and other current liabilities | | | 200,925 | | | | 245,292 | | | | 113,881 | | | | 1,062,093 | | (Increase) decrease in other operating assets and liabilities | | | 136,507 | | | | (6,576 | ) | | | 102,117 | | | | (54,384 | ) | Net cash (used in) operating activities | | | (845,282 | ) | | | (762,433 | ) | | | (1,042,392 | ) | | | (5,110,571 | ) | | | | | | | | | | | | | | | | | | Cash flows from investing activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of mineral properties & equipment | | | (33,117 | ) | | | (21,467 | ) | | | (968 | ) | | | (17,190,703 | ) | Dispositions of equipment | | | - | | | | 26,500 | | | | 130,000 | | | | 161,352 | | Net additions to equipment | | | - | | | | - | | | | - | | | | (167,929 | ) | Deferred exploration expenditures | | | - | | | | - | | | | - | | | | (143,071 | ) | Deposit on equipment | | | - | | | | - | | | | - | | | | (17,880 | ) | Acquisition of shares of subsidiary | | | - | | | | - | | | | - | | | | (715,932 | ) | Advance to subsidiary | | | - | | | | - | | | | - | | | | (177,875 | ) | Payable under option agreement | | | - | | | | - | | | | - | | | | 716,481 | | Refundable deposit on purchase of shares of subsidiary | | | - | | | | - | | | | - | | | | (73,847 | ) | Net cash provided by (used in) investing activities | | | (33,117 | ) | | | 5,033 | | | | 129,032 | | | | (17,609,404 | ) |
See accompanying notes to consolidated financial statements | | For the Years Ended May 31, | | | December 30, 1986 (Inception) through | | | | 2010 | | | 2009 | | | May 31, 2010 | | Cash flows from financing activities: | | | | | | | | | | Proceeds from sale of common shares | | | 177,500 | | | | 248,400 | | | | 18,712,579 | | Proceeds from sale of private equity | | | - | | | | - | | | | 345,000 | | Proceeds from borrowings long term-debt | | | 10,253,878 | | | | - | | | | 17,029,960 | | Proceeds from borrowing on shareholder note | | | - | | | | 282,000 | | | | 282,000 | | Repayments of long term debt | | | (9,992,046 | ) | | | (3,147 | ) | | | (11,902,794 | ) | Repayments of debt - convertible debentures | | | (60,000 | ) | | | (119,500 | ) | | | (220,926 | ) | Advances to affiliated companies, shareholders and directors | | | - | | | | - | | | | (106,730 | ) | Restricted cash | | | - | | | | - | | | | (31,789 | ) | Share subscriptions received in advance | | | - | | | | - | | | | 518,415 | | Net cash provided by financing activities | | $ | 379,332 | | | $ | 407,753 | | | $ | 24,625,715 | | | | | | | | | | | | | | | Effect of foreign exchange | | | - | | | | - | | | | 936,263 | | | | | | | | | | | | | | | Net change in cash and cash equivalents | | | 27,919 | | | | (15,555 | ) | | | 27,919 | | Cash at beginning of period | | | - | | | | 15,555 | | | | - | | Cash at end of period | | $ | 27,919 | | | $ | - | | | $ | 27,919 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental Cash Flow Information | | | | | | | | | | | | | Interest expense paid in cash | | $ | - | | | $ | 201,365 | | | $ | 1,188,233 | | Interest received | | $ | - | | | $ | - | | | $ | 3,999 | | Debt restructuring - warrants issued | | $ | - | | | $ | 213,788 | | | $ | 412,407 | | Common shares issued in connection with accrued liabilities | | $ | 360,000 | | | $ | - | | | $ | 360,000 | | Common shares issuable for debt restructuring | | $ | - | | | $ | - | | | $ | 556,321 | | Common shares issuable for settlement | | $ | - | | | $ | - | | | $ | 93,847 | | Common shares issued for debt restructuring and settlements | | $ | 948,370 | | | $ | 153,233 | | | $ | 1,255,717 | | Common shares issued for acquisition of property | | $ | - | | | $ | - | | | $ | 32,500 | | Shares issued for mineral property development | | $ | - | | | $ | - | | | $ | 96,315 | | Shares issued for repayment of shareholder advances | | $ | - | | | $ | - | | | $ | 9,240,146 | |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) CONSOLIDATED STATEMENTS OF CASH FLOWS | | | For the Years Ended May 31, | | | December 30, 1986 (Inception) through | | | | | 2007 | | | | 2006 | | | | 2005 | | | May 31, 2007 | | | | | | | | | | | | | | | | | | | Cash flows from financing activities: | | | | | | | | | | | | | | | | | Proceeds from sale of common shares | | $ | 50,000 | | | $ | 625,000 | | | $ | 245,000 | | | | 17,027,779 | | Proceeds from sale of private equity | | | - | | | | 345,000 | | | | - | | | | 345,000 | | Proceeds from borrowings on long term-debt | | | 1,020,500 | | �� | | - | | | | 241,000 | | | | 6,183,509 | | Proceeds from borrowings on shareholder note | | | - | | | | 23 | | | | 4,650 | | | | 4,673 | | Repayments of long term debt | | | (243,431 | ) | | | (137,045 | ) | | | (21,353 | ) | | | (2,115,719 | ) | Repayments of debt - convertible debentures | | | (25,000 | ) | | | - | | | | - | | | | (41,426 | ) | Advances to affiliated companies, shareholders and directors | | | - | | | | - | | | | - | | | | (106,730 | ) | Restricted cash | | | - | | | | - | | | | - | | | | (31,789 | ) | Share subscriptions received in advance | | | - | | | | - | | | | - | | | | 518,415 | | Net cash provided by financing activities | | | 802,069 | | | | 832,978 | | | | 469,297 | | | | 21,783,712 | | | | | | | | | | | | | | | | | | | Effect of foreign exchange | | | - | | | | - | | | | - | | | | 936,263 | | | | | | | | | | | | | | | | | | | Net change in cash and cash equivalents | | | (76,330 | ) | | | 75,578 | | | | (444,063 | ) | | | - | | Cash at beginning of period | | | 76,330 | | | | 752 | | | | 444,815 | | | | - | | Cash at end of period | | $ | - | | | $ | 76,330 | | | $ | 752 | | | $ | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental Cash Flow Information | | | | | | | | | | | | | | | | | Interest expense paid in cash | | $ | 28,367 | | | $ | 80,339 | | | $ | 7,588 | | | $ | 428,394 | | Interest received | | $ | - | | | $ | - | | | $ | - | | | $ | 3,999 | | Debt restructuring - warrants issued | | $ | - | | | $ | 105,890 | | | $ | - | | | $ | 105,890 | | Common shares issued in connection with debt restructuring and settlement of accrued liabilities | | $ | 566,221 | | | $ | 55,651 | | | $ | - | | | $ | 650,168 | | Shares issued for mineral property development | | $ | - | | | $ | - | | | $ | - | | | $ | 96,315 | | Shares issued for repayment of shareholder advances | | $ | - | | | $ | - | | | $ | - | | | $ | 9,240,146 | |
See accompanying notes to consolidated financial statements CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20092005
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION Calais Resources, Inc. was incorporated under the laws of the Province of British Columbia, Canada, on December 30, 1986. Calais Resources, Inc. and its subsidiaries (collectively with its subsidiaries, referred to herein as “Calais”, “we”, “us” or “our”) is currently in the process of exploring various mineral interests, primarily gold and silver. We are headquartered in Colorado, and have mining interests principally in Colorado and Nevada. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves, impairment of fixed assets, valuation allowances for deferred tax assets and the fair value of financial instruments. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions. We haveThrough May 9, 2011 we had not filed financial statements with the Securities and Exchange Commission (“SEC”) since our Form 10-QSB for the quarter ended August 31, 2004. Subsequent to our filing the consolidated financial statements contained hereinon May 9, 2011 we intendcontinue to complete and file with the SEC our financial statements for all periods, including November 30, 2004 through May 31, 2009.so as to bring the Company current with respect to its reporting requirements.
Our activities to date have primarily consisted of raising capital and acquiring and exploring our mining interests. We have had no significant revenue in our history. Accordingly, we are considered to be in the exploration stage. Our fiscal year end is May 31st. Through May 31, 2004, we reported our financial information using Canadian Generally Accepted Accounting Principles (“Canadian GAAP”) using the Canadian dollar as our functional and reporting currency. During the fiscal year ended May 31, 2005, we changed our reporting basis to “U.S. GAAP” and our functional and reporting currency to the United States dollar (“U.S. dollar”). This change was made for several reasons, including the following: (1) substantially all of our assets and employees are now located in the United States; (2) substantially all of our labor, materials and other costs are now denominated in the U.S. dollar; and (3) our recent financing transactions, including both lending activities and cash infusions in exchange for equity, have been denominated in the U.S. dollar and have involved parties and investors located in the United States. Accordingly, historical financial information included in this Annual Report on Form 10-K has been restated using U.S. GAAP with a functional and reporting currency of the U.S. dollar, unless otherwise noted. All references herein to “$” and “US$” refer to U.S. Dollars,dollars, unless otherwise indicated. Unless otherwise specified, all dollar amounts are expressed in United StatesU.S. dollars. All references to Common Shares refer to shares of our common stock (without par value) unless otherwise indicated. NOTE 2 - LIQUIDITY These financial statements have been prepared on a going concern basis. To date, we have not generated any revenues from operations and have incurred losses since inception, resulting in a deficit accumulated during the development stage of $45,781,468,$36,834,528, as of May 31, 2010.2007. Further losses are anticipated as we continue to be in the exploration stage. Our ability to continue operations depends upon our ability to generate profitable operations in the future and/or to raise additional funds through equity or debt financing. Since inception through May 31, 2007, we have raised $19,575,994$17,891,194 through the sale of equity securities and $17,311,960$6,188,182 through the issuance of debt instruments which has been used primarily to provide operating funds, repay long term debt acquire mineral interests and property and equipment. Subsequent to May 31, 2010,2007, we have acquired an additional $2,394,900$5,279,700 in financing (Note 13). There is no assurance that we will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to us or at all. If we cannot obtain needed funds for implementing our mine plan after completion of the feasibility study, we may be forced to curtail or cease our activities. Equity financing, if available, may result in substantial dilution to existing stockholders. All of these factors cause substantial doubt CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20092005 activities. Equity financing, if available, may result in substantial dilution to existing stockholders. All of these factors cause substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue as a going concern. NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain prior period amounts have been reclassified in the consolidated financial statements to conform to the current period presentation. Foreign Currency For all periods prior to May 31, 2004, our functional and reporting currency was the Canadian dollar. We determined during the fiscal year ended May 31, 2005 that our functional currency was the U.S. dollar (Note 1). We translated financial statements prior to May 31, 2005 into U.S. dollars by translating all assets and liabilities at the exchange rate in effect at the balance sheet date. Transactions involving equity were translated at the exchange rate in effect on or about the date of each transaction. Income and expenses were translated using an average exchange rate for the period. Adjustments resulting from translation of foreign currency financial statements were reported as Other Comprehensive Income. Cash Equivalents We consider all highly liquid debt securities purchased with an original maturity of three months or less to be cash equivalents. Mineral Interests We expense general prospecting costs and the costs of acquiring and exploring unevaluated mineral interests. We capitalize land. When a mineral interest is determined to have proven and probable reserves, subsequent exploration costs are capitalized to mineral interests. For acquired mineral interests withwe capitalize land and when the acquisition includes proven and probable reserves, we capitalize other acquisition costs and subsequent development costs. When mineral interests are developed and operations commence, capitalized costs will be charged to operations using the units-of-production method over proven and probable reserves. Upon abandonment or sale of a mineral interest, all capitalized costs relating to the specific property will be written off in the period abandoned or sold and a gain or loss is recognized. To date, we have not yet commenced our primary operations. Notes Receivable
We have recorded notes receivable as of May 31, 2010 and 2009 it is our policy to review the notes for collectability on a periodic basis or when there has been a significant change in circumstances that might impact the collectability of the notes. As of May 31, 2010 and 2009 we have not recorded any allowance for notes receivable and we believe these amounts to be fully collectible.
