Zoned Properties, Inc. - Quarter Report: 2012 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2012

[  ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period __________ to __________

Commission File Number 000-51640

VANGUARD MINERALS CORPORATION

(formerly Knewtrino, Inc.)

(Exact name of small Business Issuer as specified in its charter)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes [  ] 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.

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 15, 2012, the Company had 1,386,111 shares issued and outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that can be expected for the year ending December 31, 2012.

The following financial statements of Vanguard Minerals Corporation (the “Company”) are included with this Quarterly Report on Form 10-Q:

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS (UNAUDITED)

AS OF JUNE 30, 2012 AND 2011

The accompanying notes are an integral part of these financial statements.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

PERIOD FROM AUGUST 25, 2003 (INCEPTION) TO JUNE 30, 2012

The accompanying notes are an integral part of these financial statements.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)

AS OF JUNE 30, 2012

The accompanying notes are an integral part of these financial statements.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011

PERIOD FROM AUGUST 25, 2003 (INCEPTION) TO JUNE 30, 2012

The accompanying notes are an integral part of these financial statements

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 1 – NATURE OF OPERATIONS

The Company was incorporated in the State of Nevada, United States of America on August 25, 2003.

The Company entered into a mineral license option agreement to explore and mine two properties in Mongolia. On April 19, 2006, the Company terminated the option agreements it previously held.

On May 2, 2006, the Company changed its name to Knewtrino, Inc. On August 10, 2007, the Company changed its name to Vanguard Minerals Corporation.

In November 2007, the Company entered into an agreement with Coastal Uranium Holdings Ltd. to acquire its right and option to an undivided 50% right, title and interest in certain mineral claims in the Athabasca region of Canada for $58,300 (Cdn) plus 2,000,000 shares of the common stock of Vanguard. In addition, Vanguard agreed to take on the financial responsibility of Coastal Uranium Holdings Ltd. to fund development of the mineral property.

In April 2008, Vanguard entered into a second agreement with Coastal Uranium Holdings Ltd. to acquire its 50% interest in mining claim S-110476 in the Athabasca region of Canada for $ 250,000 (Cdn) plus 4,000,000 shares of the common stock of Vanguard. In addition, Vanguard agreed to take on the financial responsibility of Coastal Uranium Holdings Ltd. to fund development of the mineral property.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Exploration Stage Company

The Company has not generated any significant revenues to date from its mineral exploration efforts, and in accordance with ASC 915-10 is considered to be an Exploration Stage Company.

Accounting Basis

These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. The Company has adopted a December 31 fiscal year end.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared by Vanguard Minerals Corporation (the “Company”) pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2011.

The results of operations for the three and six months ended June 30, 2012 are not indicative of the results that may be expected for the full year.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Fair Value of Financial Instruments

Vanguard’s financial instruments consist of accounts payable and accrued expenses. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States 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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Mineral Properties

Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as occurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.

Basic Income (Loss) Per Share

Basic income (loss) per share is calculated by dividing the Company’s net income or loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no common stock equivalents outstanding at June 30, 2012.

Revenue Recognition

The Company is in the exploration stage and has yet to realize significant revenues from operations.  Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of June 30, 2012, there have been no interest or penalties incurred on income taxes.

Dividends

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. There was no stocked based compensation during the six months ended June 30, 2012.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.   There has been no stock-based compensation issued to non-employees.

Recent Accounting Pronouncements

Vanguard Minerals does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

NOTE 3 – INVESTMENT IN SECURITIES

On April 23, 2010, the Company issued 1,000,000 shares of common stock at a deemed price of $ 1.50 per share. In consideration, the Company received 1,000,000 shares of PEI Worldwide Holdings, Inc., a Nevada Corporation. The PEI shares were valued at $1,500,000. Due to a decline in value of the PEI shares for an extended period, impairment of $1,020,000 was recorded in 2010. On September 21, 2010, Vanguard signed an agreement with PEI that it would attempt to liquidate or sell its shares in PEI to a third party buyer and that if it was unable to do so in a 90 day period, which was subsequently extended, the transaction would be rescinded and Vanguard would return the shares to PEI. The transaction was rescinded in 2011.

