x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
333-97201
|
98-0360062
|
(State
or other jurisdiction of incorporation or organization)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
World
Trade Center 14th Floor
Jl.
Jenderal Sudirman Kav. 29-31
Jakarta,
Indonesia
|
12920
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Large
accelerated Filer ¨
|
Accelerated
Filer ¨
|
Non-accelerated
Filer ¨
(Do not check if a smaller reporting company)
|
Smaller
reporting company x
|
Page No.
|
||
Part I.
|
Financial
Information
|
|
Item 1.
|
Financial
Statements
|
3
|
Consolidated
Balance Sheets — November 30, 2008 (unaudited) and May 31,
2008
|
3
|
|
Consolidated
Statements of Operations (unaudited)— Three and Six Month
Periods Ended November 30, 2008 and 2007 and the Period From February 21,
2001 (Inception) to November 30, 2008
|
4
|
|
Consolidated
Statements of Cash Flows (unaudited)— Three and Six Month Periods Ended
November 30, 2008 and 2007 and the Period From February 21, 2001
(Inception) to November 30, 2008
|
5
|
|
Consolidated
Statements of Stockholders’ Equity/(Deficit) (unaudited)- From February
21, 2001 (Inception) to November 30, 2008
|
6
|
|
Notes
to Unaudited Consolidated Financial Statements
|
7
|
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
22
|
Item 4.
|
Controls
and Procedures
|
22
|
Part II.
|
23
|
|
Item 6.
|
Exhibits
|
24
|
Signatures
|
24
|
|
Exhibit Index
|
||
NOVEMBER
30, 2008
|
MAY
31, 2008
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 122,295 | $ | 1,944,567 | ||||
Other
receivable
|
16,766 | 75,945 | ||||||
Prepaid
expenses and other current assets
|
215,817 | 123,307 | ||||||
Total
Current Assets
|
354,877 | 2,143,819 | ||||||
Property,
Plan and Equipment, net
|
104,556 | - | ||||||
Intangible
assets, net
|
6,436,183 | 6,613,326 | ||||||
Total
Assets
|
$ | 6,895,616 | $ | 8,757,144 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 1,107,773 | $ | 597,459 | ||||
Shares
to be issued
|
- | 700,000 | ||||||
Total
Current Liabilities
|
1,107,773, | 1,297,459 | ||||||
COMMITMENTS
|
- | - | ||||||
Stockholders’
Equity
|
||||||||
Common
Stock
|
||||||||
Authorized:
|
||||||||
500,000,000
voting common shares, par value $0.0001
|
||||||||
Issued
and outstanding:
|
||||||||
9,000,000
treasury shares issued and outstanding
|
900 | - | ||||||
135,387,072
and
134,687,072 common shares issued and outstanding respectively
|
13,539 | 13,469 | ||||||
Additional
paid-in capital
|
23,562,323 | 21,904,316 | ||||||
Subscription
receivable
|
- | (40,000 | ) | |||||
Deficit
Accumulated During The Exploration Stage
|
(17,788,919 | ) | (14,418,100 | ) | ||||
Total
Stockholders' Equity
|
5,787,843 | 7,459,685 | ||||||
Total
Liabilities and Stockholders' Equity
|
$ | 6,895,616 | $ | 8,757,144 | ||||
FOR
THE CUMULATIVE
|
||||||||||||||||||||
PERIOD
FROM
|
||||||||||||||||||||
FOR
THE THREE MONTH
|
FOR
THE SIX MONTH
|
FEBRUARY
21
|
||||||||||||||||||
PERIODS
ENDED
|
PERIODS
ENDED
|
2001
(INCEPTION) TO
|
||||||||||||||||||
NOVEMBER
30
|
NOVEMBER
30
|
NOVEMBER
30
|
||||||||||||||||||
2008
|
2007
|
2008
|
2007
|
2008
|
||||||||||||||||
Net
Revenue
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Operating
Expenses
|
||||||||||||||||||||
Exploration
expenditures
|
400,894 | 946,506 | 780,810 | 2,372,251 | 5,170,455 | |||||||||||||||
Stock
