As
filed with the Securities and Exchange Commission on December 4,
2009
Registration
No. 333- _____________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Searchlight
Minerals Corp.
(Exact
name of registrant as specified in its charter)
Nevada
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98-0232244
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S. Employer
Identification
Number)
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2441
West Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada 89052
(702)
939-5247
(Address,
including zip code and telephone number, including
area
code, of registrant’s principal executive offices)
Ian
R. McNeil
Chief
Executive Officer
2441
West Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada 89052
(702)
939-5247
(Name,
address, including zip code and telephone number,
including
area code, of agent for service)
With
copies to:
Jeffrey
P. Berg, Esq.
Kenneth
M.H. Hoff, Esq.
Baker
& Hostetler LLP
12100
Wilshire Boulevard
Suite
1500
Los
Angeles, California 90025-7120
(310)
820-8800
Approximate date of commencement of
proposed sale to the public:
From time to time after the effective date
of this Registration Statement.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
¨
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.
x
If this
Form is filed to register additional securities for an offering pursuant to
Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective Registration Statement for the same offering.
¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
¨
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
¨
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
¨
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Accelerated
filer
x
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Non-accelerated
filer
¨
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Smaller
reporting company
¨
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(Do
not check if a smaller reporting
company)
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CALCULATION
OF REGISTRATION FEE
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Title of Each Class of
Securities to be
Registered
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Amount to be
Registered
(1)
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Proposed Maximum
Aggregate Offering Price
Per Share
(2)
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Proposed Maximum
Aggregate Offering
Price
(1)
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Amount of
Registration Fee
(3)
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Common
stock,
$0.001 par value
(2)
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17,819,859
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$1.42
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$35,931,963
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$2,005.00
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Common Stock
Purchase
Rights
(4)
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(1) 17,819,859
shares of common stock, par value $0.001 per share, of Searchlight Minerals
Corp., a Nevada corporation (the “Company”), are being registered hereunder. The
shares consist of 11,678,596 shares of common stock and 6,141,263 shares of
common stock underlying certain of the Company's outstanding common stock
purchase warrants.
In
accordance with Rule 416(a) under the Securities Act of 1933, as amended (the
“Securities Act”), the Registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold resulting from stock splits,
stock dividends or similar transactions.
(2) Estimated
solely for the purpose of calculating the registration fee pursuant to Rule
457(c) of the Securities Act based upon the price of $1.42 which was the average
of the high and low bid prices for the Company’s common stock on the
Over-the-Counter Bulletin Board (the “OTCBB”) on December 3, 2009.
(3) Computed
in accordance with Section 6(b) of the Securities Act.
(4) The
common stock purchase rights are attached to and traded with the shares of
common stock being registered. The value attributable to the common stock
purchase rights, if any, is reflected in the value attributable to the common
stock.
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
The
information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary prospectus is
not an offer to sell these securities nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
Subject
to Completion, dated December 4, 2009
17,819,859
Shares
SEARCHLIGHT
MINERALS CORP.
Common
Stock
We are
registering 17,819,859 shares of our common stock for sale by our stockholders,
including 11,678,596 shares of common stock and 6,141,263 shares of our common
stock issuable, from time to time, upon the exercise of outstanding common stock
purchase warrants. On November 12, 2009, we issued an aggregate of 12,078,596
units of our securities to certain investors, consisting of 12,078,596 shares of
common stock and warrants to purchase an additional 6,039,298 shares of common
stock, which became exercisable on November 12, 2009 and expire on November 12,
2012, in a private placement to various accredited investors pursuant to a
Securities Purchase Agreement. The weighted average exercise price of the
warrants is $1.85 per share. We also paid commissions to registered
broker-dealers in connection with the private placement in the amount of
approximately $1,056,877 and warrants to purchase up to 301,965 shares of common
stock. The warrants issued to such broker-dealers are being registered herewith.
Nanominerals Corp., one of our principal stockholders and an affiliate of
certain of our officers and directors, purchased 400,000 units in the private
placement at an aggregate purchase price of $500,000. However, Nanominerals
Corp. waived its registration rights in connection with the private placement.
The private placement is more fully described on pages 24 through 27
of this prospectus under the heading “Selling Stockholders.”
The
selling stockholders identified in this prospectus, or their pledgees, donees,
transferees or other successors-in-interest, may offer the shares from time to
time through public or private transactions at prevailing market prices, at
prices related to prevailing market prices or at privately negotiated prices. We
will not receive any proceeds from the sale of the shares. We may receive
proceeds in connection with the exercise of warrants for the underlying shares
of our common stock, which may in turn be sold by the selling stockholders under
this prospectus. The selling stockholders may resell the common stock to or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions. The selling stockholders will
bear all commissions and discounts, if any, attributable to the sales of shares.
We will bear all costs, expenses and fees in connection with the registration of
the shares.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning
on page 6 for certain risks and uncertainties that you should
consider.
Our
common stock is quoted on the OTC Bulletin Board under the symbol “SRCH.” The
last reported sale price of our common stock on December 3, 2009 was $1.45 per
share.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date
of this prospectus is ______________, 2009
TABLE
OF CONTENTS
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Page
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Summary
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2
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Special
Note Regarding Forward-Looking Statements
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6
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Risk
Factors
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6
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Use
of Proceeds
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23
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Selling
Stockholders
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24
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Plan
of Distribution
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28
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Legal
Matters
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30
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Experts
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30
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Incorporation
of Certain Information By Reference
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30
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Where
You Can Find Additional Information
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31
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You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information that is different from that
contained in this prospectus. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
The information in this
prospectus is complete and accurate only as of the date of the front cover
regardless of the time of delivery of this prospectus or of any sale of shares.
Except where the context requires otherwise, in this prospectus, the words
“Company,” “Searchlight,” “we,” “us” and “our” refer to Searchlight Minerals
Corp., a Nevada corporation.
SUMMARY
This
summary highlights selected information from this prospectus. It does not
contain all of the information that is important to you. We encourage you to
carefully read this entire prospectus and the documents to which we refer you.
The following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this prospectus.
Our
Company
Exploration Stage Company
. We
are an exploration stage company engaged in the acquisition and exploration of
mineral properties and slag reprocessing projects. Our business is presently
focused on our two mineral projects in which we hold interests:
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the
Clarkdale Slag Project, located in Clarkdale, Arizona, is a reclamation
project to recover precious and base metals from the reprocessing of slag
produced from the smelting of copper ore mined at the United Verde Copper
Mine in Jerome, Arizona; and
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the
Searchlight Gold Project, which involves exploration for precious metals
on mining claims near Searchlight,
Nevada.
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Clarkdale Slag Project
. The
Clarkdale Slag Project, located in Clarkdale, Arizona, is a reclamation project
to recover precious and base metals from the reprocessing of slag produced from
the smelting of copper ore mined at the United Verde Copper Mine in Jerome,
Arizona. Metallurgical testing and project construction on the Clarkdale Slag
Project have been ongoing since 2005, initially under the direction of the prior
owners, thereafter with our participation in a joint venture with the prior
owners in 2005, and currently solely by us since we acquired 100% of the
Clarkdale Slag Project in 2007.
Since our
acquisition of 100% of the Clarkdale Slag Project in 2007, we have devoted
considerable effort to the designing and engineering of our first production
module, which included finalizing the production flow sheet, sourcing and
purchasing equipment as well as refurbishing the module building and
constructing the electrowinning building. The module and electrowinning
buildings house the first production module, which has been designed to allow
for the grinding, leaching, filtering and extraction of precious and base metals
from the slag material and is expected to process between 100 and 250 tons of
slag material per day. During 2008, we completed the refurbishing and
construction of the module and electrowinning buildings, respectively, and we
installed all the necessary equipment in the two buildings for the operation of
the first production module. During 2009, we have been executing our plan of
operation on the Clarkdale Slag Project, which includes the start-up and
operation of the first production module, in an effort to achieve consistent
levels of gold and silver extraction that would support the economic feasibility
of a commercial production facility.
Searchlight Gold Project
. The
Searchlight Gold Project involves exploration for precious metals on mining
claims near Searchlight, Nevada. We have been engaged in an exploration program
on our Searchlight Gold Project since 2005. Our Searchlight Claims are comprised
of non-patented placer mining claims located on federal land administered by the
United States Bureau of Land Management (“BLM”). Drilling and mining activities
on the Searchlight Claims must be carried out in accordance with a Plan of
Operations or permit issued by the BLM.
The
former Searchlight Claim owners had previously obtained a BLM approved Plan of
Operations, which included permission to drill eighteen holes on the 3,200 acre
project area and to mine a 36-acre pit on our RR304 claim. We had anticipated
conducting our early stage exploratory work on the Searchlight Claims property
by utilizing the Plan of Operations issued to the former Searchlight Claim
owners, until such time as we would obtain a permit for exploration and
development in our own name or the former Searchlight Claim holder’s permit was
transferred to us.
Although
the Plan of Operations was accepted and registered in the name of a former
Searchlight Claim owner, which is an affiliate of K. Ian Matheson, one of our
principal stockholders and a former officer and director, in September 2007, we
learned that the BLM had issued an order (the “BLM Order”) for “Immediate
Suspension of All Activities” notice on May 12, 2006 against Mr. Matheson and
certain of his affiliates with respect to a dispute with the BLM on a project
unrelated to the Searchlight Gold Project. The issuance of the BLM Order
restricted our ability to rely upon the Plan of Operations to conduct our early
stage exploratory work on the Searchlight Claims property until such time that
we may obtain our own Plan of Operations. The BLM Order effectively covered all
projects tied to Mr. Matheson.
As a
result of the BLM Order, we have been delayed in our ability to drill on the
Searchlight Gold Project property. However, we have anticipated that regulatory
and other delays would take place, which are typical in our industry. We have
applied for a new Plan of Operations in our name and are currently in the course
of the BLM’s review process. In addition, we have continued and will continue
with our surface sampling and metallurgical testing program while awaiting
approval of a new Plan of Operations.
After a
series of correspondence between us and the BLM, on December 15, 2008, we
received a letter from the BLM advising us that the BLM had closed our Notice of
Intent from consideration and that a new Plan of Operations would be required
based on two issues relating to the Desert Tortoise (Gopherus asassizii), a
Federally listed Threatened Species: (i) the proximity of the project area to a
nearby “Areas of Critical Environmental Concern” (ACEC); and (ii) the future
likelihood of tortoises being present on the land within the project area which
is involved in the application.
We
conformed the new Plan of Operations with the previously approved Environmental
Assessment and, after a further series of correspondence between us and the BLM,
on October 13, 2009, we received a letter from the BLM regarding our Plan of
Operations confirming that the BLM considers our Plan of Operations to conduct
drilling complete and that the BLM will conduct a final review of the previously
approved Environmental Assessment to determine its adequacy. The BLM’s letter
also advised that they would be sending letters addressing the Conditions of
Approval and the bond determination under separate cover.
There is
no regulatory time frame for the BLM to review our Plan of Operations. We
understand that the average time frame for approval of a plan of operation by
the Las Vegas, Nevada branch office of the BLM since January 1, 2000 has been
approximately four years and five months. Although we understand that the
average time frame of the application process by the Las Vegas branch office of
the BLM relating to an environmental assessment in connection with a plan of
operations is approximately eleven months, the “threatened species” issue raised
by the BLM requires the BLM to consult with the U.S. Fish and Wildlife Service
of the Department of Interior, and the BLM has no control over the length of
this consultation process in order to develop any necessary environmental
mitigation measures.
Our work
on the project site will be limited to the scope within the Plan of Operations.
However, the Plan of Operations approval process will delay the start of our
drilling program for an undetermined period of time. To perform any additional
drilling or mining on the project, we would be required to submit a new
application to the BLM for approval prior to the commencement of any such
additional activities.
We do not
believe these added requirements will have a material adverse impact on our
overall business plan for the Searchlight Gold Project, given that we have
received no indication from the BLM, at this time, that the BLM will ultimately
deny our request for approval of our Plan of Operations. However, there is no
assurance of the timeline for approval by the BLM or that the BLM will grant
approval. Our drilling and mining program on this project is dependent on
obtaining the necessary approval from the BLM. Therefore, if approval ultimately
is not obtained, we may have to scale back or abandon exploration efforts on the
project. If management determines, based on any factors including the foregoing,
that capitalized costs associated with any of our mineral interests are not
likely to be recovered, we would incur a significant impairment of our
investment in such property interests on our financial statements.
We have
not been profitable since inception and there is no assurance that we will
develop profitable operations in the future. Our net loss for the nine months
ended September 30, 2009 and 2008 was $3,194,874 and $2,363,475, respectively.
Our net loss for the years ended December 31, 2008, 2007 and 2006 was
$3,128,386, $2,221,818 and $2,540,978, respectively. As of September 30, 2009,
we had an accumulated deficit of $16,551,356. As of December 31, 2008, we had an
accumulated deficit of $13,356,482. We cannot assure you that we will have
profitable operations in the future.
Corporate Information
. Our
principal executive offices are located at 2441 W. Horizon Ridge Pkwy., Suite
120, Henderson, Nevada, 89052. Our telephone number is (702) 939-5247. Our
Internet address is
www.searchlightminerals.com
.
Through a link on the “Recent Filings” section of our website, we make available
the following filings as soon as reasonably practicable after they are
electronically filed with or furnished to the Securities and Exchange Commission
(“SEC”): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and any amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All such filings are available free of charge.
Information contained on our website or that is accessible through our website
should not be considered to be part of this prospectus.