Impairment of Long-Lived Assets We review and evaluate long-lived assets for impairment at least once per year, or more often when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. During the fiscal year ended May 31, 2010 we did not record any impairment expense. During the fiscal year ended May 31, 2009, we experienced financial difficulties due to the global economic downturn. During this downturn, the price of gold declined and the U.S. credit markets tightened, significantly lessening the availability of business
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
financing. We continued to produce net operating losses and negative cash flow during this time, ending the 2009 fiscal year with a net negative cash balance. Accordingly, we performed an impairment analysis and, as a result of that analysis, recognized an impairment of approximately $0.5 million, constituting all of our mineral interests at the time, in recognition of the fact that future cash flows were not likely given then-current facts and circumstances.
Asset Retirement and Environmental Obligations We are subject to certain environmental and regulatory obligations which will require us to restore our mine properties after mining has been completed or, in the case of environmental remediation obligations, at the request of local, state, or federal environmental authorities. The fair value of a liability for an asset retirement obligation is recognized as a liability in the period in which it is incurred if a reasonable estimate of fair value can be made, with an offsetting increase in the carrying value of the asset. The asset retirement obligation is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 The fair value of the asset retirement obligation is measured using expected future cash flow discounted at our credit-adjusted, risk-free interest rate. During the fiscal years ended May 31, 2010 and 2009, we did not recognize an asset retirement obligation related to our properties as we have not engaged in any activities which would have disturbed the initial state of the property. We have recorded an environmental remediation obligation which provides for the recognition, disclosure and subsequent measurement of liabilities related to pollution arising from some past act, corrective-action provisions of the Resource Conservation and Recovery Act, or analogous state and non-U.S. laws and regulations. During the fiscal year ended May 31, 2005 we recorded an environmental remediation obligation of $50,000 (Note 5). Royalty Interest
We have recorded liabilities relatedbelieve this amount to our purchase of perpetual independent royalty interests in our Caribou property as royalty interests (Note 4). These amounts are payable at any time no later than twenty years from the initial purchase date April, 12, 2008.be adequate for subsequent fiscal periods and continue to monitor this accordingly. Fair Value The carrying amounts reported for cash, prepaid assets, accounts payable and all accrued liabilities approximate fair value because of the immediate of short-term maturity of these financial instruments. Fair values of assets and liabilities measured on a recurring basis as of May 31, 20102007, 2006, and 2005 included notes receivable, convertible debentures, notes payable, common stock issuable and long-term debt. The reported amounts approximated fair value as of the balance sheet date. Comprehensive Income (Loss) Our comprehensive loss consists of net gains and losses on foreign currency translation adjustments, primarily related to our Canadian-dollar-based convertible debentures. Comprehensive income (loss) is presented in the accompanying consolidated statements of changes in shareholders’ equity (deficit). Concentration of Credit Risk Financial instruments which potentially subject us to concentrations of credit risk consist of cash deposits with financial institutions. We periodically evaluate the creditworthiness of financial institutions and maintain cash accounts only with major financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. On occasion, we may have cash in banks in excess of federally insured amounts. Management believes that credit risk associated with cash is remote. CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
Incomes Taxes Deferred income taxes are recognized using the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. We have not fully evaluated the existence of uncertain tax positions relating to unfiled federal income tax returns. Net Loss Per Common Share Basic loss per share is computed by dividing income available to common stockholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings. All of the common shares underlying stock options and warrants outstanding as of May 31, 20102007, 2006 and 20092005 were excluded from diluted weighted average shares outstanding for each of the respective years because their effects were considered anti-dilutive. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 Restricted Cash Restricted cash consists of certificates of deposit and underlying letters of credit for state and local bonds related to our mineral properties. Share-Based Compensation For all reporting periods prior to the fiscal year ended May 31, 2004, we accounted for stock-based compensation pursuant to Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) and related interpretations. As such, compensation expense under fixed plans was recorded only if the market value of the underlying stock at the date of granting exceeded the exercise price. If the exercise price of a fixed option award was changed, the award was accounted for as a variable award from the date of modification to the final measurement date upon which the award was exercised, forfeited, or expired unexercised. Compensation cost was adjusted in subsequent periods up to the measurement date for changes in the quoted market price. In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123R (“FAS 123R”), which was a revision of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“FAS 123”). These standards were subsequently codified under ASC Topic 718, Share Based Compensation. The standards required all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. The provisions of these accounting rules were effective for all registrants as of the first fiscal year beginning after June 15, 2005; however, we adopted these standards effective for all reporting periods subsequent to June 1, 2004. New Accounting Standards Accounting standards-setting organizations frequently issue new or revised accounting rules. We have reviewed all new pronouncements that have been issued since the filing of our Form 10-K for the year ended May 31, 2004 to determine their impact, if any, on our financial statements. Effective July 1, 2009, the FASB Accounting Standards Codification (“ASC”) Topic 105, Generally Accepted Accounting Principles, became the single source for authoritative non-governmental U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
GAAP for SEC registrants. The ASC does not change U.S. GAAP but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. We do not have any assets or liabilities classified as Level 3. We have adopted the Level 1 and Level 2 amendments accordingly. As the update only pertained to disclosures, it had no impact on our financial position, results of operations, or cash flows upon adoption. In February 2010, the FASB issued ASU 2010-09, Subsequent Events, Amendment to Certain Recognition and Disclosure Requirements, to remove the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. This change removes potential conflicts with current SEC guidance and clarifies the intended scope of the reissuance disclosure provisions. The update was effective upon its date of issuance, February 24, 2010, and we adopted the amendment accordingly. As the update only pertained to disclosures, it had no impact on our financial position, results of operations, or cash flows upon adoption. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 On August 2, 2010, the FASB issued ASU 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules—Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of “Financial Reporting Policies” (“ASU 2010-21”). The ASU reflects changes made by the SEC in Final Rulemaking Release No. 33-9026, which was issued in April 2009 and amended SEC requirements in Regulation S-X (17 CFR 210.1-01 et seq.) and Regulation S-K ( 17 CFR 229.10 et seq.) and made changes to financial reporting requirements in response to the FASB's issuance of SFAS No. 141(R), Business Combinations (“ASC 805”), and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ( “ASC 810”). The provisions of ASU 2010-21 did not have a material impact on the financial statements. NOTE 4 – MINERAL INTERESTS As of May 31, 20102007, 2006 and 20092005, respectively, our mineral properties are carried at $313,073, $279,956 and $nil. We review and evaluate long-lived assets for impairment at least on an annual basis or when there has been a significant change in circumstance. The analyses performed during the periods presented resulted in theno recognition of impairment expense of $nil and $495,573 during the fiscal years ended May 31, 20102007, 2006 and 2009 respectively.2005. Since our inception we have recorded impairment expense of $9,808,572.$9,312,999. Title to mining interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history characteristics of many mining interests. We have investigated title to all of its mineral interests and, to the best of our knowledge, title to all of our interests are in good standing as described below. (a) Colorado
Calais owns or controls 137129 patented claims (consolidated separate interests in the same claim as a single claim) and 105 unpatented mineral claims in a 3.5 square mile area, which comprise the Consolidated Caribou District. In general, these claims can be classified as:
· | The Calais Patented Claims, which comprise the Caribou and Cross Projects. These claims include most of the currently disturbed and proposed development property at the Cross Mine (which is an underground mine). Calais owns the mineral rights to all these claims; and |
· | The Caribou Property (Upper) Claims represent the majority of the Consolidated Caribou District land holdings. Aardvark Agencies, Inc. (“AAI”) is the “nominee owner” of a portion of the claims, which comprise the |
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
| Caribou Property. As “nominee owner”, AAI holds record title to the parcel, however Calais retains the right to occupy, explore, mine, develop, build, and/or re-acquire the property. AAI is controlled by Marlowe Harvey, a former officer, director and significant shareholder of the Company. Following a series of transactions between AAI, Mr. Harvey, Calais, and Mr. Hendricks, which resulted in litigation brought by Mr. Hendricks against Mr. Harvey, AAI, Mr. Hendricks and Calais entered into a mutual release and settlement agreement effective July 18, 2000. This agreement, which was modified in 2004, provides that we have the right to reacquire the claims held by AAI for a debenture (which we have already paid to AAI) and for a payment from Calais to AAI of “a cash amount equal to pay the capital gains triggered by the transfer” to Calais (which his ultimately deducted from the debenture). In March 2004, Mr. Harvey and his affiliates entered into a settlement agreement with Calais which, among other things, included a more precise definition of Calais’ right (which expires August 31, 2011)2011, but can be extended for an additional ten years if AAI’s right to convert the debenture is extended as well) to repurchase the interest of AAI in the Caribou prospect, including the payment of approximately $750,000 for the reacquisition, and AAI’s right to convert that debenture before it is paid. That agreement, also defined Calais’ right to borrow against, enter in and upon the mineral interests in the Caribou prospect owned by AAI, construct buildings and mines on those prospects, and remove and sell minerals from Caribou for Calais’ own account. |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 The majority of the mineral interests acquired in 1998 from Hendricks Mining Co. (“HMC”), or acquired prior to April 2003, are subject to net smelter return royalties of 2.0% in favor of the former shareholders of HMC. The royalty grants now outstanding and of record are currently effective for a period of 20 years after the date of the grants, with expiration of the royalties beginning in MarchJanuary 2018 and ending in April 2018. Certain of the royalty grants to the former HMC shareholders on non-patented claims are subject to a partial buyout option exercisable by us at any time during the term of the grants. The buyout option gives us the right to buy out and retire 1% out of the 2% royalty grants (i.e., 50% of the outstanding grants) for an exercise price of $750,000. The royalty grants to the former HMC shareholders on the patented claims are subject to a repurchase of the 2% NSR at any time during the term for $1.5 million. Several of the mineral interests acquired after April 2003 are subject to royalty reservations in favor of the sellers in amounts varying from 1.325% to 3.5% of net smelter returns. The terms of these royalties vary from perpetual to a lifetime interest only. In April 2008, we entered into an agreement to purchase a perpetual independent royalty interest from Tusco, Incorporated (“Tusco”), a third party. Prior to this agreement, Tusco held a royalty interest in production from certain properties formerly held by HMC. Under the April 2008 agreement, Calais purchased this royalty interest from Tusco in exchange for $150,000, payable at any time during the following 20 years, and 250,000 shares of Calais common stock. In addition, Calais must pay Tusco $1,500 per month beginning May 15, 2008 and continuing through the life of Tusco’s President during the term of the agreement and the final payment period. Pursuant to this agreement, we recognized a $182,500 mineral interest, and a corresponding $150,000 liability, as well as $32,500 in common stock related to the 250,000 shares issued. We continue to make payments pursuant to this agreement. As a result of agreements entered into in the 2000 calendar year to provide financing to us, Aardvark Agencies, Inc. (“AAI”),AAI, an entity controlled by a former officer and director of ours, owns a portion of the Caribou property. The parties clarified the earlier agreements in March 2004 and, as a result, we may repurchase (through August 31, 2011)2011, with a possible ten-year extension) by repaying the $744,370$743,765 debenture (Note 7) that AAI holds (subject to the holder’s right to convert the debenture into our common stock in accordance with the terms of the debenture). During the period of time that AAI owns the property, we may enter upon the property, explore for minerals, use the Aardvark properties as collateral, and produce any minerals found for our own account. If we fail to exercise the option to reacquire the property interest held by AAI by August 31, 2011, the parties have agreed to extend the purchase option an additional ten years if we also extend the debenture held by Aardvark for the same period. CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