based compensation expense
|
768,985 | 1,551,245 | 978,977 | 3,078,640 | 7,163,408 | |||||||||||||||
General
and administrative expenditures
|
435,647 | 475,374 | 957,560 | 851,461 | 3,499,788 | |||||||||||||||
Professional
and consulting fees
|
443,523 | 164,793 | 731,420 | 375,070 | 2,154,552 | |||||||||||||||
Total
Operating Expenses
|
2,049,048 | 3,137,918 | 3,448,767 | 6,677,422 | 17,988,203 | |||||||||||||||
Other
income:
|
||||||||||||||||||||
Consulting
services
|
6,440 | - | 59,745 | - | 131,625 | |||||||||||||||
Interest
income
|
7,785 | 9,074 | 18,203 | 21,908 | 67,659 | |||||||||||||||
Total
other income
|
14,225 | 9,074 | 77,948 | 21,908 | 199,284 | |||||||||||||||
Net
Loss
|
$ | ( 2,034,822 | ) | $ | (3,128,844 | ) | $ | (3,370,819 | ) | $ | (6,655,514 | ) | $ | (17,788,919 | ) | |||||
Net
Loss Per Common Share, basic and diluted
|
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.03 | ) | ||||||||
*Basic
and Diluted Weighted Average Number Of Common Shares
Outstanding
|
137,791,559 | 98,286,413 | 139,808,361 | 98,038,614 |
FOR
THE CUMULATIVE
|
||||||||||||
PERIOD
FROM
|
||||||||||||
FOR
THE SIX MONTH PERIOD ENDED
|
FEBRUARY
21, 2001
|
|||||||||||
NOVEMBER
30
|
(INCEPTION)
TO
|
|||||||||||
2008
|
2007
|
NOVEMBER
30, 2008
|
||||||||||
Cash
Flows In Operating Activities:
|
||||||||||||
Net
loss for the period
|
$ | (3,370,819 | ) | $ | (6,655,514 | ) | $ | (17,788,919 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Stock
based compensation expense
|
978,977 | 3,078,641 | 7,163,408 | |||||||||
Stock
issued for consulting services
|
- | - | 261,250 | |||||||||
Amortization
expense
|
178,694 | 177,413 | 651,074 | |||||||||
Allowance
for bad debt-Note receivable
|
- | - | 362,656 | |||||||||
(Increase)
/ decrease in accounts receivable
|
59,179 | - | (16,766 | ) | ||||||||
Increase
in prepaid expenses and other current assets
|
(92,510 | ) | (42,431 | ) | (221,141 | ) | ||||||
Increase
in accounts payable and accrued liabilities
|
530,315 | 1,468,011 | 845,678 | |||||||||
Net
cash used in operating activities
|
(1,716,165 | ) | (1,974,150 | ) | (8,742,760 | ) | ||||||
Cash
Flows In Investing Activities:
|
||||||||||||
Cash
of acquired subsidiary
|
- | - | 201,054 | |||||||||
Cash
investment in subsidiary
|
- | - | (10,000 | ) | ||||||||
Acquisition
of property, plant and equipment
|
(106,107 | ) | (106,107 | ) | ||||||||
Net
cash provided by (used in) investing activities
|
(106,107 | ) | - | 84,947 | ||||||||
Cash
Flows In Financing Activities:
|
||||||||||||
Advances
from shareholder
|
- | 75,000 | 117,820 | |||||||||
Payments
to shareholders
|
- | - | (117,820 | ) | ||||||||
Issuance
of notes payable
|
- | - | - | |||||||||
Debt
repayments
|
- | - | (198,000 | ) | ||||||||
Advances
on notes receivable
|
- | (50,000 | ) | (753,995 | ) | |||||||
Proceeds
from issuance of common stock
|
- | 1,912,259 | 9,732,103 | |||||||||
Net cash provided by financing activities
|
- | 1,937,259 | 8,780,108 | |||||||||
Increase/(Decrease)
In Cash & cash equivalents
|
(1,822,272 | ) | (36,891 | ) | 122,295 | |||||||
Cash
And Cash Equivalents, Beginning Of Period
|
1,944,567 | 729,626 | - | |||||||||
Cash
And Cash Equivalents, End Of Period
|
$ | 122,295 | $ | 692,735 | 122,295 | |||||||
Supplemental
Disclosure Of Cash Flow Information
|
||||||||||||
Cash
paid during the period