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company signed settlement agreements with two former officers of the Company. Under the agreements, the officers have waived all rights to payments of liabilities owed to them by Vanguard Minerals. Liabilities on the books of the Company totalling $60,754 relating to these officers were transferred to contributed capital in 2011.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 5 – CAPITAL STOCK

On April 6, 2008, the Company issued 4,000,000 shares of common stock in connection with the acquisition of a third mineral claim.

During the year ended December 31, 2008, the Company issued 2,333,333 shares of common stock for $70,000 in connection with a private placement.

During the year ended December 31, 2008, the Company allocated 492,336 shares of common stock for $224,400 in connection with a share subscription. During the period ended December 31, 2010, the company issued 187,000 shares of common stock in connection with this share subscription.

Effective April 16, 2010, the board of directors of the Company adopted a resolution to effect a 300 to 1 reverse share spit. As a result the authorized share capital of the company has been decreased to 1,666,666 shares of common stock with par value of $0.001 per share. On May 10, 2010, the board of directors adopted a resolution to increase the authorized share capital of the company to 500,000,000 shares of common stock with a par value of $ 0.001 per share.

On April 23, 2010, the Company issued 1,000,000 shares of common stock at a deemed price of $ 1.50 per share. In consideration, the Company received 1,000,000 shares of PEI Worldwide Holdings, Inc., a Nevada Corporation. On September 21, 2010, Vanguard signed an agreement with PEI that it would attempt to liquidate or sell its shares in PEI to a third party buyer and that if it was unable to do so in a 90 day period, which was subsequently extended, the transaction would be rescinded and Vanguard would return the shares to PEI. The transaction was rescinded in 2011.

On June 16, 2010, the Company issued 125,000 shares of common stock at a deemed price of $ 3.00 per share. In consideration, the Company received a 15% interest in Genesis Venture Fund India I, LP, a Delaware Limited partnership. The sole director of the Company is the managing director of Genesis and owns a 20% interest. In August 2010, this agreement was rescinded and the shares were subsequently cancelled.

In June 2011, Vanguard sold 1,000,000 shares of common stock in a private placement for $250,000. The funds are being held in escrow pending the satisfaction of certain conditions that were placed on the release of the funds.

In June 2011, 150,000 shares of common stock were issued to the CEO of the Company. The shares were valued at $9,000 and may be repurchased by the Company for $9,000 under certain conditions.

VANGUARD MINERALS CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012

NOTE 6 – INCOME TAXES

Due to the prior years’ operating losses and the inability to recognize an income tax benefit therefrom, there is no provision for current or deferred income taxes for the three and six months ended June 30, 2012. The cumulative net operating loss carryforward is $5,546,076 at June 30, 2012, and will expire in years through 2031.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal income tax purposes.

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of June 30, 2012 and December 31, 2011:

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.

NOTE 7 – FORGIVENESS OF DEBT

During the period, the Company signed a settlement agreement with a vendor under which the vendor waived all rights to rights to payments of liabilities owed to them by Vanguard Minerals. Liabilities on the books of the Company totalling $41,146 relating to this vendor have been recognized as income from the forgiveness of debt in the current period.

NOTE 8– COMMITMENTS AND CONTINGENCIES

The Company neither owns nor leases any real or personal property. An officer has provided office services without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

NOTE 9 – GOING CONCERN

The Company’s financial statements are prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not begun to generate significant revenues, and has incurred a significant operating losses through June 30, 2012.

The Company is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful. Without sufficient financing, or the achievement of profitable operations, it would be unlikely for the Company to continue as a going concern.

NOTE 10 – SUBSEQUENT EVENTS

On August 14, 2012, 150,000 common shares, which were issued to a former officer of the Company in 2011, were cancelled.

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2012 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than those events described above.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

The information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our markets, capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the ability to continue mining exploration on a timely basis, that we will attract customers, that there will be no material adverse competitive or regulatory change in conditions in our business, that our President will remain employed as such, that our forecasts accurately anticipate market demand, and that there will be no material adverse change in our operations or business or in governmental regulations affecting our business, availability of funds, common share prices, operating costs, capital costs, and other factors. Forward-looking statements are made, without limitation, in relation to marketing plans, operating plans, availability of funds, and ongoing capital and operating costs. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

OVERVIEW

We are an exploration stage mining company that has briefly conducted other businesses, including wireless and mobile software and management consulting. We plan to interview geological firms for our mineral properties and raise funds to develop those properties. We have previously entered into two agreements with Coastal Uranium Holdings Ltd. to acquire its rights and options to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 for which proceeds were released to us on August 15, 2012 and we are planning to work on the exploration of our Uranium Properties, although legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until November 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling.

