Vista Gold - 10-Q quarterly report FY

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

Commission File Number 1-9025

VISTA GOLD CORP.

(Exact name of registrant as specified in its charter)

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 the filing requirements for the past 90 days:

Yes  x  No  o

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  34,452,117

Common Shares, without par value, outstanding at August 8, 2008

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VISTA GOLD CORP.

(An Exploration Stage Enterprise)

FORM 10-Q

For the Quarter Ended June 30, 2008

INDEX

In this Report, unless otherwise indicated, all dollar amounts are expressed in United States dollars.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

(U.S. dollars unless specified otherwise)

1.                                      General

The consolidated interim financial statements of Vista Gold Corp. (an Exploration Stage Enterprise) (the “Corporation”), as of June 30, 2008, and for the three-month and six-month periods ended June 30, 2008, have been prepared by the Corporation without audit and do not include all of the disclosures required by generally accepted accounting principles in Canada for annual financial statements. As described in Note 15, generally accepted accounting principles in Canada differ in certain material respects from generally accepted accounting principles in the United States.  In the opinion of management, all of the adjustments necessary to fairly present the interim financial information set forth herein have been made.  These adjustments are of a normal and recurring nature. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.  These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2007.

2.                                      Nature of operations and changes in accounting policies

Nature of operations

The Corporation evaluates, acquires and explores gold exploration and potential development projects. As such, the Corporation is considered an Exploration Stage Enterprise. The Corporation’s approach to acquisitions of gold projects has generally been to seek projects within political jurisdictions with well established mining, land ownership and tax laws, which have adequate drilling and geological data to support the completion of a third-party review of the geological data and to complete an estimate of the gold mineralization. In addition, the Corporation looks for opportunities to improve the value of its gold projects through exploration drilling, and/or reengineering the operating assumptions underlying previous engineering work.

In 2007, the Board of Directors and management reevaluated the corporate strategy regarding the development of the Corporation’s more advanced projects.  As of result of this reevaluation, the Corporation has begun moving its more advanced projects through advanced and pre-feasibility studies in preparation for mine development so that production decisions can be made on those projects.

Although the Corporation has reviewed and is satisfied with the title for all mineral properties in which it has a material interest, there is no guarantee that title to such concessions will not be challenged or impugned.

Changes in accounting policies

Effective January 1, 2008, the Corporation adopted the following standards updates by the Canadian Institute of Chartered Accountants (“CICA”).  These new standards have been adopted on a prospective basis with no restatement to prior period financial statements.

CICA Section 1535, “Capital Disclosures” requires the disclosure of an entity’s objectives, policies and processes for managing capital, quantitative data about what the entity regards as capital and whether the entity has complied with any capital requirements and, if it has not complied, the consequences of such noncompliance.  The Corporation’s objective is to ensure the Corporation’s ability to continue as a going concern, so that it can continue to provide returns for shareholders.

The Corporation considers items included in its shareholders’ equity and its convertible debt as capital.  The Corporation manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.  In order to maintain or adjust the capital structure, the Corporation may issue new shares through equity financings to reduce debt.  The Corporation is not subject to externally imposed capital requirements.  See Notes 7, 8, 9 and 10.

CICA Section 1400, “General Standards of Financial Statement Presentation”, was amended to include requirements to assess and disclose an entity’s ability to continue as a going concern.  The new requirements are effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2008.  The adoption of this statement did not have an impact on the consolidated financial statements.

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CICA Section 3862, “Financial Instruments-Disclosures” and Section 3863, “Financial Instruments-Presentations” are two standards that replace Section 3861, “Financial Instruments-Disclosure and Presentation”, revising disclosures related to financial instruments and carry forward unchanged presentation requirements.  These standards increase the disclosures currently required, which will enable users to evaluate the significance of financial instruments for an entity’s financial position and performance, including disclosures about fair value.  In addition, disclosure is required of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosure about credit risk, liquidity and market risk.  The quantitative disclosures must provide information about the extent to which the entity is exposed to risk, based on information provided internally to the entity’s key management personnel.

