NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION
|
The unaudited condensed consolidated financial
statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). The condensed consolidated financial statements and notes are presented as permitted on Form 10-Q
and do not contain information included in the Company’s annual consolidated financial statements and notes thereto. 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 pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in conjunction with the Company’s Form 10-K Annual Report at December
31, 2012, which includes audited financial statements and the accompanying notes thereto. While management believes the procedures
followed in preparing these condensed consolidated financial statements are reasonable, the accuracy of the amounts are in some
respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
These condensed consolidated unaudited
financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary
to present fairly the consolidated operations and cash flows for the periods presented.
Lantis Laser, Inc. (the “Company”)
was incorporated in the State of New Jersey on January 14, 1998. On November 3, 2004, the Company was acquired by Hypervelocity,
Inc., a Nevada corporation.
In the transaction, the Company exchanged
100% of its stock in exchange for 127,718,500 shares of common stock of Hypervelocity, Inc. The transaction was treated for accounting
purposes as a reverse merger with Lantis Laser, Inc. being the accounting acquirer. Included in the 127,718,500 shares issued to
the shareholders of Lantis Laser, Inc. in the transaction, 6,422,500 shares were issued in conversion of convertible notes payable
the Company had entered into in 2001 and 2003. The shares represent the conversion of the original notes, the interest accrued
on those notes as well as warrants that were offered and paid for by the note holders. The value of the convertible notes, interest
and warrants was $259,529.
On December 9, 2004, Hypervelocity, Inc.
changed its name to Lantis Laser Inc. and is domiciled in Nevada.
On June 16, 2006, the Company authorized
a 1 for 2 reverse stock split for all issued shares. All shares reflected herein have been retroactively adjusted to account for
the reverse stock split.
The Company was formed to commercialize
the application of novel technologies in the dental industry. The criteria for selected products include competitive edge, exclusivity
and large market potential. The Company was developing its Optical Coherence Tomography ("OCT") "Dental Imaging"
as its first product but has suspended further development until it receives the funding to do so. The Company has licensed the
exclusive rights for the dental field for the OCT patented technology from Lawrence Livermore National Laboratories. OCT was invented
in the early 1990’s at Massachusetts Institute of Technology and it is currently being commercialized in ophthalmology and
cardiovascular imaging.
On May 31, 2007, the Company entered into
an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for technology relevant
to the imaging probe of its Dental Imaging System; the Agreement carries a $1,000 initial licensing fee.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION (CONTINUED)
|
On July 9, 2008, the Company entered into
an exclusive license agreement for the field of dentistry for a patent pending technology known as Near Infrared Transillumination
Imaging (NIR). The Company paid the initial licensing fee of $10,000. This technology is synergistic with the OCT technology and
the Company intends to sell it in a combination OCT/NIR platform and also as a standalone product.
Management of the Company had extensive
experience in the dental industry, including technology, development, marketing and distribution, clinical and research dentistry.
OCT is a diagnostic imaging technology
that is based on advanced photonics and fiber optics. It enables the capture of cross-sectional images of tissue with an axial
resolution of up to ten times that of x-ray, providing tissue characterization and images that cannot be obtained by any other
means, including x-ray. Information is captured by shining a near- infrared light through a single optical fiber only .006”
diameter deep into the internal structures of the subject tissue.
When the light becomes scattered in the
dense biological tissue, a certain component of the reflected light remains unscattered and thus contains good quantitative and
structural image information. The OCT technology maps the changing intensities of reflections from the tissue to form an image
of the subject area. This image, displayed on a monitor in real time, has an unprecedented amount of diagnostic information and
can be manipulated, printed out and stored in a digital format.
On April 22, 2011, the Company entered
into an Agreement and Plan of Merger (the “Merger Agreement”) with Lantis Acquisition Corp., a Wyoming corporation
and wholly-owned subsidiary of the Company (“Merger Sub”), and TAG Minerals Inc., a Wyoming corporation (“TAG”),
pursuant to which the Merger Sub was to be merged into TAG (the “Merger”). As a result of the Merger TAG became a wholly-owned
subsidiary of the Company. The transaction was completed on May 23, 2011 and the Company issued to the shareholders of TAG 165,000,000
shares of common stock which represented 50% of the total issued and outstanding shares at the time of the Merger in exchange for
100% of their shares in TAG. The Company accounted for this transaction as an acquisition, and Lantis was the surviving company.
TAG is a U.S. based mineral resource acquisition,
exploration and development company, with operations conducted through its operating affiliate, TAG Minerals Zimbabwe (Private)
Limited (“TAG - Z”). The company’s business is managed by its directors and officers who have mineral extraction
and commercial experience. TAG’s strategy is to identify, acquire and exploit mineral properties that have potential. TAG
is augmented by independent financial, geological, and mining professionals who advise the company on its mining and exploration
projects throughout Zimbabwe, Africa. TAG-Z will commence their own alluvial surface gold mining operations.
Concurrent with the Merger Agreement, the
Company’s former Chief Executive Officer and Executive Vice President Clinical Affairs and a Director of the Company resigned
on May 6, 2011. The Company retained these former executives to continue to head up the dental technology subsidiary of the Company.
These two executives received employment contracts dated May 23, 2011.
The President and Chief Executive Officer
of TAG were named the new President and Chief Executive Officer of the Company. In addition, the remaining two shareholders of
TAG became Directors in the Company, with one of these Directors resigning in January 2013.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION (CONTINUED)
|
At the time
of the Merger, the Board of Directors approved the conversion of an outstanding note for each officer totaling $960,000 plus accrued
interest of $62,466 into 14,400,000 cashless warrants. The warrants have a term of five-years, with an exercise price of $0.075.
The Company performed a
Black-Scholes
calculation to establish a value of $100,800 for the
warrants.
The gain on the conversion of the related
party debt to warrants of $921,666 is reflected in additional paid-in capital in accordance with ASC 850.
The other related party debt of $150,000
at the time of the Merger was converted to a convertible note. The notes will be repaid at the rate of 5% of any funding, whether
debt or equity, received by the Company or its subsidiaries, or 5% of net revenues of the Company until repaid in full. The note
holders have the right to convert any amounts outstanding and due to them at $0.075 per share at their sole discretion.
In July 2011, TAG-Z, acquired 100% of the
capital stock of Ontage Resources (Private) Limited (“Ontage”). Ontage holds a 10% stake in an existing operating gold
mining producer, Slashwood Mining (Private) Limited (“Slashwood Mining”). Slashwood Mining is a registered percentage
owner of eight custom gold milling centers across various locations in Zimbabwe, along with ownership of 30 mining claims encompassing
approximately 2,000 acres. All of the gold milling centers and mining claims are completely outfitted with mining equipment; to
include gold-ore crushers, excavators, generators and dump trucks. Slashwood Mining has 200 employees and is forging a path of
expansion into mining projects. On December 31, 2012 the Company has permanently impaired the investment in Slashwood Mining, originally
valued at $150,000 to $0. The July 2011 TAG-Z, acquisition of 100% of the capital stock of Ontage has been deemed to be worthless
as of December 31, 2012. Ontage was a wholly owned subsidiary of TAG-Z a consolidated variable interest entity of the Company and
its only activity had been the acquisition of 10% stake in an existing operating gold mining producer, Slashwood Mining.
On September 19, 2011, TAG-Z, entered into
a Sale of Shares Agreement, whereby, TAG-Z agreed pay $433,000 in installments through November 30, 2012 for 100% of the Dodge
Mine blocks 1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123 hectares containing
multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the
previous owner of the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received 50% of the issued
and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive company originally
formed to conduct mining operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled the Chiroswa shares
it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself. The balance
remaining for the payment of Dodge Mine blocks was $5,000 at March 31, 2013. Under the terms of this agreement the final installment
payment was due in February.