CORPORATE HISTORY AND DEVELOPMENT

Overview

Vanguard Minerals Corporation, formerly Knewtrino, Inc., (the “Company”) was originally incorporated as Mongolian Explorations Ltd. on August 25, 2003, under the laws of the State of Nevada. We were originally founded to conduct mineral explorations in Mongolia. Although we did exploratory feasibility work on mineral lease development, we abandoned our mineral exploration efforts in April, 2006 due to the deteriorating political and security situation in Mongolia and specifically due to intense protests over North American mining concessions in that country which jeopardize the safety of our consultants as well as undermining our confidence that we will ever be able to see a return on our continued investments to develop the properties.

Since that time, we had appointed an interim chief executive officer, Jenifer Osterwalder, who saw us through our transition out of the mineral exploration business and now are under the leadership of a new chief executive officer, Vladimir Fedyunin, and we were in the process of developing a business around cell phone enabled wireless applications. Toward that end, we acquired the intellectual property of wireless technology start-up Instant Wirefree, Inc., a Nevada corporation.  Unfortunately, we were not able to make the transition to the ultra-competitive field of cell phone wireless applications.  In June, 2007, we made the decision to abandon this line of business and to no longer pursue commercialization of any product in the wireless space.  Instead, we have returned to our original, core focus of mining, where the company has its roots, however, we wished to find a more politically stable and less dangerous environment to mine in than Mongolia.  

In September, 2007, we changed our name to Vanguard Minerals Corporation to reflect our renewed commitment to our traditional core business of mineral exploration. In November 2007, the Company entered into an agreement with Coastal Uranium Holdings Ltd. to acquire its right and option to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. The option was acquired through payment of $57,585 in cash as well as 2,000,000 common shares of the Company. On April 6, 2008, we entered into another agreement with Coastal Uranium Holdings Ltd., whereby we acquired a 50% undivided right, title and interest to the mineral claim numbered S-110476 in the Athabasca region of Canada in exchange for $250,000 CAD ($248,508 USD) and 4,000,000 common shares of Vanguard Minerals Corporation.  In addition, we have agreed to take on the financial responsibility of Coastal to fund development of the mineral property that is the subject of claim S-110476.

In February, 2010, James Price was appointed President, Chief Executive Officer and Sole Director of the Company. Vladimir Fedyunin, the former President and CEO, remained as Principal Financial and Accounting Officer. Mr. Fedyunin left the company later in 2010.

On April 16, 2010, we effected a 300 for 1 reverse stock split in our common shares for shareholders of record as of that date.

On April 20, 2010, the Company initiated a new line of business doing business as Vanguard Management. The Company ceased this management consulting business in June, 2011. We did receive some stock in exchange for management consulting services. All this stock has been liquidated or returned. We did enter into a related party transaction with Genesis Venture Fund India I, LP that involved a swap of stock and management consulting services. That transaction has been rescinded.

On September 21, 2010, the company entered into an agreement whereby the above referenced transaction with PEI would be rescinded and the PEI shares returned to the purchasers and the 1,000,000 common shares of Vanguard common stock returned to treasury unless a buyer for the shares could be found. This rescission was to take place within 90 days. In December, 2010, the timeframe for this rescission was extended until June 21, 2011.

On June 7, 2011, the registrant completed a rescission whereby the 1,000,000 shares previously issued in exchange for the PEI shares were cancelled and the 1,000,000 shares of PEI were returned to the purchasers.

On June 13, 2011, we entered into an agreement with Sean Rice to serve as our President, Chief Executive Officer and Principal Financial and Accounting Officer in exchange for a grant of 150,000 of our common stock vesting over a period of four years. Mr. Rice will also earn a salary of $120,000 per year, but such salary will not accrue or be payable until the Company has received aggregate financing proceeds from the sale of its common stock of $2,000,000 within a 12 month period. The agreement does not provide for any severance or accrual of unpaid salary and is an at-will employment agreement.

James Price no longer has any role in our company and is no longer a shareholder.

