Attached files
file | filename |
---|---|
EX-32 - Magnum dOr Resources Inc | v174529_ex32.htm |
EX-31 - Magnum dOr Resources Inc | v174529_ex31.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended December 31, 2009
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from ______________
Commission
File Number: 000-31849
MAGNUM D’OR
RESOURCES, INC.
(Exact
name of registrant as specified in its charter)
NEVADA
|
80
- 0137402
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
1326 S.E.
17th
Street, #513
Ft. Lauderdale, Florida
33316
(Address
of principal executive offices)
(305)
420-6563
(Registrant's
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes o No
o
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 73,436,212 shares as of February 16,
2010.
Transitional
Small Business Disclosure Format (Check one): Yes o No x
MAGNUM
D’OR RESOURCES, INC. AND SUBSIDIARY
Quarterly
Report for the period Ended December 31, 2009
(Unaudited)
Item
Number
|
PART
I – Financial Information
|
Page
|
Item
1
|
Financial
Statements
|
3
|
3
|
||
Condensed
Consolidated Statements of Operations (unaudited)
|
4
|
|
Condensed
Consolidated Statement of Changes in Stockholders' Equity
(unaudited)
|
5 | |
Condensed
Consolidated Statements of Cash Flows (unaudited)
|
6
|
|
Notes
to the Condensed Consolidated Financial Statements
(unaudited)
|
7
|
|
Item
2
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
21
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
23
|
Item
4
|
Controls
and Procedures
|
24
|
PART
II – Other Information
|
||
Item
1
|
Legal
Proceedings
|
25
|
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
25
|
Item
6
|
Exhibits
|
27
|
Signatures
|
29
|
2
MAGNUM
D'OR RESOURCES, INC.
|
AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
December
31,
|
September
30,
|
|||||||
2009
|
2009
|
|||||||
(unaudited)
|
(audited)
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$ | 2,938,054 | $ | 57,844 | ||||
Accounts
receivable
|
12,934 | 19,708 | ||||||
Inventory
|
51,193 | 25,509 | ||||||
Bond
acquisition costs, net
|
288,443 | - | ||||||
Lien
asset receivable, net of deferred revenue of $66,547
|
66,550 | 66,550 | ||||||
Prepaid
expenses
|
3,105,205 | 408,311 | ||||||
Total
Current Assets
|
6,462,379 | 577,922 | ||||||
Property,
plant and equipment, net
|
3,513,692 | 3,242,466 | ||||||
Other
Assets:
|
||||||||
Inventory
|
6,971,698 | 6,971,698 | ||||||
Utility
deposits
|
29,796 | 28,333 | ||||||
Deposits
on equipment
|
409,302 | 390,558 | ||||||
Total
Other Assets
|
7,410,796 | 7,390,589 | ||||||
TOTAL
ASSETS
|
$ | 17,386,867 | $ | 11,210,977 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 868,388 | $ | 598,836 | ||||
Accrued
interest
|
44,449 | 138,778 | ||||||
Advances
from stockholders
|
- | 1,051,000 | ||||||
Deferred
rent
|
219,155 | 189,084 | ||||||
Current
obligations under capital leases
|
16,533 | 15,667 | ||||||
Notes
payable, net of discounts of $3,409,308 and $18,451,
respectively
|
1,860,722 | 2,288,706 | ||||||
Total
Current Liabilities
|
3,009,247 | 4,282,071 | ||||||
Long
Term Liabilities:
|
||||||||
Asset
retirement obligation
|
52,619 | |||||||
Non-current
obligations under capital leases
|
77,742 | 79,236 | ||||||
Non-current
notes payable
|
2,277,656 | 1,460,188 | ||||||
Derivative
liability
|
2,982,699 | - | ||||||
Total
Long Term Liabilities
|
5,390,716 | 1,539,424 | ||||||
TOTAL
LIABILITIES
|
8,399,963 | 5,821,495 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
Stockholders'
Equity:
|
||||||||
Preferred
stock, $.001 par value; 10,000,000 shares authorized,
|
||||||||
10,000,000
issued and outstanding, respectively
|
10,000 | 10,000 | ||||||
Preferred
stock B, $.001 par value; 40,000,000 shares
authorized,
|
||||||||
30,000,000
and 0 issued and outstanding, respectively
|
30,000 | 30,000 | ||||||
Common
stock, $.001 par value; 150,000,000 shares authorized,
|
||||||||
73,436,209
and 68,613,792 issued and outstanding, respectively
|
73,436 | 68,614 | ||||||
Additional
paid-in capital
|
57,320,748 | 51,204,486 | ||||||
Accumulated
deficit
|
(48,455,392 | ) | (45,878,841 | ) | ||||
Accumulated
other comprehensive loss
|
8,112 | (44,777 | ) | |||||
Total
Stockholders' Equity
|
8,986,904 | 5,389,482 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 17,386,867 | $ | 11,210,977 |
See
accompanying notes to the consolidated financial statements
3
MAGNUM
D'OR RESOURCES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
|
(unaudited)
|
Three
Months Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Sales
|
$ | 5,377 | $ | 5,647 | ||||
Cost
of Sales
|
355,977 | 33,254 | ||||||
Gross
Loss
|
(350,600 | ) | (27,607 | ) | ||||
Operating
Expenses
|
||||||||
Officer
compensation, non-cash
|
123,706 | 418,612 | ||||||
Consulting
fees, non-cash
|
1,690,867 | 4,138,540 | ||||||
Legal
and professional fees
|
409,715 | 95,571 | ||||||
General
and administrative expenses
|
174,986 | 41,544 | ||||||
Rent
|
101,479 | 86,414 | ||||||
Royalties
|
48,361 | 25,216 | ||||||
Depreciation
and amortization
|
8,368 | 9,239 | ||||||
Total
Operating Expenses
|
2,557,482 | 4,815,136 | ||||||
Loss
from Operations
|
(2,908,082 | ) | (4,842,743 | ) | ||||
Other
Income (Expense)
|
||||||||
Gain
(loss) on disposal of assets
|
(3,808 | ) | - | |||||
Miscellaneous
income
|
3,027 | - | ||||||
Interest
income
|
111 | - | ||||||
Amortization
of bond acquisition costs
|
(6,557 | ) | - | |||||
Gain
on derivative
|
512,799 | - | ||||||
Interest
expense
|
(174,041 | ) | (113,042 | ) | ||||
Net
other income (expense)
|
331,531 | (113,042 | ) | |||||
Net
Loss
|
(2,576,551 | ) | (4,955,785 | ) | ||||
Other
Comprehensive Income (Loss)
|
||||||||
Gain
(loss) from foreign currency translation
|
52,889 | (153,370 | ) | |||||
Comprehensive
Loss
|
$ | (2,523,662 | ) | $ | (5,109,155 | ) | ||
Net
Loss Per Share - Basic and Diluted
|
$ | (0.04 | ) | $ | (0.16 | ) | ||
Per
Share Information:
|
||||||||
Weighted Average
Number of Shares
|
||||||||
Outstanding
- Basic and Diluted
|
72,771,012 | 30,621,473 |
See
accompanying notes to the consolidated financial statements
4
MAGNUM
D'OR RESOURCES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT)
|
(unaudited)
|
Total
|
||||||||||||||||||||||||||||||||||||||||
Additional |
|
Other
|
Stockholder's
|
|||||||||||||||||||||||||||||||||||||
Common
|
Stock
|
Preferred
|
Stock
|
Preferred
|
Stock
|
Paid-in
|
Accumulated
|
Comprehensive
|
Equity
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
B
|
Amount
|
Capital
|
(Deficit)
|
Loss
|
(Deficit)
|
|||||||||||||||||||||||||||||||
Balance
- September 30, 2008
|
16,117,137 | 16,117 | 10,000,000 | 10,000 | - | - | 8,351,065 | (8,562,779 | ) | (26,857 | ) | (212,454 | ) | |||||||||||||||||||||||||||
Issuance
of stock for consulting services
|
40,849,500 | 40,850 | 25,000,000 | 25,000 | 29,269,776 | 29,335,626 | ||||||||||||||||||||||||||||||||||
Issuance
of stock for compensation
|
2,500,000 | 2,500 | 5,000,000 | 5,000 | 3,167,500 | 3,175,000 | ||||||||||||||||||||||||||||||||||
Issuance
of stock for accrued legal services
|
620,000 | 620 | 708,030 | 708,650 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for exercise of stock option
|
500,000 | 500 | 49,500 | 50,000 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for conversion of note payable
|
7,006,185 | 7,006 | 6,982,667 | 6,989,673 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock in connection with the purchase of assets
|
500,000 | 500 | 549,500 | 550,000 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for accrued expenses
|
150,000 | 150 | 152,850 | 153,000 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for accrued compensation
|
370,970 | 371 | 459,629 | 460,000 | ||||||||||||||||||||||||||||||||||||
Valuation
of warrants issued with notes payable
|
1,513,969 | 1,513,969 | ||||||||||||||||||||||||||||||||||||||
Net
loss for year
|
(37,316,062 | ) | (37,316,062 | ) | ||||||||||||||||||||||||||||||||||||
Other
comprehensive loss
|
(17,920 | ) | (17,920 | ) | ||||||||||||||||||||||||||||||||||||
Balance
- September 30, 2009
|
68,613,792 | 68,614 | 10,000,000 | 10,000 | 30,000,000 | 30,000 | 51,204,486 | (45,878,841 | ) | (44,777 | ) | 5,389,482 | ||||||||||||||||||||||||||||
Issuance
of stock for consulting services
|
