Attached files
file | filename |
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EX-32.1 - WHITE MOUNTAIN TITANIUM CORP | v202409_ex32-1.htm |
EX-31.2 - WHITE MOUNTAIN TITANIUM CORP | v202409_ex31-2.htm |
EX-31.1 - WHITE MOUNTAIN TITANIUM CORP | v202409_ex31-1.htm |
EX-10.1 - WHITE MOUNTAIN TITANIUM CORP | v202409_ex10-1.htm |
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 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 September 30, 2010
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the
transition period from
to
Commission
File Number 333-129347
WHITE
MOUNTAIN TITANIUM CORPORATION
(Name
of small business issuer in its charter)
NEVADA
|
87-0577390
|
(State
of incorporation or organization)
|
(IRS
Identification No.)
|
Augusto
Leguia 100, Oficina 812
Las
Condes, Santiago
Chile
(Address
of principal executive offices)
(56 2)
657-1800
(Issuer’s
telephone number)
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed under Section 13 or
15(d) of the Exchange Act during the past 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
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No ¨
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.
Large
Accelerate Filer ¨
|
Accelerated
Filer ¨
|
Non-Accelerated
Filer ¨
(Do not check if a smaller reporting company)
|
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 ¨ No x
44,382,012
shares of the issuer’s common stock, $.001 par value, were outstanding at
October 20, 2010.
PART
I. FINANCIAL INFORMATION
Item 1. Financial
Statements
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Consolidated
Balance Sheets
(US
Funds)
(Unaudited)
September 30,
2010
|
December 31, 2009
|
|||||||
Assets
|
||||||||
Current
|
||||||||
Cash
and cash equivalents
|
$ | 1,275,603 | $ | 1,343,994 | ||||
Prepaid
expenses
|
59,314 | 57,546 | ||||||
Receivables
|
46,700 | 50,443 | ||||||
Total
Current Assets
|
1,381,617 | 1,451,983 | ||||||
Property and Equipment
(Note
2)
|
54,800 | 73,927 | ||||||
Mineral
Properties
|
651,950 | 651,950 | ||||||
Total
Assets
|
$ | 2,088,367 | $ | 2,177,860 | ||||
Liabilities
|
||||||||
Current
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 12,890 | $ | 188,534 | ||||
Total
Current Liabilities
|
12,890 | 188,534 | ||||||
Other Liabilities – Warrants
(Note
3(d))
|
923,100 | 2,956,725 | ||||||
Total
Liabilities
|
935,990 | 3,145,259 | ||||||
Stockholders’
Equity (Deficit)
|
||||||||
Preferred Stock and Paid-in
Capital in Excess of $0.001 Par Value (Note
3(a))
|
||||||||
20,000,000 shares
authorized
|
||||||||
NIL
(December 31, 2009 – 625,000) shares issued and
outstanding
|
- | 500,000 | ||||||
Common
Stock and Paid-in Capital in Excess of $0.001 Par Value (Note
3(a))
|
||||||||
100,000,000 shares
authorized
|
||||||||
40,382,012
(December 31, 2009 – 36,400,972) shares issued and
outstanding
|
24,490,006 | 21,660,100 | ||||||
Deficit
Accumulated During the Exploration Stage
|
(23,337,629 | ) | (23,127,499 | ) | ||||
Total
Stockholders’ Equity (Deficit)
|
1,152,377 | (967,399 | ) | |||||
Total
Liabilities and Stockholders’ Equity (Deficit)
|
$ | 2,088,367 | $ | 2,177,860 |
See notes
to unaudited consolidated condensed financial statements.
2
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Consolidated
Condensed Statements of Operations
(US
Funds)
(Unaudited)
Three Months
Ended
September
30
|
Nine Months Ended
September 30
|
Cumulative
From Inception
November 13,
2001 Through
September 30,
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
Expenses
|
||||||||||||||||||||
Advertising
and promotion
|
$ | 47,212 | $ | 11,665 | $ | 79,052 | $ | 29,316 | $ | 305,716 | ||||||||||
Amortization
|
7,363 | 3,645 | 21,166 | 15,206 | 162,271 | |||||||||||||||
Bank
charges and interest
|
2,023 | 1,158 | 7,234 | 2,859 | 34,802 | |||||||||||||||
Consulting fees (Note
3(c))
|
23,573 | - | 177,367 | 294,438 | 2,159,152 | |||||||||||||||
Consulting fees – directors and officers (Note
3(c))
|
86,430 | 128,319 | 693,990 | 692,299 | 4,729,363 | |||||||||||||||
Engineering
consulting
|
- | - | - | - | 719,282 | |||||||||||||||
Exploration
|
110,007 | 119,756 | 246,091 | 335,719 | 4,766,615 | |||||||||||||||
Filing
fees
|
- | 788 | 22,236 | 4,776 | 75,113 | |||||||||||||||
Insurance
|
12,365 | 13,786 | 35,314 | 40,504 | 281,536 | |||||||||||||||
Investor relations, net (Note
3(c))
|
335 | 1,316 | 335 | 696,191 | 770,324 | |||||||||||||||
Licenses,
taxes and filing fees, net
|
7,141 | 3,187 | - | 21,393 | 379,947 | |||||||||||||||
Management fees (Note
3(c))
|
95,026 | 34,800 | 556,542 | 104,400 | 2,092,132 | |||||||||||||||
Office (Note
3(c))
|
46,502 | 17,091 | 101,087 | 25,624 | 287,622 | |||||||||||||||
Professional
fees
|
46,509 | 29,891 | 131,654 | 94,782 | 1,676,568 | |||||||||||||||
Rent
|
22,752 | 20,622 | 63,187 | 55,303 | 454,284 | |||||||||||||||
Telephone
|
4,594 | 4,234 | 11,532 | 10,120 | 101,338 | |||||||||||||||
Transfer
agent fees
|
2,480 | 905 | 4,408 | 2,370 | 18,926 | |||||||||||||||
Travel
and vehicle
|
30,181 | 42,270 | 78,008 | 96,825 | 1,081,637 | |||||||||||||||
Loss
before other items
|
(544,493 | ) | (433,433 | ) | (2,229,203 | ) | (2,522,125 | ) | (20,096,628 | ) | ||||||||||
Gain
on sale of marketable securities
|
- | - | - | - | 87,217 | |||||||||||||||
Loss
on sale of assets
|
- | - | - | (7,465 | ) | (19,176 | ) | |||||||||||||
Adjustment
to market for marketable securities
|
- | - | - | - | (67,922 | ) | ||||||||||||||
Foreign
exchange gain (loss)
|
3,062 | 9,056 | (23,620 | ) | 27,179 | (246,720 | ) | |||||||||||||
Dividend
income
|
- | - | - | - | 4,597 | |||||||||||||||
Interest
income
|
3,079 | 360 | 9,068 | 1,372 | 356,211 | |||||||||||||||
Change in fair
value of warrants (Note
3(d))
|
808,775 | 998,012 | 2,033,625 | (903,450 | ) | (1,122,099 | ) | |||||||||||||
Financing
agreement penalty
|
- | - | - | - | (330,000 | ) | ||||||||||||||
Net
and comprehensive income (loss) for the period
|
270,423 | 573,995 | (210,130 | ) | (3,404,489 | ) | (21,434,520 | ) | ||||||||||||
Preferred
stock dividends
|
- | - | - | - | (1,537,500 | ) | ||||||||||||||
Net
Income (Loss) Available for Distribution
|
$ | 270,423 | $ | 573,995 | $ | (210,130 | ) | $ | (3,404,489 | ) | $ | (22,972,020 | ) | |||||||
Basic and
Diluted Income (Loss) Per Share (Note 4)
|
$ | 0.01 | $ | 0.02 | $ | (0.01 | ) | $ | (0.10 | ) | - | |||||||||
Weighted
Average Number of Common Shares Outstanding
|
37,885,782 | 34,472,520 | 37,257,392 | 33,477,669 | - |
See notes
to unaudited consolidated condensed financial statements.