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
Taxes
|
$ | - | $ | - | $ | - | ||||||
Supplemental
Disclosure of Non Cash Transactions
|
||||||||||||
Shares
issued to acquire subsidiary
|
$ | - | $ | - | $ | 6,400,000 | ||||||
Shares
returned by founders
|
$ | 900 | $ | - | $ | 900 | ||||||
Shares
issued to investors
|
$ | 873 | $ | - | $ | 873 |
ACCUMULATED
|
||||||||||||||||||||||||||||||||
TREASURY
STOCK
|
COMMON
STOCK
|
DEFICIT
|
||||||||||||||||||||||||||||||
ADDITIONAL
|
DURING
THE
|
|||||||||||||||||||||||||||||||
PAID-IN
|
SUBSCRIPTION
|
EXPLORATION
|
||||||||||||||||||||||||||||||
NUMBER
|
AMOUNT
|
NUMBER
|
AMOUNT
|
CAPITAL
|
RECEIVABLE
|
STAGE
|
TOTAL
|
|||||||||||||||||||||||||
Issuance
of common stock for cash
|
||||||||||||||||||||||||||||||||
Founders’
shares
|
- | - | 40,000,000 | $ | 1,000 | $ | - | $ | - | $ | - | $ | 1,000.00 | |||||||||||||||||||
Initial
shares
|
- | - | 6,875,272 | 3,688 | 47,877 | - | - | 51,565 | ||||||||||||||||||||||||
Net
loss for the period
|
- | - | - | - | - | - | (35,809 | ) | (35,809 | ) | ||||||||||||||||||||||
Balance,
May 31, 2001
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (35,809 | ) | 16,756 | |||||||||||||||||||||||
Net
income for the year
|
- | - | - | - | - | - | 15,723 | 15,723 | ||||||||||||||||||||||||
Balance,
May 31, 2002
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (20,086 | ) | 32,479 | |||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (16,847 | ) | (16,847 | ) | ||||||||||||||||||||||
Balance,
May 31, 2003
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (36,933 | ) | 15,632 | |||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (18,846 | ) | (18,846 | ) | ||||||||||||||||||||||
Balance,
May 31, 2004
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (55,779 | ) | (3,214 | ) | ||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (11,544 | ) | (11,544 | ) | ||||||||||||||||||||||
Balance,
May 31, 2005
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (67,323 | ) | (14,758 | ) | ||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (10,348 | ) | (10,348 | ) | ||||||||||||||||||||||
Balance,
May 31, 2006
|
- | - | 46,875,272 | 4,688 | 47,877 | - | (77,671 | ) | (25,106 | ) | ||||||||||||||||||||||
Merger
with Thatcher Mining Pte. Ltd.
|
- | - | 32,000,000 | 3,200 | 6,396,800 | - | - | 6,400,000 | ||||||||||||||||||||||||
Stock
issued for cash
|
- | - | 17,615,000 | 1,762 | 3,501,239 | - | - | 3,503,000 | ||||||||||||||||||||||||
Stock
issued for services
|
- | - | 1,112,500 | 111 | 222,389 | - | - | 222,500 | ||||||||||||||||||||||||
Issuance
of shares under stock compensation plan
|
- | - | 125,000 | 13 | 342,488 | - | - | 342,500 | ||||||||||||||||||||||||
Stock
based compensation expense
|
- | - | - | - | 958,872 | - | - | 958,872 | ||||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (3,693,152 | ) | (3,693,152 | ) | ||||||||||||||||||||||
Balance,
May 31, 2007
|
- | - | 97,727,772 | 9,773 | 11,469,664 | - | (3,770,823 | ) | 7,708,614 | |||||||||||||||||||||||
Stock
issued for cash
|
- | - | 34,957,600 | 3,496 | 5,473,042 | - | - | 5,476,528 | ||||||||||||||||||||||||
Stock
issued for services
|
- | - | 55,000 | 6 | 38,745 | - | - | 38,750 | ||||||||||||||||||||||||
Issuance
of shares under stock compensation plan
|
- | - | 1,946,700 | 195 | 674,909 | (40,000 | ) | - | 635,104 | |||||||||||||||||||||||
