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EX-32.2 - EXHIBIT 32.2 - LEGEND INTERNATIONAL HOLDINGS INCa50057405-ex322.htm
EX-31.2 - EXHIBIT 31.2 - LEGEND INTERNATIONAL HOLDINGS INCa50057405-ex312.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q

 

(Mark one)
 
x
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 For the Quarterly Period Ended September 30, 2011
   
or
 
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
 For the transition period from ________________ to ________________
   
Commission File Number: 000-32551
 
———————
LEGEND INTERNATIONAL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
———————

Delaware
233067904
(State or Other Jurisdiction
(I.R.S. Employer
of Incorporation)
Identification No.)
   
Level 8, 580 St Kilda Road
 
Melbourne, Victoria, Australia
3004
(Address of Principal Executive Offices)
(Zip Code)
   
Registrant’s telephone number, including area code: 001 (613) 8532 2866
 
———————
 
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.  x  Yes  ¨  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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x  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 definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.
 
(Check one):            
Large accelerated filer  ¨ Accelerated filer  x Non-accelerated filer  ¨ Smaller reporting company  ¨
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act).     ¨  Yes  x  No
 
There were 226,407,246 shares of common stock outstanding on November 7, 2011.
 


 
 

 
 
Table of Contents

 
 
1

 


Item 1.    CONSOLIDATED FINANCIAL STATEMENTS

Introduction to Interim Consolidated Financial Statements.

The interim consolidated financial statements included herein have been prepared by Legend International Holdings, Inc. (“Legend” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These interim consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

In the opinion of management, all adjustments, consisting of normal recurring adjustments and consolidating entries, necessary to present fairly the consolidated financial position of the Company and subsidiaries as of September 30, 2011, the results of its consolidated operations for the three and nine month periods ended September 30, 2011 and September 30, 2010 and for the cumulative period January 5, 2001 (inception) through September, 2011, and the changes in its consolidated cash flows for the nine month periods ended September 30, 2011 and September 30, 2010 and for the cumulative period January 5, 2001 (inception) through September 30, 2011, have been included.  The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Foreign Currency Translation

The functional and reporting currency of the Company is the Australian dollar (“A$”). Amounts have been rounded, except for earnings per share, to the nearest thousand.

UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN AUSTRALIAN DOLLARS.
 
 
2

 
 
LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Balance Sheet
 
   
September 30,
2011
A$000s
(unaudited)
   
December 31,
2010
A$000s
 
ASSETS
           
             
Current Assets:
           
Cash
    4,098       25,166  
Receivables
    724       1,165  
Prepayments
    174       913  
Inventories
    110       110  
Other investments (note 10)
    2,457       2,784  
Marketable securities (note 10)
    -       264  
Total Current Assets
    7,563       30,402  
                 
Non-Current Assets:
               
Property and equipment, net (note 3)
    14,243       13,832  
Investment in unconsolidated entities (note 13)
    12,023       13,570  
Other investments
    200       200  
Deposits (note 5)
    1,148       1,176  
Advances to affiliates (note 7)
    6,803       3,039  
Prepayments
    30       37  
Development costs (note 4)
    1,652       -  
Mineral Rights (note 15)
    15,843       16,892  
Goodwill (note 14)
    1,093       1,093  
Total Non-Current Assets
    53,035       49,839  
                 
Total Assets
    60,598       80,241  
                 
LIABILITIES
               
                 
Current Liabilities:
               
Accounts payable and accrued expenses
    2,239       2,134  
Current portion of long-term debt (note 16)
    302       224  
Lease liability (note 9)
    350       455  
Total Current Liabilities
    2,891       2,813  
                 
Non Current Liabilities:
               
Reclamation and remediation provision (note 8)
    951       926  
Long-term debt (note 16)
    2,738       2,611  
Lease liability (note 9)
    210       254  
Total Non Current Liabilities
    3,899       3,791  
                 
Total Liabilities
    6,790       6,604  
                 
Commitments and Contingencies (Note 11)
               
                 
Stockholders’ Equity
               
Common stock: US$.001 par value, 400,000,000 shares authorised
               
226,407,246 and 226,399,674 shares issued and outstanding
    275       275  
Additional paid-in-capital
    164,151       163,808  
Accumulated other comprehensive loss
    (1,402 )     (1,926 )
Retained (deficit) prior to exploration activities
    (839 )     (839 )
Retained (deficit) during exploration period
    (105,495 )     (101,591 )
Retained (deficit) during development period
    (15,378 )     -  
                 