(b) Nevada In December 1994, we acquired from a then-director a 51% interest in various properties in Nevada known as the Manhattan project. We also agreed to acknowledge any applicable 5% net smelter return royalties on certain claims in that project to that director. It appears that the director owned no interest in these properties at that time, although he believes that he had and still has rights to acquire interests in those properties. In October 2003, we received partial title information relating to these properties which consist of 28 patented mining claims and 147 unpatented mining claims. In July 2004, the former director and his affiliated companies conveyed their respective interests in these properties to us. Certain of these claims overlie other claims. It appears that the record ownership of the various prospects is as follows: · | 28 patented mining claims appear to be owned by us (which received assignment of these claims in July 2004) as to a 60% undivided interest, and by Nevada Manhattan Mining, Inc., an entity controlled by the former director (“NMMI”), as to a 40% undivided interest; |
· | 42 unpatented mining claims appear to be owned by us (which received assignment of these claims in July 2004); |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 · | 56 unpatented mining claims appear to be owned by an individual named Anthony Selig or entities associated with Mr. Selig; and |
· | The remaining claims appear to be owned by us or by us and NMMI in the 60-40 ratio described above for the patented claims. Our ownership of these claims was received by the July 2004 assignment. |
Mr. Selig has denied any obligation to convey any portion of the claims directly to us, but has admitted an obligation to convey his interest in claims listed in a 1997 agreement between Selig and NMMI to NMMI. Selig is aware of the outcome of the Calais/NMMI litigation and he and his counsel have indicated a willingness to tender the NMMI deed to the District Court in and for Nye County if properly directed to do so. We believe that the settlement of the NMMI litigation reached in September 2000 results in NMMI being obligated to convey its interests in the prospects to Calais, subject to the terms of the settlement, including payment of royalties to NMMI from production. We are currently unable to locate any person with authority to act for NMMI; management is evaluating the possible invocation of the jurisdiction of the District Court to accept the Selig deed on behalf of the joint venture, and subject to the terms of the recorded settlement. We also plan to deposit the remaining funds due to NMMI with the registry fund of the Nye County, Nevada District Court, as NMMI itself cannot be located or contacted. (c) Panama On February 28, 2003, we entered into a “Purchase Option Agreement,” wherein we received an option to purchase a 40,000 acre mineral concession in an historic gold producing district of Panama with Panama Mining of Golden Cycle of Panama Incorporated (“PMGC”) in exchange for a combination of cash and our shares. Under the Purchase Option Agreement and subsequent extensions, we were committed to perform certain work on the properties, including an obligation to complete a $250,000 exploration program for lode deposits by September 25, 2004, and an additional $250,000 program to explore for placer gold deposits and install a pilot placer operation. We also hired a shareholder of the sellers, Herbert Hendricks, to oversee the project. Herbert Hendricks is the brother of our then-President, Thomas Hendricks, but they do not share the same home, they make independent business decisions, and are not otherwise affiliated. These performance obligations were modified by a full restatement of the agreement dated September 2005. It was later determined that the concession applications and the concession originally issued for the original exploitation concession were not of a status with the Panamanian government that exploration could be pursued without further processing of the concession applications in Panama and the official re-issuance of the exploitation concession. The issuance of these documents was the responsibility of the Panama companies, and the Panama companies were unable to produce written evidence of such issuance, in violation of our agreement with them. After extensive correspondence with the Panama companies over said concessions, management determined that it was unable to conduct exploration activities in Panama absent the formal issuance of these CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
concessions by the Panamanian government. Accordingly, we did not meet the aforementioned performance obligations and can offer no assurance that we will do so. In 2007, the Panama companies declared us to be in default; we protested and declared the Panama companies to be in default. We have since initiated arbitration with the International Center of Dispute Resolution, the international division of the American Arbitration Association, seeking damages of $995,000. There can be no assurance of a positive outcome for this arbitration and, in the event the outcome is positive, there can be no assurance as to the collectability of assets pursuant to a judgment. We do not intend to pursue any further exploration activities in Panama.
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005
NOTE 5 - ENVIRONMENTAL REMEDIATION LIABILITY We have been approached by the State of Nevada, Division of Minerals (“Nevada Division of Minerals”), with regard to the need for safeguarding and public notification of several dozen mine openings in the area of our properties in Nevada and are working with the Nevada Division of Minerals to set forth a plan of remediation. Management’s current cost estimates for this remediation are in the range of $25,000 - $35,000. In addition, we have been contacted by the United States Forest Service (“USFS”) with regard to the potential need for environmental remediation related to exploration activities that took place on federal lands within our mining claims. Management’s preliminary estimates indicate that costs are not expected to exceed $15,000 with respect to this remediation. Pursuant to the above, we have recorded an environmental remediation liabilityliabilities of $50,000, which management believes is the most likely cost outcome for these activities. This environmental remediation liability is an estimate and it is reasonably possible that this estimate could change in the near term or that costs to remediate these claims could exceed management’s estimates. NOTE 6 – DEBT A summary of notes payable outstanding at May 31, is as follows:
| | 2010 | | | 2009 | | Current Portion | | | | | | | Note payable (“mortgage”) | | $ | - | | | $ | 5,222,095 | | Accrued interest (“mortgage”) | | | - | | | | 2,121,002 | | Note payable (“Calim”) | | | - | | | | 1,170,500 | | Note payable (“Congo Chief”) | | | - | | | | 259,892 | | Note payable – shareholders (“Duffy”) | | | - | | | | 823,636 | | Note payable – shareholders (“Russell”) | | | - | | | | 336,720 | | Note payable (“Brigus”) | | | 10,253,878 | | | | - | | Other | | | - | | | | 41,436 | | Total Current Portion | | $ | 10,253,878 | | | $ | 9,975,281 | |
Mortgage Loan | | 2007 | | | 2006 | | | 2005 | | Current Portion | | | | | | | | | | Note payable (“mortgage”) | | $ | 5,222,095 | | | $ | - | | | $ | - | | Accrued interest (“mortgage”) | | | 892,654 | | | | - | | | | - | | Note payable (“Calim”) | | | 1,020,500 | | | | - | | | | - | | Note payable (“Congo Chief”) | | | 262,697 | | | | 264,100 | | | | - | | Note payable – shareholders (“Duffy”) | | | 645,909 | | | | 606,839 | | | | 681,000 | | Other | | | 5,356 | | | | 6,358 | | | | 9,821 | | Total Current Portion | | | 8,049,211 | | | | 877,297 | | | | 690,281 | | Long Term Portion | | | | | | | | | | | | | Note payable (“mortgage”) | | | - | | | | 5,222,095 | | | | 4,500,000 | | Accrued interest (“mortgage”) | | | - | | | | 280,901 | | | | 16,576 | | Total Long Term Portion | | | - | | | | 5,502,996 | | | | 4,516,576 | | Totals | | $ | 8,049,211 | | | $ | 6,380,293 | | | $ | 5,206,857 | |
On August 1, 2003, we issued a note payable to Broadway Mortgage Corporation (“Broadway”) for $4,500,000, which bore interest at 12.9% annually and was due in full on July 31, 2005. The note payable was secured by a first trust deed on the Caribou Town-site and Mine, owned jointly between us and Aardvark Agencies, Inc. Cash proceeds from the note were $3,339,000 and non-cash proceeds representing prepaid interest on the note were $1,161,000. In the event of default, a late fee penalty of 10% of the face value of the note was to be added to the principal amount of the note, and the note carried a default interest rate of 15%. In consideration for financing of the CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
note, we issued 8,181,818 shares of common stock to Broadway valued at $4,500,000 and incurred $286,104 in transaction closing costs.
On July 31, 2005, we defaulted on our obligation to pay the note. Under the terms of the amended note agreement, the principal amount increased $450,000 to $4,950,000 and we began to accrue interest at the 15% per annum default interest rate. On December 15, 2005, MFPI Partners, LLC (“MFPI”) purchased the face value of the note of $4,950,000 and accrued interest and late fees of $722,095,$272,095, as well as all assigned interests in the note from Broadway. In addition, CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 the note’s maturity was extended to December 15, 2006 and the default interest rate was reduced from 15% to 12.9% per annum. On December 15, 2006, we and MFPI agreed to extend the maturity of the note to March 15, 2007. As of March 16, 2007, we defaulted on the note agreement and remained in default until February 2010.
InSubsequent to May 31, 2007, in February 2010, all amounts outstanding including principal, accrued interest and accrued late fees totaling $7,755,622 payable to MFPI were paid in full as a component of the February 2010 debt restructure, as discussed below.restructure. (Note 13)
Calim Payable
In July 2006, the Company entered into an agreement with MFPI Capital Partners (“Calim”), which, among other provisions related to MFPI mortgage loan, provides for non-interest bearing cash advances. During 2007, the Company received cash totallingtotaling $1,020,500 under this agreement. During 2008,Subsequent to May 31, 2007, the Company received cash totalling $150,000 under this agreement.
Congo Chief Payable
On December 16, 2005, we issued a note payable to MFPI Partners, LLC for $258,956 and the proceeds used for the purchase of the Congo Chief Lode Mining Claim. The Congo Chief note bore interest at 12.0% per annum and the principal amount of the note plus all accrued and unpaid interest was originally due and payable on February 21, 2006. On February 21, 2006, we defaulted on the payment commitment on the note and began to accrue interest at a default rate of 18% on the total of the principal amount and accrued and unpaid interest of $264,567.
On February 1, 2010, we repaid all past due amounts on the note of total principal and interest in the amount of $386,653 as a component of a debt restructuring as discussed below.restructuring. (Note 13)
The Duffy Notes
On August 1, 2005, we issued a note payable to a group of shareholders for $807,650, in exchange for $681,000 originally infused into us as Share Capital, and interest accrued from the date of each infusion totaling $126,650. The note payable was secured by a trust deed on the Caribou Townsite and Mine. The Duffy Note bore interest at 15.9% and was payable in two installments: the first due on October 31, 2005 for $166,000 and the remaining principal and interest due October 31, 2006. In addition, in consideration of financing of the note, the Duffy Group received warrants on August 11, 2005 for the purchase of 1,000,000 shares of Common stock. The warrants were valued at $105,890 and recorded as a discount to the note payable to be amortized over the initial term of the note (Note 9). Initially, in the event that any scheduled payments were not made, a penalty representing 5% of the payment amount was to be added to the principal amount of the note. In the event that the note holders provided written notification of default and the default was not cured within 10 days, the default interest rate would increase to 24% per annum on the entire principal amount and accrued interest. CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
On October 31, 2005, we defaulted on our obligation to pay $166,000. Under the terms of the note, a late fee penalty of 5%, or $8,300, was added to the principal amount of the note. On December 15, 2005, we made a payment on the note of $169,070.
On October 31, 2006, we defaulted on the payment due at the note’s maturity and, under the terms of the note, a late fee penalty of 5%, or $39,129, was added to the principal amount of the note. In addition, the default rate under the terms of the note was increased to 24% per annum. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 The note was restructured on March 26, 2007. The principal balance was set at $910,677, consisting of the original balance of the note, plus late fees and interest. The payment terms specified an initial payment of $200,000 and payments of $75,000 per month until the note was repaid in full. The interest rate was reset from the default rate of 24% to 15.9%. We issued 500,000 shares of stock at $0.18 per share or $90,000 to the Duffy Group and extended the exercise date on warrants owned by the Duffy Group to purchase 875,000 shares of common stock from April 2008 to March 2012.