3
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Consolidated
Condensed Statements of Cash Flows
(US
Funds)
(Unaudited)
Cumulative Period
|
||||||||||||
from Inception
|
||||||||||||
(November 13,
|
||||||||||||
2001) Through
|
||||||||||||
Nine Months Ended Sept. 30,
|
Sept. 30,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||
Operating
Activities
|
||||||||||||
Net
loss for period
|
$ | (210,130 | ) | $ | (3,404,489 | ) | $ | (21,434,520 | ) | |||
Items
not involving cash
|
||||||||||||
Amortization
|
21,166 | 15,206 | 150,560 | |||||||||
Stock-based
compensation
|
146,682 | 1,024,122 | 3,334,893 | |||||||||
Loss
on sale of assets
|
- | 7,465 | 19,176 | |||||||||
Fair
value of common stock issued for services
|
842,400 | 164,000 | 3,360,030 | |||||||||
Change
in fair value of warrants
|
(2,033,625 | ) | 903,450 | 1,122,099 | ||||||||
Financing
agreement penalty
|
- | - | 330,000 | |||||||||
Adjustment
to market on marketable securities
|
- | - | 67,922 | |||||||||
Gain
on sale of marketable securities
|
- | - | (87,217 | ) | ||||||||
Non-cash
resource property expenditures
|
- | - | 600,000 | |||||||||
Changes
in non-cash working capital
|
||||||||||||
Prepaid
expenses
|
(1,768 | ) | 7,720 | 186,766 | ||||||||
Receivables
|
3,743 | (5,259 | ) | (46,700 | ) | |||||||
Marketable
securities
|
- | - | 19,295 | |||||||||
Accounts
payable and accrued liabilities
|
(175,644 | ) | 25,886 | (233,190 | ) | |||||||
Cash
Used in Operating Activities
|
(1,407,176 | ) | (1,261,899 | ) | (12,610,886 | ) | ||||||
Investing
Activities
|
||||||||||||
Additions
to property and equipment, net
|
(2,039 | ) | (25,091 | ) | (224,536 | ) | ||||||
Additions
to mineral property
|
- | - | (651,950 | ) | ||||||||
Cash
Used in Investing Activities
|
(2,039 | ) | (25,091 | ) | (876,486 | ) | ||||||
Financing
Activities
|
||||||||||||
Repayment
of long-term debt
|
- | - | (100,000 | ) | ||||||||
Issuance
of preferred stock for cash
|
- | - | 5,000,000 | |||||||||
Issuance
of common stock for cash
|
1,340,824 | 1,045,340 | 9,631,804 | |||||||||
Stock
subscriptions received
|
- | - | 231,000 | |||||||||
Working
capital acquired on acquisition
|
- | - | 171 | |||||||||
Cash
Provided by Financing Activities
|
1,340,824 | 1,053,702 | 14,762,975 | |||||||||
Inflow
(Outflow) of Cash and Cash Equivalents
|
(68,391 | ) | (233,288 | ) | 1,275,603 | |||||||
Cash
and Cash Equivalents,Beginning of Period
|
1,343,994 | 1,475,460 | - | |||||||||
Cash
and Cash Equivalents, End of Period
|
$ | 1,275,603 | $ | 1,242,172 | $ | 1,275,603 | ||||||
Supplemental
Cash Flow Information
|
||||||||||||
Income
tax paid
|
$ | - | $ | - | $ | - | ||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Shares
Issued for
|
||||||||||||
Settlement
of debt
|
$ | - | $ | - | $ | 830,000 | ||||||
Services
|
$ | 842,400 | $ | 164,000 | $ | 3,360,030 | ||||||
Issuance
of common stock on conversion of preferred shares
|
$ | 500,000 | $ | - | $ | 500,000 |
See notes
to unaudited consolidated condensed financial statements.
