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EX-32.1 - CERTIFICATION - BIOXYTRAN, INCf10q0911a1ex32i_usrareearth.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q/A
Amendment No. 1

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the Quarter ended September 30, 2011

Commission File Number: 333-154912

U.S. RARE EARTH MINERALS, INC
(Formerly known as U.S. Natural Nutrients & Minerals, Inc)
 (Exact name of registrant as specified in its charter)

Nevada
 
26-2797630
(State or jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
     
6460 Medical Center St. Suite 230
Las Vegas, NV
 
 
89148
(Address of principal executive offices)
 
(Zip code)

(702) 888-1450, ext 281
(Registrant’s telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months and (2) has been subject to such filing requirements for the past 90 days.
Yes T  No  £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files); Yes T No £.

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
£
 
Accelerated Filer
£
Non-Accelerated Filer
£
 
Smaller Reporting Company
T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No T

There were 74,731,109 shares of common stock outstanding as of September 30, 2011.
 
 
 

 
 
EXPLANATORY NOTE
 
The  purpose of this amendment to our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, originally filed with the Securities and Exchange Commission on November 14, 2011, is revalue the stock issued to consultants and professionals at fair market value and presentation of the previously disclosed stock split.
 
No changes have been made to the Form 10-Q other than the information described above. This amendment does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way disclosures made in the Form 10-Q.
 
 
 

 

TABLE OF CONTENTS
_________________
 
 
Page
PART I - FINANCIAL INFORMATION
 
   
ITEM 1.     FINANCIAL STATEMENTS
4
ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
10
ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
14
ITEM 4A   (T).  CONTROLS AND PROCEDURES
14
   
PART II - OTHER INFORMATION
 
   
ITEM 1.     LEGAL PROCEEDINGS
16
ITEM 1A.  RISK FACTORS
16
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
16
ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
16
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
16
ITEM 5.     OTHER INFORMATION
16
ITEM 6.     EXHIBITS
17
SIGNATURES
18

 
3

 

PART I – FINANCIAL INFORMATION
 
 ITEM 1. INTERIM FINANCIAL STATEMENTS
 
U.S. RARE EARTH MINERALS, INC
(Formerly known as U.S. Natural Nutrients & Minerals, Inc)
 (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS

   
September 30,
   
December 31,
 
   
2011
   
2010
 
   
(Unaudited)
Restated
   
(Audited)
As filed
 
ASSETS
 
             
CURRENT ASSETS
           
Cash
  $ 57,974     $ 22,755  
Inventory
    21,070       7,487  
Note Receivable
    200       200  
Prepaid Expenses
    8,249       -  
    Total current assets
    87,493       30,442  
                 
Property and Equipment, Net
    176,221       50,289  
                 
          Total assets
    263,714       80,731  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
                 
CURRENT LIABILITIES
               
Accounts payable and accrued expenses
  $ 41,655     $ 69,615  
10% Series A Senior (non-subordinated) debentures
    20,000       40,000  
Accrued interest
    7,980       -  
Loan payable, current
    25,000       -  
     Total current liabilities
    94,635       109,615  
                 
Loans payable - long term
    -       25,000  
Loan payable - related party
    -       2,132  
     Total liabilities
    94,635       136,747  
                 
STOCKHOLDERS' EQUITY (DEFICIT)
               
Common stock: $0.001 par value; 300,000,000 authorized,
               
    74,731,109 and 34,424,337 shares issued and outstanding
               
    as of September 30, 2011 and December 31, 2010, respectively
    74,731      
34,424
 
Additional paid-in capital
   
2,609,232
     
546,699
 
Deficit accumulated during the development stage
    (2,514,884 )     (637,139 )
     Total stockholders' equity (deficit)
    169,079       (56,016 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 263,714     $ 80,731  
 
See accompanying notes to the financial statements .
 