We defaulted on the $75,000 payment due April 15, 2007. The note was restructured again on December 31, 2007. The principal balance of the note was set at $900,537, consisting of the principal balance established at March 26, 2007, plus additional late fees and interest. The maturity date was extended to April 1, 2008. Warrants to purchase 1,000,000 shares of stock at $0.40 per share, expiring April 14, 2011 and 875,000 shares of stock at $0.25, expiring March 15, 2012, owned by the Duffy Group, were modified, with the exercise price set at $0.25 and the expiration date extended to January 1, 2020. The modification of the warrants was valued at $93,088,$93,089, and was recorded as interest expense in December 2007 (Note 9).
The note was restructured again on March 31, 2008. The principal balance of the note was set at $948,397 consisting of the principal balance established at December 31, 2007 and interest. The payment terms specified an initial payment of $100,000 and five monthly payments of $50,000 each beginning May 1, 2008. The remaining principal and interest are due October 1, 2008. We issued to the Duffy Group 1,185,496 shares of Common stock at $0.13 per share and warrants to purchase 1,185,496 shares of Common stock at $0.12 per share, expiring April 1, 2013. The warrants were valued at $153,753,$153,754 and were deemed to be a modification to the terms of the original note payable, and as such were recorded as interest expense in April 2008 (Note 9).
In May 2008, as a result of the failure to pay scheduled interest payment in accordance with the March 31, 2008 loan modification, the note holders were issued 1,021,000 shares of Common stock at $0.15 per share and warrants to purchase 1,021,000 shares of common stock at $0.12 per share expiring in August 2013. The warrants were valued at $150,939 and were deemed to be a modification to the terms of the original note payable, and as such were recorded as interest expense in August 2008 (Note 9).
In May 2009, the note holders were issued 1,249,900 shares of Common stock at $0.14 per share and warrants to purchase 1,249,900 shares of common stock at $0.12 per share expiring in May 2020 in connection with the execution of a trust deed modification. The warrants were valued at $62,489 and were deemed to be a modification to the terms of the original note payable, and as such were recorded as interest expense in May 2009 (Note 9).
In February 2010, in connection with the repayment of $435,347 in principal of the outstanding loan balance, the assignment of the right to title and interest to the loan property “Caribou,” as described above, to Brigus Gold Corp. (“Brigus”), and the assumption of $653,021 in outstanding principal and accrued interest by Brigus, the note holders received 10,306,790 shares of Common stock. See Debt restructure as described below.(Note 13)
Shareholder NoteNOTE 7 - DEBENTURES
On December 20, 2008,A summary of convertible debentures outstanding at May 31 is as follows:
| | 2007 | | | 2006 | | | 2005 | | | | | | | | | | | | Debentures (a) | | $ | 4,723,979 | | | $ | 4,600,798 | | | $ | 4,036,090 | | Debentures (b) | | | 225,000 | | | | 250,000 | | | | 250,000 | | Total debentures payable | | $ | 4,948,979 | | | $ | 4,850,798 | | | $ | 4,286,090 | | Less: Current portion | | | (125,000 | ) | | | (100,000 | ) | | | (50,000 | ) | Long-term portion | | $ | 4,823,979 | | | $ | 4,750,798 | | | $ | 4,236,090 | |
(a) These debentures are unsecured, non-interest bearing, and initially matured in May 2011. These debentures are owned by Marlowe Harvey who was the Company issuedPresident and a one-year note payable todirector of ours until he resigned as President in 2000 and as a shareholder, R. David Russell,director in November 2003; Argus Resources, Inc., the amountpresident of $405,410 in consideration for cash of approximately $282,000. The cash was granted to the Company pursuant to an exploration and development agreement wherein the proceeds were to be used for development at the Gold Hill mine. We recorded a debt discount in the amount of $123,410, which has been recorded as debt discount and accreted to interest expense over the term of the note. In August 2009 the Company defaulted on it’s agreement withis Mr. Russell and issued 5,067,650 shares of our common stock valued at $861,501 as consideration for theHarvey; Judy Harvey who is CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20092005 default. We have recorded additional expense of $456,905 in connection with our default on this agreement. (Note 9).
Debt Restructure
On February 1, 2010, we, Elkhorn Goldfields, LLC (“Elkhorn”), and Brigus Gold Corporation (“Brigus”) entered into a purchase agreement which provided for the assignment to Brigus of principal, accrued interest and penalties owed to MFPI, in connection with the mortgage note of $7,755,622, principal and accrued interest in the amount of $386,653 owed in connection with the Congo Chief note, and $1,458,582 owed to MFPI Capital Partners. On February 19, 2010, the Duffy Group entered into an agreement with Brigus and us whereby the Duffy group received 10,306,790 shares of Calais common stock in exchange for the forgiveness of $453,347 of our debt to Duffy, the assignment to Brigus of the remaining balance of $653,021 owed by us, and the assignment by the Duffy Group of its right to title and interest to the “Caribou” loan property to Brigus. The terms of the agreement allowed for additional consideration to be conveyed to the Duffy group from a third party, Elkhorn, in consideration for the consummation of the transaction.
Immediately following the debt restructure, we owed $10,253,878 in principal accruing interest at 8% per annum to Brigus. The debt initially matured on February 1, 2011. On January 15, 2011, we received forebearance under the terms of this agreement effectively extending the maturity date of the debt through June 30, 2011. As of May 31, 2010, interest of $269,691 had been accrued on this note.
In connection with the acquisition of our outstanding debt obligations, Brigus has a lien on our Caribou property.
Future Maturities
As of May 31, 2010, all of our notes and debt payable, consisting of one note with a balance of $10,253,878, was due before May 31, 2011. However, on January 13, 2011, we received an extension on the repayment of this debt until June 2011 (Note 13).
NOTE 7 - DEBENTURES
A summary of convertible debentures outstanding at May 31 is as follows:
| | 2010 | | | 2009 | | | | | | | | | Debentures (a) | | $ | 4,809,649 | | | $ | 4,644,900 | | | | | | | | | | | Debentures (b) | | | 45,500 | | | | 105,500 | | Total debentures payable | | $ | 4,855,149 | | | $ | 4,750,400 | | Less: Current portion | | | (4,855,149 | ) | | | (105,500 | ) | Long-term portion | | $ | - | | | $ | 4,644,900 | |
(a)These debentures are unsecured, non-interest bearing, and initially matured in May 2011. These debentures are owned by Marlowe Harvey whom was the President and a director of ours until he resigned as President in 2000 and as a director in November 2003. Mr. Harvey is the President of Argus Resources, Inc., a holder of one of the debentures, Judy Harvey whom is Mr. Harvey’s spousespouse; and Lynne Martin. Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005. The debentures are convertible into common stock at $1.23 in Canadian Dollars at the holders’ discretion and contain no restrictive covenants. The debentures are denominated in Canadian dollars. As the debentures presented herein are in U.S. dollars, fluctuations in the debenture balances between periods relate to changes currency translation adjustments.
In December 2010, $4,306,347 of the debentures werewas converted into 9,550,368 shares of common stock at $0.15 per share valued at $1,432,555 and in exchange for $259,149 in cash (Note 13). The remaining debenture, totaling $743,765 matured on May 31, 2011. We are currently in default related to the repayment of the principal. We are in discussion with the note holders with respect to reaching a settlement agreement. We anticipate that amounts owing related to this note will maturebe settled in May 2011.shares of our common stock.
(b) This debenture is owed to Thomas S. Hendricks, an officer, director and shareholder of the Company. The debenture is non interest-bearing, convertible into common stock at $0.85 per share in $50,000 annual increments, contains no restrictive covenants and matured on July 8, 2008. As of May 31, 2007, 2006, and 2005 the unpaid balance on this note amounted to $225,000, $250,000, and $250,000 respectively. We repaid $25,000 of this debenture in 2007,2007. We repaid $119,500 of this debenture in 2009, $60,000 in 2010 and the remaining $45,500 in 2011.
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
$119,500 in 2009, and $60,000 in 2010. At May 31, 2010, the balance of the unpaid debenture was $45,500. This debt was subsequently paid to Mr. Hendricks.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
We lease certain mineral rights, have both patented and unpatented mine claims that require annual maintenance payments and have entered into certain royalty agreements with third parties wherein we have monthly obligations. Failure to make payments on our patented or unpatented claims or royalty interests will result in the loss of the interests and underlying claims.
The table below sets forth anticipated expenditures under the patented and unpatented claims as well as our royalty interests.interests as of:
May 31, 2008 | | $ | 52,595 | | May 31, 2009 | | | 63,471 | | May 31, 2010 | | | 76,752 | | May 31, 2011 | | | 75,345 | | May 31, 2012 | | | 75,793 | | Total | | $ | 343,956 | |
May 31, 2011 | | $ | 75,345 | | May 31, 2012 | | | 75,793 | | May 31, 2013 | | | 76,248 | | May 31, 2014 | | | 76,711 | | May 31, 2015 | | | 78,182 | | Total | | $ | 382,279 | |
In July 2006, the Company entered into an employment agreement with David K. Young, as its then President and Chief Executive Officer. The agreement had no expiration and provided for compensation to Mr. Young of $175,000 annually, and monthly automobile allowance. In the event that Mr. Young is terminated without cause, the agreement provides for severance equal to 36 months of salary, plus 50% of entitled bonuses. In addition, upon termination described above, health coverage for Mr. Young will continue for a period of 36 months. The agreement also includes a provision pursuant to an Effective Change in Control, whereby Mr. Young will have been deemed terminated without cause, and the provisions discussed above will become effective. In July 2006, the Company entered into an employment agreement with Thomas Hendricks, as its Vice President for Exploration and Corporate Development. The agreement had no expiration and provided for compensation to Mr. Hendricks of $150,000 annually, and monthly automobile allowance. In the event that Mr. Hendricks is terminated without cause, the agreement provides for severance equal to 36 months of salary, plus 50% of entitled bonuses. In addition, upon termination described above, health coverage for Mr. Hendricks will continue for a period of 36 months. The agreement also includes a provision pursuant to an Effective Change in Control, whereby Mr. Hendricks will have been deemed terminated without cause, and the provisions discussed above will become effective. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 From time to time we are involved in litigation in the ordinary course of trade or business. Included in accrued liabilities on our consolidated balance sheets is $75,000 related to a litigation claim payable. We believe that that this amount is adequate. We are not aware of any additional potential claims and or contingencies other than as discussed herein. NOTE 9 --- SHAREHOLDERS’ DEFICIT Common stock - We have an authorized unlimited number of common shares of our no par value common stock. Common shares outstanding as of May 31 were as follows:
2010 | | 2009 | 76,278,142 | | 50,992,802 |
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
Fiscal 2010 Transactions - During the year ended May 31, 2010 we issued 25,285,340 share of our common stock as follows:
· | In August 2009 and February, April and May 2010, we raised $177,500 in cash from accredited investors for the sale of units comprising 3,150,000 shares of restricted Common stock and warrants to purchase 1,450,000 of common shares. The Common stock prices ranged from $0.05 to $0.0625 per share and the warrants had an exercise price of $0.20 per share with expiration dates ranging from August 2012 to February 2013.
