HNO International, Inc. 10-Q

Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management has conducted an evaluation, with the participation of our principal executive and principal acting financial officers, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive and principal financial officer have concluded that our disclosure controls and procedures were not sufficiently effective in reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act. While our disclosure controls and procedures have improved, we believe there is room for further improvement. . Management is currently evaluating the situation with a view to making further improvements during our Fiscal Year 2011. The reconciliation of monthly accounts has not been managed in a timely manner, which has resulted in the account information required for consolidated financial reports being received late. We intend to recruit a Chief Financial Officer with experience in US GAAP accounting and SEC filing procedures in order to improve our accounting and reporting procedures and preparation of our Annual Report on Form 10-K for the year ending October 31, 2011. We will not be directly operating power plants under the joint venture and licensing agreement with Futenco. We do not intend to finance the operations of power plants in the future. The divesture of Clenergen India has allowed us to focus on generating revenues from development fees, license fees, sale of biomass feedstock, distributions from our joint venture investments and other projects. Internal controls and procedures to account for these revenue streams do not require us to have our own management operating the subsidiary companies. We will anticipate that we have one seat on the board of directors for each company where we have a minority equity interest. Our director will be responsible on a monthly basis for providing us with information which shall include, but not be limited to, monthly account statements, quarterly financial reports, agreements, profit and loss statements, employee staffing and incentive programs and other information that is relevant to the operations of these companies or is required in order for us to timely and accurately report on our financial results and financial position. Changes in Internal Control over Financial Reporting We have changed our internal control over financial reporting as a result of the divesture of Clenergen India and no longer are required to consolidate the accounts from this former majority-owned subsidiary. As noted above, we intend to recruit experience management in financial reporting and accounting matters and are in the process of evaluating possible solutions to the material weaknesses to our internal controls and procedures which have been identified. We intend to disclose any new controls and procedures or changes to current controls and procedures as they are implemented. As a 40% shareholder in the Joint Venture Entities, the Company reserves the right to receive monthly statement of accounts and any other such information required in order to meet regulatory reporting requirements. 16 PART II – OTHER INFORMATION Item 1. Legal Proceedings. Not applicable. Item 1A. Risk Factors. Not applicable.