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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May 2006
Commission File Number: 001-31819
Gold Reserve Inc.
(Exact name of registrant as specified in its charter)
926 W. Sprague Avenue, Suite 200
Spokane, Washington 99201
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F _____
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82-____________
Filed with this Form 6-K is the following, which is incorporated herein by
reference:
99.1 Gold Reserve U.S. GAAP reconciliation to Financial Statements in
accordance with item 18 under Form 20-F
Certain statements included herein, including those that express management's
expectations or estimates of our future performance, constitute "forward
looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Forward looking statements are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management are inherently subject to significant business,
economic and competitive uncertainties and contingencies. We caution that such
forward-looking statements involve known and unknown risks, uncertainties and
other risk factors that may cause the actual financial results, performance,
or achievements of Gold Reserve to be materially different from our estimated
future results, performance, or achievements expressed or implied by those
forward looking statements. Numerous factors could cause actual results to
differ materially from those in the forward-looking statements, including
without limitation, concentration of operations and assets in foreign
countries, corruption, requests for improper payments, uncertain legal
enforcement, regulatory, political and economic risks associated with
Venezuelan operations, our ability to obtain additional funding for the
development of the Brisas project, in the event any key findings or
assumptions previously determined by our experts in the final feasibility
study (including any updates thereto) significantly differ or change as a
result of actual results in our expected construction and production at the
Brisas project, risk that actual mineral reserves may vary considerably from
estimates presently made, impact of currency, metal prices and metal
production volatility, changes in proposed development plans (including
technology used), our dependence upon the abilities and continued
participation of certain key employees, and risks normally incident to the
operation and development of mining properties. These are discussed in greater
detail in Gold Reserve's filings with the U.S. Securities and Exchange
Commission at www.sec.gov and the Annual Information Form and other reports
filed with Canadian provincial securities commissions at www.sedar.com. Gold
Reserve expressly disclaims any intention or obligation to update or revise
any forward looking statement whether as a result of new information, events
or otherwise.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Gold Reserve Inc.
(Registrant)
Date: May 2, 2006
By: s/ Robert A. McGuinness
Name: Robert A. McGuinness
Title: Vice President - Finance & CFO
EXHIBIT INDEX
99.1 Gold Reserve U.S. GAAP reconciliation to Financial Statements in
accordance with item 18 under Form 20-F
Auditors' Report with respect to supplementary information
To the Board of Directors of Gold Reserve Inc.
Our audit of the consolidated financial statements of Gold Reserve Inc.
referred to in our report to the Shareholders dated February 17, 2006
included consideration of note 11, Differences Between Canadian and U.S.
GAAP as at December 31, 2005 and 2004 and for each of the years in the
three-year period ended December 31, 2005.
Management has also prepared supplementary disclosure under U.S. GAAP
as at December 31, 2005 and 2004 and for each of the years in the
three-year period ended December 31, 2005 ("Supplementary Information
on Differences Between Canadian and U.S. GAAP"). In our opinion, this
Supplementary Information on Differences Between Canadian and U.S. GAAP
presents fairly, in all material respects, the disclosures set forth
therein when read in conjunction with the related consolidated financial
statements of the Company.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
Vancouver, British Columbia, Canada
February 17, 2006
Supplementary Information on Differences Between Canadian and U.S. GAAP
The Company prepares its consolidated financial statements in U.S. dollars
in accordance with Canadian GAAP, which principles differ in certain
respects from United States GAAP. The Company has previously reported its
financial statements in accordance with Item 17 under Form 20-F, including
the U.S. GAAP reconciliation requirements thereunder. This should be read
in conjunction with the financial statements of the Company set forth in
the 2005 Form 20-F.
The effect of the principal differences between U.S. and Canadian GAAP as
required by Item 18 of Form 20-F (and the rules and regulations of the SEC)
are summarized below.
