UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________
TO _______________
ALTAIR INTERNATIONAL INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Province of
Ontario,
Canada 1-12497 None
- ------------------ ------------------ ----------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
-----------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (307) 587-8245
|_| Securities registered pursuant to Section 12(b) of the Act: None
|X| Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
The aggregate market value of the Common Stock held by non-affiliates of
the Registrant on February 28, 1997, based upon the closing sale price of the
Common Stock on the Alberta Stock Exchange of $11.75 per share on February 27,
1997, was approximately $140,587,375. Shares of the Common Stock held by each
officer and director and by each person who may be deemed to be an affiliate of
the Registrant have been excluded.
As of February 28, 1997, the Registrant had 15,110,245 shares of Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
Altair International Inc. (the "Registrant") is filing this amendment on
Form 10-K/A (the "Amendment") to its Annual Report on Form 10-K for the purpose
of supplementing the financial statements required by Item 8 and Item 14(a) of
Form 10-K. Included in this Amendment are the Report of McGovern, Hurley,
Cunningham, independent accountants, for the years ended December 31, 1996,
1995, and 1994; Consolidated Balance Sheets at December 31, 1996 and 1995;
Consolidated Statements of Operations and Deficit for the years ended December
31, 1996, 1995, and 1994; Consolidated Statements of Changes in Financial
Position for the years ended December 31, 1996, 1995, and 1994; and Notes to
Consolidated Financial Statements.
Item 8. Financial Statements and Supplementary Data
The financial statements required by this Item appear on pages F-1 through
F-17 of this Amendment.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents Filed
1. Financial Statements. The following Consolidated Financial
Statements of the Company and Auditor's Report are filed as
part of this Amendment to the Annual Report on Form 10-K:
o Report of McGovern, Hurley, Cunningham, for the years
ended December 31, 1996, 1995, and 1994.
o Consolidated Balance Sheets at December 31, 1996 and
1995.
o Consolidated Statements of Operations and Deficit for
the years ended December 31, 1996, 1995, and 1994
o Consolidated Statements of Changes in Financial
Position for the years ended December 31, 1996, 1995,
and 1994.
o Notes to Consolidated Financial Statements
2. Financial Statement Schedules. Not applicable.
<PAGE>
3. Exhibit List
Exhibit Incorporated Filed
No. Exhibit by Reference Herewith
- ----- --------------------------------------- ------------ --------
3.1.1 Articles of Incorporation of the Registrant (1)
3.1.2 Amendment to Articles of Incorporation of the
Registrant dated November 6, 1996 (2)
3.2 Bylaws of the Registrant (1)
4.1 Form of Common Stock Certificate (1)
4.2 Form of Series D Warrant Certificate (1)
4.3 Form of Series E Warrant Certificate (1)
4.4 Form of Series F Warrant Certificate (1)
4.5 Form of Series G Warrant Certificate (1)
4.6 Form of Series H Warrant Certificate (1)
10.1 Articles of Merger of Mineral Recovery
Systems, Inc. with and into Fine Gold
Recovery Systems Inc. dated June 21, 1996,
including Exhibit A thereto, Plan of Merger
and Merger Agreement (1)
10.2 Merger Agreement among Fine Gold Recovery
Systems Inc., Altair International Inc. and
Trans Mar, Inc., dated February 8, 1996, as
amended February 22, 1996 (the "TMI Merger
Agreement") (1)
10.2.1 Exhibit 1.1(c) to the TMI Merger Agreement
-- Articles of Merger (1)
10.2.2 Exhibit 1.1(e)(1) to the TMI Merger Agreement
-- Principal Escrow Agreement dated February
29, 1996 (1)
10.2.3 Exhibit 1.1(e)(2) to the TMI Merger Agreement
Performance Escrow Agreement dated Febreemy
27, 1996 (1)
10.2.4 Exhibit 1.1(h) to the TMI Merger Agreement
-- Warrant Certificate (1)
10.2.5 Schedule 1.1(e)(ii) to the TMI Merger
Agreement -- Principal Escrow Release Schedule (1)
10.2.6 Schedule 1.1(e)(iii) to the TMI Merger
Agreement -- Performance Escrow Release
Schedule (1)
10.3 Employment Agreement between Altair
International Inc. and William P. Long
dated January 1, 1988 (1)
10.4 Employment Agreement between Fine Gold
Recovery Systems Inc. and C. Patrick Costin
dated August 15, 1994 (1)
10.5 Altair International Inc. Stock Option Plan
adopted by shareholders May 10, 1996 (1)
10.6 Share Purchase Agreement between Altair
International Inc. and Fine Gold Recovery
Systems, Inc dated April 21, 1994 (1)
10.7 Escrow Agreement among Altair International
Inc., Equity Transfer Services Inc., Thomas
P. Campbell and C. Patrick Costin dated June
1, 1994 (1)
<PAGE>
22 Subsidiaries of the Registrant (2)
27 Financial Data Schedule (3)
- -----------------------
(1) Incorporated by reference to Registration Statement on Form 10-SB filed
with the Commission on November 25, 1996.
