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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-K

 

 

[Mark One]

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Fiscal Year Ended December 31, 2011

 

OR

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File No. 000-53585

 

RAPTOR RESOURCES HOLDINGS INC. 

 (Exact name of registrant as specified in its charter)

 

 

 

Nevada   65-0813656
(State of jurisdiction of   (IRS Employer
incorporation or organization)   Identification No.)

 

41 Howe Lane    
Freehold, New Jersey    07728
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (732) 252-5146

 

 

 

Securities Registered Pursuant to Section 12(b) of the Act.

 

Common Stock, par value $0.001 per share   N/A
(Title of each class)   (Name of exchange on which registered)

 

Securities registered pursuant to Section 12(g) of the Act: None

 

 

 

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

 

Indicate by check mark if registrant is not required to file reports pursuant to Rule 13 or Section 15(d) of the Act.    Yes  ¨    No  x

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ¨

 

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):

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer £  (Do not check if a smaller reporting company) Smaller reporting company x

 

As of April 12, 2011, the aggregate market value of all voting and non-voting common equity held by non-affiliates was $4,678,201.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

As of April 12, 2012, 382,306,456 shares of common stock, $0.001 par value per share, were issued and outstanding.

 

Documents Incorporated by Reference: None

 

 
 

 

RAPTOR RESOURCES HOLDINGS INC.

10-K ANNUAL REPORT

For the Fiscal Year Ended December 31, 2011

 

TABLE OF CONTENTS

 

        Page
         
PART I        
Item 1.   Business   3
Item 1AA.   Risk Factors   11
Item 1B   Unresolved Staff Comments   19
Item 2.   Properties   19
Item 3.   Legal Proceedings   19
Item 4.   Mine Safety Disclosures   19
PART II        
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   19
Item 6.   Selected Financial Data   20
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   21
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk   26
Item 8.   Financial Statements and Supplementary Data   26
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   27
Item 9A.   Controls and Procedures   27
Item 9B.   Other Information   29
PART III        
Item 10.   Directors and Executive Officers of the Registrant   29
Item 11.   Executive Compensation   31
Item 12.   Security Ownership of Certain Beneficial Owners and Management   32
Item 13.   Certain Relationships and Related Transactions   32
Item 14.   Principal Accounting Fees and Services   32
PART IV        
Item 15.   Exhibits, Financial Statement Schedules   33
EX-23.1 Consent of Independent Registered Public Accounting Firm    
EX-31.1 Section 302 Certification of CEO    
EX-31.2 Section 302 Certification of CFO    
EX-32.1 Section 906 Certification of CEO    
EX-32.2 Section 906 Certification of CFO    

 

2
 

 

PART I

 

You are urged to read this Annual Report on Form 10-K (“Form 10-K”) in its entirety. This Form 10-K contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from the projected results discussed in these forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed below and in Item 1A, “Risk Factors.” “We,” “our,” “ours,” “us,” or “the Company” when used herein, refers to Raptor Resources Holdings Inc., a Nevada corporation.

 

Forward-Looking Statements

 

Certain statements made in this Form 10-K and the information incorporated into this Form 10-K by reference contain “forward-looking statements,” including statements regarding our expectations, beliefs, plans or objectives for future operations and anticipated results of operations. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words, “believes,” “estimates,” “plans,” “expects,” “may” and similar expressions are intended to identify forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

 

Our current plans and objectives are based on assumptions relating to the development of our business. Although we believe that our assumptions are reasonable, any of our assumptions could prove inaccurate. In light of the significant uncertainties inherent in the forward-looking statements made herein, which reflect our views only as of the date of this Form 10-K, you should not place undue reliance upon such statements. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Item 1. Business

 

Overview

 

We were incorporated in Nevada in February 1998 under the name Beekman Enterprises, Inc. In February 2001, we changed our name to Virtual Internet Communications, Inc., and in April 2002, we changed our name to Hypervelocity, Inc. Until September 2002, Hypervelocity was a consulting firm specializing in voice, data and video communications convergence, network design and integration. In September 2002, Hypervelocity dissolved its operating subsidiary and assigned its assets to an individual holding a note payable that was secured by the assets. From September 2002 until November 2004, Hypervelocity was non-trading public shell company, with no operations. In November 2004, we acquired Lantis Laser, Inc., a New Jersey corporation formed in January 1998 (“Lantis New Jersey”), in a reverse-triangular merger and succeeded to its business as our sole line of business. In connection with the merger, we changed our name to “Lantis Laser Inc.” Lantis Laser Inc. was formed to commercialize the application of novel technologies in the dental industry.

 

On April 22, 2011, through a reverse triangular merger, we acquired both TAG Minerals Inc. ("TAG") and its 49%-owned operating subsidiary, TAG Minerals Zimbabwe (Private) Limited. TAG became our second wholly-owned subsidiary. We issued 50% of our outstanding shares at the date of the merger to TAG's shareholders and our existing directors resigned and become the directors of Lantis New Jersey. Lantis New Jersey continues our dental technology business. We are now focused on the mining of gold and other industrial minerals.

 

3
 

 

Through our operating affiliate, TAG Minerals Zimbabwe (PVT) Ltd. ("TAG-Z"), we entered into a Sale of Shares Agreement dated September 19, 2011, pursuant to which TAG-Z, for a total cash payment of $433,000, to be paid in installments through November 30, 2012, purchased 100% of the mineral assets of Dodge mine blocks 1-6, located in Zimbabwe. The transfer of all six blocks has been completed. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of the Dodge mine blocks. We believe that in light of the significant recent oil and gas discoveries off the coast of neighboring Mozambique and new drilling contracts expected in the Middle East, Central Africa, South Africa and Western Australia the high grade barite alone, which serves as a weighting agent for drilling fluids in oil and gas drilling applications, will be of significant future cash value to us. Along with the purchase of Dodge mine blocks 1-6 TAG-Z received 50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited ("Chiroswa"), an inactive company originally formed to conduct mining operations on the Dodge mine. Since Chiroswa is not an operating company TAG-Z has canceled the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.

 

On December 5, 2011, we entered into a Stock Purchase Agreement, dated effective as of December 2, 2011 (“Stock Purchase Agreement”), with Raptor Networks Technology, Inc. (RPTN.QB) (“Raptor”) pursuant to which we issued 5,000,000 restricted shares of our common stock to the holder of certain Raptor convertible notes, California Capital Equity, LLC, and we received 109,928,311 restricted shares of Raptor's common stock or 55% of its issued and outstanding shares of common stock. We have filed a Schedule 14C on behalf of Raptor stating our intention to effect a 1:10 reverse stock split, own 80% of the fully diluted shares of Raptor's common stock on a post-split basis, change the name of Raptor to Mabwe Minerals Inc. and have Raptor engage in the exploration and mining of gold and other industrial minerals and cease any involvement with the historical business of Raptor. Raptor is a majority owned subsidiary of Lantis.

 

On March 5, 2012 we amended our Articles of Incorporation to change our name to Raptor Resources Holdings Inc. to. more clearly reflect our new focus on the mining of gold and other industrial minerals and to help build a new brand identity.

 

Lantis Laser, Inc.

 

Our first product we are developing and plan to market, after we obtain FDA clearance, is a diagnostic dental imaging device based on a light-based technology known as optical coherence tomography or OCT System. We have the exclusive rights to OCT for diagnostic applications in dentistry in terms of our license agreement with Lawrence Livermore National Laboratories (“Livermore”). We had license agreement with LightLab Imaging for a portfolio of enabling patents relating to the scanning of tissue. This license terminated in July 2010 and LightLab did not want to renew it at that time, as the company had recently been acquired. They indicate that this could be reviewed once Lantis was closer to commercialization of its OCT System for dental application. We also have an exclusive license with University of Florida for a patented technology relating to the probe scanner which we may deploy in our OCT System. In July 2008 we signed an exclusive agreement with The Regents of California for a patent pending technology called “Nearinfrared Transillumination for the Detection of Tooth Decay” or NIR System. This technology is synergistic with OCT as both modalities use the same light source but provide different views of oral structures. We expect to integrate NIR with our OCT System in the form of a chairside platform and also sell it separately as a standalone diagnostic imaging aid, subject to obtaining sufficient capital to complete development of OCT and NIR. Before we can market these devices we would need to obtain FDA approval.

 

In June 2008, we entered into a strategic agreement with AXSUN Technologies, Inc. (“AXSUN”) whereby AXSUN would develop and supply the OCT Engine, based on their advanced and patented technology, for our OCT System. Due to lack of funding, in April 2009 we defaulted on a payment due in terms of the development agreement and were formally advised in writing on March 17, 2010 of termination of the agreement. We have both agreed to enter into a new agreement once the Company obtains sufficient capital to complete the development program and is in a position to enter into a new supply agreement.

 

In December 2007, we entered into a joint venture with Laser Energetics, Inc., an Oklahoma corporation (“LEI”), pursuant to which we and LEI formed HyGeniLase, Inc., a Delaware corporation (“HyGeniLase”), with each party owning 50% of HyGeniLase. HyGeniLase was formed to develop, manufacture, market, sell and distribute to the dental markets worldwide a laser instrument, based on LEI alexandrite laser technology, for the treatment and removal of tartar and deposits from teeth. As of December 31, 2009, the company has delayed the joint venture project with LEI due to failure on LEI’s part to comply with their end of the agreement as well as funding. As a result, the company reserved the remaining $81,332 of the investment on their books.

 

Our S-1 filing for our stock registration was deemed effective on February 17, 2009. In 2009 we moved our stock quotation from the Pink Sheets to the Bulletin Board and since then we have been a fully reporting company.

 

4
 

 

We defaulted in May 2009 and May 2010 on the interest payment due to noteholders on the 5% convertible note which was issued in 2007. In terms of the note, in the event of default the interest increased from 5% to 10%. Provision for the interest payable to December 31, 2010 amounting to $155,148 has been included in the financial statements.

 

As a result of the company’s failure to timely pay the interest, the convertible notes are in technical default. Therefore, in 2009 the company has reclassified the debt to current liabilities. In an effort to reduce the liabilities of the company, on July 1, 2010 the company offered noteholders the opportunity to convert their notes to common stock at $0.05 per share including any and all outstanding interest that has been accrued from the original $0.15 conversion price. In addition, the company offered to reset the exercise price of the warrants that were issued with the Notes to $0.075 from $0.25 and extend the warrants for a further three years from the original date of issue for all warrant holders. Through December 31, 2010, convertible notes of $1,942,000, including $386,687 of accrued interest was converted to 39,173,333 shares of common stock. The outstanding principal balance of unconverted notes as at December 31, 2010 is $459,500.

 

We have been and continue to seek for capital or a strategic partner to enable us to continue with the development of our OCT and NIR Beta Systems to move towards commercialization. At this time we have no commitments to provide the company with needed capital.

 

Market Opportunity for Lantis Laser, Inc.

 

We believe our OCT System, and NIR System, when developed, will enhance the diagnostic capability of dentists to detect early, later stage and hidden disease in oral tissue. We believe that the enhanced diagnostic ability of OCT and NIR will be welcomed by dentists and will help early diagnosis capabilities catch up with early stage dental disease treatment modalities. Management believes that it’s OCT Dental Imaging System, if adopted, will have a significant and positive impact on the practice of dentistry.

 

Management’s market analysis indicates that there are approximately 140,000 practicing dentists in 100,000 offices and 380,000 treatment rooms, or chairs, in the United States and at least 100,000 offices in Europe, Japan and other first world countries with an estimated 200,000 treatment rooms. Based on the assumption that each office would purchase one OCT System, management estimates the world market at 200,000 OCT Systems. The potential market for NIR is at least of equal size based on the assumption that each office would purchase at least one NIR System.

 

Management expects that initially early adopters will form the majority of purchasers but that once the benefits of the OCT and NIR diagnostic systems become evident, we believe that a larger part of the dental professional body will embrace these safe and effective modalities.

 

About OCT and NIR Technology

 

OCT is a new intraoral, laser-light based diagnostic imaging technology with an axial resolution of up to 10 times that of conventional x-ray. OCT was invented in the early 1990’s at the Massachusetts Institute of Technology (“MIT”) and has been commercialized by Carl Zeiss Meditec for ophthalmology. LightLab Imaging is commercializing OCT for cardiovascular imaging.

 

In dentistry, it is the first modality capable of imaging both “hard” tissue (teeth) and “soft” tissue (gums). The high-resolution images of dental structures are captured by the dental professional examining a patient’s mouth using a hand-held scanner and the images are displayed on a chairside monitor in real time.

 

According to the ANSI Z136 laser classification, the superluminescent diode (“SLD”) to be used in our imaging Systems is a Class IIIB laser, which is considered harmless for diffuse light, although exposure to a direct beam may damage the retina of the eye. As a precaution, the FDA will require both patients and dental practitioners to wear safety glasses when our OCT System is being used. In addition, dental practitioners will be required to use our OCT System in a controlled area, which generally must be restricted to authorized, trained personnel, and must contain warning signs and comply with certain other precautionary safety requirements.

 

We believe OCT enhanced diagnostic capability has significant benefits for the practice of dentistry by the detection of early, later and hidden oral diseases such as decay and periodontal disease. Early detection of disease will enable non-invasive or minimally intervention treatment to be deployed using an expanding array of techniques to arrest and even reverse disease. Less invasive early stage treatment is less traumatic, less painful and potentially less costly for patients and results in a higher standard of care. More loyal patients result in more regular visits and increase the opportunity for other services, such as tooth bleaching and cosmetic procedures, to be delivered.

 

5
 

 

OCT images can be used chairside to visually demonstrate to patients the need for prescribed treatment. Intraoral cameras are extensively used to show the patient a surface view of a particular problem and OCT can reinforce the diagnosis and treatment plan with a subsurface view of tissue. The OCT System provides an image that can be used for insurance reimbursements when claims are made for treatment of early disease, as early stage decay is not visible on traditional x-ray and there is currently no means of documenting the need for early stage treatment with an easily readable image.

 

NIR Technology was discovered and developed at the University of California (San Francisco) School of Dentistry by doctors Fried and Jones. They discovered that at the same wavelength of light used by OCT, the tooth enamel becomes highly transparent and decay and defects become visible. NIR differs from OCT in that IT captures reflected light whereas NIR captures light that is transmitted through the tooth by using optics opposite or adjacent to the light source to capture and transmit the information to the sensor for display on a chairside computer monitor. This modality is suitable for imaging between the teeth and also the occlusal (biting surfaces) where an estimated 80% of decay occurs and which x-ray cannot image. NIR is synergistic with OCT in that it can be used for screening the teeth and then OCT can provide the dentist with more detailed information on the areas of interest.

 

Our Lantis Laser, Inc. Products

 

The OCT System

 

We plan to make the OCT System available in a self-contained cart configuration that can be moved between rooms. Development has been slowed down in 2009 due to lack of adequate capital. In early 2010 we ceased development due to lack of funds. If we can obtain the required capital to complete our OCT System, we will complete the Beta systems, generate the required data for FDA submission to obtain marketing clearance, and thereafter begin the transition to manufacturing and marketing.

 

We are undertaking development in 3 phases:

 

Phase 1 of the technology deployment commenced with development of the software to enable scanning, capture and storage of images. The first generation demonstration system for bench use was built and operated to expectations. A prototype of the hand-held scanner for operation in the mouth was also designed and built. The Phase 1 Alpha OCT System prototype demonstrated depth penetration and characterization of dental structures.

 

Phase 2 development is in process with major components of the System being redesigned to provide the high scanning speed required in the System, based on Axsun OCT Engine. A significant amount of time and resources was spent in upgrading components to function with the specification of this advanced System as against the earlier time domain system that we initially intended developing. The objective in this phase, if sufficient capital can be found, is to build 5 Beta Systems for clinical use and experience prior to completing the final specification for the pre-production System. These Beta Systems will be used to provide the data needed to support the FDA submission and to obtain clinical feedback for the development of the pre-production System. We have received 3 Beta1 OCT Engines from AXSUN and upon resumption of development a further 5 Beta2 Engines are due to be delivered.

 

Phase 3 development is focusing on finalizing the specification of the pre-production OCT System and is being conducted concurrently with Phase 2 development. The industrial design and documentation commenced in 2008 but was suspended in March 2009 due to lack of funding. The full documentation of the System for manufacturing will be completed in this phase. FDA device regulatory consultants need to be fully engaged to ensure that the System complies with FDA and CE (Europe) regulatory requirements and any other applicable standards and requirements to enable sales, worldwide. Validation of Software and UL testing will be undertaken in this phase.

 

A development facility was established in Pinellas Park, Florida under the direction of Mr. Doug Hamilton, VP Research and Development. As there was no development taking place, the facility was closed in October 2010 and all the equipment and development components were placed in a storage facility in Tampa, Florida. In addition to Hamilton we employed a software programmer until February 2009 when the clinical software was completed. We use specialized outside resources on a development and consulting basis to assist Mr. Hamilton in preparing the components for the OCT System. A functional prototype of the digital board has been completed and a redesign and fabrication is necessary to produce a pre-production board to be used in the Beta Systems.

 

Upon completion of clinically usable Systems, estimated to be up to 12 months after obtaining funding, clinical data will be generated to support an FDA filing. We anticipate obtaining FDA marketing clearance through a 510(k) filing as OCT has previously been cleared for other biomedical applications.,

 

6
 

 

Our projected cost to complete Phase 2 and Phase 3 is $2,000,000 and we anticipate that we can achieve this in an 18-24 month timeframe, once funding is obtained.

 

The NIR System

 

We can only commence development upon adequate funding being available. We have identified a suitable and cost effective sensor technology which we believe can be deployed in the NIR System, however to achieve the product cost objective requires volume purchases of certain key components. We are currently reviewing the price/volume sensitivity of this component to determine how a commercialization program could be effected. The first step will be to undertake a resign and repacking of the camera to adapt to the handpiece we envisage suitable for use in dental application. Development of the NIR System is expected to take up to 24 months at an estimated cost of $2.0 million.