3,375,000 | 3,375 | 4,511,125 | 4,514,500 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for conversion of note payable
|
1,047,417 | 1,047 | 1,182,237 | 1,183,284 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for conversion of warrants
|
300,000 | 300 | 300,000 | 300,300 | ||||||||||||||||||||||||||||||||||||
Issuance
of stock for prepaid expenses
|
100,000 | 100 | 122,900 | 123,000 | ||||||||||||||||||||||||||||||||||||
Net
loss for year
|
(2,576,551 | ) | (2,576,551 | ) | ||||||||||||||||||||||||||||||||||||
Other
comprehensive gain
|
52,889 | 52,889 | ||||||||||||||||||||||||||||||||||||||
Balance
- December 31, 2009
|
73,436,209 | 73,436 | 10,000,000 | 10,000 | 30,000,000 | 30,000 | 57,320,748 | (48,455,392 | ) | 8,112 | 8,986,904 |
See
accompanying notes to the consolidated financial statements
5
MAGNUM
D'OR RESOURCES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited)
|
Three
Months Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
Loss
|
$ | (2,576,551 | ) | $ | (4,955,785 | ) | ||
Adjustments
to reconcile net loss to net cash used in
|
||||||||
operating
activities:
|
||||||||
Stock
issued for services and expenses
|
1,734,433 | 4,080,525 | ||||||
Stock
issued for compensation expense
|
- | 375,000 | ||||||
Depreciation
and amortization
|
79,342 | 9,239 | ||||||
Amortization
of debt discount
|
104,641 | 59,466 | ||||||
Loss
on disposal
|
3,808 | - | ||||||
Services
paid with fixed assets
|
5,000 | - | ||||||
Gain
on derivatives
|
(512,799 | ) | - | |||||
Changes
in operating assets and liablitites:
|
||||||||
Accounts
receivable
|
6,899 | (5,647 | ) | |||||
Inventory
|
(24,625 | ) | - | |||||
Prepaid
expenses
|
209,009 | (53,195 | ) | |||||
Utility
deposits
|
(500 | ) | - | |||||
Accounts
payable and accrued expenses
|
276,598 | 280,000 | ||||||
Accrued
interest
|
43,570 | 53,042 | ||||||
Deferred
rent
|
- | 40,665 | ||||||
Net
cash flows used in operating activities
|
(651,175 | ) | (116,690 | ) | ||||
Cash
Flows from Investing Activities:
|
||||||||
Payments
for equipment
|
(43,938 | ) | (298,367 | ) | ||||
Increase
in equipment deposits
|
(196,580 | ) | (428,958 | ) | ||||
Cash
flows used in investing activities
|
(240,518 | ) | (727,325 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Cash
overdraft
|
- | 9,347 | ||||||
Payments
on capital leases
|
(3,905 | ) | - | |||||
Repayment
on notes payable
|
(584,303 | ) | (650 | ) | ||||
Payments
of bond acquisition costs
|
(295,000 | ) | - | |||||
Proceeds
from issuance of notes payable
|
4,659,329 | 300,000 | ||||||
Proceeds
from loans and advances from stockholders
|
- | 87,690 | ||||||
Cash
flows provided by financing activities
|
3,776,121 | 396,387 | ||||||
Net
(decrease) increase in cash
|
2,884,428 | (447,628 | ) | |||||
Effect
of exchange rates on cash
|
(4,218 | ) | (62,041 | ) | ||||
Cash
- Beginning of year
|
57,844 | 510,042 | ||||||
Cash
- End of year
|
$ | 2,938,054 | $ | 373 | ||||
Supplementary
Information
|
||||||||
Interest
Paid
|
$ | 14,280 | $ | - | ||||
Taxes
Paid
|
$ | - | $ | - | ||||
Non-Cash
Transactions
|
||||||||
Conversion
of notes payable for common stock
|
$ | 1,345,686 | $ | - | ||||
Common
stock issued for prepaid expenses
|
$ | 2,903,067 | $ | - | ||||
Common
stock issued for accrued interest
|
$ | 137,899 | $ | - | ||||
Equipment
financed through capital lease obligations
|
$ | - | $ | 95,524 |
See
accompanying notes to the consolidated financial
statements
|
6
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Note
1 - Basis of Presentation and Summary of Significant Accounting
Policies
Business
Description
Magnum
d’Or Resources, Inc. (the “Company”) was incorporated on September 3, 1999,
under the laws of the State of Nevada. Since its inception, the Company evolved
through several transitions to its present mode. During its evolution, it
operated as an internet information company, a junior resource mining company,
and a business acquisition company. These ventures proved to be marginally
effective.
Currently
the Company is engaged in the business of providing modified sources of recycled
rubber products, reconstituted rubber derivatives, and rubber powders to various
distributors and manufacturers. It currently has two production facilities
located in Magog, Canada and Hudson, CO. It intends to develop
additional facilities that produce various wholesale rubber products, high
quality reconstituted rubber powders, specialty blend malleable materials,
thermoplastics and thermoplastics elastomers.
The
Company intends to acquire additional equipment, facilities and resources to
allow it to strategically provide modified sources of recycled rubber products,
reconstituted rubber derivatives, and high quality rubber powders to various
distributors and manufacturers. This will be accomplished through wholly owned
and joint venture facilities that may be fabricated or acquired as the market
allows. The Company intends on establishing technical facilities,
either coincident with or separate from its production facilities, for purposes
of research and development activities. It may also enter into
strategic alliances with educational institutions and/or research firms to
advance its market research and develop innovative products and solutions
associated with its core recycling business.
Business
History
During
October 2005, the Company formed Sunrise Mining Corporation (“Sunrise”), which
became a wholly-owned subsidiary. Subsequent to Sunrise’s incorporation, the
Company transferred all of the rights to its mining operations to Sunrise.
During January 2007, the Company announced that it planned to spin-off its
wholly owned subsidiary, Sunrise Mining Corporation, to its
stockholders. The spin-off was completed in November
2007.
During
December 2006, the Company was acquired by a new management group and
restructured for the express purpose of pursuing and consummating a merger
between the Company and Terra Elastomer Technologies S.L., a private European
company based in Düsseldorf, Germany. In December 2007 the Merger was abandoned
due to unexpected complexities, market financing interruptions and
insurmountable cost considerations.
During
December 2007, the Company acquired licensing rights to a number of patents and
processes that allowed rubber to be reconstituted, added to raw virgin rubber in
various quantities, specially blended into various other polymers, and mixed
into EPDM compounds. These license agreements were terminated on
September 28, 2008 and replaced by new and more advanced technologies agreements
developed by Sekhar Research Innovations of Malaysia (see below and Note
11).
In May
2008, the Company formed a wholly-owned subsidiary, Recyclage Magnum Canada,
Inc. (“MRC”), which the Company subsequently transferred all production
equipment to for the purpose of establishing its first North American production
facility. The facility is located in Magog, Quebec, Canada for
strategic geographical and commercial purposes. Equipment
installation and testing was performed throughout the summer and fall of
2008. Production activities commenced during November of 2008, thus
transforming the Company from a development stage entity to an operational
entity.
During
this same period the Company entered into a Joint Venture Agreement with Sekhar
Research Innovations of Malaysia (October 2008) to acquire use of
technologically advanced patents, processes, and equipment that were thought to
be more compatible with overall Company product development and market strategy.
The Company will use these patented processes to disintegrate scrap tires,
remove fibers and metal wire, produce crumb rubber, slurry, and liquefy recycled
raw materials into various rubber and rubber-like products.
7
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
In June
2009, the Company formed another wholly-owned subsidiary, Magnum Recycling USA
(“MRUSA"), for the purpose of establishing its first US
operations. In August 2009, a tire disposal facility located in
Hudson, CO was acquired to meet this goal and establish a centralized US
production and distribution facility. The site is superbly located
geographically in the US to allow access to raw materials and delivery
throughout the USA and North America.