(2) Incorporated by reference to Amendment No. 1 to Registration Statement on
Form 10 filed with the Commission on December 23, 1996.
(3) Filed with and attached to the Annual Report on Form 10-K filed with the
Commission on March 31, 1997, following page F-18 thereof. Incorporated
into this Amendment by reference thereto.
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the last
quarter of the fiscal year ended December 31, 1996.
(c) Exhibits
Exhibits to the Annual Report on Form 10-K are attached page F-18
hereof.
(d) Financial Statement Schedule
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, on this ___ day of
June, 1997.
ALTAIR INTERNATIONAL INC.
By: /s/ William P. Long
-----------------------------------
William P. Long, President,
Chief Executive Officer
<PAGE>
AUDITORS' REPORT
To the Shareholders of
Altair International Inc.
We have audited the consolidated statements of Altair International Inc. as at
December 31, 1996 and 1995 and the consolidated statements of operations and
deficit, and changes in financial position of Altair International Inc. for the
years ended December 31, 1996, 1995 and 1994. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 1996
and 1995 and the results of its operations and the changes in its financial
position for the years ended December 31, 1996, 1995 and 1994 in accordance with
generally accepted accounting principles in Canada.
McGOVERN, HURLEY, CUNNINGHAM
/s/ McGovern, Hurley, Cunningham
Chartered Accountants
NORTH YORK, Canada
March 18, 1997
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31, 1996
================================================================================
1996 1995
(Expressed in Canadian Dollars) $ $
================================================================================
ASSETS
CURRENT
Cash and term deposits 4,482,083 424,185
Advances and accounts receivable 18,580 130,102
------------ -----------
4,500,663 554,287
CAPITAL (Note 3)
Office equipment, vehicles and mining equipment,
net of accumulated amortization 351,047 33,365
CENTRIFUGAL JIG (Note 4) 5,984,808 733,430
MINERAL PROPERTIES AND RELATED DEFERRED
EXPLORATION EXPENDITURES (Note 5) 172,213 -
GOODWILL, net 14,787 15,609
------------ -----------
11,023,518 1,336,691
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (Note 8) 213,443 124,605
Current portion of notes payable 209,751 -
----------- -----------
423,194 124,605
NOTES PAYABLE (Note 6) 369,630 -
----------- -----------
792,824 124,605
SHAREHOLDERS' EQUITY
CAPITAL STOCK (Note 7)
Issued
14,686,296 Common shares (1995 - 8,497,849) 15,588,187 5,779,016
COMMON SHARES TO BE ISSUED (Note 7) 65,440 -
DEFICIT (5,422,933) (4,566,930)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 10,230,694 1,212,086
---------- ----------
11,023,518 1,336,691
APPROVED ON BEHALF OF THE BOARD:
CHRISTOPHER J. PROUD , Director
- -------------------------------------
WILLIAM P. LONG , Director
- -------------------------------------
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1996
================================================================================
1996 1995 1994
(Expressed in Canadian Dollars) $ $ $
================================================================================
OPERATING EXPENSES
Professional fees 439,267 91,257 31,711
Wages and administration 305,406 141,494 3,402
Research and development 218,856 222,350 -
General and office 107,291 29,379 20,781
Shareholders' meetings 52,666 6,946 9,768
Public relations 48,336 28,812 21,148
Occupancy costs 37,005 - -
Travel 31,991 1,027 -
Transfer agent's fees 19,161 9,378 7,991
Insurance 16,047 11,457 6,520
Patent maintenance 12,237 - -
Accounting and corporate services 9,182 8,348 8,120
Government fees and taxes 5,763 2,650 3,343
Stock exchange fees 4,800 5,091 3,100
Bank charges 1,041 - -
Loss (gain) on foreign exchange (6,799) 8,894 5,621
Financing fees - 17,810 -
Royalties - - 46,109
Write-off of mineral properties and
related exploration expenditures - 11,255 616,398
Amortization 523,617 4,319 1,408
---------- ---------- ----------
1,825,867 600,467 785,420
Add: Interest on notes payable 26,415 - -
Less: Interest income (38,113) (1,370) (1,342)
---------- ---------- ----------
Loss from operations 1,814,169 599,097 784,078
Gain on forgiveness of debt (958,166) - -
---------- ---------- ----------
