fc_posam4-80708.htm
As filed
with the Securities and Exchange Commission on July 24, 2008
Registration
No. 333-132218
UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 4
FORM
S-1
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REGISTRATION
STATEMENT UNDER THE
SECURITIES
ACT OF 1933
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FIRSTGOLD
CORP.
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(Name
of Small Business Issuer in Its Charter)
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Delaware
(State
or Other Jurisdiction of Incorporation or Organization)
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1081
(Primary
Standard Industrial Classification Code Number)
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16-1400479
(I.R.S.
Employer
Identification
No.)
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3108
Ponte Morino Drive, Suite 210
Cameron
Park, CA 95682
(530)
677-5974
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(Address
and Telephone Number of Principal Executive Offices)
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3108
Ponte Morino Drive, Suite 210
Cameron
Park, CA 95682
(Address
of Principal Place of Business or Intended Principal Place of
Business)
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A.
Scott Dockter
3108
Ponte Morino Drive, Suite 210
Cameron
Park, CA 95682
(530)
677-5974
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(Name,
Address and Telephone Number of Agent For Service)
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Copy
to:
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Roger
D. Linn, Esq.
Duncan
Linn & Wade
2261
Lava Ridge Court, Roseville, CA 95661
(916)
797-7436
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Approximate
Date of Commencement of Proposed Sale to the Public: as soon as practicable
after the effective date of this Registration Statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check the following
box. [X]
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One):
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Large
accelerated filer _______
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Accelerated
filer
_______
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Non-accelerated
filer
_______
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Smaller
reporting company
X
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CALCULATION OF REGISTRATION
FEE
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Title of Each Class
of
Securities to be
Registered
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Amount to
be
Registered
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Proposed Maximum Offering Price
Per Share (1)
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Proposed
Maximum
Aggregate Offering Price (1)
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Amount of
Registration
Fee
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Common
Stock
$.001
par value
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4,500,000
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$0.23
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$1,035,000
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$121.82
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Common
Stock
$.001
par value issuable upon conversion of convertible
debenture
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-0-
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$0.23
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$-0-
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$651.06
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Common
Stock
$.001
par value issuable upon exercise of warrants
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3,875,000
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$0.23
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$891,250
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$135.35
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TOTAL
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8,375,000(2)
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$0.23
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$1,926,250
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$908.23(3)
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(1)
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The
proposed maximum offering price per share is estimated solely for purpose
of calculating the registration fee in accordance with Rule 457(c) on the
basis of the average of the high and low sales price as reported by the
Over-the-Counter Bulletin Board on May 22,
2006.
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(2)
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If,
as a result of stock splits, stock dividends or similar transactions, the
number of securities purported to be registered on this registration
statement increases, the provisions of Rule 416 under the Securities Act
of 1933 shall apply, and this registration statement shall be deemed to
cover any such additional shares of common
stock.
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(3)
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Registration
Fee was previously paid
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The
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
TABLE
OF CONTENTS
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1
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3
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3
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4
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5
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12
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19
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22
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47
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48
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53
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58
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60
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61
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62
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63
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66
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66
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66
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66
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66
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68
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II-1
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II-1
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II-11
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PART I - INFORMATION REQUIRED IN PROSPECTUS
The
information in this prospectus is not complete and may be
changed. The Selling Security Holders may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell
securities, and we are not soliciting an offer to buy these securities, in any
state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED July 24, 2008.
PROSPECTUS
FIRSTGOLD
CORP.
8,375,000
Shares of Common Stock
__________________________
This
prospectus relates to the disposition by certain selling stockholders identified
in this prospectus (the “Selling Stockholders”) of up to an aggregate of
8,375,000 shares of Common Stock, par value $0.001 per share (“Common Stock”)
which includes (i) 4,500,000 shares of common stock; and
(ii) 3,875,000 shares issuable upon the exercise of
warrants. All of such shares of Common Stock are being offered for
resale by the Selling Stockholders.
The
prices at which the Selling Stockholders may sell shares will be determined by
the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale
of these shares by the Selling Stockholders. However, we will receive
proceeds from the exercise of warrants if exercised by the Selling
Stockholder.
We will
bear all costs relating to the registration of the Common Stock, other than any
Selling Stockholder’s legal or accounting costs or commissions.
Our
Common Stock is quoted on the Over-the-Counter (“OTC”) bulletin board under the
symbol “FGOC”. On May 30, 2008, the closing price of our Common Stock
on the Over-the-Counter Bulletin Board was $0.48 per share.
Our
principal executive offices are located at 3108 Ponte Morino Drive, Suite 210,
Cameron Park, CA 95682 and our telephone number is (530)
677-5974.
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INVESTING
IN THE COMMON STOCK OFFERED HEREIN INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE
LOSS OF YOUR INVESTMENT. YOU SHOULD CONSIDER CAREFULLY THE “RISK
FACTORS” CONTAINED IN THIS PROSPECTUS BEGINNING ON PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is
______________, 2008.
TABLE
OF CONTENTS
We have not authorized anyone to
provide information different from that contained in this
prospectus. This prospectus is not an offer to sell nor is it seeking
an offer to buy these securities in any jurisdiction where such offer or sale is
not permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of the Common Stock. In
this prospectus, references to “Firstgold,” the “Company,” “we,” “us” and “our”
refer to Firstgold Corp., a Delaware corporation.
Some of the statements in this
prospectus and in any prospectus supplement we may file relate to future
events concerning our business and to our future revenues, operating results,
and financial condition. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “could,” “would,” “should,”
“expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “forecast,”
“predict,” “propose,” “potential,” or “continue” or the negative of those terms
or other comparable terminology.
Any forward looking statements
contained in this prospectus or any prospectus supplement are only estimates or
predictions of future events based on information currently available to our
management and management’s current beliefs about the potential outcome of
future events. Whether these future events will occur as management anticipates,
whether we will achieve our business objectives, and whether our revenues,
operating results, or financial condition will improve in future periods are
subject to numerous risks. The section of this prospectus captioned “Risk
Factors,” beginning on page 4, provides a summary of the various risks that
could cause our actual results or future financial condition to differ
materially from forward-looking statements made in this prospectus. The factors
discussed in this section are not intended to represent a complete list of all
the factors that could adversely affect our business, revenues, operating
results, or financial condition. Other factors that we have not considered may
also have an adverse effect on our business, revenues, operating results, or
financial condition, and the factors we have identified could affect us to a
greater extent than we currently anticipate. Before making any investment in our
securities, we encourage you to carefully read the information contained under
the caption “Risk Factors,” as well the other information contained in this
prospectus and any prospectus supplement we may file.
__________________________
The
following summary is qualified in its entirety by the information contained
elsewhere in this prospectus. You should read the entire prospectus,
including “Risk Factors” and the financial statements before making an
investment decision.
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Issuer:
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Firstgold
Corp.
3108
Ponte Morino Drive, Suite 210
Cameron
Park, CA 95682
(530)
677-5974
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Description
of Business:
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Firstgold’s
business is the acquisition, exploration and, if warranted, development of
various mining properties located in the state of Nevada with the
objective of identifying, mining and processing gold and silver ore
deposits. Firstgold plans to carryout comprehensive exploration
and development programs on its properties which currently consists of
various mineral leases associated with the Relief Canyon Mine located near
Lovelock, Nevada. A description of our business begins on page
22 of this prospectus.
On
October 24, 2006 Firstgold entered into a Mineral Lease Agreement to
explore and, if warranted, develop up to 25,000 acres of property located
in Elko County, Nevada.
On
July 9, 2007 Firstgold completed staking claims on approximately 4,200
acres in the Horse Creek area of Nevada.
On
January 11, 2008, we entered into a lease to explore approximately 2,300
acres of potentially mineralized ground located near Fairview,
Nevada.
On
February 22, 2008 we entered into a lease to explore approximately 3,300
acres of potentially mineralized ground located near Winnemucca,
Nevada.
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The
Offering:
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This
offering relates to the resale of shares of our Common Stock that were
acquired upon conversion of outstanding Secured Convertible Debentures and
upon exercise of outstanding warrants. The selling stockholders
and the number of shares that may be sold by each are set forth beginning
on page 62 of this prospectus.
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Shares:
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8,375,000
shares of our Common Stock. A description of our Common Stock
is set forth on page 61 of this prospectus.
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Manner
of Sale:
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The
shares of our Common Stock may be sold from time to time by the selling
stockholders in open market or negotiated transactions at prices
determined from time to time by the selling stockholders. A
description of the manner in which sales may be made is set forth in this
prospectus beginning on page 63 of this prospectus.
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Use
of Proceeds:
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We
will not receive any of the proceeds from the sale of our Common Stock by
the Selling Stockholders. However, we will receive proceeds from the
exercise of warrants.
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Risk
Factors:
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The
securities offered hereby involve a high degree of risk and will result in
immediate and substantial dilution. A discussion of additional
risk factors relating to our stock, our business and this offering begins
on page 5 of this prospectus.
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Please
carefully consider the specific factors set forth below as well as the other
information contained in this prospectus before purchasing shares of our Common
Stock. This prospectus contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ significantly
from the results discussed in the forward-looking statements.
Risks
Related to Our Business
We
have a limited operating history and have not generated a profit since we
recommenced operations, consequently our long term viability cannot be
assured.
We were
inactive from July 2001 to February 2003 at which time we resumed our mining
related activities and have incurred losses in each reporting period since
recommencing operations.
Our
prospects for financial success are difficult to forecast because we have a
relatively limited operating history and have not yet commenced exploration at
two of our mining properties and have conducted limited exploration at the
Relief Canyon mining property. Our prospects for financial success
must be considered in light of the risks, expenses and difficulties frequently
encountered by exploration stage mining companies initiating exploration of
unproven properties. Our business could be subject to any or all of
the problems, expenses, delays and risks inherent in the establishment of a gold
and silver exploration enterprise, including limited capital resources, possible
delays in mining explorations and development, failure to identify commercially
viable gold or silver deposits, possible cost overruns due to price and cost
increases in exploration and ore processing, uncertain gold and silver market
prices, inability to accurately predict mining results and attract and retain
qualified employees. Therefore, there can be no assurance that our
exploration or mining will be successful, that we will be able to achieve or
maintain profitable operations or that we will not encounter unforeseen
difficulties that may deplete our capital resources more rapidly than
anticipated.
We
may need additional financing to expand our business plan.
We had
cash in the amount of $1,168,620 and working capital of $412,146 as of April 30,
2008. While we have generated some revenue from renting out our drilling rigs
and crew from time to time we have not generated revenues from our mining
operations. Our business plan calls for substantial investment and
cost in connection with the acquisition and exploration of our mineral
properties owned or currently under lease. While we believe we have
sufficient funds to carry out our current plans at Relief Canyon, unforeseen
expenses, an expanded exploration plan or establishing future mining operations
could require additional operating capital. We do not currently have
any arrangements for additional financing and we can provide no assurance to
investors that we will be able to find additional financing if
required. Obtaining additional financing would be subject to a number
of factors, including market prices for minerals, investor acceptance of our
properties, and investor sentiment. These factors may make the
timing, amount, terms or conditions of additional financing unfavorable to
us. The most likely source of future funds would be through the sale
of additional equity capital and loans. Any sale of additional shares
will result in dilution to existing stockholders while incurring additional debt
will result in encumbrances on our property and future cash flows.
Because
there is no assurance when we will generate mining revenues, we may deplete our
cash reserves and not have sufficient outside sources of capital to complete our
exploration or mining programs.
We have
not earned any revenues as of the date of this prospectus from mining operations
and have never been profitable. To date we have been involved
primarily in financing activities and limited exploration
activities. We do not have an interest in any revenue generating
properties. Prior to our being able to generate revenues, we will
incur substantial operating and exploration expenditures without realizing any
revenues. We therefore expect to incur significant losses into the
foreseeable future. Our net loss for the fiscal year ended January
31, 2008 was $7,632,537 and our net loss for the three months ended April 30,
2008 was $2,595,314.
Due to
our continuing losses from business operations, our most recent independent
auditor’s report dated May 15, 2008, includes a “going concern” explanation
relating to the fact that our continued operations are dependent upon obtaining
additional working capital either through significantly increasing revenues or
through outside financing. While we were operating with a cash
reserve of approximately $1,168,000, as of April 30, 2008, we have not yet
generated any revenues from mining operations. Our cash reserves will
be used to primarily fund ongoing plans at
Relief Canyon. However, our inability to generate increased
revenues could eventually inhibit our ability to continue in business or achieve
our business objectives.
Because
of the speculative nature of exploration of natural resource properties, there
is substantial risk that we will not find commercially viable gold or silver ore
deposits which would reduce our realization of revenues.
There is
no assurance that any of the claims we explore or acquire will contain
commercially exploitable reserves of gold or silver
minerals. Exploration for natural resources is a speculative venture
involving substantial risk. Hazards such as unusual or unexpected
geological formations and other conditions often result in unsuccessful
exploration efforts. Success in exploration is dependent upon a
number of factors including, but not limited to, quality of management, quality
and availability of geological expertise and availability of exploration
capital. Due to these and other factors, no assurance can be given
that our exploration programs will result in the discovery of new mineral
reserves or resources.
We may not have
access to all of the supplies and materials we need for exploration, which could
cause us to delay or suspend operations.
Demand
for drilling equipment and limited industry suppliers may result in occasional
shortages of supplies, and certain equipment such as drilling rigs that we need
to conduct exploration activities. While we currently operate five
mobile drilling rigs, we have not negotiated any long term contracts with any
suppliers of products, equipment or services. If we cannot find the
trained employees and equipment when required, we will have to suspend or
curtail our exploration plans until such services and equipment can be
obtained.
We
have no known ore reserves and we cannot predict when and if we will find
commercial quantities of mineral ore deposits. The failure to
identify and extract commercially viable mineral ore deposits will affect our
ability to generate revenues.
We have
no known ore reserves and there can be no assurance that any of the mineral
claims we are exploring contain commercial quantities of gold or
silver. Even if we identify commercial reserves, we cannot predict
whether we will be able to mine the reserves on a profitable basis, if at
all.
If
we are unable to hire and retain key personnel, we may not be able to implement
our business plan.
Firstgold
is substantially dependent upon the continued services of A. Scott Dockter, its
Chief Operating Officer and James Kluber, its Chief Financial
Officer. We have an employment agreement with Mr. Dockter and Mr.
Kluber which expire in January, 2009, but do not have either key person life
insurance or disability insurance on them. While both Mr. Dockter and
Mr. Kluber expect to spend the majority of their time assisting Firstgold and
its business, there can be no assurance that their services will remain
available to Firstgold. If either Mr. Dockter’s or Mr. Kluber’s
services are not available to Firstgold, Firstgold will be materially and
adversely affected. While both Mr. Dockter and Mr. Kluber have three
year employment agreements, through 2009, and both Mr. Dockter and Mr. Kluber
have been significant stockholders of Firstgold and each considers his
investment of time and money in Firstgold of significant personal value, there
is no assurance that both men will remain employed through the end of their
current employment contract. Our success is also largely
dependent on our ability to hire highly qualified personnel. This is
particularly true in the highly technical business such as mineral
exploration. These individuals are in high demand and we may not be
able to retain the personnel we need. In addition, we may not be able
to afford the high salaries and fees demanded by qualified personnel, or may
lose such employees after they are hired. Failure to hire key
personnel when needed, or on acceptable terms, to carryout our exploration and
mining programs would have a significant negative effect on our
business.
Because
the probability of many of the individual mining prospects explored will not
show commercially viable amounts of gold or silver ore deposits, substantial
amounts of funds spent on exploration will not result in identifiable
reserves.
The
probability of our exploration program identifying individual prospects having
commercially significant reserves cannot be predicted. It is likely
that many of the properties explored will not contain any commercially
significant reserves. As such substantial funds will be spent on
exploration which may identify only a few, if any, claims having commercial
development potential.
Our
mining claims could be contested which would add significant costs and delays to
our exploration programs.
Our
mining property rights currently consist of 146 mill site and unpatented mining
claims at the Relief Canyon Mine and recently staked claims on approximately
4,200 acres of land in the Horse Creek area of Nevada and three parcels of
leased properties in Nevada. The validity of unpatented mining claims and staked
claims are often uncertain and are always subject to
contest. Unpatented mining claims are generally considered subject to
greater title risk than patented mining claims, or real property interests that
are owned in fee simple. If our claims on a particular property are successfully
challenged, we may not be able to develop or retain our interests on that
property, which could reduce our future revenues.
Mining
operations are subject to extensive federal and state regulation which increases
the costs of compliance and possible liability for non-compliance.
Mining is
subject to extensive regulation by state and federal regulatory
authorities. State and federal statutes regulate environmental
quality, safety, exploration procedures, reclamation, employees’ health and
safety, use of explosives, air quality standards, pollution of stream and fresh
water sources, noxious odors, noise, dust, and other environmental protection
controls as well as the rights of adjoining property owners. We
believe that we are currently operating in compliance with all known safety and
environmental standards and regulations applicable to our Nevada properties or
are in the process of remediating our property to be
compliant. However, there can be no assurance that our compliance
could be challenged or that future changes in federal or Nevada laws,
regulations or interpretations thereof will not have a material adverse affect
on our ability to resume and sustain exploration operations.
Mining
operations are subject to various risks and hazards which could result in
significant costs or hinder ongoing operations.
The
business of gold mining is subject to certain types of risks, including
environmental hazards, industrial accidents, and theft. We carry
insurance against certain property damage loss (including business interruption)
and comprehensive general liability insurance. While we will maintain
insurance consistent with industry practice, it is not possible to insure
against all risks associated with the mining business, or prudent to assume that
insurance will continue to be available at a reasonable cost. We have
not obtained environmental liability insurance because such coverage is not
considered by management to be cost effective.
Compliance with
corporate governance and public disclosure regulations may result in additional
expenses.
Changing
laws, regulations and standards relating to corporate governance and public
disclosure, including the Sarbanes-Oxley Act of 2002, and new regulations issued
by the Securities and Exchange Commission, are creating uncertainty for
companies, which could result in compliance deficiencies. In order to comply
with these regulations, we may need to invest substantial resources to comply
with evolving standards, and this investment would result in increased general
and administrative expenses and a diversion of management time and attention
from revenue-generating activities to compliance activities.
Our
officers and directors have limited liability and have indemnification
rights
Our
Certificate of Incorporation and by-laws provide that we will indemnify our
officers and directors against losses sustained or liabilities incurred which
arise from any transaction in that officer’s or director’s respective managerial
capacity unless that officer or director violates a duty of loyalty, did not act
in good faith, engaged in intentional misconduct or knowingly violated the law,
approved an improper dividend, or derived an improper benefit from the
transaction.
Risks
Related to Our Stock
Our
Stock Price is Volatile.
The
market price of a share of our Common Stock has fluctuated significantly in the
past and may continue to fluctuate significantly in the
future. During the fiscal year 2008, ended January 31, 2008, the high
and low sales prices of a share of Firstgold common stock as reported on the
OTCBB were $0.97 and $0.33 respectively. During the fiscal quarter
ended April 30, 2008, the high and low sales prices of a share of Firstgold
Common Stock as reported on the OTCBB were $0.70 and $0.48,
respectively. The market price of a share of our Common Stock may
continue to fluctuate in response to a number of factors,
including:
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results
of our exploration program;
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fluctuations
in our quarterly or annual operating
results;
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fluctuations
in the market price of gold and
silver;
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the
loss of services of one or more of our executive officers or other key
employees;
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adverse
effects to our operating results due to unforeseen difficulties affecting
our exploration program; and
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general
economic and market conditions.
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We
may need to raise funds through debt or equity financings in the future, which
would dilute the ownership of our existing stockholders and possibly subordinate
certain of their rights to the rights of new investors or
creditors.
We may
choose to raise additional funds in debt or equity financings if they are
available to us on terms we believe reasonable to increase our working capital,
strengthen our financial position or to make acquisitions. Any sales
of additional equity or convertible debt securities would result in dilution of
the equity interests of our existing stockholders, which could be substantial.
Additionally, if we issue shares of preferred stock or convertible debt to raise
funds, the holders of those securities might be entitled to various preferential
rights over the holders of our Common Stock, including repayment of their
investment, and possibly additional amounts, before any payments could be made
to holders of our Common Stock in connection with an acquisition of the
Company. Such additional debt, if authorized, would create rights and
preferences that would be senior to, or otherwise adversely affect, the rights
and the value of our Common Stock. Also, new investors may require that we and
certain of our stockholders enter into voting arrangements that give them
additional voting control or representation on our board of
directors.
Inadequate
market liquidity may make it difficult to sell our stock.
There is
currently a public market for our Common Stock, but we can give no assurance
that there will always be such a market. Only a limited number of
shares of our Common Stock are actively traded in the public market and we
cannot give assurance that the market for our stock will develop sufficiently to
create significant market liquidity. An investor may find it
difficult or impossible to sell shares of our Common Stock in the public market
because of the limited number of potential buyers at any time. In
addition, the shares of our Common Stock are not eligible as a margin security
and lending institutions may not accept our Common Stock as collateral for a
loan.