Recent accounting pronouncement not yet adopted

In February 2008, the CICA issued Section 3064, “Goodwill and Intangible Assets”, which replaces Section 3062, “Goodwill and Intangible Assets,” and results in a withdrawal of CICA Section 3450, “Research and Development Costs,” and amendments to Accounting Guideline (AcG) 11, “Enterprises in the Development Stage,” and CICA Section 1000, “Financial Statement Concepts.” The standard intends to reduce the differences with International Financial Reporting Standards (“IFRS”) in the accounting for intangible assets and results in closer alignment with U.S. GAAP. Under current Canadian standards, more items are recognized as assets than under IFRS or U.S. GAAP. The objectives of CICA Section 3064 are to reinforce the principle-based approach to the recognition of assets only in accordance with the definition of an asset and the criteria for asset recognition; and clarify the application of the concept of matching revenues and expenses such that the current practice of recognizing assets that do not meet the definition and recognition criteria are eliminated. This standard will be effective for fiscal years beginning on or after October 1, 2008. The Corporation is currently evaluating the impact of adopting this standard in 2009.

3.                                      Disposal of Amayapampa gold project

On April 7, 2008, the Corporation announced an agreement to dispose of its wholly-owned subsidiary Vista Gold (Antigua) Corp. (“Vista Gold Antigua”) to Republic Gold Limited (“Republic”). Vista Gold Antigua indirectly held the Corporation’s interest in the Amayapampa gold project in Bolivia. Under the terms of the transaction, Republic has agreed to pay to the Corporation, $3.0 million in three payments of $1.0 million. The first of these payments is due and payable upon the start of commercial production (as defined in the purchase and sale agreement) at Amayapampa followed by $1.0 million payments on each of the first and second anniversaries of the start of commercial production.  In addition, Republic has agreed to pay to the Corporation a net smelter return royalty (“NSR”) on the gold produced by or on behalf of Republic from the Amayapampa project in varying percentages depending on the price of gold per ounce. When gold is between $500.01 and $650.00 per ounce, a 2% NSR is payable, when the price of gold is between $650.01 and $750.00 per ounce, a 3% NSR is payable, and when the price of gold is $750.01 per ounce and above, an NSR of 3.5% is payable. The NSR is capped at 720,000 gold equivalent ounces and no NSR payments are due to the Corporation if the gold price is below $500 per ounce. The Corporation will retain a first right of refusal in the event Republic decides to sell the property and will also retain a right to re-acquire the property if Republic or Vista Gold Antigua have not moved to close a financing under a project financing facility within five years.  Under the terms of the transaction, the Corporation agreed to lend $350,000 to Republic for ongoing expenses on the Amayapampa gold project.  The loan was completed on April 7, 2008.  Interest on the loan accrues and is payable at the rate of 10% per annum, payable monthly.  The principal is due on or before the earlier of (a) September 30, 2008, (b) the date that a bankable feasibility study is completed with respect to the Amayapampa gold project or (c) such earlier date in the event the Corporation makes demand for full payment upon the occurrence of an event of default.

The fair value of the consideration received on disposal of the Amayapampa project has been calculated as of June 30, 2008 using probability weighted cash flow scenarios and assumptions including future gold prices, estimated gold production and the timing of commencement of commercial production.  These inputs in the “income approach” valuation model used by the Corporation are considered to be level three unobservable inputs as defined by SFAS No. 157, “Fair Value Measurements.”  These are the Corporation’s own assumptions based on management’s best estimates and the best information available at the time.

Prime Corporate Finance Pty Limited (“PCF”) of West Perth, Australia served as corporate advisor to the Corporation in connection with the above transaction.  In compensation for the advisory services provided by PCF, the Corporation had agreed to pay PCF a success fee of 5% of the face value of any transaction completed with a party introduced by PCF.  Republic was introduced to the Corporation by PCF.  On April 8, 2008, the Corporation and PCF agreed that the success fee payable to PCF was $165,000, such amount being equivalent to Cdn. $166,815.  In addition, on April 8, 2008, PCF and the Corporation agreed that the success fee would be payable in common shares of the Corporation.  Based on the market price of the Corporation’s common shares at the close of business on April 7, 2008 of Cdn. $4.47, 37,318 common shares of the Corporation were issuable to PCF.  This issuance was completed on June 17, 2008.