Legend Stockholders’ Equity
    41,312       59,727  
Non-controlling interests
    12,496       13,910  
                 
Total Equity
    53,808       73,637  
                 
Total Liabilities and Equity
    60,598       80,241  
   
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
3

 

LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
 
   
For the three months
ended September 30
   
For the nine months
ended September 30
   
January 5, 2001
 (Inception) to
 September 30,
 
     
2011
A$000s
     
2010
A$000s
     
2011
A$000s
     
2010
A$000s
     
2011
A$000s
 
                                         
Revenues:
                                       
                                         
Sales
            -               -       6  
less cost of sales
            -               -       (1 )
                                         
Gross profit
            -               -       5  
                                         
Other income
                                       
Interest income – related entity
    41       45       93       118       398  
Interest income – other
    77       459       464       1,728       9,580  
Other
    575       364       587       495       1,679  
Total other income
   
 
693
      868       1,144       2,341       11,657  
                                         
Costs and expenses:
                                       
Legal, accounting and professional
    160       245       468       618       3,303  
Exploration expenditure
    4,209       5,604       10,343       21,166       79,381  
Aircraft maintenance
    246       156       761       351       2,642  
Stock based compensation
    31       376       403       1,334       12,723  
Interest expense
    57       13       184       44       455  
Impairment of investment
    -       -       -       -       327  
Amortization of mineral rights
    350       350       1,049       1,049       3,030  
Administration expenses
    1,775       2,191       6,037       7,885       36,064  
Total costs and expenses
   
 
(6,828
)     (8,935 )     (19,245 )     (32,447 )     (137,925 )
                                         
(Loss) from operations
    (6,135 )     (8,067 )     (18,101 )     (30,106 )     (126,263 )
                                         
Foreign currency exchange gain/(loss)
    (142 )     (861 )     (160 )     (504 )     (266 )
Adjustment to fair value on stepped acquisition
    -       -       -       -       2,201  
Realized gain/(loss) on marketable securities
    (5 )     31       (66 )     6       186  
Loss on other investments
    (62 )     -       (62 )     -       (62 )
Loss from sale of property and equipment
    (3 )     -       (168 )     -       (168 )
Writeoff/writedown of assets
    (25 )     -       (30 )     -       (275 )
                                         
(Loss) before income taxes and equity in losses of unconsolidated entities
    (6,372 )     (8,897 )     (18,587 )     (30,604 )     (124,647 )
                                         
Provision for income taxes
    -       -       -       -       -  
                                         
(Loss) before equity in losses of unconsolidated entities
    (6,372 )     (8,897 )     (18,587 )     (30,604 )     (124,647 )
                                         
Equity in losses of unconsolidated entities (note 13)
    (601 )     (632 )     (2,075 )     (1,007 )     (3,861 )
                                         
Net (loss)
    (6,973 )     (9,529 )     (20,662 )     (31,611 )     (128,508 )
                                         
Net loss attributable to non-controlling interests
    742       558       1,380       3,466       6,796  
                                         
Net (loss) attributable to Legend stockholders
    ( 6,231 )     (8,971 )     (19,282 )     (28,145 )     (121,712 )
                                         
Basic and diluted loss per common shares
    (0.03 )     (0.04 )     (0.08 )     (0.12 )     (1.15 )
                                         
   
Number
(000s)
   
Number
(000s)
   
Number
(000s)
   
Number
(000s)
   
Number
(000s)
 
                                         
Weighted average number of common shares used in per share calculations
    226,407       226,400       226,406       226,393       105,900  
                                         
The accompanying notes are integral part of the consolidated financial statements
 
 
 
4

 
 
LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
for the period ended September 30, 2011
(Unaudited)
 