 
4

 
 
U.S. RARE EARTH MINERALS, INC
(Formerly known as U.S. Natural Nutrients & Minerals, Inc)
 (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)
 
   
Three Months Ended
   
Nine Months Ended
   
From inception
June 9, 2008 to
 
   
September 30, 2011
   
September 30, 2010
   
September 30, 2011
   
September 30, 2010
   
September 30, 2011
 
   
Restated
   
As filed
   
Restated
   
As filed
   
Restated
 
                               
Revenues
  $ 13,199     $ 1,790     $ 53,216     $ 11,027     $ 69,348  
Cost of goods sold
    3,300       448       13,304       2,758       17,338  
Gross Profit
    9,899       1,342       39,912       8,269       52,010  
                                         
General, selling and administrative expenses
    357,992       71,116       1,915,116       272,792       2,552,610  
                                         
Operating Loss
    (348,093 )     (69,774 )     (1,877,745 )     (264,523 )     (2,500,600 )
                                         
Other income (expense):
                                       
Interest income
    2,052       -       2,052       925       3,895  
Interest expense
    -       (1,613 )     (4,593 )     (6,954 )     (18,179 )
      2,052       (1,613 )     (2,541 )     (6,029 )     (14,283 )
Net Loss
  $ (346,041 )   $ (71,387 )   $ (1,877,745 )   $ (270,552 )   $ (2,514,884 )
                                         
Net loss per common share - basic and diluted
  $ (0.00 )   $ (0.00 )   $ (0.02 )   $ (0.01 )        
                                         
Weighted average of common shares outstanding
    66,226,229       33,304,823       61,782,852       25,403,217          
 
See accompanying notes to the financial statements .

 
5

 
 
U.S. RARE EARTH MINERALS, INC
(Formerly known as U.S. Natural Nutrients & Minerals, Inc)
 (A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

               
From inception
 
   
September 30,
   
September 30,
   
June 9, 2008 to
 
   
2011
Restated
   
2010
As filed
   
June 30, 2011
Restated
 
Cash Flows from Operating Activities:
                 
Net Loss
  $
(1,877,745
)   $ (270,552 )   $ (1,727,589 )
Adjustments to reconcile net loss to net cash
                       
   used by operating activities:
                       
Depreciation
    18,771       838       22,182  
Stock for services
   
1,699,393
      196,650       1,107,463  
Accretion of debt premium and interest
    -       724       2,869  
Contributed capital to cost of goods sold
    -       690       690  
Expenses paid by stockholder contribution
    -       5,807       5,807  
Changes in assets and liabilities:
                       
   Decrease note receivable
    -       29,231       -  
   (Increase) decrease prepaid expenses
    (8,249 )     13,805       (5,762 )
   Increase inventory
    (13,583 )     (2,522 )     (21,070 )
   Increase (decrease) accounts payable and accrued expenses
    (27,960 )     (37,720 )     56,669  
                         
Net cash used in operating activities
  $
(209,373
)   $ (63,049 )   $
(491,200
)
                         
Cash flows used in Investing Activities:
                       
Capital expenditures
   
(144,703
)     (26,150 )    
(198,403
)
                         
Net cash used in investing activities
   
(144,703
)     (26,150 )    
(198,403
)
                         
Cash flows from Financing Activities:
                       
Proceeds from Convertible debt
    -       -       15,000  
Proceeds from Series A Debentures
    -       -       52,250  
Payment of loan payable and debentures
    (22,132 )     (10,000 )     (34,131 )
Accrued interest
    7,980       6,585       7,980  
Proceeds from (payments of) Loans payable
    -       (100 )     39,000  
Proceeds from Loan payable, related party
    -       3,840       2,232  
Common stock issued for cash
   
403,447
      104,146      
665,247
 
Net cash provided by financing activities
   
389,295
      104,471      
747,577
 
                         
                         
Net increase (decrease) in cash
    35,219       15,272       57,974  
Cash, beginning of period
    22,755       5,727       -  
Cash, end of period
  $ 57,974     $ 20,999     $ 57,974  
                         
Cash paid for:
                       