The
application of the “penny stock regulation” could adversely affect the market
price of our Common Stock
Penny
stocks generally are equity securities with a price of less than $5.00 per share
other than securities registered on certain national securities exchanges or
quoted on the NASDAQ Stock Market, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. Our securities may be subject to “penny stock
rules” that impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established customers and accredited
investors (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser’s written consent to the transaction prior to the
purchase. Consequently, the “penny stock rules” may restrict the
ability of broker-dealers to buy and sell our securities and may have the effect
of reducing the level of trading activity of our Common Stock in the secondary
market.
We
may engage in future acquisitions that dilute our stockholders and cause us to
incur debt or assume contingent liabilities.
As part
of our strategy, we expect to review opportunities to acquire or participate in
the exploration of other mining properties that would complement our current
exploration or mining program, or that may otherwise offer growth opportunities.
In the event of any future acquisitions, we could:
|
●
|
issue
stock that would dilute current stockholders' percentage
ownership;
|
These
acquisitions also involve numerous risks, including:
|
|
problems
combining additional exploration or mining opportunities with current
business operations:
|
|
|
holding
a minority interest in other joint ventures or
partnerships;
|
|
|
possible
financial commitments to fund future
development;
|
|
|
possible
shared control with other persons or
entities.
|
Risks
Relating to Our Current Financing Arrangement
We
have significant "equity overhang" which could adversely affect the market price
of our Common Stock and impair our ability to raise additional capital through
the sale of equity securities.
As of May
1, 2008, Firstgold had 130,717,460 shares of Common Stock outstanding and
convertible debentures which are convertible into up to 1,444,444 shares of our
Common Stock. Additionally, warrants to purchase a total of
47,545,756 shares and options to purchase 4,650,000 shares of our Common Stock
were outstanding as of May 1, 2008. The possibility that substantial
amounts of our outstanding Common Stock may be sold by investors or the
perception that such sales could occur, often called "equity overhang," could
adversely affect the market price of our Common Stock and could impair our
ability to raise additional capital through the sale of equity securities in the
future.
If
an event of default occurs under the Secured Convertible Debenture dated May 1,
2008, or the Security Agreement relating to the Debenture, the Debenture Holder
could take possession of all our mining rights held in the Relief Canyon
property.
In
connection with the issuance of the Secured Convertible Debenture dated May 1,
2008, as amended, we executed a Security Agreement in favor of 2171216 Ontario,
Inc. granting them a first priority security interest in all of our leasehold
interests and mining rights to the Relief Canyon property as well as any
equipment or improvements located on such property. The Security Agreement
states that if an event of default occurs under the Secured Convertible
Debenture or Security Agreement, 2171216 Ontario, Inc. has the right to take
possession of the collateral, to operate our business using the collateral, and
have the right to assign, sell, lease or otherwise dispose of and deliver all or
part of the collateral, at public or private sale or otherwise to satisfy our
obligations under these agreements.
We
may not be able to pay our debt and other obligations and our assets may be
seized as a result.
We have
not established a sinking fund nor do we intend to set aside sufficient funds to
repay our outstanding debt, including certain Debentures, at
maturity. Consequently, we may not generate the cash flow required or
have sufficient funds available to pay our liabilities as they become
due. We may not have sufficient cash reserves to repay the Debentures
at such time, which would cause an event of default under the Debentures and may
force us to declare bankruptcy. If we raise additional funds to repay
the Debentures by selling equity securities, the relative equity ownership of
our existing investors could be diluted and new investors could obtain terms
more favorable than previous investors.
On
September 26, 2006, we entered into a Securities Purchase Agreement with Cornell
Capital Partners, LP (“Cornell Capital”), which Agreement was later amended on
November 1, 2006 pursuant to which we agreed to issue up to an aggregate
principal amount of $3,000,000 of convertible secured debentures to be issued
and funded in three separate issuances of $1,000,000 each and documented in
three convertible secured debentures. In October 2006 we issued three debentures
in the aggregate principal amount of $650,000 to other investors (collectively,
the “Debentures”).
Each
Debenture has a term of three years during which time we intend to commence
production at the Relief Canyon Mine. The anticipated resources from
any such future production is planned to enable us to repay these amounts within
the repayment period. In the event that we were unsuccessful in
commencing operations at the Relief Canyon Mine or any of our other mining
properties, or if revenues from any such future production was less than
anticipated, then it would be unclear whether cash flow from operations would be
sufficient to repay these amounts.
It has
been represented to us that none of the Debenture Holders have an existing short
position in our common stock.
Prior
Transaction with Selling Security Holders
Prior to
the September 26, 2006 financing transaction, on January 27, 2006, we entered
into a Securities Purchase Agreement with Cornell Capital pursuant to which we
agreed to issue up to an aggregate principal amount of $1,000,000 of convertible
secured debentures to be issued and funded in three separate issuances of
$600,000, $200,000 and $200,000 with each disbursement documented by a
convertible secured debenture. Convertible debentures were issued on
January 27, 2006 ($600,000 principal amount); March 9, 2006 ($200,000 principal
amount); and July 17, 2006 ($200,000 principal amount). By September
15, 2006, Cornell Capital had converted all three convertible debentures and
$30,947.95 of accrued interest into a total of 4,040,168 shares of our
restricted common stock.
Cornell
Capital was also issued warrants exercisable into 2,500,000 shares of Firstgold
common stock. 1,250,000 warrants are exercisable at $0.20 per share
and 1,250,000 warrants are exercisable at $0.30 per share. The
warrants expire on January 27, 2010. In October 2006 Cornell Capital assigned
125,000 of its warrants exercisable at $0.20 and 125,000 of its warrants
exercisable at $0.30 to an unrelated third party. On March 6, 2007
Cornell Capital exercised its warrants as to 1,125,000 shares at an exercise
price of $0.20 per share for total proceeds to Firstgold of $225,000. On March
30, 2007 Cornell Capital assigned its warrants with an exercise price of $0.30
for the remaining 1,125,000 shares to an unrelated third party. All of the
Firstgold shares acquired by Cornell Capital through the conversion of its
convertible debentures and exercise of 1,125,000 warrants were resold pursuant
to a previous registration statement by March 31, 2007.
We had no
prior relationship or arrangement with any of the other convertible debenture
investors other than Cornell Capital.
Current Convertible
Debentures
The first
$1,000,000 convertible secured debenture in the most recent financing (the
“Closing Debenture”) has been issued and was funded on September 26,
2006.
The
second $1,000,000 convertible debenture (the “Filing Debenture”) was issued and
funded on December 1, 2006 upon the filing a previous registration statement
(the “Registration Statement”) with the Securities and Exchange Commission
(“SEC”) registering shares of common stock pursuant to a Registration
Rights Agreement between us and Cornell Capital dated September 26, 2006 (the
“Rights Agreement”). The third $1,000,000 convertible secured
debenture (the “Final Debenture”) was issued and funded on March 16,
2007.
As of the
date of this prospectus, all of Cornell Capital’s Debentures have been fully
converted with accrued interest at the Fixed Conversion Price into 7,080,450
shares of Firstgold common stock.
In
addition to the convertible debentures issued to Cornell Capital, Firstgold
issued an additional $650,000 principal amount of convertible debentures to a
limited number of other investors. These latter debentures have
similar terms and conditions as those issued to the Cornell Capital except the
conversion provision is only at the Fixed Conversion Rate of $0.45 per
share.
Based on
the foregoing, the remaining $650,000 of Debentures will be convertible at the
option of holder at any time up to maturity at a conversion price equal to
$0.45. The Debentures have a three-year term and accrue interest at 8% per year
payable in cash or our common stock. If paid in stock, the stock will
be valued at the rate equal to the conversion price of the Debentures in effect
at the time of payment. Interest and principal payments on the
Debentures accrue until converted or, if not converted, are due on the maturity
date of each Debenture.
Although
not covered by this registration statement, on May 1, 2008, we issued a
Convertible Debenture in the principal amount of $1,100,00 being interest at 10%
per annum (the “May 08 Debenture”). The Debenture is convertible into
Firstgold common stock at a conversion rate of $0.80 per share. The
Debenture is due and payable on January 1, 2009. In conjunction with
the issuance of the Debenture, Firstgold issued warrants to purchase 1,100,000
shares of its common stock at an exercise price of $1.00 per
share. The warrants have a term of 18 months.
Warrants
On
September 26, 2006, as amended on November 1, 2006, we also issued to Cornell
Capital two warrants for a total of 3,500,000 shares of our common stock (each a
“Warrant” and collectively the “Warrants”) with the aggregate exercise price of
$1,575,000 if exercised on a cash basis and if we are not in default on any of
the Debentures. The “A Warrant” is exercisable for 2,000,000 shares
of our common stock at $0.45 per share, expiring November 1,
2010. The “B Warrant” was originally exercisable for 1,500,000 shares
of our common stock at $0.60 per share, expiring four years after the issuance
date of the Warrants. However, on March 16, 2007 an Amended and
Restated “B Warrant” was issued covering 1,500,000 shares at an exercise price
of $0.45 per share, expiring on November 1, 2010.
If the
Warrants are exercised on a cashless basis, we would receive no proceeds from
their exercise by Cornell Capital.
The other
shareholders hold warrants to purchase up to 4,296,805 shares of Firstgold
common stock at an exercise price $0.65 per share. These warrants include
271,156 penalty warrants issued on October 16, 2007. The warrants are
exercisable for a period of 18 months after the issuance date of April 12,
2007.
The
following table summarizes the value of each of the Warrants assuming the
holders exercise them on a cash basis and we are not in default the
Debentures.
|
Warrant
|
Market
Price
on
Date of Conversion (1)
|
Conversion
Price
on
Date of Sale (2)
|
Total
Shares Underlying the Warrant (3)
|
Total
Value of Shares
at
Market Price (4)
|
Total
Value of Shares
at
Exercise Price (5)
|
Total
Possible Discount to Market Price (6)
|
|
A
Warrant
|
$0.36
|
$0.45
|
2,000,000
|
$720,000
|
$900,000
|
$0
|
|
B
Warrant
|
$0.36
|
$0.45
|
1,500,000
|
$540,000
|
$675,000
|
$0
|
|
Other
Warrant Holders
|
$0.57
|
$0.45
|
4,296,805
|
$2,449,179
|
$1,933,562
|
$515,617
|
|
(1)
|
Closing
market price per share of our common stock on the assumed date of the
exercise of the Warrants which is the date the securities were
issued.
|
|
(2)
|
Exercise
price per share of our common stock on the date of the exercise and
issuance of the Warrants. The exercise price of the Warrants is
fixed pursuant to the terms of each of the Warrants except that each of
the Warrants contain anti-dilution protections which in certain
circumstances, may result in a reduction to the exercise
price.
|
|
(3)
|
Total
number of shares of common stock underlying each Warrant assuming full
conversion as of the assumed date of the conversion of the
Warrants. Upon certain anti-dilution adjustments of the
exercise price of the Warrants, the number of shares underlying the
Warrants may also be adjusted such that the proceeds to be received by us
would remain constant.
|
|
(4)
|
Total
market value of the shares of common stock underlying each Warrant
assuming full exercise of each Warrant as of the assumed date of the
exercise of the Warrants (9/21/07) based on the market price of the common
stock on the date of the exercise of the Warrants.
|
|
(5)
|
Total
value of shares of common stock underlying each Warrant assuming full
exercise of each Warrant as of the assumed date of the conversion of the
Warrants and based on the conversion price.
|
|
(6)
|
Discount
to market price calculated by subtracting the result in footnote (5) from
the result in footnote (4).
|
Registration
Rights Agreement
Pursuant
to the Amended Registration Rights Agreement with Cornell Capital, we agreed to
register for resale under the Securities Act of 1933, as amended, up to
18,750,000 shares of common stock issuable upon conversion of the Debentures and
upon exercise of the Warrants, and to file such Registration Statement within
thirty (30) days after November 1, 2006. We were also required to
register up to 2,191,227 shares on behalf of the other convertible
debenture/warrant holders. We filed a Registration Statement with the
SEC on December 1, 2006. We were also required to use our reasonable
best efforts to have that Registration Statement declared effective by February
28, 2007. However, for administrative reasons we withdrew that prior
Registration on May 18, 2007. In addition, due to certain subsequent
amendments to the Cornell Capital investment and subsequent private sales, we
are now only required to register 8,504,553 shares of common stock issued upon
conversion of the Debentures including accrued interest on such Debentures prior
to conversion and upon exercise of the Warrants. The value of the
total number of shares of common stock that we are required to register pursuant
to the Amended Registration Rights Agreement with Cornell Capital, based on the
market price of our common stock on September 21, 2007 ($0.62) was approximately
$5,273,000.
We paid
structuring fees to Yorkville Advisors, LLC (“Yorkville”), the manager of
Cornell Capital, of
$20,000, and a due diligence fee of $5,000. We also agreed to pay Cornell
Capital a fee of 9% of the aggregate principal amount of Debentures then issued
and outstanding. We made no payments in conjunction with the sale of
convertible debentures to other investors.
Payments
and Premiums to Debenture Holders
Line 1 of
the following table summarizes the potential payments we would have been
required to pay to Cornell Capital and affiliates of Cornell Capital without
giving effect to the conversions of $450,000 on July 13, 2007, and $1,000,000 on
September 13, 2007. For purposes of this table, we have assumed that
the entire $3,000,000 aggregate principal amount of the Debentures were issued
and sold on September 26, 2006. Line 2 of the following table
summarizes the potential payments to other Debenture holders.
|
Maximum
Commitment Fee (1)
|
Structuring
and Due Diligence Fees (2)
|
Maximum
Interest Payments (3)
|
Maximum
Redemption Premiums (4)
|
Maximum
Liquidated Damages (5)
|
Total
Maximum Payments (6)
|
Total
Net Proceeds to Company (7)
|
|
$270,000
|
$25,000
|
$720,000
|
$372,000
|
$450,000
|
$1,837,000
|
$1,985,000
|
|
$0
|
$0
|
$156,000
|
$80,600
|
$97,500
|
$334,100
|
$494,000
|
________________________
|
(1)
|
We
agreed to pay Cornell Capital a commitment fee equal to 9% of the
$3,000,000 purchase price of the Debentures issued pursuant to the
Agreement on a pro rata basis as the Debentures were issued. As
of the filing of this Registration Statement, $3,000,000 of the Debentures
have been issued and we paid Cornell Capital $270,000 in commitment
fees.
|
|
(2)
|
Pursuant
to the Agreement, we paid Yorkville an aggregate of $20,000 in structuring
and $5,000 in due diligence fees in connection with the transactions
contemplated by the Agreement.
|
|
(3)
|
Maximum
amount of interest that can accrue assuming all the Debentures remaining
outstanding until the maturity date. We may pay accrued interest in either
cash or, at our option, in shares of our common stock.
|
|
(4)
|
Under
certain circumstances we have the right to redeem the full principal
amount of the Debentures prior to the maturity date by repaying the
principal and accrued interest plus a redemption premium of 10% of such
principal and accrued interest. This represents the maximum
redemption premium we would pay assuming we redeem all of the Debentures
prior to maturity with the redemption premium.
|
|
(5)
|
Maximum
amount of liquidated damages we may be required to pay for the twelve
months following the sale of all the Debentures.
|
|
(6)
|
Total
maximum payments that we may be required to make for the twelve months
following the sale of all the Debentures and assuming that we made all of
the payments described in footnotes 1 through 5.
|
|
(7)
|
Total
net proceeds to us assuming that we were not required to make any payments
as described in footnotes 4 and 5.
|
Security
Agreement
The May
2008 Debenture is secured by a Security Agreement with 2171216 Ontario,
Inc.. The obligation is secured by all our property and mining rights
held in the Relief Canyon Mine property, as affirmed by a Memorandum of Security
Agreement and UCC-1 as filed with the County Recorder of Pershing County,
Nevada.
We plan
to use the proceeds for general corporate purposes and for working
capital. We sold $650,000 principal amount of debentures to three
investors without fees or deductions. The following table summarizes the
potential proceeds available to us pursuant to the latest financing with Cornell
Capital and three additional investors. For purposes of this table, we have
assumed that all of the $3,000,000 aggregate principal amount of convertible
secured debentures were issued and sold on September 26, 2006 and that Cornell
Capital exercises all of the Warrants on a cash basis.
|
Total
Gross
Proceeds
Payable to
Company
|
Total
Maximum
Payments
by
Company
(1)
|
Net
Proceeds to
Company
(2)
|
Total
Possible
Profit
to Debenture Holders(3)
|
Percentage
of Return on Investment
(Payments
+ Discounts) ÷ Net Proceeds (4)
|
|
$5,561,052
|
$2,171,100
|
$3,389,952
|
$1,121,954
|
97%
|
_________________________
|
(1)
|
Total
maximum payments payable by us.
|
|
(2)
|
Total
net proceeds to us calculated by subtracting the result in column (2) from
the result in column (1).
|
|
(3)
|
Total
possible profit to Debenture Holders based on the aggregate discount to
market price of the conversion of the Debentures and
Warrants.
|
|
(4)
|
Percentage
equal to the total amount of possible payments to Debenture Holders under
the Debentures ($2,171,100) plus total possible discount to the market
price of the shares underlying the Debentures ($1,121,954) divided by the
net proceeds to us resulting from the sale of the Debentures
($3,389,952).
|
Effect
on Shares Outstanding
Firstgold
transacted one prior financing with Cornell Capital effective as of January 27,
2006. The table below summarizes the number of shares originally
registered in the prior transaction.
|
Number
of Shares Outstanding Prior to Current
Transaction
|
Number
of Shares Outstanding Prior to 2006
Transaction
held by non-affiliates (1)
|
Number
of Previously Registered Shares on Behalf of all Selling
Shareholders(2)
|
Number
of Shares Registered on Behalf of all Selling
Shareholders
|
Percentage
of Public Float (1)
|
Number
of Shares Still Held on Behalf of Selling Shareholders
|
Number
of Shares Sold in Registered Resale Transactions by Selling
Shareholders
|
Number
of Shares Registered for Resale of Selling Shareholder in the Current
Transaction(3)
|
Per
Share Market price of Firstgold stock on January 26, 2006
|
Per
Share market price of Firstgold common stock on Sept. 21,
2007
|
|
63,104,072
|
52,240,675
|
7,000,000
|
33.550.025
|
64.2%
|
7,000,000
|
5,165,168
|
20,635,588
|
$0.21
|
$0.62
|
___________________________
|
(1)
|
Represents
the number of shares of common stock of the Company issued and outstanding
as of January 27, 2006 (prior to the transaction with Cornell) held by
persons other than Cornell, affiliates of Cornell and affiliates of the
Company.
|
|
(2)
|
Represents
the total number of shares of common stock of the Company previously
registered on behalf of Cornell and/or Cornell’s affiliates prior to this
registration statement being filed. on behalf of Cornell
Capital.
|
|
(3)
|
Includes
8,504,553 shares of common stock of the Company registered in the current
registration statement filed on behalf of Cornell
Capital.
|
The
following table summarizes the number of shares registered (Registration #
333-145016) on behalf of Cornell Capital.
|
Number
of Shares Outstanding Prior to Current Transactions Held by Non-Affiliates
(1)
|
Number
of Previously Registered Shares on Behalf of Selling Stockholders (2)
|
Number
of Shares Still Held on Behalf of Selling Stockholders (3)
|
Number
of Shares Sold in Registered Resale Transactions by Selling
Share-holders
|
Percent-age
of Public Float(4)
|
Number
of Shares Registered for Resale of Selling Shareholder in the Current
Transaction
|
|
59,104,675
|
6,540,168
|
24,880,569
|
5,165,168
|
23%
|
20,635,588
|
___________________________
|
(1)
|
Represents
the number of shares of common stock of the Company issued and outstanding
as of September 26, 2006 (prior to the transaction with Cornell) held by
persons other than Cornell, affiliates of Cornell and affiliates of the
Company.
|
|
(2)
|
Represents
the total number of shares of common stock of the Company previously
registered on behalf of Cornell and/or Cornell’s affiliates prior to this
registration statement and reflects the deregistration of 20,009,857
shares on behalf of Cornell.
|
|
(3)
|
Represents
the total number of shares of common stock of the Company held by Selling
Security Holders.
|
(4) Percentage
based upon 96,842,019 shares held by non-affiliates as of September
21,2007.