   
Common Stock
          Accumulated    
  Retained
   
  Retained
    Retained              
   
Shares
000s
   
Par Value
A$000s
 
  Additional
Paid-In Capital
 A$000s
 
 Other
 Comprehensive
 Income (Loss)
 A$000s
 
(Deficit) Prior to
 Exploration
 Activities
A$000s
 
(Deficit) During
 Exploration
Period
A$000s
 
  (Deficit) During
 Development
 Period
A$000s
 
  Non-Controlling
 Interests
A$000s
   
Stockholders’
 Equity (Deficit)
A$000s
 
Balance, January 5, 2001
    -       -       -       -       -       -       -       -       -  
                                                                         
Shares issued to founder for organisation cost and services at US$0.05 per shares
    4,298       5       119       -       -       -       -       -       124  
                                                                         
Shares issued for services rendered at US$0.05 per share
    146       -       4       -       -       -       -       -       4  
                                                                         
Shares issued for cash
    616       1       17       -       -       -       -       -       18  
                                                                         
Net Loss
    -       -       -       -       (131 )     -       -       -       (131 )
                                                                         
Balance, December 31, 2001
    5,060       6       140       -       (131 )     -       -       -       15  
                                                                         
Shares issued for cash
    225       -       6       -       -       -       -       -       6  
                                                                         
Shares issued for officer’s compensation
    11,250       15       148       -       -       -       -       -       163  
                                                                         
Net Loss
    -       -       -       -       (183 )     -       -       -       (183 )
                                                                         
Balance, December 31, 2002
    16,535       21       294       -       (314 )     -       -       -       1  
                                                                         
Shares issued for services rendered at US$0.022 per share
    5,026       7       139       -       -       -       -       -       146  
                                                                         
Net Loss
    -       -       -       -       (157 )     -       -       -       (157 )
                                                                         
Balance, December 31, 2003
    21,561       28       433       -       (471 )     -       -       -       (10 )
                                                                         
Shares issued for services rendered at US$0.022 per share
    2,005       3       55       -       -       -       -       -       58  
                                                                         
Options issued for services
    -       -       161       -       -       -       -       -       161  
                                                                         
Loan forgiveness-former major shareholder
    -       -       12       -       -       -       -       -       12  
                                                                         
Net Loss
    -       -       -       -       (235 )     -       -       -       (235 )
                                                                         
Balance, December 31, 2004
    23,566       31       661       -       (706 )     -       -       -       (14 )
 
 
5

 
 
LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
for the period ended September 30, 2011
(Unaudited)
(continued)
 
   
Common Stock
          Accumulated       Retained       Retained     Retained              
   
Shares
000s
 
  Par Value
 A$000s
 
  Additional
Paid-In Capital
 A$000s
 
  Other
 Comprehensive
 Income (Loss)
 A$000s
 
 (Deficit) Prior to
 Exploration
 Activities
A$000s
 
 (Deficit) During
 Exploration
Period
A$000s
 
  (Deficit) During
 Development
 Period
A$000s
 
  Non-Controlling
 Interests
A$000s
 
  Stockholders’
 Equity (Deficit)
 A$000s
 
Shares issued on cashless exercise of options
    17,086       22       (22 )     -       -       -       -       -       -  
                                                                         
Net Loss
    -       -       -       -       (75 )     -       -       -       (75 )
                                                                         
Balance, December 31, 2005
    40,652       53       639       -       (781 )     -       -       -       (89 )
                                                                         
Shares issued on cashless exercise of options
    72,281       93       (93 )     -       -       -       -       -       -  
                                                                         
Shares and options issued under settlement agreement
    113       0       35       -       -       -       -       -       35  
                                                                         
Shares issued for cash
    12,757       17       3,855       -       -       -       -       -       3,872  
                                                                         
Cost of share issues
    -       -       (128 )     -       -       -       -       -       (128 )
                                                                         
Amortisation of options under stock option plan
    -       -       115       -       -       -       -       -       115  
                                                                         
Net unrealized gain on foreign exchange translation
    -       -       -       38       -       -       -       -       38  
                                                                         
Net Loss
    -       -       -       -       (58 )     (4,516 )     -       -       (4,574 )
                                                                         
Balance, December 31, 2006
    125,803       163       4,423       38       (839 )     (4,516 )     -       -       (731 )
                                                                         
Shares issued for cash
    47,687       56       25,686       -       -       -       -       -       25,742  
                                                                         
Cost of share issues
    -       -       (1,675 )     -       -       -       -       -       (1,675 )
                                                                         
