Telco Cuba, Inc. - Annual Report: 2012 (Form 10-K)

DESCRIPTION OF BUSINESS

How our company is organized

Sungro Minerals Inc. (the "Company" or "Sungro") was incorporated under the laws of the State of Nevada on August 10, 2007.

Where you can find us

We are located at 1530 Atwood Ave. #19652, Johnston, RI 02919. Our telephone number is (401) 648-0805, our facsimile number is (401) 648-0699, our e-mail address is info@americanmineralgroup.com, and our homepage on the world-wide web is at http://www.sungrominerals.com.

About Our Company

Sungro Minerals, Inc. is an early stage Mining and Exploration Company seeking to acquire, develop, and manage various mineral properties and resources. In August 2009, the Company entered into an agreement to acquire the mineral rights to 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California.  The Company continues to evaluate other properties for acquisition or development.  In March 2011, the Company completed the staking and filing of claims on an additional 217 unpatented lode mining claims located in the Conglomerate Mesa bringing the total number of claims to 548.

Subsequent to the end our fiscal year 2011, the Company received notice that it was delinquent in its annual payments under the Mineral Agreement and that the holders of the 331 unpatented lode mining claims were exercising their right to cancel the agreement.  While the Company hoped to reach agreement with the holders, and in spite of significant potential outlined in its February 2011 geological report, in fiscal year 2012 the Company determined that its resources would be more effectively utilized if we focused on an alternative mining opportunity in Africa, abandoning the Conglomerate Mesa project.  

Governmental Regulations and Environmental Compliance

The Company’s operations if and when they begin, will be subject to various federal, state, and local permitting and environmental regulations.  With cancellation of the Mineral Lease for the Conglomerate Mesa project, the Company is pursuing other gold mining and oil and gas opportunities and therefore expects to encounter additional regulatory and compliance oversight.   

Plan of Operation

With the cancellation of the first Conglomerate Mesa Mineral Agreement, our goal is to continue seeking out and acquiring mineral properties to develop or explore, or in the alternative, acquire companies or businesses with those assets who are seeking the advantages of being a publicly held company.  

If we decide to acquire a target company or business, we do not plan to restrict our potential candidate companies to any specific business, industry or geographical location and, thus, we may acquire any type of business.  The Company has been in discussion with several potential business acquisition candidates regarding business opportunities for Sungro. The Company has unrestricted flexibility in seeking, analyzing and participating in such potential business opportunities. Management will screen all potential properties to determine their economic viability and examine proposed properties with regard to sound business fundamentals, utilizing the expertise and experience of management and such consultants as the Company determines are needed to fully understand the potential of the properties to be acquired. In its efforts to analyze potential acquisition targets, Sungro will consider some or all of the following factors:

(a)        Potential for growth, indicated by new technology, anticipated market expansion or new products;

(b)        Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;

(c)        Strength and diversity of management, either in place or scheduled for recruitment;

(d)       Capital requirements and anticipated availability of required funds, to be provided by Sungro or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;

(e)        The cost of participation by Sungro as compared to the perceived tangible and intangible values and potentials;

(f)         The extent to which the business opportunity can be advanced;

(g)        The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and

(h)        Other relevant factors.

In applying the foregoing criteria, none of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.

There is no assurance that management will identify and successfully negotiate the acquisition of any potential properties or assets, or any interests therein, or that any such opportunities or businesses acquired will be profitable.

The Company intends to develop the mineral sites acquired to the point of proven reserves.  Depending on the types of mineral deposits, and the complexity of their extraction, the Company will generate revenue in one of two ways:

Sale of the mining rights to a third party mining company with Sungro receiving a percentage of the revenue generated; or

The Company will retain a management team or Joint Venture Partner with the experience and capabilities of directing the efforts connected with the development and commercialization of the various mining property(s).

Employees

We presently have two employees our Chief Executive Officer / President, our Chief Financial Officer, both of whom are directors of the Company.  We expect that as we begin development of any potential project, additional personnel will be added.  We believe that our relationship with employees is satisfactory. We have not suffered any labor problems during the last two years.  

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ITEM 1A. RISK FACTORS

Investment in our securities involves a high degree of risk. We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

We are an Exploration Stage Company, as such; you cannot evaluate the investment merits of our Company because we have no operating history.

Our Company has no operating history since it was organized, which makes it difficult to evaluate the investment merits of our Company. Our Company was organized on August 10, 2007 as a start-up, Exploration Stage Company. We have no operating history and we did not have any business prior to our organization. During the fiscal year ended November 30, 2011, we incurred $125,492 in claims fees paid to the Bureau of Land Management to preserve the Conglomerate Mesa claims in good standing.  The Company had accrued the annual payment of $200,000 due under the Mineral Agreement and an additional $50,000 as a late payment fee while it worked to sort out the information provided by the BLM with regard to claims development and potentially reinstate the Mineral Agreement.  The accruals cover potential costs due for the period ended November 30, 2012.  However, subsequently, the Company determined not to continue exploration efforts of the Conglomerate Mesa claims.  We incurred a total of $13,907,996 in expenses from inception to November 30, 2012.

We may not be able to continue as a going concern if we do not obtain additional financing.

Because of our lack of sufficient funds and short operating history incurring only expenses, and no revenues, our independent auditors report states that there is substantial doubt about our ability to continue as a going concern. Our independent auditor in their audit report have stated that we incurred only losses since our inception raising substantial doubt about our ability to continue as a going concern. Therefore, our ability to continue as a going concern is highly dependent upon obtaining additional financing for our planned operations. As of the date hereof, cash has been raised from the issuance of securities and promissory notes.

Our Negative Cash Flow, Operating Losses, Lack of Revenue, And Limited Operating History Makes It Difficult or Impossible To Evaluate Our Performance And Make Predictions About The Future.

We have not generated revenue, nor are we likely to generate revenue within the next twelve to eighteen months.  We are an exploration stage company.  Consequently, there is no meaningful historical operating or financial information about our business upon which to evaluate future performance.