Consolidated Summarized Balance Sheets
- ------------------------------------------------------------------------------
Canadian GAAP Change U.S. GAAP
- ------------------------------------------------------------------------------
2005
- ------------------------------------------------------------------------------
Assets
Current assets A $ 22,797,616 $ 4,112,904 $ 26,910,520
Mineral property costs C 46,381,380 (41,034,321) 5,347,059
Other assets 12,775,876 - 12,775,876
- ------------------------------------------------------------------------------
$ 81,954,872 $(36,921,417) $ 45,033,455
==============================================================================
Liabilities $ 2,317,106 - $ 2,317,106
Shareholders' equity
Common shares & equity units B 140,512,063 (5,185,930) 135,326,133
Less, common shares & equity units
held by affiliates (674,598) (674,598)
Contributed surplus 1,489,156 1,489,156
Stock options B 1,867,537 3,922,652 5,790,189
Value assigned to warrants 3,682,447 3,682,447
Accumulated deficit B,C (61,983,016) (44,942,646) (106,925,662)
Accumulated other
comprehensive income A 4,112,904 4,112,904
KSOP debt (84,220) (84,220)
- ------------------------------------------------------------------------------
79,637,766 (36,921,417) 42,716,349
- ------------------------------------------------------------------------------
$ 81,954,872 $ (36,921,417) $ 45,033,455
==============================================================================
- ------------------------------------------------------------------------------
Canadian GAAP Change U.S. GAAP
- ------------------------------------------------------------------------------
2004
- ------------------------------------------------------------------------------
Assets
Current assets A $ 33,057,053 $ 3,043,978 $ 36,101,031
Mineral property costs C 41,034,321 (41,034,321)
Other assets 12,514,157 12,514,157
- ------------------------------------------------------------------------------
$ 86,605,531 $(37,990,343) $ 48,615,188
==============================================================================
Liabilities $ 2,429,473 $ 2,429,473
Shareholders' equity
Common shares & equity units B 136,907,516 (5,409,346) 131,498,170
Less, common shares & equity units
held by affiliates (674,598) (674,598)
Stock options B 1,004,197 7,071,690 8,075,887
Value assigned to warrants 5,395,019 5,395,019
Accumulated deficit B,C (52,955,734) (48,091,684) (101,047,418)
Accumulated other
comprehensive income A 3,043,978 3,043,978
KSOP debt (105,323) (105,323)
- ------------------------------------------------------------------------------
84,176,058 (37,990,343) 46,185,715
- ------------------------------------------------------------------------------
$ 86,605,531 $(37,990,343) $ 48,615,188
==============================================================================
Consolidated Summarized Statements of Operations
2005 2004 2003
- ------------------------------------------------------------------------------
Net Loss under Canadian GAAP $ (9,027,282) $ (5,482,629) $ (3,707,336)
Stock based compensation B 3,149,038 1,391,066 (7,704,726)
Mineral property costs C (6,268,328)
- ------------------------------------------------------------------------------
Net loss under U.S. GAAP (5,878,244) (10,359,891) (11,412,062)
Other comprehensive income (loss)
Unrealized gain (loss) on
available-for-sale securities A 1,068,926 (70,147) 3,072,941
Reclassification adjustment
for (gain)loss included in
net loss 55,957 (176,375)
- ------------------------------------------------------------------------------
Total comprehensive
loss under U.S. GAAP $ (4,753,361) $ (10,430,038) $ (8,515,496)
==============================================================================
Basic and diluted net loss
per share under U.S. GAAP $ (.17) $ (.35) $ (.46)
==============================================================================
Consolidated Summarized Statements of Cash Flows
2005 2004 2003
- ------------------------------------------------------------------------------
Cash flow used by operating
activities under
Canadian GAAP $ (7,729,508) $ (3,958,108) $ (2,898,151)
Mineral property costs C (6,268,328)
- ------------------------------------------------------------------------------
Cash flow used by operating
activities under U.S. GAAP $ (7,729,508) $ (10,226,436) $ (2,898,151)
==============================================================================
Cash flow (used) provided
by investing activities
under Canadian GAAP $ (2,691,289) $ (3,661,785) $ 2,731,267
Mineral property costs C 6,268,328
- ------------------------------------------------------------------------------
Cash flow (used) provided by investing
activities under U.S. GAAP $ (2,691,289) $ 2,606,543 $ 2,731,267
==============================================================================
A Under U.S. GAAP, marketable securities would be divided between
held-to-maturity securities and available-for-sale securities. Those
securities classified as available-for-sale would be recorded at market
value and the unrealized gain or loss would be recorded as part of
comprehensive income.