On May 30, 2012, Sean Rice resigned as President and CEO and Christopher Anzalone was appointed as President, CEO and director. On August 14, 2012, Mr. Rice resigned as Principal Financial and Accounting Officer and a director. Mr. Anzalone was appointed as Principal Financial and Accounting Officer on August 14, 2012.

Our company is exclusively focused on the development of our Athabasca, Canada mineral properties and the development and exploration of other natural resource properties we would like to acquire.

We were able to complete a financing for $250,000 for sales of our common stock in June, 2011, although we were not released the proceeds of this financing until August 15, 2012 when we were able to meet the conditions of the release of the proceeds. We are not currently working on the exploration of our Uranium Properties because financing, legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until September, 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling.

Our principal executive offices are located at 6301 NW 5th Way, Suite 5000 Ft. Lauderdale, FL 33309. Our phone number is 954-892-9376.

Results of Operations

Until April 19, 2006, we have been involved primarily in organizational activities related to our original business of mining in Mongolia, including the acquisition of the option to acquire the Altan as well as the Ovorkhangai property mineral licenses, obtaining a geological report on our mineral licenses and initiating the first phase of exploration. After April 19, 2006, when we abandoned these efforts due to the political situation in Mongolia, we acquired wireless technology from Instant Wirefree, Inc., a Nevada corporation.  We attempted to commercialize technology for the wireless space but abandoned that effort in June, 2007.  We are currently in the process of returning to our core business of mining. Toward that end, we changed our name in September 2007 and we acquired interests in mineral claims in the Athabasca region of Canada in November 2007 and April 2008. We have incurred an accumulated net loss of $5,546,076 for the period from inception to June 30, 2012. We have had $163,500 in revenues from operations since our inception.

In April, 2010, the Company briefly entered and then exited the management consulting business. It is now entirely focused on the development of its mineral interests.

We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 and the proceeds of this financing were released to us on August 15, 2012 we and are not actively working on the exploration of our Uranium Properties, because of financial, legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, this may mean that our next drilling and trenching program may not begin until September 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling. As of the fiscal year ended December 31, 2011 we had $0 of cash on hand and $250,000 in proceeds from our June financing that were being held in escrow for us that have now been released. However, given our accounts payable, debts and existing commitment to our properties, our current cash situation is challenging and the proceeds will not allow us to significantly develop our properties.

Financial Condition and Liquidity

Overview

Our financial statements contained herein have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. We incurred an accumulated net loss of $5,546,076 for the period from inception to June 30, 2012.

Our financial statements included in this report have been prepared without any adjustments that would be necessary if we become unable to continue as a going concern and are therefore required to realize upon our assets and discharge our liabilities in other than the normal course of business.

Cash and Working Capital

The Company's cash balance as of June 30, 2012 was $0, as compared to the cash balance of $0 as of December 31, 2011. We drew down on our $250,000 in financing proceeds on August 15, 2012.

Periods Ending June 30, 2012 and June 30, 2011

Operating expenses for the three-month periods ended June 30, 2012 and June 30, 2011 totalled $5,432 and $4,000 respectively; and from inception to the period ended June 30, 2012 operating expenses totalled $4,935,929. The company experienced a net loss/income of 35,714, ($1,016,000) and a net loss of $(5,546,076) for the three-month periods ended June 30, 2012, June 30, 2011 and from inception to period ended June 30, 2012, respectively, against $163,500 in total revenues to date from operations. The major expense during this three-month period was for general administrative costs. We did not acquire any new mineral properties in the first six months of 2012.

The net loss per share (fully diluted -- weighted average) was $0.00 for the three-month period ended June 30, 2012.

Liquidity and Capital Resources

For the six month period ended June 30, 2012, net cash used in operating activities, was $0. For the six-month period ended June 30, 2012, net cash used in operating activities, was $0. For the period from inception to June 30, 2012, net cash used in operating activities, consisting mostly of loss from operations was $2,283,809.

For the period from inception to June 30, 2012, net cash resulting from financing activities was in the amount of $2,337,411.

Our capital resources have been limited. We currently do not, and have not yet determined when we will, generate revenue for our mining and mineral exploration activities, and to date have relied on the sale of equity and related party loans for cash required for our exploration activities and the efforts of our chief executive officer for consulting agreements. The company has no external sources of liquidity in the form of credit lines from banks. No investment banking agreements are in place and there is no guarantee that the company will be able to raise capital in the future should that become necessary.