|
· | In August 2009, we issued units to the Duffy Group in connection with extension of Duffy notes. The units consisted of 1,249,900 shares of restricted Common stock and warrants to purchase an equal number of common shares. The Common stock price was $0.14 per share and the warrants had an exercise price of $0.12 with an expiration date of August 2021. |
· | In August 2009, we issued 511,000 shares of restricted Common stock in connection with a settlement of a $42,436 note payable to Walsh Environmental Sciences. |
· | In September 2009, we issued 5,067,650 shares of restricted Common stock in connection with the settlement of a note payable due a shareholder related to our default on an exploration and development agreement. The Common stock price was $0.17 per share. In connection with the issuance of these shares we have recorded a loss on default of the exploration agreement in the amount of $456,901; this amount has been included in other (income) loss on our consolidated income statement. |
· | In September 2009, we issued 1,000,000 shares of restricted Common stock in connection with a consulting agreement. The Common stock price was $0.17 per share. We have recognized the expense of $170,000 ratably over the term of the agreement. |
· | In February 2010, we issued 10,306,790 shares of restricted common stock to the Duffy Group in connection with the restructuring of $1,088,367 of notes payable to Duffy Group. The Duffy Group entered into an agreement with Brigus and Calais whereby the Duffy group received these shares for the forgiveness of $435,347 in debt, with the remaining balance of $653,021 owed, assigned to Brigus. The Company recorded a gain on the settlement of the Duffy note of $359,992. The common stock price was $0.09 per share. |
· | In May 2010, we issued 4,000,000 shares of restricted common stock to members of our board of directors as compensation, for the period of June 2006 through August 2009. The common stock price was $0.09 per share. |
Fiscal 2009 Transactions - During the year ended May 31, 2009 we issued 4,126,000 shares of our common stock as follows:
· | In June, July and October 2008, we raised $248,400 in cash from accredited investors for the sale of units, totaling 3,105,000 shares of restricted Common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with an expiration dates of June, July and October 2013. |
· | In August 2008, we issued units to the Duffy Group in connection with extension of notes payable. These units consisted of 1,021,000 shares of restricted common stock and warrants to purchase an equal number of common shares. The warrants were valued at $150,939 were recorded as a charge to interest expense. The common stock price was $0.15 per share and the warrants had an exercise price of $0.12 with an expiration date of August 2013 (Note 9). |
Fiscal 2008 Transactions - During the year ended May 31, 2008 we issued 17,921,746 shares of our common stock as follows:
· | In November and December 2007 and in January, February and March 2008, we raised $1,258,900 in cash from accredited investors for the sale of units comprising 15,736,250 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with expiration dates ranging from November 2012 to March 2013. |
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
· | In December 2007, we entered into a transaction wherein we intended to purchase assets from one of our shareholders in exchange for common stock. The transfer of title to the assets was not completed; however, we issued 750,000 shares restricted common stock at to the purchaser in exchange for a note receivable in the amount of $60,000. In connection with this transaction, we have recorded a loss of $30,000, which represents the value as set for in the initial agreement and the value of the 750,000 shares of common stock as issued. |
· | In April 2008, we issued units to the Duffy Group in connection with extension of notes. The units consisted of 1,185,496 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.13 per share and the warrants had an exercise price of $.12 with an expiration date of April 2013. |
· | In April 2008, we issued 250,000 shares of restricted common stock as partial consideration for the purchase of a royalty interest. The common stock price was $0.13 per share. |
2007 | | 2006 | | 2005 | 28,945,056 | | 24,333,351 | | 21,114,702 |
Fiscal 2007 Transactions - During the year ended May 31, 2007 we issued 4,611,705 shares of our common stock as follows: · | In June 2006, we raised $50,000 in cash from accredited investors for the sale of units, totaling 250,000 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $.20$0.20 per share and the warrants had an exercise price of $0.25 per share with an expiration date of June 2010. |
· | In July 2006, we issued 3,782,955 shares of restricted common stock and issued 4,782,955 warrants to MFPI. The common stock price was $0.15 per share and the warrants had an exercise price of $0.25 per share with an expiration dates ranging from December 20072006 to December 2010. The shares of common stock were issued in connection with the execution of a letter agreement between Calim/MFPI and us wherein MFPI acquired the Broadway Mortgage (Note 8). |
· | In November 2006, we issued 23,750 shares of restricted common stock to SQ Funding in connection with investor relations services received in November and December 2006. The common stock price was $0.27 per share. |
· | In May 2007, we issued 55,000 shares of restricted common stock in connection with the settlement of accrued interest and other charges owed to an officer of ours. The common stock price was $0.18 per share. |
· | In March 2007, we issued 500,000 shares of restricted common stock to the Duffy Group in connection with the modification of a trust deed. The common stock price was $0.18 per share. We have recorded a charge to interest expense in connection with the issuance of these shares. |
Fiscal 2006 Transactions - During the year ended May 31, 2006 we issued 3,218,649 shares of our common stock as follows:
· | In July 2005 and February and April 2006, we raised $625,000 in cash during from accredited investors through the sale of units. These units totaled 3,125,000 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.20 per share and the warrants had an exercise price of $0.25 per share with expiration dates ranging from April 2008 to June 2010. Included in the private placements were 875,000 units sold to the Duffy Group for cash proceeds of $175,000. Each unit sold to the Duffy group contained one share of common stock and one warrant to purchase an equal number of common shares at $0.25 with an original expiration date of April 2008. These warrants were subsequently extended with an expiration date of January 2020. |
· | In April 2006, we issued 93,649 shares of restricted common stock to the Duffy Group as reimbursement for legal fees totaling $44,951 associated with the initial Duffy notes payable described above. |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20092005 Fiscal 2005 Transactions - During the year ended May 31, 2005 we issued 1,200,000 shares of our common stock as follows: · | In January and March 2005, we raised $245,000 in cash from accredited investors through the sale of units. The units totaled 1,200,000 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock prices ranged from $0.20 to $0.25 per share, and the warrants had exercise prices of $0.25 to $0.30 per share and expired on various dates in February and March 2010. |
Warrants - The following stock purchase warrants were outstanding at May 31 (warrants in thousands):31:
| | | | | Exercise Price | | Balance, May 31, 2004 | | | 255,000 | | | | $0.25-$0.50 | | Issued | | | 1,200,000 | | | | $0.25 | | Expirations | | | (50,000 | ) | | | $0.50 | | Exercised | | | - | | | | | | Balance, May 31, 2005 | | | 1,405,000 | | | | $0.25-$0.50 | | Issued | | | 4,125,000 | | | | $0.25 | | Expirations | | | (205,000 | ) | | | $0.50 | | Exercised | | | - | | | | | | Balance, May 31, 2006 | | | 5,325,000 | | | | $.25-$.50 | | Issued | | | 5,032,955 | | | | $0.25 | | Expirations | | | (125,000 | ) | | | $0.25 | | Exercised | | | - | | | | | | Balance, May 31, 2007 | | | 10,232,955 | | | | $0.25 | | Issued | | | 16,921,746 | | | | $0.12 | | Expirations | | | (1,000,000 | ) | | | $0.25 | | Exercised | | | - | | | | | | Balance, May 31, 2008 | | | 26,154,701 | | | | $0.12-$0.25 | | Issued | | | 5,376,450 | | | | $0.12 | | Expirations | | | (1,782,955 | ) | | | $0.25 | | Exercised | | | - | | | | | | Warrants Outstanding at May 31, 2009 | | | 29,748,196 | | | | $0.12-$0.25 | | Issued | | | 1,450,000 | | | | $0.20 | | Expirations | | | (2,700,000 | ) | | | $0.25-$0.30 | | Expiratons | | | - | | | | | | Warrants Outstanding at May 31, 2010 | | | 28,498,196 | | | | $0.12-$0.25 | |
· | Fiscal 2010 Transactions - During the year ended May 31, 2010, we issued 1,450,000 warrants to purchase our common shares at $0.20 expiring in 2012 and 2013. The warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant.
|
| | Number of Warrants Outstanding | | | Weighted Average Exercise Price | | | Number of Warrants Exercisable | | Outstanding as of May 31, 2004 | | | 255,000 | | | | $0.50 | | | | | Issued | | | 1,200,000 | | | | $0.25 | | | | | Expirations | | | (50,000 | ) | | | $0.50 | | | | | Exercised | | | - | | | | | | | | | Outstanding as of May 31, 2005 | | | 1,405,000 | | | | $0.33 | | | | 1,405,000 | | Issued | | | 4,125,000 | | | | $0.25 | | | | | | Expirations | | | (205,000 | ) | | | $0.50 | | | | | | Exercised | | | - | | | | | | | | | | Outstanding as of May 31, 2006 | | | 5,325,000 | | | | $0.27 | | | | 5,325,000 | | Issued | | | 5,032,955 | | | | $0.25 | | | | | | Expirations | | | (125,000 | ) | | | $0.25 | | | | | | Exercised | | | - | | | | | | | | | | Outstanding as of May 31, 2007 | | | 10,232,955 | | | | $0.26 | | | | 10,232,955 | |
· | Fiscal 2009 Transactions - During the year ended May 31, 2009, we issued 5,376,450 warrants to purchase our common shares at $0.12 per share. Of the warrant issuances during the period, 3,105,000 were issued in connection with unit sales, each unit consisting of one common share and one warrant. The |
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
| warrants issued in connection with the unit sales expire in 2013. 2,271,450 warrants were issued in connection with the modification of terms of notes payable due to a related party, the warrants expire in 2013. 2,271,450 warrants were issued in connection with the modification of terms of notes payable due to a related party, the warrants expire in 2013 and 2021. We have recorded a charge of $213,490 in interest expenses related to the issuance of these warrants. |
· | Fiscal 2008 Transactions - During the year ended May 31, 2008, we issued 16,921,746 warrants to purchase our common shares at $0.12 per share. Of the issuances during the period, 15,736,250 warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. The warrants issued in connection with unit sales expire in 2012 and 2013. 1,185,496 warrants were issued in
|
· | connection with the modification of notes payable due a related party and expire in 2013. We recorded a charge of $153,754 in interest expense relating to the issuance of these warrants. In addition, we recorded $93,089 as a discount on notes payable related to the re-pricing and extension of the original Duffy warrants issued in August 2005. |
· | Fiscal 2007 Transactions - During the year ended May 31, 2007, we issued 5,032,955 warrants to purchase our common shares at $0.25 per share. 250,000 warrants were issued in connection with unit sales expiring in 2010. 4,782,955 warrants to purchase our common stock at $0.25 expiring in 2007, 2008 and were issued in connection with our private equity offering as well as the modification of our Broadway mortgage. |