Interest
  $ -     $ 1,008     $ 1,337  
                         
Supplemental schedule of non-cash investing and Financing Activities
                       
Loan payable, related party reclassified as loan payable
  $ -     $ -     $ 100  
Loan reclassified to accounts payable
  $ -     $ -     $ 2,000  
Loan receivable reclassified to accounts payable
  $ -     $ -     $ 15,721  
Series A Debentures reclassified to Convertible Debenture
  $ -     $ -     $ 5,000  
Common stock issued for intangible - customer list
  $ -     $ -     $ 25,000  
Common stock issued for convertible debt, debentures
  $ -     $ -     $ 30,000  
Common stock issued for equipment
  $ 40,600     $ -     $ 40,600  
Warrants issued for prepaid consulting services
  $ -     $ -     $ 24,750  
Stock payable issued
  $ -     $ 25,000     $ 25,000  
Contributed capital by shareholder, used to pay expenses
  $ -     $ 5,807     $ 5,807  

See accompanying notes to the financial statements .

 
6

 
 
U.S. RARE EARTH MINERALS, INC.
(Formerly known as U.S. Natural Nutrients & Minerals, Inc)
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Note 1. Basis of Presentation and Organization and Significant Accounting Policies

Basis of Presentation and Organization
Basis of Presentation

The accompanying financial statements have been prepared on substantially the same basis as the audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2010. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission (SEC) rules and regulations regarding interim financial statements. All amounts included herein related to the  financial statements as of September 30, 2011 and the nine months ended September 30, 2011 and 2010 are unaudited and should be read in conjunction with the audited financial statements and the notes there to included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
     
In the opinion of management, the accompanying financial statements include all necessary adjustments for the fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the full fiscal year ending December 31, 2011.

U.S. Rare Earth Minerals, Inc. (Formerly U.S. Natural Nutrients and Minerals, Inc.) was incorporated in the state of Nevada on June 9, 2008.

The Company has limited operations and in accordance with the Financial Accounting Standards Board Codification (“FASB ASC”) Development Stage Entities, is classified as a development stage company.

As used in these Notes to the Financial Statements, the terms the "Company", "we", "us", "our" and similar terms refer to U. S. Rare Earth Minerals, Inc. (Formerly U.S. Natural Nutrients and Minerals, Inc.)

Basis of Financial Statement Presentation

The accompanying unaudited  financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim  financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, these interim  financial statements should be read in conjunction with the Company's most recent audited financial statements and notes thereto included in its December 31, 2010 Annual Report on Form 10-K. Operating results for the period ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
 
 
7

 
 
Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern.  To date, the Company generated minimal revenue, is considered a development stage company, has experienced recurring net operating losses, had a net loss of $1,877,745 for the nine months ended September 30, 2011, and a working capital deficiency of $7,142 at September 30, 2011.  These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital sufficient to meet its minimal operating expenses by seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually begin operations in accordance with our business plan. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
 
Note 2. Common Stock

The Company’s authorized preferred stock is 50,000,000 with a $0.001 par value and common stock is 300,000,000 common shares with $0.001 par value.

There were 74,731,109 shares of common stock outstanding as of September 30, 2011.

On April 12, 2011, the Company announced that the board of directors approved a 3 for 1 forward split of the shares of common stock issued and outstanding effective May 2, 2011.
 
Note 3. Recent Accounting Pronouncements

From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting.  The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
 
 
8

 

Note 4. Restatements
 
The tables below show the effects of the restatements on (i) the Company's consolidated balance sheets as of September 30, 2011 and December 31, 2010, (ii) the consolidated statements of operations for the three and nine months ended September 30, 2011, and (iii) the consolidated statement of cash flows for the nine months ended September 30, 2011.
 
