FIRMA HOLDINGS CORP., 10-K filed on 4/16/2012
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2011
Apr. 13, 2012
Jun. 30, 2011
Document and Entity Information [Abstract]
 
 
 
Document Type
10-K 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2011 
 
 
Entity Registrant Name
Tara Minerals Corp. 
 
 
Entity Central Index Key
0001387054 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
FY 
 
 
Entity Filer Category
Smaller Reporting Company 
 
 
Entity Common Stock, Shares Outstanding
 
66,713,435 
 
Entity Current Reporting Status
Yes 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Public Float
 
 
$ 43,352,000 
CONSOLIDATED BALANCE SHEETS (USD $)
Dec. 31, 2011
Dec. 31, 2010
Current assets:
 
 
Cash
$ 365,587 
$ 157,579 
Other receivables, net
341,950 
275,322 
Deferred tax asset, current
4,041,000 
   
Prepaid assets
116,500 
   
Total current assets
4,865,037 
432,901 
Property, plant, equipment, mine development and land, net
6,948,187 
8,101,786 
Mining deposits
203,880 
53,368 
Deferred tax asset, non-current portion
2,475,000 
2,930,982 
Goodwill
12,028 
12,028 
Other assets
32,752 
157,870 
Total assets
14,536,884 
11,688,935 
Current liabilities:
 
 
Accounts payable and accrued expenses
1,282,856 
680,221 
Notes payable, current portion
419,977 
824,001 
Notes payable related party
100,000 
100,000 
Due to related parties, net of due from
2,380,403 
3,465,232 
Total current liabilities
4,183,236 
5,069,454 
Notes payable, non-current portion
68,974 
1,068,350 
Total liabilities
4,252,210 
6,137,804 
Iron Ore Properties financial instrument, net
570,000 
   
Stockholders' equity:
 
 
Common stock: $0.001 par value; authorized 200,000,000 shares; issued and outstanding 66,713,435 and 57,236,288 shares
66,713 
57,236 
Additional paid-in capital
30,930,613 
24,515,978 
Technical data paid with common stock
1,432,805 
   
Common stock subscribed, net of stock receivable of $0 and $212,744
   
1,129,696 
Accumulated other comprehensive loss
(209,217)
(246,253)
Accumulated deficit during exploration stage
(25,333,453)
(21,962,357)
Total Tara Minerals stockholders? equity
6,887,461 
3,494,300 
Non-controlling interest
2,827,213 
2,056,831 
Total equity
9,714,674 
5,551,131 
Total liabilities and equity
$ 14,536,884 
$ 11,688,935 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Dec. 31, 2011
Dec. 31, 2010
CONSOLIDATED BALANCE SHEETS [Abstract]
 
 
Common stock, par value per share
$ 0.001 
$ 0.001 
Common stock, shares authorized
200,000,000 
200,000,000 
Common stock, shares issued
66,713,435 
57,236,288 
Common stock, shares outstanding
66,713,435 
57,236,288 
Common stock receivable
$ 0 
$ 212,744 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $)
12 Months Ended 68 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [Abstract]
 
 
 
Mining revenues
    
$ 160,421 
$ 160,421 
Cost of revenue
   
658,007 
658,007 
Gross margin
   
(497,586)
(497,586)
Exploration expenses
2,899,026 
2,022,851 
5,372,735 
Operating, general, and administrative expenses
4,223,522 
15,572,562 
24,595,862 
Net operating loss
(7,122,548)
(18,092,999)
(30,466,183)
Non-operating (income) expense:
 
 
 
Interest (income)
(26,449)
(26,000)
(162,089)
Loss on conversion of debt to common stock
   
783,090 
783,090 
Loss on disposal/sale of assets, net
28,190 
   
28,190 
Interest expense
(20,339)
327,161 
2,068,461 
Gain on debt extinguishment
   
(6,178)
(6,138)
Gain on dissolution of joint venture
(100,000)
   
(100,000)
Other (income)
4,260 
(1,200)
(775,775)
Total non-operating (income) expense
(114,338)
1,076,873 
1,835,739 
Loss before income taxes
(7,008,210)
(19,169,872)
(32,301,922)
Income tax benefit
(3,585,018)
(2,930,982)
(6,516,000)
Net loss
(3,423,192)
(16,238,890)
(25,785,922)
Add: Net loss attributable to non-controlling interest
52,096 
400,368 
452,469 
Net loss attributable to Tara Minerals' shareholders
(3,371,096)
(15,838,522)
(25,333,453)
Other comprehensive income (loss):
 
 
 
Foreign currency translation
37,036 
(106,237)
(209,217)
Comprehensive loss
$ (3,334,060)
$ (15,944,759)
$ (25,542,670)
Net loss per share, basic and diluted
$ (0.06)
$ (0.3)
 
Weighted average number of shares, basic and diluted
61,963,938 
54,079,665 
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $)
Total
Common Stock [Member]
Additional Paid In Capital [Member]
Common Stock Payable (Receivable) [Member]
Accumulated Other Comprehensive Income [Member]
Accumulated Deficit During Exploration Stage[Member]
Balance at May. 11, 2006
   
   
   
   
   
   
Balance, shares at May. 11, 2006
 
   
 
 
 
 
Founders shares, issued October 31, 2006
   
30,000 
(30,000)
   
   
   
Founders shares, issued October 31, 2006, shares
 
30,000,000 
 
 
 
 
Net loss
   
   
   
   
   
   
Balance at Oct. 31, 2006
   
30,000 
(30,000)
   
   
   
Balance, shares at Oct. 31, 2006
30,000,000 
30,000,000 
 
 
 
 
Common stock sold for cash
2,540,500 
5,081 
2,535,419 
   
   
   
Common stock sold for cash, shares
 
5,081,000 
 
 
 
 
Common stock issued for services
750,000 
1,500 
748,500 
   
   
   
Common stock issued for services, shares
 
1,500,000 
 
 
 
 
Options for officer compensation and vested options
1,164,173 
   
1,164,173 
   
   
   
Foreign currency translation
11,374 
   
   
   
11,374 
   
Net loss
(2,220,782)
   
   
   
   
(2,220,782)
Balance at Oct. 31, 2007
2,245,265 
36,581 
4,418,092 
   
11,374 
(2,220,782)
Balance, shares at Oct. 31, 2007
36,581,000 
36,581,000 
 
 
 
 
Common stock sold for cash
641,500 
1,069 
640,431 
   
   
   
Common stock sold for cash, shares
 
1,069,167 
 
 
 
 
Common stock issued for equipment
600,000 
1,200 
598,800 
   
   
   
Common stock issued for equipment, shares
 
1,200,000 
 
 
 
 
Common stock issued for compensation, shares
 
1,500,000 
 
 
 
 
Cancelled shares
(750,000)
(1,500)
(748,500)
   
   
   
Common stock subscribed
88,000 
   
   
88,000 
   
   
Foreign currency translation
(184,255)
   
   
   
(184,255)
   
Net loss
212,301 
   
   
   