On
October 1, 2009, the Company formed a wholly-owned subsidiary, Magnum
Engineering ("MEI") for the express purpose of providing engineering related
services to the Company and to interested third parties.
Basis of
Presentation
These
condensed consolidated financial statements have been prepared by the Company,
without audit, in accordance with U.S. generally accepted accounting principles
(“GAAP”) for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three month period ended December 31, 2009, are not
necessarily indicative of results that may be expected for the fiscal year
ending September 30, 2010. The condensed consolidated balance sheet information
as of September 30, 2009 was derived from the audited consolidated financial
statements included in the Company’s Annual Report on Form 10-K. These interim
financial statements should be read in conjunction with that
report.
The
Company operates in one business segment, the development of recycling rubber
tires into various rubber products. Significant accounting principles followed
by the Company and the methods of applying those principles, which materially
affect the determination of financial position and cash flows, are summarized
below:
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Consolidation
Policy
The
accompanying consolidated financial statements include the accounts of Magnum
d’Or Resources, Inc. and its wholly owned subsidiaries, Recyclage Magnum Canada,
Inc., Magnum Recycling USA, Inc, and Magnum Engineering. Intercompany accounts
and transactions have been eliminated.
Foreign Currency
Adjustments
The
accompanying consolidated financial statements are presented in United States
dollars (USD). The functional currency of the Company’s foreign subsidiary is
the Canadian dollar (CND). Assets and liabilities of this foreign subsidiary are
translated into United States dollars at currency exchange rates in effect at
the end of the periods reported. Equity accounts are translated at historical
rates corresponding to the date of transaction. Revenues and expenses are
translated at average exchange rates in effect for the periods reported. Gains
and losses resulting from translation of foreign subsidiary financial statements
into U.S. dollars are included as a separate component of stockholders’
equity.
Accounts
Receivable
Accounts
receivable are recognized and carried at the original invoice amount less
allowance for any uncollectible amounts. The Company uses the
allowance method to account for uncollectible trade receivable
balances. An estimate for doubtful accounts is made when collection
of the full amount is no longer probable.
8
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Inventories
At
December 31, 2009, inventories are stated at the lower of cost (determined on a
first-in, first-out basis) or market. Provisions to value the inventory at the
lower of the actual cost to purchase and / or manufacture the
inventory, or the current estimated market value of the inventory, are based
upon assumptions about future demand and market conditions. The Company also
performs evaluations of inventory and records a provision for estimated excess
and obsolete items based upon forecasted demand, and any other known factors at
the time. No provision existed as of December 31,
2009. Raw materials are primarily considered long-term assets as they
are not expected to be manufactured and sold by the end of the subsequent fiscal
year. Finished goods are considered current assets as they are expected to be
sold before the end of the subsequent fiscal year. Inventory as of
December 31, 2009 consists of the following:
Raw
materials
|
$ | 6,971,698 | ||
Finished
Goods
|
51,193 | |||
Total
|
$ | 7,022,891 |
Property, plant and
equipment
Property,
plant and equipment are stated at cost. Depreciation has been computed using the
straight-line method based upon estimated useful lives of ten years for
production equipment and three to five years for software and computer
equipment. Leasehold improvements are depreciated over the lesser of the
remaining term of the lease, or the economic useful
life.
Income
Taxes
The
Company accounts for income tax using an asset and liability approach and allows
for recognition of deferred tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A
valuation allowance is provided for deferred tax assets if it is more likely
than not these items will expire before either the Company is able to realize
their benefits, or that future realization is uncertain.
There has
been no provision for U.S. federal, state, or foreign income taxes for any
period because the Company has incurred losses in all periods and for all
jurisdictions since inception.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. The Company has identified
net deferred tax assets, primarily made up of cumulative net operating loss
carryforwards. However, the Company has also recorded a 100%
valuation allowance for these deferred tax assets based on the amount expected
to be realized.
In
accounting for unrecognized tax benefits, a tax position is required to meet a
prescribed recognition threshold before being recognized in the financial
statements. Based on all known facts and circumstances and current tax law, the
Company believes that the total amount of unrecognized tax benefits as of
December 31, 2009, is not material to its results of operations, financial
condition or cash flows. The Company also believes that the total
amount of unrecognized tax benefits as of December 31, 2009, if recognized would
not have a material effect on its effective tax rate. The Company further
believes that there are no tax provisions for which it is more likely than not,
based on current tax law and policy, that the unrecognized tax benefits will
significantly increase or decrease over the next 12 months producing,
individually or in the aggregate, a material effect on the Company’s results of
operations, financial condition, or cash flows.
9
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Asset Retirement
Obligations
The
Company accounts for asset retirement obligations in accordance with ASC
410-20. Under this standard, a liability is recognized for the fair
value of legally required asset retirement obligations associated with
long-lived assets in the period in which the retirement obligations are incurred
and the liability can be reasonably estimated. The Company capitalizes the
associated asset retirement costs as part of the carrying amount of the
long-lived asset. The liability is initially measured at fair value and
subsequently is adjusted for accretion expense and changes in the amount of
timing of the estimated cash flows.
Going
Concern
The
accompanying consolidated financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate the
continuation of the Company as a going concern. The Company’s operations are
progressing forward; however, the Company has generated no significant revenue,
has an accumulated deficit of $48,455,392 and a negative cash flow from
operations of $651,175 for the three months ended December 31,
2009. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The condensed consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
The
future success of the Company is dependent on its ability to obtain additional
capital funds to purchase equipment and construct facilities to fulfill its
current contractual commitments, and, ultimately attain future profitable
operations. There can be no assurance that the Company will be successful in
obtaining such financing, or that it will attain positive cash flow from
operations.
Fair Value of Financial
Instruments
The
Company accounts for fair value in accordance with ASC 820-10 with respect to
fair value measurements of (a) non-financial assets and liabilities that
are recognized or disclosed at fair value in the Company's financial statements
on a recurring basis (at least annually) and (b) all financial assets and
liabilities. ASC 820-10 defines fair value as the exit price, or the amount that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants as of the measurement
date.
ASC
820-10 establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available.
Observable inputs are inputs market participants would use in valuing the asset
or liability developed based on market data obtained from sources independent of
the Company. Unobservable inputs are inputs that reflect the Company's
assumptions about the factors market participants would use in valuing the asset
or liability developed based upon the best information available in the
circumstances. The hierarchy is broken down into three levels. Level 1
inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities. Level 2 inputs include quoted prices for similar assets or
liabilities in active markets. Level 3 inputs are unobservable inputs for
the asset or liability. Categorization within the valuation hierarchy is based
upon the lowest level of input that is significant to the fair value
measurement.
10
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
The
following table provides the assets and liabilities carried at fair value
measured on a recurring basis as of December 31, 2009:
Total
Carrying
Value
at
12/31/2009
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||||
Compound
Embedded Derivative
|
$ | 714,368 | $ | — | $ | — | $ | 714,368 | ||||||||
Warrant
Derivatives
|
$ | 2,268,331 | $ | — | $ | — | $ | 2,268,331 | ||||||||
Total
|
$ | 2,982,699 | $ | — | $ | — | $ | 2,982,699 |
The
derivative liabilities are measured at fair value using quoted market prices and
estimated volatility factors, and are classified within Level 3 of the
valuation hierarchy. There were no changes in the valuation techniques during
the three months ended December 31, 2009. The Company recorded a gain
from the derivative liability of $512,799 which is recorded as gain on derivate
in the statement of operations.
Fair
Value Measurements Using
Significant
Unobservable Inputs (Level 3)
|
||||||||||||
Compound
Embedded
Derivative
|
Warrant
Derivative
|
Total
|
||||||||||
Inception
date fair value (December 23, 2009)
|
$ | 863,134 | $ | 2,632,364 | $ | 3,495,498 | ||||||
Total
(gains) recorded in earnings
|
(148,766 | ) | (364,033 | ) | (512,799 | ) | ||||||
Fair
value at December 31, 2009
|
$ | 714,368 | $ | 2,268,331 | $ | 2,982,699 |
Stock Based
Compensation
The
Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs. The Company accounts for stock option and warrant grants issued and
vesting to employees using ASC 718-10, and for all share-based payments granted
based on the requirements of ASC 718-10. The Company accounts for stock option
and warrant grants issued and vesting to non-employees in accordance with ASC
505-50: whereas the value of the stock compensation is based upon the
measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to
earn the equity instruments is complete.
Net Loss per
Share
The net
loss per share has been computed using the weighted-average number common shares
outstanding during the three months ending December 31, 2009. As of
December 31, 2009, potentially dilutive convertible notes payable, options and
warrants to purchase common stock aggregating 2,892,562, zero, and 7,231,406
shares respectively, were outstanding and not considered because their effect
would have been anti-dilutive.
