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, |
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,Telco Cuba Inc.
(Exact name of small business issuer as specified in its charter)
Nevada (State of Incorporation) | 98-0546544 (I.R.S. Employer Identification No.) |
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 |
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
| 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, 2013of June 18, 2015 was 1,860,884,37025,099,245 shares, all of one class of common stock, $0.001 par value, having an aggregate market value of $186,088$163,145 based on the closing price of the Registrant's common stock of $0.0001$0.0045 on March 31, 2013June 18, 2015 as quoted on the Electronic Over-the-Counter Bulletin Board ("OTCBB"OTCPK").
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 |
DOCUMENTS INCORPORATED BY REFERENCE
None
|
Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 20
PART I
ITEM 1.
DESCRIPTION OF BUSINESS
How our company is organized
Sungro Minerals
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc.
CaerVision Global, Inc. fka American Mineral Group 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,1629 Warwick Ave3., Warwick, RI 02919.02889. Our telephone number is (401) 648-0805,648-0800, our facsimile number is (401) 648-0699, our e-mail address is info@americanmineralgroup.com,info@caservision.com, and our homepage on the world-wide web is at http://www.sungrominerals.com.www.caeervisionglobal.com.
About Our Company
Sungro Minerals,Telco Cuba, Inc. is(formerly CaerVision Global, Inc. fka American Mineral Group Inc.) was an early stage Mining and Exploration Company seekingthroughout the fiscal year ended November 30, 2014 and 2013. We sought to acquire, develop, and manage various oil, gas, and 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 onadded 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, inclaims. In fiscal year 2012, the Company determined that itsthe effort and cost of developing these claims required more resources wouldthat could be more effectively utilized if we focusedused on an alternative mining opportunity in Africa, abandoningother opportunities, and abandoned the Conglomerate Mesa project.
In February 2013, the Company acquired a 28% Working Interest in the Grand Chenier oil and gas prospect in Louisiana. The property contains an estimate 9.0 million barrels of oil and was in production until approximately 2009 when the then operator failed to manage the interests and certain repairs were not made leading to the cessation of production. The Company believes that with approximately $2.0 million in capital, the field can be returned to production and additional wells within the prospect can then be brought online increasing production to a profitable level.
In November 2014, the Company returned the working interest in the Grand Chenier oil and gas prospect to the original holders due to its failure to raise the capital required to “work over” the existing wells.
Simultaneously with divesting the Grand Chenier prospect, the Company entered into negotiations to acquire Vitall, Inc. and was renamed CaerVision Global, Inc., and closed on this deal in January 2015. The newly renamed Company had 60 days to close on a minimum $500,000 in debt or equity financing to support the new direction. When this was not achieved, the prior owner invoked a rescission clause and terminated the deal.
Subsequently, the Company (see Subsequent Events) entered into an agreement with Amgentech Inc.’s Telco Cuba division whereby they acquired a majority interest in the Company and will pursue telecom opportunities in the newly emerging Cuban market. The Company has filed an amendment to its articles of incorporation to change its name to Telocuba, Inc.
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 goldoil, gas, and mining and oil and gas opportunities and therefore expects to encounter additional regulatory and compliance oversight.
Plan of Operation
WithAbout Telco Cuba, Inc.: Founded in 2001, Amgentech -- the cancellationparent company of the first Conglomerate Mesa Mineral Agreement, our goalTelco Cuba has been providing internet based solutions and services for over 14 years. Amgentech has generated over 7 million dollars in revenue. Telco Cuba is launching best of breed communication services including, but not limited to continue seeking outVoIP, Calling Cards and acquiring mineral properties to develop or explore, ordirect SMS messaging in the alternative, acquire companies or businesses with those assets who are seekingUS and between 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 locationUS 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).Cuba. For more information visit (http://www.telcocuba.com & http://pr.telcocuba.com)
Employees
We presently have two employeesone employee, our Chief Executive Officer / President our/ Chief Financial Officer both of whom are directors/ Treasurer / Secretary, who also serves as the sole director 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 reportSince we have stated that we incurred only losses since our inception, raisingit raises 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, 20122014 Were Not Sufficient To Satisfy Our Current Liabilities.
As of November 30, 2012,2014, 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$2,428,421 and current assets of $3,970$2 at November 30, 2012,2014, and a working capital deficiency of $1,523,091.$2,428,419. If we cannot meet our current liabilities we may have to curtail or cease business operations.
In Our Prior Fiscal YearYears We Have Been The Subject Of A Going Concern Opinion As Of November 30, 2011 And Expect That Upon Completion Of Our AuditAudits For November 30, 2012 From Our Independent Auditors,2014 and 2013, 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.
OurThe Company was previous audited for the years ended November 30, 2011 and 2010 whereby our independent auditors have added an explanatory paragraph to their audit report issued in connection with our financial statementsreport. We believe, that upon completion of a two year audit for the yearyears ended November 30, 2011. Upon completion2014 and 2013, an independent auditor will once again as part 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.statements. We have incurred losses of $465,897$347,190 and $5,154,853$569,693 for the years ended November 30, 20122014 and 2011,2013 respectively, and a cumulative loss since inception of $13,907,996,$14,824,879, and that we had a working capital deficiency of $1,523,091$2,428,419 at November 30, 2012 and that these2014. 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.pursue telecom opportunities in the newly emerging Cuban market.. As of November 30, 2012,2014, we had cash in the amount of $470,$2, and current liabilities of $1,527,061.$2,428,421. 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 our key executivesexecutive and consultants, including Frederick Pucillo, Jr.,William Sanchez, 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 Sungrous 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)(ii)
changes in our revenue and revenue growth rates; and
(v)(iii)
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 asat an average of 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'sThe Company’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'sAmerican Mineral Group's common stock and may limit the ability of investors in this offering to sell Sungro'sAmerican Mineral Group's common stock in the secondary market.
The limited public market for Sungro'sAmerican Mineral Group's common stock may limit the ability of shareholders to sell their shares.
There has been only a limited public market for Sungro'sour common stock. An active trading market for Sungro'sAmerican Mineral Group'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'sour common stock may decline as the result of announcements by SungroAmerican Mineral Group or its competitors, variations in Sungro'sAmerican Mineral Group'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 shareshares outstanding. The Company intends to pursue this matter duringin the coming months as funding permits.