   
212,301 
Balance at Oct. 31, 2008
2,852,811 
37,350 
4,908,823 
88,000 
(172,881)
(2,008,481)
Balance, shares at Oct. 31, 2008
37,350,167 
37,350,167 
 
 
 
 
Common stock sold for cash
44,000 
325 
64,675 
(21,000)
   
   
Common stock sold for cash, shares
 
325,000 
 
 
 
 
Common stock subscribed
   
235 
66,765 
(67,000)
   
   
Common stock subscribed, shares
 
235,000 
 
 
 
 
Foreign currency translation
(68,036)
   
   
   
(68,036)
   
Net loss
(81,766)
   
   
   
   
(4,033,588)
Balance at Dec. 31, 2008
2,747,009 
37,910 
5,040,263 
   
(240,917)
(2,090,247)
Balance, shares at Dec. 31, 2008
37,910,167 
37,910,167 
 
 
 
 
Common stock sold for cash
1,060,001 
2,987 
1,057,014 
   
   
   
Common stock sold for cash, shares
 
2,986,667 
 
 
 
 
Common stock issued for services
224,475 
580 
223,895 
   
   
   
Common stock issued for services, shares
 
579,894 
 
 
 
 
Common stock issued for compensation
129,500 
809 
128,691 
   
   
   
Common stock issued for compensation, shares
 
808,924 
 
 
 
 
Loan conversion plus accrued interest
1,750,088 
 
 
 
 
 
Foreign currency translation
100,901 
   
   
   
100,901 
   
Beneficial conversion feature on convertible debt related party
1,695,000 
   
1,695,000 
   
   
   
Net loss
(4,033,588)
   
   
   
   
(4,033,588)
Balance at Dec. 31, 2009
3,673,386 
51,036 
9,886,201 
   
(140,016)
(6,123,835)
Balance, shares at Dec. 31, 2009
51,036,092 
51,036,092 
 
 
 
 
Common stock sold for cash
2,111,543 
3,441 
2,320,846 
   
   
   
Common stock sold for cash, shares
 
3,440,657 
 
 
 
 
Common stock issued for services
4,397,209 
2,222 
4,394,987 
   
   
   
Common stock issued for services, shares
 
2,222,039 
 
 
 
 
Common stock issued for compensation
157,000 
100 
156,900 
   
   
   
Common stock issued for compensation, shares
 
100,000 
 
 
 
 
Exploration expense paid with common stock
984,375 
437 
983,938 
   
   
   
Exploration expense paid with common stock, shares
 
437,500 
 
 
 
 
Options for officer compensation and vested options
3,405,967 
   
3,405,967 
   
   
   
Option valuation for services
3,078,564 
 
 
 
 
 
Beneficial conversion feature on financial instrument
   
 
 
 
 
 
Debt discount on notes payable, related and non-related party
288,575 
   
288,575 
   
   
   
Loan conversion plus accrued interest
1,342,440 
   
   
1,342,440 
   
   
Foreign currency translation
(106,237)
   
   
   
(106,237)
   
Beneficial conversion feature on convertible debt related party
   
 
 
 
 
 
Net loss
(15,838,522)
   
   
   
   
(15,838,522)
Balance at Dec. 31, 2010
3,494,300 
57,236 
24,515,978 
1,129,696 
(246,253)
(21,962,357)
Balance, shares at Dec. 31, 2010
57,236,288 
57,236,288 
 
 
 
 
Common stock sold for cash
3,008,044 
6,657 
2,788,643 
212,744 
   
   
Common stock sold for cash, shares
 
6,657,348 
 
 
 
 
Common stock issued for services
417,450 
355 
417,095 
   
   
   
Common stock issued for services, shares
 
355,000 
 
 
 
 
Common stock issued for compensation
100,000 
100 
99,900 
   
   
   
Common stock issued for compensation, shares
 
100,000 
 
 
 
 
Exploration expense paid with common stock
2,491,990 
1,246 
1,057,939 
1,432,805 
   
   
Exploration expense paid with common stock, shares
 
1,246,100 
 
 
 
 
Option valuation for services
529,738 
   
529,738 
   
   
   
Beneficial conversion feature on financial instrument
180,000 
   
180,000 
   
   
   
Loan conversion plus accrued interest
 
1,119 
1,341,321 
(1,342,440)
   
   
Loan conversion plus accrued interest, shares
   
1,118,699 
 
 
 
 
Foreign currency translation
37,036 
   
   
   
37,036 
   
Beneficial conversion feature on convertible debt related party
   
 
 
 
 
 
Net loss
(3,371,096)
   
   
   
   
(3,371,096)
Balance at Dec. 31, 2011
$ 6,887,461 
$ 66,713 
$ 30,930,613 
$ 1,432,805 
$ (209,217)
$ (25,333,453)
Balance, shares at Dec. 31, 2011
66,713,435 
66,713,435 
 
 
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
12 Months Ended 68 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
Cash flows from operating activities:
 
 
 
Net loss
$ (3,371,096)
$ (15,838,522)
$ (25,333,453)
Adjustments to reconcile net loss to net cash:
 
 
 
Allowance for doubtful accounts
(159,739)
1,873,963 
1,832,195 
Depreciation
278,890 
228,917 
574,815 
Stock based compensation and stock bonuses
529,738 
6,641,531 
8,464,942 
Common stock issued for services
417,450 
4,397,209 
5,789,134 
Cancellation of shares for settlement
   
   
(750,000)
Non-controlling interest in net loss of consolidated subsidiaries
(52,096)
(400,368)
(452,459)
Non-controlling interest - stock issued to third parties of subsidiaries
322,479 
348,549 
671,028 
Accretion of beneficial conversion feature and debt discount
   
288,576 
1,983,575 
Exploration expenses paid with parent and subsidiary common stock, marked to market as required
2,491,990 
1,224,375 
3,716,365 
Gain on debt extinguishment
   
(6,138)
(6,138)
Loss on conversion of debt to common stock
   
783,090 
783,090 
Accrued interest converted to common stock
   
29,350 
84,438 
Deferred tax asset, net
(3,585,018)
(2,930,982)
(6,516,000)
Gain on dissolution of joint venture
(100,000)
   
(100,000)
Other
76,467 
   
82,467 
Changes in operating assets and liabilities:
 
 
 
Recoverable value-added taxes
(31,884)
(351,205)
(1,085,492)
Other receivables
(44,324)
(63,192)
(153,844)
Prepaid expenses
(116,500)
   
(116,500)
Other assets
65,118 
(139,088)
(92,753)
Accounts payable and accrued expenses
610,309 
509,829 
1,309,649 
Net cash used in operating activities
(2,668,216)
(3,404,106)
(9,314,941)
Cash flows from investing activities:
 
 
 
Acquisition of land
   
   
(19,590)
Purchase of mining concession
(30,060)
(25,011)
(860,231)
Payments made for mining deposits
(180,512)
   
(211,512)
Proceeds from disposal/sale of assets
29,128 
   
29,128 
Acquisition of property, plant and equipment
(37,544)
(267,405)
(2,625,593)
Other
   
   
(1,721)
Net cash used in investing activities
(218,988)
(292,416)
(3,689,519)
Cash flows from financing activities:
 