Effective December 2, 2011, the Company
entered into a Stock Purchase Agreement with Mabwe Minerals Inc. (f/k/a/Raptor Networks Technology, Inc.) (MBMI: OTCQB) (“Mabwe”)
under which the Company issued 5,000,000 shares of its common stock to the lender of certain convertible notes of Mabwe, as incentive
to convert their promissory notes into shares of common stock. As a result of this transaction, Mabwe issued 55.52% of its issued
and outstanding shares of common stock to the Company, and thus Mabwe became a majority owned subsidiary of the Company, and under
the terms of the Agreement, at which time the officers and directors of Mabwe resigned. Al Pietrangelo, President and CEO of the
Company, became President and CEO of Mabwe and be the sole member of the Board of Directors. Mabwe conducted a reverse split and
issued additional shares of its common stock to allow the Company to hold 80.14% of its issued and outstanding common shares on
a post-split basis.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION (CONTINUED)
|
On March 5, 2012, the Company amended its
Articles of Incorporation to change its name to Raptor Resources Holdings Inc. to more clearly reflect its new focus on the mining
of gold and other industrial minerals and to help build a new brand identity. The name change became effective March 28, 2012.
On June 1, 2012 the Company entered into
a contract renegotiation with the owner of Dodge Mines Blocks 1-6, Chiroswa Syndicate (“Chiroswa”) related to the previous
agreement for the $433,000 in installment payments for the Dodge Mine blocks 1-6, located in Zimbabwe. Under the new terms of the
contract with Chiroswa, Chiroswa accepted 45,000 shares of our Preferred Convertible Series B stock (each share is convertible
into 50 shares of Common Stock of Raptor Resources Holdings Inc. (RRHI) and 25 shares of common stock of majority owned Mabwe Minerals
Inc. (MBMI)). The Company paid $3,000 as a down payment with $27,000 due upon the retitling of the Dodge Mine Blocks 1-6 into the
name of Mabwe Minerals Zimbabwe (PVT) Limited (Mabwe-Z). An additional $30,000 will be paid in five equal monthly installments
beginning October 1, 2012. Under the terms of the amended contract with Chrioswa, it forgave $132,917 of the debt owed and agreed
that upon completion of the retitling of the asset into the name of Mabwe-Z the asset of the Dodge Mine Blocks 1-6 ($433,000) and
the remaining liability ($57,000) will be transferred to Mabwe-Z to support continuing operations and revenue generating activities.
The balance remaining for the payment of Dodge Mine blocks is $5,000 at March 31, 2013.
On June 28, 2012 the charter of Mabwe increased
the number of authorized shares of common stock. Mabwe issued to the Company an additional 79,078,817 shares of its common stock
(post 1:10 reverse split) giving the Company at that time ownership of 80.14% of the issued and outstanding shares of Mabwe common
stock.
On July 18, 2012 Mabwe Minerals Inc. acquired
a 49% interest in Mabwe Minerals Zimbabwe (PVT) LTD ("MAB-Z") with the issuance of 25,000 shares of Raptor Resources
Holdings Inc. Series B Preferred Convertible Stock ("Series B Preferred Stock"). Each share of Series B Preferred Stock
is convertible into 50 common shares of Raptor Resources Holdings Inc. and 25 common shares of Mabwe Minerals Inc., both subject
to a one year holding period. The remaining 51% ownership in MAB-Z is held by a director of the Company, Zimbabwean resident, Tapiwa
Gurupira (41% ownership), with the remaining portion owned by Asswell Gurupira (10% ownership). MAB-Z will be the operating arm
of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-Z. MAB-Z is a Variable Interest
Entity (VIE) with respect to guidance under ASC 810-10-5 and is therefore consolidated.
On October 29, 2012, Mabwe Minerals Inc.,
Mabwe Corporation (PVT) LTD (“MAB-C”), and WGB Kinsey & Company (“Kinsey”) entered into an Equity Exchange
Agreement (“Equity Exchange Agreement”). In accordance with the Equity Exchange Agreement, the Company issued 5,000,000
shares of their common stock to Kinsey in exchange for a 25% ownership for MAB-C in Kinsey. Additionally, should the value of the
5,000,000 shares of common stock fail to be valued at $5,000,000 on December 31, 2013, Mabwe Minerals Inc., must issue additional
shares of common stock to achieve that value for Kinsey. The common shares issued have been valued at $500,000, as the price of
MBMI common stock was trading at $0.10 per share, and no valuation has been provided for Kinsey at this time.
Kinsey, based in Zimbabwe, Africa, has
operated since 1955 in the mining and construction industry. They own their own mining equipment, including a fleet of articulated
dump trucks, front and wheeled loaders, excavators, dozers and graders. With both open pit and open cast mining experience ranging
from chrome to platinum to gold, they possess all the experience necessary to efficiently perform all the mining operations at
the Dodge Mines.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION (CONTINUED)
|
On November 7, 2012 the principals of MAB-Z
received approval from the government of Zimbabwe, Africa to form a new parent holding corporation for the purpose of holding MAB-Z
and the percentage investment stake in WGB Kinsey & Company (“Kinsey”.) The new company will be called Mabwe Corporation
(PVT) LTD (“MAB-C”.) The new corporation will own 100% of MAB-Z and 25% of Kinsey. The Company owns a 49% stake in
MAB-C the newly formed corporation; the remaining 51% ownership in MAB-C held by a director of the Company, Zimbabwean resident,
Tapiwa Gurupira (41% ownership), with the remaining portion owned by Asswell Gurupira (10% ownership). MAB-C will be the operating
arm of Mabwe Minerals Inc., with the Company being the primary beneficiary of all the activities of MAB-C. MAB-C is a Variable
Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and is therefore consolidated.
On December 17, 2012 the Company entered
into a share buyback restructuring agreement with Stanley Baron (former Chief Executive Officer of the Company) and Craig Gimbel
(former Executive Vice President of the Company) where Baron and Gimbel returned all of their shares (26,847,423 and 27,511,500
respectively) along with granting exercisable option rights on their warrants to buy Company stock. The number of warrants held
by Baron and Gimbel are 8,640,000 and 5,760,000 respectively with an exercise price of $.075/share. Under terms of this agreement
Baron and Gimbel executed an option agreement simultaneously to TAG and the Company to purchase all of the shares back at $.04/share.
The agreement terminated the employment agreements and all money owed to Baron and Gimbel including a $150,000 loan from the former
employees. As consideration Baron and Gimbel received shares of Mabwe Minerals Inc., a majority owned subsidiary of the Company
in the amounts of 1,700,000 and 1,300,000, respectively. Additionally, Baron and Gimbel received from the Company all contracts
related to the dental technology business of the Company. There were no assets recorded for this division, and no development done
for the past year, as this was inactive. The Company no longer is engaged in the dental technology business. The cancellation of
the Baron and Gimbel shares and issuance of the certificate in the name of the Company was January 30, 2013 by the Company’s
transfer agent. The closing of the transaction occurred December 17, 2012, and therefore was recorded in the 2012 financial statements.
Effective July 1, 2009, the Company adopted
the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally
Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards
Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive
releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
All guidance contained in the Codification carries an equal level of authority.
The Codification superseded all existing
non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification
is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force
Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative
in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide
the basis for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have
been updated for the Codification.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 1
-
|
ORGANIZATION
AND BASIS OF PRESENTATION (CONTINUED)
|
Going Concern
As shown in the accompanying condensed
consolidated financial statements the Company has incurred attributable recurring losses of $473,492 and $205,134 for the three
months ended March 31, 2013 and 2012, respectively, and has incurred an attributable cumulative loss of $13,224,907 since inception
(January 14, 1998). The Company has a working capital deficit in the amount of $991,185 as of March 31, 2013. The Company is currently
in the development stage and has merged the gold mining business of TAG and the mining and distribution of non-gold metals and
minerals of Mabwe into the Company.