Copies
of Agreements
Incorporated
by reference to the Registration Statement to which this prospectus relates (see
“Exhibits” below) are copies of all agreements between us and:
|
|
Cornell
Capital Partners, L.P. and other Selling
Shareholders;
|
|
|
any
affiliates of Cornell Capital Partners, L.P. and other Selling
Shareholders; and
|
|
|
any
person with whom Cornell Capital Partners, L.P. has a contractual
relationship regarding the transaction in connection with the sale of the
convertible debentures and attached
warrants.
|
These
documents include the following, which have been filed with the SEC as
indicated:
|
(1)
|
●
Securities
Purchase Agreement between Firstgold Corp. and Cornell Capital Partners
LP
|
|
(2)
|
●
Amendment
to Securities Purchase Agreement
|
|
(1)
|
●
Secured
Convertible Debenture for 1,000,000 (“Closing
Debenture”)
|
|
(3)
|
●
Secured
Convertible Debentures for $1,000,000 (“Filing
Debenture”)
|
|
(4)
|
●
Secured
Convertible Debenture for $1,000,000 (“Final
Debenture”)
|
|
(1)
|
●
Registration
Rights Agreement between Firstgold Corp. and Cornell Capital Partners
LP
|
|
(2)
|
●
Amendment
to Registration Rights Agreement
|
|
(3)
|
●
Pledge
and Escrow Agreement with Cornell Capital and
Amendment
|
|
5)
|
●
Transfer
Agent Instruction
|
|
(1)
|
●
“A
Warrant” Agreement between Firstgold Corp. and Cornell Capital Partners
LP
|
|
(1)
|
●
“B”
Warrant Agreement between Firstgold Corp. and Cornell Capital Partners
LP
|
|
(4)
|
●
Amended and Restated “B” Warrant Agreement between Firstgold Corp.
and Cornell Capital Partners LP
|
|
(3)
|
●
Amendments
to A and B Warrants
|
|
(3)
|
●
Amended
Memorandum of Security Agreement
|
|
(6)
|
●
Amendment
to Investor Registration Agreement
|
|
(7)
|
●
Warrants
dated April 17, 2007
|
|
(8)
|
●
Form
of Subscription Agreement for Regulation S offering in April
2007
|
________________________________________
|
(1)
|
Filed
as exhibit to Report on Form 8-K filed on September 29,
2006
|
|
(2)
|
Filed
as exhibit to Amended Report on Form 8-K filed on November 24,
2006
|
|
(3)
|
Filed
as exhibit to Amendment No. 1 to Registration Statement on Form SB-2,
#333.139052filed on February 8,
2007
|
|
(4)
|
Filed
as exhibit to Report on Form 8-K filed on March 22,
2007
|
|
(5)
|
Filed
as exhibit to Amendment No. 2 to Registration Statement on Form SB-2,
#333.139052, filed April 16, 2007.
|
|
(6)
|
Filed
as exhibit to Registration Statement on Form SB-2 #333-145016 filed August
1, 2007.
|
|
(7)
|
Incorporated
by reference to Registrant’s Form 8-K filed on May 11,
2007.
|
|
(8)
|
Filed
as exhibit to Amendment No. 2 to Form SB-2 #333-145016 filed November 7,
2007.
|
The
Shares offered by this prospectus are being registered for the account of the
selling stockholders. We will not receive any proceeds from the sale
of Common Stock by the selling stockholders or the conversion of the Convertible
Debentures. Proceeds from the exercise of warrants will be used for working
capital.
MARKET
FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
PURCHASES OF EQUITY SECURITIES.
Market
for Our Common Stock
In July
1997, our Common Stock was approved for quotation on the Over-the-Counter
(“OTC”) Bulletin Board where it traded under the symbol “NGLD” until June
2001. In June 2001, our Common Stock was moved to the “Pink Sheets”
published by the Pink Sheets LLC (previously National Quotation Bureau,
LLC). On June 7, 2005, our Common Stock was again approved for
quotation on the OTC Bulletin Board with its symbol of “NGLD.” Due to
our name change to Firstgold Corp., effective December 1, 2006 our trading
symbol was changed to “FGOC.” As of May 1, 2008 the closing bid price
of our Common Stock was $0.49 per share.
In
January 2008, Firstgold filed an application to become listed on the Toronto
Stock Exchange (“TSX”). This application had been pending with the
TSX while Firstgold satisfied various listing requirements including securing
additional capital. On May 12, 2008 the TSX approved Firstgold’s application for
listing its common shares and effective May 14, 2008 Firstgold’s shares became
listed for trading under the symbol “FGD”.
Price
Range of Our Common Stock
A public
trading market having the characteristics of depth, liquidity and orderliness
depends upon the existence of market makers as well as the presence of willing
buyers and sellers, which are circumstances over which we do not have
control. The following table sets forth the high and low sales prices
reported by the OTC Bulletin Board for our Common Stock in the periods
indicated. The quotations below reflect inter-dealer prices, without
retail mark-up, markdown or commission, and may not represent actual
transactions.
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FIRSTGOLD
CORP. COMMON STOCK
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Low
|
High
|
| |
|
|
| Year
Ending January 31, 2009 |
|
|
| |
|
|
|
First
Quarter (February-April)
|
$0.48
|
$0.70
|
| |
|
|
| Year
Ending January 31, 2008 |
|
|
| |
|
|
|
Fourth
Quarter (November-January)
|
$0.625
|
$0.97
|
| |
|
|
|
Third
Quarter (August-October)
|
$0.52
|
$0.69
|
| |
|
|
|
Second
Quarter (May-July)
|
$0.56
|
$0.72
|
| |
|
|
|
First
Quarter (February-April)
|
$0.33
|
$0.73
|
| |
|
|
|
Year
Ending January 31, 2007
|
|
|
| |
|
|
|
Fourth
Quarter (November-January)
|
$0.255
|
$0.39
|
| |
|
|
|
Third
Quarter (August-October)
|
$0.30
|
$0.47
|
| |
|
|
|
Second
Quarter (May-July)
|
$0.19
|
$0.53
|
| |
|
|
|
First
Quarter (February-April)
|
$0.14
|
$0.245
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Stockholders
As of
January 31, 2008, there were approximately 1,145 holders of record of our Common
Stock. This amount does not include stockholders whose shares are
held in street name.
Dividend
Policy
We have
never declared or paid any cash dividends on our Common Stock. We
currently anticipate that we will retain all future earnings for the expansion
and operation of our business and do not anticipate paying cash dividends in the
foreseeable future.
Securities
Authorized For Issuance Under Equity Compensation Plans
On July
26, 2006, our Board of Directors adopted the 2006 Stock Option Plan which was
submitted to and approved by stockholders at the 2006 annual stockholders
meeting held on November 17, 2006. Under the terms of the 2006 Plan, we may
grant options to purchase up to 5,000,000 shares of our common stock which can
include Incentive Stock Options issued to employees and Nonstatutory Stock
Options issuable to employees or consultants providing services to Firstgold on
such terms as are determined by our board of directors. Our Board
administers the 2006 Plan. Under the 2006 Plan, options vest not less
than 20% per year and have 10-year terms (except with respect to 10%
stockholders which have five-year terms). If an option holder
terminates his/her employment with us or becomes disabled or dies, the option
holder or his/her representative will have a certain number of months to
exercise any outstanding options. If we sell substantially all of our
assets or are a party to a merger or consolidation in which we are not the
surviving corporation, then we have the right to accelerate unvested options and
will give the option holder written notice of the exercisability and specify a
time period in which the option may be exercised. All options will
terminate in their entirety to the extent not exercised on or prior to the date
specified in the written notice unless an agreement governing any change of
control provides otherwise. As of January 31, 2008, options to
purchase 4,650,000 shares of common stock had been issued as
follows: 750,000 options issued to A. Scott Dockter; 400,000 options
issued to James Kluber; 750,000 options issued to Terrence Lynch; 1,000,000
options issued to Stephen Akerfeldt; 500,000 options issued to each of Donald
Heimler, Fraser Berrill and Kevin Bullock; and 250,000 options issued to an
employee for the purchase of Firstgold restricted common stock. At
the 2007 Annual Stockholders Meeting held on September 20, 2007, stockholders
approved an increase in the shares issuable under the 2006 Plan to 10,000,000
shares.
Equity
Compensation Plan Information
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights as of January 31, 2008
(a)
|
Weighted-average
exercise price of outstanding options, warrants and right
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|
Equity
compensation plans to be approved by security holders
|
4,650,000
|
$ 0.62
|
5,350,000
|
|
Equity
compensation plans not approved by security holders
|
N/A
|
|
|
|
TOTAL
|
4,650,000
|
$ 0.62
|
5,350,000
|
Shares
Issuable Upon Conversion of Convertible Debentures
The
$650,000 principal balance of Convertible Debentures are convertible into shares
of our Common Stock at a per share conversion rate of $0.45.
The
$1,100,000 principal balance of the May 2008 Convertible Debenture is
convertible into shares of our Common Stock at a per share conversion rate of
$0.80.
Repurchase
of Equity Securities
None
General
Firstgold
Corp. (“we,” “us,” “our” or “Firstgold”) has a business strategy whereby it will
invest in, explore and if warranted, conduct mining operations of its current
mining properties and other mineral producing properties. Firstgold
is a public company that in the past has been engaged in the acquisition and
exploration of gold-bearing properties in the continental United
States. Currently, Firstgold’s principal assets include various
mineral leases associated with the Relief Canyon Mine located near Lovelock,
Nevada along with various items of mining equipment and improvements located at
that site. Firstgold has also secured rights to explore approximately
25,000 acres of property located in Elko County, Nevada, and has staked claims
on approximately 4,200 acres of land at the Horse Creek exploration project near
Winnemucca, NV, claims on approximately 3,300 acres of land located at it
Honorine Gold exploration project near Winnemucca, NV, and claims on
approximately 2,300 acres of land at its Fairview-Hunter exploration project,
near Fairview, NV.
From 1995
until the beginning of 2000, Firstgold had followed the above described business
activity focusing on the exploration and mining of gold and silver ore
deposits. With the fall of the precious metal markets,
Firstgold attempted to redevelop its business strategy, and from approximately
July 2001 until February 2003 Firstgold discontinued all business
activity. During the period of inactivity, ASDi LLC, an entity
controlled by A. Scott Dockter who is also the Chief Operating Officer of
Firstgold, made the necessary expenditures to maintain the current status of the
Relief Canyon mining claims. In February 2003, Firstgold resumed its
business of acquiring, exploring and if warranted developing its mining
properties.
Firstgold's
mailing address is 3108 Ponte Morino Drive, Suite 210, Cameron Park,
CA 95682 and its telephone number is (530) 677-5974.
The
Company
Firstgold
Corp., a Delaware corporation, has been engaged in the acquisition and
exploration of gold-bearing properties in the continental United States since
1995. In fiscal 1999 Firstgold placed its only remaining property,
the Relief Canyon Mine, located in Pershing County, Nevada, on a care and
maintenance status. During fiscal 2000, Firstgold executed a contract
to sell the Relief Canyon Mine to A. Scott Dockter, then Chairman of Firstgold;
however the sale was never completed and the asset remains the property of
Firstgold. It is now Firstgold’s intention to resume mining at the
Relief Canyon Mine. See “Business” below for further
detail.
Firstgold’s
independent accountants have included a “going concern” explanatory paragraph in
their report dated May 15, 2008 on Firstgold’s financial statements for the
fiscal year ended January 31, 2008, indicating substantial doubt about
Firstgold’s ability to continue as a going concern (See Note 2 of Financial
Footnotes). If Firstgold’s exploration program is not successful or
if insufficient funds are available to carry out Firstgold’s business plans,
then Firstgold will not be able to execute its business plan.
For
financial information regarding Firstgold, see “Financial
Statements.”
Business
Firstgold
is an “exploration stage” company engaged in the search and/or verification of
ore deposits (reserves) in its property. Our business will be to
acquire, explore and, if warranted, develop various mining properties located in
the state of Nevada. We plan to carryout comprehensive exploration
and, if warranted, development programs on our properties. While we
currently plan to fund and conduct these activities ourselves, in the future we
may engage in joint venture, royalty or partnership arrangements pursuant to
which other companies would agree to finance and carryout the exploration and
possible future development programs on our mining properties. Our
current plan will require the hiring of various mining employees to perform
exploration and mining activities for our various mining
properties.
Properties
Relief Canyon
Mine
The
Relief Canyon Mine is an open-pit, heap leaching operation located approximately
110 miles northeast of Reno, Nevada. Firstgold held 50 unpatented
mining claims covering approximately 1000 acres until October 2004 at which time
Firstgold completed re-staking the Relief Canyon mill site and lode
claims. Firstgold currently holds a total of 146 claims including 120
mill site claims and 26 unpatented mining claims. The annual payments
to maintain these claims are approximately $15,600. The mine is
readily accessible by improved roads. Water for mining and processing
operations is provided by two wells located on the property in close proximity
to the mine and processing facilities. Power is provided by a local
rural electric association and phone lines are present at the mine
site. Relief Canyon is located in the Humboldt Range, a mining
district in Pershing County, Nevada.
Background
and History
On
January 10, 1995, Firstgold purchased the Relief Canyon mine from J.D. Welsh
& Associates for $500,000. The mine at that time consisted of 39
unpatented lode mining claims covering approximately 780 acres and a lease for
access to an additional 800 acres contiguous to the 39 claims located on
Firstgold’s property. When first acquired, the property included a
building containing five carbon tanks and a boiler for carbon strip solution,
four detoxified leach pads, a preg pond for gold bearing solution, a barren pond
for solution from which gold had been removed, water rights, and various
permits. From acquisition through November 1997, Firstgold
refurbished the processing facilities by the purchase and installation of all
equipment required to process the gold bearing leach solution when the mine was
returned to production in 1997. During 1997, Firstgold staked an
additional 402 claims. However, subsequent to January 31, 1998,
Firstgold reduced the total claims to 50 (covering approximately 1,000
acres). In 1999 Firstgold placed the mine in a care and maintenance
status.
If mining
operations are not resumed at the Relief Canyon mine, it is possible Firstgold
may be required to reclaim the mine. Reclamation consists of
recontouring the four heaps to a 3:1 slope, sale and removal of the building and
its contents, evaporation of all water in both ponds and burial of the building
foundation and floor within the ponds' liners under the soil contained in the
pond berms. Finally, native vegetation must be re-established in all
areas of disturbance. A cash bond has been posted which will cover
the cost of these reclamation activities.
During
1996, Repadre Capital Corporation (“Repadre”) purchased for $500,000 a net
smelter return royalty (Repadre Royalty). Repadre was to receive a 1.5% royalty
from production at each of the Relief Canyon Mine and Mission Mines. In July
1997, an additional $300,000 was paid by Repadre for an additional 1% royalty
from the Relief Canyon Mine. In October, 1997, when the Mission Mine lease was
terminated, Repadre exercised its option to transfer the Repadre Royalty solely
to the Relief Canyon Mine resulting in a total 4% royalty. The total amount
received of $800,000 has been recorded as deferred revenue in the accompanying
financial statements.
Plan for
Relief Canyon
Based on
past exploration by us and work done by others, we believe the Relief Canyon
Mine presents the potential for gold bearing ore deposits which will hopefully
be validated through further exploration of additional mining
claims.
The
Relief Canyon properties include 146 millsite claims and unpatented mining
claims contained in about 1,000 acres.
Firstgold’s
operating plan is to place the most promising mining targets into production
during the 2008 calendar year, and use the net proceeds from these operations,
if any, to fund expanded exploration and, if warranted, development of its
entire property holdings. By this means, Firstgold intends to
progressively enlarge the scope and scale of the mining and processing
operations, thereby increasing Firstgold’s annual revenues and eventually its
net profits.
Firstgold’s
goals for environmental protection and reclamation are for minimal environmental
disturbance during mining, and reclamation and/or restoration of the disturbed
area after mining ceases. The economics of Firstgold’s operations
will permit this environmentally responsible plan of operations.
We will
initially focus on exploring the North Relief Canyon mining
property. We recently posted a $652,800 reclamation bond with the
Nevada Bureau of Mining Regulations and Reclamation (“BMRR”) which allows us to
apply for new permits for mining and processing on the
property. Posting the reclamation bond completes the Activities of
Compliance mandated by the Bureau of Land Management (“BLM”) and Nevada
Department of Environmental Protection (“NDEP”) before any work can
commence. We have completed all of the environmental work required by
NDEP in the Administrative Order of Consent issued May 2005 (the
AOC). The purpose of the AOC is to bring the Relief Canyon mine up to
current environmental compliance.
On
September 25, 2006 we submitted our “Plan of Operations” for the Relief Canyon
Mining Project to the NDEP. The Plan contains extensive details on
how the mine will operate if and when production is achieved. The
Plan includes an intention to reprocess the existing heaps containing
approximately 8 million tons of ore and the construction of a new heap leach
pad. The Plan also includes facilities and processes which are
compliant with our “Green Initiative” to construct and operate an
environmentally conscience project.
On
October 19, 2006 we received notice from the NDEP that we would be allowed to
attach our current Plan of Operations as an amendment to a previous Plan of
Operations submitted in 1996. This consolidation of Plans is expected
to significantly reduce the processing time and documentation necessary to
secure our production permit from the NDEP which will allow us to commence
processing ore at the Relief Canyon Mining Project. On April 9, 2007
we received notice from the NDEP that Firstgold’s 1996 Plan of Operation had
been reinstated, and that the NDEP was processing the amendment. With
this approval, Firstgold is allowed to proceed at Relief Canyon with onsite
construction, drilling, operations and, if deemed appropriate, production,
subject to final determination and posting of reclamation bonds.
To assist
us in this effort, we have retained Dyer Engineering Consultants, Inc. as our
lead engineering firm for the permitting and compliance engineering work at the
Relief Canyon and other exploration projects in Nevada.
Currently,
we can proceed with the permits to commence full scale exploration and mining
activities. The estimated time for completing the permitting process
is between six months to nine months. However, upon posting the
reclamation bond, we are able to carry on limited operations pending full
permitting for full mining operations.
Description
of Past Exploration and Existing Exploration Efforts
Over 400
historic reverse circulation holes have been drilled at the Relief Canyon
project. Of the 400 holes drilled, 106 had intercepts of gold bearing
ore structures of 0.1 gold/ton content.
The
mineral zone of Relief Canyon is open ended on three sides. It is
projected that ongoing drilling will increase the size of possible
reserves. Most of the drilling to date was targeted for open pit
mining, resulting in shallow holes which did not test for possible deeper ore
deposits. A significant number of deep holes were drilled on the
North end of the property.
In late
May 2007 we completed 57 drill holes on existing heaps at Relief Canyon using
sonic drilling. The patented sonic drill head works by sending high frequency
resonant vibrations down the drill string of the drill bit while the operator
controls the frequencies to suit the specific conditions of the soil/rock
geology. This round of drilling was intended to improve our understanding of the
mineral content in the existing heap leach pads. We have also
completed 83 reverse circulation drill holes in the existing pit area. Fire
assays have been returned on the first 174 of these holes which are designed to
evaluate three specific exploration target areas.
We have
retained SRK Engineering to perform a resource evaluation of the Relief Canyon
Property.
Firstgold
owns 3 reverse circulation drill rigs and two diamond core drill
rigs. In addition to providing exploration drilling to Firstgold,
these drilling rigs, along with operating crews, have been contracted out from
time to time to other nearby mining operations. This rental activity
produced $551,279 of revenue during fiscal 2008.
Ore
Processing Facilities
In
October 2006, we commenced revitalization of our process solution
ponds. The existing Pregnant and Barren ponds, which were converted
to secondary overflow containment, have been cleaned and relined with the latest
technology of fluid containment. In keeping with our “Green
Initiative,” this will include new leak detection equipment and
protocols. In addition, a new enclosed solution transmission system
will be constructed between the site of the proposed heap leach pad and the
existing solution ponds. Upon completion, we plan to process
approximately 8 million metric tons of existing lower grade oxide ores by heap
leaching. Heap leaching consists of stacking crushed or run-of-mine
ore in impermeable ponds, where a weak cyanide solution is applied to the top
surface of the heaps to absorb the gold.
An ore
processing facility, with capacity to process up to 20,000 tons of material per
day, is presently under construction at the property site. A new jaw
crushing unit is also currently being erected. Planned construction
will commence on the new heap leach pad, pending approval and issuance of the
proper permit from NDEP. This permit is in the final stages of
evaluation, having completed its public commentary period.
Antelope
Peak
On
October 24, 2006, we entered into a Mineral Lease Agreement with the owners of
approximately 25,000 acres of property located in Elko County, Nevada (the
“Antelope Peak” property). The Lease allows Firstgold the exclusive
right to explore for and, if warranted, develop gold, silver and barite minerals
on the leased property. The Lease has an initial term of five (5)
years; however the term can be automatically extended thereafter for so long as
Firstgold is engaged in mining operations.
To date
we have performed an Aerial Ground Magnetic Survey which allows our geologists
to identify targets for more detailed exploration. We have also
conducted extensive ground sampling on the property.
Horse
Creek
On July
9, 2007, we completed staking claims on approximately 4,200 acres of potentially
mineralized ground Humboldt County, Nevada. We have conducted
preliminary sampling of the area. During the course of the property
evaluation, rock chip samples were collected. This sampling has shown the
potential presence of intrusion-related gold systems. The next phase of this
project will be to conduct extensive mapping of the area’s bedrock
geology. Additionally, we plan to conduct an airborne geophysical
survey to map the magnetic character of the rocks. Geochemical
exploration efforts will continue with more rock chip sampling as well as an
in-depth soil sampling survey.