 

Lantis Laser, Inc. Licenses and Patents

 

Under our exclusive agreement with Livermore we have rights to applications and methods, and to make, use and sell products, generally described as OCT, for use in the dental field incorporating technology covered by their respective patents. We licensed a portfolio of seven patents from Livermore. Our licenses from Livermore terminate upon expiration or abandonment of the patents. Livermore can terminate our licenses earlier if we materially breach the license agreement and fail to cure such breach. We paid Livermore an initial license fee of $175,000 and agreed to pay an annual royalty up to 6%. Our minimum royalty payments are $20,000, $20,000, $20,000, $60,000, $100,000 and $250,000 for 2008, 2009, 2010, 2011, 2012 and from 2013 through expiration, respectively. We have paid the license fee due for 2008 and an amendment to the agreement requires us to pay the license fees for 2009 and 2010 by June 30, 2011. Our original license agreement with Livermore required a license fee payment with minimum royalties becoming payable in 2004. The development time took longer than anticipated due to the difficulty in obtaining an OCT engine that could scan at the desired speeds and at a cost that met our objectives. At the end of 2004, Livermore granted us a two-year moratorium on all payments to allow us to continue the commercialization process without undue pressure. By the end of the moratorium in October 2006, we had established a clear path forward and had raised a round of financing. In a meeting with Livermore in November 2006, it was mutually agreed to reset the royalty clock with minimum royalty payments to commence in 2008 instead of 2004, as originally intended. Consequently, the minimum royalty payments under the initial contract were forgiven and a new schedule to pay all other outstanding amounts was agreed upon. We have adhered to this schedule with amendments.

 

Patent Description  Patent No.   Date Issued/
Date of Expiration
         
Method for Detection of Dental Caries and Periodontal Disease Using Optical Imaging   5,570,182   October 29, 1996/
May 27, 2014
         
Dental Optical Coherence Domain Reflectometry Explorer   6,179,611   January 30, 2001/
May 19, 2019
         
Birefringence Insensitive Optical Coherence Domain Reflectometry System   6,385,358   May 7, 2002/
January 7, 2020
         
Optical Coherence Tomography Guided Dental Drill   6,419,484   July 16, 2002/
September 12, 2020
         
OCDR Guided Laser Ablation Device   6,451,009   September 17, 2002/
September 12, 2020
         
Optical Fiber Head for Providing Lateral Viewing   6,466,713   October 15, 2002/
June 18, 2021
Optical Detection of Dental Disease Using Polarized Light   6,522,407   February 18, 2003/
March 18, 2022

 

7
 

 

Our license for LightLab’s portfolio of patents relating to methods for scanning biomedical tissue terminated in July 2010 and LightLab advised us that they did not wish to undertake any further licensing at that time. They indicated that they would review the status regarding licensing as and when we get closer to OCT commercialization. We will also undertake a patent review at the appropriate time to ascertain what licenses might be necessary to market our OCT product.

 

We also have licensed from the University of Florida Research Foundation, Inc. (“UFRF”) Patent No. 6,940,630, entitled “Vertical Displacement Device,” issued September 6, 2005 and expiring April 29, 2024. We have licensed this patent for use in connection with the micromirror component of our products. This license expires when the patent expires or is no longer enforceable. UFRF may terminate the license earlier if we materially breach the agreement and fail to cure the breach, if the first commercial sale of a product developed from the patent does not occur on or before July 31, 2011 (as amended) or if the payment of earned royalties, once begun, ceases for more than five calendar quarters. We paid UFRF an initial license fee of $1,000 and agreed to pay an annual royalty equal to $5.00 per unit. Our minimum royalty payments are $180, $630 and $1,485 for 2008, 2011 and from 2012 through expiration, respectively. We are also responsible for undertaking certain development activities to bring to market a product developed from the patent, and we must provide UFRF periodic written reports of our progress, which we have done.

 

We have entered into a license agreement with The Regents of the University of California for exclusive rights to the patent, if and when issued, for a patent-pending technology known as “Near-infrared Transillumination for the Imaging of Early Dental Decay”. The patent application is currently on appeal with the patent office. Under the license agreement, we are obligated to spend at least $50,000 developing this technology by December 31, 2011 (as amended). We have spent at least this amount in designing and completing the software that would enable scanning, capture, manipulation and saving of the images generated by this modality. If a patent is issued, we anticipate that the earliest we would commence any development activity would be in fiscal 2011 subject to adequate funding being available. Under terms of the agreement, we paid a $10,000 non-refundable license fee with further milestone payments of $15,000 and $25,000 to be paid if and when the patent is issued and when FDA clearance is obtained, respectively. The license bears an annual royalty of 5% on net sales and is subject to minimum earned royalties being payable commencing in 2012, as amended. Minimum royalties in years 2012, 2013, 2014, and 2015 and thereafter are $10,000, $50,000, $100,000, $150,000, and $200,000, respectively.

 

Government Regulation of Lantis Laser, Inc. Products

 

Our proposed products and research and development activities are subject to regulation by numerous governmental authorities, principally, the FDA and corresponding state regulatory agencies. The FDCA, the regulations promulgated thereunder, and other federal and state statutes and regulations, govern, among other things, the preclinical and clinical testing, manufacture, safety, efficacy, labeling, storage, record keeping, advertising and promotion of medical devices and drugs, including our products currently under development. Product development and approval within this regulatory framework may take a number of years and involves the expenditure of substantial resources.

 

Medical devices are classified into three different classes, class I, II and III, on the basis of controls deemed necessary to reasonably ensure the safety and effectiveness of the device. Class I devices are subject to general controls which include labeling, pre-market notification and adherence to FDA’s GMPs and class II devices are subject to general and special controls which include performance standards, post-market surveillance, patient registries, and FDA guidelines. Generally, class III devices are those which must receive pre-market approval by the FDA to ensure their safety and effectiveness and include life-sustaining, life-supporting and implantable devices, or new devices which have been found not to be substantially equivalent to legally marketed devices.

 

Before a new medical device can be marketed, marketing clearance must be obtained through a pre-market notification under Section 510(k) of the FDCA (a “510(k) Notification”) or a pre-market approval (“PMA”) application under Section 515 of the FDCA. A 510(k) Notification will typically be granted by the FDA if it can be established that the device is substantially equivalent to a “predicate device,” which is a legally marketed class I or II device or a pre-amendment class III device (i.e. one that has been marketed since a date prior to May 28, 1976) for which the FDA has not called for PMAs. The FDA has been requiring an increasingly rigorous demonstration of substantial equivalence, and this may include a requirement to submit human clinical trial data. It generally takes three to nine months from the date of a 510(k) Notification to obtain clearance, but it may take longer. The FDA may determine that a medical device is not substantially equivalent to a predicate device, or that additional information is needed before a substantial equivalence determination can be made. A “not substantially equivalent” determination, or a request for additional information, could prevent or delay the market introduction of new products that fall into this category. For any devices that are cleared through the 510(k) Notification process, modifications or enhancements that could significantly affect the safety or effectiveness, or that constitute a major change in the intended use of the device, will require new 510(k) Notifications. We have been working with our FDA consultant to prepare our 510(k) Notification, which we expect to submit in the fourth quarter of 2009.

 

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A PMA application must be filed if a proposed device is not substantially equivalent to a legally marketed class I or class II device, or if it is a pre-amendment class III device for which the FDA has called for PMAs. A PMA application must be supported by valid scientific evidence to demonstrate the safety and effectiveness of the device, typically including the results of clinical trials, bench tests, and laboratory and animal studies. The PMA must also contain a complete description of the device and its components, and a detailed description of the methods, facilities and controls used to manufacture the device. In addition, the submission must include the proposed labeling, advertising literature, and any training materials. The PMA process can be expensive, uncertain and lengthy, and a number of devices for which FDA approval has been sought by other companies have never been approved for marketing.

 

Upon receipt of a PMA application, the FDA makes a threshold determination as to whether the application is sufficiently complete to permit a substantive review. If the FDA determines that the PMA application is sufficiently complete to permit a substantive review, the FDA will accept the application for filing. Once the submission is accepted for filing, the FDA begins an in-depth review of the PMA. The FDA review of a PMA application generally takes one to three years from the date the PMA is accepted for filing, but may take significantly longer. The review time is often significantly extended by the FDA asking for more information or clarification of information already provided in the submission. During the review period, an advisory committee, typically a panel of clinicians may be convened to review and evaluate the application and provide a recommendation to the FDA as to whether the device should be approved. The FDA accords substantial weight to the recommendation but is not bound by it. Toward the end of the PMA review process, the FDA generally will conduct an inspection of the manufacturer’s facilities to ensure compliance with applicable GMP requirements, which include elaborate testing, control documentation and other quality assurance procedures.

 

If the FDA evaluations of both a PMA application and the manufacturing facilities are favorable, the FDA may issue either an approval letter or an approvable letter, which usually contains a number of conditions that must be met in order to secure final approval of the PMA. When and if those conditions have been fulfilled to the satisfaction of the FDA, the agency will issue a PMA approval letter, authorizing marketing of the device for certain indications. If the FDA’s evaluation of the PMA application or manufacturing facilities is not favorable, the FDA will deny approval of the PMA application or issue a “non-approvable” letter. The FDA may determine that additional clinical trials are necessary, in which case the PMA may be delayed for one or more years while additional clinical trials are conducted and submitted in an amendment to the PMA. Modifications to a device that is the subject of an approved PMA, its labeling or manufacturing process may require approval by the FDA of PMA supplements or new PMAs. Supplements to a PMA often require the submission of the same type of information required for an initial PMA, except that the supplement is generally limited to that information needed to support the proposed change from the product covered by the original PMA. While we intend for our OCT System to qualify for the 510(k) Notification process, it is possible that a PMA may be required.

 

If human clinical trials of a device are required, either for a 510(k) Notification or a PMA, and the device presents a “significant risk,” the sponsor of the trial (usually the manufacturer or the distributor of the device) must file an investigational device exemption (“IDE”) application prior to commencing human clinical trials. The IDE application must be supported by data, typically including the results of animal and laboratory testing. If the IDE application is approved by the FDA and one or more appropriate Institutional Review Boards (“IRBs”), human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a “non-significant risk” to the patient, a sponsor may begin the clinical trial after obtaining approval for the study by one or more appropriate IRBs without the need for FDA approval. Submission of an IDE does not give assurance that FDA will approve the IDE and, if it is approved, there can be no assurance that FDA will determine that the data derived from the studies support the safety and efficacy of the device or warrant the continuation of clinical studies. Sponsors of clinical trials are permitted to sell investigational devices distributed in the course of the study provided such compensation does not exceed recovery of the costs of manufacture, research, development and handling. An IDE supplement must be submitted to and approved by the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness or the rights, safety or welfare of human subjects.

 

Among the additional requirements for product approval is the requirement that the prospective manufacturer conform to the FDA’s GMP regulations. In complying with the GMP regulations, manufacturers must continue to expend time, money and effort in product, record keeping and quality control to assure that the product meets applicable specifications and other requirements. The FDA periodically inspects device manufacturing facilities in the U.S. in order to assure compliance with applicable GMP requirements.

 

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If we obtain clearance or approval, any device we manufacture or distribute will be subject to pervasive and continuing regulation by the FDA. We will be subject to routine inspection by the FDA and will have to comply with the host of regulatory requirements that usually apply to medical devices marketed in the United States, including labeling regulations, GMP requirements, the Medical Device Reporting (“MDR”) regulation (which requires a manufacturer to report to the FDA certain types of adverse events involving its products), and the FDA’s prohibitions against promoting products for unapproved or “off-label” uses.

 

Because our OCT and NIR Systems incorporate the use of lasers, our products will be regulated under the Radiation Control for Health and Safety Act administered by the Center for Devices and Radiological Health of the FDA. The law requires medical and non-medical laser manufacturers to file new product and annual reports and to maintain quality control, product testing and sales records, to incorporate certain design and operating features in lasers sold to end users under a performance standard, and to comply with labeling and certification requirements. Various warning labels must be affixed to the laser, depending on the class of the product under the performance standard.

 

Competition

 

In the field of dental diagnostic imaging, the x-ray has been the most dominant modality. The adoption of digital x-ray has increased steadily over the last 15 years, since its introduction, and we believe that almost 50% of dentists in the United States are currently using this modality. The dental x-ray unit is limited in that it only images hard tissue (teeth or bone) and cannot image soft tissue such as gums. In addition, the resolution is such that decay can only be detected at a much later stage when more invasive procedures are required, usually with a drill. In addition, the dental x-ray cannot image occlusal (biting surfaces), where an estimated 80% of decay occurs.

 

Over the last 10 years, numerous small handheld devices have been introduced into dentistry for the early detection of decay. The first of these devices, “DIAGNOdent” from KaVo Dental GmbH (“KaVo”), has been readily embraced by the market and uses light fluorescence to indicate the presence of decay by emitting an audible and visual reading. The device does not provide an image. A similar device, ID Caries was introduced by Dentsply and also does not provide an image. Other devices using fluorescence, impedance and electrothermal methods have been introduced but these devices have been characterized as needing to be used very carefully and can be subject to false/positive readings. We believe that our OCT and NIR modalities fill the diagnostic void in every respect by providing high-resolution, quantitative and qualitative, imaging of dental tissue and with an image that can be stored in the patient file for monitoring treatment. We believe that our light-based modalities can meet the highly important diagnostic requirements for detection of early, later and hidden dental disease symptoms and structural defects. Additionally, the OCT System provides detailed images of both teeth and gums and the captured information can be displayed chairside on a monitor, printed, digitally stored in the patient’s file and transmitted electronically for consultation or insurance claims, if and when applicable. While other devices are typical being sold in the $3,000 to $6,000 price range which is much lower than the price we anticipate for OCT and NIR, respectively, we do not believe that they would provide the same level of diagnostic information and be able to obtain a reimbursement code. We believe that based on previous representations to the American Dental Association Code Revision Committee that OCT and NIR would obtain reimbursement codes as they provide more detail than x-ray, are safe and provide an image for diagnostic and insurance claim purposes that is easily read and interpreted.

 

The gold and other industrial minerals industry is very competitive industry with many established and well-recognized competitors. There is aggressive competition within the minerals industry to discover and acquire mineral properties considered to have commercial potential. We compete for the opportunity to participate in promising exploration projects with other entities, many of which have greater resources than us. In addition, we compete with others in efforts to obtain financing to acquire and explore mineral properties, acquire and utilize mineral exploration equipment and hire qualified mineral exploration personnel.

 

Sales and Marketing of Lantis Laser, Inc. Dental Products

 

Subject to obtaining FDA clearance for marketing, we intend selling the OCT and NIR Systems through existing channels of distribution. The larger distribution companies have specialized personnel to sell, install and train users of high-technology equipment. We will support their sales efforts by placing our own company field representatives to assist in sales, training and installation of the equipment. We do not currently have any distribution agreement in place. In international markets, we expect to enter into exclusive agreements with distributors in each country or territory to undertake the sales, installation, training and support of the OCT and NIR Systems.

 

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We expect the initial sales price to dentists to be approximately $30,000 for each OCT System and $38,000 for the combination OCT/NIR System, including all components packaged in a mobile cart with a computer and monitor. All Systems will undergo very stringent quality assurance testing as necessary for a medical device and also to meet the FDA Good Manufacturing Practices requirements. The NIR System would also be sold as a standalone device for use in each operatory as an adjunct to x-ray. Subject to obtaining funding, and obtaining FDA clearance, we anticipate being able to commence introduction of the OCT System into the dental market within an 18-24 month timeframe. The NIR System, subject to successful development and obtaining FDA clearance, could also be ready for market introduction in the 18- 24 month timeframe after adequate development funding is obtained.

 

Research and Development

 

We have devoted substantially all of our operating resources towards research and development. Our research and development efforts to date have focused on developing the OCT System. Due to lack of funding our development of the OCT has slowed down in 2009 and we ceased development in February 2010.

 

Employees

 

We have three employees, all of whom are management. None of them received salaries or other compensation in 2010. To the best of our knowledge, we are in compliance with local prevailing wage, contractor licensing and insurance regulations. None of our employees is represented by any collective bargaining agreement, and our relationship with our employees is good. Upon funding, we may seek to hire two additional employees, an optical engineer and a technician, to help us complete the development and preparation of the OCT Systems for clinical use, although we may decide to retain independent contractors in lieu of additional employees.

 

Item 1A. Risk Factors

 

Risks Related to Our Operating Results and Business

 

The likelihood of successfully implementing our business plan cannot be predicted from our limited operating history.

 

We have incurred losses since inception, and our accumulated deficit is approximately $10.41 million. We have not generated any revenue from the sale of our products to date. Therefore, there is limited historical basis on which to determine whether we will be successful in implementing our business plan. We expect that our annual operating losses will increase over the next few years as we expand our research, development and commercialization efforts. To become profitable, we must successfully develop and obtain regulatory approval for the OCT and NIR imaging Systems and effectively manufacture market and sell the products we develop. Accordingly, we may never generate significant revenues, and even if we do generate significant revenues, we may never achieve profitability.

 

The loss of our executive officers and certain other key personnel could hurt our business.

 

We are dependent on Al Pietrangelo, our Chairman, President and CEO and, for Lantis Laser, Inc., on Stanley Baron, our Chairman, President & CEO, Craig Gimbel, DDS, our Executive Vice-President and Douglas Hamilton our head of Research and Development. Unlike larger companies, we rely heavily on a small number of officers to conduct a large portion of our business. The loss or unavailability of their services, along with the loss of their skills, numerous contacts and relationships in the industry, would have a material adverse effect on our product development and business prospects and/or potential earning capacity.

 

We have no Chief Financial Officer, which makes it more difficult for us to comply with our public company reporting obligations and prevents us from having an internal check on our financial reporting.

 

We have no Chief Financial Officer, and the duties of a Chief Financial Officer are currently performed by Al Pietrangelo, our Chairman, President & CEO. As a result, it will be more difficult for us to fully comply with our reporting obligations as a public company, and our ability to do so is uncertain. In addition, as our CEO is also acting as our Chief Financial Officer, we do not have any internal check on our financial reporting.

 

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Our dental device products are subject to an extensive government regulation and pre-approval process before such products may be marketed. Any unanticipated costs or delays in these processes, or any failure to obtain the necessary approvals, will have a material adverse affect on our ability to introduce and market our products.