CONSOLIDATED BALANCE SHEETS
               
 
September 30, 2011 (Unaudited)
 
    As Reported    
Adjustments
   
Restated
 
Common stock
    74,731       -       74,731  
Additional paid-in capital
    1,821,937       787,295 b   2,609,232  
Deficit accumulated during the development stage
    (1,727,589 )     (787,295 ) b     (2,514,884 )
 
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
 
  Three months ended September 30, 2011    
Nine months ended September 30, 2011
 
      As Reported      
Adjustments
       
Restated
      As Reported      
Adjustments
       
Restated
 
General, selling and administrative expenses
    236,200       121,792   b     357,992       1,127,821       787,295   b     1,915,116  
Operating Loss
    (226,301 )     (121,792 ) b     (348,093 )     (1,087,909 )     (787,295 ) b     (1,875,204 )
Interest income
    2,052       -         2,052       0       2,052   b     2,052  
Interest expense
    -                 -       (2,541 )     (2,052 ) b     (4,593 )
Net Loss
    (224,249 )     (121,792 ) b     (346,041 )     (1,090,450 )     (787,295 ) b     (1,877,745 )
Weighted average of common shares outstanding
    69,972,945       (3,746,716 )       66,226,229       64,857,937       (3,075,085 )       61,782,852  
 
     
From Inception June 9, 2008 to
September 30, 2011
 
      As Reported       
Adjustments
       
Restated
 
Continued
                         
General, selling and administrative expenses
    1,765,316       787,294   b     2,552,610  
Operating Loss
    (1,713,306 )     (787,294 ) b     (2,500,600 )
Interest income
    1,844       2,051   b     3,895  
Interest expense
    (16,127 )     (2,052 ) b     (18,179 )
Net Loss
    (1,727,589 )     (787,295 ) b     (2,514,884 )
Weighted average of common shares outstanding
    -       -         -  
 
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
 
                             
From Inception June 9, 2008 to
 
   
For the nine months ended September 30, 2011
   
September 30, 2011
 
      As Reported       
Adjustments
       
Restated
      As Reported       
Adjustments
   
Restated
 
Net Loss
    (1,090,450 )     (787,295 ) b     (1,877,745 )     (1,727,589 )     -     (1,727,589 )
Stock for services
    844,558       854,835   b     1,699,393       1,107,463       -     1,107,463  
Net cash used in operating activities
    (276,913 )     67,540   b     (209,373 )     (558,741 )     67,541   b (491,200 )
Capital Expenditures
    (104,103 )     (40,600 ) b     (144,703 )     (157,803 )     (40,600 ) b (198,403 )
Net cash used in investing activities
    (104,103 )     (40,600 ) b     (144,703 )     (157,803 )     (40,600 ) b (198,403 )
Common stock issued for cash
    430,387       (26,940 ) b     403,447       692,187       (26,940 ) b 665,247  
Net cash provided by financing activities
    416,235       (26,940 ) b     389,295       774,518       (26,941 ) b 747,577  
 
a - To adjust the common stock and additional paid in capital to reflect the 3 for 1 stock split which occurred on May 11, 2011.
b - To adjust stock issued for services to reflect the market value of those shares on the date of issuance.
 
 
9

 
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion should be read in conjunction with our unaudited financial statements and the notes thereto.

Forward-Looking Statements

This quarterly report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words "believe," "anticipate," "expect," "estimate," “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; federal or state laws or regulations having an adverse effect on proposed transactions that we desire to effect; Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks,"; and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.

Overview
 
U.S. Rare Earth Minerals, Inc. (Formerly U.S. Natural Nutrients and Minerals, Inc.) (the “Company”), primary focus is on sales and distribution of certain products derived from the Company’s mining activities relating to natural mineral deposits commonly known as Calcium Montmorillonite. These activities will be carried out through a web-based and distributor-based sales program directed at agricultural, animal and human uses of the product.

To the extent that the Company requires additional capital for operations which it cannot derive from profits from sales, the Company plans to sell additional shares of unregistered common stock to raise money for additional operating capital.  There is no guarantee the Company will be successful in selling additional shares to raise funds for additional operating capital, or if successful, it will raise the desired amount or be on terms and conditions which are beneficial to the Company.
 