Future Financings

We anticipate that if we pursue any additional financing, the financing would be an equity financing achieved through the sale of our common stock. We do not have any arrangement in place for any debt or equity financing. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our company. If we do not secure additional financing in the future we may consider bringing in a joint venture partner to provide the required funding. We have not, however, undertaken any efforts to locate a joint venture partner.

Off Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Significant Contingencies

Our financial statements have been prepared assuming we will continue as a going concern. Our independent auditors have made reference to the substantial doubt about our ability to continue as a going concern in their report of independent registered public accounting firm on our audited financial statements for the year ended December 31, 2011. Our continuation is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern.

Plan of Operation

We have developed a new plan of operation for 2012. In addition to continuing to seek financing to develop our mineral properties in the Athabasca region of Canada, we intend to acquire other mineral properties if we can.

We intend to conduct significant mineral exploration activities on our properties in 2012, as long as we are able to find suitable exploration providers before the winter season shuts down exploration work. We continue to seek geological advice and work on developing possible partnerships for the development of these properties. We intend to conduct over the next 12 months helicopter-supported property-scale boulder sampling and prospecting, close-spaced ground geophysics and drilling on our mining properties. With these two projects, consisting of 3 mineral claims, in close proximity to each other, we believe such operations can be conducted in a cost-efficient manner. We are now ready to commence ground geophysics and drilling. Management has continued negotiations started in 2008 with geophysical and drill contractors in preparation for this exploration. Management is also reviewing other opportunities to acquire additional property in the region, both unexplored properties and properties with varying amounts of previous exploration. We intend to develop our management consulting business and to expand it with additional consulting clients throughout the year.

Vanguard Minerals Corporation’s short-term prospects are challenging considering our lack of financial resources to fully develop our mineral properties and considering that we have not yet derived significant revenues from our new line of business. However, should we be able to develop revenue from our new line of business or secure financing to develop our mineral properties, our prospects might improve considerably. If we do secure additional financing to continue to exploit our mineral properties, revenue from the sale of mineral products from our properties may still remain several years away.

Cash requirements

Our current cash requirements are very low. Our chief executive officer, Christopher Anzalone, continues to serve without a salary. Mr. Anzalone currently hosts our operations in his location in Ft. Lauderdale, FL without charge. Nevertheless, without continued infusions of cash from management or securing additional financing or revenues from our new line of business, we will not have enough cash to complete exploration activity on our property, which could run into tens of millions of dollars.

Research and development

We would like to spend several hundred thousand dollars over the next 12 months on exploration and extraction related to our mineral properties. We would spend significantly more money than this developing those mineral properties at the moment that our full scale extraction operation were to commence. However, currently we do not have enough cash to make more than $150,000-$200,000 of such expenditures.

Plant and equipment

We currently have a location in Ft. Lauderdale, FL provided by our chief executive officer, Christopher Anzalone, at no cost. We anticipate expanding our office within the next 6-12 months, especially if our exploration work yields promising results.

Employees

We have one employee currently, President and Chief Executive Officer Christopher Anzalone. We have several consultants engaged in our mineral exploration activities, although none are currently active as we are negotiating new contracts and interviewing them due to our recent funding. We intend to hire additional exploration and geological consultants over the next 120-180 days.

The Company’s executive offices are currently located in Ft. Lauderdale, FL. The company’s telephone number is (954)892-9376.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency and Credit Risk. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company’s reporting currency is the US Dollar. We do undertake drilling, mining exploration and other expenses related to our Canadian mining properties that must be paid in Canadian dollars and are subject to cost variations based in currency rate fluctuations.

Fair Value of Financial Instruments. The carrying value of the Company's financial instruments, including prepaid expenses, related party receivables, accounts payable and accrued liabilities at June 30, 2011 and December 31, 2010 approximates their fair values due to the short-term nature of these financial instruments.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). As a result of this evaluation, we identified material weaknesses in our internal control over financial reporting as of June 30, 2012. Accordingly, we concluded that our disclosure controls and procedures were not effective as of June 30, 2012.

As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer has concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.

The material weakness identified in our amended annual report on Form 10-K for the year ended December 31, 2011 was related to a lack of an accounting staff resulting in a lack of segregation of duties and accounting technical expertise necessary for an effective system of internal control. This weakness still exists at June 30, 2012.