Fairview-Hunter
On
January 11, 2008 we secured claims on approximately 2,300 acres of potentially
mineralized ground near Fairview, Nevada. We are conducting
preliminary sampling of the area. During the course of the property
evaluation, rock chip samples were collected. The next phase of this
project will be to conduct extensive mapping of the area’s bedrock
geology. Additionally, we plan to conduct an airborne geophysical
survey to map the magnetic character of the rocks. Geochemical
exploration efforts will continue with more rock chip sampling as well as an
in-depth soil sampling survey.
Honorine
Gold
On
February 22, 2008, we secured claims on approximately 3,300 acres of potentially
mineralized ground north of Winnemucca, Nevada. We are conducting
preliminary sampling of the area. During the course of the property
evaluation, rock chip samples were collected. The next phase of this
project will be to conduct extensive mapping of the area’s bedrock
geology. Additionally, we plan to conduct an airborne geophysical
survey to map the magnetic character of the rocks. Geochemical
exploration efforts will continue with more rock chip sampling as well as an
in-depth soil sampling survey.
Crescent Red Caps
LLC
In early
2005 we entered into a Letter of Intent to form a joint venture to acquire the
exploration rights to certain properties which consisted of two leases of
unpatented mining claims located in northeastern Nevada, approximately 60 miles
southwest of Elko, Nevada in Lander County for which ASDi LLC was the
lessee. In furtherance of this intended joint venture on January 25,
2006 ASDi LLC and Firstgold entered into an Operating Agreement for the Crescent
Red Caps LLC, a Nevada limited liability company (“Crescent Red Caps LLC”)
formed for the intended purpose of exploring the properties. The terms of the
Operating Agreement for Crescent Red Caps LLC provided for Firstgold to own an
initial 22.22% interest in the LLC and be the Manager and the remaining 77.78%
interest to be held by ASDi LLC, a California limited liability company owned by
A. Scott Dockter, COO of Firstgold. Additionally, by the terms of the
Operating Agreement, Firstgold, by making expenditures over three years (January
2006 - January 2009) aggregating $2,700,000, could acquire a 66.66% overall
interest in the Crescent Red Caps LLC. Firstgold would then have the
opportunity to purchase the remaining Crescent Red Caps LLC interest held by
ASDi LLC based on the results of the exploration work contemplated by these
additional expenditures.
On
October 13, 2006 and November 1, 2006 the lessors gave notices of termination of
the two leases. The lessors claimed that the proposed assignment of
the leases by ASDi LLC to Crescent Red Caps LLC was either ineffective or in
breach of the leases. ASDi LLC disputed the lease terminations and on
February 8, 2007, the lessors filed a lawsuit seeking to terminate the leases
(see the section “Legal Proceedings” below). As a result of the recent
settlement of this litigation ASDi LLC, Firstgold and Crescent Red Caps LLC
relinquished all rights to any interest in the above leases or
properties. Firstgold had not yet expended any significant amounts on
its exploration program on the properties prior to this lease
dispute.
Mining
Support Services
Outside Drilling
Services
Increased
activity in the mining industry in Nevada has resulted in a shortage of
available drilling equipment and qualified drilling personnel. While
our priority is to drill on our own projects with our five drill rigs, from time
to time we lease some of our drilling rigs and crew to other nearby mining
operations. We expect this outside drilling activity to continue for
the foreseeable future. As of April 30, 2008 we had invested
approximately $2,283,000 for property, plant and equipment related to our
drilling services.
New Assay
Laboratory
There is
also a shortage of qualified laboratories in Nevada to perform required mineral
assay work on a timely basis, again due to the increased activity in the mining
industry. Accordingly, we are in the process of completing our own
laboratory facility in Lovelock, Nevada. The laboratory will be
located in approximately 10,000 sq. ft. of existing building space and fully
equipped to allow us to obtain assay results on a timely basis and to perform
assay work for other nearby mining operations. The laboratory is
expected to be operational in the third fiscal quarter. As of April
30, 2008 we had invested approximately $612,000 for property, plant and
equipment related to our laboratory facility.
Industry
Overview
The gold
mining and exploration industry has experienced several factors recently that
are favorable to Firstgold as described below.
The spot
market price of an ounce of gold has increased from a low of $253 in February
2001 to a high of $1,011 in March 2008. The price was $923 as of
January 31, 2008 and $853 as of May 1, 2008. This current price level
has made it economically more feasible to produce gold as well as made gold a
more attractive investment for many. Accordingly, the gross margin
per ounce of gold produced per the historical spot market price range above
provides significant profit potential if we are successful in identifying and
mining gold at the Relief Canyon mine.
By
industry standards, there are generally four types of mining
companies. Firstgold is considered an “exploration stage”
company. Typically, an exploration stage mining company is focused on
exploration to identify new, commercially viable gold
deposits. “Junior mining companies” typically have proven and
probable reserves of less then one million ounces of gold, generally produces
less then 100,000 ounces of gold annually and / or are in the process of trying
to raise enough capital to fund the remainder of the steps required to move from
a staked claim to production. “Mid-tier” and large mining (“senior”)
companies may have several projects in production plus several million ounces of
gold in reserve.
Generally
gold reserves have been declining for a number of years for the following
reasons:
|
●
|
The
extended period of low gold prices from 1996 to 2001 made it economically
unfeasible to explore for new deposits for most mining
companies.
|
|
|
The
demand for and production of gold products have exceeded the amount of new
reserves added over the last several consecutive
years.
|
Reversing
the decline in lower gold reserves is a long term process. Due to the
extended time frame it takes to explore, develop and bring new production on
line, the large mining companies are facing an extended period of lower gold
reserves. Accordingly, junior companies that are able to increase
their gold reserves more quickly should directly benefit with an increased
valuation.
Additional
factors causing higher gold prices over the past two years have come from a
weakened United States dollar. Reasons for the lower dollar compared
to other currencies include the historically low US interest rates, the
increasing US budget and trade deficits and the general worldwide political
instability caused by the war on terrorism.
Competition
Of the
four types of mining companies, we believe junior companies represent the
largest group of gold companies in the public stock market. All four
types of mining companies may have projects located in any of the gold producing
continents of the world and many have projects located near the Relief Canyon
mine in Nevada. Many of our competitors have greater exploration,
production, and capital resources than we do, and may be able to compete more
effectively in any of these areas. Firstgold’s inability to secure
capital to fund current exploration and possible future production capacity,
would establish a competitive cost disadvantage in the marketplace which would
have a material adverse effect on its operations and potential
profitability.
We also
compete in the hiring and retention of experienced
employees. Consequently, though unlikely, it is possible that we may
not be able to hire or retain qualified miners or operators in the numbers or at
the times desired.
Employees
As of
January 31, 2008, we had 61 full-time employees. Employees include a
Mine Manager, Chief Geologist and Senior Geologist, a Lead Driller and a Plant
Metallurgist. We anticipate hiring additional employees during the current year
to work on the mining sites in Nevada as our exploration program
continues. While skilled equipment and operations personnel are in
demand, we believe we will be able to hire the necessary workers to sustain our
exploration program. Our employees are not expected to be subject to
a labor contract or collective bargaining agreement. We consider our
employee relations to be good.
Consulting
services, relating primarily to geologic and geophysical interpretations, and
relating to such metallurgical, engineering, and other technical matters as may
be deemed useful in the operation of our exploration activities, will be
provided by independent contractors.
Government
Controls and Regulations
Our
exploration, mining and processing operations are subject to various federal,
state and local laws and regulations governing prospecting, exploration,
development, production, labor standards, occupational health, mine safety,
control of toxic substances, and other matters involving environmental
protection and employment. United States environmental protection
laws address the maintenance of air and water quality standards, the
preservation of threatened and endangered species of wildlife and vegetation,
the preservation of certain archaeological sites, reclamation, and limitations
on the generation, transportation, storage and disposal of solid and hazardous
wastes, among other things. There can be no assurance that all the
required permits and governmental approvals necessary for any mining project
with which we may be associated can be obtained on a timely basis, or
maintained. Delays in obtaining or failure to obtain government
permits and approvals may adversely impact our operations. The
regulatory environment in which we operate could change in ways that would
substantially increase costs to achieve compliance. In addition,
significant changes in regulation could have a material adverse effect on our
operations or financial position.
Outlined
below are some of the more significant aspects of governmental controls and
regulations which materially affect our interests in the Relief Canyon, Horse
Creek and Antelope Peak properties.
Regulation of Mining
Activity
Firstgold’s
mining activities, including exploration, and possible future development and
production activities are subject to environmental laws, policies and
regulations. These laws, policies and regulations affect, among other
matters, emissions to the air, discharges to water, management of waste,
management of hazardous substances, protection of natural resources, protection
of endangered species, protection of antiquities and reclamation of
land. The mines are also subject to numerous other federal, state and
local laws and regulations. At the federal level, the mines are
subject to inspection and regulation by the Division of Mine Safety and Health
Administration of the Department of Labor (“MSHA”) under provisions of the
Federal Mine Safety and Health Act of 1977. The Occupation and Safety
Health Administration (“OSHA”) also has jurisdiction over certain safety and
health standards not covered by MSHA. Mining operations and all
future exploration and development will require a variety of
permits. Although we believe the permits can be obtained in a timely
fashion, permitting procedures are complex, costly, time consuming and subject
to potential regulatory delay. We do not believe that existing
permitting requirements or other environmental protection laws and regulations
would have a material adverse effect on our ability to explore and eventually
operate the mines. However, we cannot be certain that future changes
in laws and regulations would not result in significant additional expenses,
capital expenditures, restrictions or delays associated with the operation of
our properties. We cannot predict whether we will be able to obtain
new permits or whether material changes in permit conditions will be
imposed. Granting new permits or the imposition of additional
conditions could have a material adverse effect on our ability to explore and
operate the mining properties in which we have an interest.
On June
9, 2005, we received permission from the NDEP to commence designated
environmental activities previously requested by us. In January 2006,
we made a cash deposit of $243,204 to cover future reclamation costs as required
by the NDEP for the Relief Canyon Mine.
In
September 2006, we submitted our “Application for Water Pollution Control Permit
and Design Report” for the Relief Canyon project with the NDEP. This
document provides the BLM and NDEP with information regarding the
characteristics of the site, proposed management of process fluids, monitoring
and tentative plans for the eventual closure of operations. In
addition, this fulfills Nevada state requirements and illustrates the plan to
prevent undue degradation of public lands while the Relief Canyon Mining Project
is in operation.
On
October 19, 2006 we received notice from the NDEP that we would be allowed to
attach our current Plan of Operations for Relief Canyon submitted on September
15, 2006 as an amendment to the previous Plan of Operations submitted in
1996. This consolidation of Plans is expected to significantly reduce
the processing time and documentation necessary to secure our production permit
from the NDEP for the Relief Canyon project. We were also required to
increase the reclamation cost deposit from $243,204 to $613,500 which was placed
in a blocked account with our bank in Sacramento, California in March
2007. On April 9, 2007 we received notice from the NDEP that
Firstgold’s Plan of Operation had been reinstated. With this
approval, Firstgold is allowed to commence onsite operations subject to final
determination and posting of reclamation bonds.
On
November 16, 2006, the NDEP notified Firstgold of certain violations that had
occurred pertaining to the unauthorized release of water from one of the
overflow containment ponds at the Relief Canyon mining site in early November
2006. On August 14, 2007, Firstgold was notified that a fine of $9,000 had been
assessed for these violations. Firstgold paid the fine in full on
August 21, 2007. Such violation and fine is not expected to affect the
permitting process or exploration program at the Relief Canyon Mine
site.
Legislation
has been introduced in prior sessions of the U.S. Congress to make significant
revisions to the U.S. General Mining Law of 1872 that would affect our
unpatented mining claims on federal lands, including a royalty on gold
production. It cannot be predicted whether any of these proposals
will become law. Any levy of the type proposed would only apply to
unpatented federal lands and accordingly could adversely affect the
profitability of portions of any future gold production from the Relief Canyon
mine.
The State
of Nevada, where our mine properties are located, adopted the Mined Land
Reclamation Act (the “Nevada Act”) in 1989 which established design, operation,
monitoring and closure requirements for all mining facilities. The
Nevada Act has increased the cost of designing, operating, monitoring and
closing mining facilities and could affect the cost of operating, monitoring and
closing existing mine facilities. The State of Nevada also has
adopted reclamation regulations pursuant to which reclamation plans must be
prepared and financial assurances established for existing
facilities. The financial assurances can be in the form of cash
placed on deposit with the State or reclamation bonds underwritten by insurance
companies. We prepared a specific reclamation plan of the Relief
Canyon Mine and began implementation of the plan in April 2005. This
work was completed in the summer of 2005. As a result of completing
the work, the State of Nevada reduced the financial assurance amount to $243,204
which we have deposited in a blocked account with our bank in Sacramento,
California. In March 2007, we increased the reclamation cost deposit
to $613,500 and in October, 2007, we increased the deposit to
$652,800. We have now completed the Activities of Compliance required
by BLM and NDEP which was a prerequisite to the issuance of mining
permits. Our ability to commence full mining operations at the Relief
Canyon Mine is subject to our obtaining all necessary mining
permits.
Environmental
Regulations
Legislation
and implementation of regulations adopted or proposed by the United States
Environmental Protection Agency (“EPA”), the BLM and by comparable agencies in
various states directly and indirectly affect the mining industry in the United
States. These laws and regulations address the environmental impact
of mining and mineral processing, including potential contamination of soil and
water from tailings, discharges and other wastes generated by mining
process. In particular, legislation such as the Clean Water Act, the
Clean Air Act, the Federal Resource Conservation and Recovery Act (“RCRA”), and
the National Environmental Policy Act require analysis and/or impose effluent
standards, new source performance standards, air quality standards and other
design or operational requirements for various components of mining and mineral
processing, including gold-ore mining and processing. Such statutes
also may impose liability on us for remediation of waste we have
created.
Gold
mining and processing operations by an entity would generate large quantities of
solid waste which is subject to regulation under the RCRA and similar state
laws. The majority of the waste which is produced by such operations
is “extraction” waste that EPA has determined not to regulate under RCRA's
"hazardous waste" program. Instead, the EPA is developing a solid
waste regulatory program specific to mining operations under the
RCRA. Of particular concern to the mining industry is a proposal by
the EPA entitled “Recommendation for a Regulatory Program for Mining Waste and
Materials Under Subtitle D of the Resource Conservation and Recovery Act”
(“Strawman II”) which, if implemented, would create a system of comprehensive
Federal regulation of the entire mine site. Many of these
requirements would be duplicates of existing state
regulations. Strawman II as currently proposed would regulate not
only mine and mill wastes but also numerous production facilities and processes
which could limit internal flexibility in operating a mine. To
implement Strawman II the EPA must seek additional statutory authority, which is
expected to be requested in connection with Congress' reauthorization of
RCRA.
We also
are subject to regulations under (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA" or “Superfund”) which regulates
and establishes liability for the release of hazardous substances and (ii) the
Endangered Species Act (“ESA”) which identifies endangered species of plants and
animals and regulates activities to protect these species and their
habitats. Revisions to “CERCLA” and “ESA” are being considered by
Congress; however, the impact of these potential revisions on us is not clear at
this time.
The Clean
Air Act, as amended, mandates the establishment of a Federal air permitting
program, identifies a list of hazardous air pollutants, including various metals
and cyanide, and establishes new enforcement authority. The EPA has
published final regulations establishing the minimum elements of state operating
permit programs. Firstgold will be required to comply with these EPA
standards to the extent adopted by the State of Nevada.
In
addition, we are required to mitigate long-term environmental impacts by
stabilizing, contouring, resloping, and revegetating various portions of a
site. While a portion of the required work was performed concurrently
with prior operations, completion of the environmental mitigation occurs once
removal of all facilities has been completed. These reclamation
efforts are conducted in accordance with detailed plans which have been reviewed
and approved by the appropriate regulatory agencies. We have made the
necessary cash deposits and we made provision to cover the estimated costs of
such reclamation as required by permit.
We
believe that our current exploration activities at the Relief Canyon
Mine, are in substantial compliance with federal and state regulations and is
consistent with our Green Initiative approach to environmental impact and that
no further significant capital expenditures for environmental control facilities
will be required unless and until production resumes at the site.
Firstgold’s
executive office is located at 3108 Ponte Morino Drive, Suite 210, Cameron Park,
California 95682. Firstgold also owns and maintains an office at 1055
Cornell Avenue, Lovelock, Nevada 89419.
Mining
Property Rights
Relief Canyon
Property
Our
mining property rights are represented by 146 unpatented mill site and mining
lode claims which were re-staked in October 2004 and June
2006. Unpatented mining claims are generally considered subject to
greater title risks than patented mining claims or real property interests that
are owned in fee simple. To remain valid, such unpatented claims are
subject to annual maintenance fees. As of January 31, 2008, we were
current in the payment of such maintenance fees.
Dalton Livestock and
Winchell Ranch Mineral Lease
On
October 24, 2006, we entered into a Mineral Lease Agreement with the owners of
approximately 25,000 acres of property located in Elko County, Nevada (the
“Antelope Peak” property). The Lease allows Firstgold the exclusive
right to explore for and, if warranted, develop gold, silver and barite minerals
on the leased property. The Lease includes exploration, mining and
access rights, deposit of waste material, mineral processing and water
rights. The Lease has an initial term of five (5) years; however the
term can be automatically extended thereafter for so long as Firstgold is
engaged in mining operations.
Firstgold
paid $20,000 upon the signing of the Lease and is required to pay rent of
$50,000 per year. Firstgold is required to expend the following sums
for exploration work on the premises: first year - $150,000; second year -
$450,000; third year - $1,000,000; fourth year - $1,500,000; and fifth year -
$2,000,000. In addition, should mining operations be commenced, the
Lessors would be entitled to a percentage of net smelter returns ranging from 2%
to 5% depending on the price of gold. A finder’s fee of 2,000,000 common shares
and 2,000,000 warrants to purchase common shares at a price of $0.50 per common
share were issued to an unrelated third party at the date of signing the
Lease. The warrants have a term of three years.
Horse Creek
Property
On July
9, 2007, we completed staking claims on approximately 4,200 acres of ground in
the Horse Creek area located approximately 100 miles Northeast of Reno,
Nevada. These claims are staked claims on property owned by the U.S.
Bureau of Land Management (“BLM”). Such staking of claims is
permitted on U.S. Government property; however such claims must be filed with
the BLM and any significant drilling or development activity will be subject to
the review and approval of the BLM and NDEP. Upon conclusion of all mineral
exploration and mining operations, if any, Firstgold is required to restore the
property.
Fairview-Hunter
On
January 11, 2008 we entered into a Mineral Lease Agreement with the Randall
Stoeberl, dba RSgold of approximately 2,300 acres of potentially mineralized
ground near Fairview, Nevada (“Fairview-Hunter” property). The Lease
allows Firstgold the exclusive right to explore for and, if warranted, develop
gold, silver and barite minerals on the leased property. The Lease
includes exploration, mining and access rights, deposit of waste material,
mineral processing, and water rights. The Lease has an initial term
of ten (10) years; however the term can be automatically extended thereafter for
so long as Firstgold is engaged in mining operations.
Firstgold
paid $25,000 upon the signing of the Lease and is required to pay rent of
$25,000 the first year, with payments increasing each subsequent year by $5,000,
with a maximum annual payment of $50,000. Firstgold is required to
complete an initial 2000 feet of drilling in the first year, with no specified
obligations thereafter. In addition, should mining operations
be commenced, the Lessors would be entitled to 3% of net smelter
returns.
These
claims are staked claims on property owned by the U.S. Bureau of Land Management
(“BLM”), and controlled by Randall Stoeberl. Such staking of claims
is permitted on U.S. Government property; however such claims must be filed with
the BLM and any significant drilling or development activity will be subject to
the review and approval of the BLM and NDEP.
Honorine
Gold
On
February 22, 2008, we entered into a Mineral Lease Agreement with the Randall
Stoeberl, dba RSgold of approximately 3,300 acres of property located in
Humboldt County, Nevada (the “Honorine Gold” property). The Lease
allows Firstgold the exclusive right to explore for and, if warranted, develop
gold, silver and barite minerals on the leased property. The Lease
includes exploration, mining and access rights, deposit of waste material, and
mineral processing. The Lease has an initial term of ten (10) years;
however the term can be automatically extended thereafter for so long as
Firstgold is engaged in mining operations.
Firstgold
paid $15,000 upon the signing of the Lease and is required to pay rent of
$15,000 the first year, with payments increasing each subsequent year by
$15,000, with a maximum annual payment of $50,000. Firstgold is
required to complete an initial 2000 feet of drilling in the first year, with no
specified obligations thereafter. In addition, should mining
operations be commenced, the Lessors would be entitled to 5% of net smelter
returns.
These
claims are staked claims on property owned by the U.S. Bureau of Land Management
(“BLM”), and controlled by Randall Stoeberl. Such staking of claims
is permitted on U.S. Government property; however such claims must be filed with
the BLM and any significant drilling or development activity will be subject to
the review and approval of the BLM and NDEP.