The
Offering
Securities
offered by the selling stockholders
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17,819,859
shares of common stock
(1)
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Common
stock outstanding as of December 3, 2009
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118,657,123
shares
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Warrants
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Each
warrant sold in the private placement is exercisable for shares of our
common stock at an initial exercise price of $1.85 per share, subject to
adjustment upon certain events. The warrants were exercisable upon
issuance and will expire on November 12, 2012. The common stock underlying
the warrants sold in the private placement is being registered for resale
hereunder. The warrants themselves have not been, are not hereby being,
and are not expected to be registered under the Securities Act of 1933, as
amended, or the Securities Act. Currently, there is no public market for
the warrants, and we do not expect that any such market will develop. The
warrants will not be listed on any securities exchange or included in any
automated quotation system.
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Use
of Proceeds
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We
will not receive any of the proceeds from the sale of the securities owned
by the selling stockholders. We may receive proceeds in connection with
the exercise of warrants for the underlying shares of our common stock,
which may in turn be sold by the selling stockholders under this
prospectus. We intend to use any proceeds from the exercise of warrants
for working capital and other general corporate purposes. There is no
assurance that any of the warrants will ever be exercised for cash, if at
all.
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Risk
Factors
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An
investment in our securities involves a high degree of risk and could
result in a loss of your entire investment. Prior to making an investment
decision, you should carefully consider all of the information in this
prospectus and, in particular, you should evaluate the risk factors set
forth under the caption “Risk Factors” beginning on page
6.
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OTC
Bulletin Board Symbol
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SRCH
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(1)
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Consists
of 11,678,596 shares of common stock and 6,141,263 shares of our common
stock issuable upon the exercise of our outstanding common stock purchase
warrants. These include warrants to purchase an additional 5,839,298
shares of common stock issued to investors in a private placement closed
on November 12, 2009 and warrants to purchase up to 301,965 shares of
common stock issued as commissions to registered broker-dealers in
connection with the private
placement.
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. Forward-looking statements
provide our current expectations or forecasts of future events. Forward-looking
statements include statements about our expectations, beliefs, plans,
objectives, intentions, assumptions and other statements that are not historical
facts. Words or phrases such as “anticipate,” “believe,” “continue,” “ongoing,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project”
or similar words or phrases, or the negatives of those words or phrases, may
identify forward-looking statements, but the absence of these words does not
necessarily mean that a statement is not forward-looking.
The risk
factors referred to in this prospectus could materially and adversely affect our
business, financial conditions and results of operations and cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements made by us, and you should not place undue reliance
on any such forward-looking statements. Any forward-looking statement speaks
only as of the date on which it is made and we do not undertake any obligation
to update any forward-looking statement or statements to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events. The risks and uncertainties described below
are not the only ones we face. New factors emerge from time to time, and it is
not possible for us to predict which will arise. There may be additional risks
not presently known to us or that we currently believe are immaterial to our
business. In addition, we cannot assess the impact of each factor on our
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statements
.
If any such
risks occur, our business, operating results, liquidity and financial condition
could be materially affected in an adverse manner. Under such circumstances, you
may lose all or part of your investment.
The
industry and market data contained in this prospectus are based either on our
management’s own estimates or, where indicated, independent industry
publications, reports by governmental agencies or market research firms or other
published independent sources and, in each case, are believed by our management
to be reasonable estimates. However, industry and market data is subject to
change and cannot always be verified with complete certainty due to limits on
the availability and reliability of raw data, the voluntary nature of the data
gathering process and other limitations and uncertainties inherent in any
statistical survey of market shares. We have not independently verified market
and industry data from third-party sources. In addition, consumption patterns
and customer preferences can and do change. As a result, you should be aware
that market share, ranking and other similar data set forth herein, and
estimates and beliefs based on such data, may not be verifiable or
reliable.
RISK
FACTORS
An
investment in our common stock is very risky. Our financial condition is
unsound. You should not invest in our common stock unless you can afford to lose
your entire investment. You should carefully consider the risk factors described
below, together with all other information in this prospectus and incorporated
by reference herein, before making an investment decision. If an active market
is ever established for our common stock, the trading price of our common stock
could decline due to any of these risks, and you could lose all or part of your
investment. You also should refer to the other information set forth, and
incorporated by reference, in this prospectus, including our financial
statements and the related notes.
Risks
Relating to Our Business
We
lack an operating history and have losses which we expect to continue into the
future. As a result, we may have to suspend or cease exploration activities if
we do not obtain additional financing, and our business will fail.
We were
incorporated on January 12, 1999 and initially were engaged in the business of
biotechnology research and development. In February, 2005, we changed our
business to mineral exploration. We have a limited history upon which we may
make an evaluation of the future success or failure of our current business
plan.
We have a
history of operating losses and have an accumulated deficit. Our net loss for
the nine months ended September 30, 2009 and 2008 was $3,194,874 and $2,363,475,
respectively. We recorded a net loss of $3,128,386, $2,221,818 and $2,540,978
for the years ended December 31, 2008, 2007 and 2006, respectively, and have
incurred cumulative net losses from operations of $16,551,356, $13,356,482,
$10,228,096 and $8,006,278, as of September 30, 2009, December 31, 2008, 2007
and 2006, respectively. In addition, we had cash reserves of approximately
$13,690,278, $7,055,591 and $12,007,344 at November 30, 2009, December 31, 2008
and 2007, respectively. We have not commenced our proposed mineral processing
and mining operations and are still in the exploration stages of our proposed
operations. Prior to completion of our exploration stage, we anticipate that we
will incur increased operating expenses without realizing any revenues. We
therefore expect to incur significant losses into the foreseeable
future.
We have
not attained profitable operations and are dependent upon obtaining financing to
pursue our plan of operation. Our ability to achieve and maintain profitability
and positive cash flow will be dependent upon, among other things:
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our
ability to locate a profitable mineral
property;
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positive
results from our feasibility studies on the Searchlight Gold Project and
the Clarkdale Slag Project;
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positive
results from the operation of our initial test module on the Clarkdale
Slag Project; and
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our
ability to generate revenues.
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We may
not generate sufficient revenues from our proposed business plan in the future
to achieve profitable operations. If we are not able to achieve profitable
operations at some point in the future, we eventually may have insufficient
working capital to maintain our operations as we presently intend to conduct
them or to fund our expansion plans. In addition, our losses may increase in the
future as we expand our business plan. These losses, among other things, have
had and will continue to have an adverse effect on our working capital, total
assets and stockholders’ equity. If we are unable to achieve profitability, the
market value of our common stock will decline and there would be a material
adverse effect on our financial condition.
Our
exploration and evaluation plan calls for significant expenses in connection
with the Clarkdale Slag Project and the Searchlight Gold Project. Over the next
twelve months, our management anticipates that the minimum cash requirements for
funding our proposed exploration, testing and construction program and our
continued operations will be approximately $9,000,000. On November 12, 2009, we
completed a private placement of 12,078,596 units of our securities at a
purchase price of $1.25 per unit, resulting in aggregate gross proceeds to us of
$15,098,245. Based on the net proceeds received by us from the private
placement, we estimate that our current financial resources are sufficient to
allow us to meet the anticipated costs of our exploration, testing and
construction programs for the 2010 fiscal year. However, if actual costs are
greater than we have anticipated, we will require additional financing in order
to fund our exploration, testing and construction plans for 2010. We do not
currently have any financing arrangements in place for such additional
financing, and there are no assurances that we will be able to obtain additional
financing in an amount sufficient to meet our needs or on terms that are
acceptable to us.
Obtaining
additional financing is subject to a number of factors, including the market
prices for the mineral property and base and precious metals. These factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us. If adequate funds are not available or if they are not available on
acceptable terms, our ability to fund our business plan could be significantly
limited and we may be required to suspend our business operations. We cannot
assure you that additional financing will be available on terms favorable to us,
or at all. The failure to obtain such a financing would have a material, adverse
effect on our business, results of operations and financial
condition.
If
additional funds are raised through the issuance of equity or convertible debt
securities, the percentage ownership of current stockholders will be reduced and
these securities may have rights and preferences superior to that of current
stockholders. If we raise capital through debt financing, we may be forced to
accept restrictions affecting our liquidity, including restrictions on our
ability to incur additional indebtedness or pay dividends.
For these
reasons, the report of our auditor accompanying our financial statements filed
herewith includes a statement that these factors raise substantial doubt about
our ability to continue as a going concern. Our ability to continue as a going
concern will be dependent on our raising of additional capital and the success
of our business plan.
Actual
capital costs, operating costs and economic returns may differ significantly
from our estimates and there are no assurances that any future activities will
result in profitable mining operations.
We are an
exploration stage company and are still in the process of exploring and testing
our mineral projects. We do not have any historical mineral operations upon
which to base our estimates of costs. Decisions about the exploration, testing
and construction of our mineral properties will ultimately be based upon
feasibility studies. Feasibility studies derive cost estimates based primarily
upon:
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anticipated
tonnage, grades and metallurgical characteristics of the ore to be mined
and processed;
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anticipated
recovery rates of gold and other metals from the
ore;
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cash
operating costs of comparable facilities and equipment;
and
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anticipated
weather/climate conditions.
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To date,
we have only conducted an internal pre-feasibility study of the Clarkdale Slag
Project. In particular:
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we
have conducted limited amounts of drilling at the
site;
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process
testing has been limited to smaller scale pilot plants and bench scale
testing;
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our
mine plans, slag processing concepts, metallurgical flow sheets and
estimated recoveries are still in exploration stages;
and
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actual
metallurgical recoveries may fail to meet preliminary estimates when
scaled up from pilot plant scale to production
scale.
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We
incurred delays during the construction of our production module, including
delays in receiving large pieces of equipment from manufacturers, engineering
related delays due to the complexity of installing the production module
equipment in a World War I era module building and the decision to construct a
separate building to house the electrowinning equipment after it was determined
that the electrowinning equipment would not adequately fit in the module
building. Consequently, the construction timeline for completing the production
module was extended by approximately twelve months from what we originally
anticipated and there was an approximately 55% increase in costs from what we
had originally projected.
In order
to demonstrate the large scale viability of the project, we will need to
complete final feasibility studies that address the economic viability of the
project. Capital and operating costs and economic returns, and other estimates
contained in our final feasibility studies may differ significantly from our
current estimates. There is no assurance that our actual capital and operating
costs will not exceed our current estimates. In addition, delays to construction
schedules may negatively impact the net present value and internal rates of
return for our mineral properties. There are no assurances that actual
recoveries of base and precious metals or other minerals processed from our
mineral projects will be economically feasible or that actual costs will match
our pre-feasibility estimates.
Feasibility
estimates typically underestimate future capital needs and operating costs. Our
projected operating and capital cost estimates are in preliminary stages and may
be subject to significant, upward adjustment based on future events, including
the results of any final feasibility study which we may develop.
If
the results from our feasibility studies and the results from the operation of
our first proposed production module are not sufficiently positive for us to
proceed with the construction of our processing facility we will have to scale
back or abandon our proposed operations on the Clarkdale Slag
Project.
We intend
to continue the exploration, testing and construction of our production module
at the Clarkdale Slag Project site, which is anticipated to consist of a full
scale production and processing cycle. This first production module is expected
to be used to conduct a final test of the economic feasibility of the Clarkdale
Slag Project. However, if the results of our pre-feasibility studies on the
Clarkdale Slag Project and the results from the operation of the first
production module are not positive, we will have to scale back or abandon our
proposed operations of the Clarkdale Slag Project. There is no assurance that
actual recoveries of base and precious metals or other minerals re-processed
from the slag pile will be economically feasible. If metal recoveries are less
than projected, then our metal sales will be less than anticipated and may not
equal or exceed the cost of mining and recovery. In such event, we will have
difficulty in raising additional capital to maintain operations and that would
result in a material adverse effect on our operating results, financial
condition and our ability to remain in business.
If
we are unable to achieve projected mineral recoveries from our exploration
mining activities at the Clarkdale Slag Project and Searchlight Gold Project,
then our financial condition will be adversely affected.
As we
have not established any reserves on either our Clarkdale Slag Project or
Searchlight Gold Project to date, there is no assurance that actual recoveries
of minerals from material mined during exploration mining activities will equal
or exceed our exploration costs on our mineral properties. To date, we have
completed only a limited amount of drilling and sampling on the Clarkdale Slag
Project site and the process testing of results has been limited to small pilot
plants and bench scale testing. There is no assurance that if we move to
production scale from pilot plant scale that our actual results will match
pre-feasibility estimates. If mineral recoveries are less than projected, then
our sales of minerals will be less than anticipated and may not equal or exceed
the cost of exploration and recovery, in which case our operating results and
financial condition will be materially, adversely affected.
We
have no known mineral reserves and if we cannot find any, we will have to cease
operations.
We have
no known mineral reserves. Mineral exploration is highly speculative. It
involves many risks and is often non-productive. Even if we are able to find
mineral reserves on our property our production capability is subject to further
risks including:
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costs
of bringing the property into production including exploration work,
preparation of production feasibility studies, and construction of
production facilities;
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availability
and costs of financing;
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ongoing
costs of production; and
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environmental
compliance regulations and
restraints.
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The
marketability of any minerals acquired or discovered may be affected by numerous
factors which are beyond our control and which cannot be accurately predicted,
such as market fluctuations, the lack of milling facilities and processing
equipment near the Searchlight Gold Project, the success of our drilling and
sampling activities on the Clarkdale Slag Project and such other factors as
government regulations, including regulations relating to allowable production,
exporting of minerals, and environmental protection. If we do not find a mineral
reserve or if we cannot explore the mineral reserve, either because we cannot
obtain an approved Plan of Operations, do not have the money to do so or because
it will not be economically feasible to do so, we will have to cease
operations.
Our
rights under the Searchlight Claims may be difficult to retain and may not apply
to all metals and minerals located on the Searchlight property.
