May 4, 2005
via facsimile and U.S. mail
Mr. W. Pierce Carson
President and Chief Executive Officer
Azco Mining Inc.
7239 N. El Mirage Road
Glendale, AZ 85307
Re: Azco Mining Inc.
10-K for the fiscal year ended June 30, 2003
Supplemental response dated April 13, 2005
File No. 001-12974
Dear Mr. Carson:
We have read your filings and supplemental responses and
have
the following additional accounting comments. Where indicated, we
think you should revise your document in response to these
comments.
If you disagree, we will consider your explanation as to why our
comment is inapplicable or a revision is unnecessary. Please be
as
detailed as necessary in your explanation. In some of our
comments,
we may ask you to provide us with supplemental information so we
may
better understand your disclosure. After reviewing this
information,
we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
10-K for the fiscal year ended June 30, 2003
General
1. You did not electronically file your response letter dated
April
13, 2005, as required by Subparts 232.100 and 232.101 of
Regulation
S-T. Please electronically file your response letter, as well as
all
future correspondence.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
2. We note your response to prior comment #3 and the proposed
changes
to the amended 2003 Form 10-K provides a general statement that
the
results of operations reflect under-capitalization of the project,
and that you expect the results of operations realized in 2003 and
2002 to continue in the foreseeable future. In addition to the
proposed changes already made, if and when you obtain financing to
resume operations, you should provide specific discussion
surrounding
management`s expectations for the specific areas addressed in
MD&A.
For example, provide specific factors management is aware of that
could positively or negatively affect the amount of sales and
ongoing
expenses.
If there is more than one factor that could impact future
performance, breakdown and quantify the impact of each factor or
element.
3. In your response to prior comment #7 you state that you
incurred
an impairment charge related to inventory in the amount of
$996,223
and $1,340,207 in 2003 and 2002 respectively. Please include a
discussion in MD&A explaining the factors resulting in the
impairment, and the extent to which future impairments may be
necessary. One of the objectives of MD&A is to provide readers
with
an explanation of the prior year`s results as well as the
potential
variability of earnings and cash flows, so the reader can
ascertain
the likelihood that past performance is indicative of future
performance.
4. Additionally, explain to us where the impairment of inventory
is
recorded on the face of the financial statements. We note a
current
impairment recorded related to long lived assets; however, the
discussion in MD&A regarding that impairment focuses on mineral
properties, plant and equipment. If applicable, please revise the
discussion currently included in MD&A.
Liquidity and Capital Resources
5. We note your response to prior comment #4 and your proposed
disclosure included in the amended 2003 Form 10-K regarding your
plan
to continue operations. In addition to your proposed disclosure,
please include a discussion of the specific steps already taken
regarding your plans and the time frame you anticipate completing
your plans. Also include a discussion of how you will maintain
operations prior to receiving the potential funding discussed in
the
disclosure.
Controls and Procedures
6. You state that you "maintain a system of disclosure controls
and
procedures that are designed to ensure required disclosure
information is accumulated and communicated to management in a
timely
manner." Please note that this only includes half of the
definition
of disclosure controls and procedures as defined in Exchange Act
Rule
13a-15(e). Revise your disclosure to state, if true, that your
disclosure controls and procedures are effective at accomplishing
all
the items defined as disclosure controls and procedures in Rule
13a-
15(e).
7. We note from your disclosure that "there have been no
significant
changes in internal controls." Please note that Item 308 (c) of
Regulation S-K requires any change in internal control over
financial
reporting be disclosed that has materially affected, or is
reasonably
likely to materially affect, your internal control over financial
reporting. Please revise your disclosure to state, if true, that
there have been no such changes to internal controls over
financial
reporting.
Exhibit 32 - Officers Certificate Pursuant to Section 302
8. In your revised 302 certification included as exhibits 31.1 and
31.2 in the draft of the amended 2003 Form 10-K, paragraph 4 and
4(b)
refer to internal controls over financial reporting. Please note
that you are not required to include such references in the
certification until your first annual report required to contain
managements internal control report as outlined in Section 404 of
the
Sarbanes-Oxley Act. For non-accelerated filers, this will not be
until the first fiscal year ending on of after June 15, 2006.
Therefore, you may include the reference to internal controls over
financial reporting in paragraph 4 and paragraph 4(b), if these
statements are true, but these statements are not required in your
certifications until the first annul report that includes
managements
internal control report.
9. Please note that under Exchange Act Rule 12b-15, all amendments
to
the form and certifications must be updated for the appropriate
date
of the amendment. As such, please ensure the 2003 amended Form
10-K
and the revised certifications are appropriately dated.
Closing Comments
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
amendments to expedite our review. Please furnish a cover letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
Direct questions regarding accounting issues and related
disclosures to Mark A. Wojciechowski, at (202) 942-1928 or, in his
absence, to William Choi, at (202) 551-3716. Direct questions
relating to all other disclosure issues to the undersigned at
(202)
942-1870. Direct all correspondence to the following ZIP code:
20549-0405.
Sincerely,
H. Roger Schwall
Assistant Director
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Mr. W. Pierce Carson
Azco Mining Inc
May 4, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE