PINX:HENI Quarterly Report 10-Q/A Filing - 6/30/2012

Effective Date 6/30/2012

PINX:HENI (Hinto Energy Inc): Fair Value Estimate
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PINX:HENI (Hinto Energy Inc): Fair Value Uncertainty
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ----------------- FORM 10Q/A ----------------- (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2012 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from __________ to ___________ Commission file number: 000-26317 HINTO ENERGY, INC. ------------------ (Exact name of registrant as specified in its charter) Wyoming 84-1384961 ------- ---------- (State of Incorporation) (IRS Employer ID Number) 7609 Ralston Road, Arvada, CO 80002 ----------------------------------- (Address of principal executive offices) 303-647-4850 ------------ (Registrant's Telephone number) (Former Address and phone of principal executive offices) 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes [X] 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 for Regulation S-T (ss.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). Yes [X ] No [] Indicate by check mark whether the registrant is a large accelerated file, 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 [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) <PAGE> Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of August 14, 2012, there were 14,402,931 shares of the registrant's common stock issued and outstanding. <PAGE> <S> <C> PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page ---- Balance Sheets - June 30, 2012 and December 31, 2011 1 Statements of Operations - Three and Six months ended June 30, 2012 and the period from from March 8, 2011 (Inception) through June 30, 2011 and the period from March 8, 2011 (Inception) to June 30, 2012 2 Statements of Changes in Shareholders' Deficit - From March 8, 2011 (Inception) to June 30, 2012 4 Statements of Cash Flows - Six months ended June 30, 2012 and the period from March 8, 2011 (Inception) through June 30, 2011 and From March 8, 2011 (Inception) through June 30, 2012 5 Notes to the Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable 17 Item 4. Controls and Procedures 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings 19 Item 1A. Risk Factors - Not Applicable 19 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 -Not Applicable Item 3. Defaults Upon Senior Securities - Not Applicable 20 Item 4. Mine Safety Disclosure - Not Applicable 20 Item 5. Other Information - Not Applicable 20 Item 6. Exhibits 21 SIGNATURES 22 <PAGE> EXPLANATORY NOTE Hinto Energy, Inc., (the "Company"), is filing this amendment to its quarterly report on Form 10-Q for the period ended June 30, 2012 filed with the Securities and Exchange Commission on August 20, 2012, for the purpose of furnishing XBRL Interactive Data Files as Exhibit 101 in accordance with Rule 405 of Regulation S-T. This amendment does not reflect events occurring after the original filing. Except for the foregoing amended information, this Form 10-Q/A continues to speak as of the date of the original filing and the Company has not otherwise updated disclosures contained therein or herein to reflect events that occurred at a later date. <PAGE> PART I ITEM 1. FINANCIAL STATEMENTS <PAGE> <S> <C> <C> HINTO ENERGY, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEETS (UNAUDITED) June 30, December 31, 2012 2011 --------------- --------------- Assets Current Assets: Cash $ 51,295 $ 487,501 Accounts Receivable 8,478 - Deposits 64,500 25,000 --------------- --------------- Total Current Assets 124,273 512,501 --------------- --------------- Other assets: Oil and Gas Leases 851,700 478,200 --------------------------------- Total Other Assets 851,700 478,200 --------------- --------------- Total Assets $ 975,973 $ 990,701 =============== =============== Liabilities and Stockholders' (Deficit) Equity Current liabilities Accounts payable $ 106,816 $ 71,416 Accrued liabilities 68,104 47,510 Convertible notes payable 25,000 500,000 Subscription received - 40,000 Notes payable, other 375,000 375,000 --------------- --------------- Total Current Liabilities 574,920 1,033,926 Long term note payable 500,000 500,000 --------------- --------------- Total liabilities $ 1,074,920 $ 1,533,926 --------------- --------------- Stockholders' (Deficit) Equity Preferred stock, $0.001 par value; 25,000,000 shares authorized, no shares issued and outstanding - - Common stock, $0.001 par value; 50,000,000 shares authorized, 14,402,549 and 11,375,000 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively 14,403 11,375 Additional paid-in capital 1,334,560 167,956 Deficit accumulated during the development stage (1,447,910) (722,556) --------------- --------------- Total Stockholders' (Deficit) Equity (98,947) (543,225) --------------- --------------- Total liabilities and stockholders' (deficit) equity $ 975,973 $ 990,701 =============== =============== See the notes to these financial statements. 