 

Our dental device products are subject to extensive regulation by governmental authorities. Before any new medical device may be introduced to the market in the United States, the manufacturer generally must obtain FDA approval by filing a pre-market application (a “PMA”) under Section 515 of the Federal Food, Drug and Cosmetic Act (the “FDCA”) or a pre-market notification pursuant to Section 510(k) (a “510(k) Notification”) of the FDCA. Obtaining FDA approval requires substantial time, effort, and financial resources, and may be subject to both expected and unforeseen delays, and there can be no assurance that any approval will be granted on a timely basis, if at all, or that delays will be resolved favorably or in a timely manner. A 510(k) Notification generally receives pre-market clearance from the FDA approximately three to nine months from submission. Approval of a PMA generally takes two or more years from the date of submission to be approved. We believe that our OCT System requires only 510(k) Notification. However, the FDA may determine that our OCT System is not substantially equivalent to a predicate device, or that additional information is needed before a substantial equivalence determination can be made. A “not substantially equivalent” determination, or a request for additional information, would subject us to the lengthier PMA process and could prevent or delay the market introduction of our OCT System. Obtaining FDA approval for our products may require the submission of extensive preclinical and clinical data and supporting information to the FDA, and there can be no guarantee of ultimate clearance or approval. See “Business – Government Regulation.”

 

If the FDA does not approve our products in a timely fashion, or does not approve them at all, our business and financial condition may be adversely affected. We, our collaboration partners or the FDA may suspend or terminate human clinical trials at any time on various grounds, including a finding that the patients are being exposed to an unacceptable health risk. The FDA conducts its own independent analysis of some or all of the pre-clinical and clinical trial data submitted in a regulatory filing and often comes to different and potentially more negative conclusions than the analysis performed by the developer. Our failure to develop safe, commercially viable OCT and NIR Systems approved by the FDA would substantially impair our ability to generate revenues and sustain our operations and would materially harm our business and adversely affect our stock price. In addition, significant delays in clinical trials will impede our ability to seek regulatory approvals, commercialize the OCT and NIR Systems and generate revenue, as well as substantially increase our development costs.

 

In addition, both before and after regulatory approval, we, our collaboration partners and our products may be subject to numerous FDA requirements covering, among other things, testing, manufacturing, quality control, labeling, advertising, promotion, distribution and export. The FDA’s requirements may change and additional government regulations may be promulgated that could affect us, our collaboration partners or our products. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action. There can be no assurance that we will not be required to incur significant costs to comply with such laws and regulations in the future or that such laws or regulations will not have a material adverse effect upon our business.

 

To obtain required government approvals, our technology must be shown to be efficacious and safe for use in humans. Our current and future technology for humans are subject to stringent government regulation in the United States by the FDA under the FDCA. The FDA regulates the preclinical and clinical testing, manufacture, safety, labeling, sale, distribution and promotion of medical devices. Included among these regulations are compliance with establishment registration and medical device listing, good manufacturing practices (or “GMP”) labeling, and promotional requirements.

 

Failure to comply with applicable regulatory requirements could result in, among other things, any of the following actions: warning letters; fines and other civil penalties; unanticipated expenditures; delays in approving or refusal to approve a product; product recall or seizure; interruption of manufacturing or clinical trials; operating restrictions; injunctions; and criminal prosecution.

 

Our dental device products are subject to ongoing governmental regulation that could make it more expensive and time consuming for us to manufacture our products.

 

Our dental device technology is subject to post-market reporting requirements for certain adverse events and device malfunctions, and correction and removal reporting and recordkeeping requirements for actions taken with respect to distributed devices to reduce a risk to health. Additionally, the FDA actively enforces regulations prohibiting marketing of devices for indications or uses that have not been cleared or approved by the FDA. If safety or efficacy problems occur after the product reaches the market, the FDA may take steps to prevent or limit further marketing of the product.

 

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The manufacture of our dental device products also is subject to periodic inspection by regulatory authorities and certain marketing partners, while manufacture of our products for human use is subject to regulation and inspection from time to time by the FDA for compliance with GMPs, as well as equivalent requirements and inspections by state and foreign regulatory authorities. There can be no assurance that we will satisfy these requirements for our technology. In addition, there can be no assurance that the FDA or other authorities will not, during the course of an inspection of our facilities, identify what they consider to be deficiencies in GMPs or other requirements and request, or seek, remedial action. Failure to comply with such regulations or any delay in attaining compliance may adversely affect our manufacturing activities and could result in, among other things, FDA refusal to grant pre-market approvals or clearances for pending or future products, warning letters, injunctions, civil penalties, fines, recalls or seizures of products, total or partial suspensions of production and criminal prosecution. Additionally, future modifications of our manufacturing facilities and processes may subject us to further FDA inspections and review before implementation of such modifications. There can be no assurance that we will be able to obtain necessary regulatory approvals or clearances on a timely basis, if at all. Delays in receipt of or failure to receive such approvals or clearances or the loss of previously received approvals or clearances will affect our ability to timely manufacture our products.

 

Uncertainties related to the early stage of our commercialization and development efforts may materially adversely affect our ability to commercialize our dental device products.

 

Our OCT System is in Phase 2 and 3 development, with Systems expected to be deployed for clinical testing 6 months after the next round of funding, if it can be obtained. Although we now intend to commercially introduce our OCT System to the dental market in the second half of 2013, subject to adequate funding being available, the timing of the commercial availability of our products is subject to a number of uncertainties. For example, our products cannot be marketed until cleared by the FDA. To date, we have not applied for or received marketing approval for any product from the FDA, but we plan to submit pre-market notification application with the FDA within approximately 6 months after completion of the Systems. In addition, we may experience unexpected delays in product development. For example, we had initially expected to deploy the OCT System in August 2008, but the vendor developing the optics components for the Systems has experienced delays. In addition, we have had to redesign and perform another round of fabrication of certain components of the System. The development and commercialization of new dental imaging products are highly uncertain and subject to a number of significant risks. Potential products that appear to be promising at early stages of development may not reach the market for a number of reasons. Such reasons include the possibilities that the devices will fail to receive necessary regulatory approvals, be difficult to manufacture on a commercial scale, be uneconomical, fail to achieve market acceptance or be precluded from commercialization by proprietary rights of third parties. No assurance can be given that development of our OCT System will be successfully completed, that clinical trials will generate anticipated results or will commence or be completed as planned, that required regulatory approvals will be obtained on a timely basis, if at all, or that any products for which approval is obtained will be commercially successful. If our OCT System is not successfully developed, required regulatory approvals are not obtained, or products for which approvals are obtained are not commercially successful, our business, financial condition and results of operations would be materially adversely affected. The same risks apply for the development of the NIR System.

 

The application rights and technology underlying our OCT and NIR System are being developed under license from third parties. The termination of any of our licenses likely would have a material adverse effect on our ability to commercialize our products.

 

Our OCT System is based upon technology that we are licensing from Lawrence Livermore National Laboratory and LightLab Imaging, LLC. The LightLab license was terminated in July 2010 and a patent review at a time closer to OCT commercialization might show the need to renew the license with LightLab and there is no guarantee that LightLab will grant a patent if it is required to market our OCT product without possible litigation. Our OCT engine is based on technology and product embodied in a development and supply agreement with Axsun Technologies. This agreement was terminated in 2010 and Axsun have indicated a willingness to enter into a new agreement when we are in a position to do so, which is when sufficient capital is obtained to complete development of our OCT system. Our NIR System is based on a license we have with the Regents of The University of California and for which patent is still pending. If any of these licenses were to be terminated by the other party, under most circumstances we would lose our rights to develop, manufacture, market and sell any products based on the technology underlying the terminated license and agreement. Such a termination would likely require us to seek alternative technology, if available, which could impede or prevent delivery of our product; be time-consuming and expensive; divert attention away from our daily business; and possibly require us to pay significantly greater royalties and licensing fees.

 

If dental care providers are unable to obtain reimbursement for our products or the procedures in which they are used from third-party payors, our ability to sell or market the OCT and NIR Systems will be materially adversely affected.

 

Dental care providers that purchase medical devices such as our product generally rely on third-party payors, principally federal Medicare, state Medicaid and private health insurance plans, to reimburse all or part of the cost of dental imaging and procedures. We anticipate that in a prospective payment System, such as the System utilized by Medicare, and in many managed care Systems used by private health care payors, there will be no separate, additional reimbursement for our products. However, we have had a meeting with the American Dental Association Code Revision Committee to ask for inclusion of a new reimbursement code for non-radiological (non x-ray) dental imaging, which would cover our OCT and NIR Systems, and we cannot be assured that such a reimbursement code will be issued. Even if there is no procedure-specific reimbursement code, we anticipate that dental patients will justify the additional cost of accepting diagnostic imaging with our OCT and NIR Systems if we can demonstrate long-term cost savings due to improved clinical outcomes attributable to the use of our product.

 

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There can be no assurance that reimbursement for our products will be available in the United States under either governmental or private reimbursement Systems. Furthermore, we could be adversely affected by changes in reimbursement policies of governmental or private health care payors. Failure by dental care providers to obtain sufficient reimbursement from health care payors for procedures in which our products are used or adverse changes in governmental and private third-party payors’ policies toward reimbursement for such procedures would have a material adverse effect on our business, financial condition and results of operations.

 

Our business may be also materially adversely affected by the continuing efforts of government and third-party payors to contain or reduce the costs of health care through various means. For example, an increasing emphasis on managed care has put, and will continue to put, pressure on pharmaceutical and medical product pricing. Such initiatives and proposals, if adopted, could decrease the price that we receive for any products we may develop and sell in the future, and thereby have a material adverse effect on our business, financial condition and results of operations.

 

Furthermore, to the extent that such proposals or initiatives have a material adverse effect on other companies that are corporate partners or prospective corporate partners for certain of our products, our ability to commercialize our products may be materially adversely affected.

 

We have limited experience in marketing or selling our dental device products, and we may need to rely on marketing partners or contract sales companies.

 

Even if we are able to develop our products and obtain necessary regulatory approvals, we have limited experience or capabilities in marketing or commercializing our products. We currently do not have a sales, marketing or distribution infrastructure. Accordingly, we are dependent on our ability to build this capability ourselves or to find collaborative marketing partners or contract sales companies for commercial sale of our internally-developed products. Even if we find a potential marketing partner, we may not be able to negotiate a licensing or distribution contract on favorable terms to justify our investment or achieve adequate revenues.

 

Risks Related to Our Industrial Minerals and Dental Device Industries

 

The market for our dental device products is new and evolving and a viable market may never develop or may take longer to develop than we anticipate.

 

Our products represent what we believe is a novel entry in an emerging market, and we do not know the extent to which our targeted customers will want to purchase them. The development of a viable market for our products may be impacted by many factors which are out of our control, including customer reluctance to try new products and the existence and emergence of products and services marketed by better-known competitors.

 

If a viable market fails to develop or develops more slowly than we anticipate, we may be unable to recover the losses we will have incurred to develop our products, and we may be unable to achieve profitability.

 

If dentists and patients do not accept our products, we may be unable to generate significant revenue, if any.

 

Our Systems may not gain market acceptance among dentists, health care payors, patients and the dental community. Dentists may elect not to purchase our products for a variety of reasons including:

 

timing of market introduction of competitive technologies;

 

lack of cost-effectiveness;

 

lack of availability of reimbursement from managed care plans and other third-party payors;

 

convenience and ease of administration;

 

other potential advantages of alternative treatment methods; and

 

ineffective marketing and distribution support.

 

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If our products fail to achieve market acceptance, we would not be able to generate sufficient revenue to fund our business plan.

 

Failure to meet customers’ expectations or deliver expected performance of our products could result in losses and negative publicity, which will harm our business.

 

If our products fail to perform in the manner expected by our customers, then our revenues may be delayed or lost due to adverse customer reaction or negative publicity about us and our products, which could adversely affect our ability to attract or retain customers. Furthermore, disappointed customers may initiate claims for substantial damages against us, regardless of our responsibility for such failure.

 

We operate in a competitive market which could constrain our future growth and profitability.

 

We operate in a competitive environment, competing for customers with biomedical device companies with varying degrees of specialization in dental devices. Many of our competitors offer complimentary products and/or services that we do not offer. Moreover, some of our competitors are much larger than we are, have proven products and may have the marketing and sales capabilities to commercialize competing products more effectively than we can.

 

If we cannot build and maintain strong brand loyalty our business may suffer.

 

We believe that the importance of brand recognition will increase as more companies produce competing products. Development and awareness of our brands will depend largely on our ability to advertise and market successfully. If we are unsuccessful, our brands may not be able to gain widespread acceptance among consumers. Our failure to develop our brands sufficiently would have a material adverse effect on our business, results of operations and financial condition.

 

We may not be able to hire and retain qualified technical personnel.

 

Competition for qualified personnel in the biomedical device industry is intense, and we may not be successful in attracting and retaining such personnel. Failure to attract qualified personnel could harm the proposed growth of our business.

 

Product liability claims against us could be costly and could harm our reputation.

 

The sale of dental and medical devices involves the inherent risk of product liability claims against us. We cannot be certain that we will be able to successfully defend any claims against us, nor can we be certain that our insurance will cover all liabilities resulting from such claims. In addition, there is no assurance that we will be able to obtain such insurance in the future on terms acceptable to us, or at all. Any product liability claims brought against us could harm our reputation and cause our business to suffer.

 

We license patent rights from third-party owners. If such owners do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.

 

We are party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful for our business. We may enter into additional licenses to third-party intellectual property in the future. Our success will depend in part on the ability of our licensors to obtain, maintain and enforce patent protection for their intellectual property, in particular, those patents to which we have secured exclusive rights. Our licensors may not successfully prosecute the patent applications to which we are licensed. Even if patents issue in respect of these patent applications, our licensors may fail to maintain these patents, may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we would. In addition, our licensors may terminate their agreements with us in the event we breach the applicable license agreement and fail to cure the breach within a specified period of time.

 

Risks Related to Our Dependence on Third Parties

 

If a collaborative partner terminates or fails to perform its obligations under agreements with us, the development and commercialization of our dental device products could be delayed or terminated.

 

If any of our collaborative partners or component suppliers do not devote sufficient time and resources to collaboration arrangements with us, we may not realize the potential commercial benefits of the arrangement, and our results of operations may be adversely affected. In addition, if any existing or future collaboration partner were to breach or terminate its arrangements with us, the development and commercialization of our Systems could be delayed, curtailed or terminated because we may not have sufficient financial resources or capabilities to continue development and commercialization.

 

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If third-party payors do not provide adequate reimbursements for the use of our Systems that are approved for marketing, our Systems might not be purchased or used, and our revenues and profits will not develop or increase.

 

Our revenues and profits will depend significantly upon the availability of adequate reimbursement for the use of our imaging Systems from governmental and other third-party payors. Reimbursement by a third party may depend upon a number of factors, including the third-party payors determination that use of a product is:

 

a covered benefit under its health plan;

 

safe, effective and medically necessary;

 

appropriate for the specific patient;

 

cost effective; and

 

neither experimental nor investigational.

 

Moreover, reimbursement rates may be based on payments allowed for lower-cost products that are already reimbursed, and/or may be incorporated into existing payments for other products or services producing lower than anticipated revenues.

 

If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our Systems, we may not generate product revenue.

 

We have no commercial products, and currently have no established network for the sales and marketing. In order to successfully commercialize our products, we must build our sales and marketing capabilities or make arrangements with third parties to perform these services. We believe our Systems can be commercialized by specialty sales forces that market to the dental community. If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate product revenue and may not become profitable.

 

Risks Related to Our Common Stock

 

Currently, there is a limited active trading market for our common stock, which may adversely impact your ability to sell your shares and the price you receive.

 

Although our common stock is quoted on the OTC:QB under the symbol “RRHI” (formerly "LLSR") there is a limited active trading market for our common stock and such a market may not develop or be sustained. We cannot assure you that an active public market will materialize as we are a development stage company and do not have revenue or profit. Furthermore, the OTC Bulletin Board is not a listing service or exchange, but is instead a dealer quotation service for subscribing members.

 

If our common stock ceases to be quoted on the OTC Bulletin Board or if an active market for our common stock does not develop, then you may not be able to resell the shares of our common stock that you have purchased, and you may lose all of your investment. If we establish an active market for our common stock, the market price of our common stock may be significantly affected by factors such as actual or anticipated fluctuations in our operating results, general market conditions and other factors. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have particularly affected the market prices for the shares of developmental stage companies, which may materially adversely affect the market price of our common stock.

 

Furthermore, for companies whose securities are quoted on the OTC:QB, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.

 

16
 

 

Our common stock is deemed to be penny stock with a limited trading market.

 

The OTC Bulletin Board is generally considered to be a less efficient market than markets such as NASDAQ or other national exchanges. This may make it more difficult for you resell the shares of our common stock that you have purchased and more difficult for us to obtain future financing. Furthermore, our common stock is subject to the “penny stock” rules adopted under Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or another national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our common stock. Because our common stock is subject to the penny stock rules, you will find it more difficult to dispose of the shares of our common stock that you have purchased.

 

Shares eligible for future sale may adversely affect the market price of our common stock, exacerbate market price volatility and negatively impact our ability to raise capital in equity financings.

 

All of the current holders of our restricted common stock are or will be eligible to sell all or some of their shares of common stock, under certain conditions, pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”). In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about our company. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the current public information requirement of Rule 144. In general, under Rule 144 as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell within any three-month period beginning 90 days after the date of the effective date of our S-1 registration statement, a number of shares that does not exceed the greater of 1% of the number of shares of common stock then outstanding, or the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

 

The above summarization of Rule 144 notwithstanding, Rule 144 is not available for the resale of securities initially issued by a former shell company, such as us, until the following conditions are met:

 

the issuer of the securities has ceased to be a shell company;

 

the issuer is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act;

 

the issuer has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months, other than Form 8-K reports; and

 

one year has elapsed since the issuer has filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer a shell company.

 

We have issued a total of 382,306,456 shares of which 101,645,031 are free trading or eligible to become free trading. This far exceeds the average daily trading volume for our common stock of approximately 77,250 shares. As a result of this imbalance, the sale or attempted sale of those formerly-restricted shares into the market can be expected to have a significant adverse effect on the market price of our common stock. This imbalance could also exacerbate volatility in the market price for our common stock – an increase in the market price could trigger an increased volume of sales or attempted sales, which could flood the market and cause the market price to decrease, resulting in price volatility.