B For U.S. GAAP purposes, the Company accounts for stock-based employee
compensation arrangements using the intrinsic value method prescribed in
Accounting Principles Board (APB) Opinion No.25, iAccounting for Stock
Issued to Employeesi. Under U.S. GAAP, when the exercise price of
certain stock options is amended (the iRepricing i), these options are
accounted for as variable compensation from the date of the effective
Repricing. Under this method, following the Repricing date,
compensation expense is recognized when the quoted market value of the
Companyis common shares exceeds the amended exercise price. Should the
quoted market value subsequently decrease, a recovery of a portion, or
all of the previously recognized compensation expense will be
recognized. For U.S. GAAP purposes, the Company will adopt SFAS 123R,
iAccounting for Stock Based Compensationi effective January 1, 2006.
SFAS 123R requires the use of the fair value method of accounting for
stock based compensation. This standard is substantially consistent
with the revised provisions of CICA 3870, which was adopted by the
Company for Canadian GAAP effective January 1, 2004. For U.S.GAAP, the
Company has not yet determined which acceptable method of adoption it
will apply.
C Under Canadian GAAP, the Company capitalizes mineral property
exploration and development costs after proven and probable reserves
have been established. The Company also capitalizes costs on properties
where it has found non-reserve material that does not meet all the
criteria required for classification as proven or probable reserves.
Under U.S. GAAP, exploration and development expenditures incurred on
properties where mineralization has not been classified as a proven and
probable reserve under SEC rules, are expensed as incurred. Accordingly,
certain expenditures are capitalized for Canadian GAAP purposes but
expensed under U.S. GAAP.
Pro-forma stock based compensation
For U.S. GAAP purposes, the Company accounts for stock-based employee
compensation arrangements using the intrinsic value method. Had the
fair value method of accounting been used under U.S. GAAP, the net loss
and net loss per share would have been as follows:
2005 2004 2003
- -----------------------------------------------------------------------------
Net loss under U.S. GAAP $ (5,878,244) $ (10,359,891) $ (11,412,062)
Variable plan accounting
adjustment included
in net loss (2,285,698) (791,643) 7,704,726
Stock based compensation under
the fair value method (863,340) (599,423) (406,108)
- -----------------------------------------------------------------------------
Pro-forma net loss under
U.S. GAAP $ (9,027,282) $ (11,750,957) $ (4,113,444)
=============================================================================
Pro-forma basic and diluted
net loss per share
under U.S. GAAP $ (.26) $ (.40) $ (.17)
=============================================================================
Development Stage Enterprise
In August of 1992, the Company acquired the Brisas Project. Beginning
in 1993 the Company decided to focus its efforts on the Development of
Brisas thereby meeting the definition of a development stage enterprise
under Statement of Financial Accounting Standards No. 7 (FAS 7),
Accounting and Reporting by development Stage Enterprises. The
following additional information is required under FAS 7.