With high gold prices and the contacts
for mining rights that the principals of the Company maintain in Zimbabwe, the Company remains positive about the future.
There is no guarantee that the Company
will be able to raise enough capital or generate revenues to sustain its operations. These conditions raise substantial doubt about
the Company’s ability to continue as a going concern for a reasonable period. Management believes that the Company’s
capital requirements will depend on many factors. These factors include finding potential acquisition targets for TAG, how these
targets can be acquired, i.e. cash, debt or common stock, and generating cash flow either through operations or through private
placements to complete the final phase of development. Additionally, the Company continues to convert its debt into equity, and
as a result has reduced its working capital deficit.
The Company’s ability to continue
as a going concern for a reasonable period is dependent upon management’s ability to raise additional interim capital and,
ultimately, achieve profitable operations. There can be no assurance that management will be able to raise sufficient capital,
under terms satisfactory to the Company, if at all.
The condensed consolidated financial statements
do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of
recorded liabilities that may be required should the Company be unable to continue as a going concern.
|
NOTE
2
-
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Principles of Consolidation
The condensed consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries, majority-owned subsidiaries and variable interest entities
(“VIEs”) for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have
been eliminated in consolidation.
The Company has adopted the provisions
of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company
is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns.
TAG Minerals Inc. on April 2, 2011 acquired
a 49% interest in TAG – Z for a 33% interest in TAG. The remaining 51% ownership in TAG – Z is held by a Director of
the Company, a Zimbabwe resident, Tapiwa Gurupira. TAG – Z will be the operating arm of TAG, initially, with the Company
being the primary beneficiary of all the activities of its subsidiary, TAG, and its associated company TAG – Z.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
2 -
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
As a result of this investment by TAG,
TAG – Z has been identified by the Company as a VIE.
The Company as of March 31, 2013 owns 66.43%
of Mabwe Minerals Inc. The 33.57% noncontrolling interest is reflected in the condensed consolidated financial statements. This
dilution was due to the private placement sale of common stock by its subsidiary, Mabwe Minerals Inc., and stock issued for acquisitions,
private placement sales, restructuring and services rendered and to be rendered. Mabwe issued 3,605,000 shares of common stock
diluting the interest of Raptor Resources Holdings Inc. from 68.25% last quarter to 66.43% this quarter.
Noncontrolling Interests
In accordance with ASC 810-10-45,
Noncontrolling
Interests in Consolidated Financial Statements,
the Company classifies controlling interests as a component of equity within
the balance sheets. The Company has retroactively applied the provisions in ASC 810-10-45 to the financial information for the
period ended March 31, 2013. There was no activity from December 2, 2011 through June 30, 2012 in Mabwe, the Company’s majority-owned
subsidiary. The Company’s controlling interest was reduced this quarter due to sale of stock through private placement and
the issuance of stock for services rendered and to be rendered. The noncontrolling interest on a percentage basis increased by
1.82% to 33.57% in Mabwe Minerals Inc. The noncontrolling interest thus increased to balance of $94,978. The net asset share of
the noncontrolling interest of $103,473 was netted with attributable losses of $108,256 compared to a December 31, 2012 net asset
share (deficit) of $90,015.
Use of Estimates
The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing
basis, the Company evaluates its estimates, including, but not limited to, those related to derivative liabilities, bad debts,
income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts of cash in financial
institutions over FDIC insured limits, exposes the Company to cash concentration risk.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
2 -
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
Fair Value of Financial Instruments (other than Derivative
Financial Instruments)
The carrying amounts reported in the condensed
consolidated balance sheet for cash and cash equivalents, and accounts payable approximate fair value because of the immediate
or short-term maturity of these financial instruments. For the notes payable, the carrying amount reported is based upon the incremental
borrowing rates otherwise available to the Company for similar borrowings.
Research and Development
The Company annually incurs costs on activities
that relate to research and development of new technology and products. Research and development costs are expensed as incurred.
Certain of these costs would be reduced by government grants and investment tax credits where applicable. The Company has expensed
its payments in connection with the license agreement as research and development costs.
Revenue Recognition
The Company has not recognized revenues
to date. The Company anticipates recognizing revenue in accordance with the contracts it enters into for their gold and other industrial
metals and minerals mining business.
Income Taxes
Under ASC 740 the liability method is used
in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
Uncertainty in Income Taxes
Under ASC 740-10-25 recognition and measurement of uncertain
income tax positions is required using a “more-likely-than-not” approach. Management evaluates their tax positions
on an annual basis and has determined that as of March, 31, 2013 no additional accrual for income taxes is necessary.
Advertising Costs
The Company expenses the costs associated
with advertising as incurred. Advertising expenses for the three months ended March 31, 2013 and 2012 are included in professional,
consulting and marketing fees in the consolidated statements of operations.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
2 -
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
Fixed Assets
Fixed assets are stated at cost. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets; computer equipment – 3-5 years,
and machinery - 5 years.
When assets are retired or otherwise disposed
of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized
in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments
are capitalized. Deduction is made for retirements resulting from renewals or betterments.
Impairment of Long-Lived Assets
Long-lived assets, primarily fixed assets,
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not
be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information
or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market
value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that
would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and
used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows
and measures the impairment loss based on the difference between the carrying amounts and estimated fair value.
Subsequent Events
In accordance with ASC 855 “Subsequent Events”,
the Company is required to disclose the date through which subsequent events have been evaluated and whether that date is the date
the financial statements were issued or the date the financial statements were available to be issued.
(Loss) Per Share Attributable to Common Shareholders of
the Company
Basic net (loss) per common share is computed
using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional
dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock
equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations due
to the fact that the Company reported a net loss and to do so would be anti-dilutive for the periods presented.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
2 -
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
The following is a reconciliation of the computation for basic
and diluted EPS:
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
Totals since
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
14-Jan-98
|
|
|
|
2013
|
|
|
2012
|
|
|
(Inception)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(473,492
|
)
|
|
$
|
(205,134
|
)
|
|
$
|
(13,224,907
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares Outstanding (Basic)
|
|
|
384,206,456
|
|
|
|
379,615,138
|
|
|
|
90,721,027
|
|
Weighted-average common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Notes
|
|
|
6,990,000
|
|
|
|
10,190,000
|
|
|
|
10,190,000
|
|
Preferred Stock (Series B)
|
|
|
59,350,000
|
|
|
|
-
|
|
|
|
-
|
|
Warrants
|
|
|
30,457,900
|
|
|
|
29,974,066
|
|
|
|
28,886,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average commons shares Outstanding (Diluted)
|
|
|
481,004,356
|
|
|
|
419,779,204
|
|
|
|
129,797,093
|
|
Recent Accounting Pronouncements
There have been no recent accounting pronouncements
or changes in accounting pronouncements during the three months ended March 31, 2013, as compared to the recent accounting pronouncements
disclosed in the Company’s Annual Report on Form 10-K that are of material significance, or have potential material significance,
to the Company.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
3
-
|
FIXED
ASSETS AND MINING RIGHTS
|
Fixed Assets:
Fixed assets as of March 31, 2013 (unaudited) and December 31,
2012 were as follows:
|
|
Estimated
|
|
|
(Unaudited)
|
|
|
|
|
|
|
Useful Lives
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
(Years)
|
|
|
2013
|
|
|
2012
|
|
Computer Equipment
|
|
|
3-5
|
|
|
$
|
2,476
|
|
|
$
|
2,476
|
|
Machinery
|
|
|
5
|
|
|
|
6,800
|
|
|
|
6,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,276
|
|
|
|
9,276
|
|
Less: accumulated depreciation
|
|
|
|
|
|
|
(3,805
|
)
|
|
|
(3,093
|
)
|
Fixed assets, net
|
|
|
|
|
|
$
|
5,471
|
|
|
$
|
6,183
|
|
There was $711 and $340 charged to operations for depreciation
expense for the three months ended March 31, 2013 and 2012, respectively.