Plan of Operation
 
The Company contemplates marketing and selling the product extracted in the mining process under the name “Exceleriteâ”.  The Company believes that Exceleriteâ may have broad applications for plants, animals and humans.  Specifically, the Company believes that by adding Exceleriteâ back into the soil, household and commercial farmers are replacing what has been lost by the use of man-made fertilizers over hundreds of years. Farmers using Exceleriteâ are seeing higher yields and larger and more nutritious crops. In addition, studies suggest that animals whose feed is supplemented with Exceleriteâ grow healthier and produce more. The naturally chelated nutrients and minerals in Exceleriteâ may enhance the production of enzymes. Without enzymes living things cannot build protein and other vital processes. BioMultimin, a supplement form of Exceleriteâ, is believed to rejuvenate the health of the human body in many ways. In addition to its natural supply of 78 essential nutrients and minerals, its ionic charge removes toxins as it works through the digestive tract.

The Company intends to market the product through various channels including but not limited to direct distribution, sales through third-party distributors and sales through the Company’s website.  The Company has also undertaken to develop a network of distributors, both in the United States and internationally.  Two of the Company’s directors, Paul Hait and Dennis Cullison, have been marketing the product to agricultural customers in Oregon and throughout the United States.  Mr. Cullison has also devoted substantial focus on the marketing of a human supplement utilizing the product named “Micro-Nutrilite” through the Company’s wholly-owned subsidary “Bio Multimin, Inc.
 
 
10

 
 
The Company has been engaged in various testing programs with several major agriculture firms for the past two years.  Two of these firms are listed NYSE companies and do business worldwide.  Results of these tests on strawberries, carrots, peaches, soy beans, sweet potatoes and grapes have been very positive.  EXCELERITE® has also been tested and proved to eliminate the odor from pig and cow manure which should lead to large orders from cattle and pig farmers worldwide.  The product is also being tested by poultry farmers.

Management believes that by partnering with these certain firms, long term business relationships will develop, deriving substantial future product sales.  The Company is bound by certain “Non-Disclosure Agreements” and therefore cannot divulge the names of partnering companies.  Announcements of the Company’s test results and identity of its partners will be forthcoming when certain test results are completed and the parties agree on the content of the disclosure.
 
RESULTS OF OPERATIONS
 
The following table shows the financial data of the consolidated statements of operations of the Company for the three months ended September 30, 2011 and 2010.
 
THREE MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2010.
 
   
September 30,
   
September 30,
             
   
2011
   
2010
   
$ Change
   
% Change
 
REVENUES
  $ 13,199     $ 1,790     $ 11,409       637 %
Cost of sales
    (3,300 )     (448 )     (2,852 )     (636 %)
      9,899       1,342       8,557       637 %
General and administrative expenses
    (357,992 )     (71,116 )     (286,876 )     (403 %)
Operating Loss
  $ (348,093 )   $ (69,774 )   $ (278,319 )     (398 %)
 
During the three months ended September 30, 2011, we recognized expenses of $357,092 an increase of 403% from the three months ended September 30, 2010.  Professional and legal fees of approximately $57,400 were incurred in relation to the preparation, review, and filing of our financial statements with the Securities and Exchange Commission. Other professional fees consisted of clerical and start-up fees necessary to develop our business and investigate new business plans which resulted in our change of focus as of October 2009.
 
 
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The following table shows the financial data of the consolidated statements of operations of the Company for the nine months ended September 30, 2011 and 2010.
 
NINE MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2010.
 
   
September 30,
   
September 30,
             
   
2011
   
2010
   
$ Change
   
% Change
 
REVENUES
  $ 40,017     $ 9,237     $ 30,780       333 %
Cost of sales
    (10,005 )     (2,310 )     (7,695 )     (333 %)
      30,012       6,927       23,085       333 %
General and administrative expenses
    (1,557,124 )     (201,676 )     (1,355,448 )     (672 %)
Operating Loss
  $ (1,527,112 )   $ (194,749 )   $ (1,332,363 )     (684 %)
 
During the nine months ended September 30, 2011, we recognized expenses of $1,557,124 an increase of 672% from the nine months ended September 30, 2010.  Professional and legal fees of approximately $1,102,833 were incurred in relation to the preparation, review, and filing of our financial statements with the Securities and Exchange Commission. Other professional fees consisted of clerical and start-up fees necessary to develop our business and investigate new business plans which resulted in our change of focus as of October 2009.
 
