What changed in this filing

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Item 1. Financial Statements

2022-08-10 compared with 2022-05-04 · 103 added, 82 removed, 218 unchanged (46% of the section changed)

3 unchanged sentences

(in thousands of U.S.

dollars, except share and per share amounts)

December 31 ,

except share and per share amounts)

Current assets:

16 unchanged sentences

Shareholders’ equity:

Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at March 31, 2022 and December 31, 2021)

Common stock, $ 0.01 par value, authorized 100,000,000 shares ( 64,760,123 and 62,036,399 shares, respectively, issued and outstanding at March 31, 2022 and December 31, 2021)

Preferred stock, $ 0.01 par value, authorized 10,000,000 shares (none issued and outstanding at June 30, 2022 and December 31, 2021)

Common stock, $ 0.01 par value, authorized 100,000,000 shares ( 64,768,873 and 62,036,399 shares, respectively, issued and outstanding at June 30, 2022 and December 31, 2021)

Additional paid-in capital

8 unchanged sentences

Three months ended

Six months ended

Costs, expenses and other:

3 unchanged sentences

Other (loss) income

Interest and dividend income

Interest income

Loss on derivative instruments

(Loss) gain on sale of marketable equity securities

Unrealized loss on short-term investments

Unrealized gain (loss) on marketable equity securities

Total other loss

Loss per common share:

(Loss) gain on sale of marketable equity securities

Unrealized loss on marketable equity securities

Total other (loss) income

Net (loss) income

(Loss) income per common share:

Basic and diluted

5 unchanged sentences

(in thousands of U.S.

Three months ended

Six months ended

Operating activities:

1 unchanged sentence

Amortization of right of use lease asset

Unrealized (gain) loss of marketable equity securities

Unrealized loss on marketable equity securities

Unrealized loss on short-term investments

2 unchanged sentences

Loss on derivative instruments

Other income PPP loan forgiveness

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable and other current liabilities

Accounts payable and other liabilities

Net cash used in operating activities

1 unchanged sentence

(Purchase) sale of short-term investments, net

Purchase of mineral property

Purchase of other assets - net

Cash from sale of marketable equity securities

Purchase of mineral properties

Sale of derivative instruments – net

Net cash (used in) provided by investing activities

Financing activities:

Issuance of common stock, net

Stock options exercised

Issuance of common stock – net of acquisition costs

Stock options exercised for cash

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental Cash Flow information:

Accrued mineral property acquisition costs included in accounts payable

Accrued common stock acquisition costs included in accounts payable

Acquisition of right to use asset

See Notes to Unaudited Condensed Consolidated Financial Statements

20 unchanged sentences

The fluctuations in precious metal and other commodity prices contribute to a challenging environment for mineral exploration and development, which has created opportunities as well as challenges for the potential acquisition of early-stage and advanced mineral exploration projects or other related assets at potentially attractive terms.

The accompanying interim condensed consolidated financial statements of Solitario for the three months ended March 31, 2022 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”).

The accompanying interim condensed consolidated financial statements of Solitario for the three and six months ended June 30, 2022 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”).

They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments necessary for a fair presentation.

17 unchanged sentences

Cash equivalents include investments in highly liquid money-market securities with original maturities of three months or less when purchased.

As of March 31, 2022, $ 309,000 of Solitario’s cash are held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation (“FDIC”) rules for the United States.

As of June 30, 2022, $ 267,000 of Solitario’s cash is held in brokerage accounts and foreign banks, which are not covered under the Federal Deposit Insurance Corporation (“FDIC”) rules for the United States.

Short-term investments

As of March 31, 2022, Solitario has $ 6,015,000 of its current assets in United States Treasury Securities (“USTS”) with maturities of 15 days to 19 months .

In addition, at March 31, 2022, Solitario has three bank certificates of deposits (“CD’s”) with face values between $ 100,000 and $ 250,000 recorded at their total fair value of $ 599,000 .

The CD’s have maturities of one month to nine months .

The USTS and CD’s are recorded at their fair value, based upon quoted market prices.

As of June 30, 2022, Solitario has $ 5,622,000 of its current assets in United States Treasury Securities (“USTS”) with maturities of 15 days to 18 months .

In addition, at June 30, 2022, Solitario has one bank certificate of deposit (“CD”) with a face value of $ 250,000 recorded at its fair value of $ 248,000 .

The CD has a maturity of six months.

The USTS and CD are recorded at their fair value, based upon quoted market prices.

The USTS are not covered under the FDIC insurance rules for United States deposits.

Solitario’s USTS and CD’s are highly liquid and may be sold in their entirety at any time at their quoted market price and are classified as a current asset.