Accounting Pronouncements
Issued Not Yet Adopted
In June
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R). Also refer to FASB ASC 810-10-65, Consolidation – Overall – Transition
and Open Effective Date Information. This guidance relates to the
consolidation of variable interest entities. It eliminates the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity and requires ongoing qualitative reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity.
This guidance also requires additional disclosures about an enterprise’s
involvement in variable interest entities. This guidance is effective as of the
beginning of an entity’s fiscal year, and interim periods within the fiscal
year, beginning after November 15, 2009. The Company will adopt this guidance in
the first quarter of fiscal 2011. The Company is currently evaluating the
potential impact, if any, of this guidance on its consolidated financial
statements.
11
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
In
October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition – Multiple
Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 updates the
existing multiple-element revenue arrangements guidance currently included in
FASB ASC 605-25. The revised guidance provides for two significant changes to
the existing multiple-element revenue arrangements guidance. The first change
relates to the determination of when the individual deliverables included in a
multiple-element arrangement may be treated as separate units of accounting.
This change will result in the requirement to separate more deliverables within
an arrangement, ultimately leading to less revenue deferral. The second change
modifies the manner in which the transaction consideration is allocated across
the separately identified deliverables. Together, these changes will result in
earlier recognition of revenue and related costs for multiple-element
arrangements than under previous guidance. This guidance also expands the
disclosures required for multiple-element revenue arrangements. Effective for
interim and annual reporting periods beginning after December 15, 2009. The
Company is currently evaluating the potential impact, if any, of this guidance
on its consolidated financial statements.
From time
to time, new accounting pronouncements are issued by the FASB that are adopted
by the Company as of the specified effective date. If not discussed, management
believes that the impact of recently issued standards, which are not yet
effective, will not have a material impact on the Company’s consolidated
financial statements upon adoption.
Note
2 –Property, Plant and Equipment and Deposits on Equipment
The
Company placed equipment into service during the quarter ending December 31,
2009 totaling $281,565. In addition, during fiscal year 2009 the Company entered
into a contract with a Malaysian company that specializes in developing rubber
compounds (see Note 9), processing techniques, and specialized equipment for
production of scrap rubber. Costs associated with this contract include certain
amounts allocated to the development and purchase of equipment. The Company made
payments aggregating $409,302 through December 31, 2009 that have been included
in the accompanying condensed consolidated balance sheet as deposits for
equipment. Advance payments made will be credited to the total
price.
December
31, 2009
|
September
30, 2009
|
|||||||
Assets:
|
||||||||
Land
|
$ | 419,566 | $ | 419,566 | ||||
Land
– Asset retirement obligation
|
52,619 | - | ||||||
Building
|
614,944 | 614,944 | ||||||
Leasehold
improvements
|
54,984 | 51,290 | ||||||
Production
equipment
|
2,589,301 | 2,289,292 | ||||||
Office
equipment and furniture
|
8,077 | 6,410 | ||||||
Total
equipment
|
3,730,494 | 3,381,502 | ||||||
Less:
accumulated depreciation
|
(216,802 | ) | ||||||
Property,
plant and equipment, net
|
$ | 3,513,692 | $ | 3,242,466 |
Depreciation
and amortization expense totaled $79,592 and $9,239 for the three months ended
December 31, 2009 and 2008, respectively.
12
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Note
3 – Notes Payable, Accrued Interest and Stockholder Loans
Notes
payable, net, consists of the following:
December
31, 2009
|
September
30, 2009
|
|||||||
4%
notes payable
|
$ | 1,867,713 | $ | 2,161,342 | ||||
6%
notes payable
|
974,179 | 1,262,553 | ||||||
9%
notes payable
|
90,692 | - | ||||||
9.75%
notes payable
|
1,164,645 | - | ||||||
12%
notes payable
|
41,149 | 324,999 | ||||||
Total
|
4,138,378 | 3,748,894 | ||||||
Less:
current maturities
|
(1,860,722 | ) | (2,288,706 | ) | ||||
Long
term debt
|
$ | 2,277,656 | $ | 1,460,188 |
4.00% Note
Payable
During
fiscal year 2009, the Company issued promissory notes aggregating $2,408,103 to
unrelated financial institutions in connection with the acquisition of liens
related to an asset acquisition. Interest payable at the rate of 4% with
scheduled monthly payments of interest and principal totaling $104,642. These
notes are secured obligations of the Company, as evidenced by pledge agreements
that provide as collateral for the repayment of these notes, deeds of trust for
all real property associated with the asset acquisition. Any unpaid
balance of principal or interest will be due in full in June 2011. As of
December 31, 2009 the outstanding principal balances totaled $1,867,713 and
accrued interest of $3,045 which are recorded in the accompanying consolidated
balance sheet.
6.00% Note
Payable
During
fiscal year 2009, the Company issued a promissory note for $1,000,000 to an
unrelated financial institution in connection with the acquisition of liens
related to an asset acquisition. Interest payable at the rate of 6% with
scheduled monthly payments of interest and principal totaling $100,000. This
note is a secured obligation of the Company, as evidenced by a pledge agreement
that provide as collateral for the repayment of this note, a deed of trust for
all real property associated with the asset acquisition. Any unpaid balance of
principal or interest will be due in full in May 2010. As of December 31, 2009
the outstanding principal balance totaled $974,179 and accrued interest of
$12,829 which are recorded in the accompanying consolidated balance
sheet.
9.00% Note
Payable
During
fiscal year 2010, the Company issued $3,500,000 (net of discounts of $3,409,308)
in convertible notes to unrelated individuals with interest payable at the rate
of 9.00% per annum. The Company incurred
$295,000 of debt issuance costs related to these notes payable. Any
unpaid balance of principal or interest will be due in full in December 2010.
The debt issuance
costs are being amortized using the effective interest rate method over the
notes payable term. Amortization recorded as interest expense in the statement
of income for the three months ended December 31, 2009 was
$6,557. The convertible notes have an accrued interest balance
of $7,875 payable as of December 31, 2009, which is recorded in accrued interest
in the accompanying consolidated balance sheet. See
Notes 6 and 7.
13
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
12% Notes
Payable
During
fiscal year 2009, the Company issued a promissory note for $43,450 to an
unrelated financial institution in connection with the acquisition of liens
related to an asset acquisition. Interest payable at the rate of 12% with no
scheduled monthly payments. Any unpaid balance of principal or
interest will be due in full in May 2011. As of December 31, 2009 the
outstanding principal balance totaled $41,149 and accrued interest of $3,492
which are recorded in the accompanying consolidated balance sheet.
9.75% Notes
Payable
During
fiscal year 2010, the Company issued, in lieu of cash, an aggregate of
$1,164,642 of 2 year promissory notes with unrelated individuals all with
interest payable at the rate of 9.75% per annum with no scheduled monthly
payments. Any unpaid balance of principal or interest will be due in
full in December 2011. The promissory notes have an accrued interest
balance of $16,329 payable as of December 31, 2009, which is recorded in accrued
interest in the accompanying consolidated balance sheet.
Note
4 – Common Stock
During
October 2009, the Company issued, in lieu of cash, an aggregate of 3,100,000
shares of common stock valued at $3,513,000 for consulting services. The common
stock was valued between $1.13 and $1.23 per share, based on the closing market
prices on the date the board of directors authorized the issuances. As of
December 31, 2009, the value of services that are yet to be performed and have
been capitalized is $2,147,000
On
October 15, 2009 the Company issued, in lieu of cash, 100,000 shares of common
stock valued at $123,000 for professional services. The common stock was valued
at $1.23 per share, based on the closing market price on the date the board of
directors authorized the issuance. The value of services that are yet
to be performed and have been capitalized is $88,157.
On
October 20, 2009, the Company issued, 300,000 shares of common stock, valued at
$300,000, in accordance with the purchase privileges of 300,000 previously
issued warrants. These warrants were exercised at their face value of
$1.00 per share (see Note 10). $300,000 of 12% principal debt was
retired concurrently with the exercise of these warrants and applied against the
purchase of the 300,000 shares of common stock issued. In addition, 46,830
shares of common stock, valued at $52,924, or $1.13 per share, were issued to
pay the accrued interest on these notes.
Also on
October 20, 2009 the Company issued in lieu of cash, 930,088 shares of common
stock valued at $1,051,000 to repay prior cash advances to the Company from
stockholders. This fulfilled complete repayment of the outstanding advance
balance as of the issue date. In addition, 70,500 shares of common stock, valued
at $79,662, or $1.13 per share, were issued to pay the accrued interest on these
notes.
During
November 2009, the Company issued, in lieu of cash, an aggregate of 550,000
shares of common stock for consulting services and bonuses valued at $686,000.