4
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Consolidated
Statements of Stockholders’ Equity (Deficit)
(US
Funds)
Shares of
Common
Stock
|
Common Stock
and Paid-In
Capital in
Excess of
Par Value
|
Shares of
Preferred Stock
|
Preferred Stock
and Paid-in
Capital in
Excess of
Par Value
|
Share Subscriptions
Received/ Obligation to
Issue Shares
|
Accumulated
Deficit
|
Total
Stockholders’
Equity (Deficit)
|
||||||||||||||||||||||
Balance,
December 31, 2008
|
32,004,042 | $ | 17,930,947 | 625,000 | $ | 500,000 | $ | - | $ | (16,183,119 | ) | $ | 2,247,828 | |||||||||||||||
Stock-based compensation (Note
3(c))
|
- | 1,024,122 | - | - | - | - | 1,024,122 | |||||||||||||||||||||
Warrants exercised (Note3(d))
|
2,100,000 | 1,045,340 | - | - | - | - | 1,045,340 | |||||||||||||||||||||
Private placement (Note
3(b))
|
1,496,930 | 900,691 | - | - | - | - | 900,691 | |||||||||||||||||||||
Reduction
in warrant liability on exercise of 2,000,000 warrants
|
- | 199,000 | - | - | - | - | 199,000 | |||||||||||||||||||||
Common stock issued for services (Note
3(c))
|
800,000 | 560,000 | - | - | - | - | 560,000 | |||||||||||||||||||||
Cumulative effect of change in accounting principle
(Note
5)
|
- | - | - | - | - | (1,084,375 | ) | (1,084,375 | ) | |||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | (5,860,005 | ) | (5,860,005 | ) | |||||||||||||||||||
Balance,
December 31, 2009
|
36,400,972 | 21,660,100 | 625,000 | 500,000 | - | (23,127,499 | ) | (967,399 | ) | |||||||||||||||||||
Stock-based compensation (Note
3(c))
|
- | 146,682 | - | - | - | - | 146,682 | |||||||||||||||||||||
Common stock issued for services (Note
3(c))
|
738,000 | 842,400 | - | - | - | - | 842,400 | |||||||||||||||||||||
Share subscriptions received/obligation to issue
shares (Note
3(e))
|
- | - | - | - | 660,000 | - | 660,000 | |||||||||||||||||||||
Warrants exercised (Note3(d))
|
2,193,040 | 1,315,824 | - | - | (660,000 | ) | 655,824 | |||||||||||||||||||||
Options exercised (Note
3(b))
|
50,000 | 25,000 | - | - | 25,000 | |||||||||||||||||||||||
Shares issued upon conversion of preferred shares
(Note
3(a))
|
1,000,000 | 500,000 | (625,000 | ) | (500,000 | ) | - | |||||||||||||||||||||
Net
loss for the period
|
- | - | - | - | - | (210,130 | ) | (210,130 | ) | |||||||||||||||||||
Balance,
September 30, 2010 (Unaudited)
|
40,382,012 | $ | 24,490,006 | - | $ | - | $ | - | $ | (23,337,629 | ) | $ | 1,152,377 |
See notes
to unaudited consolidated condensed financial statements.
5
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
1.
|
NATURE
OF BUSINESS AND BASIS OF
PRESENTATION
|
White
Mountain Titanium Corporation (the “Company”) currently has no ongoing
operations. Its principal business is to advance exploration and
development activities on the Cerro Blanco rutile (titanium dioxide) property
(“Cerro Blanco”) located in Region III of northern Chile. The Company
is considered an exploration stage company and its financial statements are
presented in a manner similar to a development stage company as defined in
Accounting Standards Codification Topic 915, Development Stage
Entities.
The
accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 2010 and for the
period then ended have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted. It is suggested that these consolidated
condensed financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company’s December 31,
2009 audited consolidated financial statements included in the Company’s 2009
annual report on Form 10-K filed with the United States Securities and Exchange
Commission (“SEC”). The results of operations for the period ended
September 30, 2010 are not necessarily indicative of the operating results for
the full year.
2.
|
PROPERTY
AND EQUIPMENT
|
September 30, 2010
|
||||||||||||
Accumulated
|
||||||||||||
Cost
|
Amortization
|
Net
|
|
|||||||||
Vehicles
|
$ | 54,154 | $ | 43,216 | $ | 10,938 | ||||||
Office
furniture
|
18,863 | 6,341 | 12,522 | |||||||||
Office
equipment
|
11,311 | 5,775 | 5,536 | |||||||||
Computer
equipment
|
8,197 | 6,424 | 1,773 | |||||||||
Computer
software
|
1,542 | 855 | 687 | |||||||||
Field
equipment
|
62,814 | 39,470 | 23,344 | |||||||||
$ | 156,881 | $ | 102,081 | $ | 54,800 |
December
31, 2009
|
||||||||||||
Accumulated
|
||||||||||||
Cost
|
Amortization
|
Net
|
||||||||||
Vehicles
|
$ | 54,153 | $ | 38,031 | $ | 16,122 | ||||||
Office
furniture
|
17,712 | 3,189 | 14,523 | |||||||||
Office
equipment
|
10,828 | 4,139 | 6,689 | |||||||||
Computer
equipment
|
8,197 | 5,192 | 3,005 | |||||||||
Computer
software
|
1,142 | 664 | 478 | |||||||||
Field
equipment
|
62,814 | 29,704 | 33,110 | |||||||||
$ | 154,846 | $ | 80,919 | $ | 73,927 |
6
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
3.
|
CAPITAL
STOCK
|
|
(a)
|
Common and preferred
stock
|
|
i)
|
Common
stock
|
During
the nine months ended September 30, 2010:
|
·
|
738,000
shares of common stock were issued for services. Of this
amount, 720,000 shares were issued as management compensation (Note
3(c));
|
|
·
|
2,193,040
shares of common stock were issued upon the exercise of warrants
(Note 3(d));
|
|
·
|
50,000
shares of common stock were issued upon the exercise of stock options
(Note 3(b)); and
|
|
·
|
1,000,000
shares of common stock were issued upon the conversion of 625,000 shares
of preferred stock into common stock at the election of the
holder.
|
|
ii)
|
Preferred
stock
|
During
the three months ended September 30, 2010, the holder of the preferred stock
elected to convert the remaining 625,000 shares of preferred stock into
1,000,000 shares of common stock. Accordingly, the Company does not
have any preferred stock outstanding as of September 30, 2010.
|
(b)
|
Stock
options
|
On June
29, 2010, the Board of Directors adopted the 2010 Stock Option/Stock Issuance
Plan (the “Plan”), which permits the Company to grant both incentive and
non-statutory stock options and to grant restricted shares of common
stock. The Plan authorizes the issuance of up to 3,800,000 shares of
common stock. The number of shares of common stock available for
issuance under the Plan will automatically increase by an amount such that on
the first trading day of January each calendar year during the term of the
Plan, beginning with calendar year 2011, the number of shares of common stock
reserved and available for issuance under the Plan will represent 10% of the
total number of shares of common stock outstanding on the last trading day in
December of the immediately preceding calendar year. The Plan is
administered initially by the Board of Directors. The persons
eligible to participate in the Plan include: (a) employees of the
Company and any of its subsidiaries; (b) non-employee members of the Board or
non-employee members of the Board of Directors of any of its subsidiaries; (c)
officers of the Company or any subsidiary; and (d) consultants and other
independent advisors who provide services to the Company or any of its
subsidiaries. The Plan will continue in effect until all of the stock
available for grant or issuance has been acquired through exercise of options or
grants of shares, or until ten years after the adoption of the Plan by the Board
of Directors, whichever is earlier. The Plan may also be terminated
in the event of certain corporate transactions such as a merger or consolidation
or the sale, transfer or other disposition of all or substantially all of the
Company’s assets.