Our
rights in the 20 placer mineral claims with respect to a contiguous,
approximately 3,200-acre site located (the “Searchlight Claims”) on Federal land
administered by the BLM near Searchlight, Nevada are the subject of unpatented
mining claims (mining claims to which the deeds from the U.S. Government have
not been received) made under the General Mining Law of 1872. The Searchlight
Claims were assigned to us in June 2008 by the original locators (those persons
who locate, or are entitled to locate, land or mining claims, and fix the
boundaries of land claims) of such claims under an Option Agreement for the
Searchlight Claims. Legal title to the Searchlight property is held by the
United States and there are numerous conditions that must be met for a mining
claimant to obtain and retain legal rights in the land and minerals claimed.
Because title to unpatented mining claims is subject to inherent uncertainties,
it is difficult to determine conclusively the ownership of such claims. These
uncertainties relate to such things as sufficiency of mineral discovery, proper
posting and marking of boundaries and possible conflicts with other claims not
determinable from descriptions of record. Since a substantial portion of all
mineral exploration, development and mining in the United States now occurs on
unpatented mining claims, this uncertainty is inherent in the mining
industry.
The
present status of our unpatented mining claims located on public lands allows us
the exclusive right to mine and remove valuable metals, such as precious and
base metals, that are in placer form (mineral which has been separated from its
host rock by natural processes). We also are allowed to use the surface of the
land solely for purposes related to mining and processing the metal-bearing
ores. However, legal ownership of the land remains with the United States.
Placer mining claims (ground with defined boundaries that contains metals in the
earth, sand, or gravel, and is not fixed in the rock) are not sufficient to
claim lode mineralization (a deposit in consolidated rock as opposed to a placer
deposit), and any metals in veins or in bedrock need to be separately claimed by
lode claims. Therefore, we may not have legal rights with respect to any lode
deposits within the property that is the subject of the Searchlight
Claims.
In order
for us to assert a valid right in the 160 acre Searchlight Claims which we
acquired in June 2008, there must have been a discovery with respect to the
Searchlight Claims prior to their transfer. The concept of the validity of the
“discovery” of a mining claim is a legal standard. Generally, the BLM considers
a discovery to be the identification of adequate amounts of minerals such that a
reasonable person would seek to develop the claim as a commercial enterprise.
Based on the results of our testing and sampling on the properties prior to
transfer of title to the related Searchlight Claims to us, we believe that we
have a valid basis to assert that we have made a discovery with respect to the
claims located on the contiguous property that is the subject of the Searchlight
Claims. Further, we are working to explore the Searchlight property and to
evaluate and plan for the exploration of the Searchlight Claims. However, if the
BLM was to determine that a discovery was not made on any of the 20 (160 acre)
association placer claims (a placer location made by an association of persons
in one location covering up to 160 acres) before any of such claims were
conveyed by the related group of locators of a particular claim to us, any of
such claims could implode to a 20-acre parcel surrounding the point of discovery
and potentially result in the loss of our rights in the surrounding 140 acres of
the particular claim. Further, placer mining claims ultimately are required to
have discovery on each 10-acre portion in order to be considered valid in their
entirety. Therefore, if the BLM was to determine that a discovery was not made
on any of the 10-acre portions of the association placer claims before any of
such claims were conveyed to us, any of such claims could implode to a 10-acre
parcel and potentially result in the loss of our rights in the surrounding 150
acres of the particular claim. At this time, there are no adversarial
proceedings by the BLM to challenge any of the 20 association placer claims.
However, there can be no assurances that adversarial proceedings will not occur
in the future, and if such proceedings occur, the BLM will not successfully
challenge these claims, which could have a material adverse effect on the
Searchlight Project and our operations.
During
the second quarter of 2008, we “double staked” the Searchlight property by
filing, with the BLM and the Clark County, Nevada Recorder, 142 new and separate
20-acre placer claims overtop of the twenty existing 160-acre claims. We were
only able to “double stake” 2,840 acres out of the 3,200 acre site due to
various regulatory restrictions on staking of certain of the smaller land
parcels on the site. We have maintained the twenty prior 160-acre claims to
provide us with a basis to retain the priority of and defend our existing
160-acre mining claims. However, we are subject to the risk that when we, a
single entity, acquire title to association placer claims from an association of
prior, multiple locators, there could be potential problems for us in the
future:
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First,
the validity of the association of the prior locators could always be
challenged by the BLM if the BLM believed that the association was not
properly assembled or if there were any “dummy locators” (place-holder
locators who did not contribute to the association). A “properly
assembled” placer association is comprised of 2–8 individuals or companies
who each may claim 20 acres and each owns a full interest in the claim.
The individuals may not be employees of one of the companies. These
individuals and/or entities must be involved actively in the business of
developing the claim. Use of an uninvolved individual or entity as a
locator for the purpose of acquiring additional acreage may constitute
fraud, and the entire claim could be declared void. A “dummy locator” is
an individual or entity who is not actively involved with the development
of the claims, and whose name has been used for the purpose of acquiring
additional acreage. The action of using dummy locator(s) may constitute
fraud, and under existing laws, the claim located by use of dummy
locator(s) can be declared void from its
inception.
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Second,
if there was deemed to be a discovery on any 160-acre claim following the
transfer to us, the claims could implode to a 20-acre parcel surrounding
the point of discovery of each claim and potentially leave the surrounding
140 acres unavailable for re-staking, and potentially to a 10-acre parcel
and leave the surrounding 150 acres unavailable for
re-staking.
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Third,
the location of the 20-acre claims may cause an implied abandonment of the
older claims. Should a problem occur in the future with the 160-acre
claims, we could revert to the 20-acre or 10-acre claims, if necessary.
Also, we will incur additional costs because we have to maintain two sets
of claims.
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We
believe that “double staking” the property enhances our existing claims because
“double staking” with 20-acre claims provides a more secure basis for asserting
our claim rights than our existing 160-acre claims because they were located and
are held solely by us, as a single entity and not as an association of two or
more entities. Holding 20-acre claims as a single entity reduces the likelihood
that the BLM will challenge the validity of the claims based on the existence of
“dummy locators.” If the BLM challenges the validity of the 160-acre claims or
we are forced to abandon such claims, we would revert to the 20-acre claims
covering only the 2,840 acres. Any regulatory permits that we have applied or
may apply for (i.e., drilling, and mining) would have to be conducted within the
related 2,840 acres. However, if the BLM was to determine that a discovery was
not made on any of the 10-acre portions of the 20-acre association placer
claims, any of such claims could implode to a 10-acre parcel and potentially
result in the loss of our rights in the adjoining 10 acres of the particular
claim.
Further,
we are required to make annual rental payments to the Federal government in
connection with our claims. If we fail to make our required payments in the
future, the related claims would be void.
In
addition, the BLM has been excluding significant amounts of land in southern
Nevada from mining and development over the past few decades. The BLM has
designated this excluded land as an ACEC. Any person that wishes to stake mining
claims would not be able to do so in these affected areas. However, if a person
already owns valid claims before the land is designated as an ACEC, the claimant
would have those claims grandfathered in. In the case of the Searchlight Claims,
the Searchlight Project has not been designated as an ACEC and our 160-acre
claims were originally located between 1990 and 2003. The BLM has advised us,
however, that due to the proximity of our claims to an ACEC we would be required
to file a Plan of Operations for our desired drilling program. We do not believe
these added requirements will have a material adverse impact on our Plan of
Operations for the Searchlight Gold Project. However, the Plan of Operations
approval process will delay the start of our drilling program for an
undetermined period of time. If the BLM decides in the future to designate the
Searchlight Project site as an ACEC, and also challenges our 160-acre claims, we
would have to rely on our “double staked” claims to preserve the Searchlight
Claims. Although we believe that, in such event, our “double staked” claims
would survive a challenge by the BLM, there can be no assurances to that effect
and the successful challenge of some or all of the Searchlight Claims would have
a material adverse effect on the Searchlight Project and our
operations.
We do not currently have a government
approved Plan of Operations for our Searchlight Gold Project, and if we are not
able to obtain an approved Plan of Operations, we will not be able to fulfill
our business plan with respect to the Searchlight Gold
Project
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The
former Searchlight Claim owners had previously obtained a BLM approved Plan of
Operations, which included permission to drill eighteen holes on the 3,200 acre
project area and to mine a 36-acre pit on our RR304 claim. We had anticipated
conducting our early stage exploratory work on the Searchlight Claims property
by utilizing the Plan of Operations issued to the former Searchlight Claim
owners, until such time as we would obtain a permit for exploration and
development in our own name or the former Searchlight Claim holder’s permit was
transferred to us. Although we did not acquire the Searchlight Claims with a
written agreement to purchase the Plan of Operations, the prior owners verbally
agreed to cooperate with us in attempting to transfer their Plan of Operations
into our name.
Although
the Plan of Operations was accepted and registered in the name of a former
Searchlight Claim owner, which is an affiliate of K. Ian Matheson, one of our
principal stockholders and a former officer and director, in September 2007, we
learned that the BLM had issued the BLM Order on May 12, 2006 against Mr.
Matheson and certain of his affiliates (Pass Minerals, Inc., Kiminco, Inc. and
Pilot Plant Inc., which also were prior Searchlight Claim owners and are our
stockholders) with respect to a dispute with the BLM on a project unrelated to
the Searchlight Gold Project. The dispute between the BLM and Mr. Matheson arose
due to the BLM’s determination that Mr. Matheson and his affiliates had engaged
in willful mineral trespass for the unauthorized removal of sand and gravel from
public lands by Mr. Matheson and his affiliates or their predecessors. The BLM
had demanded payment of approximately $2,530,000 for the willful trespass. After
failure by Mr. Matheson and his affiliates to pay the amount, the BLM issued the
BLM Order. The issuance of the BLM Order restricted our ability to rely upon the
Plan of Operations to conduct our early stage exploratory work on the
Searchlight Claims property until such time that we may obtain our own Plan of
Operations. An appeal by Mr. Matheson of the BLM Order with the Interior Board
of Land Appeals affirmed the BLM’s decision, keeping the BLM Order in effect.
The BLM Order effectively covered all projects tied to Mr.
Matheson.
As a
result of the BLM Order, we have been delayed in our ability to drill on the
Searchlight Gold Project property. However, we have anticipated that regulatory
and other delays would take place, which are typical in our industry. We have
applied for a new Plan of Operations in our name and are currently in the course
of the BLM’s review process. In addition, we have continued and will continue
with our surface sampling and metallurgical testing program while awaiting
approval of a new Plan of Operations.
In the
third quarter of 2008, we submitted a Plan of Operations to the BLM in our name,
substantially similar to the original Plan of Operations, which included a
request to drill eighteen holes on the project area and to mine a 36-acre mining
pit. On August 27, 2008, the BLM responded, in part, by advising that the
previous bond that we posted of $180,500 for the previous Plan of Operations
would not be transferrable to the new one and that a new bond would have to be
posted. At the time, we considered the recovery of the reclamation bond to be
uncertain and, therefore, we have established a full allowance against the
reclamation bond with the offsetting expense to project exploration costs. Based
on continued discussions with the BLM, we may be able to recover the bond upon
request, however, we have not chosen to make such a request at this
time.
In
September 2008, we decided that we would only continue to pursue the permits to
drill on the project area and forgo the 36-acre pit until a later date since we
believed that by keeping the pit area in the Plan of Operations, it might delay
the BLM’s approval process for our Plan of Operations. Although the 36-acre pit
had been part of the Plan of Operations obtained by the prior owners of the
Searchlight Claims, we do not believe that digging and mining a 36-acre pit
would be a material aspect of the Plan of Operations at this stage of the
Searchlight Gold Project. Therefore, we decided to remove the 36-acre pit from
the Plan of Operations. Further, by reducing the scope of the permit, we decided
that we could submit the application in the form of a Notice of Intent, a
shorter and less complex application form than a Plan of Operations.
Consequently, on September 24, 2008, we withdrew the Plan of Operations and
submitted a Notice of Intent with the BLM, pursuant to which we sought
permission to drill eighteen 500-foot drill holes on the Searchlight project
area.
After a
series of correspondence between us and the BLM, on December 15, 2008, we
received a letter from the BLM advising us that the BLM had closed our Notice of
Intent from consideration and that a new Plan of Operations would be required
based on two issues relating to the Desert Tortoise (
Gopherus asassizii
), a
Federally listed Threatened Species: (i) the proximity of the project area to a
nearby ACEC; and (ii) the future likelihood of tortoises being present on the
land within the project area which is involved in the application.
On
January 13, 2009, we filed a Notice of Appeal of the BLM’s decision regarding
the closing of our Notice of Intent. However, the BLM’s decision was upheld on
appeal by the U.S. Department of Interior on September 9, 2009.
During
the course of the appeal, we determined that, due to the standard lengthy time
required to have a Plan of Operations approved by the BLM and should we be
unsuccessful with our appeal, it would be prudent to begin the approval process
immediately by filing for our Plan of Operations. Thus, on March 23, 2009, we
submitted a new Plan of Operations to the BLM, taking into account the Desert
Tortoise issue. In our Plan of Operations, we have requested permission to drill
eighteen drill holes on the project area. In the event of the approval of our
Plan of Operations, we will be required to post a new reclamation bond with the
BLM, which we anticipate will be approximately $16,000. After a further series
of correspondence between us and the BLM, on September 15, 2009, we received a
comment letter from the BLM regarding our Plan of Operations. We have reached an
understanding with the BLM that we will use the Environmental Assessment
previously approved by the BLM under the prior Plan of Operations in connection
with the new Plan of Operations, and the BLM has requested that we conform
certain aspects of the new Plan of Operations with the previously approved
Environmental Assessment.