NET LOSS for the year 856,003 599,097 784,078
DEFICIT, beginning of year 4,566,930 3,967,833 3,183,755
--------- --------- ---------
DEFICIT, end of year 5,422,933 4,566,930 3,967,833
========= ========= =========
Net loss per share from operations
Basic $(0.16) $(0.09) $(0.17)
===== ===== =====
Net income per share from gain on
forgiveness of debt $ 0.08 $ 0.00 $0.00
===== ===== =====
See Accompanying Note to Financial Statements
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEAR ENDED DECEMBER 31, 1996
================================================================================
1996 1995 1994
(Expressed in Canadian Dollars) $ $ $
================================================================================
CASH WAS PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net loss for the year (856,003) (599,097) (784,078)
Charges not involving cash:
Amortization 523,617 4,319 1,408
Write-off of mineral properties and
related exploration expenditures - 11,255 616,398
------------ ---------- ----------
(332,386) (583,523) (166,272)
--------- ---------- ----------
Changes in noncash working capital balances:
Decrease (increase) in advances and
accounts receivable 111,522 (70,162) 5,351
Increase (decrease) in accounts payable and
accrued liabilities 88,838 (100,186) 62,943
----------- ---------- ----------
200,360 (170,348) 68,294
---------- ---------- ----------
(132,026) (753,871) (97,978)
---------- ---------- ----------
FINANCING ACTIVITIES
Issuance of common shares for cash 305,000 - 180,000
Issuance of common shares pursuant to
a private placement 1,939,095 1,200,000 -
Issuance of common shares for shares
of subsidiary 3,455,923 - 352,500
Issuance of common shares for royalties
owed - - 46,109
Common shares to be issued 65,440 - -
Exercise of stock options 722,100 73,400 -
Exercise of warrants 3,387,053 235,000 -
Notes payable 579,381 - -
---------------------------------
10,453,992 1,508,400 578,609
---------- ---------- ----------
INVESTING ACTIVITIES
Mineral properties and deferred
exploration expenditures (172,213) (11,255) (144,625)
Purchase of capital assets (349,104) (31,232) -
Centrifugal Jig patents and related
expenditures (5,742,751) (5,965) (353,509)
Option agreement costs - (291,708) (81,398)
Goodwill - - (16,431)
--------------------------------------
(6,264,068) (340,160) (595,963)
---------- ---------- ----------
Increase (decrease) in cash 4,057,898 414,369 (115,332)
Cash, beginning of year 424,185 9,816 125,148
----------- ----------- ----------
Cash and term deposits, end of year 4,482,083 424,185 9,816
========== =========== ===========
See Accompanying Note to Financial Statements
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Consolidation:
The financial statements include the accounts of the company and its
subsidiaries, Mineral Recovery Systems, Inc. (MRS) (formerly Carlin Gold
Company) (100% owned), Intercontinental Development Corporation (66%
owned), Fine Gold Recovery Systems, Inc. (Fine Gold) (100% owned) and
660250 Ontario Limited (100% owned). During 1996, Fine Gold merged with
the company previously known as MRS and Trans Mar, Inc. (TMI) (see Note
2(b)) and continued under the name Fine Gold. Subsequent to the merger,
Carlin Gold Company changed its name to Mineral Recovery Systems, Inc.
Nature of Operations:
The company and its subsidiaries are engaged in the business of acquiring,
developing and testing mineral processing equipment for use in the
recovery of fine, heavy mineral particles, including gold and
environmental contaminants. The company and its subsidiaries are also in
the process of exploring mineral properties.
Mineral Properties and Related Deferred Exploration Expenditures:
Mineral properties are carried at cost until they are brought into
production at which time they are depleted on a unit-of-production method
based on proven and probable reserves. If a property is subsequently
determined not to be economic, the property and related deferred costs are
written down to net realizable value.
Exploration expenses, as well as advance royalty payments, relating to
mineral properties in which the company has an interest in are deferred
until the properties are brought into production at which time they are
amortized on a unit-of-production basis. Other general exploration
expenses are charged to operations as incurred.