During
the quarter ended September 30, 2010, no stock options were granted. Options for
50,000 shares exercisable at $0.50 per share were exercised.
7
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
3.
|
CAPITAL
STOCK (continued)
|
|
(b)
|
Stock options
(continued)
|
The
following table represents service based stock option activity during the nine
months of 2010.
September 30, 2010
|
December 31, 2009
|
|
||||||||||||||
Number of
Shares
|
Weighted
Average
Exercise
Price
|
Number of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||
Outstanding
- beginning of period
|
2,790,000 | $ | 0.53 | 3,140,000 | $ | 0.57 | ||||||||||
Expired
|
- | - | (100,000 | ) | $ | 2.00 | ||||||||||
Exercised
|
(50,000 | ) | $ | 0.50 | - | - | ||||||||||
Forfeited
|
- | - | (250,000 | ) | $ | 0.50 | ||||||||||
Outstanding
– end of period
|
2,740,000 | $ | 0.53 | 2,790,000 | $ | 0.53 | ||||||||||
Exercisable
– end of period
|
2,740,000 | $ | 0.53 | 2,790,000 | $ | 0.53 |
As at
September 30, 2010 and December 31, 2009, the following director and consultant
stock options were outstanding:
Exercise
|
September
30,
|
December
31,
|
||||||||||
Expiry
Date
|
Price
|
2010
|
2009
|
|||||||||
January
31, 2011
|
$ | 0.50 | 400,000 | 400,000 | ||||||||
May
31, 2011
|
$ | 0.50 | 600,000 | 600,000 | ||||||||
August
1, 2011
|
$ | 0.50 | 200,000 | 200,000 | ||||||||
August
31, 2011
|
$ | 0.50 | 300,000 | 350,000 | ||||||||
August
31, 2012
|
$ | 0.50 | 1,075,000 | 1,075,000 | ||||||||
June
23, 2013
|
$ | 1.00 | 165,000 | 165,000 | ||||||||
2,740,000 | 2,790,000 |
The
shares under option at September 30, 2010 were in the following exercise price
ranges:
Weighted Average
Exercise Price
|
Number of Shares
under Option
|
Aggregate Intrinsic
Value
|
Weighted Average
Remaining Contractual Life in
Years
|
|||||||||||
$ | 0.50 | 2,575,000 | $ | 1,155,000 | 1.18 | |||||||||
$ | 1.00 | 165,000 | - | 2.73 | ||||||||||
$ | 0.53 | 2,740,000 | $ | 1,155,000 | 1.27 |
8
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
3.
|
CAPITAL
STOCK (continued)
|
|
(c)
|
Stock-based
compensation
|
During
the nine months ended September 30, 2010, the total stock-based compensation for
warrants recognized under the fair value method charged to management fees was
$146,682. This is a result of the issuance of 2,000,000 warrants to
certain directors and officers (Note 3(d)). The total stock-based
compensation calculated was $1,301,800. The remaining balance of
$1,155,118 will be amortized through December 31, 2015. These warrants were
fair valued using the Black-Scholes option pricing model with the following
weighted average assumptions: risk-free interest rate of 1.63%,
expected life of 5.9 years, an expected volatility factor of 69.30% and a
dividend yield of 0.00%.
In
February 2010, the Company granted 720,000 shares of common stock at a fair
value of $828,000 to management, employees and consultants. The
shares were granted under the 2010 Management Compensation Plan. The
shares were issued without registration under the Securities Act by reason of
the exemptions from registration afforded by the provisions of Section 4(2) of
the Securities Act and
regulations promulgated by the SEC. Each person acknowledged
appropriate investment representations with respect to the issuance and
consented to the imposition of restrictive legends upon the certificates. The
remaining 18,000 shares of common stock, at a fair value of $14,400, were issued
to market advisors of the Company during the three months ended September 30,
2010.
The total
stock-based compensation recognized for shares issued, warrants granted and
options granted for services was as follows:
September 30,
|
December 31
|
|||||||||||||||
2010
|
2009
|
2009
|
2008
|
|||||||||||||
Consulting
fees
|
$ | 62,100 | $ | 77,130 | $ | 77,130 | $ | - | ||||||||
Consulting
fees - directors and officers
|
434,700 | 252,118 | 252,117 | 45,339 | ||||||||||||
Investor
relations
|
- | 694,874 | 694,875 | - | ||||||||||||
Management
fees
|
436,482 | - | - | - | ||||||||||||
Advertising
and promotion
|
14,400 | - | - | - | ||||||||||||
Office
|
41,400 | - | - | - | ||||||||||||
$ | 989,082 | $ | 1,024,122 | $ | 1,024,122 | $ | 45,339 |
9
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
3.
|
CAPITAL
STOCK (continued)
|
|
(d)
|
Warrants
|
Details
of stock purchase warrant activity is as follows:
September 30, 2010
|
December 31, 2009
|
|||||||||||||||
Number
of Warrants
|
Weighted
Average
Exercise
Price
|
Number
of Warrants
|
Weighted
Average
Exercise
Price
|
|||||||||||||
Outstanding
- beginning of period
|
10,587,385 | $ | 0.56 | 13,022,600 | $ | 0.54 | ||||||||||
Issued
|
2,000,000 | $ | 1.50 | 589,785 | $ | 0.63 | ||||||||||
Exercised
|
(2,193,040 | ) | $ | 0.60 | (2,100,000 | ) | $ | 0.50 | ||||||||
Expired
|
(3,654,560 | ) | $ | 0.60 | (925,000 | ) | $ | 0.50 | ||||||||
Outstanding
- end of period
|
6,739,785 | $ | 0.81 | 10,587,385 | $ | 0.56 |
As at
September 30, 2010, the following share purchase warrants were
outstanding:
Expiry Date
|
Exercise Price
|
September 30,
2010
|
December 31,
2009
|
|||||||||
August
10, 2010
|
$ | 0.60 | - | 5,847,600 | ||||||||
April
1, 2011
|
$ | 0.50 | 4,250,000 | 4,250,000 | ||||||||
June
30, 2011
|
$ | 0.75 | 150,000 | 150,000 | ||||||||
June
30, 2012
|
$ | 0.50 | 235,000 | 235,000 | ||||||||
June
30, 2013
|
$ | 0.90 | 104,785 | 104,785 | ||||||||
December
31, 2015
|
$ | 1.50 | 2,000,000 | - | ||||||||
6,739,785 | 10,587,385 |
During
the nine months ended September 30, 2010, 2,000,000 warrants were issued to two
officers and directors of the Company as compensation as approved by the Board
in January 2010. These warrants are exercisable at $1.50 per share
expiring December 31, 2015 (Note 3(c)). These warrants vest only upon occurrence
of one of the following events and are exercisable in full upon the first of the
following events:
|
(i)
|
If
on or before June 30, 2011, the closing price of the common stock of the
Company is at least $2.00 per share for five consecutive trading
days;
|
|
(ii)
|
If
on or before December 31, 2012, the closing price of the common stock of
the Company is at least $2.50 per share for five consecutive trading days;
and
|
|
(iii)
|
If
on or before December 31, 2015, the closing price of the common stock of
the Company is at least $3.00 per share for five consecutive trading
days.
|
These
prices shall be subject to reasonable adjustment upon occurrence of certain
conditions.