There is
no regulatory time frame for the BLM to review our Plan of Operations. We
understand that the average time frame for approval of a plan of operation by
the Las Vegas, Nevada branch office of the BLM since January 1, 2000 has been
approximately four years and five months. Although we understand that the
average time frame of the application process by the Las Vegas branch office of
the BLM relating to an environmental assessment in connection with a plan of
operations is approximately eleven months, the “threatened species” issue raised
by the BLM requires the BLM to consult with the U.S. Fish and Wildlife Service
of the Department of Interior, and the BLM has no control over the length of
this consultation process in order to develop any necessary environmental
mitigation measures.
Our work
on the project site will be limited to the scope within the Plan of Operations.
However, the Plan of Operations approval process will delay the start of our
drilling program for an undetermined period of time. To perform any additional
drilling or mining on the project, we would be required to submit a new
application to the BLM for approval prior to the commencement of any such
additional activities.
We do not
believe these added requirements will have a material adverse impact on our
overall business plan for the Searchlight Gold Project, given that we have
received no indication from the BLM, at this time, that the BLM will ultimately
deny our request for approval of our Plan of Operations. However, there is no
assurance of the timeline for approval by the BLM or that the BLM will grant
approval. Our drilling and mining program on this project is dependent on
obtaining the necessary approval from the BLM. Therefore, if approval ultimately
is not obtained, we may have to scale back or abandon exploration efforts on the
project. If management determines, based on any factors including the foregoing,
that capitalized costs associated with any of our mineral interests are not
likely to be recovered, we would incur a significant impairment of our
investment in such property interests on our financial statements.
If
we do not complete the construction of an Industrial Collector Road pursuant to
an agreement with the Town of Clarkdale, Arizona by January 2011, we may lose
our conditional use permit from the Town of Clarkdale with respect to the
Clarkdale Slag Project, and we do not currently have sufficient funds to
complete construction of the road. The loss of the permit would have a material
adverse effect on the Clarkdale Slag Project and our operations.
In
January 2009, we submitted a development agreement to the Town of Clarkdale for
the construction of an Industrial Collector Road. The purpose of the road is to
provide us with the capability to enhance the flow of industrial traffic to and
from the Clarkdale Slag Project. The construction of the road is a required
infrastructure improvement under the terms of our conditional use permit with
the Town of Clarkdale. The Town of Clarkdale approved the development agreement
on January 9, 2009.
The
development agreement provides that its effective date will be the later of (i)
30 days from the approving resolution of the agreement by the Clarkdale Town
Council; or (ii) the date on which the Town of Clarkdale obtains a connection
dedication from separate property owners who have land that will be utilized in
construction of the road; or (iii) the date on which the Town of Clarkdale
receives the proper effluent permit. The Town of Clarkdale has approved the
development agreement, and the remaining two contingencies with respect to the
effectiveness of the development agreement are beyond our control.
Under the
development agreement, we are obligated to complete the construction of the road
within two years after the effective date of the agreement. If we do not
complete the road within the two year period, we may lose our conditional use
permit from the Town of Clarkdale. Further, as a condition of our developing any
of our property that is adjacent to the Clarkdale Slag Project, we will be
required to construct additional enhancements to the road. We will have ten
years from the start of construction on the road in which to complete the
additional enhancements. However, we do not currently have any defined plans for
the development of the adjacent property.
We
estimate that the initial cost of construction of the road will be approximately
$3,500,000 and that the cost of the additional enhancements will be
approximately $1,200,000. We will be required to fund the costs of this
construction. Based on the uncertainty of the timing of these contingencies, we
have not included these costs in our current operating plans or budgets.
However, we will require additional project financing or other financing in
order to fund the construction of the road and the additional enhancements.
There are no assurances that we will be able to obtain additional financing in
an amount sufficient to meet our needs or on terms that are acceptable to us.
The failure to complete the road and the additional enhancements in a timely
manner under the development agreement would have a material adverse effect on
the Clarkdale Slag Project and our operations.
The
nature of mineral exploration and production activities involves a high degree
of risk; we could incur a write-down on our investment in any
project.
Exploration
for minerals is highly speculative and involves greater risk than many other
businesses. Investors should be aware of the difficulties normally encountered
by new mineral exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of the mineral claim may not result in the discovery of mineral
deposits. If funding is not available, we may be forced to abandon our
operations.
Many
exploration programs do not result in the discovery of mineralization and any
mineralization discovered may not be of sufficient quantity or quality to be
profitably mined. Uncertainties as to the metallurgical amenability of any
minerals discovered may not warrant the mining of these minerals on the basis of
available technology. Our operations are subject to all of the operating hazards
and risks normally incident to exploring for and developing mineral properties,
such as:
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encountering
unusual or unexpected formations;
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environmental
pollution;
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personal
injury and flooding;
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decrease
in recoverable reserves due to lower precious and base metal prices;
and
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changing
environmental laws and regulations.
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If
management determines, based on any factors including the foregoing, that
capitalized costs associated with any of our mineral interests are not likely to
be recovered, we would incur a write-down on our investment in such property
interests on our financial statements. Further, we may become subject to
liability for such hazards, including pollution and other hazards against which
we cannot insure or against which we may elect not to insure. At the present
time, we have no coverage to insure against these hazards. Such a write-down or
the payment of such liabilities may have a material adverse effect on our
financial position.
Our
industry is highly competitive, mineral lands are scarce and we may not be able
to obtain quality properties.
In
addition to us, many companies and individuals engage in the mining business,
including large, established mining companies with substantial capabilities and
long earnings records. There is a limited supply of desirable mineral lands
available for claim staking, lease, or acquisition in the United States and
other areas where we may conduct exploration activities. We may be at a
competitive disadvantage in acquiring mining properties since we must compete
with these individuals and companies, many of which have greater financial
resources and larger technical staffs. Mineral properties in specific areas
which may be of interest or of strategic importance to us may be unavailable for
exploration or acquisition due to their high cost or they may be controlled by
other companies who may not want to sell or option their interests at reasonable
prices. In addition, the Clarkdale slag pile is a finite, depleting asset.
Therefore, the life of the Clarkdale Slag Project will be finite, if it is ever
developed to the point of economic feasibility. Our long-term viability depends
upon finding and acquiring new resources from different sites or properties.
There can be no assurances that the Clarkdale Slag Project will become
economically viable, and if so, that we will achieve or obtain additional
successful economic opportunities.
As
we undertake exploration of our mineral claims, we will be subject to compliance
with government regulation that may increase the anticipated cost of our
exploration program.
There are
several governmental regulations that materially restrict mineral exploration.
We will be subject to the laws of the State of Nevada and applicable federal
laws as we carry out our exploration program on the Searchlight Gold Project. We
are required to obtain work permits, post bonds and perform remediation work for
any physical disturbance to the land in order to comply with these laws.
Further, the United States Congress is actively considering amendment of the
federal mining laws. Among the amendments being considered are imposition of
significant royalties payable to the United States and more stringent
environmental and reclamation standards, either of which would increase the cost
of operations of mining projects. While our planned exploration program budgets
for regulatory compliance, there is a risk that new regulations could increase
our costs of doing business and prevent us from carrying out our exploration
program.
We are
required to obtain work permits, post bonds and perform remediation work for any
physical disturbance to the land in order to comply with these laws. If we enter
the production phase, the cost of complying with permit and regulatory
environment laws will be greater because the impact on the project area is
greater. Permits and regulations will control all aspects of the production
program if the project continues to that stage. Examples of regulatory
requirements include:
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water
discharge will have to meet drinking water
standards;
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dust
generation will have to be minimal or otherwise
remediated;
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dumping
of material on the surface will have to be re-contoured and re-vegetated
with natural vegetation;
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an
assessment of all material to be left on the surface will need to be
environmentally benign;
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ground
water will have to be monitored for any potential
contaminants;
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the
socio-economic impact of the project will have to be evaluated and if
deemed negative, will have to be remediated;
and
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there
will have to be an impact report of the work on the local fauna and flora
including a study of potentially endangered
species.
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There is
a risk that new regulations could increase our costs of doing business and
prevent us from carrying out our exploration program. We will also have to
sustain the cost of reclamation and environmental remediation for all
exploration work undertaken. Both reclamation and environmental remediation
refer to putting disturbed ground back as close to its original state as
possible. Other potential pollution or damage must be cleaned-up and renewed
along standard guidelines outlined in the usual permits. Reclamation is the
process of bringing the land back to its natural state after completion of
exploration activities. Environmental remediation refers to the physical
activity of taking steps to remediate, or remedy, any environmental damage
caused. The amount of these costs is not known at this time as we do not know
the extent of the exploration program that will be undertaken beyond completion
of the recommended work program. If remediation costs exceed our cash reserves
we may be unable to complete our exploration program and have to abandon our
operations.
We
must comply with complex environmental regulations which are increasing and
costly.
Our
exploration operations are regulated by both Federal and State environmental
laws that relate to the protection of air and water quality, hazardous waste
management and mine reclamation. These regulations will impose operating costs
on us. If the regulatory environment for our operations changes in a manner that
increases the costs of compliance and reclamation, then our operating expenses
may increase. This would result in an adverse effect on our financial condition
and operating results.
Compliance
with environmental quality requirements and reclamation laws imposed by Federal,
State and local governmental authorities may:
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require
significant capital outlays;
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materially
affect the economics of a given
property;
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cause
material changes or delays in our intended activities;
and
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These
authorities may require us to prepare and present data pertaining to the effect
or impact that any proposed exploration for or production of minerals may have
upon the environment. The requirements imposed by any such authorities may be
costly, time consuming, and may delay operations. Future legislation and
regulations designed to protect the environment, as well as future
interpretations of existing laws and regulations, may require substantial
increases in equipment and operating costs and delays, interruptions, or a
termination of operations. We cannot accurately predict or estimate the impact
of any such future laws or regulations, or future interpretations of existing
laws and regulations, on our operations.
Affiliates of our management and
principal stockholders have conflicts of interest which may differ from those of
ours and yours and we only have one independent board
member
.
We have
ongoing business relationships with affiliates of our management and principal
stockholders. In particular, we have continuing obligations under the agreements
under which we acquired the assets relating to our Clarkdale Slag Project. We
remain obligated to pay a royalty which may be generated from the operations of
the Clarkdale Slag Project to Nanominerals Corp. (“Nanominerals”), one of our
principal stockholders, which is an affiliate of two members of our executive
management and board of directors, Carl S. Ager and Ian R. McNeil. We also have
engaged Nanominerals as a paid consultant to provide technical services to us.
In addition, we have a similar royalty arrangement with Verde River Iron Company
(“VRIC”), an affiliate of another member of our board of directors, Harry B.
Crockett. Further, one of our board members, Robert D. McDougal, serves as the
chief financial officer and a director of Ireland Inc., a publicly traded,
mining related company, which is an affiliate of Nanominerals. For these
reasons, Martin B. Oring is the sole independent member of our board of
directors. We had negotiated the revenue sharing agreements with each of
Nanominerals and VRIC prior to the time that Messrs. Ager, McNeil and Crockett,
as applicable, became board members. These persons are subject to a fiduciary
duty to exercise good faith and integrity in handling our affairs. However, the
existence of these continuing obligations may create a conflict of interest
between us and our board members and senior executive management, and any
disputes between us and such persons over the terms and conditions of these
agreements that may arise in the future may raise the risk that the negotiations
over such disputes may not be subject to being resolved in an arms’ length
manner. In addition, Nanominerals’ interest in Ireland Inc. and its other mining
related business interests may create a conflict of interest between us and our
board members and senior executive management who are affiliates of
Nanominerals. Further, the interests of K. Ian Matheson, one of our principal
stockholders (and a former officer and director), in Royal Mines and Minerals
Corp., a publicly traded mining company based in Nevada, of which Mr. Matheson
is an affiliate, and other mining related business interests may create a
conflict of interest between us and Mr. Matheson.
Although
our management intends to avoid situations involving conflicts of interest and
is subject to a Code of Ethics, there may be situations in which our interests
may conflict with the interests of those of our management or their affiliates.
These could include:
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competing
for the time and attention of
management;
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potential
interests of management in competing investment ventures;
and
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the
lack of independent representation of the interests of the other
stockholders in connection with potential disputes or negotiations over
ongoing business relationships.
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Although
we only have one independent director, the board of directors has adopted a
written Related Person Transactions Policy, that describes the procedures used
to identify, review, approve and disclose, if necessary, any transaction or
series of transactions in which: (i) we were, are or will be a participant; (ii)
the amount involved exceeds $120,000; and (iii) a related person had, has or
will have a direct or indirect material interest. There can be no assurance that
the above conflicts will not result in adverse consequences to us and the
interests of the other stockholders.
We
may suffer adverse consequences as a result of our reliance on outside
contractors to conduct our operations.
A
significant portion of our operations are currently conducted by outside
contractors. As a result, our operations are subject to a number of risks, some
of which are outside our control, including:
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negotiating
agreements with contractors on acceptable
terms;
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the
inability to replace a contractor and its operating equipment in the event
that either party terminates the
agreement;
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reduced
control over those aspects of operations which are the responsibility of
the contractor;
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failure
of a contractor to perform under its agreement with
us;
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interruption
of operations in the event that a contractor ceases its business due to
insolvency or other unforeseen
events;
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failure
of a contractor to comply with applicable legal and regulatory
requirements, to the extent it is responsible for such compliance;
and
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problems
of a contractor with managing its workforce, labor unrest or other
employment issues.
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In
addition, we may incur liability to third parties as a result of the actions of
our contractors. The occurrence of one or more of these risks could have a
material adverse effect on our business, results of operations and financial
condition.