Solitario’s USTS and CD are highly liquid and may be sold in their entirety at any time at their quoted market price and are classified as a current asset.

Financial statement classification

Solitario separately shows its classification of changes in the fair value of its short-term investment in USTS and CD’s as unrealized gain or loss on short-term investments in the statement of operations rather than a portion of interest and dividend income (net).

During the three months ended March 31, 2022 and 2021 the non-cash decrease in the fair value of its short-term investments, due primarily to changes in interest rates on held securities, was $ 51,000 and $ 25,000 , respectively.

Solitario separately shows its classification of changes in the fair value of its short-term investment in USTS and CDs as unrealized gain or loss on short-term investments in the statement of operations rather than a portion of interest and dividend income (net).

During the three and six months ended June 30, 2022 the non-cash decrease in the fair value of Solitario’s short-term investments, due primarily to changes in interest rates on held securities, was $ 47,000 and $ 98,000 , respectively.

During the three and six months ended June 30, 2021 the non-cash decrease in the fair value of its short-term investments, due primarily to changes in interest rates on held securities, was $ 32,000 and $ 56,000 , respectively.

The 2021 income statement and cash flows have been reclassified for comparability to the 2022 presentation.

1 unchanged sentence

Earnings per share

The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three months ended March 31, 2022 and 2021.

Potentially dilutive shares related to outstanding common stock options of 5,440,000 and 5,437,650 , respectively, for the three months ended March 31, 2022 and 2021 were excluded from the calculation of diluted loss per share because the effects were anti-dilutive.

The calculation of basic and diluted earnings (loss) per share is based on the weighted average number of shares of common stock outstanding during the three and six months ended June 30, 2022 and 2021.

Potentially dilutive shares related to outstanding common stock options of 5,431,250 and 5,513,000 , respectively, for the six months ended June 30, 2022 and 2021 were excluded from the calculation of diluted loss per share because the effects were anti-dilutive.

Mineral Properties

9 unchanged sentences

Three months ended

Six months ended

Geologic and field expenses

11 unchanged sentences

Changes in market value are recorded in the condensed consolidated statement of operations.

At March 31, 2022 and December 31, 2021 Solitario owns the following marketable equity securities:

March 31 2022

At June 30, 2022 and December 31, 2021 Solitario owns the following marketable equity securities:

December 31 2021

7 unchanged sentences

Marketable equity securities at fair value

The following table represents changes in marketable equity securities during the three months ended March 31, 2022 and 2021:

The following table represents changes in marketable equity securities:

(in thousands)

Three months ended

Six months ended

Cost of marketable equity securities sold

1 unchanged sentence

Proceeds from the sale of marketable equity securities sold

Net gain (loss) on marketable equity securities

Net loss on marketable equity securities

Change in marketable equity securities at fair value

The following table represents the realized and unrealized gain (loss) on marketable equity securities:

The following table represents the realized and unrealized (loss) gain on marketable equity securities:

(in thousands)

Three months ended

Unrealized gain (loss) on marketable securities

Six months ended

Unrealized (loss) gain on marketable securities

Realized (loss) gain on marketable equity securities sold

Net gain (loss) on marketable securities

During the three months ended March 31, 2022, Solitario sold 500,000 shares of Vendetta Mining Corp.

Net loss on marketable securities

During the three months ended June 30, 2022, Solitario sold 500,000 shares of Vendetta Mining Corp.

(“Vendetta”) common stock for proceeds of $ 27,000 and recorded a loss on sale of $ 78,000 on the date of sale.

During the three months ended March 31, 2021, Solitario sold (i) 1,010,000 shares of Vendetta common stock for proceeds of $ 51,000 and recorded a loss on sale of $ 2,000 ;

(ii) 287,000 shares of TNR Gold Corp.

During the six months ended June 30, 2022, Solitario sold 1,000,000 shares of Vendetta common stock for proceeds of $ 53,000 and recorded a loss on sale of $ 159,000 on the date of sale.

During the three months ended June 30, 2021, Solitario sold 143,000 shares of TNR Gold Corp (“TNR”).

common stock for proceeds of $ 10,000 and recorded a gain on sale of $ 6,000 .

During the six months ended June 30, 2021, Solitario sold (i) 1,010,000 shares of Vendetta common stock for proceeds of $ 51,000 and recorded a loss on sale of $ 2,000 ;

(ii) 430,000 shares of TNR.

common stock for proceeds of $ 28,000 and recorded a gain on sale of $ 19,000 and (iii) 3,200 shares of Vox Royalty Corp.

1 unchanged sentence

Solitario accounts for its leases in accordance with ASC 842.

