Hondo has generated no revenues since inception and has incurred $6,176,502 in operating expenses for the year ended July 31, 2012. These expenses were comprised of $1,151,435 in officers and directors’ fees; $4,177,433 in professional fees and $847,634 in corporate, general and administrative costs for the year ended July 31, 2012. We incurred operating expenses of $1,768,472 for the year ended July 31, 2011. The net loss for the year ended July 31, 2012 was $6,454,802. The following table provides selected financial data about the Company for the years ended July 31, 2011 and 2010.

Balance Sheet Data	July 31, 2011		July 31, 2012
Cash and Cash Equivalents	$	2,052,048	$	22,118
Total Assets	$	10,182,646	$	14,049,298
Total Liabilities	$	308,325	$	1,207,409
Shareholders’ Equity (Deficit)	$	9,874,321	$	12,841,889

II.

LIQUIDITY AND CAPITAL RESOURCES

As of July 31, 2012, the Company’s cash balance was $22,118 compared to $2,052,048 as of July 31, 2011. Hondo may not have sufficient cash on hand to continue production and to fund ongoing operational expenses beyond 12 months.

Hondo will need to raise funds in the future to fund possible acquisitions or further production. Additional funding will likely come from equity financing from the sale of common stock. If successful in completing an equity financing, existing shareholders will experience dilution of their interest in the Company. Hondo does not have any financing arranged and cannot provide investors with any assurance that we will be able to raise additional funding from the sale of common stock. There are no assurances that Hondo will be able to achieve further sales of common stock or any other form of additional financing.

Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

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