 
 
Cash from the sale of common stock
3,008,044 
2,324,287 
9,706,332 
Proceeds from notes payable, related party
   
150,000 
150,000 
Proceeds from notes payable
   
480,000 
480,000 
Payments towards notes payable
(125,039)
(721,412)
(1,315,502)
Iron Ore Property Financial Instrument
750,000 
   
750,000 
Payment towards equipment financing
   
(41,412)
(201,438)
Change in due to/from related parties, net
(1,174,829)
490,762 
1,753,971 
Payments from joint venture partners
100,000 
   
100,000 
Common stock receivable
   
(212,744)
(212,744)
Non-controlling interest - cash from sale of common stock of subsidiaries
500,000 
260,481 
2,368,645 
Net cash provided by financing activities
3,058,176 
2,729,962 
13,579,264 
Effect of exchange rate changes on cash
37,036 
(106,237)
(209,217)
Net increase (decrease)
208,008 
(1,072,797)
365,587 
Cash, beginning of period
157,579 
1,230,376 
   
Cash, end of period
365,587 
157,579 
365,587 
Supplement information:
 
 
 
Interest paid
100,987 
53,807 
283,454 
Income taxes paid
   
   
   
Non-cash Investing and Financing Transactions:
 
 
 
Purchase of mining concession paid by debt to related party plus capitalized interest (negative movement due to note modification)
163,793 
   
1,445,448 
Purchase of or (reduction) in purchase of concession paid with notes payable plus capitalized interest
(875,601)
(3,352,424)
1,422,144 
Recoverable value-added taxes incurred through additional debt and due to related party, net of mining concession modification
176,550 
546,662 
1,753,293 
Beneficial conversion value for convertible debt
   
   
1,695,000 
Beneficial conversion value for financial instrument
180,000 
   
180,000 
Conversion of debt to common stock or payable, plus accrued interest
   
559,350 
2,309,438 
Purchase of mining equipment with common stock
   
   
600,000 
Acquisition of property and equipment through debt
267,130 
263,849 
698,051 
Receivable reclassified to mining deposit
30,000 
28,368 
58,368 
Construction in progress reclassified to property, plant and equipment
   
2,163,485 
2,163,485 
Issuance of common stock for Tara Minerals payable
100,000 
   
100,000 
Business Combination Of American Copper Mining Abstract
 
 
 
Cash
   
   
(2,037)
Due from related parties
   
   
1,989 
Goodwill (from net assets)
   
   
8,270 
Accounts payable and accrued expenses
    
    
$ 12,071 
Nature of Business and Significant Accounting Policies
Nature of Business and Significant Accounting Policies
Note 1.     Nature of Business and Significant Accounting Policies

Nature of business and principles of consolidation:

Tara Minerals Corp. (the "Company" or "Tara Minerals") explores and develops mining properties which may be productive of copper, lead, zinc, iron, industrial metals, and other associated metals.   The Company was incorporated in Nevada on May 12, 2006 and is in the exploration stage.

Tara Minerals owns 99.9% of the common stock of American Metal Mining S.A. de C.V. ("AMM"), a Mexican corporation.  Tara Minerals also owns 85% of the common stock of Adit Resources Corp. ("Adit"), which in turns owns 99.9% of American Copper Mining, S.A. de C.V. ("ACM"). Tara Minerals' operations in Mexico are conducted through AMM and ACM since Mexican law provides that only Mexican corporations are allowed to own mining properties.  American Metal Mining's primary focus is on industrial minerals, e.g. copper, zinc.  Adit, through American Copper Mining, focuses on gold mining concessions.

The Company currently has limited operations and, in accordance with the Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Development Stage Entities Topic, is considered an Exploration Stage Company.

Tara Minerals is a subsidiary of Tara Gold Resources Corp. ("Tara Gold" or "the Company's Parent").

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All amounts are in U.S. dollars unless otherwise indicated. All significant inter-company balances and transactions have been eliminated in consolidation.

The consolidated financial statements include the accounts of the Company, its subsidiaries and variable interest entities ("VIE") over which control is achieved through means other than voting rights and we are considered the primary beneficiary.  The primary beneficiary of the VIE consolidates the entity if control is achieved through means other than voting rights such as certain capital structures and contractual relationships.  At December 31, 2011 and 2010 the Company has no joint ventures or VIEs.

All significant intercompany transactions and accounts have been eliminated in consolidation.  The consolidated financial statements of the Company have been prepared on the accrual basis of accounting and are in conformity with accounting principles generally accepted in the United States of America and prevailing industry practice.

The reporting currency of the Company and Adit is the U.S. dollar.  The functional currency of AMM and ACM is the Mexican Peso. As a result, the financial statements of the subsidiaries have been re-measured from Mexican pesos into U.S. dollars using (i) current exchange rates for monetary asset and liability accounts, (ii) historical exchange rates for non-monetary asset and liability accounts, (iii) historical exchange rates for revenues and expenses associated with non-monetary assets and liabilities and (iv) the weighted average exchange rate of the reporting period for all other revenues and expenses. In addition, foreign currency transaction gains and losses resulting from U.S. dollar denominated transactions are eliminated. The resulting re-measurement loss is recorded to accumulated other comprehensive income.

Current and historical exchange rates are not indicative of what future exchange rates will be and should not be construed as such.

Relevant exchange rates used in the preparation of the financial statements for AMM and ACM are as follows for the years ended December 31, 2011 and 2010 respectively (Mexican peso per one U.S. dollar).

 
December 31, 2011
  
Period end exchange rate
Ps.     
     13.9787  
Weighted average exchange rate for the period ended
Ps.     
     12.4300  

 
December 31, 2010
  
Period end exchange rate
Ps.     
     12.3817  
Weighted average exchange rate for the period ended
Ps.     
     12.6366  

Other comprehensive income (loss) for the years ended December 31, 2011 and December 31, 2010 is $37,036 and ($106,237) respectively, and is primarily the result of foreign currency exchange differences. Inception to date accumulated other comprehensive loss is $209,217.

The Company's significant accounting policies are:

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 period. Actual results could differ from those estimates.

Reclassifications

Certain reclassifications, which have no effect on net loss, have been made in the prior period financial statements to conform to the current presentation.

Cash and Cash Equivalents

For the Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2011 or December 31, 2010.

Concentrations

The Company maintains cash balances at highly-rated financial institutions in the United States. Accounts at each institution are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $250,000. The Company had one and no bank accounts in excess of $250,000, as of December 31, 2011 and 2010, respectively. The Company has not experienced any losses in these accounts.
 
Recoverable Value-Added Taxes (IVA) and Allowance for Doubtful Accounts

Impuesto al Valor Agregado taxes (IVA) are recoverable value-added taxes charged by the Mexican government on goods sold and services rendered at a rate of 16%.  Under certain circumstances, these taxes are recoverable by filing a tax return and as determined by the Mexican taxing authority.

Each period, receivables are reviewed for collectability.  When a receivable is determined to not be collectable we allow for the receivable until we are either assured of collection or assured that a write-off is necessary.  Our allowance in association with our receivable from IVA from our Mexico subsidiaries is based on our determination that the Mexican government may not allow the complete refund of these taxes.