For more
detailed financial information, please refer to the audited January 31, 2008
Financial Statements included in this Form 10-KSB.
Caution
about forward-looking statements
This
Registration Statement includes “forward-looking” statements about future
financial results, future business changes and other events that haven’t yet
occurred. For example, statements like we “expect,” we “anticipate”
or we “believe” are forward-looking statements. Investors should be
aware that actual results may differ materially from our expressed expectations
because of risks and uncertainties about the future. We do not
undertake to update the information in this Registration Statement if any
forward-looking statement later turns out to be inaccurate. Details
about risks affecting various aspects of Firstgold’s business are discussed
throughout this Registration Statement and should be considered
carefully.
Plan
of Operation for the Next Twelve Months
Certain
key factors that have affected our financial and operating results in the past
will affect our future financial and operating results. These
include, but are not limited to the following:
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Gold
prices, and to a lesser extent, silver
prices;
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Current
mineralization at the Relief Canyon Mine are estimated by us (based on
past exploration by Firstgold and work done by
others).
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Our
proposed exploration of properties now include 146 millsite and unpatented
mining claims contained in about 1000 acres of the Relief Canyon Property;
the 25,000 acre Antelope Peak property; and approximately 4,200 acres in
the Horse Creek area of Nevada.
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Our
operating plan is to continue exploration work on the Relief Canyon mining
property during calendar 2008. During 2008, we plan
to resume heap leaching at the Relief Canyon mine and we anticipate
realizing production revenue from the Relief Canyon mine
thereafter. Through the sale of additional securities and/or
the use of joint ventures, royalty arrangements and partnerships, we
intend to progressively enlarge the scope and scale of our exploration,
mining and processing operations, thereby potentially increasing our
chances of locating commercially viable ore deposits which could increase
both our annual revenues and ultimately our net profits. Our
objective is to achieve annual growth rates in revenue and net profits for
the foreseeable future.
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We
expect to make capital expenditures in calendar years 2008 and 2009 of
between $10 million and $20 million, including costs related to the
exploration, development and operation of the Relief Canyon mining
property. We will have to raise additional outside capital to
pay for these activities and the resumption of exploration activities and
possible future production at the Relief Canyon
mine.
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Additional
funding or the utilization of other venture partners will be required to
fund exploration, research, development and operating expenses at the
Horse Creek, Antelope Peak, Fairview-Hunter and Honorine Gold properties
when and if such activity is commenced at these properties. In the past we
have been dependent on funding from the private placement of our
securities as well as loans from related and third parties as the sole
sources of capital to fund
operations.
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Results
of Operation
Our
current business strategy is to invest in, explore and if warranted, conduct
mining operations of our current mining properties and other mineral producing
properties. Firstgold is a public company that in the past has been
engaged in the acquisition and exploration of gold-bearing properties in the
continental United States. Currently, our principal assets include
various mineral leases associated with the Relief Canyon Mine located near
Lovelock, Nevada along with various items of mining equipment and improvements
located at that site. We have also entered into a mineral lease to
explore approximately 25,000 acres of property located in Elko County,
Nevada.
Operating Results for the
Fiscal Years Ended January 31, 2008 and 2007
Although
we commenced efforts to re-establish our mining business early in fiscal year
2004, no mining operations have commenced and no revenue from mining production
has been recognized during the fiscal years 2007 and 2008,
respectively. However, we recognized $551,279 of revenue from the
leasing of some of our drilling rigs and crew to other nearby mining operations.
We have granted a 4% net smelting return royalty to a third party related to the
Relief Canyon mining property which has been recorded as an $800,000 deferred
option income.
During
the fiscal year ended January 31, 2008 we spent $2,195,024 on exploration,
reclamation and maintenance expenses related to our mining
properties. Exploration, reclamation and maintenance expenses
expended during the year ended January 31, 2007 were $132,166. These
expenses relate primarily to exploration costs and property improvements at our
Relief Canyon mining claims. We expended $2,261,816 on retro fitting
the on-site mill facility and $2,098,686 for acquisition of mining
equipment. We incurred operating expenses of $5,715,150 during the
year ended January 31, 2008. Of this amount, $2,065,464 reflects director,
officer and staff compensation and related payroll taxes during the year,
$1,651,672 reflect fees for outside professional services, and $645,509 for
promotional expense. A large portion of the outside professional
services reflects legal and accounting work pertaining to our annual and
quarterly SEC reporting, preparation of two SB-2 registration statements
occurring in fiscal year 2008 and litigation expenses related to the Red Caps
and Crescent Valley leases. During the year ended January 31, 2007 we
incurred operating expenses of $1,955,816 of which $850,869 represents director,
officer and staff compensation and related payroll taxes during the year,
$445,940 reflect fees for outside professional services and $396,361 for
promotional expenses. It is anticipated that both mining costs and
operating expenses will increase significantly as we resume our exploration
program and mining operations.
We
incurred interest expense of $869,444 during the year ended January 31, 2008
which compares to interest expenses of $596,975 incurred during the year ended
January 31, 2007. The amount of loans outstanding on average was
higher during fiscal year 2008 compared to fiscal year 2007, which was primarily
the result of the increase in convertible debentures on average during fiscal
2008. The higher interest expense during fiscal year 2008 was
primarily due to the increase in accretion of warrants issued in fiscal years
2007 and 2008 as a debt discount as well as the write-off of balances of
derivative liabilities upon conversion of convertible debt in fiscal
2008.
In
conjunction with the Convertible Debentures issued during fiscal years 2007 and
2008, we allocated the proceeds received between convertible debt and the
detachable warrants based upon the relative fair market values on the date the
proceeds were received. Subsequent to the initial recording, the
change in the fair value of the detachable warrants, determined under the
Black-Scholes option pricing formula, and the change in the fair value of the
embedded derivative in the conversion feature of the convertible debentures are
recorded as adjustments to the liabilities at January 31, 2008 and
2007. This resulted in $703,992 of expense relating to the change in
the fair value of Firstgold’s stock reflected in the change in the fair value of
the warrants and derivatives (noted above) and is included as other income
(expense). This expense was $616,493 for the fiscal year ending
January 31, 2007.
Our total
net loss for the year ended January 31, 2008 increased to $7,632,537compared to
a net loss of $4,728,070 incurred for the fiscal year ended January 31,
2007. The larger net loss in fiscal year 2008 reflects the
substantial increase in operating expenses as we pursue our exploration programs
and reactivate our mining activities, the increase in operating expense from
additional staffing levels as well as costs associated with capital raising
activities and litigation, coupled with the limited revenues recognized during
fiscal year 2008.
Operating Results for the
Fiscal Quarter Ended April 30, 2008 and 2007
Although
we commenced efforts to re-establish our mining business early in fiscal year
2004, no mining operations have commenced and no revenues from mining operations
have been recognized during the quarters ended April 30, 2008 and 2007,
respectively. We have granted a 4% net smelting return royalty to a
third party related to the Relief Canyon mining property which has been
recorded as an $800,000 deferred option income. During the first
quarter of fiscal year 2009 we recognized revenue of $275,793 from the leasing
of drill rigs and crew to other nearby mining operations.
During
the quarter ended April 30, 2008 we spent $1,391,411 for exploration,
reclamation and maintenance expenses related to our mining
properties. Reclamation and maintenance expenses expended during the
same quarter ended April 30, 2007 were $126,681. These expenses
relate primarily to exploration, maintenance and retention costs required to
maintain our mining claims. The increase in costs was due to
extensive building and facility expansion at the Relief Canyon mine and
significant exploration drilling. During the quarter ended April 30,
2008 we expended approximately $56,250 on preliminary exploration activities at
the Antelope Peak, Horse Creek, Fairview-Hunter and Honorine Gold
properties. We incurred operating expenses of $1,466,154 during the
quarter ended April 30, 2008. Of this amount, $78,299 reflects
promotion expense, $228,460 reflects officer and director compensation during
the quarter and $394,378 reflect fees for outside professional
services. $259,798 of the outside professional services reflects
legal costs associated with the litigation involving the Crescent Red Caps
LLC. We incurred operating expenses of $985,685 during
the quarter ended April 30, 2007. Of this amount, $222,933 reflects
outside director compensation expense, $188,769 reflects promotion expense,
$93,500 reflects officer compensation and related payroll taxes during the
quarter and $124,533 reflect fees for outside professional
services.
A large
portion of the outside professional services reflects legal and accounting work
pertaining to our annual and quarterly reporting on Form 10-KSB and Form 10-QSB
occurring in fiscal year 2008 as well as the preparation and filing of a Form
SB-2. It is anticipated that both mining costs and operating expenses
will increase significantly as we continue our exploration program and prepare
for mining operations.
We
incurred interest expense of $34,606 during the quarter ended April 30, 2008
which compares to interest expenses of $247,959 incurred during the same quarter
of 2007. The principal balance of loans outstanding during the first
quarter of fiscal year 2009 decreased by $2,827,609 to $950,797 compared to a
principal balance of $3,778,406 outstanding at the end of the first quarter of
fiscal year 2008, which was primarily the result of a decrease in convertible
debentures. The decrease in interest expense during the quarter ended
April 30, 2008 was primarily due to the decrease in the principal balance of
loans outstanding during the period offset by the write-off of unamortized debt
costs related to convertible debt which was converted in full during the
period.
Our total
net loss for the quarter ended April 30, 2008 decreased to $2,595,314 compared
to a net loss of $2,977,614 incurred for the same quarter ended April 30,
2007. The larger net loss in the first quarter of fiscal 2008
reflects the increase in the adjustment to fair value of derivatives of
$1,623,255. In addition, the decrease in net loss for the quarter ended
April 30, 2008 reflects the net sales revenue recognized during the quarter
compared to no revenues recorded in the same quarter of 2007.
Liquidity
and Capital Resources
We have
incurred significant operating losses since inception and during the three
months ended April 30, 2008 which has resulted in an accumulated deficit of
$33,986,454 as of April 30, 2008. At April 30, 2008, we had cash and
other current assets of $1,897,342 compared to $1,125,613 at January 31, 2008
and net working capital of $412,145 as of April 30, 2008. Since the
resumption of our business in February 2003, we have been dependent on borrowed
or invested funds in order to finance our ongoing operations. As of
April 30, 2008, we had outstanding debentures and notes payable in the gross
principal amount of $950,797 (net balance of $817,624 after $(148,480) of
deferred financing costs) which reflects a decrease in the gross principal
balance of $2,827,609 compared to notes payable in the gross principal amount of
$3,778,406, (net balance of $5,958,845 after $(2,365,659) of note payable
discount and deferred financing costs and $4,546,098 of derivative liabilities)
as of April 30, 2007.
On
January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to
develop two Nevada mining properties known as the Red Caps Project (“Red Caps”)
and Crescent Valley Project (“Crescent Valley”). Pursuant to the
Operating Agreement for the Crescent Red Caps LLC, ASDi LLC was to contribute
the Red Caps and Crescent Valley mining leases to the Crescent Red Caps LLC in
exchange for Firstgold issuing 2.5 million shares of its common stock and
warrants to purchase 2.5 million shares of Firstgold common stock at an exercise
price of $0.40 per share and a term of three years to ASDi
LLC. Pursuant to the joint venture, Firstgold initially owned a
22.22% interest in the Crescent Red Caps LLC, a Nevada limited liability company
and ASDi LLC held a 77.78% interest. Firstgold was to expend up to
$1,350,000 on each project over the next three years. Due to the
settlement of litigation relating to these mining leases, the joint venture has
been terminated prior to Firstgold having spent any significant amounts for
exploration expenses relating to these properties. However, Firstgold
incurred approximately $1,100,000 in legal expenses relating to this
litigation.
Our
primary sources of operating capital have been debt and equity financings. In
January, 2006 we entered into a Securities Purchase Agreement which resulted in
proceeds from the issuance of convertible debentures as follows: $600,000 on
January 27, 2006; $200,000 on March 12, 2006; and $200,000 on July 18,
2006.
On
September 26, 2006 we entered into another Securities Purchase Agreement which
resulted in proceeds from the issuance of convertible debentures as follows:
$1,000,000 on September 26, 2006; $1,000,000 on December 1, 2006; and $1,000,000
on March 16, 2007.
On
October 10, 2006 we issued convertible debentures raising proceeds of
$650,000.
On April
12, 2007 we received net proceeds of $2,374,200 from the sale of Units in
Canada.
On May
18, 2007 we received gross proceeds of $337,500 upon the issuance of units
consisting of Firstgold common stock and warrants.
On June
22, 2007 we received net proceeds of $7,885,972 upon the issuance of units
consisting for Firstgold common stock and warrants sold in Canada.
During
February, March and April of 2008, Firstgold received gross proceeds of
$8,042,897 upon the private placement of Units consisting of 12,373,689 shares
of common stock and warrants to purchase 6,186,845 shares of common stock at an
exercise price of $0.80 per share. The warrants have a term of
18 months.
On May 1,
2008, we issued a Convertible Debenture in the principal amount of $1,100,000
and bearing interest or 10% per annum. The transaction included the issuance of
warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise
price of $1.00 per share.
By
attempting to resume mining operations, we will require approximately $10
million to $20 million in working capital above the amounts realized during
calendar year 2008 to bring the Relief Canyon Mine into full production and
carry out planned exploration on our other properties. We believe we
have sufficient working capital to fund our current business plan for Relief
Canyon. However, should additional funds become necessary, our
intention would be to pursue several possible funding opportunities including
the sale of additional securities, entering into joint venture arrangements, or
incurring additional debt.
Due to
our continuing losses from business operations, the independent auditor’s report
dated May 15, 2008, includes a “going concern” explanation relating to the fact
that Firstgold’s continuation is dependent upon obtaining additional working
capital either through significantly increasing revenues or through outside
financing. As of January 31, 2008, Firstgold’s principal commitments
included its obligation to pay ongoing maintenance fees on 146 unpatented mining
claims and the annual minimum rent due on the Winchell Ranch mineral lease and
mortgage payments relating to its offices in Lovelock, Nevada.
It is
likely that we will need to raise additional capital to fund the long-term or
expanded development, promotion and conduct of our mineral
exploration. Due to our limited cash flow, operating losses and
limited assets, it is unlikely that we could obtain financing through commercial
or banking sources. Consequently, any future capital requirements
will be dependent on cash infusions from our major stockholders or other outside
sources in order to fund our future operations. Prior to the
transactions with Cornell Capital Partners, Firstgold’s president had paid a
substantial portion of Firstgold’s expenses since restarting its business in
February 2003. Although we believe that our creditors and investors
would continue to fund Firstgold’s expenses if such became necessary based upon
their significant debt and/or equity interest in Firstgold, there is no
assurance that such investors would continue to pay our expenses in the
future. If adequate funds are not available in the future, through
public or private financing as well as borrowing from other sources, Firstgold
might not be able to establish or sustain its mineral exploration or mining
program.
Recent Financing
Transaction
On
September 26, 2006, we entered into a Securities Purchase Agreement (the
“Purchase Agreement”) and other agreements, which were amended on November 1,
2006, with Cornell Capital Partners LP in connection with the private placement
of convertible debentures, in the aggregate principal amount of $3,000,000 and
bearing interest at 8% per annum (the “Debentures”). The Debentures
were issued for $1,000,000 on September 26, 2006, $1,000,000 on December 1,
2006, and $1,000,000 on March 16, 2007. Each Debenture had a three
(3) year term from the date of issue unless they were converted into shares of
Firstgold Common Stock or were repaid prior to the expiration
dates. The conversion rate was adjustable and at any conversion date,
would be the lower of $0.4735 per share (and subsequently reduced to $0.45 per
share) or 95% of the Market Conversion Price. Consequently, the
number of shares of Firstgold Common Stock into which the Debentures could have
been converted would never be less than 6,666,666 shares but could have been
substantially more if the average market price of Firstgold’s Common Stock fell
below $0.45. On July 13, 2007, Cornell Capital converted $450,000
principal amount of the third Debenture at the Fixed Conversion Rate of $0.45
per share into 1,000,000 shares of Firstgold common stock. On
September 13, 2007, Cornell Capital converted the first $1,000,000 Debenture at
the Fixed Conversion Rate of $0.45 per share into 2,222,222 shares of Firstgold
common stock. As of October 31, 2007, Cornell Capital had converted
the balance of its Debentures with accrued interest at the Fixed Conversion Rate
of $0.45 per share into 3,858,228 shares of Firstgold Common Stock.
Firstgold
paid a Commitment Fee to Cornell Capital Partners, LP of 9% of gross proceeds or
a total of $270,000. Firstgold also paid Yorkshire Advisors, LLC (an
affiliate of Cornell Capital Partners) a due diligence fee of $5,000 and a
Structuring Fee of $20,000. Net proceeds to Firstgold from this
financing were approximately $2,705,000.
In
conjunction with the Purchase Agreement, we entered into an Investor
Registration Rights Agreement (the “Registration Rights
Agreement”). The Registration Rights Agreement requires us to
register at least 18,750,000 shares of our Common Stock to cover the conversion
of the Debentures (assuming conversion prices substantially below $0.4735) and
3,500,000 shares of our Common Stock issuable upon conversion of warrants (the
“Warrants”) granted to the Debenture holder. We are required to keep
this Registration Statement effective until the Debentures have been fully
converted, repaid, or becomes due and the Warrants have been fully exercised or
expire. Both the Debentures and the Warrants are currently
convertible or exercisable, respectively.
In
conjunction with the Purchase Agreement, we entered into a Security Agreement
(the “Security Agreement”). The Security Agreement creates a secured
interest in favor of the Debenture holder in our mining interest and assets in
the Relief Canyon Mine property. This security interest was created
by recordation of an Amended Memorandum of Security Agreement filed in Pershing
County, Nevada on November 15, 2006. Consequently, if a default would
occur under the Debenture, the Debenture holder could take over or sell all of
our interests, business and assets associated with the Relief Canyon
Mine.
In
conjunction with the Purchase Agreement, we granted warrants to purchase
2,000,000 shares of Firstgold Common Stock exercisable at $0.45 per share and
1,500,000 shares exercisable at $0.60 per share. However, on March
16, 2007, the exercise price of the $0.60 per share warrants was changed to an
exercise price of $0.45 per share. The Warrants have a term of four
years. The exercise price may be reduced if shares of Firstgold’s
Common Stock are sold at a price below the Warrant exercise price.
On
October 10, 2006 we received $650,000 upon the issuance of Convertible
Debentures with certain investors which bear interest at 8% per annum and are
convertible into shares of Firstgold common stock at the Fixed Conversion Price
of $0.4735 per share (and subsequently reduced to $0.45 per share) which would
equal approximately 1,372,756 if the entire principal were converted into
Firstgold common stock. In conjunction with the Convertible
Debentures, we granted 746,843 warrants to purchase shares of Firstgold Common
Stock, 426,767 exercisable at $0.45 per share and 320,076 exercisable at $0.60
per share. The Warrants have a term of four years.
On April
12, 2007 we received gross proceeds of $2,552,900 upon the issuance of Units
consisting of 5,673,110 shares of our common stock and warrants to purchase
2,836,555 shares of our common stock at an exercise price of $0.65 per share.
The warrants have a term of 18 months. Due to the fact that these Units were not
registered in an effective resale prospectus by October 15, 2007, an additional
542,310 “penalty shares” and 271,156 “penalty warrants” were issued to these
investors and included in this prospectus.
On May
18, 2007 we received gross proceeds of $337,500 upon the issuance of Units
consisting of 749,998 shares of our common stock and warrants to purchase
375,002 shares of our common stock at an exercise price of $0.65 per
share. The warrants have a term of 18 months.
On June
22, 2007, we received gross proceeds of $8,479,539.45 upon the issuance of Units
at $0.45 per Unit consisting of 18,843,421 shares of our common stock and
Warrants to purchase 9,421,711 shares of our common stock at an exercise price
of $0.65 per share. The warrants have a term of 18 months. Due to the fact that
these Units were not registered in an effective resale prospectus by November
15, 2007, an additional 1,884,342 “penalty shares” and 942,171 “penalty
warrants” were issued to these investors.
During
February, March and April, we conducted private placements in which we raised
gross proceeds of $8,042,897 upon the issuance of Units at $0.65 per Unit
consisting of 12,373,689 shares of our common stock and warrants to purchase
6,186,845 shares of our common stock at an exercise price of $0.80 per
share. The warrants have a term of 18 months.
On May 1,
2008, we issued a Convertible Debenture in the principal amount of $1,100,000
and bearing interest or 10% per annum. The transaction included the issuance of
warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise
price of $1.00 per share.
Off-Balance Sheet
Arrangements
During
the fiscal quarter ended April 30, 2008, Firstgold did not engage in any
off-balance sheet arrangements as defined in Item 303(c) of the SEC’s Regulation
S-B.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operation are
based upon our financial statements, which have been prepared in accordance with
generally accepted accounting principles in the United States. The
preparation of financial statements requires management to make estimates and
disclosures on the date of the financial statements. On an on-going
basis, we evaluate our estimates, including, but not limited to, those related
to revenue recognition. We use authoritative pronouncements,
historical experience and other assumptions as the basis for making
judgments. Actual results could differ from those
estimates. We believe that the following critical accounting policies
affect our more significant judgments and estimates in the preparation of our
financial statements.