 
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LIQUIDITY AND CAPITAL RESOURCES
 
   
September 30,
   
December 31,
             
    2011    
2010
             
   
Restated
   
As filed
   
$ Change
   
% Change
 
Cash
  $ 57,974     $ 22,755     $ 35,219       155
Accounts payable and accrued expenses
  $ 41,655     $ 69,615     $ (27,960     (40 )%
Total current liabilities
  $ 94,635     $ 109,615     $ (14,980     (14 )%
Cash proceeds from the sale of common stock
  $ 403,447       $ 136,900     $ 266,547       194
 
As of September 30, 2011, cash totaled $57,974.  This cash position was the result of a result of net cash provided by financing activities in the amount of $389,295, offsetting net cash used in operating activities in the amount of $209,373 and net cash used in investing activities in the amount of $144,703.

We believe that the level of financial resources is a significant factor for our future development, and accordingly we may choose at any time to raise capital through private debt or equity financing to strengthen its financial position, facilitate growth and provide us with additional flexibility to take advantage of business opportunities.  While we are presently considering a limited private offering of our securities, we do not have immediate plans to have a public offering of our common stock and there is no guarantee that any such offering would be successful or be completed on terms which are beneficial to the Company.

CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

Revenue Recognition

Revenue from the sale of product obtained from our mining contractor is recognized when ownership passes to the purchaser at which time the following conditions are met:

i) persuasive evidence that an agreement exists;
ii) the risks and rewards of ownership pass to the purchaser including delivery of the product;
iii) the selling price is fixed and determinable; or,
iv) collectively is reasonably assured.
 
Stock Based Compensation

Stock based compensation is accounted for using the Equity-Based Payments to Non-Employee Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. We determine the value of stock issued at the date of grant. We also determine at the date of grant the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.
 
 
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Shares issued to employees are expensed upon issuance.

If the Company issues stock for services which are performed over a period of time, the Company capitalizes the value paid in the equity section of the Company’s financial statements as it’s a non-cash equity transaction. The Company accretes the expense to stock based compensation expense on a monthly basis for services rendered within the period.

We use the fair value method for equity instruments granted to non-employees and will use the Black-Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
 
Off-Balance Sheet Arrangements

We do not have any 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 is material to investors.
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4T.  INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

·  
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

·  
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and 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 the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
 
 
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As of September 30, 2011, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments.  Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures may not be effective to detect the inappropriate application of US GAAP rules as more fully described below.  This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matter involving internal controls and procedures that our management considered may be a material weakness under the standards of the COSO was the lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in the potential for ineffective oversight in the establishment and monitoring of required internal controls and procedures.  The aforementioned material weakness was identified by our Chief Executive Officer in connection with the review of our financial statements as of September 30, 2011.

Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

Management’s Remediation Initiatives

In an effort to remediate the identified material weakness and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully-functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2012.  Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2012.
 
Changes in internal controls over financial reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
 
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PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.

ITEM 1A.   RISK FACTORS.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES

Payment of all outstanding amounts due or to become due by December 31, 2011 in the aggregate amount of $166,042.50 pursuant to the Company’s agreement with MStrata has been paid in full. By the terms of an agreement with M Strata, LLC, M Strata has agreed to  accept the issuance of 4,426,666 shares of unregistered common stock as payment in full for all sums currently due and to be due and owing through December 31, 2011. As reported previously on Form 8K, the Company sold three million shares of unregistered common stock to Zaev Bassin for the sum of $195,000 on July 5, 2011.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES
 
None

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The name change and forward stock split were approved by consent of the shareholders owning a majority of the outstanding common stock of the Company

ITEM 5.     OTHER INFORMATION

On October 26, 2009, U.S. Rare Earth Minerals, Inc. (USMN) (formerly known as U.S. Natural Nutrients and Minerals, Inc., a Nevada corporation (entered into an Agreement with M Strata, LLC, a Nevada limited liability company (“M Strata”) (“M Strata Agreement”) whereby M Strata granted to USMN permission and consent to mine the certain mineral products (the “Product”) from certain mining claims owned or controlled by M Strata located in Panaca, Nevada.  Pursuant to the terms of the M Strata Agreement, M Strata will designate which claims may be mined and USMN shall have the right to mine the Product and remove the Product from the mining claims so designated.