Solitario leases one facility, its Wheat Ridge, Colorado office (the “WR Lease”), that has a term of more than one year.

Solitario leases one facility, its Wheat Ridge, Colorado office, that has a term of more than one year.

Solitario has no other material operating lease costs.

During the three months ended March 31, 2021, Solitario entered into a new lease for the same facility under the WR Lease (both the prior and new lease are referred to as the “WR Lease”) and recorded a net increase in the related asset and liability of $ 99,000 .

The WR Lease is classified as an operating lease and has a term of 19 months at March 31, 2022, with no renewal option.

At March 31, 2022 and December 31, 2021, the right-of-use office lease asset for the WR Lease is classified as other assets and the related liability as current and long-term operating lease liabilities in the condensed consolidated balance sheet.

During the six months ended June 30, 2021, Solitario entered into a new lease for the same facility (both the prior lease and new lease are referred to as the “WR Lease”) and recorded a net increase in the related asset and liability of $ 99,000 .

The WR Lease is classified as an operating lease and has a term of 14 months at June 30, 2022, with no renewal option.

At June 30, 2022 and December 31, 2021, the right-of-use office lease asset for the WR Lease is classified as other long-term assets and the related liability as current and long-term operating lease liabilities in the condensed consolidated balance sheet.

The amortization of right of use lease asset expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred.

During the three months ended March 31, 2022 and 2021, Solitario recognized $ 10,000 and $ 10,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

During the three months ended March 31, 2022 and 2021, cash lease payments of $ 11,000 and $ 7,000 , respectively, were made on the WR Lease.

These cash payments, less $ 1,000 of imputed interest for each period, reduced the related liability on the WR Lease.

During the three and six months ended June 30, 2022, cash lease payments of $ 8,000 and $ 18,000 , respectively, were made on the WR Lease.

During the three and six months ended June 30, 2021, cash lease payments of $ 10,000 and $ 17,000 , respectively, were made on the WR Lease.

During the three and six months ended June 30, 2022, Solitario recognized $ 10,000 and $ 20,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

During the three and six months ended June 30, 2021, Solitario recognized $ 10,000 and $ 20,000 , respectively, of non-cash amortization of right of use lease asset expense for the WR Lease included in general and administrative expense.

These cash payments, less imputed interest for each period, reduced the related liability on the WR Lease.

The discount rate within the WR Lease is not determinable and Solitario has applied a discount rate of 5 % based upon Solitario’s estimate of its cost of capital.

The maturities of Solitario’s lease liability for its WR Lease are as follows at March 31, 2022:

The maturities of Solitario’s lease liability for its WR Lease are as follows at June 30, 2022:

Future lease payments (in thousands)

Total lease payments

Less the portion of lease payments representing interest

Less amount of payments representing interest

Present value of lease payments

Supplemental cash flow information related to our operating lease was as follows for the three months ended March 31, 2022 and 2021:

Supplemental cash flow information related to our operating lease was as follows for the three and six months ended June 30, 2022 and 2021:

(in thousands)

Three months ended

Six months ended

Cash paid for amounts included in the measurement of lease liabilities

Operating cash outflows from WR Lease payments

Operating cash outflows from the WR Lease payments

Non-cash amounts related to the WR lease

Leased assets recorded in exchange for new operating lease liabilities -net

Leased assets recorded in exchange for new operating lease liabilities

5 Other Assets

The following items comprised other assets:

5 unchanged sentences

Exploration bonds and other assets

Derivative Instruments

Vendetta Warrants

2 unchanged sentences

Each Vendetta Warrant entitles the holder to purchase one additional share of Vendetta common stock for a purchase price of Cdn$ 0.13 per share for a period of three years.

On the purchase date Solitario recorded marketable equity securities of $ 165,000 for the Vendetta shares acquired and $ 68,000 for the Vendetta Warrants based upon an allocation of the purchase price of the Vendetta units, based upon (i) the fair value of the Vendetta common shares received, based upon the quoted market price for Vendetta common shares and (ii) the fair value of Vendetta Warrants based upon a Black Scholes model.

During the three months ended March 31, 2022 and 2021, Solitario charged loss on derivative instruments $ 1 ,000 and $ 3 ,000, respectively, for the change in the fair value of the Vendetta Warrants based upon a Black Scholes model.

Solitario accounts for its financial instruments under ASC 820.

For certain of Solitario’s financial instruments, including cash and cash equivalents and payables, the carrying amounts approximate fair value due to their short-term maturities.

Solitario’s short-term investments in USTS, CD’s, and marketable equity securities are carried at their estimated fair value based on quoted market prices.