 

A significant decrease in the market price of our common stock also could have a negative impact or our ability to raise capital in one or more equity financings on favorable terms, or at all.

 

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We will need to raise additional capital in the future, but that capital may not be available.

 

Although we initially believed that the proceeds of our September 2006 and May 2007 private placements would be sufficient to support our Phase 2 and Phase 3 development plan for our subsidiary, Lantis Laser, Inc., it has taken longer than we planned and cost more than we had forecast to complete our Beta Systems. As a result, we will need additional funding to complete the development of our OCT System and transition to manufacturing and begin marketing our Systems. We are in the process of seeking additional financing. Such additional financing may not be available when we need it or may not be available on terms that are favorable to us. If we are unable to obtain adequate financing on a timely basis, we could be required to delay, or terminate our product development program.

 

We cannot assure you that we will be successful or that our operations will generate sufficient revenues, if any, to meet the expenses of our operations. Additionally, the nature of our business activities may require the availability of additional funds in the future due to more rapid growth than is forecast, and thus, we may need additional capital or credit lines to continue that rate of business growth. We may encounter difficulty in obtaining these funds and/or credit lines. Moreover, even if additional financing or credit lines were to become available, it is possible that the cost of such funds or credit would be high and possibly prohibitive.

 

If we were to decide to obtain such additional funds by equity financing in one or more private or public offerings, current stockholders would experience a corresponding decrease in their percentage ownership.

 

If we rely on stock issuances to fund any future acquisition activity, you may experience a dilution of your investment.

 

We intend to seek to acquire companies to expand our existing gold and industrial minerals properties and expertise and also novel technologies in the dental field that we believe are commercially viable. Given our present financial and operational situation, it is likely that the purchase price in any such acquisition would be paid primarily in shares of our common stock. In the event of such an issuance, you would experience dilution of your percentage ownership of our common stock.

 

Our management controls a substantial percentage of our stock and therefore has the ability to exercise substantial control over our affairs.

 

As of December 31, 2011, our directors and executive officers beneficially owned 465 million shares, or approximately 68%, of our outstanding common and Series A preferred stock in the aggregate. Because of the large percentage of stock held by our directors and executive officers, these persons could influence the outcome of any matter submitted to a vote of our stockholders. This concentration of ownership may have the effect of:

 

delaying, deferring or preventing a change in control of our company;

 

entrenching our management and/or board;

 

impeding a merger, consolidation, takeover or other business combination involving our company; or

 

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.

 

We have no independent directors and no committees of our Board of Directors composed of independent directors.

 

Currently, we have no independent directors or committees of directors. We cannot guarantee that our board of directors will have a majority of independent directors in the future. In the absence of a majority of independent directors, our executive officers, could establish policies and enter into transactions without independent review and approval thereof. This could present the potential for a conflict of interest between us and our controlling officers, stockholders or directors, including, without limitation, with respect to executive compensation, employment contracts and the like.

 

Prior to become a publicly reporting company we have not been required to comply with SEC reporting requirements, and future public reporting obligations may put significant demands on our financial, operational and management resources.

 

As a new public reporting company we are subject to the public reporting requirements of the Exchange Act and are required to implement an internal control structure and procedures for financial reporting, including those contemplated by Section 404 of the Sarbanes-Oxley Act, designed to enable us to produce consolidated financial statements and related disclosure within the time periods and in the form required under the Exchange Act. To comply with these requirements, we expect that we may need to hire additional accounting and finance staff and implement new financial Systems and procedures.

 

18
 

 

Our independent registered public accounting firm has expressed substantial doubt regarding our ability to continue as a going concern.

 

Our audited financial statements for the years ended December 31, 2011, December 31, 2010, and December 31, 2009 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued their reports dated April __, 2012, in connection with the audit of our financial statements for the year ended December 31, 2011 and December 31, 2010 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern due to our having sustained operating losses and capital deficits from operations. The fact that we have received this “going concern opinion” from our independent registered public accounting firm will likely make it more difficult for us to raise capital on favorable terms and could hinder, to some extent, our operations. Additionally, if we are not able to continue as a going concern, it is likely that stockholders will lose all of their investment. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Item 1B. Unresolved Staff Comments.

 

Not applicable

 

Item 2. Properties

 

 

For Lantis Laser, Inc. we leased approximately 720 square feet of office space for our research and development activities at 8100 Park Boulevard, Pinellas Park, Florida pursuant to a month-to-month lease. Our lease for this space provided for rent of $695 per month. This lease was terminated at the end of October 2010 as the OCT development program had ceased due to lack of capital. Our Freehold, New Jersey and Denville, New Jersey offices are also the homes of Al Pietrangelo, our President, Chairman and CEO, and Dr. Gimbel, a director and our Executive Vice-President of Clinical Affairs, respectively. We do not have any formal agreement with Al Pietrangelo or Dr. Gimbel regarding the use of these addresses, and we pay no rent.

 

Item 3. Legal Proceedings

 

None

 

Item 4. Submission of Matters to a Vote of Securities Holders

 

No matters were submitted to a vote of stockholders during the fourth quarter of 2011.

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Our common stock has been quoted on the Pink Sheets under the symbol “LLSR” from October 26, 2006 to November 2009 when it commenced quotation on the OTC Bulletin Board.

 

The following table sets forth the high and low closing bid quotations for our common stock for each calendar quarter since January 1, 2010, as reported by the Pink Sheets and the OTC Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not reflect actual transactions.

 

19
 

 

   Bid Price Per Share 
   High   Low 
2010          
January 4 through March 31  $0.10   $0.03 
April 1 through June 30  $0.04   $0.01 
July 1 through September 30  $0.04   $0.01 
October 1 through December 31  $0.02   $0.003 
2011          
January 1 through March 31  $0.10   $0.04 
April 1 through June 30  $0.07   $0.02 
July 1 through September 30  $0.04   $0.01 
October 1 through December 31  $0.04   $0.02 

 

Number of Stockholders

 

As of April 9, 2011 there were approximately 180 holders of record of our common stock and 1050 beneficial owners of our common stock.

 

Dividend Policy

 

Historically, we have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

 

Item 6. Selected Financial Data

 

Not required.

 

20
 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The information set forth and discussed in this Management’s Discussion and Analysis is derived from our financial statements and the related notes. You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2011. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements, including those set forth in this Annual Report on Form 10-K.

 

Overview

 

We were incorporated in Nevada in February 1998 under the name Beekman Enterprises, Inc. In February 2001, we changed our name to Virtual Internet Communications, Inc., and in April 2002, we changed our name to Hypervelocity, Inc. Until September 2002, Hypervelocity was a consulting firm specializing in voice, data and video communications convergence, network design and integration. In September 2002, Hypervelocity dissolved its operating subsidiary and assigned its assets to an individual holding a note payable that was secured by the assets. From September 2002 until November 2004, Hypervelocity was non-trading public shell company, with no operations. In November 2004, we acquired Lantis Laser, Inc., a New Jersey corporation formed in January 1998 (“Lantis New Jersey”), in a reverse-triangular merger and succeeded to its business as our sole line of business. In connection with the merger, we changed our name to “Lantis Laser Inc.” Lantis Laser Inc. was formed to commercialize the application of novel technologies in the dental industry.

 

On April 22, 2011, through a reverse triangular merger, we acquired both TAG Minerals Inc. ("TAG") and its 49%-owned operating subsidiary, TAG Minerals Zimbabwe (Private) Limited. TAG became our second wholly-owned subsidiary. We issued 50% of our outstanding shares at the date of the merger to TAG's shareholders and our existing directors resigned and become the directors of Lantis New Jersey. Lantis New Jersey continues our dental technology business. We are now focused on the mining of gold and other industrial minerals.

 

Through our operating affiliate, TAG Minerals Zimbabwe (PVT) Ltd. ("TAG-Z"), we entered into a Sale of Shares Agreement dated September 19, 2011, pursuant to which TAG-Z, for a total cash payment of $433,000, to be paid in installments through November 30, 2012, purchased 100% of the mineral assets of Dodge mine blocks 1-6, located in Zimbabwe. The transfer of all six blocks has been completed. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of the Dodge mine blocks. We believe that in light of the significant recent oil and gas discoveries off the coast of neighboring Mozambique and new drilling contracts expected in the Middle East, Central Africa, South Africa and Western Australia the high grade barite alone, which serves as a weighting agent for drilling fluids in oil and gas drilling applications, will be of significant future cash value to us. Along with the purchase of Dodge mine blocks 1-6 TAG-Z received 50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited ("Chiroswa"), an inactive company originally formed to conduct mining operations on the Dodge mine. Since Chiroswa is not an operating company TAG-Z has canceled the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.

 

On December 5, 2011, we entered into a Stock Purchase Agreement, dated effective as of December 2, 2011 (“Stock Purchase Agreement”), with Raptor Networks Technology, Inc. (RPTN.QB) (“Raptor”) pursuant to which we issued 5,000,000 restricted shares of our common stock to the holder of certain Raptor convertible notes, California Capital Equity, LLC, and we received 109,928,311 restricted shares of Raptor's common stock or 55% of its issued and outstanding shares of common stock. We have filed a Schedule 14C on behalf of Raptor stating our intention to effect a 1:10 reverse stock split, own 80% of the fully diluted shares of Raptor's common stock on a post-split basis, change the name of Raptor to Mabwe Minerals Inc. and have Raptor engage in the exploration and mining of gold and other industrial minerals and cease any involvement with the historical business of Raptor. Raptor is a majority owned subsidiary of Lantis.

 

On March 5, 2012 we amended our Articles of Incorporation to change our name to Raptor Resources Holdings Inc. to. more clearly reflect our new focus on the mining of gold and other industrial minerals and to help build a new brand identity.

 

21
 

 

Fiscal Year Ended December 31, 2011 and 2010

 

Total Operating Revenues

 

We recognized $0 in revenue during the years ended December 31, 2011 and 2010. Revenues are anticipated to commence within the third quarter of 2012 for the mining of gold and other industrial minerals and 24 months after financing is obtained to complete the OCT product development. Generation of sales can only commence upon FDA 510(k) clearance.

 

Total Operating Expenses

 

Total operating expenses for the year ended December 31, 2011 were $896,816 compared to $156,409 for the same period in 2010. This represented an increase of $740,407, or 83%, primarily due to the increased professional, consulting and marketing fees associated with the change in management, business focus and acquisition activity in the gold and other industrial minerals industry.

 

We depreciate fixed assets. This resulted in an expense of $22,729 and $22,481 for the years ended December 31, 2011 and 2010, respectively. We determine the fair value of the undiscounted cash flows annually and sooner if circumstances change and determination is required, to value any impairment on our intangible assets and long-lived assets. As of December 31, 2011 and December 31, 2010, we determined there was no impairment charge.

 

Other Income (Expense)

 

Interest expense, net of interest income, of $81,826 is the amount of interest payable on the notes for the year ended December 31, 2011 compared to interest of $308,641 for the year ended December 31, 2010. This decrease is due to the conversion of certain of the notes to common stock.

 

Net Income (Loss)

 

We reported a net (loss) from operations of $(896,816) for the year ended December 31, 2011 compared to $(156,409) for the year ended December 31, 2010. The increase in the net loss is attributable to the increase in total operating expenses, discussed above.

 

Provision for Income Taxes

 

There was no provision for income taxes for the year ended December, 2011 and 2010. There was no provision due to the carry forward of approximately $10,493,045 of net operating losses as of December 31, 2011 that we reserved in valuation allowances against this deferred tax asset.

 

Liquidity and Capital Resources

 

During the year ended 2011, the balance in cash and cash equivalents increased by $5,690 from $9,382 during the year ended 2010. The increase of $5,690 is reflective of cash used in operating activities of $290,459, includes an increase in accounts payable and accrued expenses of $284,511. The Company also had cash provided for financing activities for the year ended December 31, 2011 in the amount of $302,250, from the proceeds of a private placement and a loan from a related party in the amount of $32,250.

 

As of December 31, 2011, we had current assets of $165,072 consisting of cash and equivalents aand an investment and other fixed assets, net of depreciation, amounting to $9,028 and mineral rights of $433,000.

 

As of December 31, 2011, we had $1,704,802 in current liabilities, consisting of accrued interest payable on the 5% convertible note of $178,519, and accounts payable of $656,633, as well as other notes payable due in the current period.

 

We had a working capital deficit of $1,539730 as of December 31, 2011.

 

22
 

 

As a development stage company, financial resources have been directed to acquisition of gold and other industrial mining companies and projects and with respect to the dental technology for product development and no revenue has yet been generated by either businesses. We expect to generate revenues in the third quarter of 2012 from our gold and other industrial minerals business. We have suspended all development efforts to commercialize the OCT System so we do not anticipate generating any revenues from the dental technology business. While we believe that we will have capital we cannot state that we will have sufficient capital to continue to operate for twelve months and we have significant doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Critical Accounting Policies

 

Critical accounting polices include the areas where we have made what we consider to be particularly subjective or complex judgments in making estimates and where these estimates can significantly impact our financial results under different assumptions and conditions.

 

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimate, judgments and assumptions affect the reported amounts of assets and liabilities at the date of the financial statement and the reported amounts of revenue and expenses during the periods presented. Actual results could be different than those estimates.

 

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The Company has adopted the provisions of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns.

 

TAG Minerals Inc. on January 4, 2011, then amended on April 2, 2011, acquired a 49% interest in TAG – Z for a 33% interest in TAG. The remaining 51% ownership in TAG – Z is held by a Director of the Company, a Zimbabwe resident, Tapiwa Gurupira. TAG – Z will be the operating arm of TAG, initially, with the Company being the primary beneficiary of all the activities of its subsidiary, TAG, and their associated company TAG – Z.

 

As a result of this investment by TAG, TAG – Z has been identified by the Company as a VIE.

 

Fair Value of Financial Instruments (other than Derivative Financial Instruments)

 

The carrying amounts reported in our condensed consolidated balance sheets for cash and cash equivalents and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. For the notes payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to us for similar borrowings.

 

Research and Development

 

We annually incur costs on activities that relate to research and development of new technology and products. Research and development costs are expensed as incurred. Certain of these costs would be reduced by government grants and investment tax credits where applicable. We have expensed our payments in connection with license agreements as research and development costs.

 

Revenue Recognition

 

We have not yet generated revenue. We anticipate recognizing revenue in accordance with the contracts we enter into for the distribution of the products that are currently in development for the dental technology and the contracts we enter for the mining of gold and other industrial minerals.

 

23
 

 

Income Taxes

 

Under ASC 740 the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

 

Uncertainty in Income Taxes

 

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not” approach. We evaluate our tax positions on an annual basis and have determined that as of December 31, 2011 no additional accrual for income taxes is necessary.

 

Advertising Costs

 

We expense the costs associated with advertising as incurred. Advertising expenses for the year ended December 31, 2011 and the years ended December 31, 2010 are included in professional, consulting and marketing fees in the consolidated statements of operations.

 

Fixed Assets

 

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; computer and medical equipment – 3-5 years, and furniture and fixtures – 5 years.

 

When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

 

Impairment of Long-Lived Assets

 

Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. We do not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, we recognize an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amounts and estimated fair value.

 

(Loss) Per Share of Common Stock

 

Basic net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (“EPS”) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. The common stock equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations due to the fact that we reported a net loss and to do so would be anti-dilutive for the periods presented.

 

Stock-Based Compensation

 

In 2006, we adopted the provisions of ASC 718-10 “Share Based Payments”. The adoption of this principle had no effect on the Company’s operations.

 

ASC 718-10 requires recognition of stock-based compensation expense for all share-based payments based on fair value. Prior to January 1, 2006, we measured compensation expense for all of its share-based compensation using the intrinsic value method.

 

We have elected to use the modified-prospective approach method. Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. We recognize these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. We consider voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate.

 

24
 

 

We measure compensation expense for non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. For common stock issuances to non-employees that are fully vested and are for future periods, we classify these issuances as prepaid expenses and expenses the prepaid expenses over the service period.

 

Debt Issuance Costs

 

Debt issuance costs relate to the fees paid in connection with our outstanding convertible notes. These fees are being amortized over the life of the convertible notes, which is three years. Should the notes be converted prior to the maturity date of three years, then the debt issuance costs will be amortized sooner. We amortized $0 and $30,618 for the years ended December 31, 2011 and 2010, respectively.

 

Beneficial Conversion Features

 

ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. ASC 470-20 further limits this amount to the proceeds allocated to the convertible instrument

 

Recent Issued Accounting Standards

 

In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. FASB ASU 2011-04 amends and clarifies the measurement and disclosure requirements of FASB ASC 820 resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

In June 2011, FASB issued ASU No. 2011-05, Presentation of Comprehensive Income, which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, FASB ASU No. 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in 1) a single continuous statement of comprehensive income or 2) two separate but consecutive statements, in which the first statement presents total net income and its components, and the second statement presents total other comprehensive income and its components. These new presentation requirements, as currently set forth, are effective for the Company beginning October 1, 2012, with early adoption permitted. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

In September 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment, which amended goodwill impairment guidance to provide an option for entities to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the totality of events and circumstances, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performance of the two-step impairment test is no longer required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s results of operations, cash flows or financial position.

 

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

25
 

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

 Item 8. Financial Statements and Supplementary Data

 

The following financial statements are included:

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2011 AND 2010

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

  Page(s)
   
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
   
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2011 and 2010 F-2
   
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION) F-3
   
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION) F-4
   
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION) F-5
   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2011 AND 2010 F-6-F-28

 

26
 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors

Lantis Laser Inc.