We cannot assure generation of significant revenues, sustained profitability or generation of positive cash flow from operating activities in the future. If we cannot generate enough revenue, our business may not succeed and our Common Stock may have little or no value.

We Are Subject To A Working Capital Deficit, Which Means That Our Current Assets On November 30, 2012 Were Not Sufficient To Satisfy Our Current Liabilities.

As of November 30, 2012, we have incurred substantial operating losses. Since we have no revenue, we have generated negative free cash flow and expect to continue to experience negative free cash flow at least through our exploration phase.  We have current liabilities of $1,527,061 and current assets of $3,970 at November 30, 2012, and a working capital deficiency of $1,523,091.  If we cannot meet our current liabilities we may have to curtail or cease business operations.

In Our Prior Fiscal Year We Have Been The Subject Of A Going Concern Opinion As Of November 30, 2011 And Expect That Upon Completion Of Our Audit For November 30, 2012 From Our Independent Auditors, We Will Continue To Receive A Going Concern Opinion Which Means That We May Not Be Able To Continue Operations Unless We Obtain Additional Funding.

Our independent auditors have added an explanatory paragraph to their audit report issued in connection with our financial statements for the year ended November 30, 2011.  Upon completion of our audit, we believe that the auditors will, in their audit report issue a similar explanatory paragraph in connection with our financial statements for the year ended November 20, 2012.  We have incurred losses of $465,897 and $5,154,853 for the years ended November 30, 2012 and 2011, and a cumulative loss since inception of $13,907,996, and that we had a working capital deficiency of $1,523,091 at November 30, 2012 and that these conditions raise substantial doubt about the Company's ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

If we do not obtain additional financing, our business will fail because we cannot fund our business objectives.

We need to raise money to meet our general and administrative expenses, and we need to raise money to achieve our business objective to acquire other mineral properties or a target company or business. As of November 30, 2012, we had cash in the amount of $470, and current liabilities of $1,527,061. We currently do not have any operations and we have no income. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the fact that we have no business and the present financial market conditions may make obtaining additional financing difficult. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

We Could Fail To Attract Or Retain Key Personnel

Our success largely depends on the efforts and abilities of key executives and consultants, including Frederick Pucillo, Jr., our Chief Executive Officer and President, and Erwin Vahlsing, Jr. our Chief Financial Officer. The loss of the services of any of these individuals could materially harm our business because of the cost and time necessary to replace and train a replacement. Such loss would also divert management attention away from operational issues. We do not presently maintain key-man life insurance policies on any executive. In addition, we need to attract additional high quality geological, investor relations, and consulting personnel. To the extent that we are smaller than our competitors and have fewer resources we may not be able to attract the sufficient number and quality of staff.

We Are Subject To Municipal and Other Local Regulation

Municipalities may require us to obtain various permits and licenses in order to install or operate equipment in various locations where we seek to explore or develop mineral deposits. A municipality’s decision to require Sungro to obtain permits or licenses could delay or impede the development of a revenue model, as well as force us to incur additional costs.

We May Face Opposition Regarding Development of the Minerals Contained On Our Claims

We may face environmental and developmental opposition regarding the development of the mineral claims that we own.  This opposition may be sufficient to cost the Company significant funds to overcome them, if at all.  There can be no certainty with regard to the outcome of such opposition if it should develop.  If the opposition is successful in their efforts, it may render the claims valueless with a similar impact on the value of the Company’s Common Stock.

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No Expectation of Dividends on Common Stock.

We have never paid cash dividends on our Common Stock and we do not expect to pay cash dividends on our Common Stock at any time in the foreseeable future.  The future payment of dividends directly depends upon the future earnings, capital requirements, financial requirements and other factors that our Board of Directors will consider.  Since we do not anticipate paying cash dividends on our Common Stock, the return on investment on our Common Stock will depend solely on an increase, if any, in the market value of the Common Stock.

Our Common Stock May Lack Liquidity And Be Affected By Limited Trading Volume.

Our Common Stock is traded on the OTC Markets Pink Sheets. There can be no assurance that an active trading market for our common stock will be maintained. An absence of an active trading market could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all.  Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance.  In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.  We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.

The Volatility Of Stock Prices May Adversely Affect The Market Price Of Our Common Stock.

The market for our Common Stock is highly volatile.  The trading price of our Common Stock could be subject to wide fluctuations in response to, among other things:

changes in market price of the various minerals;

quarterly variations in operating and financial results;

changes in mineral resources within the claim areas;

changes in our revenue and revenue growth rates; and

marketing and advertising.

Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or related to it could result in an immediate effect in the market price of our Common Stock. In addition, the stock market has from time to time experienced extreme price and volume fluctuations which have particularly affected the market price for the securities of many mining and exploration companies and which often have been unrelated to the operating performance of these companies.  These broad market fluctuations may adversely affect the market price of our Common Stock.

If the selling shareholders sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.

Our Form S-1 Registration Statement filed on February 22, 2008, registered for resale 23,750,000 shares (adjusted for the 5:1 forward split) of our common stock held by our selling shareholders, which represented 48.7% of the common shares outstanding at that time. The offer or sale of a large number of shares at any price may cause the market price to fall.

Risks Relating to Financing Arrangements - The Conversion Price Feature of Notes, Preferred Stock, and Debentures May Encourage Short Sales in the Company’s Common Stock.

The Company has issued convertible debentures in connection with its financing needs.  These debentures are convertible at a variable price that is computed as sixty percent of the average of the lowest three days closing bid price prior to the date of conversion.  

The downward pressure on the price of the common stock as the selling stockholders under both these financings convert and sell amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. The selling stockholders could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of notes and related warrants, and Series B preferred stock, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock.