1 <PAGE> HINTO ENERGY, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND THE PERIOD FROM MARCH 8, 2011 (Inception) THROUGH JUNE 30, 2012 (UNAUDITED) <S> <C> <C> <C> <C> For The Three From March 8, For The Six From March 8, Months Ended 2011 (Inception) Months Ended 2011 (Inception) June 30, Through June 30, Through 2012 June 30, 2012 2012 June 30, 2012 ---------------- ------------------ ------------------ ---------------- Revenue: $ 10,364 $ - $ 10,364 $ - ---------------- ------------------ ------------------ ---------------- Operational expenses: Office expenses 266,606 - 423,176 - Goodwill write off - - - - Consulting fees 96,500 - 159,730 - ---------------- ------------------ ------------------ ---------------- Total operational expenses 363,106 - 582,906 - ---------------- ------------------ ------------------ ---------------- Other Income (Expenses) Interest expense (30,214) - (48,073) - ---------------- ------------------ ------------------ ---------------- Total other income (expense) (30,214) - (48,073) - ---------------- ------------------ ------------------ ---------------- Net loss $ (382,956) $ - $ (620,615) $ - ================ ================== ================== ================ Per share information Net loss per common share Basic $ (0.02) $ - $ (0.02) $ - Fully diluted * * * * ================ ================== ================== ================ Weighted average number of common stock outstanding - - ================ ================== ================== ================ * Not provided as it is anti-dilutive See the notes to these financial statements. 2 <PAGE> CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND THE PERIOD FROM MARCH 8, 2011 (Inception) THROUGH JUNE 30, 2012 (continued) March 8, 2011 (Inception) to June 30, 2012 Revenue: $ 10,364 ----------------- Operational expenses: Office expenses 668,498 Goodwill write off 339,195 Consulting fees 368,933 ----------------- Total operational expenses 1,376,626 ----------------- Other Income (Expenses) Interest expense (81,648) ----------------- Total other income (expense) (81,648) ----------------- Net loss $ (1,447,910) ================= Per share information Net loss per common share Basic Fully diluted Weighted average number of common stock outstanding * Not provided as it is anti-dilutive See the notes to these financial statements. 3 <PAGE> HINTO ENERGY, INC. (A Development Stage Company) CONSOLIDATED STATEMENT OF STOCKHOLDER'S (DEFICIT) EQUITY FOR THE PERIOD FROM MARCH 8, 2011 (Inception) THROUGH JUNE 30, 2012 (UNAUDITED) <S> <C> <C> <C> <C> <C> <C> <C> Deficit Stockholders' accumulated Equity South Additional During Uintah Gas Total Common Stock paid-in Development Properties Noncontrolling Stockholders' Number of Shares Amount Capital Stage Inc. Interest Equity --------------- --------- ----------- ------------ ------------ ------------- ------------ Issuance of Founder Shares for cash 1,000,000 $ 1,000 $ (900) $ - $ 100 - $ 100 Issuance of Founder Shares for cash 1,000,000 1,000 (900) - 100 - 100 Issuance of Founder Shares for services 5,500,000 5,500 (4,950) - 550 - 550 Issuance of Common Stock 2,000,000 2,000 (1,800) - 200 - 200 for oil and gas leases Shares cancelled in exchange for Hinto shares held by South Uintah (300,000) (300) 300 - - - - Issuance of shares for consulting 175,000 175 (157) - 18 - 18 Issuance of stock for cash by Hinto - - 147,000 - 147,000 63,000 210,000 Shareholder capital contribution - - 63,000 - 63,000 27,000 90,000 Minority interest at purchase of majority interest in subsidiary - - - - - (16,797) (16,797) Net Loss - - - (795,873) (795,873) (31,422) (827,295) Recapitalization, due to reverse merger 2,000,000 2,000 71,203 (31,422) 41,781 (41,781) - --------------- --------- ----------- ------------ ------------ ------------- ------------ Balance - December 31, 2011 11,375,000 11,375 272,796 (827,295) (543,124) - (543,124) --------------- --------- ----------- ------------ ------------ ------------- ------------ Issuance of Shares for cash 615,000 615 306,885 - 307,500 - 307,500 Conversion of notes to common stock 2,071,931 2,072 515,910 - 517,982 - 517,982 Issuance of shares for services 315,618 315 226,494 - 226,809 - 226,809 Issuance of shares for interest 25,000 25 12,475 - 12,500 - 12,500 Net Loss - - - (620,615) (620,615) - (620,615) --------------- --------- ----------- ------------ ------------ ------------- ------------ Balance - June 30, 2012 14,402,549 $ 14,402 $ 1,334,560 $(1,447,910) $ (98,948) $ - $ (98,948) =============== ========= =========== ============ ============ ============= ============ See the notes to these financial statements. 4 <PAGE> HINTO ENERGY, INC. (A Development Stage Company) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND THE PERIOD FROM MARCH 8, 2011 (Inception) THROUGH JUNE 30, 2012 (UNAUDITED) <S> <C> <C> <C> For The Six From March 8, March 8, 2011 Months Ended 2011 (Inception) (Inception) to June 30, Through June 30, 2012 June 30, 2011 2012 -------------------- ----------------- -------------------- Cash Flows from Operating Activities: Net Loss $ (620,615) $ - $ (1,447,910) Adjustments to net loss for non-cash items: Accrued interest converted to stock 30,584 - 30,584 Stock issued for services 192,209 226,809 Write down of goodwill in subsidiary - - 339,195 Adjustments to reconcile net loss to net cash used in operating activities: Increase in Accounts receivable (8,478) - (8,478) Increase in deposits (5,000) - (30,000) Increase in accounts payable 35,500 - 124,418 Increase in accrued liabilities 20,594 - 68,087 -------------------- ----------------- -------------------- Net Cash Used by Operating Activities (355,206) - (697,295) -------------------- ----------------- -------------------- Cash Flows from Investing Activities Investment to acquire 70% interest in subsidiary - - (300,000) Investment in well (198,500) - (198,500) Purchase of Oil and Gas leases (175,000) - (478,000) -------------------- ----------------- -------------------- Net Cash Used in Investing Activities (373,500) - (976,500) -------------------- ----------------- -------------------- Cash Flows from Financing Activities: Proceeds from convertible promissory notes 25,000 - 1,025,000 Proceeds from other notes payable - - 400,000 Payments on other notes payable - - (200,000) Proceeds from shareholder contribution - - 90,000 Proceeds from stock sales 267,500 - 307,500 -------------------- ----------------- -------------------- Net Cash Provided by Financing Activities 292,500 - 