Solitario Exploration & Royalty Corp. (XPL,SLR.TO) said Friday that it would restate its previously reported financial statements for the fiscal years 2006, 2007 and the first three quarters of fiscal 2008 to correct an accounting error related to the fair value of its employee stock options.
As Solitario's employee stock options are priced in Canadian dollars and its functional currency is U.S. dollars, Solitario should have classified the fair value of its employee stock options as liabilities from January 1, 2006 upon the adoption of Statement of Financial Accounting Standards No. 123R, "Share Based Payment."
As a results, the company needs to restate its historical financial statements to record the fair value of its outstanding employee stock options as liabilities and record related non-cash charges and credits for stock-based compensation expense, net of tax, related to subsequent changes in the recorded fair values of outstanding employee stock options.
Solitario said it has estimated it will record an increase non-cash employee stock option compensation expense, net of tax, during the year ended December 31, 2006 related to the recording of the initial fair value of its outstanding options, and an increase employee non-cash stock option compensation expense, net of tax, for the year ended December 31, 2007 and a reduction in non-cash stock option compensation expense, net of tax, during the interim periods of 2008 as a result of changes in the in the fair value of its employee stock options during those periods.
Solitario plans to complete the restatements before the end of February, and will file an amended 2007 annual report and amended quarterly reports for the first 3 quarter of 2008, including required restated financial statements, as soon as possible.
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