The common stock was valued between $1.18 and $1.34 per share, based on the
closing market prices on the date the Board of Directors authorized the
issuances. As of December 31, 2009, the value of services that are
yet to be performed and have been capitalized is $750,928.
Also
during November 2009, the Company issued, in lieu of cash, 125,000 shares of
common stock, valued at $147,500 for satisfaction of certain accounts payable
for previous services rendered by consultants of the Company for professional
and contract services. The common stock was valued at $1.18 per
share, based on the closing market prices on the date the Board of Directors
authorized the issuance.
On
November 20, 2009, the Company rescinded 500,000 shares of common stock issued
to a previous employee and Director, valued at $75,000, in accordance with its
revocability clauses in response to the early termination of his employment
contract. The remaining terms of the agreement are currently in
effect with no additional liability for payments or penalties. The common stock
issued was valued at $0.15 per share, based the closing market prices on the
date the board of directors authorized the issuance.
14
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
During
December 2009, the Company issued, in lieu of cash, 500,000 shares of common
stock, valued at $715,000 for satisfaction of certain accounts payable for
previous services rendered by consultants of the Company for professional and
contract services.
During
December 2009, the Company rescinded 400,000 shares of common stock previously
issued in connection with the asset acquisition due to breach of the agreement
entered into. The common stock rescinded was valued at $472,000, or
$1.18 per share, based on the value at the date of issuance.
Note
5 – Preferred Stock
During
August 2009, the Company issued, in lieu of cash, an aggregate of 30,000,000
shares of Series B preferred stock to the Chief Executive Officer and a
consultant valued at $16,800,000 or $0.56 per share. The valuation
was based on an analysis report performed by an independent valuation expert who
utilized a market approach to value the securities. The stock was issued in lieu
of cash bonus and performance payments.
Note
6 – Secured Convertible Note Financing
On
December 18, 2009 the Company entered into an agreement with Chardan Capital
Markets, LLC as exclusive placement agent to procure equity based financing for
the Company. On December 23, 2009 the Company completed an agreement
with Cranshire Capital, LP and other entities involving the issuance of
$3,500,000 of 9% secured convertible notes payable due in one year, plus
warrants. The notes are convertible into the Company’s common shares
based upon a fixed conversion price of $1.21, but are subject to full-ratchet
anti-dilution protection if the Company sells shares or share-indexed financing
instruments at less than the conversion price. The holders have the
option to redeem the notes for cash in the event of defaults and certain other
contingent events, including a change in control event and events related to the
common stock into which the instrument was convertible, registration and listing
(and maintenance thereof) of our common stock and filing of reports with the
Securities and Exchange Commission. In addition, the Company extended
registration rights to the holders that require registration and continuing
effectiveness thereof. In connection with the issuance of the Notes,
the Company issued Series A warrants to purchase 2,169,422 shares of the
Company's common stock, Series B warrants to purchase 2,892,562 shares of the
Company's common stock, and Series C warrants to purchase 2,169,422 shares of
the Company's common stock. The exercise price for the warrants is
$1.21 per share, and each class of warrant is exercisable for five, one, and
five years, respectively, from the date of issuance.
The
Company received net proceeds of $3,415,000 from the financing
arrangement. Incremental, direct financing costs of $295,000, which
includes $85,000 withheld from the note balance are included in deferred bond
acquisition costs and are subject to amortization using the effective
method. Accumulated amortization of deferred financing costs, which
is included in interest expense, during the current quarterly period, amounted
to $6,557.
In the
Company’s evaluation of the financing arrangement, it was concluded that the
conversion features were not afforded the exemption as a conventional
convertible instrument due to the anti-dilution protection; and it did not
otherwise meet the conditions set forth in current accounting standards for
equity classification. Since equity classification is not available for the
conversion feature, the Company was required to bifurcate the embedded
conversion feature and carry it as a derivative liability, at fair value (see
Note 6). The Company also concluded that the default put required bifurcation
because, while puts on debt instruments are generally considered clearly and
closely related to the host, the default put is indexed to certain events and
premiums that are not associated debt instruments. The Company
combined all embedded features that required bifurcation into one compound
instrument that is carried as a component of derivative liabilities. The Company
determined that the investor warrants did not meet the conditions for equity
classification. Therefore, the investor warrants are also required to be carried
as a derivative liability, at fair value. Derivative financial
instruments are carried initially and subsequently at their fair
values.
15
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
The
Company estimated the fair value of the derivative warrants and the compound
derivative on the inception dates, and subsequently, using the lattice valuation
technique, specifically the binomial model, because that technique embodies all
of the assumptions (including credit risk, interest risk, stock price volatility
and conversion behavior estimates) that are necessary to fair value complex
compound derivative instruments. See Note 7.
Note
7 – Derivative Liabilities
Derivative
financial instruments, as defined in ASC 815-10-15-83 Derivatives and
Hedging (pre-Codification FAS No. 133 Accounting for Derivative
Financial Instruments and Hedging Activities), consist of financial
instruments or other contracts that contain a notional amount and one or more
underlying (e.g. interest rate, security price or other variable), require no
initial net investment and permit net settlement. Derivative
financial instruments may be free-standing or embedded in other financial
instruments. Further, derivative financial instruments are initially, and
subsequently, measured at fair value and recorded as liabilities or, in rare
instances, assets.
The
Company generally does not use derivative financial instruments to hedge
exposures to cash-flow, market or foreign-currency risks. However, the Company
has entered into certain other financial instruments and contracts, such as debt
financing arrangements, and freestanding warrants with features that are either
(i) not afforded equity classification, (ii) embody risks not clearly and
closely related to host contracts, or (iii) may be net-cash settled by the
counterparty. As required by ASC 815, these instruments are required
to be carried as derivative liabilities, at fair value, in the financial
statements.
The
conversion feature of the Company’s $3,500,000 convertible debt as disclosed in
Note 6, and the warrants issued with this debt, do not have fixed settlement
provisions because their conversion and exercise prices, respectively, may be
lowered if the Company issues securities at lower prices in the
future. The Company was required to include the reset provisions in
order to protect the debenture holders from the potential dilution associated
with future financings. In accordance with ASC 815-10, the conversion
feature of the debentures was separated from the host contract, the debenture,
and recognized as an embedded derivative instrument. Both the
conversion feature of the debt and the warrants have been characterized as
derivative liabilities. ASC 815-10 requires that the fair value of these
liabilities be re-measured at the end of every reporting period with the change
in value reported in the statement of operations.
The
Company measures the fair value of derivative financial instruments using
various techniques (and combinations thereof) that are considered to be
consistent with the objective of measuring fair value. In selecting the
appropriate technique, the Company considers, among other factors, the nature of
the instrument, the market risks that it embodies and the expected means of
settlement. For complex derivative instruments, such as embedded conversion
options, puts and redemption features embedded in hybrid debt instruments, the
Company generally uses a lattice valuation technique, specifically the binomial
model, and the Monte Carlo Simulation valuation technique because these
techniques embody all of the requisite assumptions (including credit risk,
interest-rate risk and exercise/conversion behaviors) that are necessary to fair
value these more complex instruments. Estimating fair values of derivative
financial instruments requires the development of significant and subjective
estimates that may, and are likely to, change over the duration of the
instrument with related changes in internal and external market factors. In
addition, the valuation techniques are highly volatile and sensitive to changes
in the trading market price of our common stock, which has a high-historical
volatility. Since derivative financial instruments are initially and
subsequently carried at fair values, our income will reflect the volatility in
these estimate and assumption changes.
Information
and significant assumptions embodied in the valuations (including ranges for
certain assumptions during the subject periods that instruments were
outstanding) as of the inception date of the financing (December 23, 2009) are
illustrated in the following tables:
16
Series
A Warrants
|
Series
B Warrants
|
Series
C Warrants
|
||||||||||
Risk-free
interest rate
|
2.51 | % | 0.41 | % | 2.51 | % | ||||||
Expected
volatility
|
69.5 | % | 69.5 | % | 69.5 | % | ||||||
Expected
life (in years)
|
5 | 1 | 5 | |||||||||
Strike
price of warrant
|
$ | 1.21 | $ | 1.21 | $ | 1.21 | ||||||
Underlying
stock price
|
$ | 1.165 | $ | 1.165 | $ | 1.165 | ||||||
Embedded
Conversion
Derivative
|
||||
Risk-free
interest rate
|
0.41 | % | ||
Expected
volatility
|
69.5 | % | ||
Expected
life (in years)
|
1 | |||
Strike
price of conversion
|
$ | 1.21 | ||
Underlying
stock price
|
$ | 1.165 |
Due to
the relatively short period of time between the inception date of December 23,
2009 and December 31, 2009, the only significant factor that changed in the
derivative liability fair value calculations for the warrants and the embedded
conversion derivative is the underlying stock price. The underlying
stock price on December 31, 2009 was $1.05.