1,622,500 -------------------- ----------------- -------------------- Net Increase (decrease) in Cash (436,206) - (51,295) Cash and Cash Equivalents - Beginning of Period 487,501 - - -------------------- ----------------- -------------------- Cash and Cash Equivalents - End of Period $ 51,295 $ - $ (51,295) ==================== ================= ==================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest expense $ - $ - $ - ==================== ================= ==================== Cash paid for income taxes $ - $ - $ - ==================== ================= ==================== SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES: Net deficit of subsidiary on purchase $ - $ - $ - ==================== ================= ==================== Issuance of notes payable for assets $ 150,000 $ - $ 150,000 ==================== ================= ==================== Issuance of common stock for deposits and $ - $ - $ - ==================== ================= ==================== accounts payable $ 199,309 $ - $ 199,309 ==================== ================= ==================== Issuance of common stock for oil leases $ - $ - $ - ==================== ================= ==================== See the notes to these financial statements. 5 <PAGE> HINTO ENERGY, INC. (A Development Stage Company) Notes to the Financial Statements For the Periods Ended March 31, 2012 and December 31, 2011 (Unaudited) NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Business Hinto Energy, Inc. ("the Company") was incorporated in February 13, 1997 in the state of Wyoming. The Company was originally incorporated for the purpose of general investing. Due to an inability to raise adequate financing the Company was forced to cease operations in 2001. On October 12, 2004, the Company filed a Form 15-12G, with the Securities and Exchange Commission ("SEC") to cease its filing obligations under the Securities Act of 1934. On November 14, 2007, the Company filed a Registration Statement on Form S-1 in order to register its outstanding shares of common stock and resume its SEC filing status. The Company's fiscal year end is December 31st. The Company's financial statements are presented on the accrual basis of accounting. Share Exchange Agreement On July 27, 2011, the Company entered into a Share Exchange and Acquisition Agreement with South Uintah Gas Properties, Inc. ("South Uintah") and the South Uintah shareholders. Pursuant to the Share Exchange and Acquisition Agreement ("the Agreement"), the Company has agreed to issue shares of its restricted common stock for 100% of the issued and outstanding common stock of South Uintah. The shares were to be exchanged on a one for one basis. The closing of the transaction was dependent upon the delivery of audited financial statements by South Uintah. Prior to the signing of the Agreement, South Uintah had purchased 3,000,000 shares of the Company's common stock from its then majority shareholder Ms. Sharon Fowler. After such purchase, South Uintah held approximately 70% of the issued and outstanding common stock of the Company. As part of the Agreement, South Uintah had agreed to return the 3,000,000 shares of common stock to the Company. On December 22, 2011 the Company and South Uintah modified the purchase agreement and reduced the number of shares to be returned by South Uintah by 300,000, to 2,700,000. On January 23, 2012 the Company completed the Share Exchange and Acquisition Agreement ("the Agreement") and the shareholders of South Uintah became the majority shareholders of Hinto Energy, Inc. Hinto issued 11,446,931 shares of stock in a one for one share exchange, assumed $175,000 in notes payable and issued 6,700,000 of warrants in a one for one exchange with South Uintah warrant holders. South Uintah returned 2,700,000 shares of Hinto stock to the Company, such stock being cancelled. The Company accounted for the Share Exchange and Acquisition as a reverse capitalization, with South Uintah being the accounting acquirer. 6 <PAGE> Basis of Presentation Development Stage Company The Company has not earned significant revenues from planned operations. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Company." Therefore, the Company's financial statements of operations, stockholders' equity and cash flows disclose activity since the date of the Company's inception, in this case, South Uintah Gas Properties, Inc., for the period March 8, 2011 through December 31, 2011 and the combined companies, Hinto and South Uintah from January 1, 2012 forward. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less and money market instruments to be cash equivalents. Oil and Gas Properties, Full Cost Method The Company uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized. Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. The Company assesses the realization of unproved properties, taken as a whole, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of the Company to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. 7 <PAGE> Costs of oil and gas properties will be amortized using the units of production method. In applying the full cost method, the Company will perform an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the "estimated present value," of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. Revenue Recognition The Company recognizes revenue when it is earned and expenses are recognized when they occur. Net Loss per Share Basic net loss per common share is calculated by dividing the net loss applicable to common shares by the weighted average number of common and common equivalent shares outstanding during the period. For the periods ended June 30, 2012 and December 31, 2011, there were no potential common equivalent shares used in the calculation of weighted average common shares outstanding as the effect would be anti-dilutive because of the net loss. Stock-Based Compensation The Company adopted the provisions of and accounts for stock-based compensation using an estimate of value in accordance with the fair value method. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which generally is the vesting period. The Company elected the modified-prospective method, under which prior periods are not revised for comparative purposes. The valuation method applies to new grants and to grants that were outstanding as of the effective date and are subsequently modified. Fair Value of Financial Instruments The carrying amount of accounts payable is considered to be representative of respective fair values because of the short-term nature of these financial instruments. Other Comprehensive Income The Company has no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. Income Taxes Provision for income taxes represents actual or estimated amounts payable on tax return filings each year. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying balance sheets, and for operating loss and tax credit carry forwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustment to the tax provision or benefit in the period of enactment. 8 <PAGE> Recent Accounting Pronouncements There were accounting standards and interpretations issued during the period ended June 30, 2012, none of which are expected to have a material impact on the Company's financial position, operations or cash flows. NOTE 3 - GOING CONCERN AND MANAGEMENTS' PLAN The Company's financial statements for the six months ended June 30, 2012 and the period of March 3, 2011 through December 31, 2011 and the period of March 3, 2011 through June 30, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $620,615 for the six months ended June 30, 2012, and an accumulated deficit of $1,447,910 as of June 30, 2012. At June 30, 2012, the Company had a working capital deficit of $950,647. The future success of the Company is likely dependent on its ability to attract additional capital, or to find an acquisition to add value to its present shareholders and ultimately, upon its ability to attain future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will develop positive cash flow from operations. Management believes that actions presently being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. NOTE 4 - OIL AND GAS LEASES On May 9, 2012, the Company and Pacific Energy and Mining Company ("Pacific") entered into an Asset Purchase and Sale Agreement ("The Pacific Agreement."). On May 30, 2012, the Company closed the transaction. As part of the Pacific Agreement, the Company acquired certain oil and gas wells and related assets in the Greater Cisco area of the Uintah Basin in Grand County, Utah. The assets acquired include 4,783 gross acres in the Cisco Fields with an 80% Net Revenue Interest (NRI) and approximately 3,827 net acres. The property includes 27 wells that need to be re-worked, connected to a gas pipeline, or offset drilled. In exchange for such oil and gas wells and related assets, the Company paid $325,000 in a combination of cash and a convertible promissory note, as follows: - $175,000 cash; and - a $150,000 convertible promissory note. The convertible promissory note has an interest rate of 8% and is due May 30. 2013. The convertible promissory note and accrued interest may be converted into shares of the Company's restricted common stock at $1.00 per share. The Company purchased a farmout of deep right interests in approximately 5,000 net acres in the Uintah Basin in Utah in July 2011, amended in December 2011. The purchase price of the farmout interest was $478,200, made up of $303,000 in cash, $175,000 in notes payable and $200 in common stock (2,000,000 shares.) The Company has subsequently expended an additional $198,500 in cash for the completion of a gas pipeline connection, surface equipment and initial well rework. 9 <PAGE> NOTE 5 - CURRENT LIABILITIES During June 2012, the Company in exchange for cash of $25,000 issued a convertible promissory note for $25,000. The note is convertible in shares of the Company's restricted common stock at $0.50 per share and has a term of 12 months. The Company has $375,000 in other notes payable that it expects to be paid in the next twelve months. Of this amount, $200,000 is to be returned to a former investor. Further information regarding the $200,000 amount payable is found in Note 7. NOTE 6 - LONG TERM NOTE PAYABLE The Company placed a $500,000 secured convertible note payable with a single investor. The note has a term of 3 years, an interest rate of 10%, is convertible into the Company's common stock at $1 per share and is secured by oil and gas leases held by South Uintah Gas Properties, Inc. in the Natural Buttes area. NOTE 7 - STOCKHOLDERS' EQUITY Common Stock The authorized common stock of the Company is 50,000,000 shares of common stock with a $0.001 par value. At June 30, 2012, the Company had 14,402,931 shares of its common stock issued and outstanding. During the six months ended June 30, 2012, the Company issued 615,000 shares of its common stock to investors that purchased $307,500 of securities at a price of $.50 per common share and 124,000 shares for services valued at $131,000. The Company issued 191,618 shares of its common stock as a payment for outstanding accounts payable of $95,809 owed for legal services to an affiliate of the Company. The Company issued 25,000 shares of its common stock as interest of $12,500. The Company also issued 11,375,000 of its restricted common shares to acquire South Uintah Gas Properties, Inc. Preferred Stock On August 18, 2011, the Company filed an amendment to the Articles of Incorporation with the Secretary of State of Wyoming to authorize 25,000,000 shares of Preferred Shares to be designated in any series or classes and with those rights, privileges and preferences to be determined at the discretion of the Company's Board of Directors. At this time, the Company has not designated any series of preferred stock or issued any shares of preferred stock. Stock Option Plan On August 17, 2011, the Company's shareholders approved the 2011 Hinto Energy, Inc. Stock Option and Award Incentive Plan ("Plan"). The Plan provides for the grant of stock options to directors, officers, employees, consultants, and advisors of the Company. The Plan is administered by a committee consisting of members of the Board of Directors (the "Stock Option Committee"), or in its absence, the Board of Directors. 