   
December 31, 2011
    
December 31, 2010
  
             
Allowance - recoverable value-added taxes
   $ 1,211,109     $ 1,366,533  
Allowance - other receivables
     377       4,692  
Total
   $ 1,211,486     $ 1,371,225  

Property, plant, equipment, mine development and land

Mining concessions and acquisitions, exploration and development costs relating to mineral properties are deferred until the properties are brought into production, at which time they will be amortized on the unit of production method based on estimated recoverable reserves. If it is determined that the deferred costs related to a property are not recoverable over its productive life, those costs will be written down to fair value as a charge to operations in the period in which the determination is made. The amounts at which mineral properties and the related deferred costs are recorded do not necessarily reflect present or future values.

The recoverability of the book value of each property is assessed at least annually for indicators of impairment such as adverse changes to any of the following:

• estimated recoverable ounces of copper, lead, zinc, gold, silver or other precious minerals
• estimated future commodity prices
• estimated expected future operating costs, capital expenditures and reclamation expenditures

A write-down to fair value is recorded when the expected future cash flow is less than the net book value of the property or when events or changes in the property indicate that carrying amounts are not recoverable. This analysis is completed as needed, and at least annually. As of the date of this filing no events have occurred that would require the write-down of any assets. In addition, the carrying amounts of the group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication of impairment exists, the asset's recoverable amount will be reduced to its estimated fair value. As of December 31, 2011 and 2010, respectively, no indications of impairment existed.

Certain mining plant and equipment included in mine development and infrastructure is depreciated on a straight-line basis over their estimated useful lives from 3 - 10 years. Other non-mining assets are recorded at cost and depreciated on a straight-line basis over their estimated useful lives from 3 - 10 years.

Financial and Derivative Instruments

The Company periodically enters into financial instruments. Upon entry, each instrument is reviewed for debt or equity treatment.  In the event that the debt or equity treatment is not readily apparent, FASB ASC 480-10-S99 is consulted for temporary treatment, once a triggering event of any such instruments happens that remove the temporary element the Company appropriately reclassifies the instrument to debt or equity.
 
We periodically assess our financial and equity instruments to determine if they require derivative accounting. Instruments which may potentially require derivative accounting are conversion features of debt, equity, and common stock equivalents in excess of available authorized common shares, and contracts with variable share settlements.  In the event of derivative treatment, we mark the instrument to market.

Revenue recognition

Revenue from the sale of concentrate and industrial metals will be 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)
collectivity is reasonably assured.
 
Reclamation and remediation costs (asset retirement obligations)

Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and abandonment costs.

Future remediation costs for reprocessing plant and buildings are accrued based on management's best estimate at the end of each period of the undiscounted costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing remediation, maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. There were no reclamation and remediation costs accrued as of December 31, 2011 or December 31, 2010.

Exploration expenses and purchase of Technical Data

Exploration costs not directly associated with proven reserves on our mining concessions are charged to operations as incurred.

Technical data, including engineering reports, maps, assessment reports, exploration samples certificates, surveys, environmental studies and other miscellaneous information, may be purchased for our mining concessions.  When purchased for concessions without proven reserves the cost is considered research and development pertaining to a developing mine and is expensed when incurred.
 
Income taxes

Income taxes are provided for using the asset and liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realization of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, we continually assess the carrying value of our net deferred tax assets.

Stock Based Compensation

Stock based compensation is accounted for using the Equity-Based Payments to Non-Employee's 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.

Shares issued to employees are expensed upon issuance.

Stock based compensation for employees is accounted for using the Stock Based Compensation Topic of the FASB ASC.  We use the fair value method for equity instruments granted to 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.

Net Loss per Common Share

Earnings per share is calculated in accordance with the Earnings per Share Topic of the FASB ASC. The weighted-average number of common shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share is computed using the weighted average number of shares plus dilutive potential common shares outstanding. Potentially dilutive common shares consist of employee stock options, warrants, and other convertible securities, and are excluded from the diluted earnings per share computation in periods where the Company has incurred net loss. During the years ended December 31, 2011 and 2010, respectively, the Company incurred a net loss, resulting in no potentially dilutive common shares.

Fair Value Accounting

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
The three levels of the fair value hierarchy are described below:

 
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

 
Level 2
Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

 
Level 3
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Recently adopted and recently issued accounting guidance

Adopted

In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for the Company with the reporting period beginning January 1, 2011. The adoption of this guidance did not have a material impact on the Company's financial position, results of operations or cash flows.

Issued

In May 2011, the FASB issued an accounting standard update that amends the accounting standard on fair value measurements. The accounting standard update provides for a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. generally accepted accounting principles and International Financial Reporting Standards. The accounting standard update changes certain fair value measurement principles, clarifies the application of existing fair value measurement, and expands the fair value measurement disclosure requirements, particularly for Level 3 fair value measurements. The amendments in this accounting standard update are to be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance will not have a material impact on the Company's financial position, results of operations or cash flows.

In June 2011, the FASB issued an accounting standard update which requires the presentation of components of other comprehensive income with the components of net income in either (1) a continuous statement of comprehensive income that contains two sections, net income and other comprehensive income, or (2) two separate but consecutive statements. This accounting standard update eliminates the option to present components of other comprehensive income as part of the statement of shareholders' equity, and is effective for interim and annual periods beginning after December 15, 2011. In December 2011, the FASB issued ASU 2011-12, "Comprehensive Income - Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05," to defer the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. All other provisions of this update, which are to be applied retrospectively, are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance will not have a material impact on the Company's financial position, results of operations or cash flows.
 
In September 2011, the FASB issued an accounting standard update that amends the accounting guidance on goodwill impairment testing. The amendments in this accounting standard update are intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The amendments in this accounting standard update are effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this accounting standard update will become effective for the reporting period beginning January 1, 2012. The adoption of this guidance will not have a material impact on the Company's financial position, result of operations or cash flows.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows.
Mining Deposits
Mining Deposits
Note 3. Mining Deposits

As of December 31, 2011 and 2010, respectively, the Company paid deposits of $175,000 and $28,888 toward Champinon (see Note 2) and other mining projects.
Other assets, current and non-current
Other assets, current and non-current
Note 4. Other assets, current and non-current

In September 2010, the Company signed an agreement to purchase three properties for a price of $1,000,000. In order to hold these properties, the Company made a cash deposit of $60,000. The Company is obligated to pay all the expenses, fees and general expenditures relating to the sale, up to a maximum of $500,000, which are deductible from the sales price.  In March 2011, the Company received notification from Pacemaker Silver Mining S.A. de C.V. a wholly-owned Mexican subsidiary of El Tigre, indicating that they had rights to the three properties. Although this does not affect the Company's specific right to the property, until the difference can be determined, the deposit was expensed in 2011.
 