Exploration Stage
Company
Effective
January 1, 1995 (date of inception), Firstgold is considered an exploration
stage company as defined in SFAS No. 7. Firstgold’s exploration stage
activities consist of the development of several mining properties located in
Nevada. Sources of financing for these exploration stage activities
have been primarily debt and equity financing. Firstgold has, at the
present time, not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of Firstgold and other
relevant factors.
Valuation of long-lived
assets
Long-lived
assets, consisting primarily of property and equipment, patents and trademarks,
and goodwill, comprise a significant portion of our total
assets. Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that their carrying values may not be
recoverable. Recoverability of assets is measured by a comparison of
the carrying value of an asset to the future net cash flows expected to be
generated by those assets. The cash flow projections are based on
historical experience, management’s view of growth rates within the industry,
and the anticipated future economic environment.
Factors
we consider important that could trigger a review for impairment include the
following:
|
|
(a)
|
significant
underperformance relative to expected historical or projected future
operating results,
|
|
|
(b)
|
significant
changes in the manner of our use of the acquired assets or the strategy of
our overall business, and
|
|
|
(c)
|
significant
negative industry or economic
trends.
|
When we
determine that the carrying value of long-lived assets and related goodwill and
enterprise-level goodwill may not be recoverable based upon the existence of one
or more of the above indicators of impairment, we measure any impairment based
on a projected discounted cash flow method using a discount rate determined by
our management to be commensurate with the risk inherent in our current business
model.
Deferred Reclamation
Costs
In August
2001, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset
Retirement Obligations,” which established a uniform methodology for accounting
for estimated reclamation and abandonment costs. The statement was
adopted February 1, 2003. The reclamation costs will be allocated to
expense over the life of the related assets and will be adjusted for changes
resulting from the passage of time and revisions to either the timing or amount
of the original present value estimate.
Prior to
adoption of SFAS No. 143, estimated future reclamation costs were based
principally on legal and regulatory requirements. Such costs related
to active mines were accrued and charged over the expected operating lives of
the mines using the units of production method based on proven and probable
reserves. Future remediation costs for inactive mines were accrued
based on management’s best estimate at the end of each period of the
undiscounted costs expected to be incurred at a site. Such cost
estimates included, where applicable, ongoing care, maintenance and monitoring
costs. Changes in estimates at inactive mines were reflected in
earnings in the period an estimate was revised.
Exploration
Costs
Exploration
costs are expensed as incurred. All costs related to property
acquisitions are capitalized.
Mine Development
Costs
Mine
development costs consist of all costs associated with bringing mines into
production, to develop new ore bodies and to develop mine areas substantially in
advance of current production. The decision to develop a mine is based on
assessment of the commercial viability of the property and the availability of
financing. Once the decision to proceed to development is made, development and
other expenditures relating to the project will be deferred and carried at cost
with the intention that these will be depleted by charges against earnings from
future mining operations. No depreciation will be charged against the property
until commercial production commences. After a mine has been brought into
commercial production, any additional work on that property will be expensed as
incurred, except for large development programs, which will be deferred and
depleted.
Reclamation
Costs
Reclamation
costs and related accrued liabilities, which are based on our interpretation of
current environmental and regulatory requirements, are accrued and expensed,
upon determination.
Based on
current environmental regulations and known reclamation requirements, management
has included its best estimates of these obligations in its reclamation
accruals. However, it is reasonably possible that our best estimates
of our ultimate reclamation liabilities could change as a result of changes in
regulations or cost estimates.
Valuation of Derivative
Instruments
FAS
No. 133 "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of
embedded derivative instruments and measurement of their fair value for
accounting purposes. In determining the appropriate fair value, the Company uses
the Black Scholes model as a valuation technique. Derivative
liabilities are adjusted to reflect fair value at each period end, with any
increase or decrease in the fair value being recorded in results of operations
as Adjustments to Fair Value of Derivatives. In addition, the fair values of
freestanding derivative instruments such as warrants are valued using Black
Scholes models.
Stock-Based
Compensation
We
currently account for the issuance of stock options to employees using the fair
market value method according to SFAS No. 123R, Share-Based Payment.
Recent Accounting
Pronouncements
In
February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid
Financial Instruments”, which amends SFAS No. 133, “Accounting for Derivatives
Instruments and Hedging Activities” and SFAS No. 140, “Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of
Liabilities”. SFAS No. 155 amends SFAS No. 133 to narrow the scope
exception for interest-only and principal-only strips on debt instruments to
include only such strips representing rights to receive a specified portion of
the contractual interest or principle cash flows. SFAS No. 155 also
amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument. Firstgold is currently evaluating
the impact of this new Standard but believes that it will not have a material
impact on Firstgold’s financial position, results of operations, or cash
flows.
In March
2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
Assets” which provides an approach to simplify efforts to obtain hedge-like
(offset) accounting. This Statement amends FASB Statement No. 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities”, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The Statement (1)
requires an entity to recognize a servicing asset or servicing liability each
time it undertakes an obligation to service a financial asset by entering into a
servicing contract in certain situations; (2) requires that a separately
recognized servicing asset or servicing liability be initially measured at fair
value, if practicable; (3) permits an entity to choose either the amortization
method or the fair value method for subsequent measurement for each class of
separately recognized servicing assets or servicing liabilities; (4) permits at
initial adoption a one-time reclassification of available-for-sale securities to
trading securities by an entity with recognized servicing rights, provided the
securities reclassified offset the entity’s exposure to changes in the fair
value of the servicing assets or liabilities; and (5) requires separate
presentation of servicing assets and servicing liabilities subsequently measured
at fair value in the balance sheet and additional disclosures for all separately
recognized servicing assets and servicing liabilities. SFAS No. 156
is effective for all separately recognized servicing assets and liabilities as
of the beginning of an entity’s fiscal year that begins after September 15,
2006, with earlier adoption permitted in certain circumstances. The
Statement also describes the manner in which it should be initially
applied. Firstgold does not believe that SFAS No. 156 will have a
material impact on its financial position, results of operations or cash
flows.
In
July 2006, the FASB released FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes,” an interpretation of FASB Statement
No. 109 (FIN 48). FIN 48 clarifies the accounting and reporting
for uncertainties in income tax law. This interpretation prescribes a
comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of uncertain tax positions taken or expected to be
taken in income tax returns. This statement is effective for fiscal
years beginning after December 15, 2006. The Company is
currently in the process of evaluating the expected effect of FIN 48 on its
results of operations and financial position.
In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Issues No. 157, “Fair Value Measurements” (“SFAS 157”),
which defines the fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements. This statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal
years. Early adoption is encouraged, provided that the Company has
not yet issued financial statements for that fiscal year, including any
financial statements for an interim period within that fiscal year. The Company
is currently evaluating the impact SFAS 157 may have on its financial condition
or results of operations.
In
September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined
Benefit Pension and Other Post Retirement Plans.” SFAS No. 158 requires
employers to recognize in its statement of financial position an asset or
liability based on the retirement plans over or under funded status. SFAS
No. 158 is effective for fiscal years ending after December 15,
2006. The Company is currently evaluating the effect that the
application of SFAS No. 158 will have on its results of operations and financial
condition.
In
September 2006, the United States Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements” (“SAB 108”). This SAB provides guidance on the
consideration of the effects of prior year misstatements in quantifying current
year misstatements for the purpose of a materiality assessment. SAB 108
establishes an approach that requires quantification of financial statement
errors based on the effects on each of the company’s balance sheets, statements
of operations and related financial statement disclosures. The SAB
permits existing public companies to record the cumulative effect of initially
applying this approach in the first year ending after November 15, 2006 by
recording the necessary correcting adjustments to the carrying values of assets
and liabilities as of the beginning of that year with the offsetting adjustment
recorded to the opening balance of retained earnings. Additionally,
the use of the cumulative effect transition method requires detailed disclosure
of the nature and amount of each individual error being corrected through the
cumulative adjustment and how and when it arose. The Company is
currently evaluating the impact SAB 108 may have on its results of operations
and financial condition.
In
October 2006, the Emerging Issues Task Force (“EITF”) issued EITF 06-3, “How
Taxes Collected from Customers and Remitted to Governmental Authorities Should
Be Presented in the Income Statement (That is, Gross versus Net Presentation)”
to clarify diversity in practice on the presentation of different types of taxes
in the financial statements. The Task Force concluded that, for taxes
within the scope of the issue, a company may adopt a policy of presenting taxes
either gross within revenue or net. That is, it may include charges to
customers for taxes within revenues and the charge for the taxes from the taxing
authority within cost of sales, or, alternatively, it may net the charge to the
customer and the charge from the taxing authority. If taxes subject to
EITF 06-3 are significant, a company is required to disclose its accounting
policy for presenting taxes and the amounts of such taxes that are recognized on
a gross basis. The guidance in this consensus is effective for the first
interim reporting period beginning after December 15, 2006 (the first quarter of
our fiscal year 2007). We do not expect the adoption of EITF 06-3 will
have a material impact on our results of operations, financial position or cash
flow.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (SFAS 159). Under the provisions of
SFAS 159, companies may choose to account for eligible financial instruments,
warranties and insurance contracts at fair value on a contract-by-contract
basis. Changes in fair value will be recognized in earnings each
reporting period. SFAS 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. Firstgold is required to and plans to adopt the
provisions of SFAS 159 beginning in the first quarter of
2008. Firstgold is currently assessing the impact of the adoption of
SFAS 159.
On
February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps
LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red
Caps mining properties. The complaint was filed in the Sixth Judicial
District Court of Lander County, Nevada (Case No. 9661). In the
complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee
rights in the Crescent Valley and Red Caps mining properties to Crescent Red
Caps LLC (of which Firstgold is the Managing Member). The complaint
sought the termination of the leasehold rights granted to ASDi, LLC and quiet
title and punitive damages. The complaint also sought an order
against Firstgold restricting public claims of ownership or control of the
mining properties. ASDi, LLC and Firstgold believed the leases were not assigned
and that any transfer of the leases or mining claims was not wrongful nor
required the Lessors’ consent. Consequently, ASDi, LLC and Firstgold pursued a
vigorous defense of this action. On April 3, 2007, a preliminary
hearing was held in which the defendants sought a Summary Judgment to have the
leasehold termination notices declared void. The Court did not grant
the defendants’ motion thus requiring the matter to proceed to trial on the
merits. In addition, on May 11, 2007, the Court entered a preliminary injunction
against public claims of ownership of any interest in the leases or the mining
property by defendants. On June 7, 2007, the plaintiffs filed a Motion For Order
to Show Cause claiming that defendants had violated the injunction based upon
certain statements made on Firstgold’s website and certain disclosures made in
Firstgold’s annual report on Form 10-KSB and should be found in contempt of the
injunction. A hearing on the Motion to Show Cause was held on November 20, 2007
and on January 4, 2008 the Court ruled in Defendant’s favor finding no contempt
of the injunction. In late March, 2008 the parties reached a
settlement agreement and the case was dismissed by the Court on April 4,
2008. As a result of the Settlement, Firstgold paid $150,000 to
Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all
right, title and interest in the Red Caps and Crescent Valley leases to the
Plaintiffs. Consequently, Firstgold no longer has any interest in
these leases and will not pursue any further exploration activity on such leased
property.
On
September 24, 2007, a complaint was served on Firstgold by Swartz Private
Equity, LLC. The complaint was filed in the District Court for the
Western District of New York (Case No. 07CV6447). In the complaint,
plaintiff alleges that pursuant to an Investment Agreement dated October 4,
2000, and entered into with Firstgold’s former management, it is entitled to the
exercise of certain warrants in the amount of 1,911,106 shares of Firstgold
common stock or the equivalent cash value of $0.69 per share and a termination
fee of $200,000. Firstgold filed an answer to the complaint on
December 3, 2007 and expects to vigorously defend this action. The
lawsuit is now in the discovery phase.
On
January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting
Group, Inc. The complaint was filed in the Supreme Court of the State
of New York but was subsequently removed to the Federal District Court for the
Southern District of New York (Case No. 08CV01850). In the complaint,
plaintiff alleges that pursuant to a Retainer Agreement entered into on
September 1, 2000 and an Addendum thereto entered into on September 7, 2000, it
is entitled to the issuance of warrants to purchase 1,000,000 shares of
Firstgold stock, a monthly retainer fee of 50,000 shares of Firstgold stock and
a monthly cash retainer fee, a $50,000 finder’s fee, and other damages to be
proven at trial. Firstgold filed an Answer on April 15, 2008 and on
May 5, 2008 filed a Counterclaim seeking reimbursement of all costs of this
lawsuit. Firstgold expects to vigorously defend this
action.
Directors and
Executive Officers,
The
following table sets forth information about the directors and executive
officers of Firstgold together with the principal positions and offices with
Firstgold held by each:
|
Name
of Person
|
Age
|
Position
and Office Presently Held With Firstgold
|
Director
Since
|
|
|
|
|
|
|
Stephen
Akerfeldt
|
63
|
Director
and Chairman
|
2006
|
|
A.
Scott Dockter
|
51
|
Chief
Operating Officer
|
|
|
James
W. Kluber
|
57
|
Chief
Financial Officer and Secretary
|
|
|
Terrence
Lynch
|
48
|
Director
|
2006
|
|
Donald
Heimler
|
65
|
Director
|
2007
|
|
Fraser
Berrill
|
58
|
Director
|
2007
|
|
Kevin
Bullock
|
43
|
Director
|
2007
|
Biographical information for
directors and executive officers:
Stephen Akerfeldt was
appointed to the Board of Directors on September 12, 2006 and became Chairman in
June 2007 and Chief Executive Officer on January 4, 2008. Mr. Akerfeldt is
currently a member of the board of Jura Energy Corporation which is an oil and
gas exploration company based in Calgary, Canada. In 1998 he became
part owner and currently serves as a director and president of Ritz Plastics
Inc. which produces plastic injection molded parts used primarily in the
automotive industry. In 1991, Mr. Akerfeldt and certain partners
acquired two major chains of dry cleaning operations in the Toronto, Ontario
marketplace which were then sold in 2003. Mr. Akerfeldt has worked as
a business consultant to various companies and entrepreneurs since the
mid-1990’s. From 1987 to 1990 Mr. Akerfeldt was Vice-Chairman and
Chief Financial Officer of Magna International Inc. a multi-billion dollar
public company auto parts manufacturer. Mr. Akerfeldt joined the
accounting firm of Coopers and Lybrand in 1965 and from 1974 through 1987 he was
a partner in the firm’s Toronto office. His accounting practice
included a broad range of clients including investment dealers, public mining
companies, insurance companies, public oil and gas producers and manufacturing
companies, both public and private. Mr. Akerfeldt holds a Bachelor of
Arts degree from the University of Waterloo and became a chartered accountant
with the Institute of Chartered Accountants of Ontario in 1970.
A. Scott Dockter served as
Chief Executive Officer since December 2000 and Chairman from December 2000
until June 2007. Mr. Dockter resigned from the Board on December 21,
2007 and resigned as President and CEO on January 4, 2008 He now serves as Chief
Operating Officer of Firstgold. Mr. Dockter had previously served as
Firstgold’s CEO and President from November 1996 until February
2000. Mr. Dockter has been self-employed in the business sector
since 1978 and in addition to working full time with Firstgold, he currently
operates two private businesses through ASD CORP and ASDi
LLC. He has held a Class A General Engineering and Contracting
License for more than 20 years, operating his businesses in California, Nevada
and Montana, specializing in earth moving, mining, pipeline projects,
structures, dams, industrial parks and sub divisions. Mr. Dockter has
directed his companies in large landfill operations, underground concrete
structures projects, large excavations, reclamation projects and others, which
include state and local municipal projects. Mr. Dockter has also been
a real estate developer, worked on oil & gas projects and has spent 15 years
in the mining industry. He has personally owned mines, operated
mines, constructed mine infrastructures (physical, production and process) and
produced precious metals
James W. Kluber has been the
Chief Financial Officer and Secretary of Firstgold since February 2000 and a
director from April 2000 to June 2007. Mr. Kluber has served as
a senior financial consultant in a variety of service and technology
environments with special focus on high growth companies and restructuring
operations. He has successfully raised capital for companies in a
variety of markets, utilizing public and private equity as well as securitized
and unsecured debt to accomplish funding requirements. From December
2001 to September 2003, Mr. Kluber was the CFO and until October 2005 was the
interim CFO of NutraCea a public company involved in the development and
distribution of products based on the use of stabilized rice
bran. During 2004, Mr. Kluber served as interim CFO for M&A
Medical Holdings, Inc. a manufacturer of medical
devices. Additionally, he was the Senior Vice President and CFO from
1996 to 1999 for RealPage, Inc. a leading provider of software and services to
the real estate industry. From 1993 to 1996 he served as Vice
President of Financial Operations for two New York Stock Exchange listed
companies sponsored by Security Capital Group, ProLogis Trust and Archstone
Communities.
Terrence Lynch was appointed
to the Board of Directors in July 2006. Since December 2006 he has
been president of Resort Owners Group which specializes in resort home
sales. Since October 2005, Mr. Lynch has been a partner with
Kingsmill Capital Partners, a financial advisory firm specializing in advising
both public and private early stage growth companies. Prior to
joining Kingsmill Capital he spent fifteen years operating start up companies in
industrial products, oil & gas, and media. Experienced in
developing the necessary financial structure to maximize a company’s ability to
secure growth capital, Mr. Lynch has raised corporate capital via debentures,
limited partnerships, and royalty financing in addition to conventional equity
placements. From August 2004 to March 2006, Mr. Lynch served as CEO
of Star Digital, a media and internet development firm. From
September 2001 to August 2004, Mr. Lynch served as CEO of Probrandz Media, a
media and internet development firm. Mr. Lynch graduated in 1981 from
St. Francis Xavier University with a joint honors degree in Economics and a
BBA.
Donald Heimler was appointed
to the Board on January 9, 2007. His career spanned 29 years with Scotia Capital
Inc. (Scotia McLeod, McLeod Young Weir), as Director, Institutional Equities
where he successfully managed several of the firm’s largest clients by the time
he retired in October 2006. Previous to that he was the chief
accountant of a chain of optical stores under the corporate umbrella of Imperial
Optical. He attended the University of Western Ontario, enrolled in
the Certified General Accounting program and has successfully completed many
investment industry accredited courses.
Fraser Berrill was appointed
to the Board on June 26, 2007. Mr. Berrill is currently the CEO and President of
Renasant Financial Partners, which is a publicly held financial services and
technology trading organization. He also serves as a Trustee of
Vicwest Income Fund and a number of private companies. From 1991 to
2000, Mr. Berrill was Senior Vice-President, Corporate Development of publicly
held Acklands Limited, which sold its industrial distribution and auto parts
assets to WW Grainger and Carquest transforming into Morguard
Corporation. Positions held prior to that included Vice-President,
Corporate Development for the Paja Group and President of the Sherman group of
companies. In addition, Mr. Berrill was a member of litigation team
for Osler, Hoskin & Harcourt LLP from 1975 to 1981.
Kevin Bullock was appointed to
the Board of directors on December 21, 2007. Mr. Bullock currently
serves as President, CEO and a Director of Volta Resources Inc. (a mining and
mineral exploration company listed on the Toronto Venture Exchange formerly
Goldcrest Resources Ltd.). Prior to joining Volta Resources in August
2003 he was the Vice President, Corporate Development of Kirkland Lake Gold Inc.
(formerly Foxpoint Resources Ltd.) from November 2001 to August 2003
.. Prior thereto, he was Managing Director, Mining Division of Cook
Engineering, Thunder Bay, Ontario, from January 2001 to November
2001. Mr. Bullock has served as a member of the advisory board of
Orezone Resources Inc. since June, 1999. Mr. Bullock served as Vice
President of Brandon Gold Corporation from June 1997 to September 1999 and as
Manager of Operations for IAMGOLD Corporation from January 1995 to June
1997. He is currently also a director of Young Shannon Gold Mines
Ltd., Rolling Rock Resources and Kingsmill Capital Ventures. Mr.
Bullock is a professional engineer and received is B.Eng. Degree from Laurentian
University in Sudbury, Ontario. He is a member of the Canadian
Institute of Mining and Metullargy, the Professional Engineers of Ontario and
the Society of Mining Engineers.
The
current Directors will serve and hold office until the next annual stockholders'
meeting or until their respective successors have been duly elected and
qualified. Firstgold’s executive officers are appointed by the Board
of Directors and serve at the discretion of the Board.