The cost of the mineral properties abandoned or sold and the related
deferred exploration costs are charged to operations in the current year.
The company reviews its mineral properties on an annual basis to determine
if events or changes in circumstances have transpired which indicate that
the carrying value of its assets may not be recoverable. In performing its
review, the company estimates the future cash flows expected to result
from each asset and its eventual disposition. If the sum of the
undiscounted, expected future cash flow is less than the carrying value of
the asset, an impairment loss is recognized. It is reasonably possible,
based on existing knowledge, that changes in future conditions in the near
term could require a change in the determination of the need for and
amount of any writedown.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Administrative Expenditures:
Administrative expenditures are charged to operations as incurred.
Capital Assets and Amortization:
Capital assets are stated at acquisition cost. Amortization is provided
based on the estimated useful life of the assets as follows:
Furniture and office equipment 20% declining balance
Mining equipment 20% declining balance
Vehicles 20% declining balance
Centrifugal Jig equipment 7 year straight line
Centrifugal Jig Patents and Related Expenditures:
The centrifugal jig patents are carried at acquisition cost and are
being amortized on a straight-line basis over their remaining lives.
The related expenditures are also being carried at acquisition costs and
the amortization policies are as follows:
Royalty agreement (Note 2(c)) - 15 year straight line
Licence agreement - No amortization as the company
intends to sell the licence
Mineral recovery technology rights - Costs are deferred until the
jig technology produces revenue
Research and Development Expenditures:
Research and development expenditures are charged to operations as
incurred.
Goodwill:
Goodwill is the excess of the cost of investment in subsidiaries over
the estimated fair value of net assets acquired and is amortized on a
straight-line basis over 20 years. Goodwill is written down (to fair
value) when declines in value are considered other than temporary based
on expected future cash flows of the respective subsidiary.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Translation of Foreign Currency:
The operations of the company's subsidiaries are determined to be of an
integrated nature. The accounts of the U.S. subsidiaries are translated
using the temporal method, under which monetary assets and liabilities
are translated at the rate of exchange prevailing at the year end;
capital assets are translated at the rates prevailing at the acquisition
dates; and, revenue and expenses at average rates of exchange during the
year, with the exception of amortization, which is translated at
historical exchange rates. Exchange gains and losses are included in the
consolidated statement of administrative expenditures and deficit.
Transactions Involving Non-Cash Consideration:
When exchanging its shares of common stock for non-cash consideration,
the company values its exchanged shares at contemporaneous trade prices
on the Alberta Stock Exchange, with larger transactions subject to arm's
length discounting in order to arrive at fair market value.
2. ACQUISITIONS
(a) Fine Gold Recovery Systems, Inc. (Fine Gold)
Pursuant to an agreement dated April 21, 1994 the company issued 750,000
common shares, with a deemed value of $0.47 ($352,500) per share for all
of the outstanding common shares of Fine Gold, a corporation
incorporated in the State of Nevada and involved in the development of a
"Centrifugal Jig", an apparatus designed to recover fine gold from
mineral properties. Pursuant to an Agreement dated as of January 1,
1994, between Thomas P. Campbell, the inventor of the Centrifugal Jig
and Fine Gold, Fine Gold acquired the rights to develop and market
applications for the Jig at specified target sites and utilize the Jig
in the exploitation of such sites, and obtained the agreement of Mr.
Campbell to provide certain services and assistance to Fine Gold in
doing so during the term of the Agreement and throughout the world
excepting (i) areas subject to patents held by Trans Mar, Inc. and (ii)
the Republic of Costa Rica, and certain areas in Mexico and Guiana,
South America.
A total of 650,000 shares issued pursuant to the acquisition are subject
to a Performance Escrow Agreement which states that one share can be
released from escrow for each U.S. $0.45 of (i) cash flow generated by
or from the centrifugal jig, or (ii) Deferred Expenditures incurred on
the assets of Fine Gold.
As at December 31, 1996, 650,000 common shares remain in escrow.
As at December 31, 1996, Fine Gold was still in the development stage in
that no operating revenues have been earned and no operating expenses
have been incurred. (See Note 4).
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
2. ACQUISITIONS (Continued)
(b) Trans Mar, Inc. (TMI)
In March 1996, the company acquired 100% of the issued and outstanding
common stock of TMI for total consideration of 1,919,957 common shares
at $1.80 each ($3,455,923) the assumption of $1,659,770 of net
liabilities, and 580,000 Series E share purchase warrants (Note 7(v)).