In 2011, the Company paid $100,000 advance payable to the Tania Iron Ore Property vendor, against future royalty payments and $175,000 to the subcontractor at the Tania Iron Ore Property for property improvements.  The Company is seeking the return of the $175,000 from the subcontractor for non-performance.
Income taxes
Income Taxes
Note 5. Income Taxes

The Company files income tax returns in the United States ("U.S.") and Mexico jurisdictions.  In the U.S., Tara Minerals and Adit file a consolidated tax return.  In Mexico, AMM and ACM file standalone tax returns which were filed as of March 31, 2012.  The U.S. return for 2011 will be filed after the filing of these financial statements. No tax returns for the Company or any subsidiary of the Company are currently under examination by any tax authorities in their respective countries, except for routine tax reviews for AMM for August - December 2011.

The provision for federal and state income taxes for the year ended December 31, 2011 includes elements of the Tara Minerals and Adit as one filing entity; and AMM and ACM as separate filing entities.

The December 31, 2011 and since inception income tax benefit is as follows:

   
U.S. Companies
    
Mexico
Companies
    
Total
  
Current (asset) liability - total
   $ -     $ -     $ -  
Deferred (asset) liability - total
     (6,516,000 )     (1,702,000 )     (8,218,000 )
Valuation allowance
     -       1,702,000       1,702,000  
Income tax benefit, since inception
   $ (6,516,000 )   $ -     $ (6,516,000 )

As further discussed in Note 13, the Company sold 100% of its interest in ACM.  We believe that the deferred tax asset above is realizable, net of the valuation allowance disclosed, due to this.

A valuation allowance is recorded when it is more likely than not that the deferred tax assets will be realized. The future use of deferred tax assets is dependent on the future taxable profits which arise from taxable temporary timing differences such as:

 
·
Differences in expensed stock based compensation and stock for investor relation services and corporate officers.
 
·
The capitalization of foreign mining exploration expenses for federal income tax purposes.
 
·
 A carryforward of a net operating loss.
 
At December 31, 2011 total deferred tax assets and deferred tax liabilities are as follows:

   
U.S. Companies
    
Mexico Companies
    
Total
  
Deferred tax asset - current
   $ 4,041,000     $ -     $ 4,041,000  
Deferred tax asset - non-current portion
     2,475,000       1,702,000       4,177,000  
     Total deferred tax asset
     6,516,000       1,702,000       8,218,000  
                         
Deferred tax liability - current
     -       -       -  
Deferred tax liability - non current
     -       -       -  
     Total deferred tax liability
     -       -       -  
                         
Valuation allowance
     -       (1,702,000 )     (1,702,000 )
Net deferred tax asset (liability)
   $ 6,516,000     $ -     $ 6,516,000  

Due to the above mentioned sale of ACM results in the realization of a majority of the available deferred tax asset for the Company's U.S. consolidated tax return.

Net operating losses generated in Mexico may only be used to offset income generated in Mexico.  ACM has a net operating loss in Mexico of approximately $390,000 with an estimated tax benefit of $145,000 and AMM has a net operating loss in Mexico of $4,275,000 with an estimated tax benefit of $1,558,000.  Per the Income Tax topic of the FASB ASC, when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit.  We have fully allowed for the entire deferred tax asset relating to our Mexican subsidiaries at December 31, 2011.

Net operating losses expire as follows:

   
U.S. Companies
    
Mexico Companies
    
Total
  
December 31, 2019
   $ 57,000     $ -     $ 57,000  
December 31, 2020
     12,992,000       3,339,000       16,331,000  
December 31, 2021
     2,335,000       4,665,000       7,000,000  
     Total net operating loss
   $ 15,384,000     $ 8,004,000     $ 23,388,000  

Per Internal Revenue Code Section 382, in the event of a change of ownership, the availability of the Company's net operating losses carry forwards may be subject to an annual limitation against taxable income in future periods, which could substantially limit the eventual utilization of this net operating loss carry forwards.  This limitation may not apply pursuant to an ownership change as described in Section 1262 of P.L. 111-5.
 
Reconciliation of the differences between the statuary tax rate and the effective income tax rate is as follows:

   
U.S. Companies
    
Mexico
Companies
  
Statutory Federal tax rate
     35 %     30%  
Valuation allowance
     -       (30%)  
Effective income tax rate
     35 %     -  

Tax Matters related to the Company's Parent Company Tara Gold:

Corporacion Amermin S.A. de C.V. ("Amermin") is a sister company to Tara Minerals through common ownership of the Company parent, Tara Gold.  Amermin's 2007 tax return has been audited by the Mexican government, with their corresponding reporting dated January 13, 2011.  Upon receipt of this report Amermin's Mexico tax experts recommended appealing the report.  The appeal was filed March 10, 2011 and is in the evidence stage awaiting conclusion so that a ruling can be made.  Amermin's records indicate that, at the time of notification, all applicable taxes due from Amermin had been paid and the ownership of the Picacho property had been renegotiated to American Copper Mining with all related taxes payable by American Copper Mining having been paid. Although the Company believes the related taxes from this report to be in error, an accrual of approximately $653,000 was recognized at December 31, 2010 by Amermin. In the second quarter of 2011, Amermin was notified that the Mexico tax authorities had liened several of Amermin's properties along with the Picacho property.  In conjunction with the sale of American Copper Mining in 2012, the Company has paid this lien but is taking action necessary towards seeking a refund from the Mexico tax authorities.
Related Party Transactions
Related Party Transactions
Note 6. Related Party Transactions

Due to related parties, net of due from was $2,380,403 and $3,465,232 as of December 31, 2011 and 2010, respectively.
 
In January 2007, Amermin made the arrangements to purchase the Pilar, Don Roman and Las Nuvias properties listed in Note 2 (part of the Don Roman Groupings) and sold the concessions to AMM. At December 31, 2011, Amermin has paid the original note holder in full. AMM owes Amermin $535,659 for the Pilar mining concession and $211,826 for the Don Roman mining concession.
As of December 31, 2011 Amermin loaned AMM $781,898 at 0% interest, due on demand.
 
As of December 31, 2011 Tara Gold loaned the Company $657,624 which amount is included in Due to Related Parties. There are no terms to this intercompany payable and it is due on the demand of Tara Gold.

In September 2010, Tara Gold entered into a tentative agreement with the Company which provided that the Company would acquire all of the outstanding shares of Tara Gold by exchanging one Tara Mineral share for two Tara Gold shares.  In 2011 this agreement was cancelled and Tara Gold announced it would begin to distribute all of its shares of the Company's common stock to its shareholders. In May 2011, the first distribution, at a rate of one share of the Company's common stock for every 20 outstanding shares of Tara Gold, was made. At December 31, 2011, Tara Gold owns 53% of the common stock of the Company.
 
In May 2011, the Company acquired the "Picacho Fractions I, II and III" from Tara Gold for $163,793 plus value-added tax of $26,207. The full amount was financed with an interest rate of LIBOR plus 3.25%.

