Attached files

file filename
EX-31 - EXHIBIT 31.2 - American Mineral Group, Inc.exhibit312smi113012.htm
EX-32 - EXHIBIT 31.1 - American Mineral Group, Inc.exhibit321smi113012.htm
EX-32 - EXHIBIT 31.2 - American Mineral Group, Inc.exhibit322smi113012.htm
EX-31 - EXHIBIT 31.1 - American Mineral Group, Inc.exhibit311smi113012.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ý

Annual report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended November 30, 2012

r

Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________ to ________________

Commission file number 000-53157

American Mineral Group, Inc.

(Exact name of small business issuer as specified in its charter)

Nevada

(State of Incorporation)

98-0546544

(I.R.S. Employer Identification No.)


111 Airport Rd., Unit 5

Warwick, RI  02889

Tel: (401) 648-0805

(Address and telephone number of Registrant's principal

executive offices and principal place of business)


Securities registered pursuant to Section 12(b) of the Act:

 

None

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, par value $0.001
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes r      No ý


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes r      No ý


Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý      No r


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes  r   No ý


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

r

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.

 

Large accelerated filer r

Non-accelerated filer r

        (Do not check if a smaller reporting company)

Accelerated filer r

Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes q   No ý

The number of shares of Common Stock held by non-affiliates, as March 31, 2013 was 1,860,884,370 shares, all of one class of common stock, $0.001 par value, having an aggregate market value of $186,088 based on the closing price of the Registrant's common stock of $0.0001 on March 31, 2013 as quoted on the Electronic Over-the-Counter Bulletin Board ("OTCBB").

As of March 31, 2013 there were 1,891,903,870 shares of the Company's Common Stock outstanding.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.

 

Class: common stock - $0.001 par value

 

Outstanding at March 31, 2013: 1,891,903,870

 



DOCUMENTS INCORPORATED BY REFERENCE

 

None.


PART I

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:

1.

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

2.

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.  



2







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.


3



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:

(i)

changes in market price of the various minerals;

(ii)

quarterly variations in operating and financial results;

(iii)

changes in mineral resources within the claim areas;

(iv)

changes in our revenue and revenue growth rates; and

(v)

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.


4

  

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.  



5




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:

Quarter Ending

High

Low

Feb. 28, 2011

$0.0649

$0.052

May 31, 2011

$0.042

$0.037

Aug. 31, 2011

$0.0073

$0.0051

Nov. 30, 2011

$0.0036

$0.0024

Feb. 28, 2012

$0.0028

$0.0003

May 31, 2012

$0.0015

$0.0001

Aug. 31, 2012

$0.0001

$0.0001

Nov. 30, 2012

$0.0007

$0.0001


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.  

 

6

 

 

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.

 

7

 

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.


 

 

Years Ended November 30,

Expense Item

 

2012

 

2011

Mineral Property Maintenance

$

-

$

125,492

Royalty Payments

 

(250,000)

 

250,000

Payroll and bonuses

 

95,123

 

486,300

Consulting

 

422,052

 

1,030,080

Accounting

 

43,500

 

39,000

Legal

 

3,947

 

27,723

Amortization of debt discount

 

268,413

 

400,625

Interest expense

 

115,855

 

101,905

Loss on mineral rights

 

-

 

2,837,550

Other

 

(232,993)

 

(143,822)

Total

$

465,897

$

5,154,853

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.  

10


Cautionary Statement Regarding Forward-Looking Statements

This annual report contains certain 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 include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the following discussion, including under the heading "Risk Factors". Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe that such comparisons cannot be relied upon as indicators of future performance. Other important factors that could cause actual results to differ materially include the following: business conditions, the price of precious metals, ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Form 10-Q; and any current reports on Form 8-K. In addition, the Company disclaims any obligation to update or correct any forward-looking statements in all the Company's annual reports and SEC filings to reflect events or circumstances after the date hereof.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.








11









ITEM 8. FINANCIAL STATEMENTS OF SMALLER REPORTING COMPANIES



SUNGRO MINERALS, INC.

(An Exploration Stage Company)

FINANCIAL STATEMENTS

(Unaudited)


INDEX



 

Page Number

FINANCIAL STATEMENTS

 

     Balance Sheets

F-1

     Statements of Operations

F-2

     Statements of Stockholders’ Equity (Deficit)

F-3

     Statements of Cash Flows

F-4

     Notes to Financial Statements

F-5 to F-19























SUNGRO MINERALS, INC.

(An Exploration Stage Company)

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

November 30, 2012

 

November 30, 2011

 

 

 

 

 

(unaudited)

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash

 

$

470

$

399  

 

Prepaid expenses

 

3,500

 

3,917

 

 

TOTAL CURRENT ASSETS

 

3,970

 

4,316

 

 

 

 

 

 

 

 

 

 

 

 

$

3,970

$

4,316

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

$

103,523

$

64,030

 

Accrued expenses

 

106,887

 

308,032

 

Accrued payroll

 

580,581

 

274,416

 

Convertible debentures (net of debt discount of $0 and $213,413)

 

253,450

 

127,392

 

Notes payable (net of debt discount of $0 and $0)

 

261,244

 

233,014

 

Due to former CEO

 

19,816

 

20,337

 

Due to officers

 