Because
our management does not have formal training specific to the technicalities of
mineral exploration, there may be a higher risk that our business will
fail.
Our
executive officers and directors do not have any formal training as geologists
or in the technical aspects of management of a mineral exploration company. With
no direct training or experience in these areas, our management may not be fully
aware of the specific requirements related to working within this industry. Our
management's decisions and choices may not take into account standard
engineering or managerial approaches mineral exploration companies commonly use.
Consequently, our operations, earnings, and ultimate financial success could
suffer irreparable harm due to management's lack of experience in this
industry.
Mineral,
and base and precious metal prices are volatile and declines may have an adverse
effect on our share price and business plan.
The
market price of minerals is extremely volatile and beyond our control. Basic
supply/demand fundamentals generally influence gold prices. The market dynamics
of supply/demand can be heavily influenced by economic policy. Fluctuating metal
prices will have a significant impact on our results of operations and operating
cash flow. Furthermore, if the price of a mineral should drop dramatically, the
value of our properties which are being explored or developed for that mineral
could also drop dramatically and we might not be able to recover our investment
in those properties. The decision and investment necessary to put a mine into
production must be made long before the first revenues from production will be
received. Price fluctuations between the time that we make such a decision and
the commencement of production can completely change the economics of the mine.
Although it is possible for us to protect against some price fluctuations by
entering into derivative contracts (hedging) in certain circumstances, the
volatility of mineral prices represents a substantial risk which no amount of
planning or technical expertise can eliminate.
If
the price of base and precious metals declines, our financial condition and
ability to obtain future financings will be impaired.
The price
of base and precious metals is affected by numerous factors, all of which are
beyond our control. Factors that tend to cause the price of base and precious
metals to decrease include the following:
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sales
or leasing of base and precious metals by governments and central
banks;
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a
low rate of inflation and a strong U.S.
dollar;
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decreased
demand for base and precious metals in industrial, jewelry and investment
uses;
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high
supply of base and precious metals from production, disinvestment, scrap
and hedging;
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sales
by base and precious metals producers, foreign transactions and other
hedging transactions; and
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devaluing
local currencies (relative to base and precious metals prices in U.S.
dollars) leading to lower production costs and higher production in
certain major base and precious metals producing
regions.
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Our
business is dependent on the price of base and precious metals. We have not
undertaken hedging transactions in order to protect us from a decline in the
price of base and precious metals. A decline in the price of base and precious
metals may also decrease our ability to obtain future financings to fund our
planned exploration programs.
The restatement of certain of our
historical consolidated financial statements may have an adverse effect on
us
.
We have
restated certain items on our consolidated balance sheets and statements of
operations. On our consolidated balance sheets: (i) mineral properties have been
restated to include the market value of certain shares issued by us under the
terms of our option agreements for the acquisition of the mineral claims making
up the Searchlight Gold Project and for the computation of deferred tax
liability assumed in the acquisition; and (ii) the Clarkdale Slag Project has
been restated to include revision of acquisition costs related to issuance of
warrants, consideration of certain terms with respect to future payments that
should have been recorded as contingent consideration and related deferred
future income tax liability in connection with our acquisition of Transylvania
International, Inc. (“Transylvania”). Our statement of operations for the year
ended December 31, 2005, has been restated to reclassify other comprehensive
income as discontinued operations and to reflect income tax benefit related to
the acquisition accounting for the Searchlight Claims and the Clarkdale Slag
Project. Our statement of operations for the year ended December 31, 2006 has
been restated to reclassify foreign currency translation adjustments as general
and administrative expenses and to reflect income tax benefit related to the
acquisition accounting for Searchlight Claims. Our consolidated statement of
operations for the year ended December 31, 2007, has been restated to reflect
the recomputation of the income tax benefit related to net operating losses as a
result of changes to the purchase accounting for the Clarkdale Slag Project.
There was no other impact on the results of operations. Our consolidated
statement of operations for the period from inception to December 31, 2007 has
been restated to reflect the cumulative totals impacted by the 2005, 2006 and
2007 restated amounts, as well as to reclassify net losses prior to January 1,
2005 as losses from discontinued operations. Related to these issues, our
balance sheets for the periods ended December 31, 2005, 2006 and consolidated
balance sheet for 2007 have been restated to reclassify accumulated other
comprehensive loss as accumulated deficit during the exploration stage. Details
regarding the restatement and its underlying circumstances are discussed in the
Explanatory Notes in Notes 1, 3, 4 and 16 of the Notes to the consolidated
financial statements included in this prospectus. As a result of the events
described above, we may become subject to a number of significant risks, which
could have an adverse effect on our business, financial condition and results of
operations, including: we may be subject to potential civil litigation,
including stockholder class action lawsuits and derivative claims made on behalf
of us, and regulatory proceedings or actions, the defense of which may require
us to devote significant management attention and to incur significant legal
expense and which litigation, proceedings or actions, if decided against us,
could require us to pay substantial judgments, settlements or other
penalties.
We
identified material weaknesses in our internal control over financial reporting
and concluded that such controls were not effective. If we fail to maintain
effective internal control over financial reporting, we may not be able to
accurately report our financial results. We can provide no assurance that we
will at all times in the future be able to report that our internal control is
effective.
As a
registrant under the Exchange Act and a public company, and under Section 404 of
the Sarbanes-Oxley Act of 2002, we are required to include a management report
of our internal controls over financial reporting in our annual report, which
contains management’s assessment of the effectiveness of the company’s internal
controls over financial reporting. We are required to report, among other
things, control deficiencies that constitute material weaknesses or changes in
internal control that, or that are reasonably likely to, materially affect
internal control over financial reporting. A “material weakness” is a
significant deficiency or combination of significant deficiencies that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. If we fail to
comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or
report a material weakness, we might be subject to regulatory sanction and
investors may lose confidence in our financial statements, which may be
inaccurate if we fail to remedy such material weakness.
Our
independent registered public accounting firm is required to attest to and
report on management’s assessment of the effectiveness of the company’s internal
controls over financial reporting. Our management may conclude that our internal
controls over our financial reporting are not effective. Moreover, even if our
management concludes that our internal controls over financial reporting are
effective, our independent registered public accounting firm may still decline
to attest to our management’s assessment or may issue a report that is qualified
if it is not satisfied with our controls or the level at which our controls are
documented, designed, operated, or reviewed, or if it interprets the relevant
requirements differently from us. Our reporting obligations as a public company
will place a significant strain on our management, operational, and financial
resources and systems for the foreseeable future. Effective internal controls,
particularly those related to revenue recognition, are necessary for us to
produce reliable financial reports and are important to help prevent fraud. As a
result, our failure to achieve and maintain effective internal controls over
financial reporting could result in the loss of investor confidence in the
reliability of our financial statements, which in turn could harm our business
and negatively impact the trading price of our stock. Furthermore, we anticipate
that we will incur considerable costs and use significant management time and
other resources in an effort to comply with Section 404 and other requirements
of the Sarbanes-Oxley Act.
Based on
the restatements described above, our management concluded that our system of
internal control over financial reporting was not effective during the period
from March 31, 2005 through September 30, 2008, which resulted in the
restatements described above. Management had identified internal control
deficiencies which, in management’s judgment, represented material weakness in
internal control over financial reporting. The control deficiencies generally
related to controls over the accounting for complex transactions to ensure such
transactions are recorded as necessary to permit preparation of financial
statements and disclosure in accordance with generally accepted accounting
principles. Such complex transactions included capital asset acquisitions and
accounting for income taxes. At this time, management has remediated all of our
deficiencies in internal controls which, in management’s judgment, represented
material weakness in internal control over financial reporting. We can provide
no assurance that we will at all times in the future be able to report that our
internal control over financial reporting is effective. If we fail to maintain
an effective system of internal controls, we may not be able to accurately
report our financial results or prevent fraud.
Risks
Relating to Our Securities
There
has been a very limited public trading market for our securities, and the market
for our securities may continue to be limited and be sporadic and highly
volatile.
There is
currently a limited public market for our common stock. Our common stock is
quoted on the Over-the-Counter Bulletin Board (the “OTCBB”). We cannot assure
you that an active market for our shares will be established or maintained in
the future. The OTCBB is not a national securities exchange, and many companies
have experienced limited liquidity when traded through this quotation system.
Holders of our common stock may, therefore, have difficulty selling their
shares, should they decide to do so. In addition, there can be no assurances
that such markets will continue or that any shares, which may be purchased, may
be sold without incurring a loss. The market price of our shares, from time to
time, may not necessarily bear any relationship to our book value, assets, past
operating results, financial condition or any other established criteria of
value, and may not be indicative of the market price for the shares in the
future.
In
addition, the market price of our common stock may be volatile, which could
cause the value of our common stock to decline. Securities markets experience
significant price and volume fluctuations. This market volatility, as well as
general economic conditions, could cause the market price of our common stock to
fluctuate substantially. Many factors that are beyond our control may
significantly affect the market price of our shares. These factors
include:
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price
and volume fluctuations in the stock
markets;
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changes
in our earnings or variations in operating
results;
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any
shortfall in revenue or increase in losses from levels expected by
securities analysts;
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changes
in regulatory policies or law;
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operating
performance of companies comparable to us;
and
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general
economic trends and other external
factors.
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Even if
an active market for our common stock is established, stockholders may have to
sell their shares at prices substantially lower than the price they paid for the
shares or might otherwise receive than if an active public market
existed.
Future
financings could adversely affect common stock ownership interest and rights in
comparison with those of other security holders.
Our board
of directors has the power to issue additional shares of common stock without
stockholder approval. If additional funds are raised through the issuance of
equity or convertible debt securities, the percentage ownership of our existing
stockholders will be reduced, and these newly issued securities may have rights,
preferences or privileges senior to those of existing stockholders.
If we
issue any additional common stock or securities convertible into common stock,
such issuance will reduce the proportionate ownership and voting power of each
other stockholder. In addition, such stock issuances might result in a reduction
of the per share book value of our common stock.
We do not
currently have an authorized class of preferred stock. However, we intend to
submit a proposal to our stockholders to authorize a class of up to 40,000,000
shares of preferred stock, and have filed a proxy statement with the SEC to that
effect. There can be no assurances that our stockholders will approve the
proposed authorization of a class of preferred stock.
The
proposed class of preferred stock is commonly known as “blank check” preferred
stock. The preferred stock may be issued from time to time in one or more
series, and the board of directors, without further approval of our
stockholders, would be authorized to fix the relative rights, preferences,
privileges and restrictions applicable to each series of preferred stock. Such
shares of preferred stock, if and when issued, may have rights, powers and
preferences superior to those of our common stock. Although there are no current
plans, commitments or understandings, written or oral, to issue any preferred
stock, in the event of any issuances, the holders of common stock will not have
any preemptive or similar rights to acquire any preferred stock.
The
proposed class of preferred stock could, under certain circumstances, have an
anti-takeover effect. For example, in the event of a hostile attempt to take
over control of us, it may be possible for us to endeavor to impede the attempt
by issuing shares of preferred stock, thereby diluting or impairing the voting
power of the other outstanding shares of common stock and increasing the
potential costs to acquire control of us. The proposed class of preferred stock
therefore may have the effect of discouraging unsolicited takeover attempts,
thereby potentially limiting the opportunity for our stockholders to dispose of
their shares at the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed class of preferred
stock may have the effect of permitting our current management, including the
current board of directors, to retain its position, and place it in a better
position to resist changes that stockholders may wish to make if they are
dissatisfied with the conduct of our business.
Our
anti-takeover provisions or provisions of Nevada law, in our articles of
incorporation and bylaws and the common share purchase rights that accompany
shares of our common stock could prevent or delay a change in control of us,
even if a change of control would benefit our stockholders.
Provisions
of our articles of incorporation and bylaws, as well as provisions of Nevada
law, could discourage, delay or prevent a merger, acquisition or other change in
control of us, even if a change in control would benefit our stockholders. These
provisions:
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classify
our board of directors so that only one-third of the directors are elected
each year and require the vote of 66 2/3% of the outstanding stock
entitled to vote in the election of directors to amend these
provisions;
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prohibit
stockholder action by written consent and require that all stockholder
actions be taken at a meeting of our stockholders;
and
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establish
advance notice requirements for nominations for election to the board of
directors or for proposing matters that can be acted upon by stockholders
at stockholder meetings and require the vote of 66 2/3% of the outstanding
stock entitled to vote in the election of directors to amend these
provisions,
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In
addition, the Nevada Revised Statutes contain provisions governing the
acquisition of a controlling interest in certain publicly held Nevada
corporations. These laws provide generally that any person that acquires 20% or
more of the outstanding voting shares of certain publicly held Nevada
corporations, such as us, in the secondary public or private market must follow
certain formalities before such acquisition or they may be denied voting rights,
unless a majority of the disinterested stockholders of the corporation elects to
restore such voting rights in whole or in part. These laws provide that a person
acquires a "controlling interest" whenever a person acquires shares of a subject
corporation that, but for the application of these provisions of the Nevada
Revised Statutes, would enable that person to exercise (1) one-fifth or more,
but less than one-third, (2) one-third or more, but less than a majority or (3)
a majority or more, of all of the voting power of the corporation in the
election of directors. The Control Share Acquisition Statute generally applies
only to Nevada corporations with at least 200 stockholders, including at least
100 stockholders of record who are Nevada residents, and which conduct business
directly or indirectly in Nevada. Our Bylaws provide that the provisions of the
Nevada Revised Statutes, known as the “Control Share Acquisition Statute” apply
to the acquisition of a controlling interest in us, irrespective of whether we
have 200 or more stockholders of record, or whether at least 100 of our
stockholders have addresses in the State of Nevada appearing on our stock
ledger. These laws may have a chilling effect on certain transactions if our
articles of incorporation or bylaws are not amended to provide that these
provisions do not apply to us or to an acquisition of a controlling interest, or
if our disinterested stockholders do not confer voting rights in the control
shares.
