Attached files
| file | filename |
|---|---|
| EX-31.1 - 302 CERTIFICATION OF THE CEO - Hondo Minerals Corp | ex-31_1.htm |
| EX-31.2 - 302 CERTIFICATION OF THE CFO - Hondo Minerals Corp | ex-31_2.htm |
| EX-32.1 - 906 CERTIFICATION OF THE CEO/CFO - Hondo Minerals Corp | ex-32_1.htm |
| EX-32.2 - 906 CERTIFICATION OF THE CEO/CFO - Hondo Minerals Corp | ex-32_2.htm |
| EXCEL - IDEA: XBRL DOCUMENT - Hondo Minerals Corp | Financial_Report.xls |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2011
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 333-161868
HONDO MINERALS CORPORATION
(Exact name of registrant as specified in its charter)
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Nevada
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26-1240056
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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15303 N. Dallas Parkway, Suite 1050
Addison, Texas 75001
(Address of principal executive offices)
(214) 444-7444
(Registrant’s telephone number)
with a copy to:
Zouvas Law Group, P.C.
2368 Second Avenue
San Diego, CA 92101
Telephone (619) 688-1116
Facsimile (619) 688-1716
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 such filing requirements for the past 90 days.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No (Not required)
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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | o | Accelerated Filer | o | ||
| Non-Accelerated Filer | x | Smaller Reporting Company | o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of October 31, 2011, there were 59,835,390 shares of the registrant’s $0.001 par value common stock issued and outstanding.
HONDO MINERALS CORPORATION*
TABLE OF CONTENTS
Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Hondo Minerals Corporation (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "HMNC" refers to Hondo Minerals Corporation.
2
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ITEM 1.
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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3
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HONDO MINERALS CORPORATION
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CONSOLIDATED BALANCE SHEETS
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OCTOBER 31, 2011 AND JULY 31 2011
(Unaudited)
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October 31,
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July 31,
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2011
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2011
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(unaudited)
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(audited)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 1,834,607 | $ | 2,052,048 | ||||
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Other current assets
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39,590 | 59,386 | ||||||
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Total Current Assets
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1,874,197 | 2,111,434 | ||||||
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Properties, Equipment, and Buildings:
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Vehicles
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67,183 | 67,183 | ||||||
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Office equipment
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168,500 | 56,428 | ||||||
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Mining equipment
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5,079,825 | 4,129,601 | ||||||
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Plant and buildings
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2,340,819 | 1,539,387 | ||||||
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Land and mineral properties, net of $920,000 allowance for
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impairment
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2,541,981 | 2,278,513 | ||||||
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Total Properties, Equipment, and Buildings
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10,198,308 | 8,071,112 | ||||||
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Other Assets
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9,994 | 100 | ||||||
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TOTAL ASSETS
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$ | 12,082,499 | $ | 10,182,646 | ||||
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities:
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Accounts payable
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$ | 382,325 | $ | 293,066 | ||||
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Accounts payable - related parties
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- | 15,259 | ||||||
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Total Current Liabilities
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382,325 | 308,325 | ||||||
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Shareholders' Equity:
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Common Stock, $0.001 par value, 200,000,000 shares authorized
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62,425,190 and 57,711,390 shares issued and outstanding at
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October 31, 2011 and July 31, 2011, respectively
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62,425 | 57,711 | ||||||
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Additional paid-in capital
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15,573,032 | 13,220,847 | ||||||
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Treasury stock, at cost
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(12,921 | ) | (12,921 | ) | ||||
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Accumulated (deficit)
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(3,922,362 | ) | (3,391,316 | ) | ||||
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Total Shareholders' Equity
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11,700,174 | 9,874,321 | ||||||
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
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$ | 12,082,499 | $ | 10,182,646 | ||||
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The accompanying notes are an integral part of these financial statements.
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F-1
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HONDO MINERALS CORPORATION
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CONSOLIDATED STATEMENTS OF OPERATIONS
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FOR THE 3 MONTHS ENDED OCTOBER 31, 2011 and 2010
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(Unaudited)
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2011
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2010
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Operating Expenses
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Officers' and directors' fees
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$ | 223,950 | $ | 62,800 | ||||
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Professional fees
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116,210 | 1,500 | ||||||
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Corporate general and administrative
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190,886 | 106,989 | ||||||
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Loss from Operations
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(531,046 | ) | (171,289 | ) | ||||
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Other Income (Expense)
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Other income
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- | 16,250 | ||||||
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Interest expense
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- | (16,500 | ) | |||||
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Net (Loss)
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$ | (531,046 | ) | $ | (171,539 | ) | ||
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(Loss) per share
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Basic and fully diluted:
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Weighted average number of shares outstanding
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59,940,840 | 30,574,578 | ||||||
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(Loss) per share
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$ | (0.01 | ) | $ | (0.01 | ) | ||
The accompanying notes are an integral part of these financial statements.
F-2
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HONDO MINERALS CORPORATION
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE 3 MONTHS ENDED OCTOBER 31, 2011 and 2010
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(Unaudited)
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2011
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2010
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Cash flows from operating activities:
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Net (loss)
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$ | (531,046 | ) | $ | (171,539 | ) | |
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Adjustments to reconcile net (loss) to net cash used in
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operating activities:
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Common stock issued for services
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60,300 | 30,376 | |||||
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Common stock issued for officers' and directors' fees
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223,950 | 62,800 | |||||
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Common stock issued for interest-related party
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- | 16,500 | |||||
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Donated management services
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- | 3,000 | |||||
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Changes in current assets and liabilities:
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Accounts receivable
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- | (8,500 | ) | ||||
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Other current assets
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19,796 | - | |||||
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Accounts payable
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89,258 | - | |||||
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Accounts payable - related parties
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(15,259 | ) | (17,219 | ) | |||
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Net cash (used) in operating activities
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(153,001 | ) | (84,582 | ) | |||
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Cash flows from investing activities:
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Purchase of vehicles
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- | (7,500 | ) | ||||
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Purchase of office equipment
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(112,072 | ) | (1,434 | ) | |||
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Purchase of mining equipment
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(950,224 | ) | (11,200 | ) | |||
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Purchase of buildings
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(703,482 | ) | (12,700 | ) | |||
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Purchase of land and mining properties
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(263,468 | ) | (183,342 | ) | |||
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Deposit on office space
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(9,894 | ) | - | ||||
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Net cash (used) in investing activities
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(2,039,140 | ) | (216,176 | ) | |||
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Cash flows from financing activities
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Proceeds from shareholder loans
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- | 318,650 | |||||
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Sale of common stock
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1,974,700 | - | |||||
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Net cash provided by financing activities
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1,974,700 | 318,650 | |||||
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Net (decrease) increase in cash and cash equivalents
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(217,441 | ) | 17,892 | ||||
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Cash and cash equivalents, beginning of year
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2,052,048 | 10,638 | |||||
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Cash and cash equivalents, end of year
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$ | 1,834,607 | $ | 28,530 | |||
The accompanying notes are an integral part of these financial statements
F-3
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HONDO MINERALS CORPORATION
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE 3 MONTHS ENDED OCTOBER 31, 2011 and 2010
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(Continued)
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2011
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2010
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Supplemental cash flow disclosures:
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Cash paid during the year for:
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Interest
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$ | - | $ | - | ||||
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Income Taxes
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$ | - | $ | - | ||||
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Non-cash investing and financing activities:
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Common stock issued for mining equipment
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$ | - | $ | 40,000 | ||||
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Common stock issued for buildings
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97,950 | - | ||||||
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Acquisition of mining equipment
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- | (40,000 | ) | |||||
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Acquisition of buildings
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(97,950 | ) | - | |||||
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Common stock issued for payment of short-term
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loans--related party
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- | 330,000 | ||||||
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Payment of short-term loans--related party
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- | (330,000 | ) | |||||
| $ | - | $ | - | |||||
The accompanying notes are an integral part of these financial statements
F-4
Hondo Minerals Corporation
Notes to Consolidated Financial Statements
October 31, 2011
(Unaudited)
Note 1 – Nature of Operations
Tycore Ventures Inc. (“Tycore”) was incorporated in the State of Nevada on September 25, 2007 to engage in the acquisition, exploration and development of natural resource properties. On February 22, 2011, Tycore changed its name to Hondo Minerals Corporation (the “Company”).
On February 8, 2011, the two controlling shareholders of Tycore and Hondo Minerals, Inc. (“Hondo”) entered into an agreement to merge the two companies into a single entity. By agreement, Tycore exchanged 17,783,888 shares of its common stock for all of the issued and outstanding common shares of Hondo. The two controlling shareholders owned the following percentages of each company:
| Company | Ownership Percentage | ||
| Tycore Ventures Inc. | 71.4% | ||
| Hondo Minerals, Inc. | 58.0% |
Due to the common control, the historical basis of accounting of each company was maintained and the accompanying financial statements and historical accounting information represents combined amounts.