Denville, NJ

 

We have audited the accompanying consolidated balance sheets of Lantis Laser Inc. (the “Company”) as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 2011 and 2010 with cumulative totals since the Company’s inception. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lantis Laser Inc. as of December 31, 2011 and 2010, and the results of its consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years ended December 31, 2011 and 2010, with cumulative totals since January 14, 1998, the commencement of the development stage in conformity with U.S. generally accepted accounting principles.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company is a development stage company and has sustained operating losses and capital deficits that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ KBL, LLP

New York, NY

April __, 2012

 

F-1
 

  

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2011 AND 2010

 

   DECEMBER 31,   DECEMBER 31, 
   2011   2010 
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $15,072   $9,382 
Investment   150,000    - 
           
Total Current Assets   165,072    9,382 
           
Fixed assets, net of depreciation   9,028    24,590 
           
Other Asset:          
Mineral rights   433,000    - 
           
           
TOTAL ASSETS  $607,100   $33,972 
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
           
LIABILITIES          
Current Liabilities:          
Accrued interest - convertible notes  $178,519   $155,148 
Accounts payable and accrued expenses   656,633    438,946 
Note payable - Dodge Mines   283,000    - 
Related party payable   27,150    1,100,542 
Convertible promissory note - related parties   150,000    - 
Convertible notes payable, net of discount and beneficial conversion feature   409,500    489,118 
           
Total Current Liabilities   1,704,802    2,183,754 
           
Total Liabilities   1,704,802    2,183,754 
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred stock, $.001 Par Value; 10,000,000 shares authorized and 0 shares issued and outstanding   -    - 
Common stock, $.001 Par Value; 990,000,000 shares authorized and 378,205,600 and 139,874,905 shares issued and outstanding   378,205    139,874 
Additional paid-in capital   8,639,808    6,949,807 
Additional paid-in capital - warrants   1,268,787    1,167,987 
Deficits accumulated during the development stage   (11,384,502)   (10,407,450)
           
Total Stockholders’ Equity (Deficit)   (1,097,702)   (2,149,782)
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $607,100   $33,972 

 

The accompanying notes are an integral part of the consolidated financial statements

 

F-2
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

 

           CUMULATIVE 
           TOTALS SINCE 
   YEARS ENDED   INCEPTION 
   DECEMBER 31,   JANUARY 14, 
   2011   2010   1998 
             
OPERATING REVENUES               
Sales  $-   $-   $- 
                
OPERATING EXPENSES               
                
Research and development   -    20,037    2,129,906 
Exploration costs   3,000    -    3,000 
Wages and wage related expenses   182,055    -    1,162,036 
Professional, consulting and marketing fees   365,616    76,936    4,799,553 
Value of stock issued to secure puchase of Raptor   155,000    -    155,000 
Other general and administrative expenses   168,416    36,955    746,090 
Depreciation   22,729    22,481    136,458 
Total Operating Expenses   896,816    156,409    9,132,043 
                
LOSS BEFORE OTHER INCOME (EXPENSE)   (896,816)   (156,409)   (9,132,043)
                
                
                
Amortization of debt issuance costs   -    (30,618)   (287,571)
Loss in investment under equity method   -    -    (167,664)
Gain on conversion of interest   524    -    524 
Gain on sale of equipment   1,066    -    1,066 
Interest expense - debt discount   -    (125,729)   (1,017,246)
Interest income (expense), net   (81,826)   (308,641)   (781,568)
Total Other Income (expense)   (80,236)   (464,988)   (2,252,459)
                
NET LOSS BEFORE PROVISION FOR INCOME TAXES   (977,052)   (621,397)   (11,384,502)
Provision for Income Taxes   -    -    - 
                
NET LOSS APPLICABLE TO COMMON SHARES  $(977,052)  $(621,397)  $(11,384,502)
                
NET LOSS PER BASIC AND DILUTED SHARES   (0.00)   (0.01)   (0.19)
                
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   280,812,406    108,351,161    59,347,524 

 

F-3
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

 

                           Deficits     
                       Additional   Accumulated     
                   Additional   Paid-in   During the     
   Preferred Stock   Common Stock   Paid-in   Capital-   Development     
   Shares   Amount   Shares   Amount   Capital   Warrants   Stage   Total 
                                 
Balance - January 14, 1998   -   $-    -   $-   $-   $-   $-   $- 
                                         
Shares issued to founders   -    -    200    200    87    -    -    287 
                                         
Net loss for the period January 14, 1998through December 31, 2003   -    -    -    -    -    -    (408,404)   (408,404)
                                         
Balance January 1, 2004   -    -    200    200    87    -    (408,404)   (408,117)
                                         
Shares issued in reverse merger   -    -    81,788,563    81,589    (81,876)   -    -    (287)
                                         
Shares issued in conversion of notes   -    -    3,211,250    3,211    256,318    -    -    259,529 
                                         
Net loss for the year   -    -                   -    (251,734)   (251,734)
                                         
Balance December 31, 2004   -    -    85,000,013    85,000    174,529    -    (660,138)   (400,609)
                                         
Net loss for the year   -    -    -    -    -    -    (347,397)   (347,397)
                                         
Balance December 31, 2005   -    -    85,000,013    85,000    174,529    -    (1,007,535)   (748,006)
                                         
Shares and warrants issued in private placement, net of placement fees   -    -    5,850,000    5,850    307,507    208,143    -    521,500 
                                         
Shares issued for services rendered   -    -    1,500,000    1,500    148,500    -    -    150,000 
                                         
Warrants issued to former noteholders   -    -    -    -    -    159,610    -    159,610 
                                         
Warrants issued to consultant in private placement   -    -    -    -    -    17,769    -    17,769 
                                         
Adjust fair value of warrants issued in private placement   -    -    -    -    -    114,930    -    - 
                                         
Royalty fees forgiven by Lawrence Livermore   -    -    -    -    380,000    -    -    380,000 
                                         
Net loss for the year ended December 31, 2006 as previously reported   -    -    -    -    -    -    (771,352)   (771,352)
                                         
Prior period adjustment - correction of an error see Note 10   -    -    -    -    -    (114,930)   114,930    - 
                                         
Net loss for the year ended December 31, 2006 as restated   -    -    -    -    -    -    (656,422)   (656,422)
                                         
Balance December 31, 2006   -    -    92,350,013    92,350    1,010,536    385,522    (1,663,957)   (175,549)
                                         
Warrants issued to placement agent   -    -    -    -    -    292,518    -    292,518 
                                         
Warrants issued to convertible noteholders   -    -    -    -    -    513,132    -    513,132 
                                         
Beneficial conversion feature on convertible notes   -    -    -    -    505,300    -    -    505,300 
                                         
Shares issued for services rendered (including prepaid services)   -    -    6,460,000    6,460    2,528,090    -    -    2,534,550 
                                         
Exercise of warrants   -    -    163,375    163    40,584    (16,241)   -    24,506 
                                         
Net loss for the year ended December 31, 2007   -    -    -    -    -    -    (2,174,069)   (2,174,069)
                                         
Balance December 31, 2007   -    -    98,973,388    98,973    4,084,510    1,174,931    (3,838,026)   1,520,388 
                                         
Exercise of warrants   -    -    69,850    70    17,352    (6,944)   -    10,478 
                                         
Shares issued for services rendered (including prepaid services)   -    -    1,075,000    1,075    228,425    -    -    229,500 
                                         
Net loss for the year ended December 31, 2008   -    -    -    -    -    -    (4,572,358)   (4,572,358)
                                         
Balance December 31, 2008   -    -    100,118,238    100,118    4,330,287    1,167,987    (8,410,384)   (2,811,992)
                                         
Exercise of warrants   -    -    -    -    -    -    -    - 
                                         
Shares returned to treasury and retired             (3,000,000)   (3,000)   3,000    -    -    - 
                                         
Shares issued upon conversion from note payable             833,334    833    111,049    -    -    111,882 
                                         
Shares issued for services rendered (including prepaid services)   -    -    2,250,000    2,250    160,250    -    -    162,500 
                                         
Net loss for the year ended December 31, 2009   -    -    -    -    -    -    (1,375,669)   (1,375,669)
                                         
Balance December 31, 2009   -   $-    100,201,572   $100,201   $4,604,586   $1,167,987   $(9,786,053)  $(3,913,279)
                                         
Shares issued for services rendered (including prepaid services)   -    -    500,000    500    19,500    -    -    20,000 
                                         
Shares issued upon conversion from note payable   -    -    39,173,333    39,173    2,289,514    -    -    2,328,687 
                                         
Beneficial conversion feature on convertible notes   -    -    -    -    36,207    -    -    36,207 
                                         
Net loss for the year ended December 31, 2010   -    -    -    -    -    -    (621,397)   (621,397)
                                         
Balance December 31, 2010   -   $-    139,874,905   $139,874   $6,949,807   $1,167,987   $(10,407,450)  $(2,149,782)
                                         
Shares issued for services rendered   -    -    11,150,000    11,150    186,068    -    -    197,218 
                                         
Shares issued upon conversion from note payable and accrued interest   -    -    35,535,397    35,535    164,191    -    -    199,726 
                                         
Shares issued for acquisition of Ontage Resources   -    -    5,000,000    5,000    145,000    -    -    150,000 
                                         
Recapitalization due to reverse merger with TAG Minerals Inc.   -    -    165,000,000    165,000    (200,278)             (35,278)
                                         
Conversion of notes payable and accrued interest to warrants   -    -    -    -    921,666    100,800    -    1,022,466 
                                         
Shares issued for cash   -    -    16,645,298    16,646    323,354    -    -    340,000 
                                         
Shares issued to lender of Raptor   -    -    5,000,000    5,000    150,000    -    -    155,000 
                                         
Net loss for the year ended December 31, 2011   -    -    -    -    -    -    (977,052)   (977,052)
                                         
Balance December 31, 2011   -   $-    378,205,600   $378,205   $8,639,808   $1,268,787   $(11,384,502)  $(1,097,702)

 

 The accompanying notes are an integral part of the consolidated financial statements

 

F-4
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

WITH CUMULATIVE TOTALS SINCE JANUARY 14, 1998 (INCEPTION)

 

           CUMULATIVE 
   YEARS ENDED   TOTALS SINCE 
   DECEMBER 31,   INCEPTION 
   2011   2010   JANUARY 14, 1998 
             
CASH FLOWS FROM OPERATING ACTIVITIES               
Net loss  $(977,052)  $(621,397)  $(11,384,502)
                
Adjustments to reconcile net loss to net cash used in operating activities:               
Depreciation   22,729    22,481    136,458 
Amortization of debt issuance costs   -    30,618    287,571 
Interest expense - debt discount   -    55,389    504,606 
Interest expense - beneficial conversion feature   20,382    70,340    533,023 
Gain on conversion of interest   (524)   -    (524)
Gain on sale of equipment   (1,066)   -    (1,066)
Loss on investment under equity method   -    -    167,664 
License fees payable for research and development   -    -    605,000 
Warrants issued to former noteholders and consultants   -    -    469,897 
Common stock issued to secure acquisition of Raptor   155,000    -    155,000 
Common stock issued for consulting services   197,218    20,000    1,076,268 
Cash flow effect of reverse merger   (35,278)   -    (35,278)
                
Changes in assets and liabilities               
Decrease (increase) in prepaid expenses   -    35,566    2,205,000 
Increase (decrease) in accounts payable and and accrued expenses   284,511    60,999    1,849,293 
Accrued interest on convertible notes   43,621    260,554    509,410 
Total adjustments   686,593    555,947    8,462,322 
                
Net cash used in operating activities   (290,459)   (65,450)   (2,922,180)
                
CASH FLOWS FROM INVESTING ACTIVITIES               
Acquisitions of fixed assets, net of disposals   (6,101)   -    (144,420)
Investment under equity method   -    -    (167,664)
                
Net cash used in investing activities   (6,101)   -    (312,084)
                
CASH FLOWS FROM FINANCING ACTIVITES               
Proceeds from notes payable   80,000    -    277,000 
Repayments made on note payable for Dodge Mines   (150,000)   -    (150,000)
Proceeds from exercise of warrants   -    -    34,984 
Increase (decrease) in bank overdraft   -    (5,168)   - 
Proceeds from convertible notes and warrants,  net of debt issuance costs   -    50,000    2,284,310 
Payments of license fee payable   -    -    (225,000)
Proceeds from private placement, net of fees (including cash received for shares to be issued)   340,000    -    861,500 
Proceeds (payments) from related parties   32,250    30,000    166,542 
                
Net cash provided by financing activities   302,250    74,832    3,249,336 
                
NET INCREASE IN CASH AND CASH EQUIVALENTS   5,690    9,382    15,072 
                
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   9,382    -    - 
                
CASH AND CASH EQUIVALENTS - END OF PERIOD  $15,072   $9,382   $15,072 
                
CASH PAID DURING THE YEAR FOR:               
Income taxes  $-   $-   $- 
Interest expense  $-   $-   $93,517 
                
SUPPLEMENTAL NONCASH INFORMATION:               
                
Conversion of notes and interest for common stock, net of discounts and issuance costs  $199,726   $2,364,894   $2,936,031 
Acquisition of Dodge Mines for Note Payable  $433,000   $-   $433,000 
Conversion of license fee payable into capital  $-   $-   $380,000 
Common stock issued to secure acquisition of Raptor  $155,000   $-   $155,000 
Common stock issued for consulting services  $197,218   $20,000   $1,076,268 
Warrants issued to former noteholders and consultants  $-   $-   $469,897 
Common stock issued for acquistion  $150,000   $-   $150,000 
Common stock issued for prepaid expenses  $-   $-   $2,205,000 
Conversion of accrued expenses for note payable-related parties  $-   $-   $960,000 
Conversion of note payable-related parties and accrued interest to warrants  $1,022,466   $-   $1,022,466 
Effect of reverse merger with TAG Minerals, Inc.               
Cash  $24,772   $-   $24,772 
Accounts payable and accrued expenses   (50)   -    (50)
Effect on retained earnings   (60,000)   -    (60,000)
Cash flow effect from reverse merger  $(35,278)  $-   $(35,278)

 

  The accompanying notes are an integral part of the consolidated financial statements 

 

F-5
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 1 -              ORGANIZATION AND BASIS OF PRESENTATION

 

Lantis Laser, Inc. (the “Company”) was incorporated in the State of New Jersey on January 14, 1998. On November 3, 2004, the Company was acquired by Hypervelocity, Inc., a Nevada corporation.

 

In the transaction, the Company exchanged 100% of their stock in exchange for 127,718,500 shares of common stock of Hypervelocity, Inc. The transaction was treated for accounting purposes as a reverse merger with Lantis Laser, Inc. being the accounting acquirer. Included in the 127,718,500 shares issued to the shareholders of Lantis Laser, Inc. in the transaction, 6,422,500 shares were issued in conversion of convertible notes payable the Company had entered into in 2001 and 2003. The shares represent the conversion of the original notes, the interest accrued on those notes as well as warrants that were offered and paid for by the note holders. The value of the convertible notes, interest and warrants were $259,529.

 

On December 9, 2004, Hypervelocity, Inc. changed its name to Lantis Laser Inc. which is domiciled in Nevada.

 

On June 16, 2006, the Company authorized a 1 for 2 reverse stock split for all issued shares. All shares reflected herein have been retroactively adjusted to account for the reverse stock split.

 

The Company was formed to commercialize the application of novel technologies in the dental industry. The criteria for selected products include competitive edge, exclusivity and large market potential. The Company was developing its Optical Coherence Tomography ("OCT") "Dental Imaging" as its first product but has suspended further development until it receives the funding to do so. The Company has licensed the exclusive rights for the dental field for the OCT patented technology from Lawrence Livermore National Laboratories. OCT was invented in the early 1990’s at Massachusetts Institute of Technology and it is currently being commercialized in ophthalmology and cardiovascular imaging.

 

On May 31, 2007, the Company entered into an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for technology relevant to the imaging probe of its Dental Imaging System; the Agreement carries a $1,000 initial licensing fee.

 

On July 9, 2008, the Company entered into an exclusive license agreement for the field of dentistry for a patent pending technology known as Near Infrared Transillumination Imaging (NIR). The Company paid the initial licensing fee of $10,000. This technology is synergistic with the OCT technology and the Company intends to sell it in a combination OCT/NIR platform and also as a standalone product.

 

Management of the Company has extensive experience in the dental industry, including technology, development, marketing and distribution, clinical and research dentistry.

 

F-6
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 1 -              ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

 

OCT is a diagnostic imaging technology that is based on advanced photonics and fiber optics. It enables the capture of cross-sectional images of tissue with an axial resolution of up to ten times that of x-ray, providing tissue characterization and images that cannot be obtained by any other means, including x-ray. Information is captured by shining a near- infrared light through a single optical fiber only .006” diameter deep into the internal structures of the subject tissue.

 

When the light becomes scattered in the dense biological tissue, a certain component of the reflected light remains unscattered and thus contains good quantitative and structural image information. The OCT technology maps the changing intensities of reflections from the tissue to form an image of the subject area. This image, displayed on a monitor in real time, has an unprecedented amount of diagnostic information and can be manipulated, printed out and stored in a digital format.

 

On April 22, 2011, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Lantis Acquisition Corp., a Wyoming corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and TAG Minerals Inc., a Wyoming corporation (“TAG”), pursuant to which the Merger Sub was to be merged into TAG (the “Merger”). As a result of the Merger TAG became a wholly-owned subsidiary of the Company. The transaction was completed on May 23, 2011 and the Company issued to the shareholders of TAG 165,000,000 shares of common stock which represented 50% of the total issued and outstanding shares at the time of the Merger in exchange for 100% of their shares in TAG. The Company accounted for this transaction as an acquisition, and Lantis was the surviving company.

 

TAG is a U.S. based mineral resource acquisition, exploration and development company, with operations conducted through its operating affiliate, TAG Minerals Zimbabwe (Private) Limited (“TAG - Z”). The company’s business is managed by its directors and officers who have mineral extraction and commercial experience. TAG’s strategy is to identify, acquire and exploit mineral properties that have potential. TAG is augmented by independent financial, geological, and mining professionals who advise the company on its mining and exploration projects throughout Zimbabwe, Africa. TAG-Z will commence their own alluvial surface gold mining operations.

 

Concurrent with the Merger Agreement, the Company’s former Chief Executive Officer and Executive Vice President Clinical Affairs and a Director of the Company resigned on May 6, 2011. The Company retained these former executives to continue to head up the dental technology subsidiary of the Company. These two executives received employment contracts dated May 23, 2011.

 

The President and Chief Executive Officer of TAG were named the new President and Chief Executive Officer of the Company. In addition, the remaining two shareholders of TAG became Directors in the Company.