The
Company’s $3,500,000 convertible debt and related warrants issued give rise to
the following derivative liabilities as of December 31, 2009:
Compound
Embedded
Derivative
|
Warrant
Derivatives
|
Total
Derivatives
|
||||||||||
$3,500,000
face value convertible note:
|
$ | 714,368 | $ | 2,268,331 | $ | 2,982,699 |
The
following table summarizes the effects on the Company’s income (expense)
associated with changes in the fair values of the derivatives liabilities for
the three months ended December 31, 2009:
Compound
Embedded
Derivative
|
Warrant
Derivatives
|
Total
Derivatives
|
||||||||||
$3,500,000
face value convertible note:
|
$ | 148,766 | $ | 364,033 | $ | 512,799 |
The
following table summarizes the change in the Company’s derivative liabilities
for the three months ended December 31, 2009:
Inception
date fair value (December 23, 2009)
|
$ | 3,495,498 | ||
Change
in value of derivative liability
|
512,799 | |||
Fair
value at December 31, 2009
|
$ | 2,982,699 |
17
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
The
Company’s derivative liabilities and derivative gain as of December 31, 2009 are
significant to the Company’s consolidated financial statements. The magnitude of
derivative gain reflects the following: The market price of the Company’s common
stock, which significantly affects the fair value of the derivative financial
instruments, experienced material price fluctuations from the inception date to
December 31, 2009. The lower stock price on December 31, 2009 compared to the
stock price on the inception date had the effect of significantly decreasing the
fair value of the derivative liabilities and, accordingly, the Company was
required to adjust the derivatives to these lower values with charges to
derivative income.
Note
8 – Asset Retirement Obligations
The
Company has recorded estimated asset retirement obligations related to the
restoration of its Colorado land. These obligations were acquired in connection
with the Company’s August 2009 acquisition of properties in Colorado. The
Company’s asset retirement obligation at December 31, 2009 is as
follows:
Asset
retirement obligations at September 30, 2009
|
$ | - | ||
Adjustment
to estimate
|
52,619 | |||
Accretion
expense
|
- | |||
Asset
retirement obligations at December 31, 2009
|
$ | 52,619 |
Note
9 –Consulting Agreements
The
continuation of other agreements with independent financial and business
advisors continued through the reporting period. These consultants provide
strategic relationships with several business development resources, and such
other business matters as deemed necessary by Company management. The
terms of these agreements range from six months to several years. Under the
terms of several of these agreements the Company shall from time to time, pay to
the consultant such compensation as shall be mutually agreed to between the
parties. Under the terms of others, these agreements specify a fixed obligation
by the Company to pay the consultant, either in cash or Company stock, at the
discretion of the Company. Under the terms of these agreements,
during fiscal year 2009 the consultants received 1,042,500 shares of common
stock from the Company’s 2007 Consultant Stock Option, SAR and Stock Bonus Plan.
The total value of the services was $172,525 which was recorded as consulting
expense in the accompanying condensed consolidated statement of operations and
comprehensive loss for the three months ended December 31, 2008. None of the
$172,525 in consulting compensation is capitalized at December 31,
2009.
During
December 2008, the Company commenced with the consulting portion of a broader
agreement entered into in October 2008. The agreement calls for a
monthly advisory fee of $7,000 to a consultant which continues in
2010.
In
accordance with this agreement, $21,000 was charged to expense in the statement
of operations for the three months ended December 31, 2009.
Note 10
– Warrants
The
following table summarizes certain information about the Company’s stock
purchase warrants (including the warrants discussed in Notes 6 and
7).
18
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Number
of Warrants
|
Weighted
Ave.
Exercise
Price
|
|||||||
Warrants
outstanding, September 30, 2009
|
350,000 | $ | 1.00 | |||||
Warrants
granted
|
7,231,406 | $ | 1.21 | |||||
Warrants
exercised
|
(300,000 | ) | $ | 1.00 | ||||
Warrants
expired/cancelled
|
(50,000 | ) | $ | 1.00 | ||||
Warrants
outstanding, December 31, 2009
|
7,231,406 | $ | 1.21 |
The
warrants issued and outstanding as of December 31, 2009 are considered
derivative liabilities and the valuation factors are disclosed in Note
7.
Note 11
– Commitments and Contingencies
License and royalty
agreement
In
October 2008, the Company entered into an agreement with a Malaysian company
that specializes in developing rubber compounds, processing techniques, and
specialized equipment for processing scrap rubber and producing specialty
compounds. License, patent, and royalty expenses associated with this contract
include payments aggregating $130,031 through December 31, 2009 and have been
included in the accompanying condensed consolidated statement of operations and
comprehensive loss as operating expenses.
Note 12
- Operating and Capital Leases
The
Company entered into a building lease agreement on September 1, 2008 to lease
98,535 square feet of a commercial building in Magog, Quebec, Canada for the
purpose of processing scrap rubber and tires. The term of this lease is five
years, with annual rent equal to $2.25 per square foot (approximately $204,000,
or $17,000 per month) for the first year, with annual base rent escalations of
$1.00 per square foot, resulting in annual rent in the fifth year of $5.75 per
square foot (approximately $567,000, or $47,250 per month). The Company is also
responsible for real estate taxes, utilities and other general maintenance of
the premises.
On
October 9, 2008 the Company entered into an equipment lease agreement for a
forklift to transfer materials within its facility in Magog, Quebec, Canada. The
lease calls for 60 equal payments of $535, which includes a financing fee of
7.25%, and a buyout provision of $1 at the lease completion. This lease is
accounted for as a capitalized lease and recorded as obligations under capital
leases in the accompanying consolidated balance sheet.
On
December 9, 2008 the Company entered into an equipment lease agreement for a
loader truck to transfer materials within and external to its facility in Magog,
Quebec, Canada. The lease calls for 60 equal payments of $1,214, which includes
a financing fee of 7.25%, and a residual buyout provision of 25%
(approximately $20,000) at the lease completion. This lease is accounted for as
a capitalized lease and recorded as obligations under capital leases in the
accompanying consolidated balance sheet.
19
Magnum
d’Or Resources Inc. and Subsidiaries
Notes
to the Condensed Consolidated Financial Statements
December
31, 2009
(Unaudited)
Minimum
future lease payments as of December 31, 2009 are payable as
follows:
Year
Ending
|
Operating
Lease
|
Capital Leases
|
||||
September
30, 2010 (remaining)
|
$
|
237,371
|
$
|
17,090
|
||
September
30, 2011
|
411,443
|
22,786
|
||||
September
30, 2012
|
506,391
|
22,786
|
||||
September
30, 2013
|
543,975
|
22,786
|
||||
$
|
1,699,180
|
$
|
85,448
|
Lease
expenses for the quarter ending December 31, 2009 and 2008 were $121,382 and
$86,414.
The
Company has evaluated subsequent events through February 16, 2010, the date the
financial statements were issued, and has concluded that no recognized and one
non-recognized subsequent event has occurred since the quarter ended December
31, 2009 as detailed below.
During
the month of January 2010 the Company entered into equipment purchase and
installation contracts with JECC Mecanique Ltee of Quebec, Canada to procure,
fabricate, deliver, and install systems and components for its facilities in
Magog, Canada and Hudson, Colorado. Costs of these contracts total
$1,676,607 and consist of $750,000 in deposits, full payments in the amount of
$179,144, and a balance of $747,463 upon delivery of remaining
equipment.
20
Item
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-looking
Information
This
quarterly report contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. These statements relate to future
events or to our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ materially. There are a number of factors that could cause our actual
results to differ materially from those indicated by such forward-looking
statements. See our annual reports on Form 10-K for the years ended September
30, 2009 and 2008.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance,
or achievements. Moreover, we do not assume responsibility for the accuracy and
completeness of such forward-looking statements. We are under no duty to update
any of the forward-looking statements after the date of this report to conform
such statements to actual results.
General
The
Company is currently engaged in the business of providing modified sources of
recycled rubber products, reconstituted rubber derivatives, and rubber powders
to various distributors and manufacturers. It currently has two production
facilities located in Magog, Quebec, Canada and Hudson, CO and is pursuing
expansion and development of additional facilities.
The
Company’s ongoing business strategy is to secure source raw materials and
process them into useable value added substrates and supply them to a variety of
manufacturers as well as develop its own market for retail end use eco-friendly
products. The Company currently utilizes its licensed patented processes to
disintegrate scrap tires, remove fibers and metal wire, and produce crumb rubber
sorted into different mesh sizes to be recycled into various rubber
products.