· | Fiscal 2006 Transactions - During the year ended May 31, 2006, we issued 4,125,000 warrants to purchase our common shares at $0.25. 2,250,000 of the warrants were sold in connection with unit sales and expired in 2010, and 875,000 warrants were issued in connection with unit sales to a related party and expire in 2020. In August 2005, we issued 1,000,000 warrants to the Duffy Group in connection with the restructuring of the initial Duffy notes payable (Note 8). The warrants had an exercise price of $.25$0.25 per share with expiration dates ranging from 2010 to 2020. We have recorded $105,890 to discount on notes payable related to the warrants issued in connection with the notes payable to be amortized over the initial term of the note. |
· | Fiscal 2005 Transactions - During the year ended May 31, 2005, we issued 1,200,000 warrants to purchase our common shares between $0.25 and $0.30, expiring in 2010. The warrants were issued in connection with unit sales. |
The value of the warrants as discussed above was determined using the Black-Scholes model for pricing. The following table represents the assumptions used in the Black-Scholes pricing model:
| 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | Expected Term | - | 3 – 12 years | 5 - 12 years | - | 5 years | - | - | 5 years | - | Risk free Interest Rate | - | 1.39% - 2.79% | 1.94% - 3.23% | - | 4.09% | - | - | 4.09% | - | Expected Dividend Yield | - | None | None | - | None | - | - | None | - | Volatility | - | 230.52% - 274.43% | 269.77% - 284.73% | - | 162.66% | - | - | 162.66% | - |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 NOTE 10 - STOCK-BASED COMPENSATION We have no formal stock option or stock-based compensation plan. However, historically, we have granted stock options to our directors, officers and employees. Options issued to employees and directors had historically been issued with exercise prices in both Canadian and U.S. dollars. Effective June 1, 2004, our functional currency became the U.S. dollar (Note 1) and therefore all amounts below have been presented in U.S. dollars. CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
A summary of the activity as of and for the years ended May 31, are as follows: | | Number of Shares | | | Weighted Average Exercise Price | | Number of Shares | | | Weighted Average Exercise Price | | Options Outstanding May 31, 2004 | | | 1,232,500 | | | $ | 3.34 | | 1,232,500 | | | $ | 3.34 | | | | | | | | | | Options Exercisable May 31, 2004 | | | 1,232,500 | | | $ | 3.34 | | 1,232,500 | | | $ | 3.34 | | | | | | | | | | Grants | | | - | | | $ | | | - | | | | | | Forfeits | | | - | | | | | | - | | | | | | Expirations | | | (82,500 | ) | | | 0.80 | | (82,500 | ) | | $ | 0.80 | | Options Outstanding May 31, 2005 | | | 1,150,000 | | | $ | 3.52 | | 1,150,000 | | | $ | 3.52 | | | | | | | | | | Options Exercisable May 31, 2005 | | | 1,150,000 | | | $ | 3.52 | | 1,150,000 | | | $ | 3.52 | | | | | | | | | | Grants | | | - | | | | | | - | | | | | | Forfeits | | | - | | | | | | - | | | | | | Expirations | | | (50,000 | ) | | $ | 0.33 | | (50,000 | ) | | $ | 0.33 | | Options Outstanding May 31, 2006 | | | 1,100,000 | | | $ | 3.67 | | 1,100,000 | | | $ | 3.67 | | Options Exercisable May 31, 2006 | | | 1,100,000 | | | $ | 3.67 | | 1,100,000 | | | $ | 3.67 | | | | | | | | | | Grants | | | - | | | | | | - | | | | | | Forfeits | | | - | | | | | | - | | | | | | Expirations | | | - | | | | | | - | | | | | | Options Outstanding May 31, 2007 | | | 1,100,000 | | | $ | 3.67 | | 1,100,000 | | | $ | 3.67 | | Options Exercisable May 31, 2007 | | | 1,100,000 | | | $ | 3.67 | | 1,100,000 | | | $ | 3.67 | | Grants | | | - | | | | | | | Forfeits | | | - | | | | | | | Expirations | | | - | | | | | | | Options Outstanding May 31, 2008 | | | 1,100,000 | | | $ | 3.67 | | | Options Exercisable May 31, 2008 | | | 1,100,000 | | | $ | 3.67 | | | Grants | | | - | | | | | | | Forfeits | | | - | | | | | | | Expirations | | | - | | | | | | | Options Outstanding May 31, 2009 | | | 1,100,000 | | | $ | 3.67 | | | Options Exercisable May 31, 2009 | | | - | | | | | | | Grants | | | - | | | | | | | Forfeits | | | - | | | | | | | Expirations | | | (1,100,000 | ) | | $ | 3.67 | | | Options Outstanding May 31, 2010 | | | - | | | | | | |
We considered legacy pronouncement SFAS 123(R), which became effective as of the beginning of the first interim or annual reporting period that began subsequent to June 15, 2005 when assessing the impact of stock options granted prior to May 31, 2004. As all options were vested as of May 31, 2004, and there were no grants, modifications, repurchases, or other activity during the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006, or 2005, we have not adopted any of the three transition approaches as prescribed by SFAS 123(R). We deemed that the “Modified Perspective,” “Modified Retrospective,” and “Limited Retrospective” approaches were not applicable. Therefore, we did not recognize stock-based compensation expense during the reporting periods presented above, nor have we recorded any deferred financing cost at the end of the respective reporting periods. The 1,100,000 options to purchase our common shares outstanding at May 31, 2007 expired during the fiscal year ended May 31, 2010. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 20102007, 2006 AND 20092005 NOTE 11 - INCOME TAXES We account for income taxes using the asset and liability approach in accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.
Income tax expense (benefit) consists of the following for the fiscal years ended May 31:
| | 2010 | | | 2009 | | | | | | | | | | | 2007 | | | 2006 | | | 2005 | | Current taxes | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | Deferred taxes | | | (1,096,737 | ) | | | (975,635 | ) | | | (824,222 | ) | | | (1,016,051 | ) | | | (1,839,215 | ) | Less: valuation allowance | | | 1,096,737 | | | | 975,635 | | | | 824,222 | | | | 1,016,051 | | | | 1,839,215 | | Net income tax provision (benefit) | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Our effective tax rate differs from the statutory rate for the fiscal years ended May 31 due to the following (expressed as a percentage of pre-tax income):
| | 2010 | | | 2009 | | | 2007 | | | 2006 | | | 2005 | | Federal taxes at statutory rate | | | 35.00 | % | | | 35.00 | % | | | 35.00 | % | | | 35.00 | % | | | 35.00 | % | State taxes, net of federal benefit | | | 3.01 | % | | | 3.01 | % | | | 3.01 | % | | | 3.01 | % | | | 3.01 | % | Permanent items | | | -0.01 | % | | | -0.02 | % | | | -0.02 | % | | | -0.02 | % | | | -0.04 | % | Alternative minimum tax | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | Valuation allowance | | | -35.10 | % | | | -36.50 | % | | | -36.50 | % | | | -36.50 | % | | | -36.00 | % | Expiring NOLs, change in tax rate and other adjustments | | | -2.90 | % | | | -1.49 | % | | | -1.49 | % | | | -1.49 | % | | | -1.97 | % | Effective income tax rate for continuing operations | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
As of May 31 the components of these temporary differences and the deferred tax asset were as follows:
| | 2010 | | | 2009 | | | 2007 | | | 2006 | | | 2005 | | Deferred tax assets: | | | | | | | | | | | | | | | | Net operating loss carryforwards | | $ | 12,243,573 | | | $ | 11,183,678 | | | $ | 9,361,632 | | | $ | 8,582,396 | | | $ | 7,732,651 | | Stock grants | | | 288,876 | | | | 260,640 | | | | 84,207 | | | | 42,103 | | | | - | | Debentures issued for compensation | | | 17,295 | | | | 40,101 | | | | 85,523 | | | | 95,025 | | | | 95,025 | | Exploration costs | | | - | | | | - | | | | 25,254 | | | | 54,895 | | | | 89,377 | | Accrued compensation | | | 367,848 | | | | 256,868 | | | | 122,281 | | | | 114,680 | | | | 103,625 | | Other | | | 55,687 | | | | 135,255 | | | | 87,754 | | | | 73,949 | | | | 67,371 | | Gross deferred tax assets | | | 12,973,279 | | | | 11,876,542 | | | | 9,766,651 | | | | 8,963,048 | | | | 8,088,049 | | | | | | | | | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | | | | | | | | | | | Financing fees | | | - | | | | - | | | | - | | | | - | | | | 151,600 | | Other | | | - | | | | - | | | | - | | | | 20,619 | | | | 10,072 | | Gross deferred tax liabilities | | | - | | | | - | | | | - | | | | 20,619 | | | | 161,672 | | | | | | | | | | | | Net deferred tax assets before valuation allowance | | | 12,973,279 | | | | 11,876,542 | | | | 9,766,651 | | | | 8,942,429 | | | | 7,926,377 | | | | | | | | | | | | Valuation allowance | | | (12,973,279 | ) | | | (11,876,542 | ) | | | (9,766,651 | ) | | | (8,942,429 | ) | | | (7,926,377 | ) | | | | | | | | | | | Deferred tax assets (liabilities), net | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Based upon the level of historical losses and the level of uncertainty with respect to future taxable income over the periods in which the deferred tax assets are deductible, a full valuation allowance has been provided. CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005
As of May 31, 2010,2007, 2006, and 20092005 we had $34,981,000,$26,892,000, $24,756,000, and $31,953,000,$22,436,000, respectively, in net operating loss carry-forwards available to reduce future taxable income. The benefits of the losses have not been recognized in the financial statements. The losses will expire through 2030.2027.
| | Canada | | | US | | | Total | | 2011 | | $ | 114,000 | | | $ | - | | | $ | 114,000 | | 2012 | | | - | | | | - | | | | - | | 2013 | | | - | | | | - | | | | - | | 2014 | | | - | | | | - | | | | - | | 2015 | | | - | | | | - | | | | - | | 2016 | | | - | | | | - | | | | - | | 2017 | | | - | | | | - | | | | - | | 2018 | | | - | | | $ | 5,476,000 | | | $ | 5,476,000 | | 2019 | | | - | | | $ | 4,963,000 | | | $ | 4,963,000 | | 2020 | | | - | | | $ | 66,000 | | | $ | 66,000 | | 2021 | | | - | | | $ | 534,000 | | | $ | 534,000 | | 2022 | | | - | | | $ | 401,000 | | | $ | 401,000 | | 2023 | | | - | | | $ | 718,000 | | | $ | 718,000 | | 2024 | | | - | | | $ | 8,152,000 | | | $ | 8,152,000 | | 2025 | | | - | | | $ | 2,126,000 | | | $ | 2,126,000 | | 2026 | | | - | | | $ | 2,320,000 | | | $ | 2,320,000 | | 2027 | | | - | | | $ | 2,136,000 | | | $ | 2,136,000 | | | | $ | 114,000 | | | $ | 26,892,000 | | | $ | 27,006,000 | |
| | Canada | | | US | | | Total | | 2011 | | $ | 114,000 | | | $ | - | | | $ | 114,000 | | 2012 | | | - | | | | - | | | | - | | 2013 | | | - | | | | - | | | | - | | 2014 | | | - | | | | - | | | | - | | 2015 | | | - | | | | - | | | | - | | 2016 | | | - | | | | - | | | | - | | 2017 | | | - | | | | - | | | | - | | 2018 | | | - | | | $ | 4,239,523 | | | $ | 4,239,523 | | 2019 | | | - | | | $ | 4,121,101 | | | $ | 4,121,101 | | 2020 | | | - | | | $ | 660,237 | | | $ | 660,237 | | 2021 | | | - | | | $ | 1,065,740 | | | $ | 1,065,740 | | 2022 | | | - | | | $ | 964,039 | | | $ | 964,039 | | 2023 | | | - | | | $ | 989,426 | | | $ | 989,426 | | 2024 | | | - | | | $ | 7,927,626 | | | $ | 7,927,626 | | 2025 | | | - | | | $ | 2,233,167 | | | $ | 2,233,167 | | 2026 | | | - | | | $ | 2,410,718 | | | $ | 2,410,718 | | 2027 | | | - | | | $ | 2,213,983 | | | $ | 2,213,983 | | 2028 | | | - | | | $ | 2,881,440 | | | $ | 2,881,440 | | 2029 | | | - | | | $ | 2,246,000 | | | $ | 2,246,000 | | 2030 | | | - | | | $ | 3,028,000 | | | $ | 3,028,000 | | | | $ | 114,000 | | | $ | 34,981,000 | | | $ | 35,095,000 | |
We have not filed our federal income tax returns for 2005 through 2010.2007. Upon filing of the returns adjustments may be required to the components of the deferred tax assets and liabilities. However, no tax expense will be recorded as a result of a full valuation allowance.