TMI is incorporated in the State of Washington and is involved in the
development of the patented Campbell Centrifugal Jig. TMI holds patent
rights to the centrifugal jig technology (subject to a 10% royalty - See
Note 2(c)) in the United States, South Africa, United Kingdom, Australia
and Canada. This transaction has been accounted for using the purchase
method. The excess paid over the net book value (which approximates fair
value) of the assets acquired has been allocated to the centrifugal jig
patents. TMI was merged with Fine Gold immediately after the
acquisition.
The 1,919,957 common shares were deposited into escrow pursuant to the
terms of two escrow agreements as follows:
i) 1,170,000 shares are to be released dependent upon Altair receiving
revenues from the sale of the centrifugal jigs formerly held by TMI.
The basis of the share release is one share of common stock for each
$1.80 in cash flow received by Altair, provided that no more than
one-third of the original number of shares of common stock escrowed
may be released in any one year over the first three years of the
escrow. Shares of common stock still in escrow at the end of five
years may be cancelled by the Alberta Stock Exchange.
ii) The remaining 749,957 shares will be released from escrow to each
former TMI shareholder at a rate equal to the greater of 15,000
shares or 5% of such shareholder's total escrowed holdings each
calendar quarter. in addition, each former TMI shareholder or
warrant holder is restricted from selling more than the greater of
15,000 shares or 10% of such holder's holdings in any calendar
quarter.
The net value of the assets acquired is as follows:
Working capital deficiency $(1,710,980)
Capital assets, mining equipment 13,003
Centrifugal jig patent - expires December, 1998 685,750
Centrifugal jig patent - expires December, 2008 4,468,150
---------
Issuance of 1,919,957 common shares $3,455,923
=========
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
2. ACQUISITIONS (Continued)
(c) Intercontinental Development Corporation (INDECO)
During 1996, the company purchased 66% of the issued and outstanding
shares of Indeco for total consideration of $437,096 (U.S.$319,298).
This acquisition has been accounted for using the purchase method.
Indeco is a dormant company whose sole asset is a royalty agreement
entitling the corporation to 10% of the cost of manufacturing any
centrifugal jigs which are placed in production, sold or exploited for
profit worldwide. The entire amount of the purchase price has been
allocated to the centrifugal jig royalty agreement.
3. CAPITAL ASSETS
Accumulated Net Net
Cost Amortization 1996 1995
------- ------------ ------ ------
$ $ $ $
Furniture and office equipment 46,513 9,607 36,906 3,702
Vehicles 101,087 14,487 86,600 29,662
Mining equipment 13,003 1,300 11,703 -
Centrifugal jig equipment 228,533 12,692 215,838 -
------- ------- ------- ------
389,136 38,086 351,047 33,365
======= ======= ======= ======
4. CENTRIFUGAL JIG PATENTS AND RELATED EXPENDITURES
Royalty Agreement (Note 2(c)) $ 437,096
Less: Accumulated amortization (14,511) $ 422,585
----------
Patents (Note 2(b)) 5,613,021
Less: Accumulated amortization (476,862) 5,136,159
----------
Mineral recovery technology rights (Note 2(a)) 336,069
License agreement 89,995
$5,984,808
License Agreement
On June 10, 1996, the company entered into an agreement with RDR, Inc. to
acquire the entire right, title and interest in a license agreement
related to the centrifugal jig. The company agreed to purchase the right
for U.S$75,000 with an initial deposit of U.S.$5,000 and monthly payments
of U.S.$2,000 commencing July 1, 1996 over a 35-month period. The company
intends to resell the license.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
5. Mineral Properties and Related Deferred Exploration Expenditures
The company's subsidiary, Mineral Recovery Systems, Inc. (MRS), has entered
into various mineral leases for a 100% interest in approximately 3,600 acres
of land in Benton County, State of Tennessee, United States for U.S.$18,712
(U.S.$14,237 paid during the year) and minimum annual advance royalty
payments as follows:
1997 U.S.$18,712
1998 U.S.$18,712
1999 U.S.$32,348
2000 U.S.$36,423
2001 U.S.$36,423
2002 and each year thereafter U.S.$91,058
The mineral leases are subject to a 5% production royalty, however, MRS will
receive a credit for all advance royalties paid against production
royalties. The lessors can only terminate the leases upon the failure of MRS
to make the required minimum payments as required by the leases. During the
year approximately $150,000 was incurred on exploration.