Rules of the Securities and Exchange Commission concerning low priced securities may limit the ability of shareholders to sell their shares

Sungro's common stock is subject to Rule 15g-9 of the Securities and Exchange Commission which regulates broker/dealer practices in connection with transactions in "penny stocks". Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security are provided by the exchange or system. The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level or risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and if the broker/dealer is the sole market-maker, the broker/dealer must disclose this fact and the broker/dealers presumed control over the market. This information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. The bid and offer quotations, and the broker/dealer and its salesperson compensation information, must be given to the customer in writing before or with the customer's confirmation. The broker/dealer must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale. Monthly statements must be sent by the broker/dealer to the customer disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. These disclosure requirements may reduce the level of trading activity in the market for Sungro's common stock and may limit the ability of investors in this offering to sell Sungro's common stock in the secondary market.

The limited public market for Sungro's common stock may limit the ability of shareholders to sell their shares.

There has been only a limited public market for Sungro's common stock. An active trading market for Sungro's stock may not develop and purchasers of the shares may not be able to resell their securities at prices equal to or greater than the price paid for these shares. The market price of Sungro's common stock may decline as the result of announcements by Sungro or its competitors, variations in Sungro's results of operations, and market conditions in the real estate and commodities markets in general.

The Depository Trust Company has placed a “Chill” on Deposits of the Common Shares of the Company

In November 2011, the Company became aware that the Depository Trust Company (DTC) had placed a “Chill” on deposit of its common shares into the automated settlement system which they maintain.  This chill makes it more difficult for investors to acquire and deposit shares of the Company’s Common Stock into many brokerage accounts – it does NOT prevent trading on existing shares, and there are alternate companies that provide deposit and settlement services albeit at an increased price and which take more time.  Upon inquiry, the Company was advised that it was a precaution and that for deposits through DTC to be resumed would require an audit and representation by a DTC participating broker dealer as to the accuracy of its share outstanding.  The Company intends to pursue this matter during as funding permits.

Rules of the Securities and Exchange Commission concerning late report filings

Originally quoted on FINRA’s OTCBB Sungro's common stock is currently quoted on the OTC Markets Pink Sheets as the Company is delinquent in the filing of its 10-K for the fiscal years ended November 2012 and 2013 as well as all 10-K filings for fiscal year 2013 and 2014.  With this filing, the Company is in the process of bringing all delinquent filings up to date, and expects to provide audited statements in the next few months.

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ITEM 1B UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We have acquired 331 unpatented lode mining claims known as the Conglomerate Mesa, and in 2011 claimed and staked an additional 217 unpatented lode mining claims bringing our total number of claims to 548.  These claims are located in Inyo County, California.  The Company must maintain periodic payments on these claims to the Bureau of Land Management in order to maintain their title to the claims.  

Subsequent to the end our fiscal year 2011, the Company received notice that it was delinquent in its annual payments under the Mineral Agreement and that the holders of the 331 unpatented lode mining claims were exercising their right to cancel the agreement.  While the Company hoped to reach agreement with the holders, and in spite of significant potential outlined in its February 2011 geological report, in fiscal year 2012 the Company determined that its resources would be more effectively utilized if we focused on an alternative mining opportunity in Africa, abandoning the Conglomerate Mesa project.  

Currently, the Company occupies approximately 200 SF of office space provided by one of its officers gratis.  

ITEM 3. LEGAL PROCEEDINGS

In August, 2009, trading in the Company’s stock was temporarily suspended in British Columbia, Canada by the British Columbia Securities Commission (BCSC).  The temporary suspension was the result of what the BCSC termed “suspicious trading activity” due to a significant increase in the share price of the Company’s stock price.  Various shareholders, and the former CEO and President, Malkeet Bains have been interviewed and several have been either charged with or accepted please in connection with violations of Canadian securities laws.  

The Cease Trade Order is still in effect regarding trading in British Columbia, Canada only, and specifically affects the residents thereof.  

The case outlined above does not involve the Company or any of its current officers or directors.

ITEM 4. Mine Safety Disclosures

As the Company currently has no operating mining operations, therefore there are no is mine safety issues to disclose.  

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of March 31, 2013, there were approximately 725 owners of record of the Company's common stock. The Company's common stock is traded on the OTC Bulletin Board under the symbol "SUGO". Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.  The following table reports high and low closing prices, on a quarterly basis, for the Company's common stock:

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

Recent Sales of Unregistered Securities

The following sets forth certain information regarding sales of, and other transactions with respect to, our securities, which sales and other transactions were not registered pursuant to the Securities Act of 1933, during the last three years. Unless otherwise indicated, no underwriters were involved in such transactions.

In December 2010, the Company issued 2,500,000 common shares for gross proceeds of $50,000 under a Subscription Agreement with a non-affiliated, accredited investor.

In December 2010, the Company issued 1,500,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.047 per share the closing market price on the date of issuance.  

In January 2011, the Company issued 437,956 common shares in connection with the conversion of $12,000 of convertible debentures.  The conversions had an average price of $0.0274 per share.  

In January 2011, the Company issued 1,000,000 common shares to the Company’s president and a director at a price of $0.05 per share as compensation.

In January 2011, the Company issued 1,500,000 common shares to the Company’s Chief Financial Officer and a director at a price of $0.05 per share as compensation.

In January 2011, the Company issued 500,000 common shares to the Company’s Investor Relations Manager at a price of $0.05 per share as compensation.

In February 2011, the Company issued 953,126 common shares in connection with the conversion of $24,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.0256 per share.  

In February 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.057 per share the closing market price on the date of issuance.  

In March 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.06 per share the closing market price on the date of issuance.  

In March 2011, the Company issued 6,667 common shares to a non-affiliated, accredited investor in connection with a Subscription Agreement previously recorded as “Stock to be issued”.  The shares were issued at a price of $0.75 per share the closing market price on the date of the original subscription.  

In March 2011, the Company issued 2,196,629 common shares in connection with the conversion of $78,080 of convertible debentures and accrued interest.  The conversions had an average price of $0.0356 per share.  

In April 2011, the Company issued 1,879,699 common shares in connection with the conversion of $50,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.0266 per share.  

In May 2011, the Company issued 1,302,827 common shares in connection with the conversion of $30,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.023 per share.  