Mining Rights:
On September 19, 2011, TAG-Z, entered into
a Sale of Shares Agreement whereby TAG-Z paid $433,000 in installments through November 30, 2012 for 100% of the Dodge Mine blocks
1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits
of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of
the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received 50% of the issued and outstanding shares
of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive company originally formed to conduct mining
operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled the Chiroswa shares it received under the
Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.
On January 9, 2012, TAG-Z expanded the
property along the hydrothermal mountain range adding an additional 500 hectares bringing the total Dodge Mine property size to
623 hectares. The only cost expended was the acquisition of a prospecting license to determine feasibility of claim development
recorded as exploration cost.
On June 1, 2012 entered into a contract
renegotiation with the owner of Dodge Mines Blocks 1-6, Chiroswa Syndicate, related to the previous agreement for the $433,000
in installment payments of the Dodge Mine blocks 1-6, located in Zimbabwe. Under amended terms of the contract Chiroswa accepted
45,000 shares of the Company's Preferred Convertible Series B stock (each share is convertible into 50 shares of Common Stock of
Raptor Resources Holdings Inc. (RRHI) and 25 shares Common Stock of majority owned Mabwe Minerals Inc. (MBMI)). The deal was secured
with a $3,000 down payment with $27,000 due upon the retitling of the Dodge Mine blocks 1-6 into the Name of Mabwe Minerals Zimbabwe
(PVT) Limited (Mabwe-Z). An additional $30,000 will be paid in five equal monthly installments commencing October 1, 2012. This
transaction resulted in the forgiveness of $132,917 of the debt owed.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE
3 -
|
FIXED
ASSETS AND MINING RIGHTS (CONTINUED)
|
With the acquisition of MAB-Z the chief
revenue producing asset of mining rights of the Dodge Mine Blocks 1-6 and the associated note payable were transferred from fully
consolidated subsidiary of Raptor Resources Holdings Inc. TAG-Z to MAB-Z a fully consolidated variable interest entity of Mabwe
Minerals Inc., majority owned subsidiary of Raptor Resources Holdings Inc., The value transferred to MAB-Z for the Mining rights
of Dodge Mine blocks 1-6 has a book value of $433,000 offset by a note payable $57,000 at the time of transfer. This value of $376,000
in related party loans is further offset by net payment of expenses incurred by and paid on behalf of consolidating parent Raptor
Resources Holdings Inc. Though the balance in the related party payable is nearly identical to that of the Dodge Mine Blocks Net
asset there have been several invoices flow through the account in either direction they nearly zero out. The value of the Note
Payable for the Dodge Mines at March 31, 2013 was $5,000, as the Company paid $8,500 during the quarter ended March 31, 2013. Also
in this related party activity is the charge for the 25,000 shares of stock that were issued by Raptor Resources Holdings Inc.to
acquire MAB-Z. This transaction has also resulted in recording of Goodwill on the books of MAB-Z, as the value of the 25,000 shares
of Series B Preferred Convertible Stock of Raptor Resources Holdings Inc. has a value of $25,000.
|
NOTE
4
-
|
CONVERTIBLE
NOTES
|
Original Noteholders
In April and May 2007, the Company issued
5% Senior Convertible 3 Year Notes to investors in the amount of $2,526,500, which equaled the gross proceeds raised by the Company
(the “Convertible Notes”). The Convertible Notes are convertible to shares of the Company’s common stock anytime
in the three-year period at a fixed conversion price of $.15. The Convertible Notes will convert into 16,843,333 shares of the
Company’s common stock. In May 2009, convertible notes of $125,000 were converted, at a fixed conversion rate of $.15 per
share, into 833,334 shares of common stock. This conversion reduced the outstanding principal to a balance of $2,401,500. In an
effort to reduce the liabilities of the Company, on July 1, 2010 the Company offered note holders the opportunity to convert their
Notes to common stock at $0.05 per share including any and all outstanding interest that has been accrued from the original $0.15
conversion price.
In addition, the Company offered to reset
the exercise price of the warrants that were issued with the Notes to $0.075 from $0.15 and $0.25 and extend the warrants for a
further three years from the original date of issue for all warrant holders.
Approximately 90% of note holders have
agreed to accept the terms of the conversion. Through June 30, 2010, convertible notes of $2,117,000, including $404,413 of accrued
interest was converted to 42,340,000 shares of common stock. This conversion reduced the outstanding principal balance to a balance
of $409,500. The Company determined that there was no material modification to the debt instrument under ASC 47-50-40, as the embedded
conversion option immediately before and after the modification of the debt instrument was under the 10% threshold.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 4 -
|
CONVERTIBLE NOTES (CONTINUED)
|
The convertible note holders received 6,737,333
detachable warrants with their notes. The warrants were exercisable for 5 years at an exercise price of $.25. The Placement Agent
received 2,947,583 exercisable at $.25 for 5 years. The Company separately valued the warrants at $513,132, and recorded a debt
discount in that amount which is being amortized to interest expense over the three-year Convertible Notes period. The Company
has recorded an additional discount of $505,300 as the value of the beneficial conversion option.
Proceeds of the $2,526,500 were allocated
as follows:
i) Convertible Notes - $2,013,368; and
ii) Warrants (also Debt Discount) - $513,132
The debt discount of $1,018,432 was amortized
using the effective interest method over the life of the Convertible Notes of three years. As part of the transaction, the Company
incurred $292,190 of debt issuance costs.
On December 28, 2012, one of the noteholders
signed their notice of conversion to convert $60,000 in principal and accrued interest in the amount of $28,110 for 1,500,000 shares
of common stock in the amount of $75,000 ($0.05 conversion price). The transaction resulted in a gain of $13,110 on conversion.
The transaction was reflected in the financial statements for 2012 as the conversion notice was dated December 28, 2012. The share
certificate was not issued until January 31, 2013.
Interest expense on the Original Noteholders
Convertible Notes for the three months ended March 31, 2013 and 2012 was $8,594 and $10,181, respectively and $199,953 is accrued
at March 31, 2013. A total of $404,413 of accrued interest was converted into common stock at the time of the note conversions
in 2010 and 2011.
As a result of the Company’s failure to timely pay the
interest in May 2009, the convertible notes are in technical default. Therefore, the Company has reclassified the debt to current
liabilities. The summary of the Convertible Notes is as follows at March 31, 2013:
$349,500 Convertible Notes at 10% interest per annum due on demand
|
|
$
|
349,500
|
|
|
NOTE 5
-
|
CONVERTIBLE NOTES – RELATED PARTIES
|
In May 2011, the Company converted two
5% interest bearing notes with the former Directors of the Company, and now officers of the dental technology subsidiary in the
amount of $149,017 into new Convertible Notes totaling $150,000. The $983 variance was recorded by the Company as an expense. The
Convertible Notes will be repaid at the rate of 5% of any funding, whether debt or equity, received by the Company or its subsidiaries,
or 5% of net revenues of the Company. The note holders have the right to convert any amounts outstanding and due to them at $0.075
per share at their sole discretion.
Under the terms of the December 17, 2012
agreement the $150,000 balance of this note was forgiven. The forgiveness was recorded as an adjustment to additional paid in capital
as the amount was due to a related party.
There are no material related party loans
outstanding as of March 31, 2013
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 6
-
|
RELATED PARTY LOANS
|
The Company
had entered into employment agreements with its two senior officers through December 31, 2009. The agreements obligated the Company
to pay these officers $200,000 per year through December 31, 2009. Total commitment for the Company was $960,000. The amount is
due December 31, 2012; however, there is no prepayment penalty. Concurrent with the Merger, the Directors who are owed the $960,000
plus $62,466 in accrued interest that remained outstanding agreed to convert these amounts into 14,400,000 warrants. The warrants
have a term of five-years, with an exercise price of $0.075. The Company performed a
Black-Scholes
calculation to determine the value of the warrants, and they were determined to have a value of $100,800. The gain on the conversion
of the related party debt to warrants of $921,666 is reflected in additional paid-in capital. Under the terms of the December 17,
2012, restructuring agreement, the Company may call the shares at a price of $.04 per share.