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for our interim period is not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosure contained in the audited financial statements for the year ended July 31, 2011, as reported in the Form 10-K, have been omitted.
These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company anticipates future losses in the development of its business, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or issuance of common shares.
Note 2 – Equity Transactions
On February 22, 2011 the Company increased its authorized shares of common stock from 75,000,000 to 200,000,000. The par value remained the same at $.001.
During the quarter ended October 31, 2011, the Company sold 3,949,400 shares of its common stock at $.50 per unit for net proceeds of approximately $1,974,700. A unit consists of one share of common stock at a par value of $.001, a warrant to purchase one share of common stock at $2.00 per share, and a warrant to purchase one share of common stock at $3.00 per share.
As has been the Company’s custom, shares of the Company’s common stock were issued for the officers’ and directors’ fees, miscellaneous services, and acquisition of mining equipment and buildings. During the quarter ended October 31, 2011, 382,200 shares of the Company’s common stock were issued for these services.
F-5
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ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
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FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
RESULTS OF OPERATIONS
Working Capital
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October 31, 2011
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October 31, 2010
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Current Assets
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$ | 1,874,197 | $ | 41,230 | ||||
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Current Liabilities
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$ | 382,325 | $ | 54,454 | ||||
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Working Capital (Deficit)
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$ | 1,491,872 | $ | (13,224 | ) | |||
Cash Flows
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October 31, 2011
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October 31, 2010
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Cash Flows from (used in) Operating Activities
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$ | (153,001 | ) | $ | (84,582 | ) | ||
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Cash Flows (used in) Investing Activities
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$ | (2,039,140 | ) | $ | (216,176 | ) | ||
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Cash Flows provided by Financing Activities
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$ | 1,974,700 | $ | 318,650 | ||||
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Net Increase (decrease) in Cash During Period
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$ | (217,441 | ) | $ | 17,892 | |||
Operating Revenues
We recorded no revenues for the three months ended October 31, 2011. From the period of September 25, 2007 (inception) to October 31, 2011, we recorded no revenues.
Operating Expenses and Net Loss
Operating expenses for the three month period ended October 31, 2010 was $531,046 and is comprised of officer and director fees, professional fees, and corporate general and administrative expenses. Operating expenses for the three month period ended October 31, 2010 were $171,289 and comprised of officer and director fees, professional fees, and corporate general and administrative expenses.
Net loss for the three month period ended October 31, 2011 was $531,046 compared to net loss of $171,539 for the three month period ended October 31, 2010.
Liquidity and Capital Resources
At October 31, 2011, the Company’s cash balance was $1,834,607 compared to $28,530 as at October 31, 2010. The increase in cash is attributed to the sale of common stock. We do have sufficient cash on hand to commence initial production and to fund our ongoing operational expenses beyond 12 months.
We may need to raise funds in the future to fund possible acquisitions or further production. Additional funding will likely come from equity financing from the sale of our common stock. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our Company. We do not have any financing arranged and we cannot provide investors with any assurance that we will be able to raise additional funding from the sale of our common stock. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing.
3
Cash flow from Operating Activities
During the quarter ended October 31, 2011, the Company used $153,001 of cash for operating activities compared to the use of $84,582 of cash for operating activities during the period ended October 31, 2010.
Cash flow from Investing Activities
During the quarter ended October 31, 2011, the Company used $2,039,140 of cash for investing activities compared to the use of $216,176 of cash for operating activities during the period ended October 31, 2010. The increase in cash flows from investing activities is attributed mainly to the purchase of office equipment, mining equipment, buildings, and land and mining properties.
Cash flow from Financing Activities
During the quarter ended October 31, 2011, the Company received $1,974,700 of cash from financing activities compared to $318,650 for the period ended October 31, 2010. Cash flows from financing activities in 2011 is attributed to sale of common stock compared to notes payable proceeds in 2010.
Quarterly Developments
On September 29, 2011 the Company released a progress report announcing that the Company intends to list its shares on the American Stock Exchange as soon as practical. A listing involves satisfying a number of regulatory requirements, including SEC filings, capital adequacy, and minimum levels of trading volume and price. There is no guarantee that the company will be able to meet these requirements and achieve the listing. The company is evaluating potential investment banking relationships to assist in implementing strategies to achieve the listing, as well as increase liquidity and research coverage.