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4.             Marketable securities

5.                                      Mineral properties

On January 24, 2008, the Corporation completed the acquisition of interests in various mineral properties adjacent to the Corporation’s Guadalupe de los Reyes project in Mexico.  The consideration paid by the Corporation for the acquisition of these interests included cash payments totalling $452,000 and the issuance of a total of 213,503 common shares of the Corporation (with an aggregate fair value of $1,000,000), to various parties.

The recoverability of the carrying values of the Corporation’s mineral properties is dependent upon the successful start-up and commercial production from, or sale, or lease, of these properties and upon economic reserves being discovered or developed on the properties.  Development and/or start-up of any of these projects will depend, among other things, on management’s ability to raise additional capital for these purposes.  Although the Corporation has been successful in raising such capital in the past, there can be no assurance that it will be able to do so in the future.

The Corporation believes that the fair value of its mineral properties exceeds the carrying value; however, a write-down in the carrying values of the Corporation’s properties may be required in the future as a result of events and circumstances, such as the Corporation’s inability to obtain all the necessary permits, resulting in an evaluation of gold resources and the application of an impairment test which is based on estimates of gold resources and gold prices.

6.                                      Plant and equipment

On January 7, 2008, the Corporation entered into an agreement with A.M. King Industries, Inc. (“A.M. King”) and Del Norte Company Ltd., a wholly-owned subsidiary of A.M. King, to purchase gold processing equipment to be used at the

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Corporation’s Paredones Amarillos project.  The aggregate purchase price was approximately $16.0 million.  The purchase price includes the cost of relocating the equipment to Edmonton, Alberta, Canada.  From this point, the Corporation is responsible for the reconditioning and transportation of the equipment to Paredones Amarillos.  The equipment includes a 10,000 tonne per day semi-autogenous grinding mill, two ball mills, gyratory crusher and a shorthead cone crusher, along with other related components, spare parts and other process plant equipment.  On April 17, 2008, the Corporation announced that it had finalized the purchase of the gold processing equipment, with the conclusion on that date of the transportation of the major equipment items to the Corporation’s lay-down yard in Edmonton.

7.                                      Brokered private placement of convertible notes

On March 4, 2008, the Corporation completed a private placement in which the Corporation issued and sold $30 million in aggregate principal amount of senior secured convertible notes (the “Notes”).  The Notes were issued on March 4, 2008 and mature at face value on March 4, 2011 (the “Maturity Date”).  The Notes pay interest of 10% per annum. Interest is payable each year in two installments on June 15 and December 15, and the principal is payable on the Maturity Date.

The Notes are convertible at the holder’s or issuer’s discretion in accordance with the terms of the Notes.  The holder can convert all or part of the debt at any time prior to the Maturity Date or the business day immediately preceding the Redemption Date at a price of $6.00 per common share, subject to adjustment in certain circumstances.  The “Redemption Date” represents the date that the Notes will be redeemed in the event that the Corporation redeems the Notes.

The Corporation can convert all, but not part, of the Notes after March 4, 2009 if the weighted-average price of the Corporation’s common shares as quoted on the American Stock Exchange (“AMEX”) has been equal to or greater than $9.00 per share for 15 consecutive trading days.  The notice of conversion must occur within 10 days of any such 15-day period and the share price must be equal to or greater than $9.00 on the date the notice is delivered.  The conversion price is $6.00 per common share subject to adjustments in certain circumstances.

The conversion price will be adjusted on March 4, 2009, being the first anniversary of the issuance of the Notes, to the lesser of the current conversion price or 120% of the 20-day weighted average share price of the common shares as quoted on AMEX.  The conversion price can also be adjusted in certain circumstances such as issuance of warrants, additional common shares or distribution of assets.  The conversion price shall not be adjusted below $4.80 per share.