Stock
options granted to employees
|
- | - | - | - | 4,247,957 | - | - | 4,247,957 | ||||||||||||||||||||||||
Net
loss for the year
|
- | - | - | - | - | - | (10,647,276 | ) | (10,647,276 | ) | ||||||||||||||||||||||
Balance,
May 31, 2008
|
- | - | 134,687,072 | 13,469 | 21,904,316 | (40,000 | ) | (14,418,100 | ) | $ | 7,459,685 | |||||||||||||||||||||
Stock
issued for cash
|
- | - | 8,729,167 | 873 | 699,127 | - | - | 700,000 | ||||||||||||||||||||||||
Stock
options granted to employees
|
- | - | 970,833 | 97 | 978,880 | - | - | 978,977 | ||||||||||||||||||||||||
Subscription
received (cancelled)
|
- | - | - | - | (20,000 | ) | 40,000 | - | 20,000 | |||||||||||||||||||||||
Stocks
returned by the founders
|
9,000,000 | 900 | (9,000,000 | ) | (9,000 | ) | - | - | - | - | ||||||||||||||||||||||
Net
loss for the six month period ended November 30, 2008
|
- | - | - | - | - | - | (3,370,819 | ) | (3,370,819 | ) | ||||||||||||||||||||||
Balance,
November 30, 2008
|
9,000,000 | $ | 900 | 135,387,072 | $ | 13,539 | $ | 23,562,323 | $ | - | $ | (17,788,919 | ) | $ | 5,787,843 |
November
30, 2008
(unaudited)
|
May
31, 2008
|
|||||||
Loan
advances
|
325,000 | 325,000 | ||||||
Accrued
interest
|
50,410 | 37,656 | ||||||
Loan
balance
|
375,410 | 362,656 | ||||||
Reserve
|
(375,410 | ) | (362,656 | ) | ||||
Total
|
- | - |
November
30, 2008
(unaudited)
|
May
31, 2008
|
|||||||
Prepaid
expenses
|
$ | 188,525 | $ | 111,542 | ||||
Deposits
|
27,292 | 11,765 | ||||||
Total
Prepaid expenses
|
$ | 215,817 | $ | 123,307 |
November
30, 2008
(unaudited)
|
May
31, 2008
|
|||||||
Accounts
payable
|
$ | 707,229 | $ | 424,847 | ||||
Accrued
expenses
|
400,544 | 172,612 | ||||||
Total
Accounts payable and accrued expenses
|
$ | 1,107,773 | $ | 597,459 |
Officers
& Directors
|
November
30, 2008
(unaudited)
|
May
31, 2008
|
||||||
Martin
Hurley
|
$ | - | $ | 32,943 | ||||
Jorge
Nigaglioni
|
49,735 | 3,154 | ||||||
William
Bloking
|
74,644 | 16,341 | ||||||
Andrew
Caminschi
|
15,778 | - | ||||||
Antonio
Varano
|
11,000 | 3,061 | ||||||
$ | 151,157 | $ | 55,499 |
November
30, 2008
(unaudited)
|
May
31, 2008
|
|||||||
Furniture
& equipment
|
$ | 95,380 | $ | - | ||||
Office
equipment
|
10,727 | - | ||||||
106,107 | - | |||||||
Less:
accumulated depreciation
|
(1,551 | ) | - | |||||
Net
property, plant and equipment
|
$ | 104,556 | $ | - |
Gross
Value of Agreements
|
$ | 7,085,706 | ||
Amortization
|
(649,523 | ) | ||
Net
Intangible assets
|
$ | 6,436,183 |
2009
|
$ | 177,144 | ||
2010
|
354,288 | |||
2011
|
354,288 | |||
2012
|
354,288 | |||
2013
|
354,288 | |||
After
|
4,841,887 | |||
Total
|
$ | 6,436,183 |
Three
months ended
November
30, 2008
(unaudited)
|
Six
months ended
November
30, 2008
(unaudited)
|
Three
months ended
November
30, 2007
(unaudited)
|
Six
months ended
November
30, 2007
(unaudited)
|
|||||||||||||
Manpower
|
$ | 311,675 | $ | 634,585 | $ | 477,643 | $ | 932,883 | ||||||||
Site
Expenses
|
50,801 | 79,844 | 228,086 | 766,966 | ||||||||||||
Equipment
|
10,259 | 22,287 | 121,515 | 436,016 | ||||||||||||
Travel
|
28,159 | 44,094 | 119,261 | 236,386 | ||||||||||||
$ | 400,894 | $ | 780,810 | $ | 946,506 | $ | 2,372,251 |
Stock
Option Plan
|
||||
Risk-free
interest rate
|
1.15
|
%
|
||
Dividend
yield
|
0
|
%
|
||
Volatility
|
117.2
|
%
|
||
Expected
life
|