10 <PAGE> The Plan provides for a total of 2,000,000 shares of common stock to be reserved for issuance subject to options. As of the date of this Proxy Statement, the Board has not approved the grant of any options to purchase shares of common stock, nor the conditions, performance or vesting requirements. Warrants The Company had the following warrants outstanding at June 30, 2012: <S> <C> ------------------------ ------------------- ---------------------- ------------------- Warrants Term in years Vesting in years Exercise Price ------------------------ ------------------- ---------------------- ------------------- 3,000,000 3 to 5 Variable $2.00 ------------------------ ------------------- ---------------------- ------------------- 1,700,000 3 1 $1 and $3 ------------------------ ------------------- ---------------------- ------------------- 2,000,000 2 Vested $0.50 ------------------------ ------------------- ---------------------- ------------------- Each warrant gives the holder the right to purchase one share of the Company's common stock at the exercise price. The 3,000,000 warrants, issued in connection with consulting services, vest at various dates from July 2012 through July 2014 and expire at various dates from July 2014 through July 2016. The 1,700,000 warrants, issued in connection with consulting services, are fully vested and expire at various dates from June 2014 through November 2014, with 1,100,000 warrants being exercisable at $1 and 600,000 being exercisable at $3. The 2,000,000 warrants currently exercisable were issued in connection with notes payable and expire at dates from May 2013 through July 2013. These 2,000,000 warrants are callable at the option of the Company in the first year from the grant dates of May through July 2011 at the exercise price under various conditions, generally if the Company completes a $4,500,000 private placement of common stock. No expense was recorded by the Company on the issuance of any of the 6,700,000 warrants, as the Company's common stock has no trading market and no material common stock cash sales have been made, and thus none of the warrants were in the money. NOTE 8 - LEGAL MATTERS In March 2012 a note holder of South Uintah Gas Properties, Inc., Bridge Industries, LLC filed a complaint against the Company in the Circuit Court of the Eighteenth Judicial Circuit, Seminole County, Florida, alleging in general breach of contract and seeking return of all monies lent to South Uintah Gas Properties, Inc. of $400,000, the value of 1,000,000 shares of the Company's common stock and other equity appreciation, and compensation for services and costs. The Company is evaluating the action and its response, and the outcome of the case is currently unknown. NOTE 9 - SUBSEQUENT EVENTS The Company has evaluated its activities subsequent to the period ended June 30, 2012, through August 17, 2012 and found no reportable subsequent events to the period ended June 30, 2012 through August 20, 2012. 11 <PAGE> ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements. The independent registered public accounting firm's report on the Company's financial statements as of December 31, 2011, and for each of the years in the two-year period then ended, includes a "going concern" explanatory paragraph, that describes substantial doubt about the Company's ability to continue as a going concern. PLAN OF OPERATIONS ------------------ We had no operations prior to 2011 and we did not have any revenues during the fiscal years ended December 31, 2011, 2010 and 2009. We did not recognize any income in the years ended December 31, 2011 and 2010. We have minimal capital, moderate cash and only our intangible assets which consist of our business plan, relationships and contacts. We are illiquid and need cash infusions from investors or shareholders to provide capital, or loans from any sources, none of which have been arranged nor assured. Share Acquisition and Exchange Agreement On July 27, 2011, we entered into a Share Exchange and Acquisition Agreement with South Uintah and the South Uintah shareholders. On January 23, 2012, we entered into an Amended Share Exchange and Acquisition Agreement ("the Amended Share Exchange Agreement"). Pursuant to the Amended Share Exchange Agreement, we agreed to issue shares of the Company's restricted common stock for 100% of the issued and outstanding common stock of South Uintah. The shares are to be exchanged on a one for one basis. As a result, South Uintah became a wholly-owned subsidiary of the Company. In addition to the exchange of common stock, we have agreed to exchange on a one for one basis the following outstanding debt and equity instruments with those of our own. The table below sets forth the equity that is being exchanged. <S> <C> Type of Equity South Uintah Balance To Be Issued By Hinto ----------------------------------- ------------------------ ---- ------------------------- Common Stock 11,446,931 shares 11,446,931 shares Warrants (1) 6,700,000 6,700,000 Debt Instruments(2) $375,000 $375,000 ----------------------------------- (1) The warrants have exercise prices ranging from $0.50 to $3.00 per share and terms ranging from 2 to 3 years. (2) The debt instrument has a term of two years. 