Simultaneous with the issuance of the Notes, the Corporation issued to Casimir Capital LP 200,000 common share purchase warrants with an exercise price of $6.00 per warrant and expiration date of March 4, 2011, as partial consideration for serving as agent for the transaction (Note 9).  The Corporation also paid to Casimir Capital a cash fee of $1.2 million, being 4% of the gross proceeds of the offering of the Notes.  The warrants provide for cashless exercise if the market price of the Corporation’s common shares is above the exercise price.  In addition, the exercise price is subject to standard anti-dilution adjustment provisions.

The Notes have been accounted for in accordance with EIC 164, “Convertible and other Debt Instruments with Embedded Derivatives”.  Under EIC 164, the fair value of the conversion feature is recorded as equity.  The issuance date fair value of the conversion feature was originally estimated to be $11.5 million and was classified as the equity component of convertible notes with the residual balance of $18.5 million being recorded as long-term debt.  However, subsequent to the initial estimation and recognition of the equity component it was determined that a risk-free rate of return would provide a more conservative estimate of the expected return an investor would expect to receive as compared to the expected return on the Corporation’s common shares, which was originally used.  This “risk neutral” approach was applied and the issuance date fair value of the convertible feature was revised.  The revised issuance date fair value of the conversion feature was estimated to be $6.8 million and the residual balance of $23.2 million was recorded as the fair value of the Corporation’s obligation to make principal and interest payments and has been classified as long-term debt.  This change in estimate has been applied on a prospective basis by adjusting the carrying values of the equity component and long-term debt on the balance sheet.

The issuance date fair value of the warrants of $336,000 and legal fees and other expenses of $1.9 million related to the issuance of these Notes have been allocated pro-rata between debt issuance costs of $1,496,000 and equity issuance costs of $447,000.  The transaction costs are added to the cost of the convertible debt and presented as a reduction of the related debt and equity portions.  The issuance costs related to the debt portion will be amortized over the term of the Notes using the effective interest rate method.  The Corporation will capitalize interest and accretion based on expenditures on qualifying assets.  As of June 30, 2008, the Corporation had qualifying expenditures of approximately $16.0 million related to the equipment purchase for the Paredones Amarillos project.

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The Corporation has used approximately $17.5 million for ongoing operations at the Paredones Amarillos project.  This includes approximately $16.0 million towards the purchase of gold processing equipment to be used at the Paredones Amarillos project.  The remaining $10.6 million raised from the private placement will be used for ongoing operations at the Paredones Amarillos project.

8.             Capital stock

9.                                      Warrants

Warrants granted, exercised and outstanding during the period are summarized in the following table:

(1)  Each warrant entitled the holder to purchase common shares as adjusted in accordance with the warrant terms pursuant to the previously announced Plan of Arrangement transaction involving the Corporation, Allied Nevada Gold Corp. and Carl and Janet Pescio that closed on May 10, 2007 (the “Plan of Arrangement”).

(2)  Each warrant entitles the holder to purchase one common share.  See Note 7.

(3)  The value of all warrants issued in conjunction with private placements is allocated to common stock upon exercise.

During the six-month period ended June 30, 2008, all remaining warrants issued in conjunction with the February 2006 private placement were exercised prior to their expiry date of February 1, 2008.  Upon exercise of these warrants, holders received 1.894 common shares per warrant as adjusted in accordance with the warrant terms pursuant to the Plan of Arrangement.  There were no warrants exercised during the three-month period ended June 30, 2008.

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10.          Options to purchase Common Shares

Under the Corporation’s Stock Option Plan (the “Plan”), the Corporation may grant options to directors, officers, employees and consultants of the Corporation or its subsidiaries.  The maximum number of common shares of the Corporation that may be reserved for issuance under the Plan is a variable number equal to 10% of the issued and outstanding common shares on a non-diluted basis.  Under the Plan, the exercise price of each option shall not be less than the market price of the Corporation’s common shares on the date preceding the date of grant, and an option’s maximum term is 10 years or such other shorter term as stipulated in a stock option agreement between the Corporation and the optionee.  Options under the Plan are granted from time to time at the discretion of the Board of Directors, with vesting periods and other terms as determined by the Board.