10
years
|
Available
For Grant
|
Shares
|
Weighted
Average
Exercise
Plan
|
|||||||||||
Outstanding
at May 31, 2007
|
1,225,000 | 10,650,000 | $ | 1.44 | |||||||||
Granted
|
-2,865,000 | 2,865,000 | $ | 0.29 | |||||||||
Exercised
|
- | -2,001,667 | $ | 0.38 | |||||||||
Cancelled
|
4,081,667 | -4,081,667 | |||||||||||
Outstanding
at May 31, 2008
|
2,441,667 | 7,431,667 | $ | 1.28 | |||||||||
Granted
|
-2,150,000 | 2,150,000 | $ | 0.12 | |||||||||
Exercised
|
- | -970,833 | $ | - | |||||||||
Cancelled
|
5,138,750 | -5,138,750 | - | ||||||||||
Outstanding
at November 30, 2008
|
5,430,417 | 3,472,084 | $ | 0.40 |
Options
Outstanding
|
Options
Exercisable
|
|||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
(in
thousands)
|
Number
Exercisable
|
Weighted
Average
Remaining
Contractual
Life
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
(in
thousands)
|
||||
$0.10-$0.50
|
2,250,000
|
9.49
|
$
|
0.25
|
$
|
736,611
|
9.17
|
$
|
0.38
|
$
|
-
|
Year
Ending November 30, 2009
|
$
28,774
|
|
·
|
for
all coal sales under $40.00 per metric ton, the Amendment reduces the
royalty payment rate from $0.40 per metric ton, indexed annually with
inflation, to $0.20 per metric ton fixed and
flat;
|
|
·
|
for
all coal sales over $40.00 per metric ton, the Amendment changes the
royalty payment rate from $0.40 per metric ton, indexed annually with
inflation, to the higher of $0.40 per metric ton or 0.65% of the price of
coal per metric ton; and
|
|
·
|
the
Company will make a one time payment to Concord of $15,000 at the time of
the first sale of coal by the Company, Thatcher or their affiliates in
exchange for Concord's agreement to waive all royalty payments by the
Company for the first three years
thereafter
|
Exhibit
Number
|
Description
|
10.1
|
Amendment
to Employment Agreement, dated as of December 10, 2008, by and between KAL
Energy, Inc. and Andrew Caminschi (incorporated by reference to Exhibit
10.1 to our Current Report on Form 8-K filed with the Securities and
Exchange Commission on December 10, 2008).†
|
10.2
|
Compensation
Agreement, dated as of December 10, 2008, by and between KAL Energy, Inc.
and William Bloking (incorporated by reference to Exhibit 10.2 to our
Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 10, 2008).†
|
31.1
|
Certification
of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) under
the Securities Exchange Act of 1934.*
|
31.2
|
Certification
of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) under
the Securities Exchange Act of 1934.*
|
32.1
|
Certification
of Principal Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) under
the Securities Exchange Act of 1934 and 18 U.S.C. Section
1350.*(1)
|
32.2
|
Certification
of Principal Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) under
the Securities Exchange Act of 1934 and 18 U.S.C. Section
1350.*(1)
|
*
|
Filed
herewith.
|
(1)
|
Furnished
herewith and not “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as
amended.
|
†
|
Indicates
management contract or compensatory plan or
arrangement
|
KAL
ENERGY, INC.
|
||
Dated:
January 19, 2009
|
/s/
William Bloking
|
|
William
Bloking
President
and Chairman of the Board of Directors
(Principal
Executive Officer)
|
||
Dated:
January 19, 2009
|
/s/
Andrew Caminschi
|
|
Andrew
Caminschi
Chief
Financial Officer
(Principal
Financial Officer)
|