Rules of the Securities and Exchange Commission concerning late report filings
Originally quoted on FINRA’s OTCBB Sungro'sAmerican Mineral Group's common stock is currently quoted on the OTC Markets Pink Sheets asunder 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.trading symbol “SUGO”. With this filing, the Company is in the process of bringing all delinquentcurrent with its 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.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
As of March 31, 2013,18, 2015, there were approximately 725657 owners of record of the Company's common stock. The Company's common stock is traded on the OTC Bulletin Board under the symbol "SUGO". Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The following table reports high and low closing prices, on a quarterly basis, for the Company's common stock:
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
The following sets forth certain information regarding sales of, and other transactions with respect to, our securities, which sales and other transactions were not registered pursuant to the Securities Act of 1933, during the last three years. Unless otherwise indicated, no underwriters were involved in such transactions.
In December 2010, the Company issued 2,500,000 common shares for gross proceeds of $50,000 under a Subscription Agreement with a non-affiliated, accredited investor.
In December 2010, the Company issued 1,500,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered. The shares were issued at a price of $0.047 per share the closing market price on the date of issuance.
In January 2011, the Company issued 437,956 common shares in connection with the conversion of $12,000 of convertible debentures. The conversions had an average price of $0.0274 per share.
In January 2011, the Company issued 1,000,000 common shares to the Company’s president and a director at a price of $0.05 per share as compensation.
In January 2011, the Company issued 1,500,000 common shares to the Company’s Chief Financial Officer and a director at a price of $0.05 per share as compensation.
In January 2011, the Company issued 500,000 common shares to the Company’s Investor Relations Manager at a price of $0.05 per share as compensation.
In February 2011, the Company issued 953,126 common shares in connection with the conversion of $24,400 of convertible debentures and accrued interest. The conversions had an average price of $0.0256 per share.
In February 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered. The shares were issued at a price of $0.057 per share the closing market price on the date of issuance.
In March 2011, the Company issued 1,000,000 common shares to Internet Marketing Solutions, Inc. as compensation for consulting services rendered. The shares were issued at a price of $0.06 per share the closing market price on the date of issuance.
In March 2011, the Company issued 6,667 common shares to a non-affiliated, accredited investor in connection with a Subscription Agreement previously recorded as “Stock to be issued”. The shares were issued at a price of $0.75 per share the closing market price on the date of the original subscription.
In March 2011, the Company issued 2,196,629 common shares in connection with the conversion of $78,080 of convertible debentures and accrued interest. The conversions had an average price of $0.0356 per share.
In April 2011, the Company issued 1,879,699 common shares in connection with the conversion of $50,000 of convertible debentures and accrued interest. The conversions had an average price of $0.0266 per share.
In May 2011, the Company issued 1,302,827 common shares in connection with the conversion of $30,000 of convertible debentures and accrued interest. The conversions had an average price of $0.023 per share.
In May 2011, the Company issued 243,902 common shares as compensation for consulting services rendered in the amount of $10,000. The shares were issued at a price of $0.041 per share the closing market price on the date of issuance.
In June 2011, the Company issued 11,272,916 common shares in connection with the conversion of $135,784 of convertible debentures and accrued interest. The conversions had an average price of $0.01205 per share.
In July 2011, the Company issued 6,620,324 common shares in connection with the conversion of $47,000 of convertible debentures and accrued interest. The conversions had an average price of $0.0071 per share.
In August 2011, the Company issued 25,484,016 common shares in connection with the conversion of $77,875 of convertible debentures and accrued interest. The conversions had an average price of $0.00306 per share.
In September 2011, the Company issued 16,582,478 common shares in connection with the conversion of $53,397 of convertible debentures and accrued interest. The conversions had an average price of $0.00322 per share.
In September 2011, the Company received $10,000 under a Subscription Agreement for 1,000,000 shares of Common Stock at a price of $0.01 per share from a non-affiliated, accredited investor.
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.
In January 2013, 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.
In January 2013, the Company issued 85,000,000 common shares in connection with the conversion of $2,125 of convertible debentures and accrued interest. The conversions had an average price of $0.00003 per share.
There were no share issuances during the fiscal year ended November 31, 2014.
In January 2015, the Company issued 791,176 common shares in connection with the conversion of $1,345 of convertible debentures and accrued interest. The conversions had an average price of $0.0017 per share.
In January 2015, the Company issued 791,593 common shares in connection with the conversion of $4,280 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In February 2015, the Company issued 832,075 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0053 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
In February 2015, the Company issued 2,560,000 common shares in connection with the conversion of 512 shares of Preferred B Shares.
In March 2015, the Company issued 831,633 common shares in connection with the conversion of $4,075 of convertible debentures and accrued interest. The conversions had an average price of $0.0049 per share.
In March 2015, the Company issued 832,075 common shares in connection with the conversion of $4,660 of convertible debentures and accrued interest. The conversions had an average price of $0.0056 per share.
In March 2015, the Company issued 328,182 common shares in connection with the conversion of $1,805 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 503,636 common shares in connection with the conversion of $4,575 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 2,545,000 common shares in connection with the conversion of 509 shares of Preferred B Shares.
In April 2015, the Company issued 3,395,000 common shares in connection with the conversion of 679 shares of Preferred B Shares.
In March 2015, the Company issued 3,730,000 common shares in connection with the conversion of 746 shares of Preferred B Shares.
In April 2015, the Company issued 2,067,073 common shares in connection with the conversion of $1,695 of convertible debentures and accrued interest. The conversions had an average price of $0.0008 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, Sungro2014, American Mineral Group had total current assets of $3,970$2 and total current liabilities of $1,527,061$2,428,421 for a net working capital deficit of $1,523,091.$2,428,419. 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, developpursue telecom opportunities in the properties we have, or acquire a target company or business.newly emerging Cuban market. The additional funding will come from equity financing from the sale of Sungro'sour common stock. If Sungro iswe are successful in completing an equity financing, existing shareholders will experience dilution of their interest in Sungro. Sungrointerest. The Company does not have any financing arranged and Sungrowe cannot provide investors with any assurance that Sungrowe will be able to raise sufficient funding from the sale of its common stock. In the absence of such financing, Sungro's businessthe Company will fail.