Corporate
Governance
Our board
of directors has five directors and has established an Audit Committee, a
Compensation Committee, and a Nominating & Corporate Governance Committee as
its standing committees. Our board does not have an executive
committee or any committee performing similar functions. We are not
currently listed on a national securities exchange or on an inter-dealer
quotation system that has requirements that a majority of the board of directors
be independent, however, the board has determined that all of our directors, are
“independent” under the definition set forth in the listings of the NASDAQ Stock
Market, Inc., which is the definition our board has chosen to use for the
purposes of determining independence. In addition, our board has
determined that all members of its Audit Committee, in addition to meeting the
standards for independence set forth in the listing standards of the NASDAQ
Stock Market, Inc., also meet the criteria for independence for audit committee
members set forth in the Securities Exchange Act of 1934, as amended, including
the rules and regulations promulgated thereunder.
Family
Relationships
There are
no family relationships between any director or executive officer.
Board
Meetings and Committees
Our Board
of Directors held 11 meetings during the fiscal year ended January 31, 2008 and
acted by unanimous written consent on 1 occasion. Each nominee who
was a director during fiscal 2008 participated in at least 75% or more of the
aggregate number of the meetings of the Board held during the time that such
nominee was a director and any committee on which he served. On October 21,
2006, the Board created an Audit Committee and on January 31, 2007, the Board
voted to create a Compensation Committee and a Nominating & Corporate
Governance Committee. Charters for those committees have been
approved by the Board.
The Audit
Committee consists of Donald Heimler as our Audit Committee financial expert and
chairman of the Audit Committee along with Terry Lynch and Fraser Berrill. Each
of Messrs. Lynch and Berrill were considered independent directors as defined
the applicable NASDAQ Stock Market listing standards and by the Sarbanes-Oxley
Act of 2002 and related regulation of the Securities and Exchange
Commission. Stephen Akerfeldt served as chairman of the Audit
Committee until January 4, 2008 when Mr. Akerfeldt assumed the position of CEO.
At that time Mr. Akerfeldt resigned from the Audit Committee and was replaced by
Donald Heimler. The Audit Committee facilitates and maintains open
communications among the Board, the Audit Committee, senior management and
Firstgold’s independent auditors. The Audit Committee also serves as
an independent and objective party to monitor Firstgold’s financial reporting
process and internal control system. In addition, the Audit Committee
reviews and evaluates the efforts of Firstgold’s independent
auditors. The Audit Committee meets periodically with management and
Firstgold’s independent auditors. The Audit Committee held 3 meetings
in fiscal year 2008. The Board has determined that the chairman of
the Audit Committee, Mr. Heimler, meets the SEC’s definition of audit committee
financial expert. The Audit Committee has a written
charter.
The
Compensation Committee, consisting of Terry Lynch, chairman, Kevin Bullock, and
Donald Heimler, establishes salary, incentive and other forms of compensation
for Firstgold’s Chief Executive Officer, and authorizes stock option issuances
for Firstgold. The Compensation Committee meets periodically with
management of Firstgold. The Compensation Committee, held two
meetings in fiscal year 2008. The Compensation Committee has a
written charter.
The Board
has also established a Nominating & Corporate Governance
Committee. The Nominating & Corporate Governance Committee,
consisting of Fraser Berrill, Chairman, Kevin Bullock, and Donald Heimler,
evaluates potential candidates for membership on the Board and may consider such
factors as it deems appropriate. These factors may include judgment,
skill, diversity, integrity, experience with businesses and other organizations
of comparable size, the interplay of the candidate’s experience with the
experience of other Board members and the extent to which the candidate would be
a desirable addition to the Board and any committees of the
Board. While the Board has not established any specific minimum
qualifications for director nominees, the Board believes that demonstrated
leadership, as well as significant years of service, in an area of endeavor such
as business, law, public service, the mining industry or academia, is a
desirable qualification for service as a director of Firstgold. The
Committee also evaluates the performance of Board members and monitors Directors
compliance with applicable rules and regulations of the Securities and Exchange
Commission and other regulatory agencies. The Nominating and
Corporate Governance Committee has a written charter.
The Board
has a policy with respect to the consideration of director candidates
recommended by stockholders. Any stockholder may make recommendations
to the Board for membership on the Board by sending a written statement of the
qualifications of the recommended individual to: Secretary, Firstgold Corp, 3108
Ponte Morino Drive, Suite 210, Cameron Park,
CA 95682. Such recommendations should be received no later
than sixty (60) days prior to the annual meeting for which the stockholder
wishes his or her recommendation to be considered. The Board will
evaluate candidates recommended by stockholders on the same basis as it
evaluates other candidates, including the following criteria:
|
|
Directors
should be of the highest ethical character and share values that reflect
positively on themselves and
Firstgold.
|
|
|
Directors
should have reputations, both personal and professional, consistent with
the image and reputation of
Firstgold.
|
|
|
Directors
should be highly accomplished in their respective fields, with superior
credentials and recognition.
|
The fact
that a proposed director nominee meets some or all of the above criteria will
not obligate the Nominating & Corporate Governance Committee Board to
nominate or recommend the candidate for director in the proxy
materials.
Stockholder
Communication Policy
Stockholders
may send communications to the Board or individual members of the Board by
writing to them, care of Secretary, Firstgold Corp., 3108 Ponte Morino Drive,
Suite 210, Cameron Park, California 95682, who will forward the communication to
the intended director or directors. If the stockholder wishes the
communication to be confidential, then the communication should be appropriately
marked to maintain confidentiality.
Code
of Business Conduct and Ethics
The Board
has adopted a Code of Business Conduct and Ethics that applies to all directors,
officers and employees of Firstgold. Firstgold will provide any
person, without charge, a copy of this Code. Requests for a copy of
the Code may be made by writing to Firstgold at 3108 Ponte Morino Drive, Suite
210, Cameron Park, California 95682. Attention:
Secretary.
The
following table sets forth the compensation of Firstgold’s Principal Executive
Officer during the last two complete fiscal years and each officer who received
annual compensation in excess of $100,000 during the last completed fiscal
year.
|
SUMMARY
COMPENSATION TABLE
|
|
|
Name
& Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Total
($)
|
|
|
|
2008
|
180,000
|
-0-
|
-0-
|
94,667
|
-0-
|
-0-
|
12,000(3)
(5)
|
286,667
|
|
|
(PEO)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
180,000
|
-0-
|
-0-
|
132,297
|
-0-
|
-0-
|
12,000(3)
(4)
|
324,297
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
Jim
Kluber
|
2008
|
160,000
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
6,000(2)
|
166,000
|
|
|
(CFO)
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
160,000
|
-0-
|
-0-
|
106,886
|
-0-
|
-0-
|
6,000(2)
|
272,886
|
|
|
(1)
|
Mr.
Dockter resigned as CEO on January 4, 2008 at which time he became
COO.
|
|
(2)
|
Amount
reflects a home office allowance.
|
|
(3)
|
Amount
reflects a $1,000 per month car
allowance.
|
|
(4)
|
The
Firstgold Board, with Mr. Dockter abstaining, approved the extension of
the expiration date from January 31, 2007 to April 15, 2007 of certain
warrants to acquire 2,000,000 shares of Firstgold common stock held by Mr.
Dockter. On April 15, 2007, Mr. Dockter exercised these
warrants with a cash payment.
|
|
(5)
|
Amount
reflects payments pursuant to the Aircraft Time Sharing
Agreement.
|
2006
Stock Option Plan
Our Board
of Directors adopted the 2006 Stock Option Plan on July 26, 2006. The
2006 Plan was submitted to and approved by stockholders at the 2006 annual
stockholders meeting held on November 17, 2006. Under the terms of
the 2006 Plan, we may grant up to 5,000,000 options which can include Incentive
Stock Options issued to employees and Nonstatutory Stock Options issuable to
employees or consultants providing services to Firstgold on such terms as are
determined by our board of directors. The Board’s Compensation
Committee administers the 2006 Plan. Under the 2006 Plan, options
vest not less than 20% per year and have 10-year terms (except with respect to
10% stockholders which have five-year terms). If an option holder
terminates his/her employment with us or becomes disabled or dies, the option
holder or his/her representative will have a certain number of months to
exercise any outstanding vested options. If we sell substantially all
of our assets, are a party to a merger or consolidation in which we are not the
surviving corporation, then we have the right to accelerate unvested options and
will give the option holder written notice of the exercisability and specify a
time period in which the options may be exercised. All options will
terminate in their entirety to the extent not exercised on or prior to the date
specified in the written notice unless an agreement governing any change of
control provides otherwise. Stockholders voting at the 2007 Annual Stockholders
meeting held on September 20, 2007 approved an increase in the shares issuable
under the 2006 Plan to a total of 10,000,000.
Options/SAR Grants in Last
Fiscal Year
The
following table sets forth certain information with respect to options or SAR
grants of Common Stock during the fiscal year ended January 31, 2008 to the
Named Executive Officers.
|
Name
|
Number
of Securities Underlying Options Granted
|
Percent
of Total Options Granted to Employees at January 31, 2008
|
Average
Exercise
or Base Price
($
Per Share)
|
Expiration
Dates
|
|
|
|
|
|
|
|
Scott
Dockter
|
750,000
|
16%
|
$0.65
|
July
27, 2011,
December
21, 2012
|
|
James
Kluber
|
400,000
|
9%
|
$0.50
|
July
27, 2016
|
|
Terrence
Lynch
|
750,000
|
16%
|
$0.55
|
July
30, 2016,
October
21, 2016,
March
28, 2017
|
|
Stephen
Akerfeldt
|
1,000,000
|
22%
|
$0.66
|
September
11, 2016
March
28, 2017,
June
26, 2017,
December
21, 2017
|
|
Donald
Heimler
|
500,000
|
11%
|
$0.58
|
January
8, 2017,
March
28, 2017
|
|
Fraser
Berrill
|
500,000
|
11%
|
$0.65
|
June
26, 2017
|
|
Kevin
Bullock
|
500,000
|
11%
|
$0.85
|
December
21, 2017
|
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information on all restricted stock and stock option
awards held by our named executive officers as of January 31, 2008. All
outstanding equity awards are in shares of our common stock.
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying Unexercised Options (#)
Exercisable
|
|
Number
of Securities Underlying Unexercised Options (#)
Unexercised-able
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
|
Option
Exercise Price
($)
|
|
Option
Expiration Date
|
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|
Scott
Dockter
|
|
|
250,000
125,000
|
|
250,000
125,000
|
|
|
0
|
|
$0.50
$0.94
|
|
|
07/2011
12/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Kluber
|
|
|
200,000
|
|
200,000
|
|
|
0
|
|
$0.50
|
|
|
07/2016
|
|
|
|
|
|
|
Terrence
Lynch
|
|
|
250,000
125,000
|
|
0
125,000
|
|
|
0
|
|
$0.50
$0.65
|
|
|
07/2016
03/2017
|
|
|
|
|
|
|
Stephen
Akerfeldt
|
|
|
250,000
125,000
125,000
125,000
|
|
0
125,000
125,000
125,000
|
|
|
0
0
0
0
|
|
$0.50
$0.65
$0.65
$0.85
|
|
|
09/2016
03/2017
06/2017
12/2017
|
|
|
|
|
|
|
Donald
Heimler
|
|
|
250,000
|
|
0
|
|
|
0
|
|
$0.50
|
|
|
01/2017
|
|
|
|
|
|
|
Fraser
Berrill
|
|
|
125,000
125,000
|
|
125,000
125,000
|
|
|
0
|
|
$0.65
|
|
|
03/2017
06/2017
|
|
|
|
|
|
|
Kevin
Bullock
|
|
|
125,000
|
|
125,000
|
|
|
0
|
|
$0.85
|
|
|
12/2017
|
|
|
|
|
|
Employment
Agreements
On
February 1, 2006, we entered into an employment agreement with A. Scott Dockter
to serve as our chief executive officer for Firstgold, Inc. Pursuant
to the agreement, Mr. Dockter will receive an annual salary of $180,000 and an
automobile expense allowance of $1,000 per month. In addition, Mr.
Dockter will be eligible to participate in any discretionary bonuses or employee
stock option plans which may be adopted in the future. The employment
agreement has a term of three years. On May 8, 2008 Mr. Dockter
entered into a new Employment Agreement as Chief Operating Officer of Firstgold.
Among other things, Mr. Dockter’s annual salary was increased to $225,000. The
new Agreement expires on January 31, 2009 and may be automatically renewed for
successive one year terms.
On
February 1, 2006, we entered into an employment agreement with James W. Kluber
to serve as our chief financial officer of Firstgold, Inc. Pursuant
to the agreement, Mr. Kluber will receive an annual salary of $160,000 and an
office expense allowance of $500 per month. In addition,
Mr. Kluber will be eligible to participate in any future discretionary
bonuses or employee stock option plans which may be adopted in the
future. The employment agreement has a term of three
years.
On
January 4, 2008 we entered into an employment agreement with Steve Akerfeldt as
Chief Executive Officer of Firstgold. Mr. Akerfeldt will receive an
annual salary of $250,000. The Agreement expires on January 31, 2009
and may be automatically renewed for successive one-year terms.
Employee
Pension, Profit Sharing or Other Retirement Plans
We do not have a defined benefit
pension plan or profit sharing plan. However, in April 2008 we
adopted a 401k retirement savings plan. The Plan is available to all Firstgold
employees and is voluntary. The Plan does not provide for any matching or other
contributory obligation by Firstgold. Firstgold will pay the administrative
costs of implementing and operating the Plan.
Compensation
of Directors
The
following table sets forth the compensation of Firstgold’s Directors paid during
fiscal year 2008 for services as a Director.
|
DIRECTOR
COMPENSATION
|
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Total
($)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|
|
|
|
|
|
|
|
Scott
Dockter(1)
|
--
|
|
$94,667
|
|
|
|
$
94,667
|
|
Terrence
Lynch
|
$38,500(2)
|
|
$61,311
|
|
|
|
$
99,811
|
|
Stephen
Akerfeldt
|
$31,000(2)
|
|
$219,936
|
|
|
|
$250,936
|
|
Donald
Heimler
|
$
61,000(2)
|
|
$61,311
|
|
|
|
$122,311
|
|
Fraser
Berrill
|
46,000
|
|
$116,086
|
|
|
|
$162,086
|
|
Kevin
Bullock
|
|
|
$201,164
|
|
|
|
$201,164
|
|
(1)
|
Employees
are not separately compensated as a
Director
|
|
(2)
|
Outside
directors receive annual compensation of $10,000 per year and $1,500 for
each Board and/or Committee meeting
attended.
|
Limitation
of Liability and Indemnification Matters
Firstgold’s
bylaws provide that it will indemnify its officers and directors, employees and
agents and former officers, directors, employees and agents unless their conduct
is finally adjudged as grossly negligent or to be willful
misconduct. This indemnification includes expenses (including
attorneys’ fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by these individuals in connection with such action, suit,
or proceeding, including any appeal thereof, subject to the qualifications
contained in Delaware law as it now exists. Expenses (including
attorneys’ fees) incurred in defending a civil or criminal action, suit, or
proceeding will be paid by Firstgold in advance of the final disposition of such
action, suit, or proceeding upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he or she is entitled to be indemnified by
Firstgold as authorized in the bylaws. This indemnification will
continue as to a person who has ceased to be a director, officer, employee or
agent, and will benefit their heirs, executors, and
administrators. These indemnification rights are not deemed exclusive
of any other rights to which any such person may otherwise be entitled apart
from the bylaws. Delaware law generally provides that a corporation
shall have the power to indemnify persons if they acted in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the conduct was unlawful. In the event
any such person is judged liable for negligence or misconduct, this
indemnification will apply only if approved by the court in which the action was
pending. Any other indemnification shall be made only after the
determination by Firstgold’s Board of Directors (excluding any directors who
were party to such action), by independent legal counsel in a written opinion,
or by a majority vote of stockholders (excluding any stockholders who were
parties to such action) to provide such indemnification. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 (the
“1933Act”) may be permitted to directors, officers and controlling persons of
Firstgold pursuant to the foregoing provisions, or otherwise, Firstgold has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, enforceable.
The
following table sets forth the number of shares of Firstgold’s Common Stock
beneficially owned as of May 1, 2008 by, (i) each executive officer and director
of Firstgold; (ii) all executive officers and directors of Firstgold as a group;
and (iii) owners of more than 5% of Firstgold’s Common Stock.
|
Name
and Address of Beneficial Owner
|
Position
|
Number
of Shares Beneficially Owned
|
Percent
|
|
Officers
and Directors
|
|
|
|
|
A.
Scott Dockter
3108
Ponte Morino Drive, Suite 210
Sacramento,
CA 95814
|
COO
|
16,424,487(1)
|
13%
|
|
|
|
|
|
|
James
Kluber
169
Elliott Road
Centerville,
MA 02632
|
CFO,
Executive Vice President, and Secretary
|
2,992,091(2)
|
2.5%
|
|
|
|
|
|
|
Terrence
Lynch
1130
Morrison Heights
Oakville,
Ontario Canada L6J 4J1
|
Director
|
471,000(3)
|
*%
|
|
|
|
|
|
|
Stephen
Akerfeldt
93
Sheppard Avenue East
North
York, Ontario, Canada M2N3A3
|
CEO
& Chairman
|
906,667(4)
|
1%
|
|
|
|
|
|
|
Donald
Heimler
75
Airdrie Road
Toronto,
Ontario, Canada
M4G
1M1
|
Director
|
672,500(5)
|
1%
|
| |
|
|
|
|
Fraser
Berrill
3672
County Road #8
Picton,
Ontario, Canada
K0K
2T0
|
Director
|
635,000(6)
|
1%
|
|
Name
and Address of Beneficial Owner
|
Position
|
Number
of Shares Beneficially Owned
|
Percent
|
|
Officers
and Directors
|
|
|
|
| |
|
|
|
|
Kevin
Bullock
36
Emeline Circle
Markham,
Ontario Canada
L3P4G4
|
Director
|
250,000(7)
|
*%
|
| |
|
|
|
|
All
officers and directors as a group (6 individuals)
|
|
22,351,745
|
18.2%
|
|
|
|
|
|
|
Stockholders
owning 5% or more
|
|
|
|
|
|
|
|
|
|
1346049
Ontario LTD
22
St. Clair Avenue East
18th
Floor
Toronto,
Ontario, Canada M4T 2S3
|
|
13,332,132
(8)
|
11%
|
*
Represents less than 1%.
|
|
(1)
|
Amount
includes 900,000 shares owned by ASDi LLC, 6,401,946 shares issuable under
stock warrants and options exercisable within 60 days of May 1, 2008 and
2,500,000 warrants held by ASDi LLC (of which Mr. Dockter is the Manager
Member) exercisable within 60 days of May 1, 2008. Does not include
375,000 unvested options.
|
|
|
(2)
|
Amount
includes 1,595,007 shares issuable under stock warrants and options
exercisable within 60 days of April 18, 2008. Does not include
200,000 unvested options.
|
|
|
(3)
|
Amount includes 750,000 of shares
issuable under options granted to Mr. Lynch since he has been a director
of Firstgold exercisable within 60 days of May 1, 2008. Amount also
includes 96,000 shares of common stock held jointly with Mr. Lynch’s wife.
Does not include 125,000 unvested
options.
|
|
|
(4)
|
Amount
includes 1,000,000 shares issuable under options to purchase 1,000,000
shares granted during the time the person has been a director of
Firstgold. Amount includes 55,000 shares issuable under stock
warrants exercisable within 60 days of May 1, 2008. Does not include
375,000 unvested options.
|
|
|
(5)
|
Amount
includes 500,000 shares issuable under options to purchase 500,000 shares
granted during the time the person has been a director of
Firstgold. Amount also includes 82,500 shares issuable under
stock warrants exercisable within 60 days of May 1, 2008. Does not include
125,000 unvested options.
|
|
|
(6)
|
Amount
includes 500,000 shares issuable under options to purchase 500,000 shares
granted during the time the person became a director of Firstgold. Amount
also includes 150,000 shares issuable under stock warrants exercisable
within 60 days of May 1, 2008. Does not include 125,000 unvested
options.
|
|
|
(7)
|
Amount includes 250,000 shares
issuable under options to purchase 500,000 shares granted at the time the
person became a director of Firstgold. 50% of the options are
exercisable immediately while the balance vests on the first anniversary
date. Does not include 125,000 unvested
options.
|
|
|
(8)
|
Amount
includes 4,444,044 shares issuable under stock warrants exercisable within
60 days of May 1, 2008. The 1346049 Ontario LTD holdings
include stock and warrants held by Trapeze Capital Corp. and Trapeze Asset
Management Inc. The responsible executive officer for each entity is
Randall Abramson.
|
As a
condition to listing the Firstgold shares on the TSX, Mr. Dockter was required
to place all shares of Firstgold stock beneficially owned by him into a Voting
Trust and Escrow held by Equity Transfer & Trust Company of Toronto, Canada.
Pursuant to the Voting Trust and Escrow Agreement dated May 8, 2008, Mr. Dockter
will be allowed to vote his shares representing no more than 9.9% of the votes
eligible to be cast on any matter subject to stockholder approval. The Agreement
also limits Mr. Dockter’s ability to acquire additional Firstgold stock in the
open marked however he is permitted to exercise warrants owned at the time the
Agreement was entered into and stock options currently owned or granted in the
future pursuant to the Firstgold Stock Option Plan. The Agreement has a term of
three years.