Consolidated Summarized Statements of Operations - U.S. GAAP
For the period from January 1, 1993 to December 31, 2005
Other income $ (14,935,581)
Mineral property exploration and development 39,505,080
General & administrative expense 27,345,826
Other expense 49,085,509
- -----------------------------------------------------------------
Deficit accumulated during the development stage
from January 1, 1993 to December 31, 2005 $ 101,000,834
- -----------------------------------------------------------------
Accumulated deficit, December 31, 1992 5,924,828
- -----------------------------------------------------------------
Accumulated deficit, December 31, 2005 $ 106,925,662
=================================================================
Consolidated Summarized Statements of Cash Flows - U.S. GAAP
For the period from January 1, 1993 to December 31, 2005
Cash used by operating activities $ (73,097,165)
Cash used by investing activities (12,432,736)
Cash provided by financing activities 103,271,301
- -----------------------------------------------------------------
Increase in cash and cash equivalents for the period
from January 1, 1993 to December 31, 2005 17,741,400
Cash and cash equivalents at December 31, 1992 1,628,852
- -----------------------------------------------------------------
Cash and cash equivalents at December 31, 2005 $ 19,370,252
=================================================================
Additional Shareholders' Equity disclosure - U.S. GAAP
For the period from January 1, 1993 to December 31, 2005
Common Shares and Equity Units Issued
Shares $ $ Value $ Value $ $ Compre-
$ and units Contrib- assigned assigned Accum- hensive $
Issue Common Equity held by uted to to ulated income KSOP
Price Shares Units $ Amount affiliates surplus options warrants Deficit (loss) debt
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1992 8,875,862 8,290,819 (70,944) (5,924,828) 50,000)
Stock issued for
cash
Private
placement 4.12 2,530,000 10,413,976
Exercise of
options 1.34 300,000 401,000
Exercise of
warrants 3.52 5,037 17,749
Stock issued for
services 3.89 12,552 48,851
Net loss (5,495,061)
Change in KSOP
debt 5,000
Reduction of
shareholders'
equity due to
change in
subsidiaries'
minority
interest (25,050)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1993 11,723,451 19,147,345 (70,944) (11,419,889) (45,000)
Stock issued for
cash
Private
placement 9.82 2,000,000 19,630,530
Exercise of
options 2.32 295,967 687,494
Exercise of
warrants 6.07 2,134,250 12,962,750
Stock issued
for services 5.50 6,000 33,000
Stock issued
to KSOP 6.19 20,000 123,760
Stock issued for
litigation
settlement 6.15 2,750,000 16,912,500
Value attributed
to warrants
issued in
litigation
settlement 800,000
Net loss (26,297,415)
Increase in
common stock
held by
affiliates (433,332)
Effect of change
in accounting
for investments 108,425
Decrease in
unrealized gain
on available-
for-sale
securities (29,408)
Change in KSOP
debt (103,760)
Reduction of
shareholders'
equity due to
change in
subsidiaries'
minority
interest (843,986)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1994 18,929,668 69,453,393 (504,276) (37,717,304) 79,017 (148,760)
Stock issued for
cash
Exercise of
options 2.74 167,835 460,162
Stock issued
to KSOP 5.60 50,000 280,195
Stock issued
for minority
interest in
subsidiaries 7.43 1,329,185 9,882,028
Net loss (3,847,605)
Increase in
common
stock held by
affiliates (924,289)
Increase in
unrealized gain
on available-
for-sale
securities 6,943
Change in KSOP
debt (187,949)
Reduction of
shareholders'
equity due
to change in
subsidiaries'
minority
interest (6,924)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1995 20,476,688 80,068,854 (1,428,565) (41,564,909) 85,960 (336,709)
Stock issued for
cash
Exercise of
options 5.37 497,623 2,673,988
Exercise of
warrants 10.52 1,729,500 18,202,500
Net loss (7,908,701)
Decrease in
unrealized gain
on available-
for-sale
securities (83,210)
Change in KSOP
debt 150,001
Addition to
shareholders'
equity due to
change in
subsidiaries'
minority
interest 7,436
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1996 22,703,811 100,952,778 (1,428,565) (49,473,610) 2,750 (186,708)
Stock issued for
cash
Exercise of
options 5.75 124,649 716,716
Stock issued
to KSOP 5.02 89,683 450,000
Net loss (10,918,111)
Increase in
unrealized gain
on available-for-
sale securities 8,250
Change in KSOP
debt (436,152)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1997 22,918,143 102,119,494 (1,428,565) (60,391,721) 11,000 (622,860)