10
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
3. CAPITAL
STOCK (continued)
|
(d)
|
Warrants
(continued)
|
Effective
January 1, 2009, the Company adopted the provisions of Emerging Issues Task
Force (“EITF”) 07-05, Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own
Stock, which was primarily codified into ASC Topic 815, Derivatives and
Hedging. ASC 815 applies to any freestanding financial
instrument or embedded feature that have the characteristics of a derivative and
to any freestanding financial instruments that are potentially settled in an
entity’s own common stock.
As a
result of adopting ASC 815, warrants to purchase 6,875,000 shares of common
stock previously treated as equity pursuant to the derivative treatment
exemption were no longer afforded equity treatment. The warrants had an exercise
price of $0.50 per warrant and expire in July and September 2009, of which
4,250,000 warrants were extended to April 2011. Effective January 1,
2009, the Company reclassified the fair value of these 4,250,000 warrants to
purchase common stock, which had exercise price reset features, from equity to
liability status as if these warrants were treated as a derivative liability
since their date of issue. On January 1, 2009, the Company
reclassified $1,084,375 to beginning deficit and $1,084,375 to other liabilities
- warrants to recognize the fair value of such warrants on such
date.
As of
September 30, 2010, the 4,250,000 warrants were fair valued using the
Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest rate of 1.63%, expected life of 1
year, an expected volatility factor of 53.19% and a dividend yield of 0.00%. The
fair value of these warrants to purchase common stock decreased to $923,100 as
of September 30, 2010. Accordingly, the Company recognized a $2,033,625 non-cash
income from the change in fair value of these warrants for the nine-month period
ended September 30, 2010.
4.
|
LOSS
PER SHARE
|
Basic and
diluted loss per share is computed using the weighted average number of common
shares outstanding as follows:
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
income (loss) for period
|
$ | 270,423 | $ | 573,995 | $ | (210,130 | ) | $ | (3,404,489 | ) | ||||||
Net
income (loss) available for distribution
|
$ | 270,423 | $ | 573,995 | $ | (210,130 | ) | $ | (3,404,489 | ) | ||||||
Allocation
of undistributed income (loss)
|
||||||||||||||||
Preferred
shares (0.00%, 2009 - 1.80%)
|
$ | - | $ | 10,332 | $ | - | $ | (61,281 | ) | |||||||
Common
shares (100%, 2009 - 98.20%)
|
270,423 | 563,663 | (210,130 | ) | (3,343,208 | ) | ||||||||||
$ | 270,423 | $ | 573,995 | $ | (210,130 | ) | $ | (3,404,489 | ) | |||||||
Basic
income (loss) per share amounts
|
||||||||||||||||
Undistributed
amounts
|
||||||||||||||||
Income
(loss) per preferred share
|
$ | 0.00 | $ | 0.02 | $ | (0.00 | ) | $ | (0.10 | ) | ||||||
Income
(loss) per common share
|
$ | 0.01 | $ | 0.02 | $ | (0.01 | ) | $ | (0.10 | ) |
11
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
4.
|
LOSS
PER SHARE (continued)
|
Weighted
average number of shares:
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Weighted
average number of shares for undistributed amounts
|
||||||||||||||||
Preferred
stock (common stock equivalent)
|
- | 625,000 | 625,000 | 625,000 | ||||||||||||
Common
stock
|
37,885,782 | 34,472,520 | 37,257,392 | 34,472,520 |
Potentially
dilutive securities not included in diluted weighted average shares outstanding
include shares underlying 2,740,000 in outstanding options and 6,739,785
warrants.
5.
|
FAIR
VALUE MEASUREMENTS
|
The
Company’s financial instruments consist of cash and cash equivalents,
receivables, and accounts payable and accrued liabilities. The
carrying amounts of these instruments approximate their respective fair values
because of the short maturities of those instruments.
The
Company follows the accounting guidance, which is now part of ASC 820-10
(formerly Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 157), Fair Value
Measurements (“SFAS 157”). ASC 820 does not require any new
fair value measurements; instead it defines fair value, establishes a framework
for measuring fair value in accordance with existing generally accepted
accounting principles and expands disclosure about fair value
measurements. The adoption of ASC 820 for the Company’s financial
assets and liabilities did not have an impact on the Company’s financial
position or operating results. Beginning January 1, 2008, assets and
liabilities recorded at fair value in the consolidated balance sheets are
categorized based upon the level of judgment associated with the inputs used to
measure fair value. Level inputs, as defined by ASC 820, are as
follows:
·
|
Level
1 - quoted
prices in active markets for identical assets or
liabilities
|
·
|
Level
2 - other
significant observable inputs for the assets or liabilities through
corroboration with market data at the measurement
date
|
·
|
Level
3 - significant
unobservable inputs that reflect management’s best estimate of what market
participants would use to price the assets or liabilities at the
measurement date.
|
The
following table summarizes fair value measurement by level at September 30, 2010
for assets and liabilities measured at fair value on a recurring
basis.