On
January 25, 2006, Firstgold entered into a joint venture with ASDi, LLC to
explore various Nevada mining properties. ASDi LLC is owned and managed by A.
Scott Dockter, the then President and CEO of Firstgold. The joint
venture was to be operated through a newly formed Nevada limited liability
company called Crescent Red Caps, LLC. The terms of the Operating
Agreement provide for ASDi LLC to contribute the leases covering two mining
properties located in Nevada in exchange for Firstgold issuing 2.5 million
shares of its Common Stock and warrants to purchase 2.5 million shares of
Firstgold Common Stock at an exercise price of $0.40 per share for a term of
three years to ASDi, LLC. Firstgold initially owned a 22.22% interest
in the Crescent Red Caps LLC and ASDi, LLC held a 77.78% interest. By
expending up to $1,350,000 on each project over the next three years, Firstgold
could have increased its interest in the Crescent Red Caps LLC to
66.66%. Thereafter, Firstgold had the right to purchase the remaining
interest in the Crescent Red Caps LLC held by ASDi, LLC at a price to be
determined by the results of the exploration work
conducted. Firstgold was the Manager of the Crescent Red Caps
LLC. Due to the April 4, 2008 settlement of litigation regarding
these Nevada mining properties, the leases held by ASDi LLC have been
relinquished back to the property owners and the joint venture
terminated. In addition to the shares and warrants previously issued
to ASDi LLC, Firstgold paid approximately $1,100,000 in litigation expenses
representing all of the litigation costs relating to these properties and paid
$150,000 in final settlement of the litigation.
On
December 1, 2006, Firstgold entered into an Aircraft Time Sharing Agreement (the
“Agreement”) with its CEO and President A. Scott Dockter. Pursuant to
the Agreement, Mr. Dockter will make his private airplane available for use by
Firstgold at a rental rate of $200 per hour plus designated
expenses. The Agreement has a term of 10 years. Firstgold
made an advance payment under the Agreement of $120,000 on December 9, 2006. As
of January 31, 2008 Firstgold had utilized $6,360 of the advance payment in
plane usage. The rental rate being charged is deemed to be
significantly less then the rates obtainable from an unaffiliated third
party. The Agreement and advance payment were approved by the
Firstgold Board with Mr. Dockter abstaining.
In April
2007, Kingsmill Capital Partners assisted Firstgold in a private placement which
was conducted in Canada and raised gross proceeds of $2,552,900. For
Kingsmill’s participation as a selling agent in the private placement, it
received selling commissions of $178,703. Terrence Lynch, a director
of Firstgold, is an officer of Kingsmill but did not receive any compensation as
such from this completed Firstgold private placement. However, CBKT
Media is Mr. Lynch’s family owned entity which in turn owns a 25% interest in
Kingsmill. Consequently, CBKT Media may receive some portion of the
selling commissions paid by Firstgold to the extent net profits of Kingsmill are
distributed to its partners. The amount of any such distribution
cannot be determined at this time, but is expected to be less than
$45,000.
Should a
transaction, proposed transaction, or series of transactions involve one of our
officers or directors or a related entity or an affiliate of a related entity,
or holders of stock representing 5% or more of the voting power (a “related
entity”) of our then outstanding voting stock, the transactions must be approved
by the unanimous consent of our board of directors. In the event a
member of the board of directors is a related party, that member will abstain
from the vote
We are
authorized to issue 250,000,000 shares of Common Stock, $.001 par value per
share. We are not authorized to issue any preferred stock
currently. We had 130,717,460 shares of our Common Stock and no
shares of preferred stock outstanding as of May 1, 2008.
Common
Stock
The
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets or funds legally available for the payment of dividends at such
times and in such amounts as the board from time to time may determine.
The Common Stock is not entitled to pre-emptive rights and is not subject
to conversion or redemption. Upon liquidation, dissolution or winding up
of our business, the assets legally available for distribution to stockholders
are distributable ratably among the holders of the Common Stock after payment of
liquidation preferences, if any, on any outstanding preferred or Common Stock or
other claims of creditors. Each outstanding share of Common Stock is duly
and validly issued, fully paid and non-assessable.
The
holders of Firstgold Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of Firstgold stockholders. Under
certain circumstances, California law permits the holders of Firstgold Common
Stock to assert their right to cumulate their votes for the election of
directors, in which case holders of less than a majority of the outstanding
shares of Firstgold Common Stock could elect one or more of Firstgold’s
directors. Holders of Firstgold Common Stock have no preemptive, subscription,
or redemption rights.
Securities
Convertible into Common Stock
Firstgold
issued convertible debentures, in the aggregate principal amount of $3,650,000
and bearing interest at 8% per annum during 2007 (the “2007
Debentures”). Each 2007 Debenture has a three (3) year term from the
date of issue unless they are converted into shares of Firstgold Common Stock or
are repaid prior to the expiration dates. The conversion rate was
adjustable and at any conversion date, would be the lower of $0.45 per share or
95% of the Market Conversion Price. However $3,000,000 of 2007
Debentures has been converted at $0.45 with the remaining Debentures all
convertible at $0.45. During 2008 Firstgold has issued one debenture
in the aggregate principal amount of $1,100,000 and bearing interest at 10% per
annum (the “May 08 Debenture”). The May 08 Debenture has a nine (9)
month term from the date of issue, unless it is converted into shares of
Firstgold Common Stock or repaid prior to the maturity date. The
conversion rate is $0.80 per share. As of May 1, 2008 only $1,750,000
in principal amount of Debentures remained outstanding. Accrued interest may
also be converted into shares of Firstgold Common Stock at the respective
conversion rates.
Warrants
to Purchase Common Stock
As of May
1, 2008, Firstgold had 47,545,756 warrants outstanding issued in conjunction
with various financing transactions. The warrants have exercise terms
of 18-months to five years and are exercisable at prices ranging from $0.15 to
$1.00 per share.
Transfer
Agent
Transfer
Online, Inc., Portland Oregon, serves as a transfer agent for the shares of
Firstgold Common Stock.
The table
below lists the selling stockholders and other information regarding the
beneficial ownership of the Common Stock by each of the selling
stockholders. The first column lists the name of each selling
stockholder. The second column lists the number of shares of Common
Stock beneficially owned by each selling stockholder as of May 1, 2008. The
third column lists the number of shares of Common Stock that may be resold under
this prospectus. The fourth and fifth columns list the number of shares of
Common Stock owned and the percentage of Common Stock owned after the resale of
the Common Stock registered under this prospectus. Other than A.
Scott Dockter, no selling stockholder has, or has had within the past three
years, any position, office, or other material relationship with Firstgold other
than their status of creditors and/or stockholders of Firstgold. All
of the shares being registered represent shares underlying convertible
debentures or warrants which were sold to a small number of investors pursuant
to the private placement exemption provided by Sections 4(2) or Section 4(6) of
the Securities Act of 1933 or sold outside the United States pursuant to
Regulation S under the Securities Act of 1933. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission, and includes voting and investment power with respect to such
shares. Shares of Common Stock issuable upon conversion of a convertible
debenture and shares of Common Stock subject to options or warrants that are
currently exercisable or exercisable within 60 days after May 1, 2008 are deemed
to be beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any other
stockholder.
|
|
|
Common Shares
|
|
Common Shares
|
|
Common Shares
|
|
|
Beneficially Owned
|
Offered
by this
|
Beneficially
Owned
|
|
Name
of Selling Stockholder
|
Prior
to Offering
|
Prospectus
|
After
Offering
|
|
|
|
|
|
Number
|
|
Percentage
|
|
Samuel
Stern
269
Kingsdale Avenue
Toronto,
Ontario M2N 3X5
|
|
4,063,500(1)
|
|
1,125,000
|
|
2,938,500
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
Finance
500, Inc.
19762
Macarthur Blvd. #200
Irvine,
CA 92612
Attn:
Robert Richards, Principal
|
|
250,000
|
|
250,000
|
|
----
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
City
Natural Resources High Yield Trust
|
|
5,000,000(2)
|
|
5,000,000
|
|
----
|
|
*
|
|
A.
Scott Dockter
|
|
16,424,487(3)
|
|
2,000,000
|
|
14,424,487
|
|
11%
|
|
TOTAL
|
|
25,737,987
|
|
8,375,000
|
|
17,362,987
|
|
13.2%
|
|
|
*
Represents holdings of less than one
percent
|
|
(1)
|
Securities
beneficially owned by Samuel Stern represent 2,605,000 shares of Common
Stock and 1,458,500 shares of Common Stock underlying warrants immediately
exercisable.
|
|
(2)
|
Securities
beneficially owned by City Natural Resources High Yield Trust, represent
2,500,000 shares of Common Stock and 2,500,000 shares of Common Stock
underlying warrants immediately exercisable. The address for
City Natural Resources High Yield Trust is Mansfield House, 1 Southhampton
Trust, London, England WC2 ROLR. The Investment Manager of City Natural
Resources is Andrew Ferguson.
|
|
(3)
|
Amount
includes 900,000 shares owned by ASDi LLC, 6,401,946 shares issuable under
stock warrants and options exercisable within 60 days of May 1, 2008 and
2,500,000 warrants held by ASDi LLC (of which Mr. dockter is the Manager
Member) exercisable within 60 days of May 1, 2008. Does not
include 375,000 unvested options. The address for Scott Dockter
is 3108 Ponte Morino Drive, Cameron Park,
CA 95682.
|
Each of
the selling stockholders, and any of their donees, pledgees, transferees or
other successors-in-interest selling shares of Firstgold Common Stock or
interests in shares of Firstgold Common Stock received after the date of this
prospectus from a selling stockholder as a gift, pledge, partnership
distribution or other transfer, may, from time to time, sell, transfer or
otherwise dispose of any or all of their shares of Common Stock or interests in
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These
dispositions may be at fixed prices, at prevailing market prices at the time of
sale, at prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices. A selling
stockholder will act independently of Firstgold in making decisions with respect
to the timing, manner and size of each sale.
Each of
the selling stockholders may use any one or more of the following methods when
selling shares:
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
settlement
of short sales entered into after the date of this
prospectus;
|
|
·
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of
sale;
|
|
·
|
through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
or
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
Broker-dealers
engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or
discounts from the selling stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each selling stockholder does not expect these
commissions and discounts relating to its sales of shares to exceed what are
customary in the types of transactions involved.
In
connection with the sale of our Common Stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume. The selling
stockholders may also sell shares of our Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The
selling stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act of 1933 (the “Securities Act”) in connection with such
sales. In such event, any commissions received by such broker-dealers
or agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities
Act. Discounts, concessions, commissions and similar selling
expenses, if any, that can be attributed to the sale of securities will be paid
by the selling stockholders and/or the purchasers. Each selling
stockholder has informed Firstgold that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.
Firstgold
is required to pay certain fees and expenses incurred by it incident to the
registration of the shares. Firstgold has agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
Because
selling stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. Each
selling stockholder has advised us that they have not entered into any
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the shares. There is no underwriter or
coordinating broker acting in connection with the proposed sale of the shares by
the selling stockholders.
We agreed
to keep this prospectus effective until the earlier of (i) September 26, 2009
(ii) the date on which the shares may be resold by the selling stockholders
pursuant to Rule 144(k) under the Securities Act or any other rule of similar
effect or (iii) all of the shares have been sold pursuant to the prospectus or
Rule 144 under the Securities Act or any other rule of similar
effect. The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), any person engaged in the distribution of the
shares may not simultaneously engage in market making activities with respect to
our Common Stock for a period of two business days prior to the commencement of
the distribution. In addition, the selling stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing of
purchases and sales of shares of our Common Stock by the selling stockholders or
any other person. We will make copies of this prospectus available to
the selling stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the
sale.
Our
Bylaws, subject to the provisions of Delaware Corporation Law, contain
provisions which allow the corporation to indemnify any person against
liabilities and other expenses incurred as the result of defending or
administering any pending or anticipated legal issue in connection with service
to us if it is determined that person acted in good faith and in a manner which
he reasonably believed was in the best interest of the corporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons,
we have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
LEGAL
MATTERS
The
validity of the shares offered under this registration statement is being passed
upon by Cota Duncan & Cole, Roseville, California.
EXPERTS
Our
financial statements for the fiscal year ended January 31, 2007 included in this
prospectus have been so included in reliance on the report of Hunter, Flemmer
Renfro & Whitaker, LLP independent registered public accounting firm, given
on that firm's authority as experts in auditing and accounting.
Our
financial statements for the fiscal year ended January 31, 2008 included in this
prospectus have been so included in reliance on the report of Hunter &
Renfro LLP independent registered public accounting firm, given on that firm's
authority as experts in auditing and accounting.
CHANGE
OF INDEPENDENT ACCOUNTANTS
On
December 16, 2006, we received notification from our then current independent
registered public accountants, Singer Lewak Greenbaum & Goldstein LLP
(“SLGG”), Certified Public Accountants, that SLGG was resigning as our
independent public accountants. On January 5, 2007, Firstgold’s Audit
Committee took action to appoint the accounting firm of Hunter Flemmer Renfro
& Whitaker LLP (“HFRW”) as our new independent accountants and HFRW accepted
the appointment on January 16, 2007. As of June 1, 2007, HFRW became
Hunter & Renfro LLP (“H&R”) with Randy Renfro continuing as Firstgold’s
principal accountant. H&R”S address is 455 Capitol Mall, Suite
235, Sacramento, CA 95814.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed with the SEC a registration statement on Form S-1 (File Number 333-132218)
under the Securities Act of 1933 regarding the shares of Common Stock offered
hereby. This prospectus does not contain all of the information found
in the registration statement, portions of which are omitted as permitted under
the rules and regulations of the SEC. For further information
regarding us and the securities offered by this prospectus, please refer to the
registration statement, including its exhibits and
schedules. Statements made in this prospectus concerning the contents
of any contract, agreement or other document filed as an exhibit to the
registration statement are summaries of the terms of those
documents. The registration statement of which this prospectus forms
a part, including its exhibits and schedules, may be inspected and copied at the
public reference room maintained by the SEC at 100 F Street, N.E., Washington,
D.C. 20549. You may obtain information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC
maintains a web site on the Internet at www.sec.gov. Our registration
statement and other information that we file with the SEC are available at the
SEC’s website.
We intend
to make available to our stockholders annual reports (on Form 10-KSB) containing
our audited consolidated financial statements and make available quarterly
reports (on Form 10-QSB) containing our unaudited interim consolidated financial
information for the first three fiscal quarters of each of our fiscal
years.
If you
are a stockholder, you may request a copy of these filings at no cost by
contacting us at:
Firstgold
Corp.
3108
Ponte Morino Drive, Suite 210
Cameron
Park, CA 95682
(530)
677-5974
FINANCIAL
STATEMENTS
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors and Shareholders
Firstgold
Corp.
We have
audited the balance sheets of Firstgold Corp. (a development stage company) (the
“Company”) as of January 31, 20078 and 2007, and the related statements of
operations, comprehensive loss, shareholders' deficit, and cash flows for each
of the two years in the period ended January 31, 2008 and the period from
January 1, 1995 to January 31, 2008. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Firstgold Corp. as of January 31,
2008, and the results of its operations and its cash flows for each of the two
years in the period ended January 31, 2008, and the period from January 1, 1995
to January 31, 2008 in conformity with accounting principles generally accepted
in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has incurred a net loss of $7,632,537 and had negative
cash flow from operations of $4,832,217. In addition, the Company had an
accumulated deficit of $31,391,142 and a shareholders’ surplus of $5,174,290 at
January 31, 2008. These factors, among others, as discussed in Note 2 to the
financial statements, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
HUNTER
& RENFRO, LLP
Sacramento,
California
May 15,
2008
FIRSTGOLD
CORP.
(A
DEVELOPMENT STAGE COMPANY)
|
|
|
January
31,
|
|
|
January
31,
|
|
|
|
|
2008
|
|
|
2007
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$ |
383,223 |
|
|
$ |
150,647 |
|
|
Receivables
|
|
|
196,811 |
|
|
|
114,737 |
|
|
Deposits
|
|
|
295,281 |
|
|
|
7,368 |
|
|
Prepaid
expense
|
|
|
250,298 |
|
|
|
140,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,125,613 |
|
|
|
412,752 |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net of accumulated depreciation
of $205,084 and $20,850 at January 31, 2008 and
2007, respectively
|
|
|
8,438,997 |
|
|
|
928,029 |
|
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
674,850 |
|
|
|
250,981 |
|
|
Deferred
reclamation costs
|
|
|
680,326 |
|
|
|
641,026 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
other assets
|
|
|
1,355,176 |
|
|
|
892,007 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
10,919,786 |
|
|
$ |
2,232,788 |
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
Current
liabilities
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
2,730,596 |
|
|
$ |
598,788 |
|
|
Accrued
expenses
|
|
|
538,987 |
|
|
|
1,198,174 |
|
|
Notes
payable
|
|
|
356,417 |
|
|
|
130,249 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
3,626,000 |
|
|
|
1,927,211 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities
|
|
|
|
|
|
|
|
|
|
Convertible
debenture and related derivative liabilities
|
|
|
|
|
|
|
|
|
|
net
of unamortized discount of $0 and $402,135 and deferred
|
|
|
|
|
|
|
|
|
|
financing
costs of $148,480 and $1,382,642 at
|
|
|
|
|
|
|
|
|
|
January
31, 2008 and 2007,respectively
|
|
|
501,520 |
|
|
|
3,110,344 |
|
|
Accrued
reclamation costs
|
|
|
680,326 |
|
|
|
641,026 |
|
|
Deferred
revenue
|
|
|
937,650 |
|
|
|
800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
long-term liabilities
|
|
|
2,119,496 |
|
|
|
4,551,370 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
5,745,496 |
|
|
|
6,478,581 |
|
F -
2
The accompanying notes are an integral part of these financial
statements
FIRSTGOLD
CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEET
| |
|
January
31,
|
|
|
January 31,
|
|
| |
|
2008
|
|
|
2007
|
|
| |
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
surplus (deficit)
|
|
|
|
|
|
|
|
Common
stock, $0.001 par value
|
|
|
|
|
|
|
|
250,000,000
shares authorized at January 31, 2008 and 2007,
respectively
|
|
|
|
|
|
|
|
117,432,317
and 77,839,601 shares issued and outstanding at
|
|
|
|
|
|
|
|
January
31, 2008 and 2007, respectively
|
|
|
117,432 |
|
|
|
77,839 |
|
|
Additional
paid in capital
|
|
|
36,447,996 |
|
|
|
19,434,973 |
|
|
Deficit
accumulated during the exploration stage
|
|
|
(31,391,142 |
) |
|
|
(23,758,605 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
shareholders' surplus (deficit)
|
|
|
5,174,290 |
|
|
|
(4,245,793 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders' surplus (deficit)
|
|
$ |
10,919,786 |
|
|
$ |
2,232,788 |
|
F -
3
The accompanying notes are an integral part of these financial
statements
FIRSTGOLD
CORP.
(A
DEVELOPMENT STAGE COMPANY)
For
the Years Ended January 31, 2008 and 2007
| |
|
|
|
|
|
|
For
the Period
|
|
| |
|
|
For
the Years Ended
|
|
|
|
From
January 1,
|
|
| |
|
|
January 31,
|
|
|
|
1995
to January
|
|
| |
|
|
2008
|
|
|
|
2007
|
|
|
|
31, 2008
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
$ |
551,279 |
|
|
$ |
- |
|
|
$ |
551,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
and maintenance costs
|
|
|
(2,195,024 |
) |
|
|
(1,591,497 |
) |
|
|
(4,089,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
loss
|
|
|
(1,643,745 |
) |
|
|
(1,591,497 |
) |
|
|
(3,538,073 |
) |
|
Operating
expenses
|
|
|
(5,715,150 |
) |
|
|
(1,955,816 |
) |
|
|
(21,582,974 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(7,358,895 |
) |
|
|
(3,547,316 |
) |
|
|
(25,121,050 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
191,919 |
|
|
|
14,065 |
|
|
|
278,671 |
|
|
Dividend
income
|
|
|
|
|
|
|
|
|
|
|
30,188 |
|
|
Other
income
|
|
|
|
|
|
|
|
|
|
|
6,565 |
|
|
Gain
on settlement of obligations
|
|
|
1,107,875 |
|
|
|
18,649 |
|
|
|
1,126,524 |
|
|
Adjustments
to fair value of derivatives
|
|
|
(703,992 |
) |
|
|
(616,493 |
) |
|
|
(1,357,903 |
) |
|
Interest
expense
|
|
|
(869,444 |
) |
|
|
(596,975 |
) |
|
|
(3,875,456 |
) |
|
Loss
from joint venture
|
|
|
|
|
|
|
|
|
|
|
(859,522 |
) |
|
Loss
on sale of marketable securities
|
|
|
|
|
|
|
|
|
|
|
(281,063 |
) |