The
Company will accomplish expansion and controlled growth through construction of
new facilities and acquisition of other established facilities, then integrate
its technologically advanced processes and techniques to process and produce
these materials. The Company also intends to establish technical facilities for
research and development or seek strategic alliances with educational
institutions and research firms to maintain and further advance its
technological edge in its targeted markets.
Overview
The
Company was formed in September 1999 and has evolved to its present mode. During
its evolution, its business models changed and the Company operated primarily as
a shell as it pursued numerous opportunities. To date the Company has not
generated a profit; however, it did transition from a development stage company
to an operating entity in November 2008. The major turning point for the Company
occurred in December 2006 when control of the Company was acquired for the
purpose of creating a public recycling and material manufacturing
company.
The
Company currently processes discarded tires and scrap rubber into modified
sources of recycled rubber products, reconstituted rubber derivatives, and
rubber powders. These products are then sold to various distributors
and manufacturers. The Company has two production facilities located in Magog,
Quebec, Canada and Hudson, CO.
21
Results
of Operations
The
following discussion and analysis summarizes the results of operations of the
Company for the three-month periods ended December 31, 2009 and
2008.
Comparison of the three
months ended December 31, 2009 and 2008
The
Company incurred continuing losses due to activities associated with purchasing,
installing, and testing equipment for its targeted business
activities. Funds were also utilized for making modifications and
leasehold improvements necessary to accommodate operating equipment and
personnel. Expenses during the quarter specifically included design
activities, equipment procurement, facility modifications, installation
activities, testing, financing, marketing, and employment
expenditures.
For the
three month period ended December 31, 2009 compared to the three month period
ended December 31, 2008, the Company had a net loss of $2,576,551 versus a loss
of $4,955,785, respectively, equating to a 48% decrease in net loss. The
costs are further delineated as follows:
For the
three month period ended December 31, 2009 compared to the three month period
ended December 31, 2008, the Company experienced the following changes
respectively; Officer compensation decreased 70% to $123,706 from $418,612;
consulting fees decreased 59% from $4,138,540 to $1,690,867; legal and other
professional fees increased 329% from $95,571 to $409,715; general and
administrative expenses increased 321% from $41,544 to $174,986; and,
interest expense increased 54% from $113,042 to $174,041.
During
the first fiscal quarter ended December 31, 2009 the Company had a net loss of
$0.04 per share compared to a net loss of $0.16 per share during the same period
in 2008.
Liquidity and Capital
Resources
At
December 31, 2009, the Company had total assets of $17,386,867, comprised of
$2,938,054 in cash, $12,934 in receivables, $3,105,205 in prepaid expenses,
$3,513,692 in property and equipment, $7,022,891 in inventory and $439,098 in
equipment and utility deposits. In addition, the company has working
capital of $3,453,132, and showed $651,175 of net cash used in operating
activities.
In
contrast, on September 30, 2009, the Company had total assets of $11,210,977,
comprised of $57,844 in cash, $19,708 in receivables, $6,997,207 in inventory,
$66,550 in liens, $408,311 in prepaid expenses, and $3,242,466 in property,
plant and equipment. In addition, the company has a working capital
deficit of $3,704,149, and a negative cash flow from operations
of $1,740,446. The increase in assets is due primarily to the
acquisition of equipment and the decrease in capital deficit is due to debt
financing activities.
The
Company must currently rely on corporate officers, directors and outside
investors in order to meet its budget. If the Company is unable to obtain
financing from any of one of these aforementioned sources, the Company would not
be able to complete its financial obligations.
Management
is currently looking for additional capital to fund operations and complete our
corporate objectives. The Company expects to carry out its plan of business. In
addition, we may engage in joint venture activities with other companies. The
Company cannot predict the extent to which its liquidity and capital resources
will be diminished prior to the consummation of a business combination or
whether its capital will be further depleted by its operating losses. The
Company has previously, and is currently, engaged in discussions concerning
potential business acquisitions, joint ventures, and other collaborative
arrangements.
Additional
funds have been procured by management. We cannot provide any assurance that any
additional funds will be made available on acceptable terms or in timely
fashion.
22
Recently
Issued Accounting Standards
In June
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation
No. 46(R). Also refer to FASB ASC 810-10-65, Consolidation – Overall – Transition
and Open Effective Date Information. This guidance relates to the
consolidation of variable interest entities. It eliminates the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity and requires ongoing qualitative reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity.
This guidance also requires additional disclosures about an enterprise’s
involvement in variable interest entities. This guidance is effective as of the
beginning of an entity’s fiscal year, and interim periods within the fiscal
year, beginning after November 15, 2009. The Company will adopt this guidance in
the first quarter of fiscal 2011. The Company is currently evaluating the
potential impact, if any, of this guidance on its consolidated financial
statements.
In
October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition – Multiple
Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 updates the
existing multiple-element revenue arrangements guidance currently included in
FASB ASC 605-25. The revised guidance provides for two significant changes to
the existing multiple-element revenue arrangements guidance. The first change
relates to the determination of when the individual deliverables included in a
multiple-element arrangement may be treated as separate units of accounting.
This change will result in the requirement to separate more deliverables within
an arrangement, ultimately leading to less revenue deferral. The second change
modifies the manner in which the transaction consideration is allocated across
the separately identified deliverables. Together, these changes will result in
earlier recognition of revenue and related costs for multiple-element
arrangements than under previous guidance. This guidance also expands the
disclosures required for multiple-element revenue arrangements. Effective for
interim and annual reporting periods beginning after December 15, 2009. The
Company is currently evaluating the potential impact, if any, of this guidance
on its consolidated financial statements.
From time
to time, new accounting pronouncements are issued by the FASB that are adopted
by the Company as of the specified effective date. If not discussed, management
believes that the impact of recently issued standards, which are not yet
effective, will not have a material impact on the Company’s consolidated
financial statements upon adoption.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Highly Competitive
Industry
The
rubber products materials industry is highly competitive. The Company faces
competition in all of its markets from large, national construction material
companies and smaller, regional companies, as well as from individuals. Many of
the Company’s competitors are larger and have greater financial resources than
the Company. The Company from time to time will experience price pressure in
certain of its markets as a result of competitors’ promotional pricing
practices. Competition is based on product quality, functionality, price, brand
loyalty, effective promotional activities and the ability to identify and
satisfy emerging consumer preferences.
Rapid
Growth
The
Company may experience rapid growth. It will be necessary for the Company to
rapidly add a significant number of employees and may be required to expand
considerable efforts in training these new employees. This growth will place
strains on the Company’s management resource and facilities. The Company’s
success will, in part, be dependent upon the ability of the Company to manage
growth effectively.
23
Business
Interruption
The
Company believes that its success and future results of operations will be
significantly dependent upon its ability to provide prompt and efficient service
to its customers. As a result, any disruption of the Company’s day-to-day
operations could have a material adverse effect upon the Company and any failure
of the Company’s management and manufacturing systems, distribution arrangements
or communication systems could impair its ability to receive and process
customer orders and ship products on a timely basis.
Competition
The
recycling industry in itself is a highly competitive business, as well as, the
production of rubber materials and related products. In the raw materials supply
industry, barriers to entry are relatively low and the risk of new competition
entering the market is high. Certain existing competitors of the Company have
substantially greater resources. In addition, price is an important competitive
factor in the rubber materials market and there can be no assurance that the
Company will not be subject to increased price competition.
In
seeking to market rubber products and specialty compounds as an alternative to
other materials, the Company competes with major companies. The conventional
material manufacturers with which the Company must compete have, in many cases,
long-established ties to the industry and have well-accepted proven products.
There are many additional large competitors in this market.
Many
large competitors have significant research and development budgets, marketing
staffs, financial resources and access to other resources which far surpass the
current resources of the Company. Several such competitors are currently
attempting to develop and introduce similar recycled materials. The Company must
also compete in the raw materials market with certain other recyclers currently
manufacturing recycled materials intended for similar applications. Few of
such recyclers, to the Company’s knowledge, have achieved significant commercial
acceptance to date.
The
Company competes for certain raw materials with other recyclers, most of which
are far larger and better established than the Company. However, management
believes that its focus towards sources of used tires that it recycles and uses
in its business are less attractive to most producers of recycled tires. As a
result, the Company believes that the tire reclamation processes that it has
developed for its manufacturing business are able to source raw materials from
readily available sources. The Company anticipates new entrants into the tire
reclamation business which could affect the Company’s source of raw
materials supply. Some of these new competitors may have substantially greater
financial and other resources than the Company.
General Economic
Conditions
The
financial success of the Company’s operations may be sensitive to adverse
changes in general economic conditions, such as inflation, unemployment, and the
cost of borrowing. These changes could cause the cost of the Company’s
production costs and raw material supplies to rise faster than it can raise
prices. The Company has no control over any of these changes.