William R. Miertschin, Chairman and CEO of Hondo Minerals, said, "I could not be more pleased at the progress achieved by our team this year. Starting with literally nothing on the ground at this time last year, we have constructed a plant, initiated volume leaching, and will soon be producing salable metals. In addition, we are starting to generate interest from potential licensees of the ELeach process, which is critical to the long-term success of Hondo. We look forward to reporting more progress in the months ahead as we reach this inflection point in our development."
On November 17, 2011 Hondo provided a Corporate Update announcing that the Company is completing construction of its first commercial scale extraction plant that will be used to process the one million ton tailings pile present at the Old Tennessee Mine in Chloride, Arizona. The company intends to extract gold, silver, zinc, lead, and other metals that it believes to be present in the pile. The Company took delivery, installed, tested, and is now operating all equipment necessary for commercial scale production of the leaching step of the extraction process. Leaching vats were modified to remove agitators and add aeration systems to improve the consistency of the leaching process. The company is now able to leach four ton batches. The company took delivery of production scale ELeach solvent generators, and is now installing and fine-tuning them. Each generator can produce 200 liters/minute of the high pH electrolyzed water that is the key technical innovation of the ELeach process. Two machines were delivered from Innovative Designs and Technology (Japan), at a cost of over $250,000 each. The company expects the generators to be fully installed and operational in December. Until the large generators are operational, the company is using its small lab-scale solvent generators (4 liters/minute) to test and refine the leaching process step.
The company has ordered, and is awaiting delivery of, the production scale electroplating systems known as RenoCells. Electroplating is a standard process to remove metals from the pregnant solution created by the leaching process step. Electrical current is applied to a conductor, which causes the metal to precipitate on the conductor. The conductor is then burned away to leave metal.
The RenoCell is a proprietary machine which performs electroplating on a carbon mesh. The company is using the RenoCell rather than traditional electroplating systems because of the RenoCell's ability to electroplate in a three dimensional environment, which increases efficiency. Hondo expects the RenoCell systems to be installed and operational within three weeks after delivery. Until volume RenoCells are installed, the company is extracting metal in very small batches with its lab-scale system.
4
On-Site Lab Status
During the last month, the company also completed its on-site, self-contained laboratory in Chloride. The final equipment installed included two spectrometers as well as traditional assay equipment. With the lab fully outfitted, the company can replicate its proprietary ELeach extraction process on a small scale, which enables quick testing of proposed process improvements. The spectrometers enable technicians to closely monitor the production extraction process, test optimization strategies on-site, and research prospective properties with in-house assay work.
Subsequent Developments
On May 2, 2011, the Company entered into a Provisional Patent Sub-License Agreement (the “Patent Agreement”) with Edward E. Alexander (“Mr. Alexander”), representing the provisional patent holders of the E-Leach process, pursuant to which Mr. Alexander shall grant to the Company a sub-license of the Provisional Patent Application Serial Number 61/455,568 (the “sub-license”), for exclusive use in the mining and mineral recovery industries in Mohave County, Arizona. In exchange for the sub-license, the Company shall grant to Mr. Alexander a one-time issuance of one million (1,000,000) shares of its common stock and royalty fees to be determined on a project-by-project basis, substantially per the terms of the Patent Agreement. A copy of the Patent Agreement is filed as Exhibit 10.04 hereto and is incorporated herein by this reference.
Going Concern
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our annual financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-11 (“ASU No. 2010-11”), “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after issuance of this Update. The Company’s adoption of provisions of ASU No. 2010-11 did not have a material effect on the financial position, results of operations or cash flows of the Company.