The fair value of stock options granted to employees and directors was estimated at the grant date using the Hull-White trinomial lattice option pricing model, using the following weighted average assumptions:

Option pricing models require the input of highly subjective assumptions including the expected price volatility.  Expected price volatility is based on the historical volatility of the Corporation’s common shares.  Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Corporation’s stock options.  The expected term of the options granted is derived from the output of the option pricing model and represents the period of time that the options granted are expected to be outstanding.  The risk-free rate for the periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the date of grant.

A summary of option activity under the Plan as of June 30, 2008, and changes during the six-month period then ended is set forth in the following table:

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A summary of the fair-value changes included in options within Shareholders’ Equity as of June 30, 2008, and the six-month period then ended is set forth in the following table:

The total number of options outstanding at the end of the quarter is 1,600,213 with exercise prices ranging from approximately $2.09 to $7.66 and remaining lives of 0.25 to 4.91 years.  The total number of options outstanding represents 4.6% of issued capital.

A summary of the status of the Corporation’s unvested stock options as of June 30, 2008, and changes during the six-month period then ended, is set forth below:

As of June 30, 2008, there was $233,801 of unrecognized compensation expense related to the unvested portion of options outstanding.  This expense is expected to be recognized over a weighted-average period of 0.3 years.

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11.          Accumulated other comprehensive income

A reconciliation of the amounts contained in accumulated other comprehensive income is as follows:

12.          Financial instruments

Financial assets and financial liabilities are classified into one of five categories:  held-to-maturity, available-for-sale, held-for-trading, loans and receivables and other financial liabilities.

All financial instruments classified as available-for-sale or held-for-trading are subsequently measured at fair value.  Changes in the fair value of financial instruments designated as held-for-trading are charged or credited to the statement of loss for the relevant period, while changes in the fair value of financial instruments designated as available-for-sale, excluding impairments, are charged or credited to other comprehensive income until the instrument is realized.  All other financial assets and liabilities are accounted for at cost or at amortized cost depending upon the nature of the instrument.  After their initial fair value measurement, they are measured at amortized cost using the effective interest rate method.

Financial Assets

The carrying amounts and fair values of financial assets are as follows:

(1)             Carrying amount is a reasonable approximation of fair value.

(2)             The fair value represents quoted market prices in an active market.

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Financial liabilities

The carrying amounts and fair values of financial liabilities are as follows:

(1)           Carrying amount is a reasonable approximation of fair value.

(2)           The carrying value of the convertible notes is being accreted to their maturity value over their expected life using the effective interest rate method.

Financial instrument risk exposure and risk management

The Corporation is exposed in varying degrees to a variety of financial instrument related risks.  Management approves and monitors the risk management processes.  The types of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

The Corporation’s credit risk is primarily attributable to its cash and cash equivalents.  The Corporation maintains its cash and cash equivalents in order to limit its exposure to credit risk.  The Corporation does not have any financial assets that are invested in asset-backed commercial paper.

Liquidity risk

The Corporation ensures that there is sufficient capital in order to meet short term business requirements, after taking into account the Corporation’s holdings of cash and cash equivalents and cash flows from financing activities.  The Corporation believes that these sources will be sufficient to cover the likely short and long term cash requirements.  The Corporation’s cash and cash equivalents are held in interest bearing liquid savings accounts.

Market risk

The significant market risk exposure to which the Corporation is exposed is interest rate risk.  The Corporation’s policy is to invest cash at floating rates of interest in highly liquid cash savings accounts in order to maintain liquidity.  Fluctuations in interest therefore impact on the value of cash equivalents and short term investments.  With respect to financial liabilities, the convertible notes are not subject to interest rate risk because they bear interest at a fixed rate and are not subject to fluctuations in interest.