Each
currently outstanding share of our common stock includes, and each newly issued
share of our common stock will include, a common share purchase right. The
rights are attached to and trade with the shares of common stock and generally
are not exercisable. The rights will become exercisable if a person or group
acquires, or announces an intention to acquire, 15% or more of our outstanding
common stock. However, the applicable threshold percentage will not exceed 20%
or more of our outstanding common stock in the case of any person or group who
owned 15% or more of our outstanding common stock as of August 24, 2009. These
persons may be deemed to include certain of our officers, directors and
principal stockholders. The rights have some anti-takeover effects and generally
will cause substantial dilution to a person or group that attempts to acquire
control of us without conditioning the offer on either redemption of the rights
or amendment of the rights to prevent this dilution. The rights are designed to
provide additional protection against abusive or unfair takeover tactics, such
as offers for all shares at less than full value or at an inappropriate time (in
terms of maximizing long-term stockholder value), partial tender offers and
selective open-market purchases. The rights are intended to assure that our
board of directors has the ability to protect stockholders and us if efforts are
made to gain control of us in a manner that is not in the best interests of us
and our stockholders. The rights could have the effect of delaying, deferring or
preventing a change of control that is not approved by our board of directors,
which in turn could prevent our stockholders from recognizing a gain in the
event that a favorable offer is extended and could materially and negatively
affect the market price of the common stock.
A
substantial number of our shares are available for sale in the public market and
sales of those shares could adversely affect our stock price.
Sales of
a substantial number of shares of common stock into the public market, or the
perception that such sales could occur, could substantially reduce our stock
price in the public market for our common stock, and could impair our ability to
obtain capital through a subsequent sale of our securities.
Our
common stock is subject to “penny stock” regulations that may affect the
liquidity of our common stock.
Our
common stock is subject to the rules adopted by the SEC that regulate
broker-dealer practices in connection with transactions in “penny stocks.” Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges, for which
current price and volume information with respect to transactions in such
securities is provided by the exchange or system).
The penny stock rules require that a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
those rules, deliver a standardized risk disclosure document prepared by the
SEC, which contains the following:
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a
description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary
trading;
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a
description of the broker’s or dealer’s duties to the customer and of the
rights and remedies available to the customer with respect to violation of
such duties or other requirements of securities
laws;
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a
brief, clear, narrative description of a dealer market, including “bid”
and “ask” prices for penny stocks and significance of the spread between
the “bid” and “ask” price;
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a
toll-free telephone number for inquiries on disciplinary actions,
definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks;
and
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such
other information and in such form (including language, type, size and
format), as the SEC shall require by rule or
regulation.
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Prior to
effecting any transaction in penny stock, the broker-dealer also must provide
the customer the following:
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the
bid and offer quotations for the penny
stock;
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the
compensation of the broker-dealer and its salesperson in the
transaction;
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the
number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock;
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the
liquidity of the market for such stock;
and
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monthly
account statements showing the market value of each penny stock held in
the customer’s account.
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In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser’s written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for a stock such as our common stock if it is
subject to the penny stock rules.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of the shares of common stock by the
selling stockholders or the shares of common stock issuable upon the exercise of
our outstanding common stock purchase warrants by the selling stockholders
pursuant to this prospectus. We may receive proceeds from the issuance of shares
of our common stock upon the exercise of common stock purchase warrants. These
warrants are exercisable at a weighted average exercise price of $1.85 per
share. We intend to use any proceeds from the exercise of warrants for working
capital and other general corporate purposes. These warrants and the exercise of
these warrants by the selling stockholders are not being offered under this
prospectus; however, the shares of our common stock currently held by the
selling stockholders and the shares of our common stock issuable upon exercise
of the warrants are being offered under this prospectus by the selling
stockholders.
There is
no assurance that any of the warrants will ever be exercised for cash, if at
all. If all of these outstanding warrants are exercised for cash, we would
receive aggregate gross proceeds of approximately $11,361,336.
SELLING
STOCKHOLDERS
Pursuant
to various registration rights agreements with the selling stockholders, we have
agreed to file with the SEC a registration statement pursuant to the Securities
Act covering the resale of our registrable securities owned by such selling
stockholders that are subject to the registration rights agreements.
Accordingly, we have filed a registration statement on Form S-3, of which this
prospectus forms a part, with respect to the resale of these securities from
time to time. In addition, we agreed in the registration rights agreements with
the investors to register securities of ours they hold and to use our best
efforts to keep the registration statement effective until the securities they
own covered by this prospectus have been sold or may be sold without
registration or prospectus delivery requirements under the Securities Act,
subject to certain restrictions. These agreements include contractual penalty
provisions for failure to comply with these registration rights
provisions.
On
November 12, 2009, we issued an aggregate of 12,078,596 units of our securities
to certain investors, consisting of 12,078,596 shares of common stock and
warrants to purchase an additional 6,039,298 shares of common stock, in a
private placement to various accredited investors pursuant to a Securities
Purchase Agreement. We paid commissions to agents in connection with the private
placement in the amount of approximately $1,056,877 and warrants to purchase up
to 301,965 shares of common stock. Dahlman Rose & Company, LLC served as
sole placement agent for the private placement, along with a syndicate that
included RK Equity Capital Markets. Nanominerals Corp., one of our principal
stockholders and an affiliate of certain of our officers and directors,
purchased 400,000 units of securities at an aggregate purchase price of
$500,000. However, Nanominerals waived its registration rights in connection
with the private placement.
The
warrants issued to the purchasers in the private placement became exercisable on
November 12, 2009. The warrants have an expiration date of November 12, 2012 and
a weighted average exercise price of $1.85 per share, although, under certain
specified circumstances, the warrants may be exercised by means of a “cashless
exercise.” The warrants have customary anti-dilution provisions, including,
without limitation, provisions for the adjustment to the exercise price based on
certain stock dividends, stock splits and issuances of equity securities
(including the issuance of debt convertible into equity) by us, subject to
certain exempt issuances which will not result in an adjustment to the exercise
price.
Pursuant
to the Securities Purchase Agreement, we are restricted from, among other
things, (i) issuing any shares of common stock, subject to certain exempt
issuances, until the initial registration statement we agreed to file pursuant
to the Registration Rights Agreement is declared effective by the SEC, but in no
event will this restriction expire prior to 90 days following the closing of the
private placement, (ii) entering into certain “variable rate transactions,” as
such term is defined in the Securities Purchase Agreement, or (iii) effecting
any forward or reverse stock splits for a period of six months after the closing
without the prior written consent of a majority of the purchasers. The
Securities Purchase Agreement also contains representations and warranties by us
and the purchasers that are customary for transactions of the type contemplated
in connection with the private placement.
Pursuant
to the Registration Rights Agreement, we have agreed to file a registration
statement covering the resale of the shares of common stock issued to purchasers
in the private placement, including the shares of common stock issuable upon
exercise of the warrants. The Registration Rights Agreement also extends to the
shares of common stock issuable upon the exercise of the warrants issued to
agents as commissions in the private placement. Pursuant to the Registration
Rights Agreement, we have agreed to file an initial registration statement with
the SEC within 30 calendar days of the closing of the private placement and to
use our best efforts to cause such registration statement to become effective
within 120 days of the closing, or we will be subject to certain liquidated
damages provisions. We also have agreed to file and keep continuously effective
such additional registration statements until all of the shares of common stock
and the shares of common stock issuable upon exercise of the warrants registered
thereunder have been sold or may be sold without volume restrictions pursuant to
Rule 144 of the Securities Act.
If, among
other things, (i) we fail to file the initial registration statement within the
prescribed period or (ii) any registration statement that we file is not
declared effective within 120 calendar days of the required filing date, we have
agreed to pay to each purchaser, as partial liquidated damages, an amount in
cash equal to 1% of the aggregate purchase price paid by each such purchaser for
any shares of common stock that have not then been registered for every 30 days
following any required filing date and, on a pro rata basis, for every 30 days
following the 120 day period within which any registration statement was to be
declared effective. The maximum aggregate liquidated damages payable to a
purchaser will not exceed 3% of the aggregate purchase price paid by such
purchaser.
We have
included in this prospectus and related registration statement the shares
issuable upon exercise of the warrants issued in the private placement to the
selling security holders.
Selling
Stockholders Table
We have
filed a registration statement with the SEC, of which this prospectus forms a
part, with respect to the resale of our securities covered by this prospectus
from time to time under Rule 415 of the Securities Act. Our securities being
offered by this prospectus are being registered to permit secondary public
trading of our securities. Subject to the restrictions described in this
prospectus, the selling stockholders may offer our securities covered under this
prospectus for resale from time to time. In addition, subject to the
restrictions described in this prospectus, the selling stockholders may sell,
transfer or otherwise dispose of all or a portion of our securities being
offered under this prospectus in transactions exempt from the registration
requirements of the Securities Act. See “Plan of Distribution.”
The table below presents information,
as of December 3, 2009, regarding the selling stockholders and the securities
that the selling stockholders (and their pledgees, assignees, transferees and
other successors in interest) may offer and sell from time to time under this
prospectus. More specifically, the following table sets forth as to the selling
stockholders:
|
·
|
the
number of shares of our common stock that the selling stockholders
beneficially owned prior to the offering for resale of any of the shares
of our common stock being registered by the registration statement of
which this prospectus is a
part;
|
|
·
|
the
number of shares of our common stock that may be offered for resale for
the selling stockholders’ account under this prospectus;
and
|
|
·
|
the
number and percent of shares of our common stock to be held by the selling
stockholders after the offering of the resale securities, assuming all of
the resale securities are sold by the selling stockholders and that the
selling stockholders do not acquire any other shares of our common stock
prior to their assumed sale of all of the resale
shares.
|
The table
is prepared based on information supplied to us by the selling stockholders. We
do not know when or in what amounts a selling stockholder may offer shares for
sale. Although we have assumed for purposes of the table below that the selling
stockholders will sell all of the securities offered by this prospectus, because
the selling stockholders may offer from time to time all or some of their
securities covered under this prospectus, or in another permitted manner, no
assurances can be given as to the actual number of securities that will be
resold by the selling stockholders or that will be held by the selling
stockholders after completion of the resales. The selling stockholders might not
sell any or all of the shares offered by this prospectus. In addition, the
selling stockholders may have sold, transferred or otherwise disposed of the
securities in transactions exempt from the registration requirements of the
Securities Act since the date the selling stockholders provided the information
regarding their securities holdings. However, for purposes of this table, we
have assumed that, after completion of the offering, none of the shares covered
by the prospectus will be held by the selling stockholders. Information covering
the selling stockholders may change from time to time and changed information
will be presented in a post-effective amendment to this registration statement
if and when necessary and required. Except as described above, based on
information provided to us by the selling stockholders and to our knowledge,
there are currently no agreements, arrangements or understandings with respect
to the resale of any of the securities covered by this prospectus.
Where
applicable, we have indicated in the footnotes to the following table the name
and title of the individuals which we have been advised have the power to vote
or dispose of the securities listed in the following table.
|
|
Shares Beneficially
Owned
Before Offering
(1)
|
|
|
Number of Shares
Being Offered
|
|
|
Shares Issuable Upon
Exercise Of Warrants
Being
Offered
(2)
|
|
|
Shares Beneficially
Owned
After Offering
(1)
|
|
Name of
Selling
Security
Holder
|
|
Number
|
|
|
Percent
|
|
|
|
|
|
|
|
|
Number
|
|
|
Percent
|
|
William
Belzberg
Revocable
Living
Trust
(3)
|
|
|
150,000
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
*
|
|
Bibicoff Family Trust
Dated 5/16/00
(4)
|
|
|
177,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
57,000
|
|
|
|
*
|
|
William Bodenlos
(5)
|
|
|
20,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
*
|
|
Robert
J. Brous
|
|
|
80,000
|
|
|
|
*
|
|
|
|
48,000
|
|
|
|
24,000
|
|
|
|
8,000
|
|
|
|
*
|
|
Bruce Burnam Trust of
1992
(6)
|
|
|
315,000
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
165,000
|
|
|
|
*
|
|
Capform, Inc.
(7)
|
|
|
90,000
|
|
|
|
*
|
|
|
|
60,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
*
|
|
Robert
E. Courson
|
|
|
600,000
|
|
|
|
*
|
|
|
|
400,000
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
*
|
|
John L. Curci Trust
Dated 12/22/93
(8)
|
|
|
120,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
*
|
|
Dahlman Rose &
Company, LLC
(9)
|
|
|
199,209
|
|
|
|
*
|
|
|
|
0
|
|
|
|
199,209
|
|
|
|
0
|
|
|
|
*
|
|
Feshbach Family Trust
(10)
|
|
|
345,000
|
|
|
|
*
|
|
|
|
230,000
|
|
|
|
115,000
|
|
|
|
0
|
|
|
|
*
|
|
Kenneth
Greif
|
|
|
240,000
|
|
|
|
*
|
|
|
|
160,000
|
|
|
|
80,000
|
|
|
|
0
|
|
|
|
*
|
|
Gunther Family Trust
(11)
|
|
|
842,500
|
|
|
|
*
|
|
|
|
235,000
|
|
|
|
117,500
|
|
|
|
490,000
|
|
|
|
*
|
|
Hartz Capital
Investments, LLC
(12)
|
|
|
420,000
|
|
|
|
*
|
|
|
|
280,000
|
|
|
|
140,000
|
|
|
|
0
|
|
|
|
*
|
|
Irene Horn Trust
(13)
|
|
|
120,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
*
|
|
Michael Jacks
(14)
|
|
|
1,654
|
|
|
|
*
|
|
|
|
0
|
|
|
|
1,654
|
|
|
|
0
|
|
|
|
*
|
|
Fred & Lenore
Kayne Family Trust Dated 3/29/04
(15)
|
|
|
1,475,200
|
|
|
|
1.24
|
%
|
|
|
200,000
|
|
|
|
100,000
|
|
|
|
1,175,200
|
|
|
|
*
|
|
Stephen
Kayne
|
|
|
45,000
|
|
|
|
*
|
|
|
|
25,600
|
|
|
|
12,800
|
|
|
|
0
|
|
|
|
*
|
|
Howard G. Klein
(5)
|
|
|
80,000
|
|
|
|
*
|
|
|
|
0
|
|
|
|
80,000
|
|
|
|
0
|
|
|
|
*
|
|
Brian W. Lawrence
Living Trust
(16)
|
|
|
2,639,994
|
|
|
|
2.22
|
%
|
|
|
159,996
|
|
|
|
79,998
|
|
|
|
2,400,000
|
|
|
|
2.02
|
%
|
Luxor Capital
Partners Offshore, Ltd.