5
In February 2010, the FASB issued ASU 2010-10 (“ASU No. 2010-10”), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions of ASU No. 2010-10 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In February 2010, the FASB issued ASU 2010-09 (“ASU No. 2010-09”), “Subsequent Events (ASC Topic 855): Amendments to Certain Recognition and Disclosure Requirements.” ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued and revised financial statements, through which the filer had evaluated subsequent events. The Company’s adoption of provisions of ASU No. 2010-09 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued ASU 2010-06 (“ASU No. 2010-06”), “Improving Disclosures about Fair Value Measurements.” ASU No. 2010-06 amends FASB Accounting Standards Codification (“ASC”) 820 and clarifies and provides additional disclosure requirements related to recurring and non-recurring fair value measurements and employers’ disclosures about postretirement benefit plan assets. This ASU is effective for interim and annual reporting periods beginning after December 15, 2009. The Company’s adoption of provisions of ASU No. 2010-06 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued an amendment to ASC Topic 505, “Equity”, where entities that declare dividends to shareholders that may be paid in cash or shares at the election of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied on a retrospective basis. The Company’s adoption of the amendment to ASC Topic 505 did not have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued an amendment to ASC Topic 820, “Fair Value Measurements and Disclosure”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010. The Company’s adoption of the amendment to ASC Topic 820 did not have a material effect on the financial position, results of operations or cash flows of the Company.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Our net sales and profitability are determined principally by the price of the rare earth products that we produce and, to a lesser extent, by the price of natural gas and other supplies used in the production process. The prices of our rare earth products are influenced by the price and demand of the end products that our products support, including clean energy technologies. A significant decrease in the global demand for these products may have a material adverse effect on our business. We currently have no hedging contracts in place and intend to consider hedging strategies in future.
Our costs and capital investments are subject to market movements in other commodities such as natural gas and chemicals. We may enter into derivative contracts for a portion of the expected usage of these products, but we do not currently have any derivative contracts and we do not anticipate entering into derivative agreements before the end of 2012.
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ITEM 4.
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CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures
6
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").
Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of October 31, 2011.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
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ITEM 1.
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LEGAL PROCEEDINGS
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On May 25, 2011, John Theodore Anderson (“Plaintiff”) filed a Complaint against the Company in the United States District Court, District of Nevada. The Plaintiff alleged a breach of contract and sought money damages against the Company. On August 8, 2011, a judgment is was entered in favor of Hondo Minerals, Inc., William R. Miertschin, Richard M. Hewitt, Advanced Natural Tech. Services, Rhena Drury, Ivan Webb, Wild Quail Resources, Inc. against Plaintiff, John Theodore Anderson. Mr. Anderson appealed the decision. On October 18, 2011, Mr. Anderson’s appeal was denied and the judgment against Mr. Anderson was affirmed. The Company is considering filing a lawsuit against Mr. Anderson for Abuse of Process, among other torts.
Other than the foregoing, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
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ITEM 1A.
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RISK FACTORS
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Our Annual Report on Form 10-K for the fiscal year ended July 31, 2011 includes a detailed discussion of our risk factors.
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ITEM 2.
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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|
1.
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Quarterly Issuances:
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|
2.
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Subsequent Issuances:
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Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.
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ITEM 3.
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DEFAULTS UPON SENIOR SECURITIES
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None.
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ITEM 4.
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[REMOVED AND RESERVED]
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|
ITEM 5.
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OTHER INFORMATION
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|
ITEM 6.
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EXHIBITS
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7
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Exhibit Number
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Description
|
Filed
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|
3.01(a)
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Certificate Articles of Incorporation
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Filed with the SEC on September 11, 2009 as part of our Registration Statement on Form S-1
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|
3.01(b)
|
Certificate of Amended Articles of Incorporation
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Filed with the SEC on March 08, 2011 on Form 8-K
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|
3.02
|
Bylaws
|
Filed with the SEC on September 11, 2009 as part of our Registration Statement on Form S-1
|
|
3.02(a)
|
Amended Bylaws
|
Filed with the SEC on March 08, 2011 on Form 8-K
|
|
Filed herewith.
|
||
|
Filed herewith.
|
||
|
Filed herewith.
|
||
|
Filed herewith
|
||
|
101.INS*
|
XBRL Instance Document
|
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL*
|
XBRL Extension Calculation Linkbase
|
|
|
101.DEF*
|
XBRL Taxonomy Definition Linkbase
|
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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HONDO MINERALS CORPORATION
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|||
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Dated: December 09, 2011
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/s/ William R. Miertschin
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||
|
By: William R. Miertschin
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|||
|
Its: President, CEO and CFO
|
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
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Dated: December 09, 2011
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/s/ William R. Miertschin
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||
| By: William R. Miertschin | |||
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Its: Director
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|||
|
Dated: December 09, 2011
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/s/ J.C. “Skip” Headen
|
||
| By: J.C. “Skip” Headen | |||
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Its: Director
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|||
|
Dated: December 09, 2011
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/s/ Ben Botello
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||
| By: Ben Botello | |||
|
Its: Director
|
|||
|
Dated: December 09, 2011
|
/s/ Howard Siegel
|
||
| By: Howard Siegel | |||
|
Its: Director
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9