6. NOTES PAYABLE
1996 1995
---- ----
$ $
Notes payable to former shareholders of Trans Mar, Inc.,
interest payable at 10% per anum, unsecured, principal
and interest due December 31, 1999 272,340 -
Notes payable to former shareholders of Trans Mar, Inc.,
non-interest bearing, unsecured, principal due
December 31, 1999 241,010 -
Note payable, interest payable at 10% per annum, blended
payments of U.S.$2,000 per month, due April 1, 1999 66,031 -
579,381 -
Less: Current portion 209,751 -
------- -------
Long-term portion of notes payable 369,630 -
======= =======
Notes payable to former shareholders of Trans Mar, Inc. (TMI), are subject
to a repayment agreement with Altair dated March 3, 1996. Altair agreed to
retire U.S.$50,000 per month of the Trans Mar, Inc. debt assumed by Altair
in the purchase of TMI.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
7. CAPITAL STOCK
The capital stock is as follows:
Authorized
Unlimited common shares
Issued
14,686,296 common shares $15,588,187
==========
Transactions during the years are as follows:
Shares Amount
# $
Balance, December 31, 1995 8,497,849 5,779,016
Private placements 554,027 1,939,095
Exercise of stock options 702,000 722,100
Exercise of warrants 2,912,463 3,387,053
Common shares issued for cash (Note 7(vi)) 100,000 305,000
Common shares issued for the acquisition of TMI
(Note 2(b)) 1,919,957 3,455,923
---------- ----------
Balance, December 31, 1996 14,686,296 15,588,187
========== ==========
Common shares to be issued from exercise
of Series E warrants (Note 7(v)) 32,720 65,440
=========== ===========
Stock Options
As at December 31, 1996, 745,000 common shares are reserved for issuance to
directors, officers and employees under the company's stock option plan. The
exercise price and expiry dates of options outstanding as of December 31,
1996 are as follows:
Number Price
of Shares $ Expiry Date
--------- ----- -----------
75,000 0.60 August 8, 1998
145,000 3.70 March 7, 2001
80,000 5.00 March 14, 1998
250,000 4.00 May 27, 2001
75,000 4.20 July 29, 2001
50,000 4.50 July 31, 2001
20,000 8.40 November 6, 2001
50,000 9.40 December 31, 2001
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
7. CAPITAL STOCK (Continued)
Warrants
i) Series A
Issued and outstanding, beginning of the year 1,000,000
Exercised during the year (1,000,000)
Issued and outstanding, end of year Nil
Total proceeds received $ 200,000
=========
ii)Series B
Issued and outstanding, beginning of the year 100,000
Exercised during the year (100,000)
Issued and outstanding, end of year Nil
Total proceeds received $ 75,000
=========
iiiSeries C
Issued and outstanding, beginning of the year 250,000
Exercised during the year (250,000)
Issued and outstanding, end of the year Nil
Total proceeds received $ 200,000
=========
iv)Series D
Issued and outstanding, beginning of the year 1,000,000
Exercised during the year (1,000,000)
Issued and outstanding, end of the year Nil
Total proceeds received $ 825,000
=========
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
7. CAPITAL STOCK (Continued)
v) Series E
Issued and outstanding, beginning of the year 580,000
Exercised during the year - common shares issued (227,636)
Exercised during the year - common shares to be issued (32,720)
Issued and outstanding, end of the year 319,644
Total proceeds received $ 520,712
=========
See Note 2(b). Each warrant entitles the holder thereof to purchase one
common share at $2.00 per share on or before March 1, 1997. Subsequent to
the year end, an additional 301,229 warrants were exercised for total
proceeds of $602,458.
vi)Series F
Issued and outstanding, beginning of the year 100,000
Exercised during the year (50,000)
Issued and outstanding, end of the year 50,000
=========
Total proceeds received $ 350,000
=========
Pursuant to a subscription agreement, the company issued 100,000 units at
$3.05 per unit for total proceeds of $305,000. Each unit consists of one
common share and one Series F share purchase warrant. Each Series F share
purchase warrant entitles the holder to purchase one common share at a
price of $7.00 per share to December 5, 1996 provided that only 50% of
the warrants may be exercised during the initial period, and at a price
of $10 per share to September 5, 1997 provided that the number of
warrants that may be exercised after December 5, 1996 may not exceed the
number of warrants exercised prior to December 5, 1996. Prior to December
5, 1996, 50,000 warrants were exercised for total proceeds of $350,000.