Based on the nature of Sungro'sour 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 propertiesto pursue telecom opportunities in the newly emerging Cuban market will cost a substantial amount of money, and possiblylikely take several years before theywe are capable of generating revenue or be profitable. Sungro'srevenues. Our 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:
Our ability to reaiseraise additional funding;
Our ability to identify and successfully negotiate the acquistionacquisition of potential properties or assets; and
If such opportunities or businesses acquired will be profitablde.
Due to Sungro'sthe Company’s lack of operating history and present inability to generate revenues, Sungro'sthe Company’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'sthe Company’s ability to continue as a going concern. This means that there is substantial doubt whether Sungrothe Company can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our bills.
Liquidity
Sungro'sThe Company’s internal sources of liquidity will be loans that may be available to Sungro from management. Although Sungrothe Company has no written arrangements with its management, SungroThe Company expects that the officers may provide Sungrothe Company with nominal liquidity, when and if it is required.
Sungro'sThe Company's external sources of liquidity will be private placements for equity and debt financing.
Between December 20102012 and November 2011,2013, the Company borrowed $177,309$21,888 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 betweenBetween December 2013 and November 2014, 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 toborrowed $200 from a non-affiliated accredited investorinvestor. The Notes carry interest at a pricerate of $0.0115% per share.year and are due on demand.
7
For the periods ended November 30, 2014 and 2013, the Company borrowed $0 and $359 from its CFO. 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 innotes are due on 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.and carry no interest.
There are no assurances that Sungrothe Company will be able to achieve further sales of its common stock or any other form of additional financing. If Sungrothe Company is unable to achieve the financing necessary it will fail to continueexecute its future plan of operations then Sungro will not be ablewhich are to continue its exploration programs and its business will fail.pursue telecom opportunities in the newly emerging Cuban market.
Capital Resources
As of November 30, 2011, Sungro2014, the Company had total assets of $4,316,$ 2, total liabilities of $1,461,384$2,428,421 and a working capital deficit of $1,457,068,$2,428,419, compared with a net working capital deficit of $941,310$3,581,228 as of November 30, 2010.2013. The assets are comprised of cash of $399,$2, and prepaid expenses of $3,917.in FY 2013 mineral rights and oil field equipment for which the Company paid $2.0 million in common stock and notes. The liabilities consisted mainly of accounting, audit and legal fees, convertible debentures, demand notes, officer loans, and accrued expenses.
Sungro's current
While the Company is attempting to commence operations and generate revenues, the Company’s cash position is not sufficientsignificant enough to fully finance its operations at current and planned levels forsupport the next 12 months.Company’s daily operations. Management intends to manage Sungro's expensesraise additional funds to support future operations. Management believes that the actions presently being taken to further implement its business plan and paymentsgenerate revenues provide the opportunity for the Company to preserve cash until Sungro is profitable, otherwisecontinue as a going concern. While management believes in the viability of its strategy to generate revenues and in its ability to raise additional financing mustfunds, there can be arranged. Specifically, management is deferring payments due them until such time as there is sufficient financing in placeno assurances to permit their payment or the possible issuancethat effect. The ability of the Company to continue as a going concern is dependent upon the Company’s stock in settlement of amounts due.ability to further implement its business plan and generate revenues.
Results of Operations
We did not earn any revenues for the fiscal yearyears ended November 30, 20122014 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.2013.
We incurred total expenses in the amount of $5,154,853$347,190 during the fiscal year ended November 30, 2011,2014, and total expenses in the amount of $7,896,734$569,693 during the fiscal year ended November 30, 2010.2013.
|
| Years Ended November 30, |
| Years Ended November 30, | ||||
Expense Item |
| 2012 |
| 2011 |
| 2014 |
| 2013 |
Mineral Property Maintenance | $ | - | $ | 125,492 | ||||
Royalty Payments |
| (250,000) |
| 250,000 |
| $ - |
| $ - |
Payroll and bonuses |
| 95,123 |
| 486,300 | ||||
Consulting |
| 422,052 |
| 1,030,080 |
| 380,779 |
| 373,134 |
Accounting |
| 43,500 |
| 39,000 |
| (6,000) |
| 36,000 |
Legal |
| 3,947 |
| 27,723 |
| - |
| 1,069 |
Amortization of debt discount |
| 268,413 |
| 400,625 | ||||
Interest expense |
| 115,855 |
| 101,905 |
| (26,377) |
| 157,245 |
Loss on mineral rights |
| - |
| 2,837,550 | ||||
Other |
| (232,993) |
| (143,822) |
| (1,212) |
| 2,245 |
Total | $ | 465,897 | $ | 5,154,853 | $ | $ 347,190 |
| $ 569,693 |
Off-Balance Sheet Arrangements
SungroThe Company 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,Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no material subsequent events exist.
On January 9, 2015, the outstanding shareholders of the Company voted to change the name of the Company from American Mineral Group, Inc. to CaerVision Global, Inc. in order to better reflect the planned change in the Company’s future operations.
On January 26, 2015, the Company entered into a stock purchase definitive agreement with Vitall, Inc., a Delaware corporation, whereby the Company will issue 15,000,000 shares of common stock for 100% of the issued and outstanding capital of Vitall, Inc. On March 17, 2015, Vitall, Inc. terminated the merger agreement due to non-performance on the part of the Company. As a result, the name CaerVision Global, Inc. will be surrendered back to its original owner.
On June 12, 2015, the Company consummated a share exchange agreement with Amgentech Inc./Telco Cuba, Inc., a Florida corporation, whereby the Company issued 75,000,000 shares of common stock previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech Inc./Telco Cuba, Inc. Amgentech Inc./Telco Cuba, Inc. will be the surviving entity and focus on opportunities in the Cuban telecommunications market. The Company has filed an amendment to its articles of incorporation to change its name to Telocuba, Inc.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to appoint William Sanchez to the position of CEO, CFO, President, Treasurer and Secretary. In the same amendment to our articles of incorporation, Erwin Vahlsing Jr., Thomas J Craft Jr. and Frederick J Puccillo Jr., resigned their positions as officers and directors of the Company.
The Company had the following issuances of stock subsequent to November 30, 2014;
In January 2015, the Company issued 78,333,333791,176 common shares in connection with the conversion of $4,700$1,345 of convertible debentures and accrued interest. The shares were issued atconversions had an average price of $0.00006$0.0017 per share.
In January 2013,2015, the Company issued 163,333,333791,593 common shares in connection with the conversion of $6,825$4,280 of convertible debentures and accrued interest. The shares were issued atconversions had an average price of $0.00004$0.0054 per share.
On March 22, 2013,In January 2015, the Company filed a name change to become American Mineral Group, Inc.issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
On March 28, 2012,In January 2015, the Company filed a Form 15-12Gissued 831,481 common shares in connection with the SEC to suspend its required reporting under the Securities Actconversion of 1933$4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
On April 24, 2013,In February 2015, the Company executed a 1:125 reverse stock splitissued 832,075 common shares in connection with the conversion of its shares. $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0053 per share.
On April 30, 2013,In February 2015, the Company filedissued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an amendment on Form 15-12G/A to reverse its decision to suspend its reporting responsibilitiesaverage price of $0.0040 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and resume its reporting obligations underaccrued interest. The conversions had an average price of $0.0040 per share.
In February 2015, the Securities ActCompany issued 2,560,000 common shares in connection with the conversion of 1933.512 shares of Preferred B Shares.
In March 2015, the Company issued 831,633 common shares in connection with the conversion of $4,075 of convertible debentures and accrued interest. The conversions had an average price of $0.0049 per share.
In March 2015, the Company issued 832,075 common shares in connection with the conversion of $4,660 of convertible debentures and accrued interest. The conversions had an average price of $0.0056 per share.
In March 2015, the Company issued 328,182 common shares in connection with the conversion of $1,805 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 503,636 common shares in connection with the conversion of $4,575 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 2,545,000 common shares in connection with the conversion of 509 shares of Preferred B Shares.
In April 2015, the Company issued 3,395,000 common shares in connection with the conversion of 679 shares of Preferred B Shares.
In March 2015, the Company issued 3,730,000 common shares in connection with the conversion of 746 shares of Preferred B Shares.
In April 2015, the Company issued 2,067,073 common shares in connection with the conversion of $1,695 of convertible debentures and accrued interest. The conversions had an average price of $0.0008 per share.
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.
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.
ITEM 8. FINANCIAL STATEMENTS OF SMALLER REPORTING COMPANIES
SUNGRO MINERALS, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
(Unaudited)
INDEX
| |
| |
|
|
|
|
|
|
|
|
|
|
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 StatementsNovember 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 StatementsNovember 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 StatementsNovember 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 amountsrelated notes are included as part 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 collectabilitythis report as indexed 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 effectappendix 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 StatementsNovember 30, 2012 and 2011
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.
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, 20122014 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, 2012,2014, 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.the filing date.
Name and Address | Age | Position |
Frederick J. Pucillo, Jr. Warwick, RI | 64 | Director, President and CEO, up until his resignation on June 15, 2015 |
Erwin Vahlsing, Jr. Warwick, RI |
| Director, Chief Financial Officer, Treasurer, and Secretary, up until his resignation on June 15, 2015 |
Thomas Craft, Jr. Warwick, RI | 49 | Director, up until his resignation on June 15, 2015 |
William Sanchez | 42 | Director, CEO, CFO, Secretary and Treasurer from June 15, 2015 to present |
Frederick J. Pucillo, Jr. has served as our President, Chief Executive Officer and Director sincefrom December 2009.2009 to June 15, 2015. Mr. Pucillo has over twenty yearsyears’ 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 sincefrom September 2009.2009 to June 15, 2015. 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., has served as a Director of the Company up until June 15, 2015. Mr. Craft 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.
William Sanchez, took over as Chief Executive Officer, Chief Financial Officer, President, Treasurer and Secretary of the Company as of June 15, 2015. Mr. Sanchez has over 23 years of experience in the internet and telecommunications space. He has been involved as a systems engineer and architect during the inception of various nascent companies, such as SportsLine (www.sportsline.com), StarMedia (www.starmedia.com), and SportsAdvisors (www.sportsadvisors.com). For the last 15 years, he has been president of Amgentech, Inc., a full service technology solutions company. At Amgentech, Mr. Sanchez was retained to create the technical process and procedures as well as the internet components of well over 20 companies
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 currently have a compensation committee, nominating committee, executive committee of our board of directors, stock plan committeean Audit, Executive, Finance, Compensation, or Nominating Committee, or any other committees.committee of the board of directors.
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 3,019,50024,156 common shares, and 12,500 Preferred B 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 of 24,000 common shares and 12,500 Preferred B shares at the time ofperiod end covered by this report of 3,000,000 common shares.
26
report.
Significant Personnel
We have no significant personnel other than our officerssole officer and directors.director. 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 & | 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 | $196,500 |
| 0 | 0 | 0 |
Director |
|
|
|
|
|
|
|
|
|
None. |
| Annual Compensation | Long-Term Compensation | |||||||
Name & | Fiscal Year Nov 30, | Salary | Bonus | Other Annual Compensation (2) | Restricted Stock Awards in US$(1) |
| Options/SARs | LTIP Payouts | All Other Compensation(2) |
|
|
|
|
|
|
|
|
|
|
Frederick J. Pucillo, Jr. | 2014 | $ 0 | $0 | $139,933 | $ 0 |
| 0 | 0 | 0 |
Former Chief Executive Officer, | 2013 | $ 0 | $0 | $134,551 | $ 0 |
| 0 | 0 | 0 |
President, Director (3) | 2012 | $ 0 | $0 | $129,376 | $31,250 |
| 0 | 0 | 0 |
|
|
|
|
|
|
|
|
|
|
Erwin Vahlsing, Jr | 2014 | $ 0 | $0 | $136,933 | $ 0 |
| 0 | 0 | 0 |
Former Chief Financial Officer, | 2013 | $ 0 | $0 | $134,551 | $ 0 |
| 0 | 0 | 0 |
Secretary, Treasurer, | 2012 | $ 0 | $0 | $129,376 | $ 31,250 |
| 0 | 0 | 0 |
Director (4) |
|
|
|
|
|
|
|
|
|
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 in 2014 with only partial payment made during the years 20122013 and 2011.2012. The balance may be paid either in cash or stock.
(3)
On June 15, 2015, Frederick J. Pucillo, Jr. resigned his position of CEO, President and Director of the Company. He was replaced by William Sanchez.
(4)
On June 15, 2015, Erwin Vahlsing, Jr. resigned his position of CFO, Secretary and Treasurer of the Company. He was replaced by William Sanchez.
Employment Agreements
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
As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
Stock Options
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, 2013June 18, 2015 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 | Title of Class | Amount and Nature of Beneficial Ownership | Percentage |
Frederick J. Pucillo, Jr. Chief Executive Officer, President, and Director | Common Preferred B(2) | 3,019,500 62,500,000 | 0.2% 3.2% | Common Preferred B(2) | 24,156 62,500,000 | 0.2% 80.5% |
Erwin Vahlsing, Jr. Chief Financial Officer, Treasurer, Secretary, and Director | Common Preferred B(2) | 3,000,000 62,500,000 | 0.2% 3.2% | Common Preferred B(2) | 24,000 62,500,000 | 0.2% 80.5% |
Thomas Craft, Jr. Director | Preferred B(2) | 62,500,000 | 3.2% | Preferred B(2) | 62,500,000 | 80.5% |
Martin Bolodian Investor Relations | Common | 1,500,000 | 0.1% | Common | 12,000 | 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% | Preferred B(2) | 250,000,000 | 94.3% |
All officers, directors, and beneficial owners as a group | Common Preferred B(2) | 32,519,500 437,500,000 | 1.7% 18.8% | Common Preferred B(2) | 260,156 437,500,000 | 1.7% 96.7% |
(1) The percentage of common shares is based on 1,891,903,870 shares of common stock outstanding as of March 31, 2013.June 18, 2015.
(2) Percentage is based on current common stock outstanding as of March 31, 2013June 18, 2015 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'sthe Company'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 Sungrothe Company was or is to be a participant, that exceeded the lesser of (1) $120,000, or (2) 1% of the average of Sungro'sThe Company'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
As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
From time to time, our former CEO, Mal Bains lentlloaned money to the Company. At November 30, 20112014 and 20102013 the balance owed was $19,950$17,950 (CAD). respectively. The balance does not bear interest and is due on demand. For financial statement purposes, the balance is adjusted based on the exchange rate on the date of the statements.
During 2011, ourOur CEO and CFO have from time to time lentloaned money to the Company. At November 30, 20112014 and 2013, they had a balance owed was $100.to them of $1,384 and $1,384 respectively. The balance doesbalances do not bear interest and isare 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 2012.2015.
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, 20112014 and 2010 by Sherb & Co., LP2013 were as follows:
| Year ended | Year ended | Year ended | Year ended |
Audit Fees | $0 | $35,500 | $0 | |
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 |
|
| Incorporated by reference | ||||
Exhibit No. | Description of Exhibit | Filed herewith | Form | Exhibit | Filing date | Description of Exhibit | Filed herewith | Form | Exhibit | Filing date |
3.1 | Articles of Incorporation |
| S-1 | 3.1 | 02/22/08 | 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 | Certificate of Change dated July 20, 2009 |
| 8-K | 3.1 | 08/03/09 |
3.3 | Bylaws |
| S-1 | 3.2 | 02/22/08 | Bylaws |
| S-1 | 3.2 | 02/22/08 |
4.1 | Specimen Stock Certificate |
| S-1 | 4.1 | 02/22/08 | 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 | Consulting and Fee Agreement dated July 1, 2009 between Internet Marketing Solutions, Inc. and American Mineral Group |
| 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 |
| Employment Agreement dated September 2, 2010 between Frederick Pucillo, Jr. and American Mineral Group |
| 10-K | 10.7 |
|
10.8 | Employment Agreement dated September 2, 2010 between Erwin Vahlsing, Jr. and Sungro |
| 10-K | 10.8 |
| Employment Agreement dated September 2, 2010 between Erwin Vahlsing, Jr. and American Mineral Group |
| 10-K | 10.8 |
|
14 | Code of Ethics |
| S-1 | 14 | 02/22/08 | 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 |
| Certifications of Principal Executive Officer and Principal Financial 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 |
| Certifications of Principal Executive Officer and Principal Financial 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
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
FINANCIAL STATEMENTS
(Unaudited)
INDEX
Page Number | |
FINANCIAL STATEMENTS | |
Balance Sheets (Unaudited) | F-1 |
Statements of Operations (Unaudited) | F-2 |
Statements of Stockholders’ Deficit (Unaudited) | F-3 |
Statements of Cash Flows (Unaudited) | F-4 |
Notes to Financial Statements (Unaudited) | F-5 to F-22 |
Telco Cuba Inc. (Formerly CaerVision Global, Inc. and American Mineral Group, Inc.) | |||
BALANCE SHEETS | |||
(Unaudited) | |||
|
|
|
|
ASSETS |
|
|
|
| November 30, 2014 |
| November 30, 2013 |
CURRENT ASSETS: |
|
|
|
Cash | $ 2 |
| $ 2 |
TOTAL CURRENT ASSETS | 2 |
| 2 |
|
|
|
|
MINERAL RIGHTS and PROPERTIES |
|
|
|
Working Interest in Grand Chenier oil & gas prospect | - |
| 800,000 |
Oil field equipment | - |
| 1,200,000 |
TOTAL MINERAL AND FIXED ASSETS | - |
| 2,000,000 |
|
|
|
|
| $ 2 |
| $ 2,000,002 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
Accounts payable | $ 101,390 |
| $ 106,644 |
Accrued expenses | 271,596 |
| 298,811 |
Accrued payroll | 1,319,194 |
| 938,415 |
Convertible debentures (net of debt discount of $0 and $0) | 241,925 |
| 241,925 |
Notes payable (net of debt discount of $0 and $0) | 283,332 |
| 1,783,132 |
Due to former CEO | 17,476 |
| 18,796 |
Due to officers | 1,384 |
| 1,384 |
Derivative liability | 192,123 |
| 192,123 |
TOTAL CURRENT LIABILITIES | 2,428,421 |
| 3,581,230 |
|
|
|
|
STOCKHOLDERS' DEFICIT: |
|
|
|
Preferred A stock, $.001 par value; authorized shares - 100,000 shares; 3,000 and 3,000 issued and outstanding | 3 |
| 3 |
Preferred B stock, $.001 par value; authorized shares - 100,000 shares; 87,500 and 87,500 issued and outstanding | 88 |
| 88 |
Preferred C Stock to be issued | - |
| 250 |
Common stock, $.001 par value; authorized shares - 500,000,000 shares; 15,135,231 and 15,135,231 shares issued and outstanding | 15,135 |
| 15,135 |
Additional paid-in capital | 12,381,235 |
| 12,880,985 |
Deficit accumulated during the exploration stage | (14,824,879) |
| (14,477,689) |
TOTAL STOCKHOLDERS' DEFICIT | (2,428,418) |
| (1,581,228) |
|
|
|
|
| $ 2 |
| $ 2,000,002 |
|
|
|
|
See notes to unaudited financial statements
| |||
| F-1 | |||
| |||
Telco Cuba Inc. (Formerly CaerVision Global, Inc. and American Mineral Group, Inc.) | |||
STATEMENTS OF OPERATIONS | |||
(Unaudited) | |||
|
|
|
|
| For the Years ended | ||
| November 30, 2014 |
| November 30, 2013 |
|
|
|
|
OPERATING EXPENSES: |
|
|
|
General and administrative | $ 376,164 |
| $ 422,743 |
Bank charges and interest | - |
| 132 |
Foreign exchange (gain) loss | (2,597) |
| (2,015) |
Mineral claim maintenance and geological costs | - |
| - |
TOTAL OPERATING EXPENSES | $ 373,567 |
| 420,860 |
|
|
|
|
OPERATING LOSS | (373,567) |
| (420,860) |
|
|
|
|
Interest expense | ( 26,377) |
| 157,245 |
Change in fair value of derivative liability | - |
| (8,412) |
Amortization of debt discount | - |
| - |
Loss of mineral rights | - |
| - |
|
|
|
|
NET LOSS | $ (347,190) |
| $ (569,693) |
|
|
|
|
BASIC AND DILUTED - LOSS PER SHARE | $ (0.02) |
| $ (0.04) |
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
|
|
|
Basic and Diluted | 15,135,231 |
| 15,026,342 |
|
|
|
|
See notes to unaudited financial statements | |||
F-2
Telco Cuba Inc. (Formerly CaerVision Global, Inc. and American Mineral Group, Inc.) | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Preferred A Stock | Preferred B Stock | Preferred C Stock | Common Stock |
| Additional |
|
|
| Total | ||||||||
| ($.0001 par value) | ($.0001 par value) | ($.0001 par value) | ($.001 par value) |
| Paid-In |
| Accumulated |
| Stockholders' | ||||||||
| Shares |
| Amount | Shares |
| Amount | Shares |
| Amount | Shares |
| Amount |
| Capital |
| Deficit |
| Equity (Deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2012 | 3,000 | $ | 3 | 87,500 | $ | 88 | - | $ | - | 1,650,267,204 | $ | 1,650,267 | $ | 10,734,547 | $ | (13,907,996) | $ | (1,523,091) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debentures |
|
|
|
|
|
|
|
|
| 241,666,666 |
| 241,667 |
| (230,111) |
|
|
| 11,556 |
Preferred C Stock to be issued |
|
|
|
|
| - | 250,000 |
| 250 |
|
|
|
| 499,750 |
|
|
| 500,000 |
Adjustment for 1:125 reverse stock split April 24, 2013 |
|
|
|
|
|
|
|
|
| (1,876,798,639) |
| (1,876,799) |
| 1,876,799 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
| - |
|
| - | - |
| - |
|
|
| (569,693) |
| (569,693) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2013 | 3,000 |
| 3 | 87,500 |
| 88 | 250,000 |
| 250 | 15,135,231 |
| 15,135 |
| 12,880,985 |
| (14,477,689) |
| (1,581,228) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred C Stock to be issued |
|
|
|
|
| - | (250,000) |
| (250) |
|
|
|
| 499,750 |
|
|
| 500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
| - |
|
| - | - |
| - |
|
|
| (347190) |
| (347190) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2013 | 3,000 | $ | 3 | 87,500 | $ | 88 | - | $ | - | 15,135,231 | $ | 15,135 | $ | 12,381,235 | $ | (14,824,879) | $ | (2,428,418) |
F-3
Telco Cuba Inc. (Formerly CaerVision Global, Inc. and American Mineral Group, Inc.) | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||
|
|
|
|
| For the years ended | ||
| November 30, |
| November 30, |
| 2014 |
| 2013 |
| (unaudited) |
| (unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss | $ (347,190) |
| $ (569,693) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
Change in fair value of derivative | - |
| (8,412) |
|
|
|
|
Changes in assets and liabilities: |
|
|
|
Prepaid expenses | - |
| 3,500 |
Accounts payable and accrued expenses | 346,990 |
| 551,890 |
NET CASH USED IN OPERATING ACTIVITIES | (200) |
| (22,715) |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
Payments on acquisition of Mineral Rights Agreement | - |
| - |
Acquisition of additional claims | - |
| - |
NET CASH USED IN INVESTING ACTIVITIES | - |
| - |
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Proceeds from expenses paid by stockholder | - |
| - |
Proceeds from notes payable | 200 |
| 21,888 |
Proceeds from /(Payments) to officer and prior CEO | - |
| 359 |
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES | 200 |
| 22,247 |
|
|
|
|
NET INCREASE (DECREASE) IN CASH | 0 |
| (468) |
|
|
|
|
CASH - BEGINNING OF PERIOD | 2 |
| 470 |
|
|
|
|
CASH - END OF PERIOD | $ 2 |
| $ 2 |
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
| |
Cash paid for interest | $ - |
| $ - |
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
Preferred C Stock issued to acquire oil and gas interests | $ - |
| $ 500,000 |
Stock issued in connection with conversion of debentures | $ - |
| $ 11,525 |
Notes issued in connection with oil & gas acquisition | $ - |
| $ 1,500,000 |
|
|
|
|
See notes to unaudited financial statements | |||
| F-4 | |||
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
1. Nature of Operations and Going Concern
Telco Cuba Inc., (Formerly CaerVision Global, Inc. fka American Mineral Group Minerals Inc.) (the "Company") was incorporated in the State of Nevada on August 10, 2007. In the fiscal year ended November 30, 2014 and 2013, the Company was engaged in the exploration, development, and acquisition of mineral properties. As a subsequent event to these financial statements herein, on June 12, 2015, the Company consummated a share exchange agreement with Amgentech Inc./Telco Cuba, Inc., a Florida corporation, whereby the Company issued 75,000,000 shares of common stock previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech Inc./Telco Cuba, Inc. Amgentech Inc./Telco Cuba, Inc. will be the surviving entity and focus on opportunities in the Cuban telecommunications market.