Item
4. Controls and Procedures
Evaluation of disclosure
controls and procedures.
Our
management evaluated, with the participation of our Principal Executive Officer
and Principal Financial Officer, the effectiveness of our disclosure controls
and procedures as of the end of the period covered by this Quarterly Report on
Form 10-Q. Based on this evaluation, our Principal Executive Officer and
Principal Financial Officer have concluded that our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)) are not effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and our disclosure
controls and procedures are not effective to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. These matters persist despite our having developed and partially
implemented a plan to ensure that all information will be recorded accurately,
processed effectively, summarized promptly and reported on a timely basis. Our
plan to date has involved, in part, reallocation of responsibilities among
officers, including the hiring of a new accounting consultant who is a Certified
Public Accountant. One of several specific additional steps that the Company
believes it must undertake is to retain a consulting firm to, among other
things, design and implement adequate systems of accounting and financial
statement disclosure controls during the current fiscal year to comply with the
requirements of the SEC. We believe that the ultimate success of our plan to
improve our disclosure controls and procedures will require a combination of
additional financial resources, outside consulting services, legal advice,
additional personnel, further reallocation of responsibility among various
persons, and substantial additional training of those of our officers, personnel
and others, including certain of our directors such as our Chairman of the
Board, who are charged with implementing and/or carrying out our plan. It should
also be noted that the design of any system of controls and procedures is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how
remote.
24
Changes in internal control
over financial reporting.
There was
no change in our internal control over financial reporting that occurred during
the period covered by this Quarterly Report on Form 10-Q that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
The
Company is not a party to any material pending legal proceedings, and to the
best of its knowledge, no such proceedings by or against the Company have
initiated.
Set forth
below is a description of all equity securities sold by the Company during the
quarter ended December 31, 2009 that were not registered under the Securities
Act or were not previously disclosed by the Company in a Current Report on Form
8-K.
Date
|
Title
|
Person
or Class
|
Amount
|
Condsideration
|
October
2009
|
Common
Stock
|
Catalano,
Caboor & Company
|
100,000
|
Professional
fees
|
October
2009
|
Common
Stock
|
Consultants
|
3,100,000
(1)
|
Consulting
Services
|
October
2009
|
Common
Stock
|
USA
Master Web Advisors
|
753,097
|
Shareholder
advances
|
October
2009
|
Common
Stock
|
Maritza
Mesa
|
250,000
|
Warrant
exercise
|
October
2009
|
Common
Stock
|
Maritza
Mesa
|
39,005
|
Payment
of interest
|
October
2009
|
Common
Stock
|
Green
Spirits Managerial Consultants
|
176,991
|
Payment
of loan
|
October
2009
|
Common
Stock
|
Archie
Blackburn
|
70,497
|
Payment
of interest
|
October
2009
|
Common
Stock
|
Henry
Carlson
|
50,000
|
Warrant
exercise
|
October
2009
|
Common
Stock
|
Henry
Carlson
|
7,830
|
Payment
of interest
|
November
2009
|
Common
Stock
|
Consultants
|
1,650,000
(1)
|
Consulting
Services
|
November
2009
|
Common
Stock
|
Marc
Boulerice
|
25,000
|
Bonus
|
December
2009
|
Common
Stock
|
Bryan
Brammer
|
500,000
|
Bonus
|
(1)
|
Subsequently
cancelled 1,000,000 shares on
12/22/09.
|
25
Advances from
Stockholders
The
Company was advanced a total of $1,051,000 from current stockholders during
2009. The advances were made as interest free loans to be paid back
shortly after the closing of the purchase of the Company’s Hudson, CO
facility. These loans are general unsecured obligations by the
Company. On October 20, 2009, the Company issued in lieu of cash,
930,088 shares of common stock valued at $1,051,000 to repay the cash advances
to the Company. This fulfilled complete repayment of the outstanding
advance balances.
The
issuances set forth in this Item 2 were granted based on exemptions from
registration under the Securities Act of 1933, as amended (the “Securities
Act”), pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation
D and applicable state laws. These issuances qualified for this
exemption from registration because (i) the Company did not engage in any
general solicitation or advertising to market the securities; (ii) the
securities were issued to a person with knowledge and experience in financial
and business matters so that he/she is capable of evaluating the merits and
risks of an investment in the Company; (iii) the persons who acquired these
shares acquired them for their own accounts; and (iv) the certificates
representing these shares will bear a restricted legend providing that they
cannot be sold except pursuant to an effective registration statement or an
exemption from registration.
26
MAGNUM
D’OR RESOURCES, INC.
Exhibits
Item
6. Exhibits
Exhibit
No.
Articles
of Incorporation, as amended (1)
|
|
3.2
|
Certificate
of Designation of the Company filed October 21, 2005 with the State of
Nevada (2)
|
3.3
|
Certificate
of Designation of the Company filed January 5, 2010 with the State of
Nevada (3)
|
3.10
|
ByLaws
(4)
|
4.1
|
Securities
Purchase Agreement dated December 21, 2009. (5)
|
4.2
|
Form
of Senior Secured Convertible Note (5)
|
4.3
|
Form
of Security Agreement (5)
|
4.4
|
Form
of Registration Rights Agreement (5)
|
4.5
|
Form
of Guaranty Agreement (5)
|
4.6
|
Form
of Series A Warrant (5)
|
4.7
|
Form
of Series B Warrant (5)
|
4.8
|
Form
of Series C Warrant (5)
|
4.7
|
Promissory
Note issued March 16, 2009 to Simco Group (6)
|
10.1
|
Consulting
Agreement between Magnum and Chad A. Curtis dated January 1, 2008.
(7)
|
10.2
|
Employment
Agreement between Magnum and Joseph Glusic dated January 1, 2008.
(7)
|
10.3
|
2007
Consultant Stock Option, SAR and Stock Bonus Plan (8)
|
10.4
|
2009
Consultant Stock Option, SAR and Stock Bonus Plan (9)
|
10.7
|
Service
Agreement between Magnum and National Sale and Supply (NSS, LLC) dated
January 28, 2008 (10)
|
10.8
|
Service
Agreement between Magnum and National Sale and Supply (NSS, LLC) dated
February 4, 2008 (11)
|
10.9
|
Service
Agreement between Magnum and National Sale and Supply (NSS, LLC) dated
June 2, 2008. (12)
|
10.10
|
Consulting
Agreement between Magnum and Michel Boux dated March 1, 2008.
(13)
|
10.11
|
Agreement
between Magnum and Gopinath B. Sekhar, Regal Carriage Sdn Bhd, Sekhar
Research Innovations Sdn Bhd dated October 10, 2008.
(14)
|
10.12
|
Lease
Agreement of Magog recycling plant in Ontario, Canada
(15)
|
10.13
|
Agreement
to purchase equipment for Magog recycling plant (15)
|
10.14
|
Entry
into a Material Definitive Agreement, “Magnum D'Or Resources (MDOR)
Executes a Securities Purchase Agreement that Provides $3.5MM in
Convertible (16)
|
31
|
Certification
of the Chief Executive Officer and chief financial officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 *
|
32
|
Certification
of the Chief Executive Officer and chief financial officer pursuant to
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 *
|
*Filed
herein.
(1)
Previously filed with the registration statement on Form S-1 filed with the
Securities and Exchange Commission on February 5, 2010.
(2)
Previously filed with the registration statement on Form S-1 filed with the
Securities and Exchange Commission on February 5, 2010.
(3)
Previously filed with the registration statement on Form S-1 filed with the
Securities and Exchange Commission on February 5, 2010.
(4)
Previously filed with the registration statement on Form S-1 filed with the
Securities and Exchange Commission on December 31, 1999.
(5)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 23, 2009.
27
(6)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 18, 2009.
(7)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on January 3, 2008.
(8)
Previously filed with the registration statement on Form S-8 filed with the
Securities and Exchange Commission on December 28, 2007.
(9)
Previously filed with the registration statement on Form S-8 filed with the
Securities and Exchange Commission on June 29, 2009.
(10)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on January 23, 2008.
(11)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on February 8, 2008.
(12)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on July 8, 2008.
(13)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 15, 2008.
(14)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on October 17, 2008.
(15)
Previously filed with the Quarterly Report on Form 10QSB filed with the
Securities and Exchange Commission on August 19, 2008.
(16)
Previously filed with the Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 23, 2009.
28
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: February
16, 2010
|
Magnum
d’Or Resources, Inc.
|
|
|
By: /s/ Joseph J.
Glusic
|
|
Joseph
J. Glusic, Chief Executive Officer, President
and
Chief Financial Officer and Principal Accounting
Officer
|
29