(17)
|
|
|
6,979,200
|
|
|
|
5.77
|
%
|
|
|
4,652,800
|
|
|
|
2,326,400
|
|
|
|
0
|
|
|
|
*
|
|
Luxor Capital
Partners, LP
(17)
|
|
|
4,314,000
|
|
|
|
3.59
|
%
|
|
|
2,876,000
|
|
|
|
1,438,000
|
|
|
|
0
|
|
|
|
*
|
|
Luxor Spectrum LLC
(17)
|
|
|
73,200
|
|
|
|
*
|
|
|
|
48,800
|
|
|
|
24,400
|
|
|
|
0
|
|
|
|
*
|
|
Luxor Spectrum
Offshore, Ltd.
(17)
|
|
|
633,600
|
|
|
|
*
|
|
|
|
422,400
|
|
|
|
211,200
|
|
|
|
0
|
|
|
|
*
|
|
Robert A. Muh
(14)
|
|
|
275
|
|
|
|
*
|
|
|
|
0
|
|
|
|
275
|
|
|
|
0
|
|
|
|
*
|
|
Plough Penny Partners
L.P.
(18)
|
|
|
120,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
*
|
|
James
R. Poage
|
|
|
120,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
*
|
|
Ralph I. Reis
Revocable Trust
(19)
|
|
|
254,500
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
134,500
|
|
|
|
*
|
|
Dennis Rosenberg and
Iris Rosenberg, JTWROS
(20)
|
|
|
147,545
|
|
|
|
*
|
|
|
|
40,000
|
|
|
|
20,000
|
|
|
|
87,545
|
|
|
|
*
|
|
Victor
J. Scaravilli
|
|
|
360,000
|
|
|
|
*
|
|
|
|
240,000
|
|
|
|
120,000
|
|
|
|
0
|
|
|
|
*
|
|
Robert
Schnell
|
|
|
30,000
|
|
|
|
*
|
|
|
|
20,000
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
*
|
|
Steven
E. Slawson
|
|
|
272,500
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
122,500
|
|
|
|
*
|
|
Sutter Securities,
Incorporated
(14)
|
|
|
827
|
|
|
|
*
|
|
|
|
0
|
|
|
|
827
|
|
|
|
0
|
|
|
|
*
|
|
TCMP³ Partners
(21)
|
|
|
473,500
|
|
|
|
*
|
|
|
|
160,000
|
|
|
|
80,000
|
|
|
|
233,500
|
|
|
|
*
|
|
Glen
Tobias
|
|
|
2,407,150
|
|
|
|
2.02
|
%
|
|
|
320,000
|
|
|
|
160,000
|
|
|
|
1,927,150
|
|
|
|
1.62
|
%
|
Bradley
E. Turell
|
|
|
190,000
|
|
|
|
*
|
|
|
|
60,000
|
|
|
|
30,000
|
|
|
|
100,000
|
|
|
|
*
|
|
Harvey
A. Turell
|
|
|
45,000
|
|
|
|
*
|
|
|
|
30,000
|
|
|
|
15,000
|
|
|
|
0
|
|
|
|
*
|
|
Vernon F. Taylor Jr.
Revocable Trust
(22)
|
|
|
120,000
|
|
|
|
*
|
|
|
|
80,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
*
|
|
Daniel
Wallen
|
|
|
206,700
|
|
|
|
*
|
|
|
|
50,000
|
|
|
|
25,000
|
|
|
|
131,700
|
|
|
|
*
|
|
Stuart
Zerner
|
|
|
318,500
|
|
|
|
*
|
|
|
|
100,000
|
|
|
|
50,000
|
|
|
|
168,500
|
|
|
|
*
|
|
(1)
|
Beneficial
ownership is determined in accordance with the rules of the SEC. Shares of
common stock subject to options or warrants currently exercisable or
exercisable within 60 days of the date of this prospectus, are deemed
outstanding for computing the percentage ownership of the stockholder
holding the options or warrants, but are not deemed outstanding for
computing the percentage ownership of any other stockholder. Unless
otherwise indicated in the footnotes to this table, we believe
stockholders named in the table have sole voting and sole investment power
with respect to the shares set forth opposite such stockholder's name.
Unless otherwise indicated, the officers, directors and stockholders can
be reached at our principal offices. Percentage of ownership is based on
118,657,123 shares of common stock outstanding as of the date of December
3, 2009.
|
(2)
|
The
shares of common stock being offered by the selling stockholders include
the shares of common stock and the shares of common stock underlying the
common stock purchase warrants issued to the selling stockholders in
connection with our November 12, 2009 private placement. The warrants,
which have a weighted average exercise price of $1.85 per share, are fully
vested and expire on November 12,
2012.
|
(3)
|
William
Belzberg has power to vote and dispose of the shares that this selling
stockholder owns.
|
(4)
|
Harvey
Bibicoff has power to vote and dispose of the shares that this selling
stockholder owns.
|
(5)
|
RK
Equity Capital Markets, LLC acted as our agent with respect to our
November 12, 2009 private placement. As a commission for the services
provided by RK Equity in connection with the November 12, 2009 private
placement, RK Equity received warrants to purchase 100,000 shares of
common stock at an exercise price of $1.85 per share. The warrants were
issued in the names of William Bodenlos and Howard G.
Klein.
|
(6)
|
Bruce
Burnam has power to vote and dispose of the shares that this selling
stockholder owns.
|
(7)
|
John
Grimes has power to vote and dispose of the shares that this selling
stockholder owns.
|
(8)
|
John
L. Curci has power to vote and dispose of the shares that this selling
stockholder owns.
|
(9)
|
Dahlman
Rose & Company, LLC acted as our agent with respect to our November
12, 2009 private placement. As a commission for the services provided by
Dahlman in connection with the November 12, 2009 private placement,
Dahlman received a cash commission of $1,056,077 and warrants to purchase
199,209 shares of common stock at an exercise price of $1.85 per share.
Each of Simar A. Rose and Ernest J. Dahlman, III has power to vote and
dispose of the shares that this selling stockholder
owns.
|
(10)
|
Andrew
Feshbach has power to vote and dispose of the shares that this selling
stockholder owns.
|
(11)
|
Richard
S. Gunther has power to vote and dispose of the shares that this selling
stockholder owns.
|
(12)
|
Empery
Asset Management LP, the authorized agent of Hartz Capital Investments,
LLC ("HCI"), has discretionary authority to vote and dispose of the shares
held by HCI and may be deemed to be the beneficial owner of these shares.
Martin Hoe and Ryan Lane, in their capacity as investment managers of
Empery Asset Management, LP, may also be deemed to have investment
discretion and voting power over the shares held by HCI. Mr. Hoe and Mr.
Lane disclaim any beneficial ownership of these
shares.
|
(13)
|
Steve
Klein has power to vote and dispose of the shares that this selling
stockholder owns.
|
(14)
|
Sutter
Securities, Incorporated acted as our agent with respect to our November
12, 2009 private placement. As a commission for the services provided by
Sutter Securities in connection with the November 12, 2009 private
placement, Sutter Securities received warrants to purchase 2,756 shares of
common stock at an exercise price of $1.85 per share. The warrants were
issued in the names of Michael Jacks, Robert A. Muh and Sutter Securities,
Incorporated. Barit Muh has power to vote and dispose of the shares that
are held in the name of Sutter Securities,
Incorporated.
|
(15)
|
Each
of Fred Kayne and Lenore Kayne has power to vote and dispose of the shares
that this selling stockholder owns.
|
(16)
|
Brian
W. Lawrence has power to vote and dispose of the shares that this selling
stockholder owns.
|
(17)
|
Christian
Leone has power to vote and dispose of the shares owned by each of these
selling stockholders. Luxor Capital Group, LP acts as the investment
manager of each of the named selling stockholders. Luxor Management, LLC
is the general partner of Luxor Capital Group, LP. Mr. Leone is the
managing member of Luxor Management, LLC. Luxor Capital Group, LP, Luxor
Management, LLC and Mr. Leone may be deemed to be the beneficial owner of
the 8,000,000 shares of common stock and the warrants to purchase up to
4,000,000 shares owned in the aggregate by these selling stockholders, or
approximately 9.77% of our common
stock.
|
(18)
|
Judson
B. Traphagen has power to vote and dispose of the shares that this selling
stockholder owns.
|
(19)
|
Ralph
I. Reis has power to vote and dispose of the shares that this selling
stockholder owns.
|
(20)
|
Each
of Dennis Rosenberg and Iris Rosenberg has power to vote and dispose of
the shares that this selling stockholder
owns.
|
(21)
|
Each
of Steven Slawson and Walter Schenker has power to vote and dispose of the
shares that this selling stockholder
owns.
|
(22)
|
Vernon
F. Taylor Jr. has power to vote and dispose of the shares that this
selling stockholder owns.
|
PLAN
OF DISTRIBUTION
The
selling stockholders may, from time to time, sell any or all of their securities
on any stock exchange, market or trading facility on which the shares are traded
or in private transactions. There is a limited public trading market for our
common stock. Our common stock is quoted under the symbol “SRCH” on the
OTCBB.
The
selling stockholders may use any one or more of the following methods when
selling securities:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
The
selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.Broker-dealers engaged by
the selling stockholders may arrange for other broker-dealers to participate in
sales.
Broker-dealers
may receive commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions, commissions and
similar selling expenses, if any, attributable to the sale of shares will be
borne by a selling stockholder. The selling stockholders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares if liabilities are imposed on that person under the
Securities Act.
The
selling stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act supplementing or
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this
prospectus.
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed a supplement to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act supplementing or amending the
list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this
prospectus.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), any person engaged in the distribution of the
resale shares may not simultaneously engage in market making activities with
respect to our common stock for a period of two business days prior to the
commencement of the distribution. In addition, the selling stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of our common stock by the selling stockholders or
any other person. We will make copies of this prospectus available to the
selling stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the
sale.
Each of
Dahlman Rose & Company, LLC and Sutter Securities, Incorporated , who are
selling stockholders, has identified itself to us as a registered broker-dealer,
and as a result, each is an underwriter within the meaning of Section 2(a)(11)
of the Securities Act in connection with the sale of the shares registered
hereunder underlying such warrants. In addition, William Bodenlos, Michael
Jacks, Howard G. Klein and Berit Muh, who also are selling stockholders, have
represented to us that they are affiliates of one or more registered
broker-dealers. Such persons also have represented to us that they purchased the
warrants relating to the shares registered hereunder in the ordinary course of
business, and at the time of the purchase of such securities, such persons had
no agreements or understandings, directly or indirectly, with any other person
to distribute such securities.
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for us
by Baker & Hostetler LLP, Los Angeles, California.
EXPERTS
The
financial statements included in the prospectus and elsewhere in the
registration statement, have been included in reliance on the reports of Brown
Armstrong, Paulden, McCown, Starbuck, Thornburgh & Keeter Accountancy
Corporation and Kyle L. Tingle, CPA, LLC, independent registered public
accountants, to the extent and for the periods indicated in their respective
reports, given on each of such firm’s authority as experts in accounting and
auditing.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC
allows us to “incorporate by reference” the information we file with it, which
means that we can disclose important information to you by referring you to
those documents instead of having to repeat the information in this prospectus.
The information incorporated by reference is considered to be part of this
prospectus, and later information that we file with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings we will make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, between the date of this
prospectus and the termination of the offering, and also between the date of the
initial registration statement and prior to effectiveness of the registration
statement:
|
·
|
our
quarterly reports on Form 10-Q for: (a) the quarter ended September 30,
2009, filed on November 13, 2009, (b) the quarter ended June 30, 2009,
filed on August 7, 2009, and (c) the quarter ended March 31, 2009, filed
on May 8, 2009;
|
|
·
|
our
annual report on Form 10-K for the year ended December 31, 2008, filed on
March 16, 2009 (and as amended on July 24, 2009, August 31, 2009 and
December 4, 2009);
|
|
·
|
our
current reports on Form 8-K or Form 8-K/A filed on January 5, 2009,
February 13, 2009, February 17, 2009, March 31, 2009, April 29, 2009, May
6, 2009, July 7, 2009, August 25, 2009, September 24, 2009 and November
13, 2009;
|
|
·
|
the
description of our common stock contained in our registration statement on
Form 10-SB, filed on July 11, 2000, including any amendment on reports
filed for the purpose of updating such
description;
|
|
·
|
the
description of our common stock purchase rights contained in our
registration statement on Form 8-A, filed on August 25, 2009 (and as
amended on September 24, 2009), including any amendment on reports filed
for the purpose of updating such description;
and
|
|
·
|
all
documents filed by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and before
termination of this offering.
|
To the
extent that any information contained in any filings we have made or will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, or
any exhibit thereto, was furnished, rather than filed with the SEC, such
information or exhibit is specifically not incorporated by reference in this
prospectus.