With the acquisition of MAB-Z the chief
revenue producing asset of mining rights of the Dodge Mine Blocks 1-6 and the associated note payable were transferred from fully
consolidated subsidiary of Raptor Resources Holdings Inc. TAG-Z to MAB-Z a fully consolidated variable interest entity of Mabwe
Minerals Inc., majority owned subsidiary of Raptor Resources Holdings Inc., The value transferred to MAB-Z for the Mining rights
of Dodge Mine blocks 1-6 has a book value of $433,000 offset by a note payable $57,000 at the time of transfer. This value of $376,000
in related party loans is further offset by net payment of expenses incurred by and paid on behalf of consolidating parent Raptor
Resources Holdings Inc. The value of the Note Payable for the Dodge Mines at March 31, 2013 was $5,000, as the Company paid $8,500
during the quarter ended March 31, 2013. Also in this related party activity is the charge for the 25,000 shares of stock that
were issued by Raptor Resources Holdings Inc.to acquire MAB-Z. This transaction has also resulted in recording of Goodwill on the
books of MAB-Z, as the value of the 25,000 shares of Series B Preferred Convertible Stock of Raptor Resources Holdings Inc. has
a value of $25,000. The related party payable balance has a contra balance due to the issuance of Mabwe stock in the amount of
$70,000 for an advisory contract with the Company. Mabwe is also paying liabilities of the Company relating to legal, accounting
and filing fees.
|
NOTE 7
-
|
NOTE PAYABLE – OTHER
|
Effective July 26, 2012 Mabwe Minerals
Zimbabwe (PVT) LTD entered into a one year financing short term loan agreement with Overseas Trade and Financing Limited for a
line of $40,000 with accrued interest at the rate of 12% . The balance with interest and fees of $43,969 at March 31, 2013 must
be fully repaid within 360 days of the effective date. Failure to pay as prescribed or duly extend loan period will result in the
accrual of late charges at a rate of 6% per annum, Extension and drawdown fees are 1% and 2% respectively. As MAB-Z is a Variable
Interest Entity (VIE) with respect to guidance under ASC 810-10-5 and is therefore reflected on consolidated financial statements.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 8
-
|
NOTE PAYABLE – DODGE MINES
|
On September 19, 2011,
TAG-Z, entered into a Sale of Shares Agreement, whereby, TAG-Z will pay $433,000 in installments through November 30, 2012 for
100% of the Dodge Mine blocks 1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123
hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management
received from the previous owner of the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received
50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive
company originally formed to conduct mining operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled
the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks
itself.
As of June 1, 2012, this transaction has
been restructured. Under the new terms of this transaction the prior owner of Chiroswa Syndicate accepted 45,000 shares of Preferred
Convertible Series B stock (each share is convertible into 50 shares of common stock of the Company and 25 shares of common stock
of majority owned Mabwe Minerals Inc. (MBMI)). The transaction was secured with a $3,000 down payment with $27,000 due upon the
retitling of the Dodge Mine Blocks 1-6 into the name of Mabwe Minerals Zimbabwe (PVT) Limited. An additional $30,000 will be paid
in five equal monthly installments commencing October 1 2012. This transaction resulted in the forgiveness of $132,917 of the debt
owed.
With the acquisition of MAB-Z the chief
revenue producing asset of mining rights of the Dodge Mine Blocks 1-6 and the associated note payable were transferred from fully
consolidated subsidiary of Raptor Resources Holdings Inc. TAG-Z to MAB-Z a fully consolidated variable interest entity of Mabwe
Minerals Inc., majority owned subsidiary of Raptor Resources Holdings Inc. The value transferred to MAB-Z for the mining rights
of Dodge Mine blocks 1-6 has a book value of $433,000 offset by a note payable $57,000 at the time of transfer. The net value of
this transfer was $376,000.. The value of the Note Payable for the Dodge Mines at March 31, 2013 was $5,000, as the Company paid
$8,500 during the quarter ended March 31, 2013. Also in this related party activity is the charge for the 25,000 shares of stock
that were issued by Raptor Resources Holdings Inc.to acquire MAB-Z. This transaction has also resulted in recording of Goodwill
on the books of MAB-Z, as the value of the 25,000 shares of Series B Preferred Convertible Stock of Raptor Resources Holdings Inc.
has a value of $25,000.
|
NOTE 9 -
|
INVESTMENT – EQUITY METHOD
|
On October 29, 2012, MBMI, MAB-C and Kinsey
entered into an Equity Exchange Agreement (“Equity Exchange Agreement”). In accordance with the Equity Exchange Agreement,
Mabwe Minerals Inc. issued 5,000,000 shares of their common stock to Kinsey in exchange for a 25% ownership for MAB-C in Kinsey.
Additionally, should the value of the 5,000,000 shares of common stock fail to be valued at $5,000,000 on December 31, 2013, Mabwe
Minerals Inc. must issue additional shares of common stock to achieve that value for Kinsey. The common shares issued have been
valued at $500,000, as the price of MBMI common stock was trading at $0.10 per share, and no valuation has been provided for Kinsey
at this time.
Kinsey, based in Zimbabwe, Africa, has
operated since 1955 in the mining and construction industry. They own their own mining equipment, including a fleet of articulated
dump trucks, front and wheeled loaders, excavators, dozers and graders. With both open pit and open cast mining experience ranging
from chrome to platinum to gold, they possess all the experience necessary to efficiently perform all the mining operations at
the Dodge Mines.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 9 -
|
INVESTMENT – EQUITY METHOD (CONTINUED)
|
The investment has been accounted for as
an equity investment under ASC 323. In accordance with the ASC, the investment will be maintained at fair value, and increased
or decreased based upon the net income or loss of Kinsey as well as any contributions made and dividends paid. Mabwe Minerals Inc.’s
investment decreased $160,391 as a result of the quarterly loss attributable from Kinsey for the three months ended March 31, 2013
in proportion to the 25% ownership by MAB-C.
|
NOTE 10 -
|
LICENSE AND ROYALTY FEES
|
Lawrence Livermore
The Company on September 14, 2001, entered
into a Limited Exclusive Patent License Agreement for Optical Coherence Tomography for Human and Animal Dentistry with The Regents
of the University of California (Lawrence Livermore National Laboratories). Pursuant to this license agreement, the Company entered
into an installment note with Lawrence Livermore National Laboratories. In the license agreement, the Company agreed to pay to
Lawrence Livermore a total of $175,000 in installments commencing September 2001. The $175,000 note did not include annual minimum
royalty fees or interest. The first installment was a license issue fee of $15,000 which was paid by the Company. The second installment
of $50,000 was the second part of the issue fee that was to be paid in nine monthly installments commencing April 2003 was partially
paid by the Company ($26,000). The last installment was originally due December 31, 2005 but it was extended by Lawrence Livermore
to October 1, 2006 in the amount of $110,000. The total due under the license agreement was $134,000, prior to a payment made by
the Company in October 2006 of $50,000.
Upon payment of this amount, the parties
agreed to amend the agreement they had for payment of the balance of $84,000 along with the unpaid royalty fees of $380,000 for
2003, 2004 and 2005 as noted below. The Company incurred $10,000 of maintenance fees in February 2007 and paid these on February
28, 2007.
In addition to the license fee, the Company
agreed to pay minimum royalties to Lawrence Livermore beginning in 2004. The Company prior to the amendment to the agreement had
not paid any of the royalties to Lawrence Livermore.