1,025

 

100

 

Derivative liability

 

200,535

 

434,063  

 

 

TOTAL CURRENT LIABILITIES

 

1,527,061

 

1,461,384  

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT):

 

 

 

 

 

Preferred A stock, $.001 par value; authorized shares -

 

3

 

3

 

 

100,000 shares; 3,000 and 3,000 shares issued and outstanding

 

 

 

 

 

Preferred B stock, $.001 par value; authorized shares -

 

88

 

22

 

 

100,000 shares; 87,500 and 22,000 shares issued and outstanding

 

 

 

 

 

Common stock, $.001 par value; authorized shares -

 

1,650,267

 

196,097

 

 

2,500,000,000 shares; 1,650,237,204and  196,097,458 shares issued and outstanding

 

 

 

 

 

Additional paid-in capital

 

10,734,547

 

11,788,909

 

Deficit accumulated during the exploration stage

 

 (13,907,996)

 

 (13,442,099)

 

 

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

 

(1,523,091)

 

(1,457,068)

 

 

 

 

 

 

 

 

 

 

 

 

$

3,970

$

4,316

 

 

 

 

 

 

 

 

See notes to the unaudited financial statements







F-1




SUNGRO MINERALS, INC.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

 

 

 

Year Ended November 30,

 

Cumulative amount

from Inception

(August 10, 2007)

through

November 30, 2012

 

 

 

 

2012

 

2011

 

 

 

 

 

(unaudited)

 

 

 

(unaudited)

OPERATING EXPENSES:

 

 

 

 

 

 

   Bank charges and interest

$

377

$

400

$

2,343

   General and administrative

 

620,777

 

1,683,939

 

9,986,686

   Foreign exchange (gain) loss

 

 (996)

 

 (261)

 

3,131

   Mineral claim maintenance and geological costs

 

(250,000)

 

376,284

 

456,934

 

TOTAL OPERATING EXPENSES

 

           370,158

 

           2,060,362

 

                  10,449,094

 

 

 

 

 

 

 

 

 

OPERATING LOSS

 

 (370,158)

 

 (2,060,362)

 

 (10,449,094)

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 (115,854)

 

 (101,905)

 

 (268,743)

CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY

 

288,528

 

245,589

 

524,905

AMORTIZATION OF DEBT DISCOUNT

 

 (268,413)

 

 (400,625)

 

 (877,514)

LOSS OF MINERAL RIGHTS

 

 

(2,837,550) 

 

(2,837,550) 

NET LOSS

$

 (465,897)

$

 (5,154,853)

$

 (13,907,996)

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED - LOSS PER SHARE

$

(0.00)

$

(0.04)

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic and Diluted

 

1,154,631,547

 

115,945,846

 

 

 

 

 

 

 

 

 

 

 

See notes to the unaudited financial statements

















F-2






SUNGRO MINERALS, INC.

(An Exploration Stage Company)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

Preferred A Stock

($.001 par value)

Preferred B Stock

($.001 par value)

Common Stock

($.001 par value)

 

Common Stock

To be issued

 

Additional

Paid-In

Capital

 

 

 

Total

Stockholders'

Equity (Deficit)

 

 

 

 

 

 

Accumulated

Deficit

 

 

 

 

Shares

 

Amount

Shares

 

Amount

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, August 10, 2007 (Inception)

-

$

-

-

$

-

-

$

-

$

-

$

-

$

-

$

-

 

 

     Adjusted for 5:1 forward stock split

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Subscription Agreement - $0.001 per share

 

 

-

 

 

-

25,000,000

 

25,000

 

-

 

 (20,000)

 

-

 

5,000

 

 Subscription Agreement - $0.02 per share

 

 

-

 

 

-

23,750,000

 

23,750

 

-

 

71,250

 

-

 

95,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

-

-

 

-

 

-

 

-

 

 (26,395)

 

 (26,395)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2007

      -

 

 

 

 

         -

48,750,000

 

48,750

 

           -

 

    51,250

 

      (26,395)

 

73,605

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

-

 

 

-

-

 

-

 

-

 

-

 

(71,962)

 

 (71,962)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2008

-

 

-

-

 

-

48,750,000

 

48,750

 

-

 

51,250

 

 (98,357)

 

1,643

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital provided by stockholder

 

 

-

 

 

-

-

 

-

 

-

 

14,996

 

-

 

14,996

 

 

 Issuance of warrants

 

 

-

 

 

-

-

 

-

 

-

 

53,290

 

-

 

53,290

 

 

 Common stock to be issued

 

 

-

 

 

-

-

 

-

 

133

 

99,867

 

-

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

-

 

 

-

-

 

-

 

-

 

-

 

 (292,155)

 

 (292,155)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2009

-

 

-

-

 

-

48,750,000

 

48,750

 

133

 

219,403

 

 (390,512)

 

 (122,226)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Conversion of debentures

 

 

-

 

 

-

1,000,000

 

1,000

 

 

 

99,000

 

-

 

100,000

 

 

    Private placement

 

 

-

 

 

-

50,000

 

50

 

 

 

24,950

 

-

 

25,000

 

 

    Compensation

 

 

-

 

 

-

24,476,284

 

24,476

 

 

 

6,967,824

 

-

 

6,992,300

 

 

    Acquisition of Mineral Agreement

 

 

-

 

 

-

2,600,000

 

2,600

 

 

 

2,597,400

 

-

 

2,600,000

 

 

 Beneficial conversion

 

 

-

 

 

-

 

 

-

 

 

 

100,000

 

-

 

100,000

 

 

 Issuance of warrants

 

 

-

 

 

-

 

 

-

 

 

 

7,350

 

-

 

7,350

 

 Common stock to be issued

 

 

-

 

 

-

 

 

-

 

2,506

 

52,494

 

-

 

55,000

 

 Issuance of stock to be issued

 

 

 

 

 

 

 

133,333

 

133

 

 (133)

 

 

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

-

 

 

-

-

 

-

 

 

 

 

 

 (7,896,734)

 

 (7,896,734)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2010

-

 

-

-

 

-

77,009,617

 

77,009

 

2,506

 

10,068,421

 

 (8,287,246)

 

1,860,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Conversion of debentures

 

 

-

 

 

-

108,837,272

 

108,837

 

 

 

540,958

 

-

 

649,795

 

 

      Private placement

 

 

-

 

 

-

1,000,000

 

1,000

 

 

 

9,000

 

-

 

10,000

 

 

      Compensation

3,000

 

3

22,000

 

22

6,743,902

 

6,744

 

 

 

1,170,531

 

-

 

1,177,300

 

 Issuance of stock to be issued

 

 

 

 

 

 

2,506,667

 

2,507

 

 (2,506)

 

 (1)

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

-

 

 

-

-

 

-

 

 

 

 

 

 (5,154,853)

 

 (5,154,853)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 30, 2011

3,000

 

3

22,000

$

22

196,097,458

$

196,097

$

-

 

11,788,909

$

(13,442,099)

$

 (1,457,068)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of stock for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Conversion of debentures

 

 

 

 

 

 

1,454,169,746

 

1,454,170

 

 

 

(1,218,046)

 

 

 

236,124

 

 

      Compensation

 

 

 

65,500

 

66

 

 

 

 

 

 

163,684

 

 

 

163,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(465,897)

 

(465,897)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, November 20, 2012

3,000

$

3

87,500

 

88

1,650,267,204

 

1,650,267

 

-

 

10,734,547

 

(13,907,996)

 

(1,523,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to the unaudited financial statements



F-3






SUNGRO MINERALS, INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

Cumulative amount

from Inception

(August 10, 2007)

through

November 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

     For the years ended November 30,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

(unaudited)

 

 

 

(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

$

(465,897)

$

(5,154,853)

$

(13,907,996)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt discount

 

268,413

 

400,625

 

877,514

 

 

Stock issued for compensation

 

163,349

 

1,177,300

 

8,333,350

Penalty on debenture default

54,500 

 -

54,500

 

 

Change in fair value of derivative

 

 (288,528)

 

 (245,589)

 

(524,904)

 

 

Loss on mineral rights

 

-

 

2,837,550

 

2,837,550

 

 

 

 

 

 

 

 

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

417

 

 (2,917)

 

(3,500)

 

 

Accounts payable and accrued expenses

 

157,791

 

554,122

 

956,307

 

Net cash used in operating activities

 

 (109,554)

 

(433,762)

 

(1,377,180)

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Payments on acquisition of Mineral Rights Agreement

-   

 

-

 

(202,000)

 

Acquisition of additional claims

 

 -

 

(35,550)

 

(35,550)

NET CASH USED IN INVESTING ACTIVITIES

 

-

 

(35,550)

 

(237,550)

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Proceeds from expenses paid by stockholder

 

-

 

-

 

14,996

 

Proceeds from notes payable

 

108,700

 

177,309

 

687,516

 

Payments of notes payable

 

 -

 

 (66,280)

 

(66,280)

 

Proceeds from private placement

 

-

 

10,000

 

290,000

 

Proceeds from convertible debentures

 

-

 

352,500

 

614,500

 

Proceeds from /(Payments) to officer and prior CEO

 925

 

(5,185)

 

74,467

NET CASH PROVIDED BY FINANCING ACTIVITIES

109,625

 

468,344

 

1,615,199

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

71

 

(968)

 

470

 

 

 

 

 

 

 

 

 

 

 

CASH - BEGINNING OF PERIOD

 

399

 

1,367

 

-

 

 

 

 

 

 

 

 

 

 

 

CASH - END OF PERIOD

$

470

$

399

$

470

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Cash paid for taxes

$

-

$

1,670

 

 

 

 

Cash paid for interest

$

5,400

$

15,810

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Stock issued in connection with conversion of debentures

$

236,525

$

649,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to the unaudited financial statements

 

F-4

 

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

1.   Nature of Operations and Going Concern

Sungro Minerals Inc. (the "Company") was incorporated in the State of Nevada on August 10, 2007. The Company is engaged in the exploration, development, and acquisition of mineral properties. The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. As shown in the accompanying financial statements, the Company incurred a net loss of $465,897 for the year ended November 30, 2012, and has an accumulated deficit of $13,907,996. Management plans to raise cash from public or private debt or equity financing, on an as needed basis and in the longer term, to generate revenues from the acquisition, exploration and development of mineral interests, if found. The Company's ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.

2.   Significant Accounting Policies

a)   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.

b)   Accounting Principles

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

c)   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."

d)   Foreign Currency Translation

The Company's functional and reporting currency is the U.S. Dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830 "Foreign Currency Matters" as follows:

i)      monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;

ii)     non-monetary assets at historical rates; and

iii)    revenue and expense items at the average rate of exchange prevailing during the period.

Gains and losses from foreign currency transactions are included in the statement of operations.

As of November 30, 2012, the Company only operates in the United States.

e)    Basic and Diluted Loss Per Share

Basic and diluted loss per share is based on the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.

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:


 

 

 

 

 

Fair Value Measurements at November 30, 2012

 

  

 

  

 

 

Quoted prices

 

 

Significant

 

 

  

 

  

 

Total Carrying

 

 

in active

 

 

other

 

 

Significant

 

  

 

Value at

 

 

markets

 

 

observable

 

 

unobservable

 

  

 

November 30, 2012

 

 

(Level 1)

 

 

inputs (Level 2)

 

 

inputs (Level 3)

 

  

 

  

 

 

  

 

 

  

 

 

  

 

Derivative liabilities

$

200,535

 

$

 -

 

$

 -

 

$

200,535

 

 

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)


 

 

 

 

 

Fair Value Measurements at November 30, 2011

 

  

 

  

 

 

Quoted prices

 

 

Significant

 

 

  

 

  

 

Total Carrying

 

 

in active

 

 

other

 

 

Significant

 

  

 

Value at

 

 

markets

 

 

observable

 

 

unobservable

 

  

 

November 30, 2011

 

 

(Level 1)

 

 

inputs (Level 2)

 

 

inputs (Level 3)

 

  

 

  

 

 

  

 

 

  

 

 

  

 

Derivative liabilities

$

434,063

 

$

 -

 

$

 -

 

$

434,063

 

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):


 

November 30,

2012

 

November 30, 2011

Beginning balance

$

434,063

 

$

139,233

Derivative liabilities recorded

 

72,246

 

 

1,054,766

Derivative liabilities converted

 

-

 

 

(587,363)

Unrealized gain attributable to the change in liabilities still held

 

(305,774)

 

 

(172,573)

Ending balance

$

200,535

 

$

434,063

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:


 

November 30,

2012

 

November 30,

2010

(Gain) Loss on derivative liabilities recorded during the period

$

(72,246)

 

$

1,054,766

Debt discount attributable to derivative liabilities recorded

 

(55,000)

 

 

(540,419)

Derivative liabilities converted during the period

 

(115,605)

 

 

(587,363)

Unrealized gain attributable to the change in liabilities still held

 

(45,677)

 

 

(172,573)

Net unrealized (gain) loss included in earnings

$

(288,528)

 

$

(245,589)

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:

 

Cash

Stock1

Stock Price

Total Value

Steven Van Ert

$170,000

2,210,000 shares

$1.00

$2,380,000

 

 

 

 

 

Noel Cousins

$ 30,000

  390,000 shares

$1.00

   $420,000

 

 

 

 

 

Total

$200,000

2,600,000 shares

$1.00

$2,800,000

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

 

Escrow Release Date

Steven Van Ert

Noel Cousins

Total

February 2010

   255,000

  45,000

   300,000

January 1, 2011

   425,000

  75,000

   500,000

January 1, 2012

   425,000

  75,000

   500,000

January 1, 2013

   425,000

  75,000

   500,000

January 1, 2014

   425,000

  75,000

   500,000

January 1, 2015

   255,000

  45,000

   300,000

Total

2,210,000

390,000

2,600,000

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

Date

Minimum Royalty

Royalty % of Net Smelter Returns

Second Anniversary

$200,000

4%

Third Anniversary on

$250,000

4%

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

5.

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.

At November 30, 2012, all warrants had expired unexercised.

 

6.   Concentration Risk

The Company's financial instruments consist of cash, accounts payable and accrued liabilities. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair values of these financial instruments approximate their carrying values.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions in the United States.  Bank deposits in the United States did not exceed federally insured limits as of November 30, 2012 and as of November 30, 2011. 

The Company may operate outside the United States of America and thus may have significant exposure to foreign currency risk in the future due to the fluctuations between the currency in which the Company operates and the U.S. dollar.


7.   Income Taxes

A reconciliation of income taxes at statutory rates with the reported income taxes is as follows:

 

Period ended November 30,

 

2012

 

2011

Income tax benefit at Federal statutory rate of 35%

$

163,000 

1,804,000 

State Income tax benefit, net of Federal effect

 

     23,000

 

     258,000

Permanent differences (primarily stock-based compensation)

 

   (107,000)

 

(160,000)

Change in valuation allowance

 

(79,000)  

 

(1,902,000)

 

$

$

The significant components of the Company's deferred income tax assets are as follows:

 As at November 30

 

2012

 

2011

 

 

 

 

 

Net Operating losses

$

2,354,400

$

2,274,400

Loss on mineral rights

 

2,838,000

 

2,838,000

Valuation allowance

 

(5,192,400)

 

(5,112,400)

 

$

$

At November 30, 2012 the Company has available net operating losses of approximately $2,354,400 which may be carried forward to apply against future taxable income. These losses will expire in 2032. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.


8.

Derivative Liabilities

In June 2008, the FASB finalized ASC 815, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” Under ASC 815, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has determined that it needs to account for 15 convertible debentures (see note 3h) issued for its shares of common stock, as derivative liabilities, and apply the provisions of ASC 815. The instruments have a ratchet provision that adjust either the exercise price and/or quantity of the shares as the conversion price equals to 60% of the "market price" at the time of conversion, which "market price" will be calculated as the average of the three lowest "trading prices" for the Company's common stock during the ten day trading period prior to the date the conversion note is sent to the Company.

As a result, the instruments need to be accounted for as derivative liabilities. In accordance with ASC 815, these convertible debentures have been re-characterized as derivative liabilities. ASC 815, “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815”) requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the statement of operations.





F-9



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

Derivative Liabilities (Continued)
 
The fair value of the derivative liabilities was measured using the Black-Scholes option pricing model and the following assumptions:

 

November 30,

November 30,

Date of

 

2012

2011

issuance

 

 

 

 

   $55,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

97.26%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $35,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

97.26%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $5,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

97.26%

Weighted Average life (months)

 

Fully Converted

12

 

 

 

 

   $27,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

97.26%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $40,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

97.26%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $60,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

319.58%

314.77%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $75,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

319.58%

298.18%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $30,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

319.58%

291.95%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $35,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

301.41%

Weighted Average life (months)

 

Fully Converted

9

 

 

 

 

   $45,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

319.58%

Weighted Average life (months)

Fully Converted

4

9

 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
F-10
 
 

 

 

 

 

 

 

 

 

 

 

 

 

November 30,

November 30,

Date of

 

2012

2011

issuance

 

 

 

 

   $32,500 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

319.58%

Weighted Average life (months)

0

5

9

 

 

 

 

   $40,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

319.58%

Weighted Average life (months)

0

5

9

 

 

 

 

   $35,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

262.42%

Weighted Average life (months)

0

9

9

 

 

 

 

   $25,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

 

0.30%

0.30%

Annual rate of dividends

 

-

-

Volatility

 

262.42%

319.58%

Weighted Average life (months)

 

Fully Converted

6

 

 

 

 

   $174,530 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

262.42%

Weighted Average life (months)

0

6

6

 

 

 

 

   $147,076 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

301.15%

Weighted Average life (months)

Fully Converted

Fully Converted

6

 

 

 

 

   $100,000 Debenture:

 

 

 

Discount Rate – Bond Equivalent Yield

0.30%

0.30%

0.30%

Annual rate of dividends

-

-

-

Volatility

196.41%

262.42%

319.58%

Weighted Average life (months)

Fully Converted

0

4

 

 

 

 

Fair Value

$  200,535

$  434,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The discount rate was based on rates established by the Federal Reserve. The Company based expected volatility on the historical volatility for its common stock. The expected life of the debentures was based on their full term. The expected dividend yield was based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the future.

 

During the year ended November 30, 2012 the Company recorded $55,000 as debt discount on $65,000 in convertible debt that it had entered into during the year ended November 30, 2012, due to the beneficial conversion feature of the debt being convertible into shares of the Company’s common stock at a conversion price below that of market on the date of entry into the convertible debt agreement. This debt will be amortized over the life of the debt, or until such time that the debt is converted with any unamortized debt discount being expensed at such time of early conversion. The convertible debt is presented net of the debt discount.

In addition to the debt discount, the Company recorded a derivative liability associated with the convertible debts, as the conversion price of most debentures is variable with a conversion threshold of 60% of the market value of the Company’s common stock on the date of conversion except for debentures totaling $247,076 which have a conversion threshold of 70% of the market value of the Company’s common stock on the date of conversion, and debentures totaling $199,530 which have a conversion threshold of 50% of the market value of the Company’s common stock on the date of conversion. The initial measurement of this derivative liability is based on the value of the shares that could be issued upon entry into the convertible debt agreement. Such valuation is determined using a fair value valuation model of the potential shares that could be issued. The difference between the initial value of the derivative liability and the debt discount is charged as an expense on the change in fair value of derivative liabilities upon entry into the debt agreement. The derivative liability is adjusted at each reporting period date based on the conversion rate available at each reporting date, or until such time as the convertible debt is converted. The initial derivative liability for all convertible debt issued during the year ended November 30, 2012 was $17,246, offset by the debt discount of $55,000, with the remaining $37,754 offset charged to change in fair value of derivative liabilities. The value of the derivative is presented as the derivative liability in the accompanying balance sheet of the Company, less any adjustments to the value of the derivative.

At November 30, 2012, the Company reevaluated the derivative liability based on the fair value assumptions for the convertible debt that it had entered into during the current and previous years then ended. As of November 30, 2012, the derivative liability recorded during the year then ended, decreased by $233,528 due to the conversion threshold being lower at this reporting date than on the date that the convertible debt had been entered into coupled with final conversion of several debentures.

 

F-11

 

9.

Notes Payable

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

The Company raised $925 in demand notes to from its CFO during the fiscal year ended November 30, 2012.  

Between December 2011 and November 2012, the Company borrowed $108,700 from a non-affiliated accredited investor.  The Notes carry interest at a rate of 15% per year and are due on demand.  


10.

Related party transactions


From time to time, our former CEO, Mal Bains lent money to the Company.  At November 30, 2012 and 2011 the balance owed was $19,816 and $20,337 respectively.  The balance does not bear interest and is due on demand.


During 2012, our CEO and CFO have from time to time lent money to the Company.  At November 30, 2012 they had a balance owed to them of $1,025.  The balance does not bear interest and is due on demand.



11.

Commitments and Contingencies

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.

A consulting agreement between Sungro and Internet Marketing Solutions, Inc. (IMS) provides that IMS will receive a Consulting Fee of ten percent (10%) of the gross value of the project received by Sungro including cash, stock and stock purchase warrants.


12.

Employment Contracts

In September 2010, the Company entered into five year Employment Contracts with its three employees.  

Below is a summary of the basic terms of the Agreements:

 

·

Base Salary for the CEO and CFO

$120,000 per year

·

Base Salary for Investor relations

$100,000 per year

·

The officers received stock grants in connection with the contracts of:

o

CEO

1,500,000 common shares

o

CFO

1,000,000 common shares

o

Investor Relations

1,000,000 common shares

·

4% annual increases in Base Salary

·

Bonus provision if and when the Company reaches profitability

·

Other normal benefits provided such as health insurance as negotiated by the Company



13.

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.


F-12



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's management, including the Company's principal executive officer and principal financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and Rule 15d-15(e) as of the end of the fiscal year covered by this annual report. Based on that evaluation, the principal executive officer and principal financial officer believe the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2012 based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Based on management’s assessment, management concluded that, as of November 30, 2012, the Company’s internal control over financial reporting was effective.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

 

ITEM 9B. OTHER INFORMATION

None

 

25

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Executive Officers And Directors

The following table sets forth the directors and executive officers of our Company, their ages and positions with our Company. Pursuant to our bylaws, our directors are elected at our annual meeting of stockholders and each director holds office until his successor is elected and qualified. Officers are elected by our Board of Directors and hold office until an officer's successor has been duly appointed and qualified unless an officer sooner dies, resigns or is removed by the Board.

There are no arrangements or understandings’ regarding the length of time a director of our company is to serve in such a capacity.

The following table sets forth information about our executive officers and directors as of March 31, 2013.

Name and Address

Age

Position

Frederick J. Pucillo, Jr.

Warwick, RI

64

Director, President and CEO

Erwin Vahlsing, Jr.

Warwick, RI

57

Director, Chief Financial Officer, Treasurer, and Secretary

Thomas Craft, Jr.

Warwick, RI

49

Director

Frederick J. Pucillo, Jr. has served as our President, Chief Executive Officer and Director since December 2009.  Mr. Pucillo has over twenty years experience serving mid-size to Fortune 100 companies in the banking and finance area, having managed a $110 million loan portfolio with 10,000 accounts, and other capital funding and business development opportunities.  Mr. Pucillo was the CFO for Atlantic Fire Protection, LLC from 2007 through 2009, and previously, was CFO for Zammido Automotive Group from 2000 through 2007.  He is thoroughly familiar with finance, cash flow analysis and budgeting, as well as negotiation of promising opportunities.  

Erwin Vahlsing, Jr. has served as our Chief Financial Officer, Secretary, Treasurer, and Director since September 2009.  Mr. Vahlsing is a financial executive with domestic and international experience managing finance departments in the manufacturing, service, and construction industries. Mr. Vahlsing has acted as Chief Financial Officer to ICOA, Inc. since 2001. He acted as a Consultant to E&M Advertising for SEC compliance and due diligence. Mr. Vahlsing received an MBA from the University of Rhode Island in 1986 and a Bachelors degree in Accounting from the University of Connecticut.

Thomas J. Craft, Jr., is a Florida attorney, specializing in federal securities law and mergers and acquisitions. He practices securities law in Florida. Mr. Craft has more than 15 years of experience in federal securities matters as well as the public markets generally. Mr. Craft has served on the board of directors of several public companies prior to joining the Company's board of directors on November 22, 2002. Mr. Craft has served as a member of our Audit Committee since 2002 and in April 2007 Mr. Craft was appointed as a member of our Compensation Committee and Nominating Committee. Mr. Craft has served as an officer and a director of Peregrine Industries, Inc., a public reporting company, since March 2004.

Committees of the Board of Directors

The functions of the audit committee are currently carried out by our Board of Directors. In 2009, we hired a Chief Financial Officer.  He was subsequently appointed to the Board.  Our Board has determined that at current, we do not need an additional expert because we are a start-up exploration company and have no revenue. The cost of hiring a financial expert to act as a director of Sungro and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee. We do not have a compensation committee, nominating committee, executive committee of our board of directors, stock plan committee or any other committees.

Code of Ethics

We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions within the Company. A copy of the code of ethics is filed with the SEC as an exhibit to the Company's Form S-1 filed on February 22, 2008. If we make any substantive amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our directors, officers and employees, we will disclose the nature of such amendment or waiver in a report on Form 8-K. The Code of Ethics is available on the Company’s website at http://www.sungrominerals.com/CodeofEthics021308.pdf.  

Family Relationships

There are no family relationships between any two or more of our directors or executive officers. There is no arrangement or understanding between any of our directors or executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings to our knowledge between non-management shareholders that may directly or indirectly participate in or influence the management of our affairs.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and 10% or greater shareholders of the Company ("Reporting Persons") to file with the Securities and Exchange Commission initial reports of ownership (Form 3) and reports of changes in ownership of equity securities of the Company (Form 4 and Form 5) and to provide copies of all such forms as filed to the Company. With the exception of the CFO, who has completed his Form 3 report but which as of the date of this filing had not been filed with the Commission, he also has not completed a Form 4 to update his holdings.  Aside from this, the Company is not aware of any Reporting Persons that have failed to file reports on a timely basis.   

Mr. Pucillo has completed and filed his Form 3 indicating he is currently the owner of 3,019,500 common shares.  

At the time of Mr. Vahlsing’ hiring, he completed his Form 3.  It appears the Company filed it on the Canadian, SEDA system and failed to file it on the SEC’s Edgar database.  The report is being updated with current information and will be filed subsequent to the date of this report.  Mr. Vahlsing is the owner at the time of this report of 3,000,000 common shares.   

 

26




Significant Personnel

We have no significant personnel other than our officers and directors. We presently rely on consultants and other third party contractors to perform administrative and geological services for the Company. We have no formal contracts with any of these consultants and contractors.

Nominating Committee

We do not have a standing nominating committee; our Board of Directors is responsible for identifying new candidates for nomination to the Board. We have not adopted a policy that permits shareholders to recommend candidates for election as directors or a process for shareholders to send communications to the Board of Directors.

ITEM 11. EXECUTIVE COMPENSATION

To date, our directors do not currently receive and have never received any compensation for serving as a director of the Company. Presently, our officers are paid on a consulting basis for the time and efforts spent on behalf of the Company.  Effective September 2, 2010 the Company entered into Employment Agreements with our CEO, CFO, and Investor Relations.

The following table sets forth all compensation awarded to, earned by, or paid for services rendered to us in all capacities by the officers for the last three fiscal years.  

Summary Compensation Table

 

Annual Compensation

Long-Term Compensation

Name &
Principal Position

Fiscal Year Nov 30,

Salary

Bonus

Other Annual Compensation (2)

Restricted Stock Awards in US$(1)

 

Options/SARs

LTIP Payouts

All Other Compensation(2)

 

 

 

 

 

 

 

 

 

 

Frederick J. Pucillo, Jr.

2012

$           0

$0

$129,376

$31,250

 

0

0

0

Chief Executive Officer,

2011

$           0

$0

$124,400

$50,000

 

0

0

0

President, Director

2010

$           0

$0

$86,250

$196,500

 

0

0

0

 

 

 

 

 

 

 

 

 

 

Erwin Vahlsing, Jr

2012

$           0

$0

$129,376

$31,250

 

0

0

0

Chief Financial Officer,

2011

$           0

$0

$124,400

$75,000

 

0

0

0

Secretary, Treasurer,

2010

$           0

$0

$86,250

$196,500

 

0

0

0

Director

 

 

 

 

 

 

 

 

 

See notes below:

(1)

The named executive officers received grants of restricted stock in connection with entry into 5 year employment agreements.

(2)

Salary was accrued with only partial payment made during the years 2012 and 2011.  The balance may be paid either in cash or stock.

We do not presently have a stock option plan but intend to develop an incentive based stock option plan for our officers and directors in the future and may reserve up to ten percent of our outstanding shares of common stock for that purpose.

Compensation Committee

We do not have a compensation committee. The functions of the compensation committee are currently carried out by our Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities authorized for issuance under equity compensation plans

The Company has no securities authorized for issuance under equity compensation plans.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of March 13, 2013 with respect to the beneficial ownership of our Company's common stock with respect to each named director and executive officer of our Company, each person known to our Company to be the beneficial owner of more than 5% of said securities, and all directors and executive officers of our Company as a group:

Name and Address

Title of Class

Amount and Nature of Beneficial Ownership

Percentage
of Class (1)

Frederick J. Pucillo, Jr.

Chief Executive Officer, President, and Director

Common

Preferred B(2)

3,019,500

62,500,000

0.2%

3.2%

Erwin Vahlsing, Jr.

Chief Financial Officer, Treasurer, Secretary, and Director

Common

Preferred B(2)

3,000,000

62,500,000

0.2%

3.2%

Thomas Craft, Jr.

Director

Preferred B(2)

62,500,000

3.2%

Martin Bolodian

Investor Relations

Common

1,500,000

0.1%

Malkeet Bains(3) – former officer

Common

25,000,000

1.3%

Internet Marketing Solutions, Inc.

Preferred B(2)

250,000,000

11.7%

All officers, directors, and beneficial owners as a group

Common

Preferred B(2)

32,519,500

437,500,000

1.7%

18.8%

(1) The percentage of common shares is based on 1,891,903,870 shares of common stock outstanding as of March 31, 2013.

(2) Percentage is based on current common stock outstanding as of March 31, 2013 plus beneficial amount owned by the individual holder, on an “As Converted” basis.  