In July 2009, Adit issued Tara Minerals a promissory note in the principal amount of $650,000 to compensate Tara Minerals for its down payment toward the purchase price of Picacho mentioned in Note 2 (d) above, and to reimburse Tara Minerals for other amounts advanced on behalf of Adit.  The note is unsecured, bears interest at 3.25% per year, and is due and payable on June 30, 2011.  Adit has since repaid $600,000 towards this note.  In March 2010, Adit acquired technical data pertaining to Picacho.  Adit paid for the Company's shares used in the acquisition by means of a note in the principal amount of $1,750,000.  The note bears interest at 6% per year and is due and payable on March 31, 2012. At any time after July 1, 2010 the Company may convert the outstanding principal, plus accrued interest, into shares of Adit's common stock.  The Company will receive one share of Adit's common stock for each $0.75 (as amended December 31, 2010) of principal and interest converted. Both notes are intercompany transactions that eliminate during the consolidation of these financial statements.

During the year ended December 31, 2010 an officer of the Company loaned the Company $50,000. The note bears interest at 10% per year, and was due and payable on December 15, 2010. As further consideration for extending credit to the Company, the officer received a warrant that entitles him to purchase 50,000 shares of the Company's restricted common stock at a price of $1.20 per share. In December 2010, the Company extended the note holder the ability to convert the note, plus interest, into shares of the Company at $0.50 per share.  Upon conversion any outstanding warrants expire.  The officer elected to convert the note and related interest as of December 31, 2010.  Based on the fair value of the shares at December 31, 2010 the Company incurred a loss on debt extinguishment of $74,006.  The related shares were issued in 2011.

On July 28, 2010 Adit borrowed $100,000 from an officer of Adit. The note bears interest at 3.25% per year, with interest payable quarter and due on June 30, 2012 (as amended).
Notes Payable
Notes Payable
Note 7. Notes Payable

The following table represents the outstanding balance of loans and capital leases for the Company.

   
December 31, 2011
    
December 31, 2010
  
             
Mining concessions
   $ 392,189     $ 1,699,737  
Auto loans
     96,762       119,766  
Related party
     100,000       100,000  
Equipment
     -       72,848  
      588,951       1,992,351  
Less - current portion
     (519,977 )     (924,001)  
Non-current portion
   $ 68,974     $ 1,068,350  

See Note 2 above for notes payable relating to mining concessions and Note 6 for notes payable, related party.
 
During the year ended December 31, 2010, AMM financed the purchase of five trucks and one car to be used in operations for $128,750.  During the year ended December 31, 2011, one of the vehicles purchased in 2010 was stolen, the insurance claim was processed, and the note payable and the fixed asset removed.  AMM financed the purchase of one truck to be used in operations for $48,491. Notes payable interest rates range between 13.5% and 14.5%; notes payable mature between August 2014 and June 2015. As of December 31, 2011 the outstanding balance of the loans was $96,762.  
 
On July 21, 2010, AMM entered into a capital lease for mining equipment for $98,500 plus value-added taxes. During the year ended December 31, 2011 the Company defaulted on the capital lease and the asset and related debt were removed, and payments were reclassified to treat the payments similar to an operating lease.

During the year ended December 31, 2010 various non-related parties loaned the Company a total of $480,000. The notes bear interest at 10% per year, and are due and payable six months after the promissory note date. The Company elected to extend the maturity of the notes by six months. The interest increased to 12% from and after December 15, 2010. As further consideration for extending credit to the Company, each note holder received a warrant that entitles them to purchase 480,000 shares of the Company's restricted common stock at a price of $1.20 per share. In December 2010, the Company extended the notes to offer the note holders the ability to convert the note, plus interest, into shares of the Company at $0.50 per share.  Upon conversion any outstanding warrants would expire.  All note holders elected to convert their notes and related interest as of December 31, 2010.  Based on the fair value of the shares at December 31, 2010 the Company incurred a loss on debt extinguishment of $709,084.  The related shares were issued in 2011.

The five year maturity schedule for notes payable is:

   
2012
    
2013
    
2014
    
2015
    
2016
    
Total
  
                                     
Mining concessions
   $ 392,189     $ -     $ -     $ -     $ -     $ 392,189  
Auto loans
     27,788       31,896       30,927       6,151       -       96,762  
Related party
     100,000       -       -       -       -       100,000  
Total
   $ 519,977     $ 31,896     $ 30,927     $ 6,151     $ -     $ 588,951  
Stockholders' Equity
Stockholders' Equity
Note 9. Stockholders' Equity

The authorized common stock of the Company consists of 200,000,000 shares with par value of $0.001.

January 2010, the Company issued 100,000 shares of common stock valued at $157,000 or $1.57 a share for officer bonuses.
 
February 2010, the Company issued 122,944 shares of common stock valued at $227,560 or $1.85 a share for investor relations.

February 2010, the Company sold 1,056 shares of common stock for $2,300 or $2.18 a share for cash.

February 2010, the Company issued 1,250,000 shares of common stock for investor relations and banking services valued at $2,687,500 or $2.15 a share, with warrants to purchase 1,250,000 common shares, vesting throughout 2010 with a total warrant value of $2,684,028.

Between February and October 2010, the Company issued 585,000 shares of common stock for warrants exercised, for $234,000 or $0.40 a share, for cash.

Between February and October 2010, the Company issued 50,669 shares of common stock for warrants exercised, for $60,803 or $1.20 a share, for cash.

March 2010, the Company issued 416,667 shares of common stock for warrants exercised, for $458,334 or $1.10 a share, for cash.

April 2010, the Company issued 437,500 shares of common stock for the assignment of technical data pertaining to the Picacho Prospect, valued at $984,375 or $2.25 a share.

April 2010, the Company issued 60,000 shares of common stock, valued at $133,800 or $2.23 a share for services rendered.

Between April and May 2010, the Company issued 20,000 shares of common stock for options exercised, for $20,000 or $1.00 a share, for cash.

May 2010, the Company issued 65,000 shares of common stock, valued at $120,250 or $1.85 a share for services rendered.

June 2010, the Company sold 499,734 shares of common stock, valued at $939,500 or $1.88 a share for services rendered.

June 2010, the Company sold 266 shares of common stock, valued at $500 or $1.88 a share for cash.

August 2010, the Company issued 75,000 shares of common stock for investor relations, valued at $112,500 or $1.50 a share.

October 2010, the Company sold 295,200 Units at a price of $1.25 per Unit.  Each Unit consisted of one share of Tara Mineral's common stock and one warrant.  Each warrant entitles the holder to purchase one share of Tara Mineral's common stock at a price of $1.50 per share during the first year period and $2.00 the second year following the sale of the Units.  The warrants expire two years after their issuance.  As of December 31, 2011 22,000 warrants were exercised for $33,000.

October 2010, the Company issued 26,120 shares of common stock for services, valued at $28,210 or $1.08 a share.

October 2010, the Company issued 500,000 shares of common stock for warrants exercised, for $500 or $0.001 a share for cash.
 
Between October and December 2010, the Company sold 1,571,799 Units at a price of $0.75 per Unit.  Each Unit consisted of one share of Tara Mineral's common stock and one warrant.  Each warrant entitles the holder to purchase one share of Tara Mineral's common stock at a price of $1.00 per share during the two year period following the sale of the Units.  The warrants expire two years after their issuance.  As of December 31, 2011 no warrants have been exercised.