On June 1, 2007, we adopted the provisions of ASC Topic 740, regarding uncertainty in income taxes. Management has not fully evaluated the existence of uncertain tax positions relating to unfiled federal income tax returns, as noted above. NOTE 12 – RELATED PARTY TRANSACTIONS Wages and other Payables
Due to the financial difficulties we faced during the 2005 – 20102007 fiscal years, we were unable to pay the wages of certain of our executive officers. As such, we had significant amounts payable to executive officers as of May 31, as follows:
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
| | 2010 | | | 2009 | | | | | | | | | | | 2007 | | | 2006 | | | 2005 | | David K. Young (1) | | $ | 417,833 | | | $ | 279,333 | | | $ | 181,988 | | | $ | 137,404 | | | $ | 120,821 | | Thomas Hendricks (2) | | | 366,820 | | | | 216,820 | | | | 4,000 | | | | 1,500 | | | | 1,500 | | Matthew Witt (3) | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | 127,750 | | | | $ | 912,403 | | | $ | 623,903 | | | $ | 313,738 | | | $ | 266,654 | | | $ | 250,071 | |
(1) David K. Young has served on our Board since July 30, 2005 and as our President and Chief Executive Officer since February 10, 2006. InSubsequent to May 31, 2007, in January 2011, Mr. Young relinquished his CEO title and was appointed as our Chief Operating Officer. He remains our President. On October 27, 2010, we and Mr. Young entered into a Settlement Agreement wherein Mr. Young agreed to relinquish and waive $227,042 in wages owed to him, which constituted 50% of the total wages he was owed as of August 31, 2010. Mr. Young agreed to accept as full payment for the remaining 50% 2,270,420 restricted shares of our common stock valued at $0.10 per share or $227,042 (Note 13). CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005
(2) Subsequent to May 31, 2010,2007, we have paid Mr. Hendricks $319,220 against both current and aged wages payable balances as well as convertible debenture balances due. (Note 13).
(3) Matthew Witt served as our Chief Financial Officer from August 2003 until February 7, 2005. On March 31, 2005, we, then-President and CEO Thomas Hendricks and Mr. Witt entered into a Settlement and Release Agreement wherein, among other things, we agreed to pay Mr. Witt (a) $127,750 for all wages, including vacation, paid personal leave, bonus or otherwise, which were due, owing and accrued through February 7, 2005 and (b) all amounts owed to Mr. Witt for any of our business expenses incurred by Witt as an employee of ours (at the time, an additional $49,718), in exchange for release of certain claims and liabilities of ours. This Settlement and Release agreement was later superseded by a Settlement Agreement entered into subsequent to May 31, 2007 on October 28, 2010 (the “October Settlement”) by and between us and Mr. Witt. Under the October Settlement,this 2010 settlement, Mr. Witt agreed to accept as full payment for all amounts owed to him under the earlier Settlement and Release Agreement 2,000,000 restricted shares at $0.0762 per share or $152,468, of our common stock and $25,000 in cash. These shares were issued and cash released in November 2010 (Note 13).
Debentures
The Canadian-dollar-denominated convertible debentures (Note 7) are owned by companies or persons related to a shareholder and former director. These convertible debentures were subject to a settlement in December 2010 (Note 13).
The U.S. Debentures are owned by an officer/shareholder and are recognized as Convertible debentures – related party on our Consolidated Balance Sheets.
Debt
During the sixthree fiscal years ended through May 31, 2010,2007, we renegotiated on numerous occasions the terms of a note payable to Duffy (Note 6). During several of these renegotiations, Duffy was issued shares and/or warrants as part of the settlement. As a result, Duffy owned more than 15% of outstanding common stock as of May 31, 2010.
Other
On February 1, 2011, certain of our debt was assumed by Brigus. At the time, our current Executive Chairman and of the Board and CEO, R. David Russell, was President and CEO of BrigusApollo Gold Group, a predecessor of Brigus. Mr. Russell also beneficially owns more than 3.9% of our outstanding common stock. NOTE 13 - SUBSEQUENT EVENTS We have evaluated all our activity and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements, except as disclosed below.
Shareholder Note On December 20, 2008, the Company issued a one-year note payable to a shareholder, R. David Russell, in the amount of $405,410 in consideration for cash of approximately $282,000. The cash was granted to the Company pursuant to an exploration and development agreement wherein the proceeds were to be used for development at the Gold Hill mine. We recorded a debt discount in the amount of $123,410, which has been recorded as debt discount and accreted to interest expense over the term of the note. In August 2009 the Company defaulted on its agreement with Mr. Russell and issued 5,067,650 shares of our common stock valued at $861,501 as consideration for the default. We have recorded an additional expense of $456,905 in connection with our default on this agreement (Note 9). CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 Debt Restructure
On February 1, 2010, AND 2009we, Elkhorn Goldfields, LLC (“Elkhorn”), and Brigus entered into a purchase agreement which provided for the assignment to Brigus of principal, accrued interest and penalties owed to MFPI, in connection with the mortgage note of $7,755,622, principal and accrued interest in the amount of $386,653 owed in connection with the Congo Chief note, and $1,458,582 owed to MFPI Capital Partners. On February 19, 2010, the Duffy Group entered into an agreement with Brigus and us whereby the Duffy group received 10,306,790 shares at $0.09 or $927,611 of Calais common stock in exchange for the forgiveness of $453,347 of our debt to Duffy, the assignment to Brigus of the remaining balance of $653,021 owed by us, and the assignment by the Duffy Group of its right to title and interest to the “Caribou” loan property to Brigus. The terms of the agreement allowed for additional consideration to be conveyed to the Duffy group from a third party, Elkhorn, in consideration for the consummation of the transaction.
Immediately following the debt restructure, we owed $10,253,878 in principal accruing interest at 8% per annum to Brigus. The debt initially matured on February 1, 2011.
On January 15, 2011, we received forbearance under the terms of this agreement effectively extending the maturity date of the debt through June 30, 2011. On June 8, 2011, Brigus agreed to extend the June 30, 2011 date to October 31, 2011 in exchange for the payment of $1,000,000 cash. The funds will be applied to accrued but unpaid interest on the debt.
In connection with the acquisition of our outstanding debt obligations, Brigus has a lien on our Caribou property.
Settlements
Since May 31, 2010,2007, we have executed against a plan to settle our trade payables with certain of our vendors as well as wages and other payables owed to current and former employees of ours, either by paying outstanding balances in full or by entering into agreements for mutually agreed-upon settlement amounts. These efforts are ongoing. Since May 31, 2010,2007, we have recognized net gains of $312,931 related to settlements and releases on our trade payables and wages payable in our Consolidated Statements of Operations. In addition, we have issued 4,270,4204,370,420 shares of restricted stock related to these settlements.
Debenture Settlements
On December 15, 2010, we entered into two agreements which relate to the settlement of a total of four convertible debentures in the aggregate principal amount of $4,306,347 in exchange for a total of $258,680 in cash and the issuance of a total of 9,550,368 restricted shares of our common stock. The two settlements, each of which involved parties who are considered to be “related parties,” are described below.
Lynne Martin Settlement
We entered into a Settlement Agreement with Lynne Martin (the “Lynne Martin Settlement”) regarding a debenture payable to her in the principal amount of $1,097,367. Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005. We and Ms. Martin agreed that Ms. Martin would accept as full payment for the debenture the amount of $109,781 in cash which is to be paid by us in four quarterly payments of $27,445, with the first payment due on December 15, 2010 and the three remaining payments due on March 15, 2011, June 15, 2011, and September 15, 2011. We made the first payment on December 15, 2010 and we made the second payment of $27,470.59 on March 18,2011.
The Harvey Settlement
We entered into a Settlement Agreement with Marlowe and Judy Harvey and Argus Resources, Inc. regarding the following three debentures:
1. Judy Harvey $ 2,038,840
2. Judy Harvey $ 949,417
3. Argus Resources, Inc. $ 220,723
Marlowe Harvey was the President and a director of ours until he resigned as President in 2000 and as a director in November 2003. Mr. Harvey is the President of Argus Resources, Inc. Judy Harvey is Mr. Harvey’s spouse. After the closing of this transaction, Mr. Harvey beneficially holds more than 5% percent of our outstanding shares.
We and Judy Harvey agreed that Ms. Harvey would accept as full payment for her two debentures the total amount of $149,368 in cash and a total of 8,890,638 restricted shares of our common stock. The cash was paid on December 15, 2010 and the shares were issued on December 20, 2010 to an escrow agent to hold the shares until the Cease Trade Order in British Columbia has been revoked.
We and Argus Resources agreed that Argus Resources would accept as full payment for its debenture 659,730 restricted shares of our common stock. The shares were issued on December 20, 2010.
Settlements
Subsequent to May 31, 2010 we continued to settle accrued liabilities and amounts outstanding with trade creditors current and former directors and officers of the Company. On October 27, 2010, we and Mr. David Young entered into a Settlement Agreement wherein Mr. Young agreed to relinquish and waive $227,042 in wages owed to him, which constituted 50% of the total wages he was owed as of August 31, 2010. Mr. Young agreed to accept as full payment for the remaining 50%, 2,270,420 restricted shares of our common stock (Note 12).valued at $0.10 per share or $227,042.
CALAIS RESOURCES INC.
(A Mining Company in the Exploration Stage)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED MAY 31, 2010 AND 2009
In October and November 2010, we have paid Mr. Hendricks $319,220 against both current and aged wages payable balances as well as convertible debenture balances due. (Note 12).
(3) Matthew Witt served as our Chief Financial Officer from August 2003 until February 7, 2005. On March 31, 2005, we, then-President and CEO Thomas Hendricks and Mr. Witt entered into a Settlement and Release Agreement wherein, among other things, we agreed to pay Mr. Witt (a) $127,750 for all wages, including vacation, paid personal leave, bonus or otherwise, which were due, owing and accrued through February 7, 2005 and (b) all amounts owed to Mr. Witt for any of our business expenses incurred by Witt as an employee of ours (at the time, an additional $49,718), in exchange for release of certain claims and liabilities of ours. This Settlement and Release agreement was later superseded by a Settlement Agreement entered into On October 28, 2010 we reached a settlement agreement with Matt Witt. Mr. Witt agreed to accept as full payment for all amounts owed to him under the earlier Settlement and Release Agreement 2,000,000 restricted shares of our common stock valued at $0.0762 per share or $152,468 and $25,000 in cash. These shares were issued and cash released in November 2010 (Note 12).
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 Debt RestructureDebenture Settlements
On JanuaryDecember 15, 2010, we entered into two agreements which relate to the settlement of a total of four convertible debentures in the aggregate principal amount of $4,306,347 in exchange for a total of $258,680 in cash and the issuance of a total of 9,550,368 restricted shares of our common stock at $0.15 or $1,442,535. The two settlements, each of which involved parties who are considered to be “related parties,” are described below.
Lynne Martin Settlement We entered into a Settlement Agreement with Lynne Martin (the “Lynne Martin Settlement”) regarding a debenture payable to her in the principal amount of $1,097,367. Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005. We and Ms. Martin agreed that Ms. Martin would accept as full payment for the debenture the amount of $109,781 in cash which is to be paid by us in four quarterly payments of $27,445, with the first payment due on December 15, 2010 and the three remaining payments due on March 15, 2011, June 15, 2011, and September 15, 2011. We made the first payment on December 15, 2010 and we made the second payment of $27,445 on March 18, 2011. On or about June 15, 2011, we announcedmade an extensionadditional payment of $28,347.