Subsequent to the year end an additional 50,000 warrants were exercised
for total proceeds of $500,000.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
7. CAPITAL STOCK (Continued)
viiSeries G
Issued during the year 494,027
Exercised during the year (284,827)
Expired during the year (209,200)
----------
Issued and outstanding, end of year Nil
Total proceeds received $1,281,722
viii) Series H
Issued and outstanding, end of year 60,000
Pursuant to a subscription agreement the company issued 60,000 units at
$3.50 per unit for total proceeds of $210,000. Each unit consists of one
common share and one Series H common share purchase warrant. Each Series
H common share purchase warrant entitles the holder to purchase one
common share at a price of $4.50 per share on or before December 26,
1997.
8. COMMITMENT
In the event of a takeover, merger or consolidation whereby voting control
of over 35% of the issued stock is acquired by an individual or a group of
individuals, then under the current compensation agreement the president
shall be given 200,000 shares of the company's common stock. Included in
accounts payable and accrued liabilities is U.S.$115,361 (1995 -
U.S.$64,385) owing to the president.
9. NET LOSS PER SHARE
The existence of stock options affects the calculation of loss per share on
a fully diluted basis. As the effect of this dilution is to reduce the
reported loss per share, the fully diluted loss per share has not been
calculated.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
10. INCOME TAXES
As at December 31, 1996, the company has approximate non-capital losses
carried forward for income tax purposes which are available to reduce
certain future year's income for tax purposes as follows:
1997 $ 76,000
1998 138,000
1999 93,000
2000 44,000
2001 54,000
2002 76,000
2003 300,000
-------
$781,000
=======
11. FORGIVENESS OF DEBT
During 1996, U.S.$868,493 of debt to former Trans Mar, Inc. shareholders was
retired with payments of U.S.$165,767. The remaining U.S.$702,726 due was
forgiven by the former Trans Mar, Inc. shareholders.
12. CONCENTRATION OF CREDIT RISK
As at December 31, 1996, MRS had U.S.$895,652 in cash deposits with Western
Bank of Cody in Wyoming, United States. This amount exceeds the insurance
limitation of U.S.$100,000 per banking institution.
Continued...
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The company prepares its accounts in accordance with accounting principles
generally accepted in Canada ("Canadian GAAP") which conform, in all
material respects, with accounting principles generally accepted in the
United States ("U.S. GAAP"), except as described below.
Statement of Changes in Financial Position
The U.S. Financial Accounting Standards Board (FASB) issued its Statement of
Financial Accounting Standards No. 95 (SFAS No. 95) effective for years ending
after July 15, 1988. SFAS No. 95, which is entitled "Statement of Cash Flows",
established standards for cash flow reporting with its primary purpose being to
provide information about the cash receipts and cash payments of an entity
during the period. Canadian Generally Accepted Accounting Principles (GAAP)
dealing with the statement of changes in financial position is based on a broad
concept, embracing all changes in financial position. The following are the
Statements of Cash Flow prepared in accordance with U.S. GAAP for each of the
three years ended December 31, 1996:
<TABLE>
<CAPTION>
=========================================================================================
1996 1995 1994
(Expressed in Canadian Dollars) $ $ $
=========================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss for the year (856,003) (599,097) (784,078)
Adjustments to reconcile net loss for the
year to net cash (used):
Amortization 523,617 4,319 1,408
Write-off of mineral property and
related exploration expenditures - 11,255 616,398
Royalties - - 46,109
Incorporation costs - - 1,444
Changes in assets and liabilities:
Advances and accounts receivable 111,522 (70,162) 5,351
Accounts payable and accrued liabilities 88,838 (100,186) 62,943
----------- ---------- ---------
NET CASH (USED IN) OPERATING ACTIVITIES (132,026) (753,871) (50,425)
----------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mineral properties and related
deferred exploration expenditures (172,213) (11,255) (144,625)
Purchase of capital assets (349,104) (31,232) -
Purchase of centrifugal Jig (5,742,751) (5,965) (18,412)
Option agreement costs - (291,708) (81,398)
Payment of net liabilities of subsidiary
on acquisition - - (472)
---------- ---------- ----------
NET CASH (USED IN) INVESTING ACTIVITIES (6,264,068) (340,160) (244,907)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares for cash 305,000 1,200,000 180,000
Proceeds from exercise of stock options 722,100 73,400 -
Proceeds from exercise of warrants 3,387,053 235,000 -
Notes payable 579,381 - -
Issuance of common shares pursuant to a
private placement 1,939,095 - -
Common shares to be issued 65,440 - -
Issuance of common shares for shares of
subsidiary 3,455,923 - -
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,453,992 1,508,400 180,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 4,057,898 414,369 (115,332)
CASH, beginning of year 424,185 9,816 125,148
---------- ---------- ----------
CASH AND TERM DEPOSITS, end of year 4,482,083 424,185 9,816
========== =========== ==========
</TABLE>
<PAGE>
ALTAIR INTERNATIONAL INC.