December 2010, the Company issued 123,241 shares of common stock for services, valued at $147,889 or $1.20 a share.

March 2011, the Company issued 1,012,977 shares of common stock valued at $1,215,572 or $1.20 a share to unrelated parties as a result of the conversion of loans in the principal amount of $480,000 and related interest of $26,489 at December 2010.

March 2011, the Company issued 105,722 shares of common stock valued at $126,866 or $1.20 a share to a related party as a result of the conversion of loans in the principal amount of $50,000 and related interest of $2,861 at December 2010.

March 2011, the Company issued 125,000 shares of common stock for warrants exercised, for $50,000 in cash or $0.40 a share.

April 2011, the Company issued 100,000 shares of common stock to an Officer of the Company, valued at $100,000 or $1.00 a share for payment on behalf of Tara Gold for services rendered. See Note 6 above.

April 2011, the Company issued 416,100 shares of common stock valued at $353,685 or $0.85 a share for the purchase of Centenario's technical data. See Note 2 above.

April 2011, the Company issued 460,000 shares of common stock valued at $391,000 or $0.85 a share for the purchase of La Palma's technical data. See Note 2 above.

April 2011, the Company issued 370,000 shares of common stock valued at $314,500 or $0.85 a share for the purchase of La Verde's technical data. See Note 2 above.

April 2011, the Company issued 280,000 shares of common stock for warrants exercised, for $112,000 in cash or $0.40 a share.

May 2011, the Company issued 792,500 shares of common stock for warrants exercised, for $317,000 in cash or $0.40 a share.

In May 2011, the Company sold 1,643,334 units in a private offering for $493,000 in cash, or $0.30 per unit. Each unit consisted of one share of the Company's common stock and one warrant.  Each warrant entitles the holder to purchase one share of the Company's common stock at a price of $1.00 per share at any time on or before May 1st, 2012.

May 2011, the Company issued 1,100,000 shares of common stock for $55,000 in cash or $0.050 a share to Officers of the Company who exercised stock options.

In May 2011, the Company increased its authorized capitalization to 200,000,000 shares of common stock.
 
In September 2011, the Company sold 1,217,667 units in a private offering for $1,217,667 in cash, or $1.00 per unit. Each unit consisted of one share of the Company's common stock and one warrant. Each warrant entitles the holder to purchase one share of the Company's common stock at a price of $1.25 per share during the first year or $1.50 per share during the second year after units were sold and shares issued.

September 2011, the Company issued 100,000 shares of common stock, valued at $66,000 or $0.66 a share for services rendered.

September 2011, the Company issued 90,000 shares of common stock, valued at $148,500 or $1.65 a share for services rendered.

September 2011, the Company issued 10,000 shares of common stock for warrants exercised, for $15,000 in cash or $1.50 a share.

September 2011, the Company issued 12,000 shares of common stock for warrants exercised, for $18,000 in cash or $1.50 a share.

In December 2011, the Company sold 1,475,714 units in a private offering for $516,500 in cash, or $0.35 per unit. Each unit consisted of one share of the Company's common stock and one warrant. Each warrant entitles the holder to purchase one share of the Company's common stock at a price of $0.35 per share for one year.

In December 2011, the Company issued 165,000 shares of common stock, valued at $202,950 or $1.23 a share for services rendered.

In December 2011, the Company issued 1,133 shares of common stock for warrants exercised, for $1,133 or $1.00 a share.
Non-controlling Interest
Non-controlling Interest
Note 10.    Non-controlling Interest

   
December 31, 2011
    
December 31, 2010
  
             
Combined Adit / ACM:
            
Common stock for cash
   $
1,999,501
     $
1,499,501
  
Common stock for services
    
95,215
      
95,215
  
Technical data for Picacho
    
240,000
      
240,000
  
Officer stock based compensation
    
944,956
      
631,478
  
Cumulative statement of operations pickup through December 31, 2010
    
(400,368
)
    
(400,368
)
Statement of operations pick up 2011
    
(52,096
)
    
-
  
Other
    
5
      
5
  
Total non-controlling interest
  
$
2,827,213
    
$
2,056,831
  
Stock Compensation
Stock Compensation
Note 11.   Stock Compensation

The Company has the following stock option plans which are registered under a Form S-8:
 
·
Incentive Stock Option Plan
 
·
Nonqualified Stock Option Plan
 
·
Stock Bonus Plan
 
In January 2010, under its Incentive Stock Option Plan the Company granted two of its officers options for the purchase of 750,000 shares of common stock. In May 2011, the options were cancelled and the Company concurrently granted new Incentive Stock Options to the officers; under this new grant the officers have the option to purchase 750,000 shares of common stock, exercisable at a price of $0.58 per share and vest at various dates until May 2013. The options expire at various dates beginning May 2013.  In accordance with the Stock Compensation Topic, FASB ASC 718-20-35, the Company has analyzed the cancellation of the award accompanied by the concurrent grant of a replacement award and determined that there was no further incremental compensation cost. The options that vested in 2011 associated with this transaction were valued at $493,384.

In September 2010, the Company granted options for 200,000 shares of common stock to an unrelated third party for investor relations services. The options have an exercise price of $1.00 per share, vest between September 2010 and March 2011, and expire two years from the date of vesting. The options that vested in 2011 associated with this transaction were valued at $36,353; 2010 vesting was valued at $145,412.

On October 28, 2009, Adit, the Company's subsidiary, adopted the following stock option plans which have not been registered:
 
·
Incentive Stock Option Plan
 
·
Nonqualified Stock Option Plan
 
·
Stock Bonus Plan

In October 2009, Adit granted four of its officers options under its Nonqualified Stock Option Plan for the purchase of 1,000,000 shares of common stock. The options have an exercise price of $0.05 per share, the options will vest at a rate of 20% per year, the first set of options vested on October 28, 2010, and is scheduled to expire on November 15, 2015.  The options that vested in 2011 and 2010 were valued at $134,979 each year.

In October 2009, Adit granted four of its officers bonus shares under its Stock Bonus Plan for 475,000 shares, 50% of the shares vested on October 28, 2010 and the remaining 50% will vest on October 28, 2011.  The stock bonuses were valued at $187,500 each year.

In February 2007, the Company granted two of its officers options under its Nonqualified Stock Option Plan for the purchase of 1,000,000 shares of common stock. The options have an exercise price of $0.05 and were originally scheduled to expire on February 1, 2010.  In January 2010, the expiration date of these options was extended to February 2012, and the Company recognized an additional $889,031.

In January 2010, the Company granted options to three of the Company's officers under its Nonqualified Stock Option Plan. The options allow for the purchase of 1,250,000 shares of common stock at an exercise price of $0.05 per share.  These options vested immediately, expire in January 2015 and were valued at $2,334,201.

In 2010, the Company granted options for the purchase of 1,000,000 shares of common stock to an unrelated third party for investor relations services. The options have an exercise price of $2.15 a share and vested during 2010. For financial reporting purposes, the options were valued at $2,684,028. During the second quarter of 2010, the number of options granted was reduced to 500,000 with no incremental compensation cost.
 