In May 2011, the Company issued 243,902 common shares as compensation for consulting services rendered in the amount of $10,000.  The shares were issued at a price of $0.041 per share the closing market price on the date of issuance.  

In June 2011, the Company issued 11,272,916 common shares in connection with the conversion of $135,784 of convertible debentures and accrued interest.  The conversions had an average price of $0.01205 per share.  

In July 2011, the Company issued 6,620,324 common shares in connection with the conversion of $47,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.0071 per share.  

In August 2011, the Company issued 25,484,016 common shares in connection with the conversion of $77,875 of convertible debentures and accrued interest.  The conversions had an average price of $0.00306 per share.  

In September 2011, the Company issued 16,582,478 common shares in connection with the conversion of $53,397 of convertible debentures and accrued interest.  The conversions had an average price of $0.00322 per share.  

In September 2011, the Company received $10,000 under a Subscription Agreement for 1,000,000 shares of Common Stock at a price of $0.01 per share from a non-affiliated, accredited investor.  

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In November 2011, the Company issued 37,410,783 common shares in connection with the conversion of $78,869 of convertible debentures and accrued interest.  The conversions had an average price of $0.00211 per share.  

In November 2011, the Company issued 22,000 Preferred B Series shares to a consultant in exchange for $770,000 of services rendered.  On a fully converted basis, the common share value is $0.007 per share which is the average market price at the time of invoicing.  

In December 2011, the Company issued 73,254,759 common shares in connection with the conversion of $46,020 of convertible debentures and accrued interest.  The conversions had an average price of $0.00628 per share.  

In January 2012, the Company issued 164,097,069 common shares in connection with the conversion of $39,023 of convertible debentures and accrued interest.  The conversions had an average price of $0.00024 per share.

In February 2012, the Company issued 148,806,139 common shares in connection with the conversion of $33,050 of convertible debentures and accrued interest.  The conversions had an average price of $0.00022 per share.

In March 2012, the Company issued 193,000,000 common shares in connection with the conversion of $50,771 of convertible debentures and accrued interest.  The conversions had an average price of $0.00026 per share.

In April 2012, the Company issued 316,473,684 common shares in connection with the conversion of $33,120 of convertible debentures and accrued interest.  The conversions had an average price of $0.0001 per share.

In May 2012, the Company issued 389,871,429 common shares in connection with the conversion of $22,041 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

In September 2012, the Company issued 73,333,333 common shares in connection with the conversion of $4,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

In October 2012, the Company issued 17,000,000 common shares in connection with the conversion of $3,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.0002 per share.

In November 2012, the Company issued 78,333,333 common shares in connection with the conversion of $4,700 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial data presented below should be read in conjunction with the more detailed financial statements and related notes, which are included elsewhere in this report. Information discussed herein, as well as elsewhere in this Annual Report on Form 10-K, includes forward-looking statements or opinions regarding future events or the future financial performance of the Company, and are subject to a number of risks and other factors which could cause the actual results to differ materially from those contained in forward-looking statements. Among such factors are general business and economic conditions, and risk factors as listed in this Form 10-K or listed from time to time in documents filed by the Company with the Securities and Exchange Commission.

Financial Condition

As of November 30, 2012, Sungro had total current assets of $3,970 and total current liabilities of $1,527,061 for a net working capital deficit of $1,523,091. We need to raise additional money to meet our general and administrative expenses, and we need to raise money to achieve our business objective to acquire additional mineral properties, develop the properties we have, or acquire a target company or business. The additional funding will come from equity financing from the sale of Sungro's common stock. If Sungro is successful in completing an equity financing, existing shareholders will experience dilution of their interest in Sungro. Sungro does not have any financing arranged and Sungro cannot provide investors with any assurance that Sungro will be able to raise sufficient funding from the sale of its common stock.  In the absence of such financing, Sungro's business will fail.

Based on the nature of Sungro's business, management anticipates incurring operating losses in the foreseeable future. Management bases this expectation, in part, on the fact that exploration and development of mineral properties will cost a substantial amount of money, and possibly take several years before they are capable of generating revenue or be profitable. Sungro's future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include, but are not limited to:

• Sungro's ability to reaise additional funding;
• Sungro's ability to identify and successfully negotiate the acquistion of potential properties or assets; and
• If such opportunities or businesses acquired will be profitablde.

Due to Sungro's lack of operating history and present inability to generate revenues, Sungro's independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements for 2011 indicating substantial doubt about Sungro's ability to continue as a going concern. This means that there is substantial doubt whether Sungro can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our bills.

Liquidity

Sungro's internal sources of liquidity will be loans that may be available to Sungro from management. Although Sungro has no written arrangements with its management, Sungro expects that the officers may provide Sungro with nominal liquidity, when and if it is required.

Sungro's external sources of liquidity will be private placements for equity and debt financing.

Between December 2010 and November 2011, the Company borrowed $177,309 from a non-affiliated accredited investor.  The Notes carry interest at a rate of 15% per year and are due on demand.  

During the year, by mutual agreement between the Company and the investor, the following sums (which included the balance forward of $231,507 the investor had loaned in the previous year) were converted or re-written to a number of one year notes: as described below:

December 1, 2011 for loans and accrued interest loaned on or before August 31, 2010 - $147,076

December 1, 2011 for loans and accrued interest loaned on or before November 18, 2010 - $169,030

March 31, 2011 for loans and accrued interest loaned on or before March 31, 2011 - $105,500

June 30, 2011 for loans and accrued interest loaned on or before June 30, 2011 - $60,000

In September 2011, the Company completed the private placement of $10,000 of restricted common stock to a non-affiliated accredited investor at a price of $0.01 per share.

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The Company raised $352,500 from the sale of nine month convertible debentures to an unaffiliated, accredited investor.  The debenture is convertible at sixty percent (60%) of the lowest three closing bid prices during the ten (10) trading days immediately prior to the date of conversion.  

The Company repaid $66,280 in demand notes to a non-affiliated investor.

The Company repaid $4,985 in demand notes to its CFO who also assigned $52,969 in demand notes to an unaffiliated accredited investor.

There are no assurances that Sungro will be able to achieve further sales of its common stock or any other form of additional financing. If Sungro is unable to achieve the financing necessary to continue its plan of operations, then Sungro will not be able to continue its exploration programs and its business will fail.

Capital Resources

As of November 30, 2011, Sungro had total assets of $4,316, total liabilities of $1,461,384 and a working capital deficit of $1,457,068, compared with a net working capital deficit of $941,310 as of November 30, 2010. The assets are comprised of cash of $399, and prepaid expenses of $3,917. The liabilities consisted mainly of accounting, audit and legal fees, convertible debentures, demand notes, officer loans, and accrued expenses.

Sungro's current cash is not sufficient to fully finance its operations at current and planned levels for the next 12 months. Management intends to manage Sungro's expenses and payments to preserve cash until Sungro is profitable, otherwise additional financing must be arranged. Specifically, management is deferring payments due them until such time as there is sufficient financing in place to permit their payment or the possible issuance of the Company’s stock in settlement of amounts due.

Results of Operations

We did not earn any revenues for the fiscal year ended November 30, 2012 and from inception on August 10, 2007 to November 30, 2012. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.

We incurred total expenses in the amount of $5,154,853 during the fiscal year ended November 30, 2011, and total expenses in the amount of $7,896,734 during the fiscal year ended November 30, 2010.

Off-Balance Sheet Arrangements

Sungro has no off-balance sheet arrangements.

Material Agreements

In July 2009, the Company entered into a Consulting and Fee Agreement for business development, strategic planning, technology implementation, public relations, and mergers and acquisitions.  The agreement calls for the payment of ten percent (10%) of the gross value of any projects to which the Company is introduced by the consultant and which is ultimately closed by the Company.  

Subsequent Events

In December 2012, The Company issued 78,333,333 common shares in connection with the conversion of $4,700 of convertible debentures and interest.  The shares were issued at an average price of $0.00006 per share.

In January 2013, the Company issued 163,333,333 common shares in connection with the conversion of $6,825 of convertible debentures and interest.  The shares were issued at an average price of $0.00004 per share.

On March 22, 2013, the Company filed a name change to become American Mineral Group, Inc.

On March 28, 2012, the Company filed a Form 15-12G with the SEC to suspend its required reporting under the Securities Act of 1933

On April 24, 2013, the Company executed a 1:125 reverse stock split of its shares.  

On April 30, 2013, the Company filed an amendment on Form 15-12G/A to reverse its decision to suspend its reporting responsibilities and resume its reporting obligations under the Securities Act of 1933.

8

Critical Accounting Policies

Exploration Stage Company

The Company is considered to be in the exploration stage. The Company is devoting substantially all of its present efforts to exploring and identifying mineral properties suitable for development.

Accounting Principles

The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.

Mineral Property Exploration

The Company is in the exploration stage and has not yet realized any revenue from its planned operations.  Mineral property acquisition costs are capitalized. Additionally, mine development costs incurred either to develop new ore deposits and constructing new facilities are capitalized until operations commence.  All such capitalized costs are amortized using a straight-line basis, based on the minimum original license term at acquisition, but do not exceed the useful life of the capitalized costs.  Upon commercial development of an ore body, the applicable capitalized costs would then be amortized using the units-of-production method.  Exploration costs, costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.  Costs of abandoned projects are charged to operations upon abandonment.  The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded.  The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected cash flows and/or estimated salvage value in accordance with guidance issued by the FASB, "Accounting for Impairment or Disposal of Long-Lived Assets."

In December 2011, the Company defaulted on payments due under its Mineral Agreement dated August 31, 2009 and subsequently chose not to cure the default after being advised by the Bureau of Land Management that certain claims required more extensive environmental impact studies than the Company had been told were necessary.  The following information related to the property is provided in connection with our prior year (2011) financial information.

Location / Access:

The Project is located in the southern Inyo Mountains, approximately 4 air miles east of Keeler, California. The Project lies within un-surveyed sections 28-34. T.16S., R.39E., and sections 2-5, 8-11, 15 and 16, T.17S., R.39E. , Mount Diablo Base Meridian. The distance to the property from Lone Pine, California, which is the nearest town with lodging and services, is 47 road miles.  

Access to the Conglomerate Mesa area can be accomplished by two-wheel drive vehicle via the Santa Rosa Flat road, a poorly improved jeep trail which traverses the main wash through Santa Rosa Flat. The Santa Rosa Flat road is accessed via the paved Santa Rosa mine road. Santa Rosa mine road is accessed from State Highway 190 in the Talc City area, approximately 28 miles from Lone Pine. No access roads currently transverse the Conglomerate Mesa area as roads were reclaimed by BHP when they abandoned the project.  Western portions of the project are accessed via the Cerro Gordo mine road from Keeler, California and via an unnamed road leaving Highway 136 approximately 1 mile south of Keeler. The access roads to the western portions of the project can only be traveled by four- wheel drive vehicles.

Title / Conditions:

Sungro Minerals (the “Company”) held the Conglomerate Mesa gold-silver-polymetallic property (the “Property”) through a lease agreement with underlying claim owners. The property consists of 331 unpatented lode claims covering approximately 6,800 acres (2,750 hectares).  Land and mineral rights in the Conglomerate Mesa project area are administered by the U.S. Department of Interior, Bureau of Land Management under the Federal Land policy and Management Act of 1976.

A Mineral Agreement was completed on August 31, 2009 between Sungro Minerals Inc. and Steven Van Ert and Noel Cousins, the underlying claim owners (Owners). Through the agreement the Property is conditionally transferred to Sungro. The Company becomes vested in the Property upon completion of a positive feasibility study along with other financial obligations.

The Company defaulted on its last annual payment in September 2011 and subsequently was advised that the Owners defaulted the Company and terminated the Agreement.

Sungro had mineral rights to the property for lode mining.

Geological Description / Mineralization:

Conglomerate Mesa hosts multiple large-scale hydrothermal gold-silver systems that are similar in style, geology, and geochemistry to the highly productive Carlin-type systems of northern Nevada.  Sungro Minerals also controls a small number of unpatented lode claims that cover a portion of the historic Santa Rosa zinc-lead-copper-silver-gold skarn that was explored by Anaconda Minerals Company and is considered to have the potential to host a world-class deposit

Narrow WNW-trending, vertical to near-vertical, porphyritic dioritic dikes and sills occur within the Conglomerate Mesa area.

Although the dioritic dikes are the only intrusive rocks exposed in the Conglomerate Mesa area, it is inferred from occurrences elsewhere in the southern Inyo Range that other phases of intrusive rocks related to the Sierra-Nevada batholith occur at depth. The Pb-Ag-Zn replacement deposits of the Santa Rosa mine occur in the calc-silicate altered Owens Valley Group sediments, indicating the presence of a shallow buried intrusive body.

Adjacent to the southern edges of the property are gently ESE-dipping basaltic flows that form Malpais Mesa. Typically, a thin sequence of bedded basaltic pyroclastic deposits underlies the thicker lava flows. These volcanic rocks were deposited on an erosional surface cut on Lower Permian rocks. Locally thin conglomeratic/breccia deposits derived from Permian lithologies occur at the base of the volcanic section.

The following general fault types occur in the project area: 1) moderate to steeply west-dipping reverse faults of the Conglomerate Mesa fault system; 2) moderately west-dipping cleavage parallel normal faults; 3) northeast-trending high-angle faults; and 4) Late Tertiary or Quaternary high-angle normal faults.

Several deposit types were the focus of previous exploration work conducted within the Conglomerate Mesa area. The primary targets identified by Newmont, BHP, and Asamera are Carlin-type sediment hosted gold deposits.  The term Carlin-type was first used to describe a class of sediment-hosted gold deposits in central Nevada following the discovery of the Carlin mine in 1961.  Carlin-type mineralization consists of disseminated gold in decalcified and variably silicified silty limestone and limy siltstone, and is characterized by elevated As, Sb, Hg, and Tl, Au/Ag ratio > 1, and very low base metal values.  Ore stage mineralization consists of gold in the lattice of arsenical pyrite rims on pre-mineral pyrite cores and of disseminated sooty auriferous pyrite and is commonly overprinted by late ore-stage realgar, orpiment and stibnite in fractures, veinlets and cavities.

9

At a regional scale, they occur within north-trending bands of favorable Paleozoic slope-facies carbonate turbidites and debris flows within the North-American continental passive margin.  These slope-facies carbonate rocks form the lower plate to Paleozoic deep water siliciclastic rocks that have been repeatedly over thrust from the west during late Paleozoic through Cretaceous orogenic events, resulting in the development of low-angle structures and open-folds.  Carlin-type deposits and the districts in which they cluster are distributed along well-defined, narrow trends that are now understood to represent deep crustal breaks extending into the upper mantle.  Carlin-type systems commonly contain multi-million ounce gold deposits as seen in Northern Nevada.

Gold mineralization at Conglomerate Mesa has been shown through rock chip sampling and drilling to be controlled by both mineralized structures and favorable stratigraphy.  Asamera drilled several areas in the western portion of the property which contained significant gold intercepts.  Newmont drilled significant gold mineralization in the Resource area and this was followed by a BHP discovery in the Dragonfly area.  All areas exhibit holes with significant gold mineralization which is controlled by both structural and stratigraphic components. Surface geochemistry completed by Newmont, Asamera and BHP show a strong Au-As-Hg-Sb correlation in rock and soil samples.

Replacement deposits consist of massive lenses and/or pipes known as mantos or replacement ore bodies, and veins of lead, zinc, copper, and iron sulfide minerals commonly rich in silver and/or gold.  They are hosted by, and replace, limestone, dolomite, or other sedimentary units.  Most massive ore from these deposits contains more than 50% sulphide minerals. Sediment hosted ores are commonly intimately associated with igneous intrusions from which the metal bearing fluids are derived.  Some polymetallic replacement deposits are associated with skarn deposits in which carbonate rocks are replaced by calc-silicate +/- iron oxide mineral assemblages.  Most polymetallic vein and replacement deposits are zoned such that gold-copper ore is proximal to intrusions, whereas lead-zinc-silver ore is laterally and vertically distal to the intrusions.  The Santa Rosa and Cerro Gordo deposits are examples of this type of deposit.

Portions of Santa Rosa are controlled by Sungro though the surrounding wilderness area presents an obstacle to being able to explore and exploit this very significant mineralized system.  Often times these types of deposits are found in proximity to porphyry copper deposits.  Porphyry copper deposits are large mineralized systems or deposits which are associated with porphyritic intrusive rocks and the fluids that accompany them during the transition and cooling from magma to rock. Circulating surface water or underground fluids may interact with the plutonic fluids. Successive envelopes of hydrothermal alteration typically enclose a core of ore minerals disseminated in often stock work-forming hairline fractures and veins.  Porphyry ore bodies typically contain between 0.4 and 1 % copper with smaller amounts of other metals such as molybdenum and gold. Work completed by Asamera identified a large area of anomalous copper in the western portion of the project area. This area is postulated to be analogous to a shallow erosion level of a syenite-diorite porphyry copper system as found in the northern Cascade and Canadian Cordillera provinces.

Background / Work Completed to date / Current Condition

The Company is in a unique situation in that their land position covers the entire district that was originally discovered by Mobil’s metal exploration group and Newmont Exploration Ltd. and subsequently explored by Asamera and BHP Billiton. Gold-silver mineralization is known to occur within a zone that is over 8 kilometers long and 4 kilometers wide. Work by previous companies was successful in defining 12 gold targets, most of which have drill holes containing significant gold intervals. In addition to the gold targets, geochemical results from rock chip, stream sediment, and soil samples collected by Asamera have identified a target described as a shallow erosion expression of a porphyry copper deposit similar to those found in the Cascade and Canadian Cordillera provinces.

Sungro Minerals also controls a small number of unpatented lode claims that cover a portion of the historic Santa Rosa zinc-lead-copper-silver-gold skarn that was explored by Anaconda Minerals Company and is considered to have significant potential. The Sungro claims cover only a small exclusion within the Malpais Mesa Wilderness area that was “cherry stemmed” into the wilderness area for a block of patented claims around the historic Santa Rosa mine. The patented claims were re-conveyed to the Federal Government and placed in the public domain and later covered by unpatented lode claims.

Mobil’s metal exploration group first conducted exploration activities in the western portions of the Conglomerate Mesa area in 1984. They completed an extensive rock chip, soil, and stream sediment sampling program and identified important host rocks and northwest trending reverse and normal faults which allowed hydrothermal fluids to infiltrate the favorable lithologies and create zones of silicification, brecciation, and argillization. Their work identified numerous areas of anomalous gold and silver mineralization and numerous drill targets.

Newmont Exploration Ltd. discovered surface gold mineralization south of Conglomerate Mesa and east of the Asamera discoveries in 1989 while the area was within the Cerro Gordo Wilderness Study Area (WSA). Newmont later drilled 22 holes that established estimates of gold at depth within the area. Newmont dropped their claims in 1993 while the WSA was still in effect. In 1994, the BLM dropped the WSA designation and much of the Conglomerate Mesa area reverted to multiple use status. BHP Minerals leased and staked unpatented lode claims in the area in 1995 and conducted geologic mapping, and rock chip, soil, and stream sediment sampling in 1996. Their work lead to the recognition of a much larger hydrothermal and mineralized system then had been identified by Newmont. Eight targets were identified at Conglomerate Mesa by BHP. These areas exhibited extraordinarily good surface rock chip geochemistry.  

In 1997, BHP drilled a total of ten widely spaced holes in three of the newly discovered target areas and the Newmont resource area for a total of 8,060 feet. Significant gold mineralization was encountered in all of the holes.

BHP subsequently dropped the property prior to drill testing all of their target areas as they made a corporate decision to terminate all gold exploration programs.

Timberline Resources acquired the property in 2006 and completed mapping and sampling to better define drill targets. Timberline submitted a Notice of Intent (NOI) to the BLM Ridgecrest Field Office to open the reclaimed roads (which were constructed by BHP) and complete a hole drill program. The NOI was opposed by environmental groups and Timberline decided to end its interest in the project when the underlying claim owners would not postpone payments pending approval of the NOI.

Currently, the property which was returned to its pre-exploration state remains in this “reclaimed” state with no current activity taking place on the claims.

Plant / Equipment / Improvements

Currently, there are physical improvements, equipment, or roadways either on the surface or subsurface of any of the claims.

As described in the previous section above, the property has been explored by a number of mining and exploration companies.  There are no exploration activities currently underway.  

To date, the Company has spent approximately $4.2 million to acquire the claims and maintain the leases on the property.  The Company expects to make annual expenditures of approximately $400,000 until such time as new exploration activities begin at which time the annual expenditures should be approximately $5.0 million.

The property has no power or water within its bounds; however, both are available at the foot of the mountain which can be extended to the location when required.

Known Reserves

The property has no reserves as defined in accordance with Industry Guideline 7.  Based on prior explorations, the Company believes there to be significant mineralization and intends to undertake an exploration program to prove the reserves and take the properties to “feasibility” and ultimately, production.  

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

f)   Fair Value Measurements

Valuation Hierarchy

ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring and non-recurring basis as of November 30, 2012 and November 30, 2011:

F-5

Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2012 and 2011

2.   Significant Accounting Policies (continued)

f)   Fair Value Measurements (continued)

The derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the valuation hierarchy.

The following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

The fair value of the derivative liability at November 30, 2012 and November 30, 2011, totaling $200,535 and $434,063, respectively, was calculated using the Black-Scholes Option Pricing model under the assumptions detailed in Note 8. Gains and losses (realized and unrealized) included in earnings (to change in fair value of derivative liability) for the years ended November 30, 2012 and 2011, are reported in other expenses as follows:

The Company did not have any Level 1 or Level 2 assets or liabilities as of November 30, 2012 and 2011, and had Level 3 liabilities consisting of notes payable.  The carrying amount of the notes payable at November 30, 2012 and 2011, approximate their respective fair value based on the Company’s incremental borrowing rate.

Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of November 30, 2012 and 2011, respectively. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option was effective at the time of adoption. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

g)   Income Taxes

Income taxes are accounted for in accordance with the provisions of FASB ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

h)    Cash and Cash Equivalents

For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.

i)    Revenue Recognition

The Companies follow the guidance of the FASB ASC 605-10-S99 “Revenue Recognition Overall – SEC Materials”. The Companies record revenue when persuasive evidence of an arrangement exists, product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Revenues consist primarily of product sales.

As at November 30, 2012, the Company had no revenues to report.

F-6

Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2012 and 2011

2.   Significant Accounting Policies (continued)

j)   Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.

k)   Accounts receivable and concentration of credit risk

The Company currently has no accounts receivable, no customers, and therefore, does not currently foresee a concentrated credit risk associated with trade receivables.  If and when the Company commences operations that generate revenue, the Company will evaluate the receivable in light of the collectability in the normal course of business.  

l)   Reclassifications

Certain prior year financial statement balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on the recorded net loss.

m)    Recently Adopted Accounting Pronouncements

Management does not believe that any recently issued but not yet effective accounting pronouncements if currently adopted would have a material effect on the accompanying financial statements.

3.   Mineral Property

On August 27, 2009, the Company entered into a Mineral Agreement (the "Agreement") with unrelated parties to acquire a 100% interest in 331 unpatented lode mining claims known as the Conglomerate Mesa.  The claims are located in Inyo Mountain County, California.  