 

At the time of the Merger, the Board of Directors approved the conversion of an outstanding note for each officer totaling $960,000 plus accrued interest of $62,466 into 14,400,000 cashless warrants. The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and they were determined to have a value of $100,800.

 

F-7
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 1 -              ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

 

The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital in accordance with ASC 850.

 

The other related party debt of $150,000 at the time of the Merger was converted to a convertible note. The notes will be repaid at the rate of 5% of any funding, whether debt or equity, received by the Company or its subsidiaries, or 5% of net revenues of the Company until repaid in full. The noteholders have the right to convert any amounts outstanding and due to them at $0.075 per share at their sole discretion.

 

In July 2011, TAG-Z, acquired 100% of the capital stock of Ontage Resources (Private) Limited (“Ontage”). Ontage holds a 10% stake in an existing operating gold mining producer, Slashwood Mining (Private) Limited (“Slashwood Mining”). Slashwood Mining is a registered percentage owner of 8 custom gold milling centers across various locations in Zimbabwe, along with ownership of 30 mining claims encompassing approximately 2,000 acres. All of the gold milling centers and mining claims are completely outfitted with mining equipment; to include gold-ore crushers, excavators, generators and dump trucks. Slashwood Mining has 200 employees and is forging a path of expansion into mining projects.

 

On September 19, 2011, TAG-Z, entered into a Sale of Shares Agreement, whereby, TAG-Z will pay $433,000 in installments through November 30, 2012 for 100% of the Dodge Mine blocks 1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received 50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive company originally formed to conduct mining operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.

 

On December 2, 2011, the Company entered into a Stock Purchase Agreement (the “Agreement”) with Raptor Networks Technology, Inc. (RPTN: OTCQB) (“Raptor”) under which the Company issued 5,000,000 shares of its common stock to the lender of certain convertible notes of Raptor, as incentive to convert their promissory notes into shares of common stock. As a result of this transaction, Raptor issued 55% of the issued and outstanding shares of common stock to the Company, and thus Raptor became a majority owned subsidiary of the Company, and under the terms of the Agreement, the officers and directors of Raptor will resign. Al Pietrangelo, President and CEO of the Company, will become President and CEO of Raptor and be the sole member of the Board of Directors. Raptor has commenced making the required filings with the Financial Industry Regulatory Authority (“Finra”) and the SEC to amend its charter, conduct a reverse split and issue additional shares of its common stock to allow the Company to hold 80% of its issued and outstanding shares of common stock on a post-split basis. As of December 31, 2011, approvals by Finra and the SEC have not occurred to reverse split the shares of common stock of Raptor.

 

F-8
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 1 -              ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

 

Effective, March 28, 2012, the Company’s name was formerly changed to Raptor Resources Holdings, Inc. (See Note 15).

 

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority.

 

The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Positions or Emerging Issue Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the basis for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.

 

Going Concern

 

As shown in the accompanying consolidated financial statements the Company has incurred recurring losses of $977,052 and $621,397 for the years ended December 31, 2011 and 2010 respectively, and has incurred a cumulative loss of $11,384,502 since inception (January 14, 1998). The Company has a working capital deficit in the amount of $1,539,730 as of December 31, 2011. The Company is currently in the development stage and has recently merged the gold mining business of TAG into their Company in addition to the OCT and NIR technology for which they currently hold exclusive licenses for dental applications.

 

With high gold prices and the contacts for mining rights that the principals of the Company maintain in Zimbabwe, the Company remains positive about the future.

 

There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period. Management believes that the Company’s capital requirements will depend on many factors. These factors include finding potential acquisition targets for TAG, how these targets can be acquired, i.e. cash, debt or common stock, and generating cash flow either through operations or through private placements to complete the final phase of development, product implementation and distribution first nationally, then internationally, of the Company's dental technology. Additionally, the Company continues to convert its debt into equity, and as a result has reduced its working capital deficit.

 

F-9
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 1 -              ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

 

The Company’s ability to continue as a going concern for a reasonable period is dependent upon management’s ability to raise additional interim capital and, ultimately, achieve profitable operations. There can be no assurance that management will be able to raise sufficient capital, under terms satisfactory to the Company, if at all.

 

The consolidated financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Development Stage Company

 

The Company is considered to be in the development stage as defined in ASC 915. The Company has devoted substantially all of its efforts to the development of their OCT technology.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, majority-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The Company has adopted the provisions of ASC 810-10-5, “Consolidation of VIEs”. ASC 810-10-5 requires a VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEs residual returns.

 

TAG Minerals Inc. on January 4, 2011, then amended on April 2, 2011 acquired a 49% interest in TAG – Z for a 33% interest in TAG. The remaining 51% ownership in TAG – Z is held by a Director of the Company, a Zimbabwe resident, Tapiwa Gurupira. TAG – Z will be the operating arm of TAG, initially, with the Company being the primary beneficiary of all the activities of its subsidiary, TAG, and their associated company TAG – Z.

 

As a result of this investment by TAG, TAG – Z has been identified by the Company as a VIE.

 

Noncontrolling Interests

 

In accordance with ASC 810-10-45, Noncontrolling Interests in Consolidated Financial Statements, the Company classifies controlling interests as a component of equity within the balance sheets. The Company has retroactively applied the provisions in ASC 810-10-45 to the financial information for the year ended December 31, 2011. There was no activity from December 2, 2011 through December 31, 2011 in Raptor, the Company’s majority-owned subsidiary.

 

F-10
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to derivative liabilities, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash equivalents. Any amounts of cash in financial institutions over FDIC insured limits, exposes the Company to cash concentration risk.

 

Fair Value of Financial Instruments (other than Derivative Financial Instruments)

 

The carrying amounts reported in the consolidated balance sheet for cash and cash equivalents, and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. For the notes payable, the carrying amount reported is based upon the incremental borrowing rates otherwise available to the Company for similar borrowings.

 

Research and Development

 

The Company annually incurs costs on activities that relate to research and development of new technology and products. Research and development costs are expensed as incurred. Certain of these costs would be reduced by government grants and investment tax credits where applicable. The Company has expensed its payments in connection with the license agreement as research and development costs.

 

Revenue Recognition

 

The Company has not recognized revenues to date. The Company anticipates recognizing revenue in accordance with the contracts it enters into for the distribution of the products that are currently in development for the dental technology, and the contracts they enter into for their gold mining business.

 

F-11
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income Taxes

 

Under ASC 740 the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

 

Uncertainty in Income Taxes

 

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis and has determined that as of December 31, 2011 no additional accrual for income taxes is necessary.

 

Advertising Costs

 

The Company expenses the costs associated with advertising as incurred. Advertising expenses for the years ended December 31, 2011 and 2010 are included in professional, consulting and marketing fees in the consolidated statements of operations.

 

Fixed Assets

 

Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets; computer and medical equipment – 3-5 years, and furniture and fixtures - 5 years.

 

When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized. Deduction is made for retirements resulting from renewals or betterments.

 

Impairment of Long-Lived Assets

 

Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company does not perform a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.

 

F-12
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Subsequent Events

 

In accordance with ASC 855 “Subsequent Events”, the Company is required to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or the date the financial statements were available to be issued.

 

Segment Information

 

The Company follows the provisions of ASC 280-10, "Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. The Company, effective May 23, 2011, operates in two reporting segments. The segments are dental technology and mining activities.

 

(Loss) Per Share of Common Stock

 

Basic net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations due to the fact that the Company reported a net loss and to do so would be anti-dilutive for the periods presented.

 

The following is a reconciliation of the computation for basic and diluted EPS:

 

           Cumulative 
           Totals since 
   December 31,   December 31,   January 14, 1998 
   2011   2010   (Inception) 
                
Net loss  $(977,052)  $(621,397)  $(11,384,502)
                
Weighted-average common shares Outstanding (Basic)   280,812,406    108,351,161    59,347,524 
Weighted-average common stock               
Equivalents               
Convertible Notes   10,190,000    10,190,000    10,190,000 
Stock options   -    -    - 
Warrants   28,886,066    14,486,066    28,886,066 
                
Weighted-average commons shares Outstanding (Diluted)   319,888,472    133,027,227    98,423,590 

 

F-13
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-Based Compensation

 

In 2006, the Company adopted the provisions of ASC 718-10 “Share Based Payments”. The adoption of this principle had no effect on the Company’s operations.

 

ASC 718-10 requires recognition of stock-based compensation expense for all share-based payments based on fair value. Prior to January 1, 2006, the Company measured compensation expense for all of its share-based compensation using the intrinsic value method.

 

The Company has elected to use the modified-prospective approach method. Under that transition method, the calculated expense in 2006 is equivalent to compensation expense for all awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair values. Stock-based compensation expense for all awards granted after January 1, 2006 is based on the grant-date fair values. The Company recognizes these compensation costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the forfeiture rate.

 

The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services". The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

 

The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital. For common stock issuances to non-employees that are fully vested and are for future periods, the Company classifies these issuances as prepaid expenses and expenses the prepaid expenses over the service period.

 

Debt Issuance Costs

 

Debt issuance costs relate to the fees paid in connection with the Convertible Notes. These fees are being amortized over the life of the Convertible Notes which is three years. Should the notes be converted prior to the maturity date of three years, then the debt issuance costs will be amortized sooner. The Company amortized $0 and $30,618 for the years ended December 31, 2011 and 2010, respectively.

 

F-14
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Beneficial Conversion Features

 

ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. ASC 470-20 further limits this amount to the proceeds allocated to the convertible instrument.

 

Recent Accounting Pronouncements

 

In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. FASB ASU 2011-04 amends and clarifies the measurement and disclosure requirements of FASB ASC 820 resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

In June 2011, FASB issued ASU No. 2011-05, Presentation of Comprehensive Income, which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, FASB ASU No. 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in 1) a single continuous statement of comprehensive income or 2) two separate but consecutive statements, in which the first statement presents total net income and its components, and the second statement presents total other comprehensive income and its components. These new presentation requirements, as currently set forth, are effective for the Company beginning October 1, 2012, with early adoption permitted. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

In September 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment, which amended goodwill impairment guidance to provide an option for entities to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the totality of events and circumstances, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performance of the two-step impairment test is no longer required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s results of operations, cash flows or financial position.

 

F-15
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 2 -              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Recent Accounting Pronouncements (Continued)

 

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

 

NOTE 3 -              FIXED ASSETS AND MINING RIGHTS

 

Fixed Assets:

 

Fixed assets as of December 31, 2011 and 2010 were as follows:

 

   Estimated         
   Useful Lives   December 31,   December 31, 
   (Years)   2011   2010 
Computer and medical equipment   3-5   $9,276   $126,319 
Machinery   5    -    - 
Software   3    -    12,000 
         9,276    138,319 
Less: accumulated depreciation        (248)   (113,729)
Fixed assets, net       $9,028   $24,590 

 

There was $22,729 and $22,481 charged to operations for depreciation expense for the years ended December 31, 2011 and 2010, respectively. In October 2011, the Company sold equipment that had a net book value of $2,109 for $3,175 resulting in a gain of $1,066.

 

Mining Rights:

 

On September 19, 2011, TAG-Z, entered into a Sale of Shares Agreement, whereby, TAG-Z will pay $433,000 in installments through November 30, 2012 for 100% of the Dodge Mine blocks 1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received 50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive company originally formed to conduct mining operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.

 

F-16
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 4 -              CONVERTIBLE NOTES

 

Original Noteholders

 

In April and May 2007, the Company issued 5% Senior Convertible 3 Year Notes to investors in the amount of $2,526,500, which equaled the gross proceeds raised by the Company (the “Convertible Notes”). The Convertible Notes are convertible to shares of the Company’s common stock anytime in the three-year period at a fixed conversion price of $.15. The Convertible Notes will convert into 16,843,333 shares of the Company’s common stock. In May 2009, convertible notes of $125,000 were converted, at a fixed conversion rate of $.15 per share, into 833,334 shares of common stock. This conversion reduced the outstanding principal to a balance of $2,401,500. In an effort to reduce the liabilities of the Company, on July 1, 2010 the Company offered noteholders the opportunity to convert their Notes to common stock at $0.05 per share including any and all outstanding interest that has been accrued from the original $0.15 conversion price.

 

In addition, the Company offered to reset the exercise price of the warrants that were issued with the Notes to $0.075 from $0.15 and $0.25 and extend the warrants for a further three years from the original date of issue for all warrant holders.

 

Approximately 90% of noteholders have agreed to accept the terms of the conversion. Through June 30, 2010, convertible notes of $2,117,000, including $404,413 of accrued interest was converted to 42,340,000 shares of common stock. This conversion reduced the outstanding principal balance to a balance of $409,500. The Company determined that there was no material modification to the debt instrument under ASC 47-50-40, as the embedded conversion option immediately before and after the modification of the debt instrument was under the 10% threshold.

 

The convertible noteholders received 6,737,333 detachable warrants with their notes. The warrants were exercisable for 5 years at an exercise price of $.25. The Placement Agent received 2,947,583 exercisable at $.25 for 5 years. The Company separately valued the warrants at $513,132, and recorded a debt discount in that amount which is being amortized to interest expense over the three-year Convertible Notes period. The Company has recorded an additional discount of $505,300 as the value of the beneficial conversion option.

 

Proceeds of the $2,526,500 were allocated as follows:

i) Convertible Notes - $2,013,368; and

ii) Warrants (also Debt Discount) - $513,132

 

The debt discount of $1,018,432 was amortized using the effective interest method over the life of the Convertible Notes of three years. As part of the transaction, the Company incurred $292,190 of debt issuance costs.

 

Interest expense on the Original Noteholders Convertible Notes for the years ended December 31, 2011 and 2010 was $64,002 and $252,650, respectively and $178,519 is accrued at December 31, 2011. A total of $404,413 of accrued interest was converted into common stock at the time of the note conversions in 2010 and 2011. Interest expense on the debt discount was $0 and $55,389 for the years ended December 31, 2011 and 2010, respectively, and amortization of the discount on the beneficial conversion feature was $0 and $70,340, respectively for the years ended December 31, 2011 and 2010.

 

F-17
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 4 -              CONVERTIBLE NOTES (CONTINUED)

 

Original Noteholders (Continued)

 

As a result of the Company’s failure to timely pay the interest in May 2009, the convertible notes are in technical default. Therefore, the Company has reclassified the debt to current liabilities. The summary of the Convertible Notes is as follows at December 31, 2011:

 

$409,500 Convertible Notes at 10% interest     
per annum due on demand  $409,500 

 

Asher Enterprises

 

In August 2010, the Company entered into a Convertible Promissory Note with Asher Enterprises Inc. in the amount of $50,000. The Convertible Note is convertible to shares of the Company’s common stock anytime in the nine-month period at a variable conversion price meaning 58% multiplied by the market price, the average of the lowest three trading prices. The Company has recorded a discount of $36,207 as the value of the beneficial conversion option. In the years ended December 31, 2011, the Company converted $50,000 of the note (the entire principal portion) into 16,440,977 shares of stock. Additionally, 689,655 shares of common stock were issued to convert $2,000 of interest.

 

Interest expense on the Asher Enterprise Convertible Note for the years ended December 31, 2011 and 2010 was $869 and $0, respectively. The Asher Enterprise Convertible Note has $0 remaining principal balance.

 

NOTE 5 -              CONVERTIBLE NOTES – RELATED PARTIES

 

In May 2011, the Company converted two 5% interest bearing notes with the former Directors of the Company, and now officers of the dental technology subsidiary in the amount of $149,017 into new Convertible Notes totaling $150,000. The $983 variance was recorded by the Company as an expense.

 

The Convertible Notes will be repaid at the rate of 5% of any funding, whether debt or equity, received by the Company or its subsidiaries, or 5% of net revenues of the Company. The noteholders have the right to convert any amounts outstanding and due to them at $0.075 per share at their sole discretion.

 

As of December 31, 2011, the remaining principal balance is $150,000.

 

NOTE 6 -             RELATED PARTY LOANS

 

The Company has unsecured loans with two of its directors. There was $149,017 outstanding in May 2011. These loans were made to fund the Company with working capital during the development stage. The loans are accruing interest at a rate of 5% per annum. Interest expense during the years ended December 31, 2011 and 2010 was $3,375 and $6,336. These loans were converted into Convertible Notes (see Note 5).

 

F-18
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 6 -              RELATED PARTY LOANS (CONTINUED)

 

The Company had entered into employment agreements with its two senior officers through December 31, 2009. The agreements obligated the Company to pay these officers $200,000 per year through December 31, 2009. Total commitment for the Company was $960,000. The amount is due December 31, 2012, however, there is no prepayment penalty. Concurrent with the Merger, the Directors who are owed the $960,000 plus $62,466 in accrued interest that remained outstanding agreed to convert these amounts into 14,400,000 warrants.

 

The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and they were determined to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital.

 

NOTE 7 -              NOTE PAYABLE – DODGE MINES

 

On September 19, 2011, TAG-Z, entered into a Sale of Shares Agreement, whereby, TAG-Z will pay $433,000 in installments through November 30, 2012 for 100% of the Dodge Mine blocks 1-6, located in Zimbabwe. The property consists of three hydrothermal mountains representing 123 hectares containing multiple deposits of superior grade barite, limestone and talc based on the drilling reports that management received from the previous owner of the Dodge mine blocks. Along with the purchase of the Dodge Mine blocks 1-6, TAG-Z received 50% of the issued and outstanding shares of common stock of Chiroswa Minerals (PVT) Limited (“Chiroswa”), an inactive company originally formed to conduct mining operations on the Dodge Mine. Since Chiroswa is an inactive company, TAG-Z has canceled the Chiroswa shares it received under the Sale of Share Agreement and intends to conduct mining operations on the Dodge blocks itself.

 

Through December 31, 2011, the Company paid $149,900 and has $283,100 currently due through November 30, 2012. There is no interest being charged on the amounts due.