Stock issued for
cash
Exercise of
options 1.90 223,624 425,883
Stock issued
to KSOP 3.00 50,000 150,000
Net loss (5,147,658)
Change in shares
held by
affiliates (1,034,323) 1,025,234
Decrease in
unrealized gain
(loss) on
available-
for-sale
securities (22,625)
Change in KSOP
debt 208,089
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1998 23,191,767 101,661,054 (403,331) (65,539,379) (11,625)(414,771)
Stock issued for
cash
Exercise of
options 1.19 12,500 14,899
Stock issued
for services 0.84 70,000 58,760
Stock issued
to KSOP 1.13 300,000 337,500
Stock retired 3.02 (1,629) (4,915)
Net loss (4,499,321)
Net common
shares exchanged
for equity units (1,584,966) 1,584,966
Decrease in
unrealized loss
on available-
for-sale
securities (328,618)
Change in KSOP
debt 230,352
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1999 21,987,672 1,584,966 102,067,298 (403,331) (70,038,700) (340,243)(184,419)
Stock issued
for services 0.55 70,000 38,688
Net loss (2,807,648)
Equity units
exchanged
for common
shares 138,570 (138,570)
Increase in
unrealized gain
on available-
for-sale
securities 437,875
Change in KSOP
debt 99,310
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2000 22,196,242 1,446,396 102,105,986 (403,331) (72,846,348) 97,632 (85,109)
Stock issued for
cash
Exercise of
options 0.78 5,500 4,285
Stock issued
for services 0.75 20,000 15,000
Stock issued
to KSOP 0.47 300,000 140,640
Net loss (2,258,191)
Change in
common stock
held by
affiliates (271,267)
Equity units
exchanged for
common shares 133,380 (133,380)
Increase in
unrealized
gain on
available-
for-sale
securities 62,368
Change in KSOP
debt 1,322
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2001 22,655,122 1,313,016 102,265,911 (674,598) (75,104,539) 160,000 (83,787)
Stock issued for
cash
Exercise of
options 0.72 18,000 12,960
Stock issued
for services 0.85 100,000 85,200
Stock issued
to KSOP 0.67 200,000 134,000
Variable plan
accounting for
options 1,162,804
Net loss (4,170,926)
Equity units
exchanged for
common shares 23,036 (23,036)
Decrease in
unrealized gain
on available-
for-sale
securities (118,816)
Change in KSOP
debt 19,003
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2002 22,996,158 1,289,980 102,498,071 (674,598) 1,162,804 (79,275,465) 41,184 (64,784)
Stock issued for
cash
Private
placement 1.95 4,042,000 7,888,508
Exercise of
options 0.74 400,000 294,605
Stock issued
for services 5.06 60,000 303,600
Stock issued
to KSOP 1.28 200,000 256,000
Value assigned
to warrants
issued 1,730,641
Variable plan
accounting
for options 7,704,726
Net loss (11,412,062)
Equity units
exchanged for
common shares 52,100 (52,100)
Increase in
unrealized gain
on available-
for-sale
securities 3,072,941
Change in KSOP
debt (39,568)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2003 27,750,258 1,237,880 111,240,784 (674,598) 8,867,530 1,730,641 (90,687,527) 3,114,125 (104,352)
Stock issued for
cash
Private
placement 3.61 5,361,000 19,337,034
Exercise of
warrants 4.28 21,100 90,211
Exercise of
options 0.89 373,954 333,310
Stock issued
for services 4.13 54,000 223,012
Stock issued
to KSOP 3.41 75,000 255,750
Value assigned
to warrants
issued 3,682,447
Variable plan
accounting
for options (791,643)
Assigned value
of exercised
warrants 18,069 (18,069)
Net loss (10,359,891)
Equity units
exchanged for
common shares 80,483 (80,483)
Decrease in
unrealized gain
on available-
for-sale
securities (70,147)
Change in KSOP
debt (971)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2004 33,715,795 1,157,397 131,498,170 (674,598) 8,075,887 5,395,019 (101,047,418) 3,043,978 (105,323)
Stock issued for
cash
Exercise of
warrants 4.33 260,900 1,129,905
Exercise of
underwriter
compensation
options 3.00 202,100 605,468
Exercise of
underwriter
compensation
warrants 4.32 70,735 305,646
Exercise of
options 1.00 573,030 571,326
Stock issued
for services 2.92 251,350 733,231
Stock issued
to KSOP 3.45 75,000 258,971
Net loss (5,878,244)
Variable plan
accounting
for options (2,285,698)
Assigned value
of exercised
warrants 223,416 (223,416)
Assigned value
of expired
warrants 1,489,156 (1,489,156)
Equity units
exchanged for
common shares 47,377 (47,377)
Increase in
unrealized
gain on
available-for-
sale
securities 1,068,926
Change in KSOP
debt 21,103
- ------------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 2005 35,196,287 1,110,020 135,326,133 (674,598) 1,489,156 5,790,189 3,682,447 (106,925,662) 4,112,904 (84,220)