Level 1
|
Level 2
|
Level 3
|
Total
|
|
||||||||||||
Cash
and cash equivalents
|
$ | 1,275,603 | $ | - | $ | - | $ | 1,275,603 | ||||||||
Receivables
|
$ | 46,700 | $ | - | $ | - | $ | 46,700 | ||||||||
Accounts
payable and accrued liabilities
|
$ | 12,890 | $ | - | $ | - | $ | 12,890 | ||||||||
Other
liabilities - warrants
|
$ | - | $ | 923,100 | $ | - | $ | 923,100 |
12
WHITE
MOUNTAIN TITANIUM CORPORATION
(An
Exploration Stage Company)
Notes
to Consolidated Financial Statements
Nine
Months Ended September 30, 2010 and 2009
(Unaudited)
(US
Funds)
6.
|
SUBSEQUENT
EVENTS
|
The
Company has evaluated its activities subsequent to September 30, 2010 and has
concluded that no subsequent events have occurred that would require recognition
or disclosure in the consolidated condensed financial statements, except as
follows:
|
·
|
On
October 1, 2010, the Company issued 4,000,000 shares of common stock
pursuant to the terms of the non-exclusive, sublicensing agreement of the
titanium metal technology developed by Chinuka Limited plc (“Chinuka” or
the “Chinuka Process”). The Company now has access to the
Chinuka Process for the Cerro Blanco project. La Serena
Technologies Ltd. (“La Serena”) executed the sublicensing agreement as
holder of the Chinuka Process master license. As consideration
for the sublicense, the terms of the agreement between the Company and La
Serena are:
|
|
·
|
4,000,000
restricted shares of common stock were issued to Chinuka and La Serena
(800,000 to Chinuka and 3,200,000 to La Serena). These shares
are to be released from escrow over 24 months with 500,000 shares released
to each Chinuka and La Serena on closing and the balance released from
escrow at the end of each subsequent fiscal quarter on the basis of 37,500
to Chinuka and 337,500 to La Serena. The Company may cancel the
sublicense agreement (and related escrow share releases) at any time
following the initial release of
shares;
|
|
·
|
The
expenditure of $5,000,000 by the Company within five years of closing to
advance development of the Chinuka Process towards
commercialization;
|
|
·
|
A
2% gross royalty payment to La Serena on any revenue generated by the
Cerro Blanco project, which is attributable to the Chinuka Process, and to
make advance minimum royalty payments to La Serena of $200,000 per year
commencing five years after closing;
and
|
|
·
|
Commercial
production of titanium metal using the Chinuka Process and feed stock
derived from the Cerro Blanco project within nine years after
closing.
|
|
·
|
On
October 13, 2010, the Company announced the signing of its first Letter of
Intent off-take agreement with a major pigment producer for the supply of
standard grade rutile concentrate. The Letter of Intent, which at this
stage is non-binding on the parties and subject to the successful
completion of a bankable feasibility study, is covered by a non-disclosure
agreement.
|
13
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion should be read in conjunction with our unaudited
consolidated financial statements and related notes thereto as filed with this
report.
Forward
Looking Statements
The
statements contained in this report that are not historical facts are
forward-looking statements that represent management’s beliefs and assumptions
based on currently available information. Forward-looking statements
include the information concerning our possible or assumed future results of
operations, business strategies, need for financing, competitive position,
potential growth opportunities, potential operating performance improvements,
ability to retain and recruit personnel, the effects of competition and the
effects of future legislation or regulations. Forward-looking
statements include all statements that are not historical facts and can be
identified by the use of forward-looking terminology such as the words
“believes,” “intends,” “may,” “will,” “should,” “anticipates,” “expects,”
“could,” “plans,” or comparable terminology or by discussions of strategy or
trends. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we cannot give any assurances that
these expectations will prove to be correct. Such statements by their
nature involve risks and uncertainties that could significantly affect expected
results, and actual future results could differ materially from those described
in such forward-looking statements.
Among the
factors that could cause actual future results to differ materially are the
risks and uncertainties discussed in this report. While it is not
possible to identify all factors, we continue to face many risks and
uncertainties including, but not limited to, the cyclicality of the titanium
dioxide industry, global economic and political conditions, global productive
capacity, customer inventory levels, changes in product pricing, changes in
product costing, changes in foreign currency exchange rates, competitive
technology positions and operating interruptions (including, but not limited to,
labor disputes, leaks, fires, explosions, unscheduled downtime, transportation
interruptions, war and terrorist activities). Mining operations are
subject to a variety of existing laws and regulations relating to exploration
and development, permitting procedures, safety precautions, property
reclamation, employee health and safety, air and water quality standards,
pollution and other environmental protection controls, all of which are subject
to change and are becoming more stringent and costly to comply
with. Should one or more of these risks materialize (or the
consequences of such a development worsen), or should the underlying assumptions
prove incorrect, actual results could differ materially from those
expected. We disclaim any intention or obligation to update publicly
or revise such statements whether as a result of new information, future events
or otherwise.
There may
also be other risks and uncertainties that we are unable to predict at this time
or that we do not now expect to have a material adverse impact on our
business.
Background
We are a
mineral exploration company. We hold mining concessions composed of
33 registered mining exploitation concessions, and 5 exploration concessions,
over approximately 8,225 hectares located approximately 39 kilometers west of
the City of Vallenar in the Atacama, or Region III, geographic region of
northern Chile (hereinafter referred to as “Cerro Blanco”). We are in
the exploration stage, which means we are engaged in the search for mineral
deposits or reserves which could be economically and legally extracted or
recovered. Our primary expenditures at this stage consist of
acquisition and exploration costs and general and administration
expenses. We have produced no revenues, have achieved losses since
inception, have no operations, and currently rely upon the sale of our
securities to fund our operations.
Plan
of Operation and Financial Condition
We
completed the acquisition of an undivided interest in Cerro Blanco in September
2005. Exploration drilling by us and the previous owner has defined
rutile mineralization. Metallurgical test work performed by Lakefield
Research has demonstrated that this mineralization can be concentrated to a
level meeting buyer specifications and can be produced using a conventional
milling and flotation process.
Over the
next twelve to twenty-four months we have two principal objectives: to advance
the project towards a final engineering feasibility level and to secure off-take
contracts for the planned rutile concentrate output. We also continue
to investigate the commercial viability of producing a feldspar
co-product. The feldspar could find applications in the glass and
ceramics industries.
14
We now
have a considerable body of engineering design and process engineering work
completed, both by us and previous owners, for the development of a large open
pit mine and milling operation. The extent to which this engineering
work could be incorporated into a feasibility study will depend on factors such
as optimal plant sizing and configuration based on product volumes and
specifications set out in off-take contracts and process design, the latter to
be determined by refinements coming out of the metallurgical test work and pilot
scale testing completed last year. With commencement of our marketing
plan to seek suitable off-take contracts, we intend to undertake a program of
drilling to provide data for mine planning and design, for an environmental
impact assessment and permitting program, and to commission a feasibility
study. As some of these activities would be undertaken in tandem, we
believe a feasibility study could be completed by second quarter 2011, subject
to the availability of funds, personnel and equipment. We estimate
the cost to take the project to the point of completing a final engineering
feasibility study at approximately $3,810,000, including general and
administrative and marketing expenses. As of November 10, 2010, our
cash position was approximately $1,003,000. We currently do not have sufficient
capital to complete this plan and we will require additional financing to do
so.