Shares issued for consulting fees
    2,604       3       1,001       -       -       -       -       -       1,004  
                                                                         
Shares issued on cashless exercise of options
    75       -       -       -       -       -       -       -       -  
                                                                         
Shares issued as a result of delay in lodgement of registration statement
    200       -       364       -       -       -       -       -       364  
                                                                         
Shares issued for part-settlement of the acquisition of rights to exploration licences under agreement
    500       1       517       -       -       -       -       -       518  

 
6

 
 
LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
for the period ended September 30, 2011
(Unaudited)
(continued)
 
   
Common Stock
         Accumulated    Retained     Retained      Retained              
   
Shares
000s
   
Par Value
A$000s
 
  Additional
Paid-In Capital
 A$000s
 
Other
Comprehensive
 Income (Loss)
 A$000s
 
(Deficit) Prior to
 Exploration
 Activities
A$000s
 
(Deficit) During
 Exploration
Period
A$000s
 
(Deficit) During
 Development
 Period
A$000s
 
Non-Controlling
 Interests
A$000s
 
Stockholders’
 Equity (Deficit)
 A$000s
 
Amortization of options under stock option plan
    -       -       376       -       -       -       -       -       376  
                                                                         
Net Loss
    -       -       -       -       -       (8,638 )     -       -       (8,638 )
                                                                         
Balance, December 31, 2007
    176,869       223       30,692       38       ( 839 )     (13,154 )     -       -       16,960  
                                                                         
Shares issued for cash
    42,000       44       109,984       -       -       -       -       -       110,028  
                                                                         
Cost of share issues
            -       ( 5,964 )     -       -       -       -       -       (5,964 )
                                                                         
Shares issued on cashless exercise of options
    1,522       2       ( 2 )     -       -       -       -       -       -  
                                                                         
Shares issued on exercise of options
    5,436       6       13,718       -       -       -       -       -       13,724  
                                                                         
Shares issued for consulting fees
    31       -       147       -       -       -       -       -       147  
                                                                         
Shares issued under registration rights agreement
    458       -       900       -       -       -       -       -       900  
                                                                         
Amortization of options under stock option plan
    -       -       5,186       -       -       -       -       -       5,186  
                                                                         
Net Loss
    -       -       -       -       -       (14,222 )     -       -       (14,222 )
                                                                         
Balance, December 31, 2008
    226,316       275       154,661       38       ( 839 )     (27,376 )     -       -       126,759  
                                                                         
Shares issued on exercise of options
    18       -       3       -       -       -       -       -       3  
                                                                         
Amortization of options under stock option plan
    -       -       4,260       -       -       -       -       -       4,260  
                                                                         
Net unrealized loss on foreign exchange translation
    -       -       -       (427 )     -       -       -       -       (427 )
                                                                         
Net Loss attributable to Legend stockholders
    -       -       -       -       -       (37,886 )     -       -       (37,886 )
                                                                         
Fair value of non-controlling interest
    -       -       -       -       -       -       -       10,261       10,261  
 
 
7

 
 
LEGEND INTERNATIONAL HOLDINGS, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
for the period ended September 30, 2011
(Unaudited)
(continued)
 
   
Common Stock
        Accumulated      Retained     Retained     Retained              
   
Shares
000s
   
Par Value
A$000s
 
  Additional
Paid-In Capital
 A$000s
 
  Other
 Comprehensive
 Income (Loss)
 A$000s
 
(Deficit) Prior to
 Exploration
 Activities
A$000s
 
(Deficit) During
 Exploration 
Period
A$000s
 
(Deficit) During
 Development
 Period
A$000s
 
  Non-Controlling
 Interests
A$000s
 
  Stockholders’
 Equity (Deficit)
 A$000s
 
Net change in controlling/non-controlling interest
    -       -       4,842       -       -       -       -       8,699       13,541  
                                                                         
Net loss attributable to non-controlling stockholders
    -       -       -       -       -       -       -       (1,612 )     (1,612 )
                                                                         
Balance, December  31, 2009
    226,334       275       163,766       (389 )     (839 )     (65,262 )     -       17,348       114,899  
                                                                         
Shares issued on cashless exercise of options
    66       -       -       -       -       -       -       -       -  
                                                                         
Amortization of options under stock option plan
    -       -       1,728       -       -       -       -       -       1,728