Warrants issued in relation to investor relations agreements vest at various rates that began the second quarter of 2010.

During 2010, the Company issued warrants in relation to debt, these warrants were cancelled when the note holders elected to convert the debt to shares (see Notes 5 and 6).

The fair value of each option/warrant award discussed above is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatilities are based on volatilities from the Company's traded common stock. The expected term of options granted is estimated at half of the contractual term as noted in the individual option/warrant agreements and represents the period of time that management anticipates option/warrants granted are expected to be outstanding.  The risk-free rate for the periods within the contractual life of the option is based on the U.S. Treasury bond rate in effect at the time of grant for bonds with maturity dates at the estimated term of the options.

 
2011
2010
Expected volatility
98.06% - 163.11%
208.37% - 319.79%
Weighted-average volatility
143.46%
159.17%
Expected dividends
0
0
Expected term (in years)
1.50
0.75 - 4.50
Risk-free rate
0.58%
0.30% - 2.37%

A summary of option activity under the Plan as of December 31, 2011 and 2010, and changes during the period then ended is presented below:
                         
Options
  
Shares
    
Weighted-
Average
Exercise
Price
    
Weighted-
Average
Remaining
Contractual
 Term
    
Aggregate
Intrinsic
 Value
  
Outstanding at December 31, 2009
     1,000,000     $ 0.05              
Granted
     4,650,000       0.87              
Exercised
     (20,000 )     1.00              
Forfeited, expired or cancelled
     (1,000,000 )     0.05              
Outstanding at December 31, 2010
     4,630,000       0.49       4.0     $ 3,111,000  
Granted
     750,000       0.58                  
Exercised
     (1,100,000 )     0.05                  
Forfeited, expired or cancelled
     (930,000 )     1.52                  
Outstanding at December 31, 2011
     3,350,000     $ 0.69       3.0     $ 1,408,500  
                                 
Exercisable at December 31, 2011
     2,340,000     $ 0.88       3.5     $ 1,281,400  

             
Nonvested Options
  
Options
    
Weighted
-Average
Grant-Date
 Fair Value
  
Nonvested at December 31, 2009
     -     $ -  
Granted
     4,650,000       1.37  
Vested
     (3,175,000 )     1.26  
Forfeited, expired or cancelled
     -       -  
Nonvested at December 31, 2010
     1,475,000       1.37  
Granted
     750,000       0.58  
Vested
     (590,000 )     0.79  
Forfeited, expired or cancelled
     (625,000 )      1.57  
Nonvested at December 31, 2011
     1,010,000     $ 1.08  

A summary of warrant activity under the Plan as of December 31, 2011 and 2010, and changes during the period then ended is presented below:

                         
Warrants
  
Shares
    
Weighted-
Average
Exercise
Price
    
Weighted-
Average
Remaining
Contractual
Term
    
Aggregate
Intrinsic
Value
  
Outstanding at December 31, 2009
     3,222,500     $ 0.65              
Granted
     4,775,252       1.43              
Exercised
     (2,052,336 )     0.82              
Forfeited, cancelled or expired
     (1,673,417 )      1.54              
Outstanding at  December 31, 2010
     4,271,999     $ 0.73       1.5     $ 2,190,060  
Granted
     4,346,715       0.87                  
Exercised
     (1,220,633 )     0.97                  
Forfeited, cancelled or expired
     (5,000 )      0.40                  
Outstanding at  December 31, 2011
     7,393,081     $ 0.89       1.5     $ 1,247,886  
                                 
Exercisable at December 31, 2011
     7,393,081     $ 0.89       1.5     $ 1,247,886  

             
Nonvested Warrants
  
Warrants
    
Weighted-
Average
 Grant-Date
Fair Value
  
Nonvested at December 31, 2009
     -     $ -  
Granted
     4,775,252       1.82  
Vested
     (4,275,252 )     1.39  
Forfeited, cancelled or expired before vesting
     (500,000 )     1.82  
Nonvested at December 31, 2010
     -       -  
Granted
     4,346,715       0.87  
Vested
     (4,346,715 )     0.87  
Forfeited, cancelled or expired before vesting
     -       -  
Nonvested at December 31, 2011
     -     $ -  
Fair Value
Fair Value
Note 12.      Fair Value

In accordance with authoritative guidance, the table below sets forth the Company's financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

   
Fair Value at December 31, 2011
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
Assets:
                        
None
   $ -     $ -     $ -     $ -  
                                 
Liabilities:
                                
Total notes payable, including related
   party
   $ 588,951     $ 588,951     $ -     $ -  
Due to related parties, net of due
   from
     2,380,403       2,380,403       -       -  
Iron ore properties financial
   instrument
     570,000       570,000       -       -  
Total
   $ 3,422,829     $ 3,422,829     $ -     $ -  


   
Fair Value at December 31, 2010
  
   
Total
    
Level 1
    
Level 2
    
Level 3
  
Assets:
                        
None
   $ -     $ -     $ -     $ -  
                                 
Liabilities:
                                
Total notes payable
   $ 1,992,351     $ 1,992,351     $ -     $ -  
Due to related parties, net of due
   from
     3,465,232       3,465,232       -       -  
Total
   $ 5,457,583     $ 5,457,583     $ -     $ -  
Subsequent Events
Subsequent Events
Note 13.       Subsequent Events

a.
In July 2010, Tara Minerals entered into a joint venture agreement whereby third parties would contribute 100% of the mining rights to the concession "Mina Godinez" and Tara Minerals would have the exclusive rights to manage, operate, explore and exploit the concession. This joint venture was terminated January 18, 2012.

b.
On April 4, 2012 Adit Resources Corp. sold its subsidiary, American Copper Mining S.A. de C.V. ("American Copper") to Yamana Mexico Holdings B.V. ("Yamana").  American Copper's primary asset is the Picacho groupings.

 
As consideration for the sale of American Copper, Yamana agreed to pay Adit, in U.S. dollars:

 
·
$7.5 million, minus approximately $780,000 (the amount required to pay the Mexican government to release its tax lien on the Property), will be deposited into an escrow account and will be released when the Mexican government releases its tax lien on the Property (the "Escrow Release Date");
 
 
·
Yamana Gold Inc. will surrender 500,000 common shares, and warrants to purchase an additional 250,000 common shares, that it holds in the capital of Adit for cancellation by Adit;
 
 
·
$9.8 million one year after the Escrow Release Date;
 
 
·
During the period ending five years after the Escrow Release Date, $1.0 million for every 100,000 ounces of gold, (whether proved, measured or inferred) (as defined by Canadian Securities Administrators National Instrument 43-101) discovered on the Property. If no gold is defined on the Property three years after the Escrow Release Date, Yamana will make an advance payment of $3 million. Pursuant to this provision of the Agreement, Yamana will pay a maximum of $14 million.
 
 
·
$4.3 million six years after the Escrow Release Date.
 
 
Yamana has the option to terminate the agreement within ten business days prior to the one year anniversary of Escrow Release Date for any reason.  If the Agreement is terminated, Yamana will be required to return the capital stock of American Copper and the underlying Property to Company in good standing.