On
October 1, 2010 the Company issued 4,000,000 shares of common stock pursuant to
the terms of the non-exclusive, sublicensing agreement of the titanium metal
technology developed by Chinuka Limited plc (“Chinuka” or the “Chinuka
Process”). The Company now has access to the Chinuka Process for the
Cerro Blanco project. La Serena Technologies Ltd. (“La Serena”)
executed the sublicensing agreement as holder of the Chinuka Process master
license. As consideration for the sublicense, the terms of the
agreement between the Company and La Serena are:
|
·
|
4,000,000
restricted shares of common stock were issued to Chinuka and La Serena
(800,000 to Chinuka and 3,200,000 to La Serena). These shares
are to be released from escrow over 24 months with 500,000 shares released
to each Chinuka and La Serena on closing and the balance released from
escrow at the end of each subsequent fiscal quarter on the basis of 37,500
to Chinuka and 337,500 to La Serena. The Company may cancel the
sublicense agreement (and related escrow share releases) at any time
following the initial release of
shares;
|
|
·
|
The
expenditure of $5,000,000 by the Company within five years of closing to
advance development of the Chinuka Process towards
commercialization;
|
|
·
|
A
2% gross royalty payment to La Serena on any revenue generated by the
Cerro Blanco project, which is attributable to the Chinuka Process, and to
make advance minimum royalty payments to La Serena of $200,000 per year
commencing 5 years after closing;
and
|
|
·
|
Commercial
production of titanium metal using the Chinuka Process and feed stock
derived from the Cerro Blanco project within nine years after
closing.
|
The
Chinuka Process was developed under the direction of Dr. Derek Fray, Professor
and Director of Research, Materials Science and Metallurgy, University of
Cambridge, UK. Unlike the industry-standard, multi-step Kroll batch
process which uses titanium pigment as a feed stock to produce titanium sponge
metal, the Chinuka Process is essentially a one-step process and uses titanium
ores and concentrates as a feed stock. By replacing a multi-step
process with a process in which refining and electro-deposition take place
simultaneously and substituting ores and concentrates as a feed stock, the
Chinuka Process holds forth potentially significant cost and production time
saving over the Kroll process.
We
anticipate the sublicensing of the Chinuka Process will create an opportunity to
add value to the Cerro Blanco project, particularly with respect to the planned
minus 53 micron titanium concentrate product.
On
October 13, 2010 the Company announced that it has signed its first Letter of
Intent off-take agreement with a major pigment producer for the supply of
standard grade rutile concentrate. The Letter of Intent, which
at this stage is non-binding on the parties and subject to the successful
completion of a bankable feasibility study, is covered by a non-disclosure
agreement.
15
Results
of Operations
We
recorded an income for the three months ended September 30, 2010 of $270,423 or
$0.01 per weighted average common share outstanding compared to an income of
$573,995 ($0.02 per share) for the comparable interim period in
2009. On a year to date basis, for the nine months ended September
30, 2010 the loss was $210,130 ($0.01 per share) compared to $3,404,489 ($0.10
per share) for the comparable period in 2009.
The
income in the third quarter of both 2010 and 2009 is a direct result of the
adoption of Emerging Issues Task Force (“EITF”) 07-05, Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock, which was
primarily codified into ASC Topic 815, Derivatives and
Hedging. ASC 815 applies to any freestanding financial
instruments or embedded features that have the characteristics of a derivative
and to any freestanding financial instruments that are potentially settled in an
entity’s own common stock.
ASC Topic
815 was effective January 1, 2009 resulted in a cumulative adjustment of
$1,084,375 to accumulated deficit as of January 1, 2009. For the
three months ended September 30, 2010 we recorded a fair value change (gain) of
$808,775 (gain of $2,033,625 year to date). The comparable effects in
2009 were a gain of $998,012 in the third quarter (loss of $903,450 year to
date). See Note 3(d) for a more detailed discussion.
Excluding
the above, and other items such as interest and foreign exchange, our loss from
our operations was $544,493 for the third quarter of 2010 (Year to date:
$2,229,203). The results for the same period of 2009 were losses of
$433,433 (2009 Year to date: $2,522,125).
Generally
most expenses continue to be comparable this quarter to the comparable quarter
of 2009 and on a year to date basis, except for the following material
items:
|
·
|
During
the third quarter of 2010, stock-based compensation of $55,005 (YTD:
$146,682) was recognized as management fees expense (note
3(c). This is a result of the issuance of 2,000,000 warrants to
certain directors and officers (Note 3(d)). The total
stock-based compensation calculated was $1,301,800, and will be amortized
until December 31, 2015. During the same nine month period of
2009, $1,024,122 of stock based compensation was recognized, including
$694,875 as investor relations expense, resulting from the extension of
warrants held by the European institutional investor who exercised two
million warrants during the quarter. There was no such charge in the
second quarter of 2010. In 2009 the Board of Directors approved
an employee benefit plan for officers, directors, and employees to
increase stockholder value and the success of the company by motivating
members of management to provide services to the company and perform to
the best of their abilities, to achieve the company’s objectives, and to
allow us to minimize the cash component of compensation. The
pool consists of up to 1% of the outstanding shares at the end of each
year. During the first quarter or 2010 we issued 720,000 shares
at a fair value of $828,000. This expense was allocated to
Consulting fees, Consulting fees – directors and officers, Management fees
and office (see note 3(c) of the quarterly financial
statements). There was no such expense in the current
quarter.
|
|
·
|
During
the first quarter of 2010 we commenced a brokered offering of shares to
raise up to $6 million. After discussions with our advisors during the
second quarter, we elected to withdraw this offering based on market
conditions. As a result, during the second quarter we wrote off
deferred offering costs of approximately $80,000 to Advertising ($3,000),
Consulting ($30,000), Filing fees ($17,000) and Professional fees
($30,000).
|
|
·
|
Advertising
and Promotion was $47,212 in the quarter (year to date $79,052), compared
to $11,665 and $29,316 respectively for 2009. This was a result
of fees paid to a market advisor of $32,400 in cash and
stock, increased news releases and filings, and attendance at
conferences
|
|
·
|
During
the current quarter we incurred lower exploration expense of $110,007
(YTD: $246,091) (2009: $119,756 and $335,719), as our work was primarily
restricted to planning for upcoming drilling and final feasibility
activities. Similarly we incurred Engineering Consulting fees
of $nil (YTD: $nil) (2009: $128,319 and $200,674). We
anticipate that both of these expenses will increase significantly in the
fourth quarter and subsequent quarters of the new year as we commence
infill drilling and final
feasibility.
|
Recent
Accounting Pronouncements
Codification
In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, a
replacement of SFAS No. 162 (the “Codification”). The
Codification will be the single source of authoritative non-governmental US
accounting and reporting standards, superseding existing FASB, AICPA, EITF and
related literature. The Codification eliminates the hierarchy of GAAP contained
in SFAS No. 162 and establishes one level of authoritative GAAP. All other
literature is considered non-authoritative. This Statement was effective for the
Company’s September 30, 2009 financial statements for interim and annual
periods. All accounting references have been updated with Accounting
Standard Codification (“ASC”) references.