12 <PAGE> South Uintah Gas Properties, Inc. was incorporated in the state of Colorado on March 8, 2011. South Uintah was organized to operate as an independent oil and gas company which would engage in the acquisition, exploration, development, production and sale of natural gas and crude oil. Selected managed risk exploration ventures would also be considered from time to time. The core area of operation is the Rocky Mountain region, which contains all of our areas of interest. With the acquisition of South Uintah, the Company intends to strive to be a low cost and effective producer of hydrocarbons and intends to develop the business model and corporate strategy as discussed herein. On May 9, 2012, the Company and Pacific Energy and Mining Company ("Pacific") entered into an Asset Purchase and Sale Agreement ("The Pacific Agreement."). On May 30, 2012, the Company closed the transaction. As part of the Pacific Agreement, the Company acquired certain oil and gas wells and related assets in the Greater Cisco area of the Uintah Basin in Grand County, Utah. The assets acquired include 4,783 gross acres in the Cisco Spring Fields with an 80% Net Revenue Interest (NRI) and approximately 3,827 net acres. The property includes 27 wells that need to be re-worked, connected to a gas pipeline, or offset drilled. In exchange for such oil and gas wells and related assets, the Company paid $325,000 in a combination of cash and a convertible promissory note, as follows: - $175,000 cash; and - a $150,000 convertible promissory note. The convertible promissory note has an interest rate of 8% and is due May 30. 2013. The convertible promissory note and accrued interest may be converted into shares of the Company's restricted common stock at $1.00 per share. During the quarter ended June 30, 2012, we made progress on our business plan by completing the hookup of our 22-1 gas well in the Uintah Basin of Utah to a pipeline and are generating initial revenues from the sales of oil and gas. During the remaining part of 2012 our plan of operations includes: 3rd Quarter 2012 Continuation of Recompletion Operations; 4th Quarter 2012 Continuation of Recompletion Operations and development of any new oil 13 <PAGE> Expected 2012 Budget - 12 months (January 2012 through December 2012) --------------------------------------------------------------------- <S> <C> Development of connection, rework, recompletion, 3 well program $1,500,000 Working Capital $1,300,000 Acquisitions $1,000,000 Payment of Debt $375,000 General and Administrative Expenses: Legal and Accounting/Auditing $157,000 Consulting $495,000 Filing Fees (State, SEC, etc.) $7,500 Travel $60,000 Interest $66,000 Miscellaneous $405,000 -------------------- TOTAL $5,000,000 The Company may change any or all of the budget categories in the execution of its business model. None of the line items are to be considered fixed or unchangeable. The Company may need substantial additional capital to support its budget. The Company has no revenues to date in the oil and gas exploration, development and production business. We have conducted a Private Offering of shares of our restricted Common Stock for capital. We intend to raise up to $5,000,000 in the next twelve months with a structure not yet determined in debt or equity. We cannot give any assurances that we will be able to raise the full $5,000,000 to fund the budget. Further, we will need to raise additional funds to support not only our expected budget, but our continued operations. We cannot make any assurances that we will be able to raise such funds or whether we would be able to raise such funds with terms that are favorable to us. We will need substantial additional capital to support our proposed future energy operations. We have no revenues. We have no committed source for any funds as of date here. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sales or royalty income, and could fail in business as a result of these uncertainties. Decisions regarding future participation in exploration wells or geophysical studies or other activities will be made on a case-by-case basis. We may, in any particular case, decide to participate or decline participation. If participating, we may pay our proportionate share of costs to maintain our proportionate interest through cash flow or debt or equity financing. If participation is declined, we may elect to farmout, non-consent, sell or otherwise negotiate a method of cost sharing in order to maintain some continuing interest in the prospect. 14 <PAGE> Since Hinto is a public company, which had nominal activity, the acquisition has been treated as a recapitalization of South Uintah. Though Hinto was the legal acquirer in the merger, South Uintah was the accounting acquirer since its shareholders gained control of Hinto. Therefore at the date of the merger the historical financial statements of South Uintah became those of Hinto. As a result, for the financial statements as of June 30, 2012, the merger date will reflect historical financial statements of South Uintah and supersede any prior financial statements of Hinto. RESULTS OF OPERATIONS --------------------- For the Three Months Ended June 30, 2012 Compared to the Three Months Ended June 30, 2011 During the period of March 8, 2011 (Inception) through June 30, 2011, the Company did not recognize any revenue, expenses, and losses, as it was newly