The royalties due were for 2003 $30,000,
for 2004 $100,000 and for 2005 $250,000. These fees were to be paid February 28 of each year for the prior calendar year. The royalties
due were $380,000.
The parties agreed on December 22, 2006
to amend the agreement. The Company agreed to pay Lawrence Livermore a total of $144,000 in three installments; $10,000 by February
28, 2007 (which was for maintenance fees for 2007 and paid by the Company), $84,000 by July 28, 2007 (which was paid by the Company
on July 9, 2007), and the final $50,000 by December 31, 2007 (which was paid by the Company on December 11, 2007). The $380,000
of minimum royalties have been forgiven by Lawrence Livermore and reclassified to additional paid in capital as of December 22,
2006.
On January 1, 2008, the Company paid minimum
annual royalty fees of $20,000 for 2008.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 10 -
|
LICENSE AND ROYALTY FEES (CONTINUED)
|
On February 18, 2009, the Company and Lawrence
Livermore entered into an Amended License Agreement, which has been amended nine times, most recently in Amendment Nine dated June
23, 2011 whereby, the Lawrence Livermore extended the due dates of the minimum royalty fees for 2009 ($20,000), 2010 ($20,000),
2011 ($20,000) and 2012 ($20,000) until June 30, 2012 and The remaining minimum royalty fees for 2013 and thereafter are due as
follows: 2013 ($60,000) due February 28, 2013; 2014 ($100,000) due February 28, 2014; and 2015 and thereafter for the life of the
Agreement ($250,000) due February 28, 2015, and February 28 of each year thereafter for the life of the Agreement.
In the restructuring agreement with the
former officers of the Company, the Company agreed to transfer this license agreement to a newly formed company of the former officers
for their relinquishment of the common stock held by them in the Company as well as the forgiveness of certain liabilities. The
outstanding liability related to minimum fees for prior years is the responsibility of the Company and remained as a liability.
The $80,000 that remains outstanding to Lawrence Livermore is
accrued for as of March 31, 2013.
LightLab
The Company entered into a Non-Exclusive
License Agreement for Imaging Patents between themselves and LightLab Imaging, LLC on August 8, 2001.
The License Agreement had an original term
of five years, commencing two years after the original agreement date, which would expire August 8, 2008, and the license could
be renewed. The minimum royalty requirements were based on Net Sales by the Company. Since the Company generated no sales in the
periods, there were no amounts due. On December 19, 2006, the Company and LightLab Imaging, Inc. negotiated an amendment whereby
the new term of the agreement is, unless terminated by either party to remain in effect for three years following whichever of
the following events occurs first: i) the Company’s release of a licensed product; ii) the Company’s first commercial
sale of a licensed product, or; iii) July 1, 2007 (July 1, 2010). The Company on September 18, 2007 paid LightLab Imaging, LLC
$50,000. This Agreement has terminated and will not be renewed as the main scanning patent licensed in this Agreement expires in
2011, before the Company intends to introduce its OCT product into the market.
There were no amounts outstanding to LightLab as of March 31,
2013.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 10 -
|
LICENSE AND ROYALTY FEES (CONTINUED)
|
University of Florida
On May 31, 2007, the Company entered into
an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for novel technology
relevant to the imaging probe of its Dental Imaging System. The Agreement carries a $1,000 initial licensing fee with royalty payments
to commence in 2008.
The Company has paid the minimum fees in
2008 and the minimum royalty for 2009, amounting to $630 originally due by December 31, 2009 has been deferred until the first
anniversary of the first commercial sale and is in accounts payable as it is unpaid as of September 30, 2012. The Company paid
some patent fees in 2009, 2010 and 2011 to the University of Florida. In addition, the first year of sale under the agreement has
been amended to 2012 from 2009.
In the restructuring agreement with the
former officers of the Company, the Company agreed to transfer this license agreement to a newly formed company of the former officers
for their relinquishment of the common stock held by them in the Company as well as the forgiveness of certain liabilities.
University of California – San Francisco
On July 9, 2008, the Company entered an
exclusive license agreement for near-infrared transillumination for the imaging of early dental decay with The Regents of the University
of California. The agreement required the payment of an initial non-refundable license fee of $10,000 and annual maintenance fees
of $5,000. The agreement also requires the payment of certain milestone payments based on patent allowance and FDA approval.
The Company has amended this agreement six times, most recently
on December 8, 2011, whereby milestones were updated to provide adequate time for the Company to complete development, obtain FDA
clearance and transition to marketing and manufacturing.
In the restructuring agreement with the
former officers of the Company, the Company agreed to transfer this license agreement to a newly formed company of the former officers
for their relinquishment of the common stock held by them in the Company as well as the forgiveness of certain liabilities. Minimum
royalties are required as follows:
First year of sales, or no later than 2012
|
|
$
|
10,000
|
|
Second year
|
|
|
50,000
|
|
Third year
|
|
|
100,000
|
|
Fourth year
|
|
|
150,000
|
|
Fifth and subsequent years
|
|
|
200,000
|
|
The latest amendment deferred payment of the annual license
maintenance fees due July 9, 2009, July 9, 2010 and July 9, 2011 ($5,000 per year for a total of $15,000) until May 31, 2012 and
are included in accrued expenses.
In the restructuring agreement with the former officers of the
Company, the Company agreed to transfer this license agreement to a newly formed company of the former officers for their relinquishment
of the common stock held by them in the Company as well as the forgiveness of certain liabilities.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
SERVICES RENDERED AGREEMENT
Mabwe Minerals Inc. entered into a Services
Rendered Agreement with WGB Kinsey and Mabwe Minerals Inc. in August 2012. Under the agreement, Mabwe Minerals Inc. agreed to issue
1,000,000 shares of common stock to Kinsey in exchange for Kinsey to allocate the necessary resources to mine the Dodge Mines at
a rate consistent with Mabwe Minerals Inc.’s ability to grow their transportation capacity which currently represents 140,000
metric tons. No production has taken place during the period ended March 31, 2013. It is anticipated that production will commence
at the end of the second quarter or the beginning of the third quarter of fiscal 2013.
LETTER OF CREDIT
On February 8, 2013, MAB-Z was issued as
beneficiary an irrevocable documentary letter of credit from Baker Hughes Oilfield Operations, Inc. in the documentary credit amount
of $3,000,000 per lot of crude barite (or a total of $9,000,000) to pay for shipments from Beira, Mozambique to any U.S. Gulf port
of three lots of barite meeting the specifications set forth in the letter of credit. The first shipment must be made between June
1, 2013 and August 31, 2013, the second shipment must be made between September 1, 2013 and November 30, 2013 and the third shipment
must be made between December 1, 2013 and March 1, 2014.
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT)
|
Series A Preferred Stock
The Company removed the 1,000,000 shares
of preferred stock from its charter, and on January 23, 2007, amended its articles of incorporation to create a class of preferred
stock, and authorized the issuance of 10,000,000 shares of preferred stock at $.001 par value. On January 24, 2012, the Company
amended its articles of incorporation to authorize the issuance of 3,000,000 shares of Series A preferred stock, par value $.001.
Each share of Series A preferred stock has 300 votes and votes with the holders of common stock on all matters which require a
vote of the shareholders.
During the year ended December 31, 2012,
1,000,000 shares of Series A preferred stock has been issued for services rendered at par value of $1,000.
No Series A preferred stock was issued
in the three months ended March 31, 2013.
The total issued and outstanding Series
A Preferred Stock at March 31, 2013 is the 1,000,000 shares.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
|
Preferred Convertible Series B Stock
As of March 31, 2013, the Company authorized
2,500,000 shares of Preferred Convertible Series B Stock. Each share of Preferred Convertible Series B Stock is convertible into
50 shares of the Company’s common stock and 25 shares of the Company’s majority owned subsidiary, Mabwe Minerals Inc.