16
Fair
value measurements
In August
2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends
ASC Topic 820, Measuring
Liabilities at Fair Value, which provides additional guidance on the
measurement of liabilities at fair value. These amended standards clarify that
in circumstances in which a quoted price in an active market for the identical
liability is not available, the Company is required to use the quoted price of
the identical liability when traded as an asset, quoted prices for similar
liabilities, or quoted prices for similar liabilities when traded as assets. If
these quoted prices are not available, the Company is required to use another
valuation technique, such as an income approach or a market approach. These
amended standards were effective on October 1, 2009 and did not have a material
impact on the consolidated financial statements.
In
January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and
Disclosures, which amends ASC Topic 820, adding new requirements for
disclosures for Levels 1 and 2, separate disclosures of purchases, sales,
issuances and settlements relating to Level 3 measurements and clarification of
existing fair value disclosures.
ASU
2010-06 is effective for interim and annual periods beginning after December 15,
2009, except for the requirement to provide Level 3 activity of purchases,
sales, issuances and settlements on a gross basis, which will be effective for
fiscal years beginning after December 15, 2010 (the Company’s fiscal year 2011);
early adoption is permitted. The Company is currently evaluating the impact of
adopting ASU 2009-14 on its consolidated financial statements.
In June
2008, the FASB ratified the consensus reached on ASC 815-40 Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock. ASC 815-40
clarifies the determination of whether an instrument (or an embedded feature) is
indexed to an entity’s own stock, which would qualify as a scope exception under
SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. The Company adopted ASC
815-40 as of January 1, 2009 (Note 11).
In May
2009, the FASB issued ASC 855. ASC 855 is intended to establish
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. It requires the disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date—that is, whether that date represents the date the financial statements
were issued or were available to be issued. In February 2010, the
FASB amended ASC 855 to remove the requirement for an SEC registrant to disclose
the date through which subsequent events were evaluated as this requirement
would have potentially conflicted with SEC requirements. Removal of this
disclosure requirement is not expected to affect the nature or timing of
subsequent events evaluations performed by the Company.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
As a
smaller reporting company, we have elected not to provide the disclosure
required by this item.
Item
4. Controls and
Procedures
Disclosure
Controls and Procedures
Our
President and our CFO, after evaluating the effectiveness of our “disclosure
controls and procedures” (as defined in the Rule 15d-15 (e) under the Exchange
Act) as of the end of the period covered by this Quarterly Report on Form 10-Q
(the “Evaluation Date”), have concluded that as of the Evaluation Date, our
disclosure controls and procedures were effective to provide assurance that
information we are required to disclose in reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission rules and forms, and
that such information is accumulated and communicated to our management,
including our principal executive and financial officers, as appropriate, to
allow timely decisions regarding required disclosure.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting (as defined in
Rule 15d-15(f) under the Exchange Act) that occurred during our most recent
quarter ended September 30, 2010, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control
systems, there is only reasonable assurance that our controls will succeed in
achieving their stated goals under all potential future conditions.
17
PART
II. OTHER INFORMATION
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
On July
1, 2010, we signed a consulting agreement with DRC Partners, LLC, a New Jersey
limited liability company. We engaged the service provider on a
non-exclusive basis to provide certain investor relations services for
us. Pursuant to the consulting agreement, we issued 18,000 shares as
compensation for the services. These shares were issued without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Sections 4(2) and 4(5) thereof, and
Rule 506 promulgated thereunder, as a transaction by an issuer not involving any
public offering. DRC Partners was an accredited investor at the time of
the issuance. It delivered appropriate investment representations
with respect to the issuance and consented to the imposition of restrictive
legends upon the stock certificates. DRC Partners did not enter into
the consulting agreement with us as a result of or subsequent to any
advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast on television or radio, or
presented at any seminar or meeting and had a preexisting relationship with
persons representing our company at the time of the
transaction. Representatives of DRC Partners were afforded the
opportunity to ask questions of our management and to receive answers concerning
the terms and conditions of the warrant issuance. No underwriting
discounts or commissions were paid in connection with the
transaction.
In
September 2006 we issued 350,000 options to purchase shares of our common stock
on or before August 31, 2011. As of September 22, 2010, one of these
option holders, Charles E. Jenkins, our CFO and a director, exercised his
options and purchased an aggregate of 50,000 shares of our common stock at $0.50
per share for total gross proceeds of $25,000. The remaining 300,000
outstanding options are still outstanding and will expire August 31,
2011. The shares were issued without registration under the
Securities Act by reason of the exemption from registration afforded by the
provisions of Regulation S. Mr. Jenkins was a non-U.S. person at the
time of the exercise. The issuance of the shares was made in an
offshore transaction and no directed selling efforts were made in the U.S. by us
or anyone acting on our behalf. No underwriting discounts or
commissions were paid in connection with the issuance of the
shares.
Item 6.
Exhibits
The
following exhibits are furnished with this report:
10.1
|
Sublicense
Agreement dated September 15, 2010, between Sociedad Contractual Minera
White Mountain Titanium and La Serena Technologies Limited (confidential
information has been
redacted)
|
31.1
|
Rule
15d-14(a) Certification by Principal Executive
Officer
|
31.2
|
Rule
15d-14(a) Certification by Chief Financial
Officer
|
32.1
|
Section
1350 Certification of Principal Executive
Officer
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
White
Mountain Titanium Corporation
|
||||
Date:
November 12, 2010
|
By
|
/s/ M. P. Kurtanjek
|
||
Michael
P. Kurtanjek, President
|
||||
(Principal
Executive Officer)
|
||||
Date:
November 12, 2010
|
By
|
/s/ C.E. Jenkins
|
||
Charles
E. Jenkins, Chief Financial Officer
|
||||
(Principal
Financial Officer)
|
18