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 $347,190 for the year ended November 30, 2014, and has an accumulated deficit of $14,824,879. 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) Accounting Principles
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.
b) 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.
c) 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 tables provides the assets and liabilities carried at fair value measured on a recurring and non-recurring basis as of November 30, 2014 and November 30, 2013:
|
|
|
|
| Fair Value Measurements at November 30, 2014 |
| ||||||
|
|
|
|
| Quoted prices |
|
| Significant |
|
|
|
|
|
| Total Carrying |
|
| in active |
|
| other |
|
| Significant |
|
|
| Value at |
|
| markets |
|
| observable |
|
| unobservable |
|
|
| November 30, 2014 |
|
| (Level 1) |
|
| inputs (Level 2) |
|
| inputs (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities | $ | 192,123 |
| $ | - |
| $ | - |
| $ | 192,123 |
|
|
|
|
|
| Fair Value Measurements at November 30, 2013 |
| ||||||
|
|
|
|
| Quoted prices |
|
| Significant |
|
|
|
|
|
| Total Carrying |
|
| in active |
|
| other |
|
| Significant |
|
|
| Value at |
|
| markets |
|
| observable |
|
| unobservable |
|
|
| November 30, 2013 |
|
| (Level 1) |
|
| inputs (Level 2) |
|
| inputs (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities | $ | 192,123 |
| $ | - |
| $ | - |
| $ | 192,123 |
|
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, 2014 |
| November 30, 2013 | ||
Beginning balance | $ | 192,123 |
| $ | 200,535 |
Derivative liabilities recorded |
| - |
|
| - |
Derivative liabilities converted |
| - |
|
| - |
Unrealized gain attributable to the change in liabilities still held |
| - |
|
| (8,412) |
Ending balance | $ | 192,123 |
| $ | 192,123 |
The fair value of the derivative liability at November 30, 2014 and November 30, 2013, totaling $192,123 and $192,123, 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, 2013 and 2012, are reported in other expenses as follows:
| November 30, 2014 |
| November 30, 2013 | ||
(Gain) Loss on derivative liabilities recorded during the period | $ | - |
| $ | - |
Debt discount attributable to derivative liabilities recorded |
| - |
|
| - |
Derivative liabilities converted during the period |
| - |
|
| - |
Unrealized gain attributable to the change in liabilities still held |
| - |
|
| 8,412 |
Net unrealized (gain) loss included in earnings | $ | - |
| $ | 8,412 |
The Company did not have any Level 1 or Level 2 assets or liabilities as of November 30, 2014 and 2013, and had Level 3 liabilities consisting of notes payable. The carrying amount of the notes payable at November 30, 2014 and 2013, approximate their respective fair value based on the Company’s incremental borrowing rate.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
2. Significant Accounting Policies (continued)
c) Fair Value Measurements (continued)
Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of November 30, 2014 and 2013, 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.
d) 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.
e) 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.
f) 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, 2014, the Company had no revenues to report.
f) 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.
g) 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.
h) 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.
i) 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
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. In March 2011, the Company added an additional 217 unpatented lode mining claims. In fiscal year 2012, the Company determined that the effort and cost of developing these claims required more resources that could be more effectively used on other opportunities, and abandoned the Conglomerate Mesa project.
In February 2013, the Company acquired a 28% Working Interest in the Grand Chenier oil and gas prospect in Louisiana. The property contains an estimate 9.0 million barrels of oil and was in production until approximately 2009 when the then operator failed to manage the interests and certain repairs were not made leading to the cessation of production. The Company believes that with approximately $2.0 million in capital, the field can be returned to production and additional wells within the prospect can then be brought online increasing production to a profitable level.
In November 2014, the Company surrendered the Grand Chenier prospect back to its orginal owners in exchange for the cancellation of the notes and stock to be issued.
4. Capital Stock
a) Authorized
Authorized capital stock consists of:
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 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.
In January 2013, 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.
In January 2013, the Company issued 85,000,000 common shares in connection with the conversion of $2,125 of convertible debentures and accrued interest. The conversions had an average price of $0.00003 per share.
There were no share issuances in the fiscal year ended November 30, 2014
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
5. Income Taxes
A reconciliation of income taxes at statutory rates with the reported income taxes is as follows:
Period ended November 30, |
| 2014 |
| 2013 |
Income tax benefit at Federal statutory rate of 35% | $ | 195,300 | $ | 199,400 |
State Income tax benefit, net of Federal effect |
| 28,000 |
| 28,500 |
Permanent differences (primarily stock-based compensation) |
| - |
| - |
Change in valuation allowance |
| (223,300) |
| (227,900) |
| $ | - | $ | - |
The significant components of the Company's deferred income tax assets are as follows:
As at November 30 |
| 2014 |
| 2013 |
|
|
|
|
|
Net Operating losses | $ | 2,794,400 | $ | 2,574,400 |
Loss on mineral rights |
| 2,838,000 |
| 2,838,000 |
Valuation allowance |
| (5,632,400) |
| (5,412,400) |
| $ | - | $ | - |
At November 30, 2014 the Company has available net operating losses of approximately $2,794,400 which may be carried forward to apply against future taxable income. These losses will expire in 2034. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.
6.
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.
| November 30, |
| November 30, |
| Date of |
| 2014 |
| 2013 |
| issuance |
|
|
|
|
|
|
$32,500 Debenture: |
|
|
|
|
|
Discount Rate – Bond Equivalent Yield | 0.30% |
| 0.30% |
| 0.30% |
Annual rate of dividends | - |
| - |
| - |
Volatility | 347.18% |
| 196.41% |
| 319.58% |
Weighted Average life (months) | 0 |
| 0 |
| 9 |
|
|
|
|
|
|
$40,000 Debenture: |
|
|
|
|
|
Discount Rate – Bond Equivalent Yield | 0.30% |
| 0.30% |
| 0.30% |
Annual rate of dividends | - |
| - |
| - |
Volatility | 347.18% |
| 196.41% |
| 319.58% |
Weighted Average life (months) | 0 |
| 0 |
| 9 |
|
|
|
|
|
|
$35,000 Debenture: |
|
|
|
|
|
Discount Rate – Bond Equivalent Yield | 0.30% |
| 0.30% |
| 0.30% |
Annual rate of dividends | - |
| - |
| - |
Volatility | 347.18% |
| 196.41% |
| 262.42% |
Weighted Average life (months) | 0 |
| 0 |
| 9 |
|
|
|
|
|
|
$174,530 Debenture: |
|
|
|
|
|
Discount Rate – Bond Equivalent Yield | 0.30% |
| 0.30% |
| 0.30% |
Annual rate of dividends | - |
| - |
| - |
Volatility | 347.18% |
| 196.41% |
| 262.42% |
Weighted Average life (months) | 0 |
| 0 |
| 6 |
|
|
|
|
|
|
Fair Value | $ 192,123 |
| $ 192,123 |
|
|
There were no new convertible debentures issued during the fiscal years ended November 30, 2014 and 2013.
At November 30, 2014, the Company reevaluated the derivative liability based on the fair value assumptions for the convertible debt that it had entered into in previous years. As of November 30, 2014, the derivative liability remained the same during the year then ended due to the conversion threshold being equivalent at this reporting date as compared to the previous fiscal year end.
7.
Notes Payable
For the years ended November 30, 2014 and 2013, the Company borrowed $200 and $21,888, respectively, from a non-affiliated accredited investor. The Notes carry interest at a rate of 15% per year and are due on demand.
The Company raised $0 and $359 in demand notes to from its CFO during the fiscal years ended November 30, 2014 and 2013, respectively.
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.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
8.
Related party transactions
Due to Officers
From time to time, our former CEO, Mal Bains loaned money to the Company. At November 30, 2014 and 2013 the balance owed was $17,476 and $18,796 respectively. The balance does not bear interest and is due on demand.
Our CEO and CFO have from time to time loaned money to the Company. At November 30, 2014 and 2013, they had a balance owed to them of $1,384 and $1,384 respectively. The balances do not bear interest and are due on demand.
Employment Contracts with Officers
In September 2010, the Company entered into five year Employment Contracts with its three officers (See Note 12). As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
9.
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 American Mineral Group 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 American Mineral Group including cash, stock and stock purchase warrants.
10.
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
As of November 30, 2014 and 2013, the Company had an accrued payroll liability balance of $1,319,194 and $938,415.
11.
Subsequent Events
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that other than listed below, no material subsequent events exist.
On January 9, 2015, the outstanding shareholders of the Company voted to change the name of the Company from American Mineral Group, Inc. to CaerVision Global, Inc. in order to better reflect the planned change in the Company’s future operations.
On January 26, 2015, the Company entered into a stock purchase definitive agreement with Vitall, Inc., a Delaware corporation, whereby the Company will issue 15,000,000 shares of common stock for 100% of the issued and outstanding capital of Vitall, Inc. On March 17, 2015, Vitall, Inc. terminated the merger agreement due to non-performance on the part of the Company. As a result, the name CaerVision Global, Inc. will be surrendered back to its original owner.
On June 12, 2015, the Company consummated a share exchange agreement with Amgentech Inc./Telco Cuba, Inc., a Florida corporation, whereby the Company issued 75,000,000 shares of common stock previously issued to third parties in exchange for 100% of the issued and outstanding capital of Amgentech Inc./Telco Cuba, Inc. Amgentech Inc./Telco Cuba, Inc. will be the surviving entity and focus on opportunities in the Cuban telecommunications market.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to change its name from CaerVision Global, Inc. to Telco Cuba, Inc.
On June 15, 2015, the Company effectuated an amendment to its articles of incorporation to appoint William Sanchez to the position of CEO, CFO, President, Treasurer and Secretary. In the same amendment to our articles of incorporation, Erwin Vahlsing Jr., Thomas J Craft Jr. and Frederick J Puccillo Jr., resigned their positions as officers and directors of the Company.
The Company had the following issuances of stock subsequent to November 30, 2014;
In January 2015, the Company issued 791,176 common shares in connection with the conversion of $1,345 of convertible debentures and accrued interest. The conversions had an average price of $0.0017 per share.
In January 2015, the Company issued 791,593 common shares in connection with the conversion of $4,280 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In January 2015, the Company issued 831,481 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0054 per share.
In February 2015, the Company issued 832,075 common shares in connection with the conversion of $4,490 of convertible debentures and accrued interest. The conversions had an average price of $0.0053 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
In February 2015, the Company issued 832,250 common shares in connection with the conversion of $3,325 of convertible debentures and accrued interest. The conversions had an average price of $0.0040 per share.
Telco Cuba Inc.
(Formerly CaerVision Global, Inc. and
American Mineral Group, Inc.)
Notes to the Unaudited Financial Statements
November 30, 2014 and 2013
(Unaudited)
11.
Subsequent Events (continued)
In February 2015, the Company issued 2,560,000 common shares in connection with the conversion of 512 shares of Preferred B Shares.
In March 2015, the Company issued 831,633 common shares in connection with the conversion of $4,075 of convertible debentures and accrued interest. The conversions had an average price of $0.0049 per share.
In March 2015, the Company issued 832,075 common shares in connection with the conversion of $4,660 of convertible debentures and accrued interest. The conversions had an average price of $0.0056 per share.
In March 2015, the Company issued 328,182 common shares in connection with the conversion of $1,805 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 503,636 common shares in connection with the conversion of $4,575 of convertible debentures and accrued interest. The conversions had an average price of $0.0055 per share.
In March 2015, the Company issued 2,545,000 common shares in connection with the conversion of 509 shares of Preferred B Shares.
In April 2015, the Company issued 3,395,000 common shares in connection with the conversion of 679 shares of Preferred B Shares.
In March 2015, the Company issued 3,730,000 common shares in connection with the conversion of 746 shares of Preferred B Shares.
In April 2015, the Company issued 2,067,073 common shares in connection with the conversion of $1,695 of convertible debentures and accrued interest. The conversions had an average price of $0.0008 per share.
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.
|
|
|
|
| |
|
|
|
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 |
|
|
|
| ||
|
|
|
|
30