During the three months ended March 31,
2013 the Company issued 20,000 shares for an advisory agreement with for services to be provided throughout the year.
During the year ended December 31, 2012,
the Company issued the following Preferred Convertible Series B Stock at the value of $1.00 per share:
182,000 shares of stock for cash in the
amount of $182,000.
45,000 shares of stock for the conversion
of $45,000 of debt related to the loan outstanding for the Dodge Mines.
25,000 shares of stock for the acquisition
of the Company’s majority owned subsidiary Mabwe Minerals Inc’s purchase of its subsidiary, MAB-Z, valued at $25,000.
915,000 shares of stock for services rendered
or to be rendered to the Company valued at $915,000.Of this amount $840,000 was deferred compensation for the period July 1, 2012
through June 30, 2013, of which $420,000 has been amortized through December 31, 2012.
As of March 31 31, 2013, the Company has 1,187,000 Preferred
Convertible Series B Stock issued and outstanding.
Common Stock
As of March 31, 2013, the Company has 990,000,000 shares of
common stock authorized with a par value of $.001. On December 9, 2004, the Company increased the authorized shares from 250,000,000
to 990,000,000.
During the three months ended March 31, 2013 there were no shares
issued in the Company and there 384,206,456 shares issued and outstanding.
During the year ended December 31, 2012,
the Company issued the following:
3,400,856 shares of common stock for cash
of $95,500 at prices ranging between $0.022 and $0.03 for an average of $.028 per share. In addition to these shares, the Company
issued 1,571,834 warrants to these investors. The Company determined the value attributable to the warrants under an implied
fair value calculation to be 25,560, and the value of the common shares to be $69,940. 1,100,000 shares of common stock for services
rendered valued at $23,122.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
|
Common Stock
(Continued)
1,500,000 shares of common stock for the
conversion of $60,000 in principal and accrued interest in the amount of $28,110. The conversion price was $0.05 as stipulated
in the agreement, which amounted to $75,000, and the Company recognized a gain of $13,110 on conversion. The transaction was reflected
in the financial statements for 2012 as the conversion notice was dated December 28, 2012. The share certificate was not issued
until January 31, 2013.
Two former executives of the Company surrendered
54,358,923 shares of the Company’s common stock which is now held as treasury stock by the Company. This transaction resulted
in the Company’s recognition of treasury stock in the amount of $300,000. This surrendering of the stock by the two former
officers, and reissuance of the certificate in the name of the Company occurred on January 30, 2013, however, is reflected in the
2012 financials as the closing occurred on December 17, 2012.
During the year ended December 31, 2011, the Company issued:
16,440,977 shares of common stock in conversion
of $50,000 in convertible notes to Asher Enterprises, and 689,655 shares of common stock to convert $2,000 of accrued interest
to Asher Enterprises.
165,000,000 shares of common stock for
100% of the shares of TAG Minerals Inc., in a reverse merger.
16,071,432 shares of common stock to convert
$80,000 of convertible note payables.
11,150,000 shares of common stock for services
rendered in the amount of $193,218.
2,333,333 shares of common stock to convert $50,000 of convertible
notes to old noteholders and to convert $17,726 in accrued interest.
16,645,298 shares of common stock for $340,000
cash.
5,000,000 shares of common stock as a deposit
for an acquisition for TAG Z valued at $150,000.
5,000,000 shares of common stock to a certain
lender of Raptor as incentive to convert their notes into common shares of Raptor valued at $155,000.
During the year ended December 31, 2010,
the Company issued:
500,000 shares to Agoracom for consulting
services. These shares were valued at $.04 per share or $20,000.
The Company also converted $1,942,000 of
convertible notes, at a fixed conversion rate of $0.05 per share, less discount, net of accrued interest, into 39,173,333 shares
of common stock at a fixed conversion price of $0.05 per share. The Company also converted $386,687 of accrued interest on these
converted notes to additional paid in capital.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
|
Common Stock
(Continued)
During the year ended December 31, 2009:
The Company issued 2,000,000 shares to
various consultants for administrative services and public and investor relation services. These shares were valued at various
prices between $.10 and $.04 per share or $150,000. In addition, the Company issued 250,000 shares to convert a payable to a consultant
($12,500).
The Company converted $125,000 of convertible
notes, at a fixed conversion rate of $.15 per share, less discount, beneficial conversion feature and issuance costs net of accrued
interest, into 833,334 shares of common stock at a fixed conversion price of $.15 per share. The Company incurred additional charges
to interest expense and amortization of debt issuance costs to reflect the conversion of these notes. This resulted in a reduction
of additional paid in capital in the amount of $13,118.
The Company received 3,000,000 shares of
stock in settlement of its complaints against Ice Cold Stocks, LLC and DC International Consulting LLC. These shares were returned
to the Treasury and retired.
During the year ended December 31, 2008,
the Company issued 575,000 shares to various consulting companies for public and investor relation services and 500,000 shares
to a vendor in connection with a strategic supply agreement related to an Optical Coherence Tomography (OCT) engine for use in
future products. These shares were valued between $.21 and $.26 per share or $229,500. In addition, a former noteholder who received
warrants in 2006 exercised his warrants at $.15 per share for 69,850 shares of common stock for a cash value paid to the Company
of $10,478. In addition, two former noteholders who received warrants in 2006 exercised their warrants at $.15 per share in 2007
for a cash value paid to the Company of $24,506.
During the year ended December 31, 2006,
the Company completed a private placement resulting in the sale of 5,850,000 shares of its common stock at a price per share of
$.10. For every 1.8 share of common stock purchased, the investors received one warrant. The Company valued each component in accordance
with APB 14. The Company received, net of fees, $521,500 through December 31, 2006. The Company also issued 1,500,000 to a consulting
company for public and investor relation services. These shares were valued at $.10 per share or $150,000.
On June 16, 2006, the Company authorized
a reverse 1 for 2 stock split on all issued shares. All shares herein have been reflected retroactive to the stock split.
For the year ended December 31, 2005, the
Company issued no shares of common stock.
During 2004, the only shares issued were
in connection with the reverse merger between Lantis Laser, Inc. and Hypervelocity, Inc. The total shares issued were 127,718,500
which included the 6,422,500 shares issued for the conversion of the notes, done simultaneously with the merger.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
|
Stockholders Equity – Issued by consolidated majority
owned subsidiary MBMI
MBMI authorized capital consists of 500,000,000
shares of common stock, par value $0.001 per share and 5,000,000 shares of preferred stock, no par value per share.
Preferred Stock – MBMI
MBMI has no issued and outstanding preferred
stock as of March 31, 2013
Common Stocks – MBMI
During the three months ended March
31, 2013, 1,000,000 shares were issued for $70,000 ($.07/share) through private placement. 1,000,000 shares were also issued
at a value of $70,000 ($.07/share) on behalf of Raptor Resources Holdings Inc., as payment for an advisory agreement in lieu
of cash. 100,000 shares were issued for public relations services to be provided over the first six months of 2013 at a value
$7,000. Also during this period 1,505,000 shares were issued through private placement for cash along with 1,505,000 warrants
that are exercisable for 1 year at $.15/share. The total number of shares issued for cash for the three months ended March 31, 2013 was 2,505,000 for $220,500.
During the year ended December 31, 2012,
Mabwe Minerals Inc. issued: 5,000,000 shares of common stock valued at $500,000 to purchase for MAB-C (variable interest entity
of Mabwe Minerals Inc.), a 25% ownership in Kinsey per the Equity Exchange Agreement.
5,000,000 shares of common stock were issued
for cash of $250,000
6,590,000 shares of common stock valued
at $152,375 were issued for services rendered and to be rendered
3,000,000 shares of common stock to two
former officers of Raptor Resources Holdings Inc. to offset the related party debt outstanding with Raptor Resources Holdings Inc.