The Harvey Settlement We entered into a Settlement Agreement with Marlowe and Judy Harvey and Argus Resources, Inc. regarding the following three debentures:
1. Judy Harvey | $ 2,038,840 | 2. Judy Harvey | $ 949,417 | 3. Argus Resources, Inc. | $ 220,723 |
Marlowe Harvey was the President and a director of ours until June 30, 2011,he resigned as President in 2000 and as a director in November 2003. Mr. Harvey is the President of Argus Resources, Inc. Judy Harvey is Mr. Harvey’s spouse. After the forbearance periodclosing of this transaction, Mr. Harvey beneficially holds more than 5% percent of our note payable inoutstanding shares.
We and Judy Harvey agreed that Ms. Harvey would accept as full payment for her two debentures the total amount of $10,253,878.$149,368 in cash and a total of 8,890,638 restricted shares of our common stock. The original forbearance period for this notecash was scheduledpaid on December 15, 2010 and the shares were issued on December 20, 2010 to expirean escrow agent to hold the shares until the Cease Trade Order in February 2011.British Columbia has been revoked.
New Chief Executive OfficerWe and Argus Resources agreed that Argus Resources would accept as full payment for its debenture 659,730 restricted shares of our common stock valued at $0.15 per share or $98,960. The shares were issued on December 20, 2010.
On January 18, 2011, we announced that R. David Russell has been appointed to the positions of Director, Executive Chairman and Chief Executive Officer. Mr. Russell has over 33 years of experience in the mining industry, having served in a variety of operating, executive and board of director positions.Shareholders’ Deficit
On the same date, we announced that David K. Young resigned his position as our CEO, but remains on the Board and will continue to serve as our President. Mr. Young was also simultaneously appointed as our Chief Operating Officer.
Common Stock Sales
Between June 1, 2010 and – Since May 2, 201131, 2007, we have issued 35,696,370a total of 122,779,930 shares of common stock. Since May 31, 2007, we have issued 67,187,620 shares of common stock for total cash proceeds of $2,394,900.$5,279,700 and 55,592,310 shares of our common stock in connection with the settlement of debt and accrued liabilities, acquisitions of mineral interests, for services, and as payment for trade accounts payable as described further below.
Subsequent to May 31, 2011 - Subsequent to May 31, 2011, we have issued 2,500,000 shares of our common stock at $0.20 per share to four accredited investors for net cash proceeds of $500,000.
Fiscal 2011 Transactions – During the fiscal year ending May 31, 2011, we have issued 72,946,844 shares of our common stock as follows: · | In June 2010, we issued 9,500,000 shares of our common stock valued at $0.08 per share or $760,000 to our Directors as compensation for their services. These amounts had been previously accrued in our balance sheet as accrued salaries and wages. |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 · | In August 2010, we sold 650,000 shares of our common stock at $0.08 per share to the wife of our current Chief Executive Officer (“CEO”) for $52,000 as part of a private placement. |
· | In June 2010, we issued 1,000,000 shares of our common stock at $0.05 per share for accounting services provided in May 2010 totaling $50,000. |
· | In June and August 2010, we issued a total of 1,500,000 shares of our common stock at $0.05 per share in connection with the payment of $76,539 in accounts payable. |
· | In September 2010, we issued 4,500,000 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $270,000. |
· | In October 2010 we issued 5,753,334 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $345,200. |
· | In October 2010, we issued 2,270,420 shares of our common stock at $0.10 per share to our Company President in connection with settlement of accrued liabilities owed to him. We have recorded a gain in the amount of $227,042 in connection with this issuance. In addition we issued 2,000,000 shares of our common stock at $0.0762 to our former CFO in connection with the settlement of accrued liabilities owed to him in the amount of $152,468. We have not recorded any gain or loss in connection with this settlement. |
· | In November 2010, we issued 1,066,666 shares of our common stock at $0.075 per share to accredited investors for net cash proceeds of $80,000. In addition we issued 17,651,667 shares of our common stock at $0.06 per share for net cash proceeds of $1,059,100. |
· | In December 2010, we issued 9,550,368 shares of our common stock at $0.15 per share to accredited investors in connection with the settlement of four convertible debentures totaling $1,432,555. |
· | In December 2010, we issued 536,666 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $32,200. In addition we issued 2,666,666 shares of our common stock at $0.08 per share to accredited investors for net cash proceeds of $200,000. |
· | In December 2010, we issued 2,102,500 shares of our common stock at $0.17 per share in connection with fundraising and consulting services valued at $357,425. |
· | In December 2010, we issued 100,000 shares of our common stock at $0.17 per share in connection with the settlement of previously accrued liabilities. |
· | In January 2011 we issued 2,033,333 shares of our common stock valued at $0.17 per share in connection with fundraising and consulting services valued at $345,667 |
· | In January 2011, we issued 66,666 shares of our common stock at $0.06 per share to an accredited investor in for net cash proceeds of $4,000. |
· | In February 2011, we issued 1,764,706 shares of our common stock at $0.17 per share to accredited investors for net cash proceeds of $300,000. |
· | In March 2011, we issued 40,000 shares of our common stock at $0.06 per share to an accredited investor for net cash proceeds of $2,400. |
· | In April 2011, we issued 1,000,000 shares of our common stock at $0.05 per share to an accredited investor for net cash proceeds of $50,000. |
· | In May 2011 we issued 7,000,000 shares of our common stock at $0.10 per share to an accredited investor for net cash proceeds of $700,000. |
· | In May 2011 we issued 193,852 shares of our common stock at $0.18 in connection with consulting services provided to us in fiscal 2006. These amounts had previously been recorded as accrued liabilities on our balance sheet. |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005 Fiscal 2010 Transactions - During the year ended May 31, 2010 we issued 25,285,340 shares of our common stock as follows: · | In August 2009 and February, April and May 2010, we raised $177,500 in cash from accredited investors for the sale of units comprising 3,150,000 shares of restricted Common stock and warrants to purchase 1,450,000 of common shares. The Common stock prices ranged from $0.05 to $0.0625 per share and the warrants had an exercise price of $0.20 per share with expiration dates ranging from August 2012 to February 2013. |
· | In August 2009, we issued units to the Duffy Group in connection with extension of Duffy notes. The units consisted of 1,249,900 shares of restricted Common stock and warrants to purchase an equal number of common shares. The Common stock price was $0.14 per share and the warrants had an exercise price of $0.12 with an expiration date of August 2021. The warrants were valued at $174,985 and have been charged to interest expense. |
· | In August 2009, we issued 511,000 shares of restricted Common stock at $0.17 per share in connection with a settlement of a $42,436 note payable to Walsh Environmental Sciences. In connection with this we have recorded a loss of $44,434. |
· | In September 2009, we issued 5,067,650 shares of restricted Common stock in connection with the settlement of a note payable due a shareholder related to our default on an exploration and development agreement. The Common stock price was $0.17 per share, and the total value of the common shares issued amounted to $861,501. In connection with the issuance of these shares we have recorded a loss on default of the exploration agreement in the amount of $456,901; this amount has been included in other (income) loss on our consolidated income statement. |
· | In September 2009, we issued 1,000,000 shares of restricted Common stock in connection with a consulting agreement for investor relation services. The Common stock price was $0.17 per share. We recognized the expense of $170,000 ratably over the term of the three month term of the agreement. |
· | In February 2010, we issued 10,306,790 shares of restricted common stock to the Duffy Group in connection with the restructuring of $1,088,367 of notes payable to Duffy Group. The Duffy Group entered into an agreement with Brigus and Calais whereby the Duffy group received these shares for the forgiveness of $435,347 in debt, with the remaining balance of $653,021 owed, assigned to Brigus. The Company recorded a gain on the settlement of the Duffy note of $155,779. The common stock price was $0.09 per share. |
· | In May 2010, we issued 4,000,000 shares of restricted common stock to members of our board of directors as compensation, for the period of June 2006 through August 2009. The common stock price was $0.09 per share. |
Fiscal 2009 Transactions - During the year ended May 31, 2009 we issued 4,126,000 shares of our common stock as follows: · | In June, July and October 2008, we raised $248,400 in cash from accredited investors for the sale of units, totaling 3,105,000 shares of restricted Common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with an expiration dates of June, July and October 2013. |
· | In August 2008, we issued units to the Duffy Group in connection with extension of notes payable. These units consisted of 1,021,000 shares of restricted common stock and warrants to purchase an equal number of common shares. The warrants were valued at $150,939 were recorded as a charge to interest expense. The common stock price was $0.15 per share and the warrants had an exercise price of $0.12 with an expiration date of August 2013 (Note 9). |
CALAIS RESOURCES, INC. (A Mining Company in the Exploration Stage) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS ENDED MAY 31, 2007, 2006 AND 2005
Fiscal 2008 Transactions - During the year ended May 31, 2008 we issued 17,921,746 shares of our common stock as follows: · | In November and December 2007 and in January, February and March 2008, we raised $1,258,900 in cash from accredited investors for the sale of units comprising 15,736,250 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.08 per share and the warrants had an exercise price of $0.12 per share with expiration dates ranging from November 2012 to March 2013. |
· | In December 2007, we entered into a transaction wherein we intended to purchase assets from one of our shareholders in exchange for common stock. The transfer of title to the assets was not completed; however, we issued 750,000 shares restricted common stock at to the purchaser in exchange for a note receivable in the amount of $60,000. In connection with this transaction, we have recorded a loss of $30,000, which represents the value as set for in the initial agreement and the value of the 750,000 shares of common stock as issued. |
· | In April 2008, we issued units to the Duffy Group in connection with extension of notes. The units consisted of 1,185,496 shares of restricted common stock and warrants to purchase an equal number of common shares. The common stock price was $0.13 per share and the warrants had an exercise price of $0.12 with an expiration date of April 2013. The warrants were valued at $153,754 and have been charged to interest expense. |
· | In April 2008, we issued 250,000 shares of restricted common stock as partial consideration for the purchase of a royalty interest. The common stock price was $0.13 per share. We have valued this transaction at $32,500 and it has been recorded as a component of our properties. |
Warrants – Since May 31, 2007, we have issued 32,748,196 warrants to purchase our common shares as discussed below. Subsequent to May 31, 2011 – In June and July 2011 we issued 1,250,000 warrants to purchase our common stock at $0.30 per share. These warrants were issued in connection with the sale of 2,500,000 common stock units in June 2011 and July 2011 the warrants expire in June and July 2012. · | Fiscal 2011 Transactions – During the year ended May 31, 2011 we issued 7,000,000 warrants to purchase our common shares at $0.12 expiring in May 2012. The warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. |
· | Fiscal 2010 Transactions - During the year ended May 31, 2010, we issued 1,450,000 warrants to purchase our common shares at $0.20 expiring in 2012 and 2013. The warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. |
· | Fiscal 2009 Transactions - During the year ended May 31, 2009, we issued 5,376,450 warrants to purchase our common shares at $0.12 per share. Of the warrant issuances during the period, 3,105,000 were issued in connection with unit sales, each unit consisting of one common share and one warrant. The warrants issued in connection with the unit sales expire in 2013. 2,271,450 warrants were issued in connection with the modification of terms of notes payable due to a related party, the warrants expire in 2013 and 2021. We have recorded a charge of $213,490 in interest expenses related to the issuance of these warrants. |
· | Fiscal 2008 Transactions - During the year ended May 31, 2008, we issued 16,921,746 warrants to purchase our common shares at $0.12 per share. Of the issuances during the period, 15,736,250 warrants were issued in connection with unit sales, each unit consisting of one common share and one warrant. The warrants issued in connection with unit sales expire in 2012 and 2013. 1,185,496 warrants were issued in connection with the modification of notes payable due a related party and expire in 2013. We recorded a charge of $153,754 in interest expense relating to the issuance of these warrants. In addition, we recorded $93,089 as a discount on notes payable related to the re-pricing and extension of the original Duffy warrants issued in August 2005. |
Page 101111 of 101111
|