incorporated. During the three months ended June 30, 2012, the Company recognized revenues of $10,364 in revenues from its operational activities. During the three months ended June 30, 2012, we incurred total operational expenses of $363,106. Operational expenses during the three months ended June 30, 2012 included $266,606 in general and administrative expenses and consulting fees of $96,500. We expect operational expenses to increase as we continue to pursue our operational plan. During the three months ended June 30, 2012, we recognized a net loss of $382,956. For the Six Months Ended June 30, 2012 Compared to the Period of Inception (March 8, 2011) through June 30, 2011 During the period of March 8, 2011 (Inception) through June 30, 2011, the Company did not recognize any revenue, expenses, and losses, as it was newly incorporated. During the six months ended June 30, 2012, the Company recognized revenues of $10,364 in revenues from its operational activities. These revenues have all been earned during the three month period ended June 30, 2012. The Company expects to continue to recognize revenues from its operational activities, but does not expect that such revenues to be adequate to support its current operations. During the six months ended June 30, 2012, we incurred total operational expenses of $582,906. Operational expenses during the six months ended June 30, 2012 included $423,176 in general and administrative expenses and consulting fees of $159,730. We expect operational expenses to increase as we continue to pursue our operational plan. During the six months ended June 30, 2012, we recognized a net loss of $620,615. LIQUIDITY --------- At June 30, 2012, the Company had total current assets of $124,273, consisting of cash of $51,295, accounts receivable of $8,478 and deposits of $64,500. At June 30, 2012, the Company had total current liabilities of $574,920, consisting of, accounts payable of $106,816, accrued liabilities of $68,104, $25,000 convertible promissory notes and notes payables of $375,000. At June 30, 2012, we have a working capital deficit of $450,647. During the six months ended June 30, 2012, we used cash of $355,206 in operations. During the six months ended June 30, 2012, we recognized a net loss of $620,615, which was adjusted for the non-cash items of accrued interest of $30,584 and services of $192,209 paid in stock. 15 <PAGE> During the six months ended June 30, 2012, we used $198,500 in our investing activities, solely in the development of our 22-1 well and $175,000 on the purchase of certain oil and gas properties and related assets in the Greater Cisco area of the Uintah Basin in Grand County, Utah. During the six months ended June 30, 2012, we received $267,500 from our financing activities from the sale of shares of our common stock. The Company placed a $500,000 secured convertible note payable with a single investor. The note has a term of 3 years, an interest rate of 10%, is convertible into the Company's common stock at $1 per share and is secured by oil and gas leases in the Natural Buttes area held by South Uintah Gas Properties, Inc. In March 2012 a note holder of South Uintah Gas Properties, Inc., Bridge Industries, LLC filed a complaint against the Company in the Circuit Court of the Eighteenth Judicial Circuit, Seminole County, Florida, alleging in general breach of contract and seeking return of all monies lent to South Uintah Gas Properties, Inc. of $400,000, the value of 1,000,000 shares of the Company's common stock and other equity appreciation, and compensation for services and costs. The Company is evaluating the action and its response, and the outcome of the case is currently unknown. During May 2012, the Company in exchange for cash of $25,000 issued a convertible promissory note for $25,000. The note is convertible in shares of the Company's restricted common stock at $0.50 per share and a term of 12 months. During the six months ended March 31, 2012, the Company issued 615,000 shares of its common stock to investors that purchased $307,500 of the securities at a price of $.50 per common share. The Company also issued 11,375,000 of its restricted common shares to acquire South Uintah Gas Properties, Inc. Short Term. On a short-term basis, we do not generate any revenue or revenues in sufficient to cover operations. Based on prior history, we will continue to have insufficient revenue to satisfy current and recurring expenses and liabilities . For short term needs we will be dependent on receipt, if any, of offering proceeds. Capital Resources We have only common and preferred stock as our capital resources. We have no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital. Need for Additional Financing We do not have capital sufficient to meet our cash needs. We will have to seek loans or equity placements to cover such cash needs. Once exploration commences, our needs for additional financing is likely to increase substantially. No commitments to provide additional funds have been made by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred. 16 <PAGE> Critical Accounting Policies ---------------------------- Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less and money market instruments to be cash equivalents. Oil and Gas Properties, Full Cost Method The Company uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized. Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. The Company assesses the realization of unproved properties, taken as a whole, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of the Company to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. Costs of oil and gas properties will be amortized using the units of production method. In applying the full cost method, the Company will perform an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the "estimated present value," of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. Revenue Recognition The Company recognizes revenue when it is earned and expenses are recognized when they occur. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not Applicable 17 <PAGE> ITEM 4. CONTROLS AND PROCEDURES Disclosures Controls and Procedures We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) and that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC's rules and forms and that the information is gathered and communicated to our management, including our Chief Financial Officer (Principal Executive Officer and Principal Financial Officer), as appropriate, to allow for timely decisions regarding required disclosure. As required by SEC Rule 15d-15(b), our Chief Financial Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation and the evaluation conducted at June 30, 2012, our Chief Financial Officer has concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Financial Officer, to allow timely decisions regarding required disclosure. MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. Hinto's management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of Hinto's management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on Hinto's financial statements. 18 <PAGE> We have identified certain material weaknesses in internal control over financial reporting relating to a shortage of accounting and reporting personnel due to limited financial resources and the size of our Company, as detailed below: (1) The Company currently does not have, but is in the process of developing formally documented accounting policies and procedures, which includes establishing a well-defined process for financial reporting. (2) Due to the limited size of our accounting department, we currently lack the resources to handle complex accounting transactions. We believe this deficiency could lead to errors in the presentation and disclosure of financial information in our annual, quarterly, and other filings. (3) As is the case with many companies of similar size, we currently lack segregation of duties in the accounting department. Until our operations expand and additional cash flow is generated from operations, a complete segregation of duties within our accounting function will not be possible. Considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations and the fact that we have been a small business with limited employees, such items caused a weakness in internal controls involving the areas disclosed above. We have concluded that our internal controls over financial reporting were ineffective as of June 30, 2012, due to the existence of the material weaknesses noted above that we have yet to fully remediate. There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 2012 a note holder of South Uintah Gas Properties, Inc., Bridge Industries, LLC filed a complaint against the Company in the Circuit Court of the Eighteenth Judicial Circuit, Seminole County, Florida, alleging in general breach of contract and seeking return of all monies lent to South Uintah Gas Properties, Inc. of $400,000, the value of 1,000,000 shares of the Company's common stock and other equity appreciation, and compensation for services and costs. The Company is evaluating the action and its response, and the outcome of the case is currently unknown. ITEM 1A. RISK FACTORS Not Applicable to Smaller Reporting Companies. 19 <PAGE> ITEM 2. CHANGES IN SECURITIES During the period of April 1, 2012 through June 30, 2012, the Company has made the following unregistered issuances of its securities. <S> <C> <C> DATE OF SALE TITLE OF SECURITIES NO. OF SHARES CONSIDERATION CLASS OF PURCHASER ------------------ ------------------------ ---------------- ----------------------------- ----------------------- April 2012 - Common Shares 55,000 Services Business Associate May 2012 May 2012 Common Shares 205,000 $102,500 Business Associate June 2012 Common Shares 191,618 Outstanding Invoices Business Associate/Affiliate May 2012 Common Shares 25,000 Interest Business Associate May 2012 Convertible Promissory - $25,000 Business Associate Note Exemption From Registration Claimed All of the above sales by the Company of its unregistered securities were made by the Company in reliance upon Rule 506 of Regulation D of the Securities Act of 1933, as amended (the "1933 Act"). All of the individuals and/or entities that purchased the unregistered securities were primarily existing shareholders, known to the Company and its management, through pre-existing business relationships, as long standing business associates and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition. ITEM 3. DEFAULTS UPON SENIOR SECURITIES NONE. ITEM 4. MINE SAFETY DISCLOSURE. Not Applicable. ITEM 5. OTHER INFORMATION NONE. 20 <PAGE> ITEM 6. EXHIBITS Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. Exhibit 31.1 Certification of Chief Financial Officer and Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 32.1 Certification of Principal Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act 21 <PAGE> SIGNATURES Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. HINTO ENERGY, INC. (Registrant) Dated: September 13, 2012 By: /s/ George Harris ---------------- George Harris (Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) 22

PINX:HENI Hinto Energy Inc Quarterly Report 10-Q/A Filling

Hinto Energy Inc PINX:HENI Stock - Get Quarterly Report SEC Filing of Hinto Energy Inc PINX:HENI stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

PINX:HENI Hinto Energy Inc Quarterly Report 10-Q/A Filing - 6/30/2012
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