 

NOTE 8 -              LICENSE AND ROYALTY FEES

 

Lawrence Livermore

 

The Company on September 14, 2001, entered into a Limited Exclusive Patent License Agreement for Optical Coherence Tomography for Human and Animal Dentistry with The Regents of the University of California (Lawrence Livermore National Laboratories). Pursuant to this license agreement, the Company entered into an installment note with Lawrence Livermore National Laboratories. In the license agreement, the Company agreed to pay to Lawrence Livermore a total of $175,000 in installments commencing September 2001. The $175,000 note did not include annual minimum royalty fees or interest. The first installment was a license issue fee of $15,000 which was paid by the Company. The second installment of $50,000 was the second part of the issue fee that was to be paid in nine monthly installments commencing April 2003 was partially paid by the Company ($26,000). The last installment was originally due December 31, 2005 but it was extended by Lawrence Livermore to October 1, 2006 in the amount of $110,000. The total due under the license agreement was $134,000, prior to a payment made by the Company in October 2006 of $50,000.

 

F-19
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 8 -              LICENSE AND ROYALTY FEES (CONTINUED)

 

                Lawrence Livermore (Continued)

 

Upon payment of this amount, the parties agreed to amend the agreement they had for payment of the balance of $84,000 along with the unpaid royalty fees of $380,000 for 2003, 2004 and 2005 as noted below. The Company incurred $10,000 of maintenance fees in February 2007 and paid these on February 28, 2007.

 

In addition to the license fee, the Company agreed to pay minimum royalties to Lawrence Livermore beginning in 2004. The Company prior to the amendment to the agreement had not paid any of the royalties to Lawrence Livermore.

 

The royalties due were for 2003 $30,000, for 2004 $100,000 and for 2005 $250,000. These fees were to be paid February 28 of each year for the prior calendar year. The royalties due were $380,000.

The parties agreed on December 22, 2006 to amend the agreement. The Company agreed to pay Lawrence Livermore a total of $144,000 in three installments; $10,000 by February 28, 2007 (which was for maintenance fees for 2007 and paid by the Company), $84,000 by July 28, 2007 (which was paid by the Company on July 9, 2007), and the final $50,000 by December 31, 2007 (which was paid by the Company on December 11, 2007). The $380,000 of minimum royalties have been forgiven by Lawrence Livermore and reclassified to additional paid in capital as of December 22, 2006.

 

On January 1, 2008, the Company paid minimum annual royalty fees of $20,000 for 2008.

On February 18, 2009, the Company and Lawrence Livermore entered into an Amended License Agreement, which has been amended nine times, most recently in Amendment Nine dated June 23, 2011 whereby, the Lawrence Livermore extended the due dates of the minimum royalty fees for 2009 ($20,000), 2010 ($20,000), 2011 ($20,000) and 2012 ($20,000) until June 30, 2012 and The remaining minimum royalty fees for 2013 and thereafter are due as follows: 2013 ($60,000) due February 28, 2013; 2014 ($100,000) due February 28, 2014; and 2015 and thereafter for the life of the Agreement ($250,000) due February 28, 2015, and February 28 of each year thereafter for the life of the Agreement.

 

The $60,000 that remains outstanding to Lawrence Livermore is accrued for as of December 31, 2011.

 

F-20
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 8 -             LICENSE AND ROYALTY FEES (CONTINUED)

 

LightLab

 

The Company entered into a Non-Exclusive License Agreement for Imaging Patents between themselves and LightLab Imaging, LLC entered into August 8, 2001.

 

The License Agreement had an original term of 5 years, commencing two years after the original agreement date, which would expire August 8, 2008, and the license could be renewed. The minimum royalty requirements were based on Net Sales by the Company. Since the Company generated no sales in the periods, there were no amounts due. On December 19, 2006, the Company and LightLab Imaging, Inc. negotiated an amendment whereby the new term of the agreement is, unless terminated by either party to remain in effect for three years following whichever of the following events occurs first: i) the Company’s release of a licensed product; ii) the Company’s first commercial sale of a licensed product, or; iii) July 1, 2007 (July 1, 2010). The Company on September 18, 2007 paid LightLab Imaging, LLC $50,000. This Agreement has terminated and will not be renewed as the main scanning patent licensed in this Agreement expires in 2011, before the Company intends to introduce its OCT product into the market.

 

There were no amounts outstanding to LightLab as of December 31, 2011.

 

University of Florida

 

On May 31, 2007, the Company entered into an exclusive licensing agreement for the field of dentistry with The University of Florida Research Foundation for novel technology relevant to the imaging probe of its Dental Imaging System. The Agreement carries a $1,000 initial licensing fee with royalty payments to commence in 2008.

 

The Company has paid the minimum fees in 2008 and the minimum royalty for 2009, amounting to $630 originally due by December 31, 2009 has been deferred until the first anniversary of the first commercial sale and is in accounts payable as it is unpaid as of December 31, 2011. The Company did pay some patent fees in 2009, 2010 and 2011 to the University of Florida. In addition, the first year of sale under the agreement has been amended to 2012 from 2009.

 

University of California – San Francisco

 

On July 9, 2008, the Company entered an exclusive license agreement for near-infrared transillumination for the imaging of early dental decay with The Regents of the University of California. The agreement requires the payment of an initial non-refundable license fee of $10,000 and annual maintenance fees of $5,000. The agreement also requires the payment of certain milestone payments based on patent allowance and FDA approval.

 

The Company has amended this agreement six times, most recently on December 8, 2011, whereby milestones were updated to provide adequate time for the Company to complete development, obtain FDA clearance and transition to marketing and manufacturing. Minimum royalties are required as follows:

 

F-21
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 8 -             LICENSE AND ROYALTY FEES (CONTINUED)

 

University of California – San Francisco (Continued)

 

First year of sales, or no later than 2012  $10,000 
Second year   50,000 
Third year   100,000 
Fourth year   150,000 
Fifth and subsequent years   200,000 

 

The latest amendment deferred payment of the annual license maintenance fees due July 9, 2009, July 9, 2010 and July 9, 2011 ($5,000 per year for a total of $15,000) until May 31, 2012 and are included in accrued expenses.

 

NOTE 9 -            COMMITMENTS

 

AXSUN

 

In June 2008, the Company entered into a strategic agreement with AXSUN Technologies, Inc. (“AXSUN”) whereby AXSUN will manufacture and supply the integrated OCT engine for the OCT System. Under the terms of the agreement, the Company had exclusive rights to the OCT engine for use in diagnostic imaging of teeth and soft tissue in human and animal dentistry. The exclusivity was subject to the Company’s purchasing a minimum number of OCT engines in each year, commencing in 2009. The agreement was terminated in May 2010 for nonperformance by the Company.

 

NOTE 10 -              STOCKHOLDERS’ EQUITY (DEFICIT)

 

Common Stock and Preferred Stock

 

As of December 31, 2011, the Company has 990,000,000 shares of common stock authorized with a par value of $.001. On December 9, 2004, Lantis Laser Inc. increased the authorized shares from 250,000,000 to 990,000,000. Lantis Laser Inc. also removed the 1,000,000 shares of preferred stock from its charter, and on January 23, 2007, amended its articles of incorporation to create a class of preferred stock, and authorized the issuance of 10,000,000 shares of preferred stock at $.001 par value. No shares have been issued to date.

 

The Company has 378,205,600 shares issued and outstanding as of December 31, 2011.

 

F-22
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 10 -              STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

 

Common Stock and Preferred Stock

 

During the year ended December 31, 2011, the Company issued:

 

16,440,977 shares of common stock in conversion of $50,000 in convertible notes to Asher Enterprises, and 689,655 shares of common stock to convert $2,000 of accrued interest to Asher Enterprises.

 

165,000,000 shares of common stock for 100% of the shares of TAG Minerals Inc., in a reverse merger.

 

16,071,432 shares of common stock to convert $80,000 of convertible note payables.

 

11,150,000 shares of common stock for services rendered in the amount of $193,218.

 

2,333,333 shares of common stock to convert $50,000 of convertible notes to old noteholders and convert $17,726 in accrued interest.

 

16,645,298 shares of common stock for $340,000 cash.

 

5,000,000 shares of common stock as a deposit for an acquisition for TAG Z valued at $150,000.

 

5,000,000 shares of common stock to a certain lender of Raptor as incentive to convert their notes into common shares of Raptor valued at $155,000.

 

During the year ended December 31, 2010, the Company issued:

 

500,000 shares to Agoracom for consulting services. These shares were valued at $.04 per share or $20,000.

 

The Company also converted $1,942,000 of convertible notes, at a fixed conversion rate of $0.05 per share, less discount, net of accrued interest, into 39,173,333 shares of common stock at a fixed conversion price of $0.05 per share. The Company also converted $386,687 of accrued interest on these converted notes to additional paid in capital.

 

During the year ended December 31, 2009:

 

The Company issued 2,000,000 shares to various consultants for administrative services and public and investor relation services. These shares were valued at various prices between $.10 and $.04 per share or $150,000. In addition, the Company issued 250,000 shares to convert a payable to a consultant ($12,500).

 

F-23
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 10 -              STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

 

Common Stock and Preferred Stock (Continued)

 

The Company converted $125,000 of convertible notes, at a fixed conversion rate of $.15 per share, less discount, beneficial conversion feature and issuance costs net of accrued interest, into 833,334 shares of common stock at a fixed conversion price of $.15 per share. The Company incurred additional charges to interest expense and amortization of debt issuance costs to reflect the conversion of these notes. This resulted in a reduction of additional paid in capital in the amount of $13,118.

 

The Company received 3,000,000 shares of stock in settlement of its complaints against Ice Cold Stocks, LLC and DC International Consulting LLC. These shares were returned to the Treasury and retired (see Note 11).

 

During the year ended December 31, 2008, the Company issued 575,000 shares to various consulting companies for public and investor relation services and 500,000 shares to a vendor in connection with a strategic supply agreement related to an Optical Coherence Tomography (OCT) engine for use in future products. These shares were valued between $.21 and $.26 per share or $229,500. In addition, a former noteholder who received warrants in 2006 exercised his warrants at $.15 per share for 69,850 shares of common stock for a cash value paid to the Company of $10,478.

 

In addition, two former noteholders who received warrants in 2006 exercised their warrants at $.15 per share in 2007 for a cash value paid to the Company of $24,506.

 

During the year ended December 31, 2006, the Company completed a private placement resulting in the sale of 5,850,000 shares of its common stock at a price per share of $.10. For every 1.8 share of common stock purchased, the investors received 1 warrant. The Company valued each component in accordance with APB 14. The Company received, net of fees, $521,500 through December 31, 2006. The Company also issued 1,500,000 to a consulting company for public and investor relation services. These shares were valued at $.10 per share or $150,000.

 

On June 16, 2006, the Company authorized a reverse 1 for 2 stock split on all issued shares. All shares herein have been reflected retroactive to the stock split.

 

For the year ended December 31, 2005, the Company issued no shares of common stock.

 

During 2004, the only shares issued were in connection with the reverse merger between Lantis Laser, Inc. and Hypervelocity, Inc. The total shares issued were 127,718,500 which included the 6,422,500 shares issued for the conversion of the notes, done simultaneously with the merger.

 

F-24
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 10 -              STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

 

Warrants

 

The Company granted 3,250,000 warrants to the investors who took part in the private placement of $585,000 based on a 1: 1.8 conversion ratio. The warrants were valued in accordance with APB 14 at a value of $208,143 utilizing the Black-Scholes method.

 

The Company granted 1,605,625 warrants to former noteholders that had previously converted their notes into shares of common stock in 2004. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $159,610. Two of these former noteholders who received these warrants exercised their warrants at $.15 per share in 2008 and 2007 for a cash value paid to the Company of $34,984.

 

The Company granted 178,750 warrants to a consultant who assisted the Company in their private placement. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $17,769.

 

The Company granted 6,737,333 warrants to the convertible noteholder investors who took part in the debt offering based on a 4:10 conversion ratio. The warrants were valued in accordance with APB 14 at a value of $513,132 utilizing the Black-Scholes method.

 

The Company granted 2,947,583 warrants to the placement agent who managed the issuance of the 5% Senior Convertible Note. The Company valued these warrants utilizing the Black-Scholes method and expensed them in their consolidated statements of operations. The warrants have a fair value of $292,518. In September 2010, the Company agreed to reset the warrant exercise price to $0.075 per share and extend the maturity of the warrant an additional three years.

 

In May 2011, the Company converted $1,022,466 in related party notes and accrued interest into 14,400,000 warrants. The warrants have a term of five-years, with an exercise price of $0.075. The Company performed a black-scholes calculation to determine the value of the warrants, and it was determined to have a value of $100,800. The gain on the conversion of the related party debt to warrants of $921,666 is reflected in additional paid-in capital.

 

F-25
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 10 -              STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

 

Warrants (Continued)

 

The following is a breakdown of the warrants:

 

Exercise Date     
Warrants   Price   Issued   Term 
              
 3,250,000   $0.075    09/28/2006    8 Years 
 1,372,400   $0.075    09/28/2006    8 Years 
 178,750   $0.075    09/28/2006    8 Years 
 6,737,333   $0.075    05/01/2007    8 Years 
 2,947,583   $0.075    05/17/2007    8 Years 
 14,400,000   $0.075    05/23/2011    5 Years 
 28,886,066                

 

The warrant agreements contain no clauses regarding adjustments to exercise price, net settlement provisions, registration rights or liquidated damages clauses.

 

NOTE 11 -              PROVISION FOR INCOME TAXES

 

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

 

At December 31, 2011, deferred tax assets consist of the following:

 

Net operating losses  $3,567,635 
      
Valuation allowance   (3,567,635)
      
   $- 

 

At December 31, 2011, the Company had a net operating loss carryforward in the amount of $10,493,045 available to offset future taxable income through 2031. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods. A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended December 31, 2011 and 2010 is summarized as follows:

 

   2011   2010 
Federal statutory rate   (34.0)%   (34.0)%
State income taxes, net of federal benefits   3.3    3.3 
Valuation allowance   30.7    30.7 
    0%   0%

 

F-26
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 12 -              INVESTMENT

 

TAG Z acquired Ontage in July 2011. The only activity in Ontage is a 10% interest in Slashwood Mining. The value of the 10% ownership is valued at $150,000, which is the value of the 5,000,000 shares of common stock that the Company issued to acquire Ontage.

 

NOTE 13 -              FAIR VALUE MEASUREMENTS

 

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. The Company determines the fair value of its liabilities, on a recurring basis using significant observable inputs. The fair value measurement of these liabilities is consistent with ASC 820, "Fair Value Measurements" ASC 820 did not have an impact on the consolidated financial position or results of operations; however, the required disclosure for the nine months ended September 30, 2011 is as follows:

 

ASC 820 classifies these inputs into the following hierarchy:

 

Level 1 inputs: Quoted prices for identical instruments in active markets.

 

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

 

Level 3 inputs: Instruments with primarily unobservable value drivers.

 

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

 

   Level 1   Level 2   Level 3   Total 
                     
Investment   -    150,000    -    150,000 
Convertible notes   -    -    559,500    559,500 

 

NOTE 14 -              RELATED PARTY ADVANCES

 

The Company was advanced $27,150 through December 31, 2011 from its CEO. These unsecured advances have no terms of repayment, are interest free and due on demand.

 

F-27
 

 

LANTIS LASER INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011 AND 2010

 

NOTE 15 -              SUBSEQUENT EVENTS

 

On February 7, 2012, the Company issued 2,175,333 shares of common stock at prices ranging between $0.022 and $0.03 per share for cash at a value of $62,400; and 200,000 shares of stock for services valued at $0.03 per share or $6,000.

 

The Company has paid an additional $47,166 in note payments for the acquisition of the Dodge Mines through February 29, 2012.

 

Effective March 5, 2012, the Company’s name was formerly changed to Raptor Resources Holdings Inc.

 

F-28
 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Item 9A(T).  Controls and Procedures

 

Disclosure Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation under the supervision and with the participation of our Chief Executive Officer of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Disclosure controls are procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, or the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified by the U.S. Securities and Exchange Commission. Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of disclosure controls includes an evaluation of some components of our internal control over financial reporting. We also perform a separate annual evaluation of internal control over financial reporting for the purpose of providing the management report below.

 

The evaluation of our disclosure controls included a review of their objectives and design, our implementation of the controls and the effect of the controls on the information generated for use in this Annual Report on Form 10-K. In the course of the controls evaluation, we reviewed data errors or control problems identified and sought to confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions of management, our Chief Executive Officer and Chief Financial Officer who are the same person, concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-Q and Form 10-K. The overall goals of these various evaluation activities are to monitor our disclosure controls and to modify them as necessary. We intend to maintain our disclosure controls as dynamic processes and procedures that we adjust as circumstances merit.

 

Based on our management’s evaluation (with the participation of Al Pietrangelo, our Chief Executive Officer and Chief Financial Officer), as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2011 since we lack sufficient funds to engage separate individuals for these two functions. We plan on making changes in the upcoming year to become more effective and properly segregate these functions.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2011 based on the guidelines established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.

 

Based on the results of our evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2011 since we lack sufficient funds to engage separate individuals for these two functions.

 

27
 

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

28
 

 

Inherent Limitations on Effectiveness of Controls

 

Our management, namely Al Pietrangelo, our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

 

Item 9B. Other Information

 

Not applicable.

 

PART III

 

Item 10. Directors and Executive Officers of the Registrant

 

 

Directors and Executive Officers

 

Name and Position   Age   Director Since
Al Pietrangelo
President and CEO and
Chairman of the Board of Directors
  54   2010
         
Greig Oppenheimer
Director
  47   2010
         
Tapiwa Gurupira
Director
  33   2011

 

Management Biographies

 

Al Pietrangelo has served as President, CEO and Chairman of the Board of Directors of Raptor Resources Holdings and TAG since 2010. From 2006 to 2010 Mr. Pietrangelo was CEO and Director of Rock of Angels Capital Corp., Rock of Angels Acquisition Corp. and Rock of Angels Holdings Inc. From 2005 to 2006 Mr. Pietrangelo was President and a Director of 4 Star Capital Management Inc. From 2002 to 2004 Mr. Pietrangelo served as Secretary and Director of Hypervelocity, Inc. We believe that Mr. Pietrangelo has the management background to assist us in its growth and the expertise to assist us in the public markets. Mr. Pietrangelo obtained a B.S. in Business Administration from the University of South Florida.