As of March 31, 2013 Mabwe Minerals Inc.
has issued and outstanding of 135,585,750
Warrants – MBMI
During the three months ended March 31,
2013, 1,505,000 warrants were issued through private placement for cash in conjunction with private placement stock sale. Warrants
that are exercisable for 1 year at $.15/share.
Warrants
The Company granted 3,250,000 warrants
to the investors who took part in the private placement of $585,000 based on a 1: 1.8 conversion ratio. The warrants were valued
in accordance with APB 14 at a value of $208,143 utilizing the Black-Scholes method.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 12 -
|
STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
|
Warrants
(Continued)
The Company granted 178,750 warrants to
a consultant who assisted the Company in their private placement. The Company valued these warrants utilizing the Black-Scholes
method and expensed them in their consolidated statements of operations. The warrants have a fair value of $17,769.
The Company granted 6,737,333 warrants
to the convertible noteholder investors who took part in the debt offering based on a 4:10 conversion ratio. The warrants were
valued in accordance with APB 14 at a value of $513,132 utilizing the Black-Scholes method.
The Company granted 2,947,583 warrants
to the placement agent who managed the issuance of the 5% Senior Convertible Note. The Company valued these warrants utilizing
the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $292,518.
In September 2010, the Company agreed to
reset the warrant exercise price to $0.075 per share and extend the maturity of the warrant an additional three years.
In May 2011, the Company converted $1,022,466
in related party notes and accrued interest into 14,400,000 warrants. The warrants have a term of five-years, with an exercise
price of $0.075. The Company performed a Black-Scholes calculation to determine the value of the warrants, and it was determined
to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional
paid-in capital.
In February 2012, the Company granted a
total of 1,088,000 warrants along with shares of common stock in exchange for cash, and in April 2012, the Company granted 483,834
warrants along with shares of common stock in exchange for cash.
The following is a breakdown of the warrants:
Warrants
|
|
|
Exercise Price
|
|
|
Date
Issued
|
|
Term
|
|
|
3,250,000
|
|
|
$
|
0.075
|
|
|
9/28/2006
|
|
|
8 Years
|
|
|
1,372,400
|
|
|
$
|
0.075
|
|
|
9/28/2006
|
|
|
8 Years
|
|
|
178,750
|
|
|
$
|
0.075
|
|
|
9/28/2006
|
|
|
8 Years
|
|
|
6,737,333
|
|
|
$
|
0.075
|
|
|
5/1/2007
|
|
|
8 Years
|
|
|
2,947,583
|
|
|
$
|
0.075
|
|
|
5/17/2007
|
|
|
8 Years
|
|
|
14,400,000
|
|
|
$
|
0.075
|
|
|
5/23/2011
|
|
|
5 Years
|
|
|
1,088,000
|
|
|
$
|
0.075
|
|
|
2/7/2012
|
|
|
2 Years
|
|
|
483,834
|
|
|
$
|
0.075
|
|
|
4/10/2012
|
|
|
2 Years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: 30,457,900
|
|
|
|
|
|
|
|
|
|
|
|
The warrant agreements contain no clauses regarding adjustments
to exercise price, net settlement provisions, and registration rights or liquidated damages clauses.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 13 -
|
PROVISION FOR INCOME TAXES
|
Deferred income taxes are determined using
the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s
assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences
are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future
tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective
tax bases.
At March 31, 2013, deferred tax assets consist of the following:
Net operating losses
|
|
$
|
4,175,930
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(4,175,930
|
)
|
|
|
|
|
|
|
|
$
|
-
|
|
At March 31, 2013, the Company had a net
operating loss carryforward in the amount of $11,383,849 available to offset future taxable income through 2032. The Company established
valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating
losses in future periods. A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and
federal statutory rate for the periods ended March 31, 2013 and 2012 is summarized as follows:
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Federal statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
|
|
|
|
|
|
|
|
|
State income taxes, net of federal benefits
|
|
|
3.3
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
30.7
|
|
|
|
30.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
0
|
%
|
In July 2011, TAG-Z, acquired 100% of the
capital stock of Ontage Resources (Private) Limited (“Ontage”). Ontage holds a 10% stake in an existing operating gold
mining producer, Slashwood Mining (Private) Limited (“Slashwood Mining”). Slashwood Mining is a registered percentage
owner of eight custom gold milling centers across various locations in Zimbabwe, along with ownership of 30 mining claims encompassing
approximately 2,000 acres. All of the gold milling centers and mining claims are completely outfitted with mining equipment; to
include gold-ore crushers, excavators, generators and dump trucks. Slashwood Mining has 200 employees and is forging a path of
expansion into mining projects. On December 31, 2012 the Company has permanently impaired the investment in Slashwood Mining, originally
valued at $150,000 to $0. The July 2011 TAG-Z, acquisition of 100% of the capital stock of Ontage has been deemed to be worthless
as of December 31, 2012. Ontage was a wholly owned subsidiary of TAG-Z a consolidated variable interest entity of the Company and
its only activity had been the acquisition of 10% stake in an existing operating gold mining producer, Slashwood Mining.
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
|
NOTE 15 -
|
FAIR VALUE MEASUREMENTS
|
The Company adopted certain provisions
of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted
accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques
are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while
unobservable inputs reflect our market assumptions. The Company determines the fair value of its liabilities, on a recurring basis
using significant observable inputs. The fair value measurement of these liabilities is consistent with ASC 820, "Fair Value
Measurements" ASC 820 did not have an impact on the consolidated financial position or results of operations; however, the
required disclosure for the three months ended March 31, 2013 is as follows:
ASC 820 classifies these inputs into the
following hierarchy:
Level 1 inputs: Quoted prices for identical
instruments in active markets.
Level 2 inputs: Quoted prices for similar
instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 inputs: Instruments with primarily
unobservable value drivers.
The following table represents the fair value hierarchy for
those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2013:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment-Equity Method
|
|
|
-
|
|
|
|
394,884
|
|
|
|
-
|
|
|
|
394,884
|
|
Investment-Cost Method
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Convertible notes
|
|
|
-
|
|
|
|
-
|
|
|
|
349,500
|
|
|
|
349,500
|
|
RAPTOR RESOURCES HOLDINGS INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
MARCH 31, 2013 AND 2012 (UNAUDITED)
Effective July 18, 2012, the Company’s
acquired a 49% interest of Mabwe Minerals Zimbabwe (PVT) LTD (MAB-Z) for 25,000 shares of Series B Convertible Preferred Stock
of Raptor Resources Holdings Inc. The value of this transaction was $25,000.
MAB – Z was essentially a newly formed
entity. The $25,000 was recorded as goodwill. As MAB-Z is a Variable Interest Entity (VIE) with respect to guidance under ASC 810-10-5
and is therefore reflected on consolidated financial statements.
Net Assets Purchased
|
|
|
|
|
Goodwill
|
|
|
25,000
|
|
Purchase Price
|
|
$
|
25,000
|
|
|
NOTE 17
-
|
SUBSEQUENT EVENTS
|
On April 29, 2013 the Company’s majority
owned subsidiary, MBMI, issued 50,000 shares of stock through a private placement for cash in the amount of $5,000. The stock was
issued with 50,000 warrants which are exercisable for one year at $.15 per share.
On April 22, 2013 the Company’s majority
owned subsidiary, MBMI, issued 50,000 shares of stock through a private placement for cash in the amount of $5,000. The stock was
issued with 50,000 warrants which are exercisable for one year at $.15 per share. The Company also issued 25,000 shares as payment
for accounting services.
On April 10, 2013 the Company’s majority
owned subsidiary, MBMI, issued 300,000 shares of stock through a private placement for cash in the amount of $30,000. The stock
was issued with 300,000 warrants which are exercisable for one year at $.15 per share. The Company also issued 15,000 shares as
payment for promotional services.