By written, mutual agreement between the parties, the final closing of the Agreement was extended to March 22, 2010.  Under the agreement, Sungro was required to make all filings related to the Conglomerate Mesa Properties, to maintain the Conglomerate Mesa Claims in good standing by preparing and filing and paying claim fees to the Bureau of Land Management, and keeping the claim area free and clear of all liens and encumbrances.

In order to complete the acquisition of the Conglomerate Mesa Claims, Sungro has made payments of cash and stock to Mr. Steve Van Ert and Mr. Noel Cousins in accordance with the table below:

1 - Shares issued into escrow and to be released in accordance with the schedule below:

In addition, the Company must make the following royalty payments:

Subsequent to the end of the fiscal year, the Company received notice that it was delinquent in its annual payments under the Mineral Agreement and that holders of the 331 unpatented lode mining claims were exercising their right to cancel the agreement.   As a result, the Company has written of the value of the claims and the additional claims it still held title to (217 claims abutting the original 331 claims).

F-7

4.   Capital Stock

a)   Authorized

Authorized capital stock consists of:

2,500,000,000 common shares with a par value of $0.001 per share; and

1,000,000 preferred shares with a par value of $0.001 per share

b)   Share Issuances

In December 2010, the Company issued 2,500,000 common shares for gross proceeds of $50,000 under a Subscription Agreement with a non-affiliated, accredited investor.

In December 2010, the Company issued 1,500,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.047 per share the closing market price on the date of issuance.  

In January 2011, the Company issued 437,956 common shares in connection with the conversion of $12,000 of convertible debentures.  The conversions had an average price of $0.0274 per share.  

In January 2011, the Company issued 1,000,000 common shares to the Company’s president and a director at a price of $0.05 per share as compensation.

In January 2011, the Company issued 1,500,000 common shares to the Company’s Chief Financial Officer and a director at a price of $0.05 per share as compensation.

In January 2011, the Company issued 500,000 common shares to the Company’s Investor Relations Manager at a price of $0.05 per share as compensation.

In February 2011, the Company issued 953,126 common shares in connection with the conversion of $24,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.0256 per share.  

In February 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.057 per share the closing market price on the date of issuance.  

In March 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered.  The shares were issued at a price of $0.06 per share the closing market price on the date of issuance.  

In March 2011, the Company issued 6,667 common shares to a non-affiliated, accredited investor in connection with a Subscription Agreement previously recorded as “Stock to be issued”.  The shares were issued at a price of $0.75 per share the closing market price on the date of the original subscription.  

In March 2011, the Company issued 2,196,629 common shares in connection with the conversion of $78,080 of convertible debentures and accrued interest.  The conversions had an average price of $0.0356 per share.  

In April 2011, the Company issued 1,879,699 common shares in connection with the conversion of $50,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.0266 per share.  

In May 2011, the Company issued 1,302,827 common shares in connection with the conversion of $30,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.023 per share.  

In May 2011, the Company issued 243,902 common shares as compensation for consulting services rendered in the amount of $10,000.  The shares were issued at a price of $0.041 per share the closing market price on the date of issuance.  

In June 2011, the Company issued 11,272,916 common shares in connection with the conversion of $135,784 of convertible debentures and accrued interest.  The conversions had an average price of $0.01205 per share.  

In July 2011, the Company issued 6,620,324 common shares in connection with the conversion of $47,000 of convertible debentures and accrued interest.  The conversions had an average price of $0.0071 per share.  

In August 2011, the Company issued 25,484,016 common shares in connection with the conversion of $77,875 of convertible debentures and accrued interest.  The conversions had an average price of $0.00306 per share.  

In September 2011, the Company issued 16,582,478 common shares in connection with the conversion of $53,397 of convertible debentures and accrued interest.  The conversions had an average price of $0.00322 per share.  

In September 2011, the Company received $10,000 under a Subscription Agreement for 1,000,000 shares of Common Stock at a price of $0.01 per share from a non-affiliated, accredited investor.   

In November 2011, the Company issued 37,410,783 common shares in connection with the conversion of $78,869 of convertible debentures and accrued interest.  The conversions had an average price of $0.00211 per share.  

In November 2011, the Company issued 22,000 Preferred B Series shares to a consultant in exchange for $770,000 of services rendered.  On a fully converted basis, the common share value is $0.007 per share which is the average market price at the time of invoicing.  

In December 2011, the Company issued 73,254,759 common shares in connection with the conversion of $46,020 of convertible debentures and accrued interest.  The conversions had an average price of $0.00628 per share.  

In January 2012, the Company issued 164,097,069 common shares in connection with the conversion of $39,023 of convertible debentures and accrued interest.  The conversions had an average price of $0.00024 per share.

In February 2012, the Company issued 148,806,139 common shares in connection with the conversion of $33,050 of convertible debentures and accrued interest.  The conversions had an average price of $0.00022 per share.

In March 2012, the Company issued 193,000,000 common shares in connection with the conversion of $50,771 of convertible debentures and accrued interest.  The conversions had an average price of $0.00026 per share.

In April 2012, the Company issued 316,473,684 common shares in connection with the conversion of $33,120 of convertible debentures and accrued interest.  The conversions had an average price of $0.0001 per share.

In May 2012, the Company issued 389,871,429 common shares in connection with the conversion of $22,041 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

In September 2012, the Company issued 73,333,333 common shares in connection with the conversion of $4,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

In October 2012, the Company issued 17,000,000 common shares in connection with the conversion of $3,400 of convertible debentures and accrued interest.  The conversions had an average price of $0.0002 per share.

In November 2012, the Company issued 78,333,333 common shares in connection with the conversion of $4,700 of convertible debentures and accrued interest.  The conversions had an average price of $0.00006 per share.

F-8

Warrants

From time to time, the Company has issued warrants in connection with the issuance of certain financial instruments.

During the year ended November 30, 2010, the Company issued 150,000 warrants at an exercise price of $0.049 per share, and 1,000,000 warrants at an exercise price of $0.050 per share.