During the three months ended March 31, 2022 there were no reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories.

The following is a listing of Solitario’s financial assets and liabilities required to be measured at fair value on a recurring basis and where they are classified within the hierarchy as of March 31, 2022:

On the purchase date Solitario recorded marketable equity securities of $ 165,000 for the Vendetta shares acquired and $ 68,000 for the Vendetta Warrants based upon an allocation of the purchase price of the Vendetta units, determined by (i) the fair value of the Vendetta common shares received based upon the quoted market price for Vendetta common shares.

and (ii) the fair value of Vendetta Warrants based upon a Black Scholes model.

During the three and six months ended June 30, 2022, Solitario charged loss on derivative instruments of $ 3,000 and $ 4,000 , respectively, for the change in the fair value of the Vendetta Warrants based on a Black Scholes model.

During the three and six months ended June 30, 2021, Solitario charged loss on derivative instruments of $ 37,000 and $ 40,000 , respectively, for the change in the fair value of the Vendetta Warrants based on a Black Scholes model.

Covered call options

From time-to-time Solitario has sold covered call options against its holdings of shares of common stock of Kinross Gold Corporation (“Kinross”) included in marketable equity securities.

The business purpose of selling covered calls is to provide additional income on a limited portion of shares of Kinross that Solitario may sell in the near term, which is generally defined as less than one year, and any changes in the fair value of its covered calls are recognized in the statement of operations in the period of the change.

Solitario did not sell any covered calls during the three and six months ended June 30, 2022.

During the three months ended June 30, 2021, Solitario sold covered calls against its holdings of Kinross for cash proceeds of $ 8,000 and recorded a gain on derivative instruments related to those covered calls of $ 7,000 .

Solitario accounts for its financial instruments under ASC 820 Fair Value Measurement .

During the six months ended June 30, 2022, there were no reclassifications in financial assets or liabilities between Level 1, 2 or 3 categories.

(in thousands)

1 unchanged sentence

Marketable equity securities

Vendetta Warrants

3 unchanged sentences

Vendetta Warrants

Solitario accounts for income taxes in accordance with ASC 740.

Solitario accounts for income taxes in accordance with ASC 740 Accounting for Income Taxes .

Under ASC 740, income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes.

2 unchanged sentences

A valuation allowance is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

At both March 31, 2022 and December 31, 2021, a valuation allowance has been recorded, which fully offsets Solitario’s net deferred tax assets, because it is more likely than not that the Company will not realize some portion or all of its deferred tax assets.

At both June 30, 2022 and December 31, 2021, a valuation allowance has been recorded, which fully offsets Solitario’s net deferred tax assets, because it is more likely than not that the Company will not realize some portion or all of its deferred tax assets.

The Company continually assesses both positive and negative evidence to determine whether it is more likely than not that the deferred tax assets can be realized prior to their expiration.

During the three months ended March 31, 2022 and 2021, Solitario recorded no deferred tax expense.

During the three and six months ended June 30, 2022 and 2021, Solitario recorded no deferred tax expense.

Commitments and contingencies

1 unchanged sentence

See Note 2, “Mineral Properties,” above.

Solitario leases office space under the WR Lease which provides for total minimum rent payments of $ 65,000 through October of 2023 .

Solitario leases office space under a non-cancelable operating lease for the Wheat Ridge, Colorado office which provides for future total minimum rent payments as of June 30, 2022 of $ 58,000 through October of 2023 .

Employee Stock Compensation Plans

On June 18, 2013, Solitario’s shareholders approved the 2013 Solitario Exploration & Royalty Corp.

Omnibus Stock and Incentive Plan (the “2013 Plan”).

Under the terms of the 2013 Plan, as amended, a total of 5,750,000 shares of Solitario common stock were reserved for awards to directors, officers, employees and consultants.

Omnibus Stock and Incentive Plan, as amended (the “2013 Plan”).

Under the terms of the 2013 Plan, a total of 5,750,000 shares of Solitario common stock are reserved for awards to directors, officers, employees and consultants.

Awards granted under the 2013 Plan may take the form of stock options, stock appreciation rights, restricted stock, and restricted stock units.

The terms and conditions of the awards are pursuant to the 2013 Plan and are granted by the Board of Directors or a committee appointed by the Board of Directors.

As of March 31, 2022, and December 31, 2021 there were options outstanding that are exercisable to acquire 5,440,000 and 5,513,000 , respectively, shares of Solitario common stock, with exercise prices between $ 0.20 and $ 0.77 per share.

During the three months ended March 31, 2022 and 2021, Solitario did not grant any options.

During the three months ended March 31, 2022, options for 73,000 shares were exercised with an average exercise price of $ 0.26 per share for proceeds of $ 19 ,000.

During the three months ended March 31, 2021, options for 120,350 shares were exercised with an average exercise price of $ 0.56 per share for proceeds of $ 67,000 .

During the three months ended March 31, 2022 and 2021, Solitario recorded stock option compensation expense of $ 13 ,000 and $ 28 ,000, respectively.

At March 31, 2022, the total unrecognized stock option compensation cost related to non-vested options is $ 67,000 and is expected to be recognized over a weighted average period of 18 months.

The terms and conditions of the awards are pursuant to the 2013 Plan and are granted by the Board of Directors of the Company (the “Board of Directors”) or a committee appointed by the Board of Directors.

As of June 30, 2022, and December 31, 2021 there were options outstanding that are exercisable to acquire 5,431,250 and 5,513,000 , respectively, shares of Solitario common stock, with exercise prices between $ 0.20 and $ 0.77 per share.

During the three and six months ended June 30, 2022, Solitario did not grant any options.

During the three months ended June 30, 2022, options for 8,750 shares were exercised with an average exercise price of $ 0.20 per share for proceeds of $ 2,000 .

During the six months ended June 30, 2022, options for 81,750 shares were exercised with an average exercise price of $ 0.25 per share for proceeds of $ 20,000 .

During the three and six months ended June 30, 2021, Solitario granted 140,000 options with an average exercise price of $ 0.68 per share, a five-year term and a grant date fair value of $ 58,000 based upon a Black-Scholes model, with a 76 % volatility and a 0.9 % risk-free interest rate.

During the three and six months ended June 30, 2021, options for 64,750 and 185,000 shares, respectively, were exercised with an average exercise price of $ 0.25 and $ 0.45 per share, respectively, for proceeds of $ 16,000 and $ 83,000 , respectively.

During the three and six months ended June 30, 2022, Solitario recorded stock option compensation expense of $ 13,000 and $ 26,000 , respectively.

During the three and six months ended June 30, 2021, Solitario recorded stock option compensation expense of $ 44,000 and $ 72,000 , respectively.

At June 30, 2022, the total unrecognized stock option compensation cost related to non-vested options was $ 54,000 and is expected to be recognized over a weighted average period of 16 months.

Shareholders’ Equity

Shareholders’ Equity for the three months ended March 31, 2022:

Shareholders’ Equity for the six months ended June 30, 2022:

(in thousands, except

5 unchanged sentences

Issuance of shares - option exercises

Balance at March 31, 2022

Shareholders’ Equity for the three months ended March 31, 2021:

Balance at June 30, 2022

Shareholders’ Equity for the six months ended June 30, 2021:

(in thousands, except

5 unchanged sentences

Issuance of shares - option exercises

Balance at March 31, 2021

Balance at June 30, 2021

At the Market Offering Agreement

4 unchanged sentences

The ATM Agreement provides that Wainwright is entitled to compensation for its services at a commission rate of 3.0 % of the gross sales price per share of common stock sold.

During the three months ended March 31, 2022, Solitario sold an aggregate of 2,650,724 shares of common stock under the ATM Agreement at an average price of $ 0.79 per share for net proceeds of $ 2,023,000 after commissions and sale expenses.

During the three months ended March 31, 2021, Solitario sold an aggregate of 150,400 shares of common stock under the ATM Agreement at an average price of $ 1.21 per share for net proceeds of $ 177,000 after commissions and sale expenses.

During the three months ended March 31, 2021, Solitario recorded $ 79,000 as a charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement.

Share Repurchase Program

On October 28, 2015, Solitario’s Board of Directors approved a share repurchase program that authorized Solitario to purchase up to two million shares of its outstanding common stock.

Solitario did not purchase any shares under the share repurchase plan during the three months ended March 31, 2022 and 2021.

Solitario has purchased a total of 994,000 shares for an aggregate purchase price of $ 467,000 under the share repurchase program since its inception.

The share repurchase plan expired on December 31, 2021, and no additional shares will be purchased under the plan in the future.

During the six months ended June 30, 2021, Solitario recorded $ 144,000 as a charge to additional paid-in-capital for one-time expenses related to entering into the ATM Agreement.

During the six months ended June 30, 2022, Solitario sold an aggregate of 2,650,724 shares of common stock under the ATM Agreement at an average price of $ 0.79 per share for net proceeds of $ 2,023,000 after commissions and sale expenses.

During the six months ended June 30, 2021, Solitario sold an aggregate of 150,400 shares of common stock under the ATM Program at an average price of $ 1.21 per share for net proceeds of $ 177,000 after commissions and sale expenses.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements