U.S. RARE EARTHS, INC

Nasdaq certified U.S. RARE EARTHS, INC's securities for listing, clearing them to begin trading.

listing compliance notice

On March 17, 2014 the audit committee concluded that the unaudited financial statements for the quarters ended June 30 and September 30, 2013 can't be relied on, due to non-cash errors. The main errors were an unrecorded option granted to Lattimore Properties as part of the June 2013 settlement of the Williams/Cowle litigation (expensed at $5.1 million) and 3,000,000 shares issued to Logic International Consulting for settlement services, revalued at $1.94 (an extra $2.8 million). The June 2013 quarter's net loss rose from $5.5 million to $13.4 million. The September quarter's net loss was restated from $361,796 to $318,463. This resolves how the 2012 board litigation ended (settlement approved June 5, 2013) and opens a new restatement thread. Note the cover page lists Delaware as the state of incorporation, versus Nevada elsewhere; the filing does not explain this.

financial restatement

On September 13, 2012 the company issued a $650,000, 5% convertible note, due September 15, 2015, to Unique Materials LLC, an entity affiliated with Chairman John Victor Lattimore Jr. It converts at $2.85 per share at the holder's demand, is secured by all mineral claims, real property, fixed assets, inventory and receivables, and becomes payable on demand if the chairman, president/VP or 20% of the board changes. The same filing discloses a board fight: the company sued former directors H. Deworth Williams, Edward Cowle and Geoff Williams, plus Blue Cap Development, in Nevada to declare their written-consent removal of directors McGroarty, Schifrin and Cassidy ineffective, while Williams and Cowle filed a competing petition in Utah. A hearing on the restraining order is set for September 27, 2012, and outcomes are uncertain. The company also paid the remaining $610,000 on the note owed to Blue Cap for the 2011 U.S. Rare Earths acquisition.

debt financing

The company said its 10-Qs for the quarters ended March 31, June 30 and September 30, 2011 can no longer be relied on, and filed restated versions. The restatements raised the net loss by about $84,000, $161,000 and about $20.1 million respectively; the September 2011 quarter included $15.5 million for impairment of the U.S. Rare Earths acquisition, a $2.5 million larger warrant derivative loss and $2.1 million more accrued officer compensation. It also reclassified $28.25 million out of mineral properties with a matching reduction in additional paid-in capital, which writes down the value placed on the 2011 acquisition.

financial restatement

On August 22, 2011 the company (then Colorado Rare Earths) closed its purchase of Delaware-based U.S. Rare Earths, which holds claims in the Lemhi Mining District of Idaho and the Montana/Beaverhead District, by merging it into its subsidiary Seaglass. U.S. Rare Earths holders get 5,000,000 unregistered shares (about 25% of the company afterward). This is again a related-party deal, since Edward Cowle and H. Deworth Williams (each about 19.6% holders, Cowle a director) are principals of the target; the company says it investigated independently. A name change to U.S. Rare Earths, Inc. is expected in late September 2011, two new directors are to be named, and the filing also discloses $4.0 million raised from 80 units sold to 40 investors, each unit carrying warrants at $4.85. Financial statements and pro formas for the acquired business are still to come by amendment.

asset acquisition disposition

Calypso agreed to acquire Seaglass Holding Corp., which owns about 37 mining claims in Gunnison and Fremont counties and two leases in Custer County, Colorado, aimed at possible rare earth deposits. It issued 5,900,000 unregistered shares (about 54% of the company afterwards) to Seaglass holders, and will rename itself Colorado Rare Earths, Inc., expected in late January 2011. Seaglass principals Edward Cowle and H. Deworth Williams were each about 12% holders of Calypso, so this was a related-party deal, which the company says it investigated independently. Harvey Kaye and Daniel McGroarty joined the board. The company says it intends to keep the advertising business, so this is a diversification into mining after the failed WebiMax deal.

asset acquisition disposition

Calypso and WebiMax mutually agreed on November 10, 2010 to terminate the acquisition agreement, which ends the deal announced in September. No securities were issued or cash paid, there are no ongoing obligations or penalties, and the private placement was cancelled with no securities sold.

material agreement termination

On September 10, 2010 Calypso agreed to buy WebiMax, L.L.C., a New Jersey search engine optimization firm, for 3,500,000 common shares, 10,000 Series A convertible preferred shares (each puttable back to Calypso at $100) and $2,500,000 in cash. Closing depended on Calypso raising at least $2,500,000 in a private placement within sixty days, and WebiMax's founder Kenneth Wisnefski would join the board at closing.

material agreement

The Media Depot acquisition closed on December 31, 2007, a little later than the roughly November 21 date expected earlier. The company first reincorporated in Nevada and renamed itself Calypso Media Services Group, then issued 3.5 million shares to Media Depot holders, who now own 70% (against 1.5 million shares outstanding beforehand). The company is now an advertising agency serving manufacturers, distributors and dealers in the US and Canada, with a Pennsylvania head office and an Arkansas satellite office. An employee stock plan covers 120,000 shares for nine employees, vesting over four years. The existing directors and officers were to resign at the merger.

asset acquisition disposition

Calypso agreed on October 12, 2007 to acquire Media Depot, Inc. (Montoursville, Pennsylvania), a co-op advertising agency, by merging a new subsidiary into it. Media Depot holders would receive 3.5 million new shares, about 70% of the company after the deal, with a further 5.0 million shares reserved for possible related acquisitions. The company also planned to move from Delaware to Nevada and rename itself Calypso Media Services Group; closing was expected around November 21, 2007. This turns the company from a shell-like entity into an advertising business.

material agreement