(3)  Mr. Bains in connection with his resignation on December 15, 2009 agreed to surrender his shares to the Company.  Due to the cease trade order by the British Columbia Securities Commission (BCSC), the shares are currently held by council in the territory pending permission of the BCSC for them to be returned to the Company.  The Company’s treasurer controls voting of these shares.

The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.


27




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Since the beginning of Sungro's last fiscal year, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder owing more than 5% of our shares of common stock has had any direct or indirect material interest in any transaction or currently proposed transaction, which Sungro was or is to be a participant, that exceeded the lesser of (1) $120,000, or (2) 1% of the average of Sungro's total assets at year end for the last two completed fiscal years.

In September 2010, the Company entered into 5 year employment agreements with its three employees.  Below is a summary of the basic terms of the Agreements:

·

Base Salary for the CEO and CFO

$120,000 per year

·

Base Salary for Investor relations

$100,000 per year

·

The officers received stock grants in connection with the contracts of:

o

CEO

1,500,000 common shares

o

CFO

1,000,000 common shares

o

Investor Relations

1,000,000 common shares

·

4% annual increases in Base Salary

·

Bonus provision if and when the Company reaches profitability

·

Other normal benefits provided such as health insurance as negotiated by the Company

From time to time, our former CEO, Mal Bains lent money to the Company.  At November 30, 2011 and 2010 the balance owed was $19,950 (CAD).  The balance does not bear interest and is due on demand.  

During 2011, our CEO and CFO have from time to time lent money to the Company.  At November 30, 2011 they had balance owed was $100.  The balance does not bear interest and is due on demand.

The Company's transactions with its officers, directors and affiliates have been and such future transactions will be, on terms no less favorable to the Company than could have been realized by the Company in arm's length transactions with non-affiliated persons and will be approved by a majority of the independent disinterested directors.

Directors Independence

The only director on our board that is independent is Thomas Craft, Jr., our other two directors Mr. Pucillo and Mr. Vahlsing, are not independent, pursuant to the definition of an "independent director" set forth in Rule 5605(a)(2) of the NASDAQ Manual. In summary, an "independent director" means a person other than an executive officer or employee of the issuer or any other individual having a relationship which, in the opinion of the issuer's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  

The Company intends to add members to the Board of Directors who are independent during the fiscal year 2012.

We do not have a compensation committee, nominating committee or audit committee; the functions of these committees are performed by our directors and Chief Financial Officer.

The Company is currently traded on the OTC Market Pink Sheet, which does not require that a majority of the Board be independent.


ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The fees billed to the Company for the fiscal years ending November 30, 2011 and 2010 by Sherb & Co., LP were as follows:

 

Year ended
Nov. 30, 2012

Year ended
Nov. 30, 2011

Audit Fees

$0

$35,500

Audit-Related Fees

$0

$0

Tax Fees

$0

$0

All Other Fees

$0

$0


Because the Company does not have an audit committee, it has not instituted pre-approval policies and procedures as described in paragraph (c)(7)(i) of Rule 2-01 of regulation S-X.  



28





PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this Annual Report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

Exhibit Listing

 

 

 

Incorporated by reference

Exhibit No.

Description of Exhibit

Filed herewith

Form

Exhibit

Filing date
(mm/dd/yy)

3.1

Articles of Incorporation

 

S-1

3.1

02/22/08

3.2

Certificate of Change dated July 20, 2009

 

8-K

3.1

08/03/09

3.3

Bylaws

 

S-1

3.2

02/22/08

4.1

Specimen Stock Certificate

 

S-1

4.1

02/22/08

10.4

Mineral Agreement for the Conglomerate Mesa claims dated August 27, 2009 between Steven Van Ert, Noel Cousins, and Sungro

 

8-K

10.1

09/03/09

10.5

Amendment No. 1 to Mineral Agreement dated September 17, 2009 between Steven Van Ert, Noel Cousins, and Sungro

 

8-K

10.1

09/23/09

10.6

Consulting and Fee Agreement dated July 1, 2009 between Internet Marketing Solutions, Inc. and Sungro

 

10-K

10.6

03/17/10

10.7

Employment Agreement dated September 2, 2010 between Frederick Pucillo, Jr. and Sungro

 

10-K

10.7

 

10.8

Employment Agreement dated September 2, 2010 between Erwin Vahlsing, Jr. and Sungro

 

10-K

10.8

 

14

Code of Ethics

 

S-1

14

02/22/08

31.1

Certifications of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

 

 

 

31.2

Certifications of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

X

 

 

 

32.1

Certifications of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

 

 

 

32.2

Certifications of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

X

 

 

 

 

29







SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 

SUNGRO MINERALS INC.



Date: July 21, 2014



By:  /s/ Frederick J. Pucillo                

Frederick J. Pucillo, President



Date: July 21, 2014



By:  /s/ Erwin Vahlsing, Jr.   

Erwin Vahlsing, Jr. Chief Financial Officer, Secretary, and  Treasurer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Registrant and in the capacities indicated on the dates indicated.

Date

Signature

Title



Date: July 21, 2014



/s/ Frederick J. Pucillo                



Director, and President

Frederick J. Pucillo



Date: July 21, 2014



/s/ Erwin Vahlsing, Jr.                    



Director, Chief Financial Officer, Secretary, and  Treasurer

Erwin Vahlsing, Jr.

 





30