The M Strata Agreement further provided that it was granting USMN the exclusive right to mine and purchase the Product from M Strata (“Exclusive Right”) and M Strata agreed that it will not sell Product or permit any other person or entity to purchase Product or mine on the claims controlled by M Strata other than USMN, on condition that USNNM meets certain Purchase Minimums (as defined in the agreement) (“Purchase Minimums”) and makes timely payments therefore.  In the event USMN fails to meet the Purchase Minimums for a period of one year, then such Exclusive Right shall terminate and M Strata shall be entitled to either (i) terminate the M Strata Agreement and cause USMN to terminate all mining operations on M Strata’s claims or (ii) sell Product to other purchasers in addition to USMN.   USMN may cure any default in the Purchase Minimum by paying for the difference between the amount actually purchased in any one calendar year which was less than the Purchase Minimum and the amount actually ordered and paid for. Nothing in the M Strata Agreement conferred on USMN or its agents any rights of ownership in any mining claims owned or controlled by M Strata now or in the future.  In addition, USMN agreed that it would only purchase Calcium Montmorillonite clay from M Strata and from no other source for the term of the M Strata Agreement or any extensions thereof..  No default has been declared by M Strata of any of the terms of the Agreement as of the date hereof.
 
 
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The term of the M Strata Agreement is five (5) years and there is provision for automatic extensions of the term for additional one (1) year terms thereafter.  The M Strata Agreement provides for payments by USMN of $24.00 per ton of Product removed from M Strata’s claims, subject to periodic adjustment in accordance with the terms of the M Strata Agreement.  Payments for Product are to be made by USMN to M Strata on a monthly basis, upon presentation of invoices and in accordance with the terms of the M Strata Agreement.

Fifty percent (50 %) of the beneficial ownership of M Strata is owned by Paul Hait and Dennis Cullison, who are both directors of the Company.

A copy of the Agreement was attached to the filing by USMN of a Form 8K in November, 2009.

In addition, the Agreement was modified on September 29, 2011 to redefine the term “Product” to include besides calcium montmorillonite additional rare earth minerals.  The term Product as defined in the Agreement has been expanded to mean, in addition to Calcium Montmorillonite, all of the following rare earth minerals as follows: potash, calcium, magnesium, cobalt, chlorine, iron, sodium, aluminum, barium, beryllium, bismuth, bromine, cadmium, carbon, cerium, chromium, cesium, dysprosium, erbium, europium, fluorine, gallium, gadolinium, germanium, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, niobium, neodymium, osmium, praseodymium, rubidium, rhenium, rhenium, rhodium, ruthenium, antimony, scandium, selenium, silicon, samarium, strontium, tantalum, terbium, tellurium, thorium, tin, titanium, thallium, thulium, vanadium, tungsten, yttrium, ytterbium, zirconium and all other rare earth metals that are deemed to be rare earth metals now or hereafter, but shall specifically exclude from the definition of Product, gold, silver, platinum, oil, natural gas deposits, found on or under the surface of the mining claims owned by M Strata.

USMN is now current with all of its payments pursuant to the MStrata Agreement through December 31, 2011.

ITEM 6.      EXHIBITS

Exhibit No.
 
Description
     
31.1
 
Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
 
Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
 
Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
 
Certification of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
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SIGNATURES

In accordance with 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.
 

 
U.S. RARE EARTH MINERALS, INC
(Formerly known as U.S. Natural Nutrients  & Minerals, Inc)


Dated:            December 31, 2012
By     /s/ Paul Hait               
Paul Hait
Chief Executive Officer and Director

Dated:            December 31, 2012
By       /s/ Dennis Cullison               
Dennis Cullison
Principle Financial Officer, President and Director
 
 
 
 
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