This
prospectus is part of a registration statement on Form S-3 that we have filed
with the SEC under the Securities Act. The rules and regulations of the SEC
allow us to omit from this prospectus certain information included in the
registration statement. For further information about us and our securities, you
should refer to the registration statement and the exhibits and schedules filed
with the registration statement. With respect to the statements contained in
this prospectus regarding the contents of any agreement or any other document,
in each instance, the statement is qualified in all respects by the complete
text of the agreement or document, a copy of which has been filed as an exhibit
to the registration statement.
These
documents may also be accessed on our website at www.searchlightminerals.com.
Except as otherwise specifically incorporated by reference in this prospectus,
information contained in, or accessible through, our website is not a part of
this prospectus.
You may
request a copy of any or all of the information incorporated by reference, at no
cost, by writing or telephoning us at the following address:
Searchlight
Minerals Corp.
2441 W.
Horizon Ridge Pkwy., Suite 120
Henderson,
Nevada, 89052
Attention:
Corporate Secretary
(702)
939-5247
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the SEC a registration statement on Form S-3 under the Securities Act
with respect to the shares of common stock offered hereby. This prospectus,
which constitutes a part of the registration statement, does not contain all of
the information set forth in the registration statement or the exhibits and
schedules filed therewith. For further information about us and the common stock
offered hereby, reference is made to the registration statement and the exhibits
and schedules filed therewith. Statements contained in this prospectus regarding
the contents of any contract or any other document that is filed as an exhibit
to the registration statement are not necessarily complete, and each such
statement is qualified in all respects by reference to the full text of such
contract or other document filed as an exhibit to the registration
statement.
A copy of
the registration statement and the exhibits and schedules filed therewith may be
inspected without charge at the public reference room maintained by the SEC,
located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of
all or any part of the registration statement may be obtained from such offices
upon the payment of the fees prescribed by the SEC. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room. We also
file annual, quarterly and current reports, proxy statements and other
information with the SEC. The SEC also maintains an Internet web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The address of the
site is
www.sec.gov
.
This
prospectus includes statistical data obtained from industry publications. These
industry publications generally indicate that the authors of these publications
have obtained information from sources believed to be reliable but do not
guarantee the accuracy and completeness of their information. While we believe
these industry publications to be reliable, we have not independently verified
their data.
TABLE
OF CONTENTS
|
|
Page
|
|
Summary
|
|
2
|
|
|
Special
Note Regarding Forward-Looking Statements
|
|
6
|
|
|
Risk
Factors
|
|
6
|
|
|
Use
of Proceeds
|
|
23
|
|
|
Selling
Stockholders
|
|
24
|
|
|
Plan
of Distribution
|
|
28
|
|
|
Legal
Matters
|
|
30
|
|
|
Experts
|
|
30
|
|
|
Incorporation
of Certain Information By Reference
|
|
30
|
|
|
Where
You Can Find Additional Information
|
|
31
|
|
|
You
should rely only on the information contained in this document. We have not
authorized anyone to give any information that is different. This prospectus is
not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted. The
information in this prospectus is complete and accurate as of the date on the
cover, but the information may change in the future.
SEARCHLIGHT
MINERALS CORP.
17,819,859
SHARES
Common
Stock
PROSPECTUS
____________,
2009
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses payable by Searchlight
Minerals Corp. in connection with the sale of the common stock being registered
hereby. The selling security holders will not bear any portion of such expenses.
All amounts are estimates except the SEC registration fee.
Description
|
|
Amount to be Paid
|
|
|
|
|
|
SEC
registration fee
|
|
$
|
2,005
|
|
Legal
fees
|
|
|
15,000
|
|
Accounting
fees
|
|
|
1,500
|
|
Printing
and related expenses
|
|
|
500
|
|
|
|
|
|
|
TOTAL
|
|
$
|
19,005
|
|
Item
15. Indemnification of Directors and Officers
Our
Bylaws include provisions for the indemnification of our directors, officers and
certain other persons, to the fullest extent permitted by applicable Nevada
law.
Section
78.7502 of the Nevada Revised Statutes permits a corporation to indemnify its
directors, officers and certain other persons, as follows:
A
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he:
|
·
|
is
not liable pursuant to Nevada Revised Statues 78.138;
or
|
|
·
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
|
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to Nevada
Revised Statutes 78.138 or did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, or that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
A
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if
he:
|
·
|
is
not liable pursuant to Nevada Revised Statutes 78.138;
or
|
|
·
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the
corporation.
|
Indemnification
may not be made for any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
To the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2 above, or in defense of any claim,
issue or matter therein, the corporation shall indemnify him against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
with the defense.
In
addition, Section 78.751 of the Nevada Revised Statutes permits a corporation to
indemnify its directors, officers and certain other persons, as
follows:
Any
discretionary indemnification pursuant to Nevada Revised Statues 78.7502, unless
ordered by a court or advanced pursuant to subsection 2, may be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
|
·
|
by
the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or
proceeding;
|
|
·
|
if
a majority vote of a quorum consisting of directors who were not parties
to the action, suit or proceeding so orders, by independent legal counsel
in a written opinion; or
|
|
·
|
if
a quorum consisting of directors who were not parties to the action, suit
or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
|
The
articles of incorporation, the bylaws or an agreement made by the corporation
may provide that the expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
The
indemnification pursuant to Nevada Revised Statues 78.7502 and advancement of
expenses authorized in or ordered by a court pursuant to this
section:
|
·
|
does
not exclude any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under the articles of
incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except
that indemnification, unless ordered by a court pursuant to Nevada Revised
Statues 78.7502 or for the advancement of expenses made pursuant to
subsection 2, may not be made to or on behalf of any director or officer
if a final adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action,
and
|
|
·
|
continues
for a person who has ceased to be a director, officer, employee or agent
and inures to the benefit of the heirs, executors and administrators of
such a person.
|
We have
liability insurance coverage for our directors and officers in the aggregate
amount of $15 million. We also intend to enter into separate indemnification
agreements with each of our directors and executive officers that provide the
maximum indemnity allowed to directors and executive officers by the Nevada
Revised Statutes and which allow for certain additional procedural
protections.
These
indemnification provisions and the indemnification agreements which we may enter
into with our officers and directors may be sufficiently broad to permit
indemnification of our officers and directors for liabilities (including
reimbursement of expenses incurred) arising under the Securities
Act.
Item
16. Exhibits
EXHIBIT
INDEX
The
following is a complete list of exhibits filed as part of this Registration
Statement, some of which are incorporated herein by reference from the reports,
registration statements and other filings of the issuer with the Securities and
Exchange Commission, as referenced below:
Reference
Number
|
|
Item
|
|
|
|
3.1
|
|
Articles
of Incorporation, as amended and restated to date
(1)
|
|
|
|
3.2
|
|
Amended
and Restated Bylaws
(2)
|
|
|
|
4.1
|
|
Specimen
Stock Certificate
(3)
|
|
|
|
4.2
|
|
Rights
Agreement, dated as of August 24, 2009, between Searchlight Minerals Corp.
and
Empire
Stock Transfer Inc.
(4)
|
|
|
|
4.3
|
|
Form
of Common Stock Purchase Warrant, dated November 12, 2009
(5)
|
|
|
|
4.4
|
|
Form
of Securities Purchase Agreement, dated November 12, 2009
(5)
|
|
|
|
4.5
|
|
Form
of Registration Rights Agreement, dated November 12, 2009
(5)
|
|
|
|
5.1
|
|
Legal
opinion of Baker & Hostetler LLP
|
|
|
|
23.1
|
|
Consent
of Dr. Richard F. Hewlett
|
|
|
|
23.2
|
|
Consent
of Nanominerals Corp.
|
|
|
|
23.3
|
|
Consent
of Mountain States R&D International Inc.
|
|
|
|
23.4
|
|
Consent
of Independent Mining Consultants, Inc.
|
|
|
|
23.5
|
|
Consent
of Arrakis, Inc.
|
|
|
|
23.6
|
|
Consent
of Baker & Hostetler LLP (contained in Exhibit 5.1)
|
|
|
|
23.7
|
|
Consent
of Brown Armstrong Paulden McCown Starbuck Thornburgh & Keeter
Accountancy Corporation
|
|
|
|
23.8
|
|
Consent
of Scott W. Lindsay
|
|
|
|
23.9
|
|
Consent
of Canadian Environmental & Metallurgical Inc.
|
|
|
|
23.10
|
|
Consent
of SGS Lakefield Research Limited
|
|
|
|
23.11
|
|
Consent
of Kyle L. Tingle, CPA, LLC
|
|
|
|
24.1
|
|
Power
of Attorney (included in the signature page to the Registration
Statement)
|
(1)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on December 23,
2008.
|
(2)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
April 29, 2009.
|
(3)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 10-SB
originally filed on July 11,
2000.
|
(4)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 8-A filed
on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto
the Form of Right Certificate and as Exhibit B thereto the Summary of
Common Stock Purchase Rights.
|
(5)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
November 13, 2009.
|
Item
17. Undertakings
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective
registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
provided,
however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) that is part of the
registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for purposes of determining liability under the Securities Act:
(i) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of the registration statement as of the date the filed prospectus was
deemed part of, and included in, the registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however , that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date.
(5) For
purposes of determining any liability under the Securities Act, each filing of
the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(6)
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(7) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities: The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Henderson, State of Nevada, on December 4, 2009.
|
SEARCHLIGHT
MINERALS CORP.
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|
|
|
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By:
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/s/ Ian R. McNeil
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Ian
R. McNeil
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President
and Chief Executive Officer
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(Principal
Executive Officer)
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KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Ian R. McNeil and Carl S. Ager, and each of them acting
individually, his true and lawful attorneys-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, as amended, and all post-effective amendments thereto,
and to file the same, with all exhibits thereto and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that such attorneys-in-fact
and agents or any of them, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated.
Signature
|
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Title
|
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Date
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/s/
IAN R.
MCNEIL
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Chief
Executive Officer, President and Director
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December
4, 2009
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Ian
R. McNeil
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(Principal
Executive Officer)
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|
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/s/
CARL S.
AGER
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Vice
President, Secretary, Treasurer and Director
|
|
December
4, 2009
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Carl
S. Ager
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|
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|
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/s/
MELVIN L.
WILLIAMS
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Chief
Financial Officer
|
|
December
4, 2009
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Melvin
L. Williams
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(Principal
Financial and Accounting Officer)
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|
|
|
|
|
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|
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Director
|
|
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Harry
B. Crockett
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|
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|
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/s/
ROBERT D.
MCDOUGAL
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Director
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December
4, 2009
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Robert
D. McDougal
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/s/ MARTIN B. ORING
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Director
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December
4, 2009
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Martin
B. Oring
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EXHIBIT
INDEX
The
following is a complete list of exhibits filed as part of this Registration
Statement, some of which are incorporated herein by reference from the reports,
registration statements and other filings of the issuer with the Securities and
Exchange Commission, as referenced below:
Reference
Number
|
|
Item
|
|
|
|
3.1
|
|
Articles
of Incorporation, as amended and restated to date
(1)
|
|
|
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3.2
|
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Amended
and Restated Bylaws
(2)
|
|
|
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4.1
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Specimen
Stock Certificate
(3)
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|
|
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4.2
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Rights
Agreement, dated as of August 24, 2009, between Searchlight Minerals Corp.
and
Empire
Stock Transfer Inc.
(4)
|
|
|
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4.3
|
|
Form
of Common Stock Purchase Warrant, dated November 12, 2009
(5)
|
|
|
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4.4
|
|
Form
of Securities Purchase Agreement, dated November 12, 2009
(5)
|
|
|
|
4.5
|
|
Form
of Registration Rights Agreement, dated November 12, 2009
(5)
|
|
|
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5.1
|
|
Legal
opinion of Baker & Hostetler LLP
|
|
|
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23.1
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Consent
of Dr. Richard F. Hewlett
|
|
|
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23.2
|
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Consent
of Nanominerals Corp.
|
|
|
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23.3
|
|
Consent
of Mountain States R&D International Inc.
|
|
|
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23.4
|
|
Consent
of Independent Mining Consultants, Inc.
|
|
|
|
23.5
|
|
Consent
of Arrakis, Inc.
|
|
|
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23.6
|
|
Consent
of Baker & Hostetler LLP (contained in Exhibit 5.1)
|
|
|
|
23.7
|
|
Consent
of Brown Armstrong Paulden McCown Starbuck Thornburgh & Keeter
Accountancy Corporation
|
|
|
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23.8
|
|
Consent
of Scott W. Lindsay
|
|
|
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23.9
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|
Consent
of Canadian Environmental & Metallurgical Inc.
|
|
|
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23.10
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Consent
of SGS Lakefield Research Limited
|
|
|
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23.11
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Consent
of Kyle L. Tingle, CPA, LLC
|
|
|
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24.1
|
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Power
of Attorney (included in the signature page to the Registration
Statement)
|
(1)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-133929) filed on December 23,
2008.
|
(2)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
April 29, 2009.
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(3)
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Filed
with the SEC as an exhibit to our Registration Statement on Form 10-SB
originally filed on July 11, 2000.
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(4)
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Filed
with the SEC as an exhibit to our Registration Statement on Form 8-A filed
on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto
the Form of Right Certificate and as Exhibit B thereto the Summary of
Common Stock Purchase Rights.
|
(5)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
November 13, 2009.
|
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