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We have been notified that we may have exposure of $25,000 on a potential shareholder claim. We are in the process of settling this claim for this amount without admission of wrongdoing. The corporation may also seek indemnification from other parties to this claim after further investigation.

ITEM 1A. RISK FACTORS.

A smaller reporting company is not required to provide the information required by this Item.

 

ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

 

On April 23, 2010, the Company completed a sale transaction whereby it sold 1,000,000 of its common shares at a price per share of $1.50. The per share purchase price was paid in the form of shares of PEI Worldwide Holdings, Inc., a Nevada corporation ("PEI"). The per share purchase price was derived from the closing price of shares of PEI on April 20, 2010 as listed on the Pink Sheets, which was $1.50 per share. Therefore, the total purchase price for the 1,000,000 common shares was $1,500,000. 860,000 of the shares were purchased by James Price and the other 140,000 of the shares were purchased by various purchasers. 1,000,000 shares of PEI represents approximately 2.5% of the issued and outstanding stock of PEI.

 

This was a related-party transaction. Mr. Price is our sole director and he approved this transaction. There was no disinterested director who approved this transaction. There can be no assurance that the price reported for PEI shares on the Pink Sheets is an accurate reflection of the true value of PEI shares.

 

This transaction had the effect of causing a change of control in the registrant. Prior to this transaction, the registrant had 268,499 shares of common stock issued and outstanding out of 1,666,666 authorized. After this transaction and giving effect to the transaction described in the paragraph below regarding the issuance of 187,000 common shares, Mr. Price owns approximately 59.1% of our issued and outstanding stock and remains our sole director.

 

On April 23, 2010, the registrant completed an issuance of 187,000 shares of common stock. This stock had been subscribed for in April, 2008 for payment of $224,400 in cash received by the corporation. The corporation issued 187,000 of its common shares to various subscribers of the stock at a per share purchase price of $1.20 per share.

 

On June 16, 2010, the Vanguard Minerals Corporation, the registrant, entered into a Strategic Business Development Agreement ("Agreement") with Genesis Venture Fund India I, LP, a Delaware limited partnership ("Genesis"). The Agreement provides that Vanguard will furnish business development services and strategic management consulting services to Genesis over a period of 24 months. The Agreement provides payment of up to $250,000 in cash by Genesis to Vanguard for the consulting services based on the milestones contained in the Agreement. In addition, under the Agreement, Vanguard will issue 125,000 shares of its common stock to Genesis in exchange for 15% of the limited partnership interests of Genesis.

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Vanguard former President, CEO and Sole Director, James Price, who was the controlling shareholder of Vanguard was also the Managing Director of Genesis and owned 20% of the limited partnership interests in Genesis.  Mr. Price exercised control of both entities and there can be no assurance that the terms of the transaction are fair to the shareholders of Vanguard or the limited partnership interest holders of Genesis or that the terms are reflective of the terms of a similar transaction between unrelated parties.  There are significant contingencies required for Vanguard to meet the milestone requirements under the Agreement and receive up to the $250,000 cash milestone payments and there can be no assurance that such payments will ever occur.  Please see the Agreement, which is attached hereto as an exhibit which were filed on the Registrant's Form 8K on June 17, 2010 for the complete terms and conditions.

 

The transaction with Genesis was rescinded on September 21, 2010.

 

The transaction with PEI was rescinded in June, 2011. In June, 2011, we sold 1,000,000 of our common shares at $0.25 per share for an aggregate purchase price of $250,000 to various shareholders in a private placement. Proceeds of this sale were made available to us on August 15, 2012.

 

In June, 2011, we issued 150,000 common shares to our former President and CEO, Sean Rice, as part of his employment with the Company.

 

In June, 2011, we issued 1,000,000 shares for $250,000 in a private placement. Proceeds of this sale were made available to us on August 15, 2012.

 

ITEM 3. DEFAULT UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

ITEM 6. EXHIBITS

 

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL).

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	Vanguard Minerals Corporation
DATE: August 20, 2012	/s/ Christopher Anzalone
	Christopher Anzalone
	President and CEO   By: /s/ Christopher Anzalone   Christopher Anzalone   Principal Financial and Accounting Officer

 

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