(FORMERLY ALTAIR INTERNATIONAL GOLD INC.)
NOTE TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(Expressed in Canadian Dollars)
================================================================================
Under Canadian GAAP, there is no requirement to disclose the company's policy
for determining which items are treated as cash equivalents. Under U.S. GAAP
cash equivalents are short-term, highly liquid investments that are readily
converted to known amounts of cash and are so near their maturities that they
present an insignificant risk of change in value because of changes in interest
rates. The cash and term deposits on hand as at December 31, 1996, 1995 and 1994
represent cash and term deposits with maturity dates of less than 30 days which
are considered cash equivalents under U.S. GAAP.
Development Stage Company
As of December 31, 1996, the company would be characterized as a "development
stage enterprise" under U.S. GAAP due to Statement of Financial Accounting
Standards No. 7 (SFAS 7). Under Canadian GAAP, there are no requirements for the
indication or reporting of development stage entities.
Foreign Currency Translation
In Canada and the United States, a distinction is made between the measurement
and accounting for an enterprise's own transactions in a foreign currency. In
the U.S. an integrated subsidiary would remeasure its books and records into the
functional currency prior to translation into the reporting currency. The U.S.
subsidiaries maintain their books and records in U.S. dollars, however, their
functional currency is Canadian dollars due to the dependency on the Canadian
parent. The remeasurement of the U.S. subsidiaries' financials according to U.S.
GAAP would not change the results of the consolidated financial statements
prepared in accordance with Canadian GAAP.
Income Taxes
Under Canadian GAAP, income taxes are accounted for under the deferred method.
Under U.S. GAAP, companies must follow the requirements of Statement of
Financial Accounting Standards No. 109 (SFAS 109) which required the use of the
asset/liability method for measurement of tax liabilities, wherein deferred tax
assets are recognized as well as deferred tax liabilities. The company has
significant non-capital loss carryforwards (Note 8). SFAS 109 would require the
recognition of a long-term tax asset for the future benefit expected from the
application of these carryforwards to future profitable years. If it is expected
that the entire amount of non-capital loss carryforwards will not be utilized,
then a valuation allowance is applied to the asset to reasonably state the asset
at its expected value. Under SFAS 109, disclosure of the amount of valuation
allowance is required. As at December 31, 1996, the valuation allowance is equal
to 100% of the deferred tax asset. Changes in the value of the deferred asset
are recognized each year as income tax expense.
Stock Options
Of the common share stock options outstanding at December 31, 1996, all 745,000
(1995 - 677,000;1994 - 438,000) are currently exercisable. As at December 31,
1996, 723,630 (1995 - 172,785; 1994 - 82,085) common shares were available for
granting of options. The following summary sets out the activity in the stock
options.
1996 1995 1994
---- ---- ----
$ $ $
Outstanding at beginning of year 677,000 438,000 883,776
Share consolidation (3 for 1,
adjusted for rounding) - - 294,589
Granted 770,000 486,000 443,000
Exercised at an average price of
$1.03 (1995 - $0.30; 1994 - Nil) (702,000) (247,000) -
Cancelled - - (299,589)
--------- --------- ---------
Outstanding at end of year 745,000 677,000 438,000
======= ======= =======
Under Canadian GAAP, there is no requirement to record compensation on the issue
of stock options to employees or directors. Under U.S. GAAP, compensation would
be accrued at the date of granting of the options calculated as the difference
between the market price and exercise price at the date of grant. For the fiscal
years ended December 31, 1996, 1995 and 1994 the exercise price of all stock
options granted has been equal to or greater than the market price on the date
of the grant and therefore the compensation cost under U.S. GAAP would be $Nil.
Other
There are no other material differences between Canadian GAAP and U.S. GAAP.