 

Greig Oppenheimer is a director of Raptor Resources Holdings and TAG since 2010. From 2003 Mr. Oppenheimer has served as CEO of IE-TEC Holdings Limited, IE-TEC Marketing Limited and IETEC Licensing Limited and CEO and Director of Innovative Environmental Technologies Corporation. Since 2003 Mr. Oppenheimer has served as a Director of Aurora Mines Inc. We believe that Mr. Oppenheimer has experience in managing companies, expertise as a mechanical engineer and specific knowledge of mineral extraction, all of which are important to us as we expand our gold mining operations.

 

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Tapiwa Gurupia is a Director of Raptor Resources Holdings and TAG since January 2011. Since 2009 Mr. Gurupira has been CEO and a Director of Ontage Resources and a Director of Mooridge Enterprises since 2007, both private companies organized and operating in Zimbabwe. While working towards his Master's degree he devised a way to separate dry mixtures of particles that was patented, and a company, Triboflow Separations, LLC, was formed. Mr. Gurupira served as Chief Engineer of Triboflow. Triboflow was awarded a grant of $2 million under the NIST Advanced Technology Program. In 2006, Mr. Gurupira joined Breen Solutions, LLC in Pittsburgh, PA, a company specializing in equipment to monitor and regulate emissions at coal combustion power plants, as Project Manager. In 2009 he returned to Zimbabwe where he started a mining technology and consulting company. Mr. Gurupira has a Masters of Science degree in Mechanical Engineering from the University of Kentucky.

 

Stanley B. Baron is the Chairman, President & Chief Executive Officer of Lantis Laser, Inc. since 2001. He has over 25 years experience in the dental industry. In 1971 in Zimbabwe he founded Metro Cash & Carry, a consumer products wholesale distribution business. Metro Cash & Carry was subsequently sold to a large European food company.

 

Mr. Baron and his family emigrated to Israel in 1979. He purchased a partnership in Mardent Ltd., a small dental equipment company that represented A-dec, a leading US dental equipment manufacturer, as well as other leading European and Japanese companies. Mardent merged with Healthco (Israel), a sundry distributor and a subsidiary of Healthco International. Mr. Baron continued to manage the combined company following the merger.

 

In 1989, Mr. Baron moved to the United States and started to work with dental companies to identify, license and commercialize new technologies. From 1993 to 2001, Mr. Baron was a principal of TechnaLink which acted as a consultant to Integra Medical, which successfully commercialized an intraoral camera imaging system for dentistry. From 1996 to 2001 TechnaLink also acted as a consultant to Frontier Pharmaceuticals which successfully commercialized a novel antiseptic/surface disinfection technology for biomedical application. We believe that Mr. Baron has significant experience in the dental industry, dental technology, the marketing of dental equipment and growing an emerging business which is of value to Lantis Laser, Inc.

 

Craig B. Gimbel, DDS — Dr. Gimbel has been Executive Vice-President Clinical Affairs and a Director of Lantis Laser, Inc. since prior to 2002. From 1978 to 2005, Dr. Gimbel practiced clinical dentistry and worked on numerous dental technology projects that included clinical research, publishing and teaching. In November 2005, Dr. Gimbel left clinical private practice to devote his full time and attention to Lantis.

 

Dr. Gimbel has over 16 years of clinical and research experience in laser/photonic dentistry. He is a past Chairperson, from 2006 to 2007, of the Scientific Committee of the Academy of Laser Dentistry and had achieved Advanced Proficiency Certification in Laser Dentistry in 1993. Presently, Dr. Gimbel is Conference Committee Chair, and since March 2007 has been President of the Academy. He is a Fellow of the American College of Dentists, American Society of Dentistry for Children, Academy of General Dentistry and Academy of Dentistry International. Dr. Gimbel has many years of experience in laser/photonic dentistry and clinical dentistry to provide valuable expertise for the successful commercialization of the company's laser technology. Dr. Gimbel graduated from New York University College of Dentistry in 1977.

 

Dr. Gimbel is the 2003 recipient of the T. H. Maiman Award for Excellence in Dental Laser/Photonics Research.

 

Douglas Hamilton, has been Vice-President R&D of Lantis Laser, Inc. since November 2004. From June 2005 to November 2006, he was also Director of Operations at Citi WiFi Networks, Inc., a privately-held provider of municipal WiFi services. From September 1997 to June 2005, Mr. Hamilton was a Technology Administrator and consultant for American Financial Solutions, a privately-held financial services firm that was acquired by National Financial Partners Corp. in October 2003. Previously, from 1992 to 1998, Mr. Hamilton was President and Director of Operations of Aries International Inc., a privately-held logistics company, where he was responsible for project team management including Systems development and integration of optical, digital and radiographic products.

 

Linda Otis, DDS,s has been our Vice-President Clinical Research since November 2004. From 2005 to the present, she has been a Professor of Oral and Maxillofacial Radiology at the University of Maryland, Baltimore College of Dental Surgery, in Baltimore, Maryland. She received her D.D.S. at University of Nebraska, Lincoln and did her postgraduate work in diagnostic science at University of Texas, San Antonio.

 

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Dr. Otis initiated the application of OCT for use in dentistry while she was at the University of California, San Francisco Dental School in 1994 and implemented the research on OCT with the Medical Technology Program scientists at Lawrence Livermore National Laboratory. She is an authority on OCT and is active in research relating to new methods for diagnosing common oral conditions as a principal investigator of a National Institute of Health research grant. Dr. Otis has lectured throughout the United States on many topics in dentistry. She has published widely, including 35 publications. She is named on three of the patents relating to OCT application in dentistry.

 

There are no family relationships among the officers and directors.

 

Audit, Nominating and Compensation Committees, and Director Independence

 

Our Board of Directors does not have standing audit, nominating or compensation committees, and our Board of Directors performs the functions that would otherwise be delegated to such committees. We anticipate that our Board of Directors will be able to attract qualified independent directors to serve on the Board and ultimately form standing audit, nominating and compensation committees.

 

Neither of our directors is considered independent. 

 

Item 11. Executive Compensation

 

The following table sets forth the compensation earned for services rendered in all capacities by our Principal Executive Officer and Principal Financial Officer whose received no annual salary and bonus for the fiscal year-ended 2011. No other executive officer’s compensation exceeded $100,000 in the fiscal year ended December 31, 2011. The individual named in the table will be hereinafter referred to as the “Named Executive Officer.”

 

SUMMARY COMPENSATION TABLE

  

Name and Principal Position  Year   Salary ($)   Bonus ($)   Stock
Awards
($)
   Option
Awards
($)
   Non-Equity
Incentive Plan
Compensation
($)
   Nonqualified
Deferred
Compensation
Earnings
($)
   All Other
Compensation
($)
   Total
($)
 
                                              
Al Pietrangelo
President and Chief Executive Officer (PEO and PFO)
   2011   $0                           $0 

 

Since January 2011, we have no employment agreements with management. We had employment agreements with Mr. Baron and Dr. Gimbel and these terminated at December 31, 2009. Under these agreements, Mr. Baron was entitled to receive an annual salary of $120,000, and Dr. Gimbel was entitled to receive an annual salary of $80,000, respectively. Their salaries accrued until we believed that our cash position would allow us to pay them the amount accrued, up to a maximum of three years, or until December 31, 2009, after which accrued and unpaid salary, if any, will be paid in the form of a convertible note bearing interest at the rate of 5% per annum, convertible into shares of common stock at a conversion price equal to the average bid price for 10 days prior to conversion. Under the terms of their respective employment agreements, Mr. Baron and Dr. Gimbel may elect to have salary paid in shares of our common stock, valued at a price equal to the average bid price for our stock for the previous 30 days. In terms of their agreement, notes were issued to them at the end of 2009 for the accrued amount of $960,000 with interest accruing at 5% per annum.

 

The tables entitled “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END” and “DIRECTOR COMPENSATION” and the respective discussions related to those tables have been omitted because no compensation required to be reported in those tables was awarded to, earned by or paid to any of the named executive officers or directors in any of the covered fiscal years.

 

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Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Matter

 

The following table sets forth, as of April 12, 2012, certain information concerning the beneficial ownership of common stock by (i) each person known by the company to be the owner of more than 5% of the outstanding common stock, (ii) each director, (iii) each Named Executive Officer, and (iv) all directors and executive officers as a group. In general, “beneficial ownership” includes those shares a director or executive officer has the power to vote or the power to transfer, and stock options and other rights to acquire common stock that are exercisable currently or become exercisable within 60 days of April 9, 2011. Except as indicated otherwise, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. The calculation of the percentage owned is based on 382,306,456 shares of common stock issued and outstanding (plus, with respect only to each holder of securities that are exercisable for or convertible into common stock, shares underlying such securities within sixty days) and 1,000,000 shares of Series A preferred stock, allowing each holder to have three votes per share and to vote on an as-converted basis with holders of our common stock. The address of each of the directors and executive officers listed below is c/o Raptor Resources Holdings Inc., 41 Howe Lane, Freehold, New Jersey 07728 unless otherwise indicated.

 

Name and Address  Amount and Nature
of Beneficial Ownership
   Percentage of
Outstanding
Shares Owned
 
Directors and Executive Officers          
Al Pietrangelo   355,000,000 (1)   52%
Greig Oppenheimer   55,000,000 (2)   8%
Tapiwa Gurupira   55,000,000    8%
All directors and executive
officers as a group (3 persons)
   465,000,000    68%

 

 

* Represents less than 1%

 

(1) Mr. Al Pietrangelo owns 1,000,000 shares of Series A preferred stock, each share of which allows the holder to have 300 votes and to vote on an as-converted basis with holders of the Company's common stock. 

 

Item 13. Certain Relationships and Related Transactions and Director Independence

 

 

 Since January 1, 2011, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $120,000 and in which, to its knowledge, any of its directors, officers, five percent beneficial security holders, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest other than compensation arrangements, which are described where required under the “Executive Compensation” section.

 

Since January 1, 2011, no promoter or control person (within the meaning of paragraph (c) to Item 404 of Regulation S-K under the Exchange Act) has received anything of value, directly or indirectly, from us, and we have acquired no assets from any such person except as follows:

 

We are accruing salaries for Mr. Baron and Dr. Gimbel pursuant to their employment agreements as more fully described above following the “SUMMARY COMPENSATION TABLE.”

 

None of our directors is considered independent.

 

Item 14. Principal Accounting Fees and Services

 

Audit Fees

 

The aggregate fees for professional services rendered by KBL, LLP for the audit of our financial statements for the fiscal years ended December 31, 2011 and December 31, 2010 were $36,500 and $36,500, respectively.

 

Audit–Related Fees

 

None

 

Tax Fees 

 

None

 

All Other Fees

 

None

 

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PART IV

 

 Item 15. Exhibits, Financial Statement Schedules

 

  3(i)   Articles of Incorporation, as amended (incorporated by reference to Exhibit 3(i) to Form SB-2 filed on September 26, 2007).
       
  3(ii)   By-laws, as amended (incorporated by reference to Exhibit 3(ii) to Form SB-2 filed on September 26, 2007).
       
  4.1   Form of common stock certificate (incorporated by reference to Exhibit 4.1 to Form SB-2 filed on September 26, 2007).
       
  4.2   Form of Amended and Restated 5% Senior Convertible Note (incorporated by reference to Exhibit 4.2 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).
       
  4.3   Form of Common Stock Purchase Warrant expiring September 28, 2011 (corrected) (incorporated by reference to Exhibit 4.3 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).
       
  4.4   Form of Placement Agent’s Warrant expiring September 28, 2011 (incorporated by reference to Exhibit 4.4 to Form SB-2 filed on September 26, 2007).
       
  4.5   Form of Class B Common Stock Purchase Warrant expiring May 17, 2012 (incorporated by reference to Exhibit 4.5 to Form SB-2 filed on September 26, 2007).
       
  4.6   Form of Placement Agent’s Warrant expiring May 17, 2012 (incorporated by reference to Exhibit 4.6 to Form SB-2 filed on September 26, 2007).
       
  10.1   Management Employment Agreement with Stanley B. Baron, dated January 1, 2006 (incorporated by reference to Exhibit 10.1 to Form SB-2 filed on September 26, 2007).
       
  10.2   Management Employment Agreement with Craig B. Gimbel, dated January 1, 2006 (incorporated by reference to Exhibit 10.2 to Form SB-2 filed on September 26, 2007).
       
  10.3   Limited Exclusive Patent License Agreement with the Regents of the University of California (as manager and operator of Lawrence Livermore National Laboratory), dated September 14, 2001 (incorporated by reference to Exhibit 10.3 to Form SB-2, filed on September 26, 2007).
       
  10.4   Amendment No. 3, dated December 18, 2006, to Limited Exclusive Patent License Agreement with the Regents of the University of California (as manager and operator of Lawrence Livermore National Laboratory) (incorporated by reference to Exhibit 10.4 to Form SB-2 filed on September 26, 2007).
       
  10.5   Non-Exclusive License for Imaging Patents with LightLab Imaging, LLC, dated August 8, 2001 (incorporated by reference to Exhibit 10.5 to Form SB-2 filed on September 26, 2007).
       
  10.6   First Amendment, dated December 19, 2006, to Non-Exclusive License for Imaging Patents with LightLab Imaging, LLC (incorporated by reference to Exhibit 10.6 to Form SB-2 filed on September 26, 2007).
       
  10.7   Standard Non-Exclusive License Agreement with the University of Florida Research Foundation, Inc., dated May 31, 2007 (incorporated by reference to Exhibit 10.7 to Form SB-2 filed on September 26, 2007).
       
  10.8   Amendment No. 1, dated September 30, 2004, to Limited Exclusive Patent License Agreement with the Regents of the University of California (as manager and operator of Lawrence Livermore National Laboratory) (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).
       
  10.9   Amendment No. 2, dated March 2, 2005, to Limited Exclusive Patent License Agreement with the Regents of the University of California (as manager and operator of Lawrence Livermore National Laboratory) (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).

 

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  10.10   Amendment to Management Employment Agreement with Stanley B. Baron, dated February 13, 2008 (incorporated by reference to Exhibit 10.10 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).
       
  10.11   Amendment to Management Employment Agreement with Craig B. Gimbel, dated February 13, 2008 (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to Form SB-2 on Form S-1 filed on February 14, 2008).
       
  10.12   Form of Subscription Agreement from September 2006 private placement (incorporated by reference to Exhibit 10.12 to Amendment No. 2 to Form SB-2 on Form S-1 filed on June 24, 2008).
       
  10.13   Form of Subscription Agreement from May 2007 private placement (incorporated by reference to Exhibit 10.13 to Amendment No. 2 to Form SB-2 on Form S-1 filed on June 24, 2008).
       
  10.14   Joint Venture Shareholders Agreement among the registrant, Laser Energetics, Inc., and HyGeniLase, Inc., dated December 18, 2007 (incorporated by reference to Exhibit 10.14 to Amendment No. 4 to Form SB-2 on Form S-1 filed on September 15, 2008).
       
  10.15   Optical Coherence Tomography (OCT) Optical Engine Development Program and Supply Agreement between the registrant and AXSUN Technologies, Inc., dated as of May 13, 2008 (incorporated by reference to Exhibit 10.15 to Amendment No. 4 to Form SB-2 on Form S-1 filed on September 15, 2008).
       
  10.16   Exclusive License Agreement with the Regents of the University of California, dated July 9, 2008 (incorporated by reference to Exhibit 10.16 to Amendment No. 5 to Form SB-2 on Form S-1 filed on October 8, 2008).
       
  10.17   Consulting Agreement, dated November 14, 2007, with DC International Consulting, LLC (incorporated by reference to Exhibit 10.17 to Amendment No. 11 to Form SB-2 on Form S-1 filed on February 17, 2009).
       
  10.18   Consulting Agreement, dated November 15, 2007, with Debbie Sutz (affiliate of VAR Growth Corp.) (incorporated by reference to Exhibit 10.18 to Amendment No. 9 to Form SB-2 on Form S-1 filed on January 29, 2009).
       
  10.19   Settlement Agreement, dated October 16, 2008, with DC International Consulting, LLC (incorporated by reference to Exhibit 10.17 to Amendment No. 11 to Form SB-2 on Form S-1 filed on February 17, 2009).
       
  10.20   Settlement Agreement, dated October 16, 2008, with Barry Davis and Debbie Sutz (affiliates of VAR Growth Corp.) (incorporated by reference to Exhibit 10.17 to Amendment No. 11 to Form SB-2 on Form S-1 filed on February 17, 2009).
       
  10.21   Agreement and  Plan of Merger Among Lantis Laser Inc., TAG Acquisition Corp. and TAG Minerals Inc. dated April 22, 2011 (incorporated by reference to Exhibit 10.1 to Form 8-K filed April 26, 2011).
       
  10.22   Agreement for the Exchange of Common Stock, dated July 21, 2011, among Lantis Laser Inc., TAG Minerals Zimbabwe (Private) Limited and Ontage Resources (Private) Limited (incorporated by reference to Exhibit 10.1 to Form 8-K filed July 25, 2011).
       
  16.1   Letter of KBL, LLP (incorporated by reference to Exhibit 16.1 to Amendment No. 4 on Form S-1 to the registrant’s Registration Statement on Form SB-2, filed on September 15, 2008).
       
  21.1   Subsidiaries of the registrant (incorporated by reference to Exhibit 21.1 to the registrant’s Registration Statement on Form SB-2, filed on September 26, 2007).
       
  24.1   Power of attorney
       
  31.1   Section 302 CEO Certification
       
  31.2   Section 302 CFO Certification
       
  32.1   Section 906 CEO Certification
       
  32.2   Section 906 CFO Certification

† Compensation plan or agreement 

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this Annual Report on Form 10-K to be signed by the undersigned, thereunto duly authorized, this 16th day of April 2012.

  

  Raptor Resources Holdings Inc.
     
  By:      /s/ Al Pietrangelo
         Al Pietrangelo
         Chairman, President, Chief Executive
         Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons, in the capacities and on the dates indicated.

 

SIGNATURE   TITLE   DATE
/s/ Al Pietrangelo   Chairman, President, Chief Executive
Officer, Principal Executive, Financial and
  April 16, 2012
Al Pietrangelo   Accounting Officer and Director    

 

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