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13.          Supplemental cash flow information

Significant non-cash transactions during the six months ended June 30, 2008 included:  (a) the Corporation’s issuance of 37,318 common shares as a success fee payment to Prime Corporate Finance Pty Limited as compensation for advisory services provided to the Corporation in connection with the Corporation’s disposition of the Amayapampa project to Republic Gold Limited (Note 3); (b) the Corporation’s issuance of 213,503 common shares as partial compensation for the acquisition of interests in various mineral properties adjacent to the Corporation’s Guadalupe de los Reyes project in Mexico (Note 5); and (c) the Corporation’s issuance of 200,000 common share purchase warrants to Casimir Capital LP as partial compensation for serving as agent for the Corporation’s private placement of convertible notes (Note 7).  There were no significant non-cash transactions during the same period in 2007.

14.          Geographic and segment information

The Corporation evaluates, acquires and explores gold exploration and potential development projects.  These activities are focused principally in South America, Australia, North America and Indonesia. The Corporation reported no revenues in the three-month and six-month periods ended June 30, 2008, or for the same periods in 2007.  Geographic segmentation of mineral properties and plant and equipment is provided in Notes 5 and 6.

15.          Differences between Canadian and United States generally accepted accounting principles

The Corporation prepares its financial statements in accordance with accounting principles generally accepted in Canada, which differ in some respects from those in the United States.  The significant differences between generally accepted accounting principles (“GAAP”) in Canada and in the United States, as they relate to these financial statements, are as follows:

(a)          In accordance with U.S. GAAP, exploration, mineral property evaluation and holding costs are expensed as incurred.  When proven and probable reserves are determined for a property and a bankable feasibility study is completed, then subsequent development costs on the property would be capitalized.   Total capitalized cost of such properties is measured periodically for recoverability of carrying value under SFAS No. 144.  Under Canadian GAAP, all such costs are permitted to be capitalized.

(b)          In accordance with U.S. GAAP (SFAS No. 115), marketable securities considered to be available-for-sale are to be measured at a fair value at the balance sheet date and related unrealized gains and losses are required to be shown separately in comprehensive income.  On January 1, 2007, the Corporation adopted CICA 3855 “Financial Instruments - Recognition and Measurement.”  This standard essentially aligns Canadian GAAP with U.S. GAAP for accounting for marketable securities considered to be available-for-sale.

 (c)          Under Canadian corporate law, the Corporation underwent a capital reduction in connection with the amalgamation of Granges, Inc. (“Granges”) and Hycroft Resources & Development, Inc. whereby share capital and contributed surplus were reduced to eliminate the consolidated accumulated deficit of Granges as of December 31, 1994, after giving effect to the estimated costs of amalgamation. Under U.S. corporate law, no such transaction is available and accordingly is not allowed under U.S. GAAP.

(d)          In accordance with U.S. GAAP (SFAS No. 123R), the fair value of all options granted after January 1, 2006 is calculated at the date of grant and expensed over the expected vesting period.  On transition to this new standard, the unvested portion of options granted to employees before January 1, 2006 is expensed over the remaining vesting period using the fair value on the date of grant.  Prior to January 1, 2006, the Corporation did not record any compensation cost on the granting of stock options to employees and directors as the exercise price was equal to or greater than the market price at the date of grants for U.S. GAAP purposes under APB Opinion No. 25.  SFAS No. 123R essentially aligns U.S. GAAP with Canadian GAAP for accounting for stock-based compensation.

(e)           In accordance with U.S. GAAP, the entire amount of convertible debt is classified as a liability and recorded at fair value on the date of issuance.  Under Canadian GAAP, the fair value of the conversion feature of convertible debt is classified as equity and the residual balance is classified as a liability.  The liability portion is accreted each period in amounts which will increase the liability to its full face amount of the convertible instrument as of the maturity date.  In accordance with SFAS No. 34, the Corporation capitalizes interest based on the pro rata amount of qualifying expenditures, with the remaining amount recorded as interest expense.

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The significant differences in the consolidated statements of loss and comprehensive loss relative to U.S. GAAP were:

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS - UNAUDITED

The significant differences in the consolidated statements of cash flows relative to U.S. GAAP were:

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED