Page
PART I
Item 1.	Business				3
Item 1A.	Risk Factors				10
Item 1B.	Unresolved Staff Comments				1014
Item 2.	Properties				1514
Item 3.	Legal Proceedings				1514
Item 4.	Mine and Safety DisclosuresDisclosure		14
		15
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities				1615
Item 6.	Selected Financial Data				1615
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations				16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk				2019
Item 8.	Financial Statements and Supplementary Data				2019
Item 9.	Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure				2139
Item 9A.	Controls and Procedures				2139
Item 9B.	Other Information		39
		22
PART III
Item 10.	Directors, Executive Officers and Corporate Governance				2339
Item 11.	Executive Compensation				2641
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters				2843
Item 13.	Certain Relationships and Related Transactions, and Director Independence				2944
Item 14.	Principal Accountant Fees and Services		44
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PART IV
Item 15.	Exhibits and Financial Statement Schedules		45
Item 16	Form 10-K Summary		3245
	SIGNATURES		46

2

FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K (the “Report”) and other reports (collectively the “Filings”) filed by the registrant from time to time with the Securities and Exchange Commission (the “SEC”) contain or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, the registrant’s management as well as estimates and assumptions made by the registrant’s management. When used in the filings the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to the registrant or the registrant’s management identify forward looking statements. Such statements reflect the current view of the registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this Report entitled “Risk Factors”) relating to the registrant’s industry, the registrant’s operations and results of operations and any businesses that may be acquired by the registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although the registrant believes that the expectations reflected in the forward looking statements are reasonable, the registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the registrant does not intend to update any of the forward-looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the registrant’s financial statements and the related notes thereto included in this Report.

In this Report, “we,” “our,” “us,” “TGS International Ltd.” or the “Company” sometimes refers collectively to TGS International Ltd. and its subsidiaries and affiliated companies.

PART I

Item 1. Business

General Overview

The Company was established on December 1, 2016 in Nevada, USA. On September 14, 2018, the Company and Arcus Mining Holdings Limited (“Arcus”) entered into a Share Exchange Agreement, dated September 14, 2018 (the “Share Exchange Agreement”), with Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited (the “Selling Stockholders”), pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of the Company. Arcus, through its wholly owned subsidiaries, is engaged in the exploration, mining, processing and sale of fluorite in Mongolia.

Arcus currently owns three fluorite projects through its subsidiaries. Its official mining licenses in Mongolia are shown below:

Details of Three Fluorite Projects transferred to the Company by Arcus

According to the staged exploration results, there are abundant resources as well as a large potential to expand the resource base of the mines, laying a solid foundation for the sustainable development of the Company.

Arcus strives to create more value through efficiency in mining. The initial expected annual production capacity of fluorite (“CaF₂”) for 2020 and 2021 is described below:

Arcus intends to start producing 97% Acid Grade powder products and further increase the production of the metallurgical grade products in 2020.

PART INevertheless, there are several areas where Arcus expects to outperform the market:

In summary, the Company intends to make full use of Mongolia’s fluorite resource advantages and market under the guidance of our experienced management team.

Item 1. BusinessArcus Company Background

The founders and the management of Arcus have extensive experience in the mining industry in Africa, China, Russia and Mongolia. Their industrial experience includes exploration, mining and mineral investment. With extensive experience in the manufacture and sale of fluorite and related products, Arcus believes the Company will be able to produce the raw material needed for various high standard industrial products, including the manufacture of acid grade fluorite, metallurgical grade fluorite and more.

To meet ever-changing demands from customers, Arcus established a management team comprised of several experienced persons in the industry, as well as financial and marketing experts from international and local markets. The mines use advanced production equipment to produce high-quality products for the market.

In 2014, the Mongolian Parliament waived several restrictions on issuing new minerals exploration licenses and introduced a series of new regulations to encourage foreign investments in the Mongolian mining sector. Arcus is well positioned to take advantage of new opportunities in this promising business environment.

Arcus Company Structure

Arcus indirectly holds three fluorite projects in Mongolia through its wholly owned subsidiaries incorporated in Hong Kong, namely Best Metro (Hong Kong) Limited, China Aim (Hong Kong) Limited, which in turn wholly own Mongolian based fluorite mining companies Khan Shashir LLC (“Khan Shashir”), Shek Hung Gold LLC (“Shek Hung”) respectively. Arcus Hong Kong Limited wholly own the PRC based Best Metro Import & Export Trading (Inner Mongolia) Limited as a trading arm.

The demand for metallurgical grade fluorite in China and other Asian countries currently exceeds supply, and current market conditions are expected to continue for the foreseeable future, creating excellent opportunities for the Company. Inherent uncertainties in the mining industry as well as the changing legal and political environment in Mongolia potentially bring additional business risks, as detailed under “Risk Factors” below.

Shek Hung currently owns a project called Altan Ovoo, while Khan Shashir owns the mines Oosmonskogo 1 and Oosmonskogo 2.

Mining Licenses

The three fluorite projects in Mongolia are Altan Ovoo (“Mine A”), Oosmonskogo 1 (“Mine B”) and Oosmonskogo 2 (“Mine C”).

The three projects have all been issued official mining licenses. The mining licenses allow the right to conduct mining activities throughout the license areas and to construct structures within the license areas that are related to its mining activities.

Mine A is located in Uulbayan soum, Sukhbaatar province, 530 kilometers (“km”) from Ulaanbaatar, the capital of Mongolia. Mine A’s mining license, reference number MV-009918, is valid until December 29, 2034. Mine A covers an area of 39.35 hectares (97.24 acres).

Mine B is located in the Bayan-Ovoo soum, Khentii province, 440 km from Ulaanbaatar. Mine B’s license, reference number MV-016819, is valid until April 28, 2041. Mine B covers an area of 98.37 hectares (243.08 acres).

Mine C is adjacent to Mine B. Mine C’s license, reference number MV-017305, is valid until April 23, 2043. Mine C covers an area of 300.96 hectares (743.69 acres).

The location map of Mines A, B and C are shown below:

Resources and Reserves

After years of exploration, a significant potential for high grade fluorite resources for Mine A and Mine B has been positively demonstrated.

The historic exploration of Mine A and Mine B can be divided into three phrases:

Arcus’ own geological team will continue to search for other resources through continued exploration in the areas surrounding existing deposits.

Mine A

Phase 1: Investigation conducted by former Soviet Union government agencies in 1980’s

The former Soviet Union politically governed Mongolia between 1925 and 1991. Its governmental agencies performed the first systematic exploration on Mine A between 1985 and 1987. Only one vein was located, east-trending with a strike length of 600 to 700 meters. The major work performed included drilling and digging six trenches three to four meters deep along the vein.

Phase 2: Investigation conducted by an independent surveyor in 2012

Since the date of the report by the Soviet Union governmental agencies, 27 new holes were drilled (2,916 m) underneath the trenches excavated in the 1980s to investigate the resource in Mine A. Most holes were drilled vertically or at an angle of 60° to the north, as the vein dips approximately 45° to the south.

Phase 3: Investigation conducted by SRK Consulting

Considering the advice from the independent explorer on the possibility of re-drilling some core holes to increase output of Mine A and Mine B, Arcus formally engaged SRK Consulting to perform a formal survey on both mines.

In late 2014, a specialist from SRK Consulting visited both Mine A and Mine B. SRK Consulting collected 43 extra drill core samples in Mine A during its visit. The finding by SRK Consulting is at a better grade with an average CaF₂ of 34%.

Mine B

Phase 1: Investigation conducted by former Soviet Union government agencies in 1930s to 1950s

Former Soviet Union governmental agencies performed the first systemic exploration on Mine B in 1937 and continued until approximately 1950. The main vein located was north-striking. It was traced by trenching and defined to be at least 400 meters in length in the 1940’s.

Major work performed in Phase 1 included:

Phase 2: Investigation conducted by an independent surveyor in 2012

The Company has drilled 9 vertical core holes with an aggregate length of 877 meters in 2011 to update information on Mine B. Based on the samples obtained from the 9 vertical core holes drilled and assays of 4 drill hole cores in the Soviet Union period.

Phase 3: Investigation conducted by SRK Consulting

During the site visit to Mine B, the specialist consultant from SRK Consulting observed that most of the fluorite ores in Mine B have a grade of more than 90% CaF₂ and could be used for ornamental and lapidary purposes.

Based on the samples taken by SRK Consulting, the average grade of CaF₂ is 67%.

Mine C

No exploration or resource estimate has been done on Mine C, but initial surface investigations suggest that the resource of Mine B may extend onto the license of Mine C.

Future development

The Company is planning to continue with a second round of exploration in Mine A and Mine B and start a first round of exploration in Mine C. The primary objective would be to gain a better understanding of the geological structure to assist in mine planning and to upgrade the identified inferred resource to the indicated resource category.

According to SRK Consulting, the drill holes in Mine A do not provide consistent coverage of all areas. Therefore, another round of exploration would allow a more detailed understanding of the resource allocation and help upgrade much of the inferred resource into the indicated resource category. Full feasibility studies for Mine A and Mine B will be prepared once it’s the right time. These feasibility studies will be conducted by external specialist consultants together with Arcus’ experienced team.

Mine C is adjacent to Mine B, and given the large cover area of Mine C, we are optimistic regarding the resources of Mine C. Based on preliminary estimates by the geologists, it is possible that the resource of Mine C could be greater than that of Mine B. Conducting a thorough exploration of the resource will allow better planning on mining Mine C and ensure sustainability of the Company’s growth.

Operations

Both Mine A and Mine B were in the exploration stage in 2019. Revenue generated during the year were $101,222 by Mine A and $181,635 by Mine B. We expected to further extend the operation of Mine A and Mine B in the second quarter of 2020.

There are two types of products available from Mine B, metallurgical and acid grade fluorite. Metallurgical grade fluorite is sold mainly to steel manufacturers for use as flux in steel production. Acid grade fluorite which is used to manufacture hydrofluoric acid, a feedstock for many different chemical processes. At the moment, there is only metallurgical grade fluorite available from Mine A.

The Company ran trial productions at Mine A and Mine B in 2019. Below is the summary of revenue for 2019 from the trial productions.

Workflow of Operations

The operation at Mine A and Mine B of the Company involves several steps as shown below:

Mine Preparation

Preparing a mine involves investigation, exploration, evaluation and the construction of necessary infrastructures and utilities facilities, among other tasks.

Both Mine A and Mine B are now equipped with the necessary facilities, but the infrastructure in Mine B is more comprehensive. The basic facilities information of Mine A and Mine B is shown below:

Water Resources

It is probable that there is sufficient water from drilled wells for mining and processing operations in Mine A and Mine B. Several such wells have been completed at both Mine A and Mine B. All the water will be recycled, but in the dry climate, evaporation is high.

Electricity Resources

Mine B is currently connected to the Bayan-Ovoo soum electrical power grid. Power generation in Mine A is currently supported by a set of wind turbines. Both Mine A and Mine B have sufficient power to meet daily usage, and each has two sets of contingent diesel generators.

Infrastructures

At Mine B, the construction of offices, living quarters and explosive stores has been completed. Of the four shafts built in Mine B, one shaft and the other shaft has been excavated with a 150 meter long and 180 meter long development drive in the fluorite ore respectively. There was no vertical development in 2019. Construction on excavating an underground tunnel to connect the four shafts is completed in 2019.

Mining activities are halted for the winter break, which takes place between January and March every year. Since mining activities are conducted underground, which is more dependent on the weather condition, the winter break for the mining activities is one month longer than the winter break for the production line. We have adopted open-pit mining at Mine A which is different from Mine B. Although mining activities are subject to weather, open-pit mining is more flexible so we decided to suspend the mining activities at Mine A in mid-February instead of late November 2019 as we did with Mine B. Production of both Mine A and Mine B is to be continued after the winter break and is expected to commence in the second quarter of 2020.

Mine A is planned as an open pit mine because the mineralization outcrops on the surface are relatively easy to begin mining. Four temporary offices and storage containers have been set up at Mine A. Since the resource in Mine A is large, management plans to develop Mine A in stages. Mining of the open pit has been commenced in 2019, while the deeper ores will be subjected to further exploration.

Mine A is originally planned to produce fluorite powder. However, in order to cope with our business development, the management decided to put the construction of refinery at Mine A on hold for now. Once it is the suitable time for further expanding our business, the management may resume the plan of the construction of refinery at Mine A.

Mining

A strategic open pit exploration at Mine A has been started in 2019. The refinery operations described below apply only to Mine B but can serve as a general reference regarding the future production of Mine A. Starting from year 2019, we have outsourced the mining activities to subcontractors.

Refining

The Company will not outsource its core fluorite processing to third parties but rather work together with the strategic partners. Major fluorite processing of metallurgical grade fluorite includes gravity separation, which refines the fluorite granules, followed by sorting the granules by sizes in accordance with a customer’s needs.

The major machines employed in Mine B are the shakers and the jiggers. A jigger is a vertical container where a pulsing action divides ores into different layers according to their densities. When sorted by a shaker, ore is placed on a horizontal water surface, and the shaker applies longitudinal forces. As ores of different densities respond to longitudinal forces, they are sorted accordingly. Both shakers and jiggers are common tools in conducting gravity selection, but jiggers mainly divide coarse ores into different size groups (30 mm - 80 mm) and shakers mainly refine smaller ores (3 mm – 10 mm or 1 mm – 3 mm).

Sales and Marketing

From 2015 throughout 2019, the mines have still been in exploration stage so the Company decided to sell metallurgical grade fluorite within the territory of Mongolia to avoid incurring cross-border freight and transportation. The Company would like to further expand its production in the second quarter of 2020. Some of the ultimate target customers include foreign steel manufacturers.

Customers

The Company intends to develop a pool of customers to reduce its distribution risk. The Company’s targeted customer base is set forth below:

The Market for Fluorite in Mongolia

Fluorite and its Applications

Fluorite, commercially termed as fluorspar, is a transparent halide mineral of various colors, composed primarily of calcium fluoride (CaF₂). Fluorite is the dominant source for the chemical element fluorine. Due to its unique chemical properties, fluorine is largely irreplaceable in its use. The major applications of fluorite and the corresponding requirement of content percentage are summarized below:

Most of the world demand for fluorite is for acid-grade fluorite, which is used to manufacture hydrofluoric acid, a feedstock for many different chemical processes. The second greatest demand is for metallurgical grade fluorite, used as flux in steel and aluminum production. A small portion is produced as ceramic grade fluorite for the manufacture of ceramics and enamels due to the high content percentage requirement.

Competition

There are a number of listed companies that are primarily focused on mining fluorite. We have presented them in the table set forth below.

Patents, Trademarks, Licenses, Franchises, Concessions and Royalty Agreements

Licenses

The three projects owned by the Company all hold official mining licenses from the Mineral Resources and Petroleum Authority of Mongolia. The mining licenses allow the holder the right to conduct mining activities throughout the license areas and to construct structures within the license areas that are related to its mining activities.

Mine A is located in Uulbayan soum, Sukhbaatar province, 530 kilometers from Ulaanbaatar, the capital of Mongolia. Mine A’s mining license, reference number MV-009918, is valid until December 29, 2034. Mine A covers an area of 39.35 hectares (97.24 acres).

Mine B is located in the Bayan-Ovoo soum, Khentii province, 440 kilometers from Ulaanbaatar. Mine B’s license, reference number MV-016819, is valid until April 28, 2041. Mine B covers an area of 98.37 hectares (243.08 acres).

Mine C is adjacent to Mine B. Mine C’s license, reference number MV-017305, is valid until April 23, 2043. Mine C covers an area of 300.96 hectares (743.69 acres).

Government Approval and Regulation of the Company’s Principal Products or Services

The Mineral Law of Mongolia governs our operations. The Company endeavors to ensure the safe and lawful operation of its facilities in its operations and the distribution of its products and believes it is in compliance in all material respects with applicable laws and regulations.

Employees

The Company currently has approximately 100 employees.

Principal Executive Offices

Our principal executive office is located at Suite 1023, 10/F., Ocean Centre, 5 Canton Rd., Tsim Sha Tsui, Kowloon, Hong Kong.

Item 1A. Risk Factors

Risks Related to our Business

Our limited operating history makes it difficult to evaluate our future prospects and results of operations.

The Company is in the process of developing its mines and bringing its fluorite products to the market. Accordingly, we have a limited operating history. You should consider our future prospects in light of the risks and uncertainties experienced by early stage companies in evolving geographical areas such as Mongolia. Some of these risks and uncertainties relate to our ability to:

If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.

Our operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.

Our operating results may fluctuate as a result of a number of factors, many outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly, year-to-date and annual expenses as a percentage of our revenues may differ significantly from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause our stock price to fall. Each of the risk factors listed in this section and the following factors may affect our operating results:

Because our business is changing and evolving, our historical operating results may not be useful to you in predicting our future operating results.

Our business operations may be adversely affected by present or future governmental regulations or political changes.

Mongolia, the country where the Company’s mines are situated, is currently undergoing rapid development. Our operations may be affected by changes to Mongolian regulation of the mining sector or changing levels of political involvement in mining.

The Mongolian Parliament passed an amendment to the Minerals Law on July 1, 2014 to ease certain restrictions on the mining industry and also to give some incentives to foreign mining companies and investors. These changes have clarified many areas of the law and settled issues around government interests in mines of national or strategic importance. These changes have brought potential benefits to the Company. Visits paid by Chinese president Xi Jinping to Mongolia have indicated Chinese support for strengthening cooperation between Mongolian and Chinese entities in the future. Corresponding lobbying by the Chinese government may help ensure that the Mongolian government respects the rights of foreign mining companies investing in Mongolia.

Our business operations may be adversely affected by the recent COVID-19

Due to the current outbreak of novel coronavirus that was first reported from Wuhan, China, on December 31, 2019 and since then, the government of Mongolia officially announced on January 31, 2020 that it will close all ports of entry from and into China with immediate effect until March 2, 2020. However, The Embassy of the PRC in Mongolia further announced on February 19, 2020 that all ports of entry from and into China will be closed until March 30, 2020. We expect that such temporary closures might result in a delay in the resumption of our exploratory work and production in the newly set up refinery at Mine A and Mine B respectively. However, we have started the preparation work for arranging working visas for the Chinese workers in advance and will hire more Mongolian workers in case all ports of entry from and into China are not open before we resume our work at both Mine A and Mine B so as to minimize the effect of the delay.

Taking the recent worldwide outbreak and development of the COVID-19 into account, the management worried the development of 2020 but we have been strictly prudent towards the epidemic. We will keep tracking the measures of different governments, especially the Chinese and Mongolian Government, are going to implement so to determine what the Company will do in order to minimize the negative effect of the COVID-19 on our business. The management will strengthen all necessary measures and make special arrangement so to protect our workers from the COVID-19 after the winter break as well as sticking to our expected performance in 2020.

Deviations between inferred resources and actual mineable resources may have an adverse effect on the Company’s results.

Actual mine output usually deviates to a certain extent when compared to the inferred resource, as every estimation model is based on certain assumptions made in the calculation. In order to enhance estimation accuracy and maximize output quantity and quality, the Company engaged SRK Consulting, a leading mining consultant company, to conduct a detailed resource and reserve assessment. However, there can be no assurance as to the accuracy of SRK Consulting’s estimate.

Adverse weather conditions may limit the periods during which the Company may conduct its operations or may cause a disruption in its utilities or the delivery of its products to its customers.

Due to the severe weather in Mongolia during the winter, we have scheduled a regular winter break between January and March for mining activities and processing every year. However, it is possible that severe weather conditions may occur outside their normal range in some years, which would hinder the Company’s mining and production operations and require the extension of the scheduled winter break. Severe weather may also cause a disruption in the Company’s essential utilities. Although the production lines will be roofed to minimize the impact of severe weather and the Company will maintain a backstock of ore to reduce the chances of production suspension from interruptions in mining, there can be no assurance that these measures will be adequate to compensate for the effects of especially severe weather. As a further precaution, we will also maintain a sufficient inventory level in our Baganuur warehouse to secure a continuous supply to customers during the winter, but there can be no assurance that our rail and trucking transportation methods will not be disrupted by weather events.

We may suffer losses resulting from industry-related accidents.

Despite the safety precautions taken by the Company in its mining operations, there can be no assurance that we will not suffer losses resulting from industry-related accidents. To minimize the occurrence of industrial incidents, we regularly monitor mine site construction in order to identify and implement practical protective measures.

We may not be successful in implementing important strategic initiatives, which may have a material adverse impact on our business and financial results.

There is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations, which may result in a material adverse impact on our business and financial results. These strategic initiatives are designed to drive long-term stockholder value and improve our results of operations.

We face significant competition, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected.

Increased competition could reduce our profitability and result in a loss of market share. Some of our existing and potential competitors may have competitive advantages, such as significantly greater financial, marketing or other resources, and may successfully mimic and adopt our business models. We cannot assure you that we will be able to successfully compete against new or existing competitors.

Failure to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business and prospects.

We intend to expand our operations and plan to expand as rapidly as possible. The continued growth of our business will result in, substantial demand on our management, operational and other resources. In particular, the management of our growth will require, among other things:

As we continue this effort, we may incur substantial costs and expend substantial resources. We may not be able to manage our current or future operations effectively and efficiently or compete effectively in new markets we enter. If we are not able to manage our growth successfully, our business and prospects would be materially and adversely affected.

Attracting skilled personnel are essential to growing our business.

We face competition for attracting skilled personnel. If we fail to attract and retain qualified personnel to meet current and future needs, this could slow our ability to grow our business, which could result in a decrease in market share.

We may need additional capital and we may not be able to obtain it at acceptable terms, or at all, which could adversely affect our liquidity and financial position.

We may need additional cash resources due to changed business conditions or other future developments. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

We do not have a majority of independent directors serving on our board of directors, which could present the potential for conflicts of interest.

We do not have a majority of independent directors serving on our board of directors. In the absence of a majority of independent directors, our executive officers could establish policies and enter into transactions without independent review and approval thereof. This could present the potential for a conflict of interest between us and our stockholders, generally, and the controlling officers, stockholders or directors. However, we are going to invite different professionals as our independent directors gradually. An independent director was added in April 2019.

We have limited insurance coverage.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited insurance products. We have determined that the risks of disruption or liability from our business, the loss or damage to our property, including our facilities, equipment and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result, we do not have any business liability, disruption, litigation or property insurance coverage for our operations in China except for insurance on some company owned vehicles. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

Similarly, although it has been 80 years since the introduction of insurance in Mongolia, the penetration of insurance is still low and its development is still immature which the insurance industry is still yet to be up to international standard. As a result, we do not have any business liability, disruption, litigation or property insurance coverage for our operations in Mongolia except for insurance on some company owned vehicles. Any uninsured occurrence of loss or damage to property, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, 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.

As a public company, we have significant additional requirements for enhanced financial reporting and internal controls. We are required to document and test our internal control procedures in order to satisfy the requirements of SOX 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

We cannot assure you that we will not, in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors to lose confidence in our reported financial information and have a negative effect on the market price for shares of our common stock.

Lack of experienced officers of publicly-traded companies may hinder our ability to comply with Sarbanes-Oxley Act.

It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance staff or consultants in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley Act’s internal controls requirements, we may not be able to obtain the independent auditor certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.

We incur increased costs as a result of being a public company.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, as well as new rules subsequently implemented by the SEC, has required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. In addition, we incur additional costs associated with our public company reporting requirements. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate that there is a high probability of additional costs we may incur or the timing of such costs.

Risks Relating to Our Securities

There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.

There is currently only a limited public market for our common stock, which is listed on the Over-the-Counter (“OTC”) Pink Sheets, and there can be no assurance that a trading market will develop further or be maintained in the future.

The market price of our common stock may be volatile.

The market price of our common stock has been and will likely continue to be highly volatile, as is the stock market in general, and the market for OTC Pink Sheet quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Our common stock may be considered a “penny stock” and may be difficult to sell.

The SEC has adopted regulations which generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and, therefore, it may be designated as a “penny stock” according to SEC rules. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares.

The market for penny stocks has experienced numerous frauds and abuses, which could adversely impact investors in our stock.

OTC Pink Sheet securities are frequent targets of fraud or market manipulation, both because of their generally low prices and because OTC Pink Sheet reporting requirements are less stringent than those of the stock exchanges or NASDAQ.

Patterns of fraud and abuse include:

Our management is aware of the abuses that have occurred historically in the penny stock market.

We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future and any return on investment may be limited to the value of our stock.

We have never paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future and any return on investment may be limited to the value of our stock. We plan to retain any future earnings to finance growth.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company’s corporate headquarters is located at Suite 1023, 10/F., Ocean Centre, 5 Canton Rd., Tsim Sha Tsui, Kowloon, Hong Kong. We believe that our existing mining and processing facilities in Mongolia, which are described above, are well maintained and in good operating condition, and will be sufficient for our production goals for the next year.

Item 3. Legal Proceedings

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 4. Mine and Safety Disclosure

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is currently traded on the OTC Pink Sheets under the trading symbol “TGSI”. There is a limited trading market in our securities.

Our transfer agent is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY, 11598, telephone: (212) 828-8436, fax: (646) 536-3179.

Holders

As of March 20, 2020, there were 35 holders of record of our common stock and 14,858,328 shares of our common stock were issued and outstanding.

Dividends

We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

In 2019, the Company issued a subscription package (the “Second Subscription Package”) of up to $825,000, consisting of 330,000 common shares and 66,000 warrants exercisable at $3.00 to purchase common shares within three years from the respective issuance dates, to accredited investors. The Company also issued the placement agent 33,000 common shares at a price of $3.70 per common share for services rendered.

In 2019, there were four convertible bond agreements entered into between the Company, Arcus and third party investors. Three of the bonds matured in 2019 and were settled by issuing 141,782 common shares at a price stated in the respective agreements, representing loans of HK$4 million and interest expenses of HK$8,333, for a total of HK$4,008,333 (equivalent to US$513,888). In November 2019, one convertible bond agreement was signed including a HK$1.5 million (equivalent to US$192,308) loan bearing interest of 5% per annum for six months. The convertible bond will mature on May 25, 2020 with a conversion price of $3.60 per share.

The shares issued in connection with the transactions were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant Section 4(a)(2) of the Securities Act and Regulation S promulgated thereunder.

Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Purchases of Equity Securities by the Company

We did not purchase any of our shares of common stock or other securities during the fiscal year ended December 31, 2019.

Item 6. Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors including the risks in the section entitled “Risk Factors”, whichthat may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our audited financial statements are stated in United States Dollars (US$($) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common shares” refer to the common shares in our capital stock.

As used in this annual report, the terms “we”, “us”, “our” and “our company”, mean TGS International Ltd. and our wholly owned subsidiaries, MJP Lightings Solutions Ltd., a British Virgin Islands corporation and MJP Holdings Ltd., an Alberta, Canada corporation.

General Overview

TGS International Ltd. (“TGS International”) was established on December 1, 2016 in Nevada, USA. On December 21, 2016, TGS International acquired TGS Building Products Ltd. of Alberta (“TGS Alberta”) as its wholly subsidiary. TGS Alberta was established in March, 2016 in Alberta, Canada with focus in the sale and installation of PVC wall and ceiling panels in addition to renovation business in North America. TGS Alberta has worked closely with a PVC products manufacturer in China to bring the Company’s newly-formulated PVC products into Canada. We are a development stage company; having entered into the development stage on December 21, 2016.

Our executive offices are located at Unit 3, 6420 – 4 Street NE, Calgary, Alberta, Canada T2K 5M8. Our telephone number is (403) 616 - 9226.

Our Company specializes in the design, procurement, marketing, sale, distribution, and installation of indoor PVC (polyvinyl chloride) wall and ceiling panels for residential, commercial, and industrial applications. Initially, the Company is focusing in the production and sale of white PVC wall and ceiling panels in standard width of 16 inches to better streamline its operations and to ensure a quality and timely delivery of its products to customers. Colored and textured panels will be offered as special custom orders on a per project basis.

Products

The Company specializes in indoor PVC (polyvinyl chloride) wall and ceiling panels for residential, commercial, and industrial applications. Initially, the Company is focusing in the production and sale of white PVC wall and ceiling panels in standard width of 16 inches to better streamline its operations and to ensure a quality and timely delivery of its products to customers. Colored and textured panels will be offered as special custom orders on a per project basis. In addition to PVC wall and ceiling panels, the company also offers a selection of PVC floorings as a part of the company’s product line.

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Product Sourcing

TGS purchases its products from a Chinese manufacturer. On June 4, 2017, we entered into a marketing and sale agency agreement with this Chinese manufacturer. With this agreement, we will be responsible for the marketing and sale of products in Canada. The agreement is for a term of 2 years with automatic renewal for one year term for subsequent years. There are no royalties payable pursuant to the agreement and no pre-determined wholesale or retail prices. Wholesale product pricing will be determined by the parties on a continual basis, and retail pricing will be at the discretion of TGS. The Chinese manufacturer will manufacture PVC panels to order based on the mold designed by the company, or to such other specifications as may be requested by the company from time to time. The company will strive to maintain a solid rapport with its manufacturer to ensure the company will have a good quality product and enhanced reliability in manufacturing and delivery. TGS also plans to work closely with its manufacturer to diversify its products to present a more complete and varied product line.

Benefit of PVC Panels

PVC panels boast many advantageous qualities for building applications both traditional and creative. Their usage has gained increasing popularity as they are ideal alternatives for conventional building materials such as drywalls and plywood, particularly in areas exposed to water and moisture.

Easy Installation. PVC panels are quick and easy to install, without the need for complex specialty tools. Their interlocking design is based on a simple tongue-and-groove mechanism, pieced together like a jigsaw puzzle. Fasteners are hidden inside the grooves and finished off with specially designed trimmings to provide a smooth and clean finish. Panels are available in standard width and customizable lengths to accommodate to different project requirements.

Low Maintenance. PVC panels require minimal effort to maintain and cleaning only involves water and a mild soap solution using a sponge or soft bristle brush. On most occasions, wiping will be sufficient.

Waterproof and Mold Proof. One of the most appealing selling points of PVC panels is their water-resistant capability; ideal for use in areas with frequent exposure to water that would otherwise damage alternative wall applications. Because of their ability to repel water, they are also highly resistant to mold and bacteria, making them highly hygienic and suitable for environments with stringent health and safety requirements.

Fire and Chemical Resistant. The chemical makeup of PVC panels provides an inherit resistance to fire and most corrosive chemicals. Not only do they offer a safe environment for application but also longevity not obtainable with conventional building materials.

Lightweight yet Durable. With their hollow design and standard widths, PVC panels are easy to transport and lightweight compared to other materials of similar application. Nonetheless, they are also very durable and robust; materials that can withstand even the toughest and most demanding environments.

Bright and Clean. The smooth, glossy finish of the panels helps reflect light, offering interiors a bright and clean appearance. As long as the panels are installed indoor as directed, they are fade resistant and the surface will remain fresh and clean for a long period of time.

Versatile Application. PVC panels are suitable for virtually all indoor settings and environments whereby walls and ceilings exist. They can be installed as a new walls system or retrofitted to existing surfaces with little complications. The panels can be installed horizontally, vertically, or even diagonally to accommodate to the needs and tastes of individual customers.

Cost and Time Effective. The simplicity of PVC panels calls for straightforward labour. No additional plastering or painting is required. Not only can projects be completed in a fraction amount of time in comparison to drywall, but money is also saved as labour cost is significantly reduced.

Recyclable. PVC panels can be recycled and reshaped into new products.

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PVC panel Applications

Due to the versatility of the products, PVC panels can be utilized in a wide array of different applications within residential, commercial, and industrial settings. They are ideal alternatives to traditional wall systems not only for their functionality but also for their decorative aptitude.

Installation Overview

Cutting. The panels can be cut vertically or horizontally using simple woodworking tools. They can be cut using a normal fine-toothed wood saw or with a jigsaw.

Fitting to Walls. The panels can be fitted directly to the wall and can be fixed straight over tiles. Only on exceptionally uneven/bad conditioned walls do they need to be fitted to battens. The panels can be glued, screwed, nailed or stapled as desired. Due to the tongue and groove nature of the paneling, they can be fixed through the tongue, such that the fixings are always hidden.

Fitting to Ceilings. Panels can be fitted using adhesive, staples or screws. If suspending from the ceiling, panels can be fitted using a metal hanger bracket or attached to a wooden framework. To cut holes for spotlights, a hole cutting attachment for an electric drill is ideal.

Industry Analysis

Construction Industry

Canada’s construction industry activity dropped from US$294.1 billion in 2014 to US$289.0 billion in 2015, marking a 1.7 percent decline, following an average annual growth of 3.6 percent for four consecutive years. Weak economic conditions, low commodity prices, poor fixed-capital investments, public spending cuts, and a high rate of unemployment all contributed to this weak performance. Despite this downturn, industry activity is expected to pick up in 2016 with marked improvement over the next five years to reach US$321 billion by 2020, driven by investment in public infrastructure, renewable energy infrastructure and commercial projects, and improvements in consumer and investor confidence. Growing population and urbanization, and improvements in domestic manufacturing activities are predicted to be the main drivers behind the industry growth up until 2020 in Canada. Several government programs, such as the Affordable Housing Initiative (AHI), New Building Canada Plan (NBCP) and Made in Canada, will also continue to support the industry’s growth over the forecast period.

Non-residential and engineering construction projects will remain the keystones of provincial and federal governments ten-year plans. As a start, the second quarter of 2016 saw investment in non-residential construction rising 0.2 percent to $12.6 billion from the previous quarter. However, construction activity will vary greatly across provinces, with some regions impacted by lower commodity prices, delayed or cancelled projects and declining employment.

Alberta. Low oil and natural gas prices in Alberta will continue to hinder engineering, institutional, and industrial construction until 2019. Commercial building, on the other hand, will continue into 2016 with existing projects, before slowing in 2017 and growing in steady increments over the long term.

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Manitoba. The province’s diverse economic sectors offer potential for growth as major new hydro, transmission and pipeline projects go underway. It is also anticipated that there will also be a gradual rise in commercial and industrial building construction and growing demand for maintenance work.

Saskatchewan. It is anticipated that non-residential building construction will be maintained at high levels until 2021 by major mining and infrastructure projects, as well as steady gains in maintenance work in the near term. As projects wind down after 2021, the decline in engineering-related work declines will be offset by moderate growth in industrial, commercial and institutional (ICI) building construction.

British Columbia. Construction in 2016 will begin in a growth phase with new infrastructure projects and energy development leading investment.

Residential

Residential construction is expected to take on more importance in the industry over the next five years, to account for 38.4 percent of the industry’s total value in 2020. The market will be supported by a rising population, urbanization, improving economic conditions, as well as the government’s initiative to provide affordable houses to the lower- and middle-class population through the Affordable Housing Initiative. The Canadian government is planning to spend US$6.0 billion in social infrastructure by 2020, which includes expenditure on renovation and new housing buildings construction.

Housing Starts

After years of record growth, nationwide housing starts are expected to slow in 2018 and 2019. While there is an overall decline in new housing starts at the national level, activity will vary greatly amongst different provinces. Oil-producing provinces such as Alberta, Saskatchewan, and Newfoundland and Labrador are expected to experience continual decline before rebounding.

Renovations

While new housing slows, renovation work continues to rise in Canada across all provinces. Renovation spending is an important part of Canada’s economy, contributing roughly $15 billion to the local market in 2015¹² and accounting for 3.4 percent of the gross domestic product in 2014. From the millennium up to the recession, the renovation industry has grown by 8.7 percent annually and 2.6 percent per year post-recession. With Canadians struggling to afford new housing options, many have turned to renovations as a way to achieve better living spaces.

Market Size and Growth

In 2013, roughly 39.3 million tons of PVC were consumed worldwide, making it one of the most widely produced plastics in addition to polypropylene (PP) and polyethylene (PE). According to German market research firm Ceresana, demand for PVC is expected to rise by 3.2 percent per annum until 2021. Asia-Pacific currently makes up the largest market in sales, accounting for 56 percent of global consumption. It will remain as the highest growth market in the upcoming years, followed by North America and Western European, who are experiencing growth again after losses in previous years.

The construction industry has been recognized as the leading market for the sale of PVC products. Despite a slowdown, China’s construction industry remains the highest growing market in the world, followed by India, who is expected to grow at a rate of 4.9 percent per year. With positive developments in the construction industry, demand for PVC products in the United States and Canada is projected to be on a steady rise, rebounding from weak domestic demand in previous years.

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Market Strategy

Agricultural

Agricultural facilities will represent one of the major target markets of the Company. Among agricultural facilities, TGS will largely be focusing its initial marketing efforts towards the Hutterites colonies within Canada through various forms of direct marketing. The Hutterites, with their concentrated geographic locations and dominant agricultural background, are ideal customers for the Company. This largely untapped market presents a tremendous potential as they allow for the purchase of large volume and opportunity for recurring business. Word-of-mouth is a very effective form of advertisement within such tightly knit community. TGS hopes to take advantage of such once it gains entry into this market. The Company will be working closely with agents with experience conducting business with the Hutterites colonies to maximize its marketing reach.

Each Hutterite colony is inhabited by 50 to 120 people with an average of 80 people and 14 families. Almost all Hutterites are sustained through farming, an occupation of utmost importance pertaining to their religious beliefs. Most colonies grow crops and manage farms between 3,000 and 12,000 acres. They also raise a large amount of livestock, at times producing 10 to 30 percent of a province’s hogs, eggs, or turkeys¹⁸.

Residential

TGS will also be pursuing the home renovation market where PVC panel could be a practical replacement to drywall installations, particularly where moisture and mold growth are issues. The Company will work with experienced contractors that can seek out potential market in the residential sector and, at the same time, generate enough buzz within the market to enhance consumer interest and knowledge for how PVC panels can be incorporated into their homes.

According to Canada Mortgage and Housing Corporation’s last issue of Renovation and Home Purchase Report published in 2012, contractors continue to play a big part in homeowner’s renovation projects. Among households that renovated in 2011, 35 percent contracted out all the work, 30 percent contracted out partial of the work, 29 percent engaged in the work themselves, and 5 percent purchased materials and contracted out the labor. Respondents between ages 45 to 54 performed 28 percent of all renovations, the highest among all the age groups, followed by age 55 to 64, age 35 to 44, age 65+, and lastly, age 25 to 34. The average cost of renovations was highest among the highest income brackets, led by those earning over $100,000 (at an average cost of $18,604), followed by those earning $80,000 to $99,999 (average cost of $11,827).

Commercial and Industrial

For the commercial and industrial market, the Company will target facilities where frequent exposure to water may pose as a concern, such as car wash facilities. As well, it will also target warehousing facilities for which the use of PVC wall panels could substantially reduce cost and installation time. PVC panels can also be considered for use in temporary facilities in which the panels can be removed at the end of the job and relocated to another facility.

Marketing and Sale Strategy

Pricing

A competitively lower price point will be set at the initial stage of the Company’s operations to avoid direct competition with the existing suppliers in Canada. This pricing strategy aims to overcome the challenge of being a new entry into the market and to attract larger volumes sales from contractors and the Hutterite colonies in hopes of retaining them as repeat customers. Generally, the Company aims to sell its products at 10% below the selling price of other suppliers while achieving a gross profit margin of at least 15% to 20%. Based on the company’s recent review, the market selling price of PVC panels ranges from $1.30 to $1.80 per square foot. Despite the company’s appealing price structure, it is important for the consumers to be aware that quality will not be comprised. TGS’ lowered pricing approach should be achievable through a combined competitive advantage of having its products sourced overseas, an effective coordination of logistic functions and a simple corporate structure. Once the Company establishes a stable foothold in the market, price adjustments can be made as needed to achieve a more favorable profit margin.

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Inventory, Sales and Distribution

We do not currently maintain an inventory of products, although we intend to do so when we have sufficient capital to procure an inventory of our custom designed panels. We will require a minimum investment of $50,000 to manufacture the first container of our custom designed PVC panels. A container represents the minimum shipping quantity available to us.

TGS does not intend to carry any large amount of in-house inventory and will aim to complete orders only upon the fulfillment of a minimum shipping quantity. It is, therefore, imperative that a significant sales volume be achieved, not only to offset the reduced profit margin due in part of the lower pricing, but also to attain maximum economy in shipping and to eliminate the cost for inventory storage. Generally, shipments of products will be shipped to Calgary and from Calgary the products will be distributed to customers. Although we do not currently require a warehouse facility, we anticipate that we will require a modest warehousing or storage space once we invest in an inventory of our custom designed panels. Such spaces are commonly available in Calgary on a month to month basis.

When we do obtain inventory, wholesale prices will be negotiated on a case by case basis. Similarly, we will negotiate retail prices on a case by case basis, typically incorporating a markup of 15% to 30% from the factory wholesale price. Generally, all payments will be due upon delivery. For large orders, we will require a deposit of 30%. We will either receive payments directly from customers or from our agents.

The sale of TGS’ products will primarily be conducted through direct sale or the company’s sales agents. Initially, TGS plans to have two groups of sales agents, with one group located in northern Alberta and one group located in southern Alberta. Generally, the Company would require a deposit of 30% upon receiving an order and a final payment on delivery. Importantly, our ability to engage sales agents is subject to our raising sufficient capital to finance inventory, marketing expense, and general and administrative expenses.

Promotion

Direct marketing, public relations, simple advertisements and word-of-mouth will be TGS’ primary promotional strategy. We will also focus our marketing efforts towards farming communities in the form of direct fax advertising to create awareness and stimulate consumer interest. Facsimile remains a common form of communication channel within the farming communities, such as Hutterite colonies. The advertisement will provide general information about our products and direct the viewer to the Company’s sales agent to obtain further details. As the sales agent will be the representative for the Company, strong interpersonal skills and public relations will be imperative for the closing of the transactions. In any sale, the ultimate goal for the Company is to foster long-term relationships with potential and existing clients in hopes of generating positive word-of-mouth referrals.

Target Customers

Initially, TGS will target its marketing efforts toward few group of customers, such as farming communities, contractors, home builders and developers. These customer groups should tend to purchase in large volume and bring recurring business. By focusing on these few initial customer groups, this will allow the Company to operate more on a person-to-person basis and to develop a good relationship which should lead to recurring business.

Competitive Analysis

The market for PVC wall and ceiling panels in Canada is still in its infancy state with a limited number of competitors in the industry. Currently, there several Canadian companies selling their own brand of PVC wall and ceiling panels in western Canada. Accompanying their direct sales approach are distributors in various regions that help market and promote their products.

Despite being a new player in the market, TGS believes that it is well positioned to enter into the market due to its low overhead structure and strong relationship with its PVC products manufacturer in China.

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Competitive Products

Drywall is the main competitive product to PVC panels. It is the most commonly used product for wall and ceiling installations. However, there are locations where drywall installation is not suitable, particularly in moist and wet locations such as car wash facilities. Using PVC panels would be a more suitable installation for moist and wet locations. PVC panels could also be better suited for temporary facilities for which the PVC panels can be removed at the end of the job and relocated to another location.

In addition to various advantages of using PVC panels, PVC panel installation is also cost effective in comparison to drywall installation. With finish surface, PVC panel installation doesn’t require tapping, mudding, sanding and painting as for drywall installation. This saves a lot of installation time and thus labor cost. Based on the current pricing, it is estimated that a drywall installation would cost significantly higher than the cost of PVC panel installation. For example for an area of 1,000 square feet, it is estimated that the installation cost using PVC panels would be in the range of about $2,000 comparing to $4,000 for drywall installation.

Employees

Currently we do not have any employees. Our President, Chief Executive Officer and director, Chung Szeto, provides his services as a consultant to our Company on a full-time basis. Our Secretary, Treasurer, and Director, Sau Chun Yu provides her services as a consultant to our Company on a part-time basis. Our officers and directors provide services to our business on a consulting basis in order to eliminate overhead costs that we would be required to incur upon the engagement of employees, including employment insurance and workers compensation premiums. We do not expect any material changes in the number of employees over the next 12-month period and will continue to outsource contract employment as needed.

Description of Property

Our executive and administrative offices are located at Unit 3, 6420 – 4 Street NE Calgary, Alberta, Canada T2K 5M8. The space, which is approximately 300 square feet, is currently provided to us at no cost by our officers and directors. We believe that our office space is sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.

Subsidiaries

We have one wholly owned subsidiary, TGS Building Products Ltd, an Alberta (Canada) company, incorporated on March 8, 2016.

Intellectual Property

We assert common law trademark rights in the province of Alberta for the names “TGS”, “TGS International”, and “TGS Building Products” in the field of construction materials. Common law trademark rights are enforceable in provincial courts in Canada, and may be asserted against those who appropriate, dilute or damage the goodwill of our business by using the same or similar trade-names or trademarks. Unlike statutory trademark rights, which are acquired by registration and provide nation-wide protection, common law trademark rights are acquired automatically and provide protection only in the jurisdiction where a business uses a name or logo in commerce. We intend to rely on common law trademark protection until such time as we deem it economical for our business to register our trade-names or trademarks.

We have not registered for the protection of any rights under trademark, patent, or copyright laws in any jurisdiction.

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Item 1A. Risk Factors

Risks Associated with Our Business

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

We incurred cumulative net losses of $83,297 during the period from December 1, 2016 (inception) to February 28, 2018 and had cash (and cash equivalents) of $8,186 as at February 28, 2018. We are in the development stage and have yet to attain profitable operations and in their report on our financial statements for the fiscal year ended February 28, 2018. Our independent auditors included an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors.

Because our officers and directors have no experience in managing a public company our business may be at a competitive disadvantage.

Our President, Chief Executive Officer and director, Chung Szeto, and our Secretary, Treasurer, Chief Financial Officer and Director, Sau Chun Yu, lack public company experience and do not possess a sophisticated knowledge of the requirements of United States securities laws, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of 2002. Neither Mr. Szeto nor Ms. Yu have ever had responsibility for managing a publicly traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely basis. Our management may not be able to implement programs and policies in an effective and timely manner which adequately responds to our legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.

If we are unable to obtain financing in the amounts and on terms and dates acceptable to us, we may not be able to expand or continue our operations and developments and so may be forced to scale back or cease operations or discontinue our business and you could lose your entire investment.

We require approximately $125,000 to carry out our planned business activities over the next 12 months and had approximately $8,168 in cash and cash equivalents on hand as of February 28, 2018. We do not currently have any arrangements for additional financing. We will have to raise additional funds for the development of our business and the marketing of our products. Such additional funds may be raised through the sale of additional stock, stockholder and director advances and/or commercial borrowing. There can be no assurance that a financing will continue to be available if necessary to meet these continuing development costs or, if the financing is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us will result in a significant dilution in the equity interests of our stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may not be able to expand or continue our operations and developments and so may be forced to scale back or cease operations.

We may not be able to compete effectively against other companies that have existed for a longer period and have greater financial resources.

We compete in a market that is highly competitive and expect competition to intensify in the future. We will seek to compete with a variety of developing and established companies, including those specialized exclusively in the sale of PVC panels, as well as those engaged in the sale of broader portfolios of hardware and building materials. Many of our prospective competitors have significantly greater financial, technical, and marketing resources than our Company, and many have established consumer brands, preferential supplier relationship, and developed retail distribution networks, both traditional and online. We may not be able to compete successfully against these competitors. If we are unable to effectively compete in our chosen markets, our results would be negatively affected, we may be unable to implement our business plan, and our business may ultimately fail.

Our products or our Company may be subject to product liability claims which may be detrimental to our reputation and financial condition.

Although we are a distributor and not a manufacturer of products, and therefore not directly responsible for potential flaws or defects in any of the goods which we intend to sell, we may become implicated in product liability claims as a result of alleged or actual harm related to the use of our products by end users. Whether we are directly implicated as a named defendant in such a civil claim, or indirectly implicated by association as a product distributor, we may suffer reputational and economic harm to the extent that the safety or quality of our products is called into question. Additionally, if we are directly named as a defendant in such a civil claim, we expect to incur significant legal expense and, if we our held responsible for injury arising from any of our products, significant additional financial liability. Although we intend to carry product liability insurance to safeguard against potential claims, any such claims could irreparably harm our reputation, our financial condition, and ultimately cause our business to fail.

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We depend on third parties for our product supply and therefore, if they fail to perform, we may not be able to effectively operate our business.

To generate significant customer traffic, volume of purchases and repeat purchases that we believe are crucial to obtaining sufficient revenues, we must develop and maintain customer trust in the quality of goods which we deliver, in the timeliness of our delivery and installation services, among other factors. If for any reason any of our suppliers fails to perform, we may not be able to service our customers (buyers) effectively and thereby may lose customers or damage our reputation. Furthermore, if we do not secure sufficient number of suppliers to supply our products, then we may not have a successful product offering and may not attract customers. In addition, the success of our business requires that we establish relationships with professionals in strategic regions around the world who can, through their expertise, source and nurture relationships to develop our business. If we are unable to establish such relationships, we may be unable to procure goods or we may be unable to procure goods on terms that are acceptable to us. In this case, our business may fail.

Compliance with rules and requirements applicable to public companies will cause us to incur increased costs, which may negatively affect our results of operations.

We are subject to a number of laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and related regulations implemented by the SEC. Unlike private companies, we must invest significant resources to comply with current and future securities laws, regulations and standards. This investment will result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities in favor of compliance related activities. In that regard, we estimate that, based on our anticipated public reporting obligations, we must dedicate approximately $40,000 per year in respect of legal, auditing, accounting and filing costs. Furthermore, the laws, regulations and standards that are applicable to our Company are subject to change, which could result in continuing uncertainty regarding compliance matters, and higher compliance and disclosure costs.

If we are unable to benefit from our status as a reporting company by establishing a public market for our securities in order to attract investment, the ongoing costs of our public reporting obligations will have a material adverse effect on our financial condition and results of operations.

Because our principal assets and our directors and officers are located outside of the United States, it may be difficult for you to enforce your rights based on U.S. Federal Securities Laws against us or our officers and directors, or to enforce U.S. Court Judgments against us or our sole officer and director in Canada.

Our officers and directors reside in Canada. In addition, although we are a Nevada corporation, our primary assets, which include cash, trade receivables, and any inventory we may acquire, will be located outside of the United States. It may therefore be difficult for investors in the United States to enforce their legal rights based on the civil liability provisions of the U.S. Federal securities laws against us in the courts of either the U.S. or in Canada and, even if civil judgments are obtained in U.S. courts, to enforce such judgments against our officers and directors in courts of Canada. Further, it is unclear whether extradition treaties now in effect between the United States and Canada would permit effective enforcement of criminal penalties against us or our officers and/or directors.

Our officers are engaged as consultants instead of employees of our Company.

Having our officers engaged as consultants instead of employees poses the risk to our Company that, perhaps, our consultant may not always be available. If one of our consultants has other clients, we may be at a lower priority until they are able to fit us into their schedule.

Further, when we engage consultants rather than employees to minimize overhead cost, we do not have the advantages of an employee, such as consistency, dependability, and availability. If we need our employee to work on a project, all we have to do is assign it and wait for it to be completed. As the business owner, we won’t be lowly prioritized as we would with a consultant. Contrary to a consultant, an employee will maintain focus on our objective, rather than furthering his/her career by taking on additional clients. Many consultants will leave clients behind once they secure higher-paying clients.

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Unlike employees, whom we can closely supervise and monitor, independent contractors enjoy certain autonomy to decide how best to do the task for which we hired them. We may be liable for injuries a consultant suffers on the job. Employees who are injured on the job are usually covered by workers’ compensation insurance. In exchange for the benefits they receive for their injuries, these employees give up the right to sue their employer for damages. Consultants are not covered by workers’ compensation, which means that if they are injured on the job, they might be able to sue us and recover damages.

We expect to be directly affected by fluctuations in the general economy.

Demand for goods is affected by the general global economic conditions. When economic conditions are favorable, commercial and residential construction increase. Under such circumstances, purchases of building and renovation materials, such as PVC panels, generally increase. When economic conditions are less favorable, sales of building and renovation materials are generally lower. In addition, we may experience more competitive pricing pressure during economic downturns. Therefore, any significant economic downturn or any future changes in consumer spending habits could have a material adverse effect on our financial condition and results of operations.

We expect our products to be subject to changes in customer taste.

The markets for our products are subject to changing customer tastes and the need to create and market new products. Demand for construction finishing materials, such as wall and ceiling paneling, is influenced by the popularity of certain aesthetics, cultural and demographic trends, marketing and advertising expenditures and general economic conditions. Because these factors can change rapidly, customer demand also can shift quickly. Some goods appeal to customers for only a limited time. The success of new product introductions depends on various factors, including product selection and quality, sales and marketing efforts, timely production and delivery and customer acceptance. We may not always be able to respond quickly and effectively to changes in customer taste and demand due to the amount of time and financial resources that may be required to bring new products to market. The inability to respond quickly to market changes could have a material adverse effect on our financial condition and results of operations.

If we are unable to successfully manage growth, our operations could be adversely affected, and our business may fail.

Our progress is expected to require the full utilization of our management, financial and other resources. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no assurance that management will be able to manage growth effectively.

Because we do not have sufficient insurance to cover our business losses, we might have uninsured losses, increasing the possibility that you may lose your investment.

We may incur uninsured liabilities and losses as a result of the conduct of our business. We do not currently maintain any comprehensive liability or property insurance. Even if we obtain such insurance in the future, we may not carry sufficient insurance coverage to satisfy potential claims. We do not carry any business interruption insurance.

We may have liabilities to affiliated or unaffiliated third parties incurred in the regular course of our business.

We regularly do business with third party vendors, customers, suppliers and other third parties and thus we are always subject to the risk of litigation from customers, employees, suppliers or other third parties because of the nature of our business. Litigation could cause us to incur substantial expenses and, negative outcomes of any such litigation could add to our operating costs which would reduce the available cash from which we could fund our ongoing business operations.

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The loss of the services of our executive officers would disrupt our operations and interfere with our ability to compete.

We depend upon the continued contributions of our executive officers. Our executive officers handle all of the responsibilities in the area of corporate administration and business development. We do not carry key person life insurance on any of their lives and the loss of services of any of these individuals could disrupt our operations and interfere with our ability to compete with others.

Risks Associated with Our Common Stock

There is no active trading market for our common stock and if a market for our common stock does not develop, our investors will be unable to easily sell their shares.

There has been no public market for our securities and there can be no assurance that an active trading market will develop or be sustained. Since we have completed a registration of our common shares on Form S-1, effective October 4, 2017, we have engaged a market maker to file an application with the Financial Industry Regulatory Authority (“FINRA”) to have our common stock quoted on the OTCQB tier of the OTC Markets electronic quotation system. We must satisfy certain criteria in order for our application to be accepted. There can be no assurance as to whether we will meet the requisite criteria or that our application will be accepted. Our common stock may never be quoted on the OTCQB or a public market for our common stock may not materialize if it becomes quoted.

If our securities are not eligible for initial or continued quotation on the OTCQB or if a public trading market does not develop, purchasers of the common stock in this Offering may have difficulty selling or they may be unable to sell their securities should they desire to do so.

As a result of the registration of our common shares on Form S-1 effective October 4, 2017, as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through October, 2018. At or prior to February 28, 2017, we may voluntarily file a registration statement under the Security Exchange Act of 1934 (“Exchange Act”) on Form 8-A, which would subject us to all of the reporting requirements of the 1934 Act, and require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders would be required to submit reports to the SEC on their stock ownership and stock trading activity. We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 2,000 shareholders (of which 500 may be unaccredited) and total assets of more than $10 million on February 28, 2018. If we do not file a registration statement under the Exchange Act at or prior to February 28, 2018, we will continue as a reporting company and will not be subject to the proxy statement requirements of the 1934 Act, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity.

We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our common stock will be a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. These rules impose additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our common shares and may affect the ability of purchasers to sell any of our common shares in the secondary market.

For any transaction (other than an exempt transaction) involving a penny stock, the rules require delivery, prior to such transaction, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made regarding sales commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

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We do not anticipate that our common stock will qualify for exemption from the Penny Stock Rules. In any event, even if our common stock is exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit your ability to buy and sell our stock, which could depress our share price.

FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares, depressing our share price.

State securities laws may limit secondary trading, which may restrict the states in which you can sell the shares offered by this prospectus.

If you purchase shares of our common stock sold pursuant to our Offering, you may not be able to resell the shares in a certain state unless and until the shares of our common stock are qualified for secondary trading under the applicable securities laws of such state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our common stock for secondary trading, or identifying an available exemption for secondary trading in our common stock in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our common stock in any particular state, the shares of common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the market for the common stock will be limited which could drive down the market price of our common stock and reduce the liquidity of the shares of our common stock and a stockholder’s ability to resell shares of our common stock at all or at current market prices, which could increase a stockholder’s risk of losing some or all of their investment.

If quoted, the price of our common stock may be volatile, which may substantially increase the risk that you may not be able to sell your shares at or above the price that you may pay for the shares.

Even if our shares are quoted for trading on the and a public market develops for our common stock, the market price of our common stock may be volatile. It may fluctuate significantly in response to the following factors:

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Your inability to sell your shares during a decline in the price of our stock may increase losses that you may suffer as a result of your investment.

Because we do not intend to pay any dividends on our common stock; holders of our common stock must rely on stock appreciation for any return on their investment.

We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future. Accordingly, holders of our common stock will have to rely on capital appreciation, if any, to earn a return on their investment in our common stock.

We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any December 31.

Our status as an “emerging growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company”, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

Item 1B. Unresolved Staff Comments

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2. Properties

Our executive and administrative offices are located at Unit 3, 6420 – 4 Street NE Calgary, Alberta, Canada T2K 5M8. The space, which is approximately 300 square feet, is currently provided to us at no cost by our officers and directors. We believe that our office space is sufficient to meet our present needs and do not anticipate any difficulty securing alternative or additional space, as needed, on terms acceptable to us.

Item 3. Legal Proceedings

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 4. Mine Safety Disclosures

Not Applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is currently not quoted on the OTC Markets. OTC Markets securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Market securities transactions are conducted through a telephone and computer network connecting dealers. OTC Market issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.

Our transfer agent is VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY, 11598, telephone: (212) 828-8436, fax: (646) 536-3179.

Holders

As of February 28, 2018, there were 27 holders of record of our common stock and, 13,530,000 shares of our common stock were issued and outstanding.

Dividends

We have not declared or paid any cash dividends since inception. We intend to retain future earnings, if any, for use in the operation and expansion of our business and do not intend to pay any cash dividends in the foreseeable future. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

We did not sell any equity securities which were not registered under the Securities Act during the year ended February 28, 2018 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended February 28, 2018.

Equity Compensation Plans

We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.

Purchases of Equity Securities by the Company

We did not purchase any of our shares of common stock or other securities during the fiscal year ended February 28, 2018.

Item 6. Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our audited financial statements and the related notes forto the years ended February 28, 2018 and February 28, 2017 that appearconsolidated financial statements included elsewhere in this annual report.Form 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 10 of this annual report.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common stock in our capital stock.

As used in this annual report, the terms “we”, “us”, “our” or the “Company” mean TGS International Ltd., a Nevada corporation, and our subsidiaries, unless otherwise indicated.

General Overview

TGS International Ltd. was established on December 1, 2016 in Nevada, USA. On September 14, 2018, TGS International Ltd. and Arcus entered into a Share Exchange Agreement, dated September 14, 2018, with Chi Kin Loo, Billion Plus Limited, First Fortune Investment Limited, Great Win Limited and Master Value Holdings Limited, pursuant to which the Selling Stockholders agreed to sell all of their ordinary shares of Arcus to the Company in exchange for an aggregate of 7,000,000 shares of common stock of TGS International Ltd.

We are a mining company focused on both fluorite mining operations in Mongolia (3 mines in total, Mining license numbers: MV-016819, MV-017305 and MV-009918) and sales of fluorite across Mongolia and China. During 2015 to 2017, we were setting up infrastructure at Mine B and appointed SRK Consulting China Limited for resource exploration for Mine A and Mine B. The only production at Mine B started in 2018 and has been ongoing since that time.

In 2019, there were a few unpredictable events, including delay in exploratory work at Mine B due to the tightened working visa application procedure by the Mongolian Government, delay in explosives delivery due to the temporary suspension of the only two explosive factories in Mongolia, which have brought about significant postponement of our exploratory work. Therefore, the production forecast for 2019 was not reached. Nonetheless, the management has devoted all their effort to minimize any impact on the Company. For instance, workers were instructed to work on the foundation of the refinery and other on-site infrastructures until the explosives arrived at our mine.

We have suspended the work at Mine B since November 25, 2019 due to the annual winter break and expect to resume our work in early April 2020, depending on the weather and overall situation. All workers working at Mine B were sent home the same day. Right before the winter break, there were 2,221 tons of output from Mine B in the last quarter of 2019.

Although open pit mining is adopted at Mine A, as the weather has become more frigid, we have put the exploratory work at Mine A on hold since mid-February 2020 to make sure the workers are safe and sound. The output in the last quarter of 2019 is 4,418 tons. We would like to take advantage of adopting open pit mining at Mine A so as to resume the exploratory work earlier once the winter break comes to an end and boost the production, presumably in early April 2020.

The construction of the refinery at Mine B was completed in late November 2019. However, the power supply upgrade at Mine B is still in progress and we hope to get it done in early April 2020 to put the refinery into use as early as possible. This is a strategic cooperation with Yantai Fulin Mining Machinery Co., Ltd (“Fulin”) which provided construction funds in advance to the construction and installation of the refinery. We expect that the production and the sales would have a certain increase in 2020 as well as the profits. During 2019, we have upgraded the infrastructures at Mine B as well as building the refinery at Mine B. The cost, therefore, was unavoidably much larger than the last year’s. With the experienced engineers and construction teams provided by Fulin, our strategic partner, we could get the construction of the refinery completed in merely six months. The refinery is basically ready. Once we get the power supply upgrade done in April 2020, the entire refinery could be put into trial in late April or early May 2020.

As what we have known that the operation of the refinery and the production line is straightforward and simple with approximately 3 steps – breaking apart and grinding, flotation separation, and drying out the acid grade fluorite, the end product. We expect to increase manpower to accelerate the exploration at Mine B by the end of the second quarter of 2020 to escalate production. The fluorite with higher grading could be sold to the market directly while the fluorite with lower grading could be used as the raw materials for producing acid grade fluorite. The management are confident in the overall development and sales of the Company.

Mine C is still intact and we have not had any development there because we would like to prioritize and focus the use of our resources for the development of Mine A and Mine B. Once we have sufficient resources, we would start exploring and developing Mine C, for example, getting SRK Consulting China Limited for resource exploration as the first step, to maximize the value of the Company.

There were a total of four convertible bond agreements entered into between the Company, a subsidiary of the Company, Arcus Mining Holdings Limited (“Arcus”), and third party investors during 2019. On August 30 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor including a HK$1 million (equivalent to US$128,205) loan bearing interest of 2.5% per annum for one month. The convertible bond matured and was converted into 34,722 shares of the Company’s common stock on September 29, 2019 with a conversion price of $3.70 per share.

ResultsOn October 25, 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor including a HK$2 million (equivalent to US$256,410) loan bearing interest of Operations2.5% per annum for one month. The convertible bond matured and was converted into 71,373 shares of the Company’s common stock on November 27, 2019 with a conversion price of $3.60 per share.

On November 4, 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor including a HK$1 million (equivalent to US$128,205) loan bearing interest of 2.5% per annum for one month. The following summaryconvertible bond matured and was converted into 35,687 shares of our resultsthe Company’s common stock on December 3, 2019 with a conversion price of operations should be read in conjunction with our audited financial statements for the years ended February 28, 2018 and 2017 which are included herein.$3.60 per share.

Operating ExpensesOn November 26, 2019, a convertible bond agreement was entered into between the Company, Arcus and a third party investor including a HK$1.5 million (equivalent to US$192,308) loan, bearing interest of 5% per annum for six months. The convertible bond will mature on May 25, 2020 with a conversion price of $3.60 per share.

Our operating expenses forAs of December 31, 2019, a loan of $132,423 was borrowed from an unrelated party. The loan is unsecured, has no collateral or guarantee and carries interest at 11.61% per annum and repayable on December 31, 2029.

Subsequent to the year ended December 31, 2019, there were four convertible bond agreements entered into between the Company, Arcus and third party investors. On January 2, 2020 a convertible bond agreement was signed including a HK$1.5 million (equivalent to US$192,308) loan bearing interest of 2.5% per annum for one month. The convertible bond matured and was converted into 53,236 shares of the Company’s common stock on February 28,1, 2020 with a conversion price of $3.62 per share.

On January 14, 2020, a convertible bond agreement was signed including a HK$400,000 (equivalent to US$51,282) loan bearing interest of 2.5% per annum for one month. The convertible bond matured and was converted into 14,196 shares of the Company’s common stock on February 13, 2020 with a conversion price of $3.62 per share.

On February 24, 2020, a convertible bond agreement was signed including a HK$200,000 (equivalent to US$25,641) loan bearing interest of 2.5% per annum for one month. The convertible bond will mature on March 25, 2020 with a conversion price of $3.62 per share.

On February 29, 2020, a convertible bond agreement was signed including a HK$500,000 (equivalent to US$64,103) loan bearing interest of 2.5% per annum for one month. The convertible bond will mature on March 30, 2020 with a conversion price of $3.62 per share.

Apart from the exploration and infrastructure work at Mine A and Mine B, the Company might consider further fund raising activities through the capital markets and from stockholders with the aim of speeding up the development of the Company.

Results of Operations

Comparison of Years Ended December 31, 2019 and December 31, 2018

Revenue

Revenue consisted mainly of fluorspar products generated from production at our mines. In 2019, we had total revenue of $282,857, as compared to revenue of $274,238 during 2018. The percentage of such increase was approximately 3% as a result of the increase in average price of metallurgical fluorite.

Commission income

Commission income was recognized when the Company purchased minerals from suppliers and received payments from the customers on selling minerals. The Company has been determined as an agent for the ultimate customers in these transactions and the revenue is recorded net of the related fulfillment costs as commission income. The Company had commission income of $393,566 in 2018 and 2017,nil commission income in 2019.

Cost of goods sold

Cost of goods sold included raw material costs. The total cost of goods sold decreased from $10,544 in 2018 to nil in 2019. The significant decrease was mainly due to no raw material costs in 2019.

Exploration cost

Exploration costs are expensed as incurred and forincluded labor and benefits, construction service fee, mining overhead, including food, supplies, utilities and lubricants related to mine exploration. Exploration costs increased significantly from $421,508 in 2018 to $737,248 in 2019. The percentage of such increment was approximately 75% and was mainly due to our focus on the period from December 1, 2016 (inception) to February 28, 2018, are outlinedmining infrastructure project resulted in the table below:increase of construction service fee, mining supplies and utilities during the year.

		Year Ended February 28, 2018				Year Ended February 28, 2017				Cumulative from December 1, 2016 (Inception) to February 28, 2018
Revenues		$	33,663			$	6,214			$	39,877
Cost of Goods Sold		$	(22,148	)		$	(5,214	)		$	(27,362	)
Operating Expenses		$	(92,507	)		$	(15,327	)		$	(107,834	)
Income Tax Expense		$	NIL			$	Nil			$	NIL
Net Loss		$	(80,992	)		$	(14,327	)		$	(95,319	)

Selling and distribution cost

RevenuesSelling and distribution costs included transportation and handling costs related to the movement of finished goods from mines to customer designated locations, security fee, royalty and custom tax. Selling and distribution costs increased significantly from $56,697 in 2018 to $105,279 in 2019. The percentage of such increment was approximately 86% and was mainly due to the increase in royalty and custom tax.

We earned revenues of $33,663 for the year ended February 28, 2018 compared to $6,214 for the year ended February 28, 2017 for an increase of $27,449 or approximately 400.42%. The increase in sales for the year ended February 28, 2018 is primarily due to having a full year of operation instead of three months for the previous year. Our gross profit for the year ended February 28, 2018 was $11,515 compared to a gross profit of $1,000 for the year ended February 28, 2017 for an increase of $10,515 or 1051.5% due to higher sales revenue.

Operating Expenses

Our consolidated expenses for the year ended February 28, 2018 and 2017:

		Year Ended June 30, 2016				Year Ended June 30, 2015				Cumulative from July 19, 2010 (Inception) to June 30, 2016
Depreciation		$	2,038				nil				2,038
Filing Fees		$	20,293				nil				20,293
General and administrative expenses		$	8,989			$	3,594				12,583
Management fees		$	8,588			$	nil				8,588
Professional fees		$	52,599			$	11,733				64,332
Total Expenses		$	92,507			$	15,327				107,834

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Administrative expenses

OurAdministrative expenses included salaries and benefits, consulting, audit, tax, legal, insurance, rent and utilities, and other general operating expenses.

Administrative expenses increased significantly from $1,342,830 in 2018 to $1,645,900 in 2019. The percentage of such increment was approximately 23% and administrativeis mainly due to the commission expenses include telephonerelated to subscription package, increase in staff salaries and internet services, banking changesincrease of rental expense by additional staff accommodation in 2019.

Other income

Other income increased significantly from $34,083 in 2018 to $195,576 in 2019. The percentage of such increment was approximately 474% as a result of a waiver of consultancy fee in 2019 and miscellaneous office supply costs. Our management fees are fees chargeda write back of receipt in advance due to the dissolution of our customer.

Interest expenses

Interest expenses mainly included other loan interest, related party loan interest and bond interest arising from convertible bonds.

Interest expenses decreased from $83,548 in 2018 to $76,824 in 2019. The percentage of such reduction was approximately 8% as a result of the repayment of related party loans of HK$3 million (equivalent to US$382,945), in which HK$2 million (equivalent to US$255,297) was settled by our officers. Our professional fees include legalissuance of shares and auditing fees. The decrease in expensesHK$1 million (equivalent to US$127,648) was settled by cash.

Net loss

As a result of the factors described above, we had a net loss of $2,115,716 for the year ended February 28, 2018 is primarily due to a full year of operation instead of three months of operations for the previous year.

Earnings after Taxes

The net loss for the year ended February 28, 2018 was $80,992December 31, 2019 as compared to a net loss of $14,327$1,241,452 for the year ended February 28, 2017.December 31, 2018. The net loss resulted mainly from the decrease in the commission income and increase in loss forcost on mining infrastructure project. This was within our management expectation since our mine is still under trial production and we expect to further increase the year ended February 28, 2018 is primarily due to higher operating expenses.productions in 2020.

Liquidity and Capital Resources

As at February 28, 2018, we were obligated to related parties, Chung Szeto, our president, chief executive officer and director and a number of shareholders, for $54,690 in funds advanced to us for working capital. The advances are unsecured and no interest rate or payback schedule has been established.

At February 28,Cash and cash equivalents are short-term, highly liquid investments with original maturities of three months or less. As of December 31, 2019 and 2018, our company had athe Company’s cash balancewas $106,850 and total assets of $8,186 and $18,539 compared with$98,121, respectively. There were no cash balance and total assets of $20,867 and $39,823 as at February 28, 2017. The decrease in cash and total assets were attributed primarily to higher operating expenses.equivalents.

As at February 28, 2018,Factors affecting our company had total liabilities of $79,666 compared with $19,955 as at February 28, 2017. The increase was primarily attributed to losses incurred during the year and lack of injection of new capital.

As at February 28, 2018, our company had a working capital deficit of $69,007 compared with a working capital of $9,950 as at February 28, 2017.

Cash Flow from Operating Activities

During the year ended February 28, 2018, our company had $13,342 ofliquidity include (i) net cash used in operating activities that consists of (a) cash required to fund the mining sites operating activities and continued expansion of our mining sites and (b) our working capital needs, which include advanced payments for several mining supplies and repair and maintenance, payment of our operating expenses; and (ii) net cash used in investing activities that consists of the investments in purchasing new and additional property, plant and equipment for mining sites. To date, we have financed our liquidity needs primarily through advances from stockholders, proceeds from related parties and unrelated party loans, proceeds from issuance of common stock and the proceeds from issuance of convertible bonds.

We expect to continue to make capital expenditures to keep pace with the expansion of the production and scale of operations of our mining sites, which we expect to fund in part with the proceeds from issuance of convertible bonds and other loans in the future. We expect that the proceeds from the above and our existing cash and cash equivalents will be used to fund working capital and for capital expenditures and other general corporate purposes, such as partnering arrangements, or reduction of debt obligations. However, there can be no assurance that we will be able obtain financing, if at all or upon terms that will be acceptable to us.

Cash Flows

As of December 31, 2019, we had $106,850 in cash and cash equivalents, compared with $10,292to $98,121 on December 31, 2018.

Net cash used duringin operating activities

Our net cash used in operating activities increased to $1,228,886 in 2019 from $888,079 in 2018. Net cash used in operating activities for the year ended February 28, 2017. TheDecember 31, 2019 primarily reflected our net loss of $2,115,716 and the add-back of non-cash items, mainly consisting of depreciation of property, plant and equipment of $51,898, stock compensation expenses of $122,100, amortization of non-cash interest expenses and bond discount related to convertible bonds of $13,732, exchange difference of $246,346, and deduct of non-cash items, mainly consisting of write back of receipt in advance of $160,542 and waiver of consultancy fee of $34,556, and changes in operating assets and liabilities primarily consisting of an increase in accounts receivable of $60,314, an increase of other receivables of $394,560, an increase of deposits and prepayments of $56,795, decrease in the useaccrued charges of $40,022 and offset by an increase of trade and other payables of $1,196,364 and increase in provision for asset retirement obligations of $3,179.

Net cash for operatingused in investing activities

Our net cash used in investing activities increased to $976,818 in 2019 from $38,379 in 2018. This was primarilymainly due to the increase in business activities. From our inception on December 1, 2016 through February 28, 2018, we used cashacquisition of $23,634 in our operating activities.property, plant and equipment at mine sites.

Net cash provided by financing activities

Our net cash provided by financing activities increased to $2,216,864 in 2019 from $989,312 in 2018. This was mainly the result of advances from stockholders and directors, proceed from unrelated party loan, issuance of common stock and convertible bonds in 2019.

Cash Flow from Financing Activities

During the year ended February 28, 2018, our Company received no cash from financing activities compared with $31,456 received during the year ended February 28, 2017. As at February 28, 2018 we had received $31,456 from financing activities since our inception on December 1, 2016.

Cash Flow from Investing ActivitiesFuture Financings

We used $154anticipate continuing to rely on related party and unrelated party loans, convertible bonds or equity sales of our common stock in investing activities sinceorder to continue to fund our inception.business operations. We believe this will enable us to meet our cash needs for the next 12 months. Issuances of additional shares will result in dilution to our existing stockholders. Importantly, there is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing (whether from related parties or otherwise) to fund our planned business activities.

PurchaseExcept for the convertible bonds and loans from others, we presently do not have any other arrangements or commitments for additional financing for the expansion of Significant Equipmentour operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations.

Off-Balance Sheet Arrangements

We do not intend to purchase any significant equipment during the twelve months beginning March 1, 2018.

Personnel Plan

We do not expect any material changes in the number of employees during the twelve months beginning March 1, 2018. We do and will continue to engage contractors or consultants as needed.

Off-Balance Sheet Arrangements

There arehave no off-balance sheet arrangements that have or are reasonably likely to have a current or future affecteffect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that isare material to investors. Our principal capital resourcesstockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. The critical accounting policies we employ in the preparation of our consolidated financial statements are those which involve impairment of long-lived assets, intangible assets and income taxes.

Going Concern

The Company incurred an operating loss of $2,115,716 for the year ended December 31, 2019, and as of that date, the Company’s current liabilities exceeded its current assets by $1,555,450. Notwithstanding the operating loss incurred for the year ended December 31, 2019 and the net current liabilities as of December 31, 2019, the accompanying consolidated financial statements have been throughprepared on a going concern basis. Since the subscription and issuanceCompany is currently in the exploration stage, it is still in the capital investing period. The Company’s business forecast indicates that the Company will have positive cash inflow after the commencement of common stock, although weformal production in 2021. Management believes the Company will have also used stockholder loans and advances from related parties.

Contractual Obligations and Commitments

As of February 28, 2018, we do not have any contractual obligations and commitments.

Anticipated Cash Requirements

Our expenses for the twelve-month period beginning from March 1, 2018 are estimated to be approximately $125,000. With oursufficient working capital deficit of $69,007 as at February 28, 2018, we will need to raise additional capital to cover our expenses for this twelve-month period beginning from March 1, 2018. We plan to raise additional funding either from new share issuance or from loans from shareholders.

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At present, our cashmeet its financing requirements for the next 12 months (beginning March 1, 2018) outweighbased on the funds available to maintain or develop our business. Offinancial support of certain stockholders, issuance of new convertible bonds, proceeds from unrelated party loans and upon their experience and their assessment of the estimated $125,000 that we require for the 12 months, we had approximately $8,186 in cashCompany’s projected performance, production ability and cash equivalents as at February 28, 2018. In order to improve our liquidity, we plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to raise sufficient additional financial, we will be required to scale back our business plan to accommodate the funds available to us. This would involve the elimination of all non-essential expenditures, such as inventory purchases, marketing & web design, and administrative expenses not related to our public reporting requirements.product market.

If we are able to raise the required funds to fully implement our business plan, we plan to implement the business actions in the order provided below. If we are not able to raise all required funds, we will prioritize our corporate activities as chronologically as follows:

March 1, 2018 to February 28, 2019:

Future Financings

We will continue to rely on equity sales of our common shares and funding from directors and shareholders in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Going Concern

We incurred a cumulative net loss of $83,297 during the period from inception, December 1, 2016, to February 28, 2018. We have commenced limited operations, raising substantial doubt about our ability to continue as a going concern. We will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance that we will be successful in accomplishing our objectives.

Our ability to continue as a going concern is dependent on additional sources of capital and the success of our plan. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.

Critical Accounting Policies

Our significant accounting policies are described in the notes to our financial statements for the year ended February 28, 2018, and are included elsewhere in this annual report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

N/A.Not applicable.

Item 8. Financial Statements and Supplementary Data

The auditOur Consolidated Financial Statements, together with the report of MNP LLP, Chartered Accountantsour independent registered public accounting firm, begin on page 20 of this Annual Report and our audited financial statements for the year ended February 28, 2018 follow on pages F-1 through F-12.are incorporated herein by reference.

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Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors and

Stockholders of TGS International Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of TGS International Ltd. (the “Corporation”and subsidiaries (collectively, the “Company”) as of February 28,December 31, 2019 and 2018, and 2017, and the related consolidated statements of lossoperations and comprehensive loss, changes in stockholders’ equity, (deficit) and cash flows for each of the year ended February 28, 2018 and fortwo years in the period fromended December 1, 2016 (inception) to February 28, 2017,31, 2019, and the related notes (collectively referred to as the consolidated“consolidated financial statements)statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the CorporationCompany as of February 28,December 31, 2019 and 2018, and 2017, and the consolidated results of its operations and its cash flows for each of the year ended February 28, 2018 and fortwo years in the period fromended December 1, 2016 (inception) to February 28, 2017,31, 2019, in conformity with accounting principles generally accepted in the United States of America.

The Corporation’s AbilityMaterial Uncertainty related to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the CorporationCompany will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Corporation’s recurring lossesCompany has suffered an operating loss of $2,115,716 for the year ended December 31, 2019, and negative cash flows from operations as well as working capital deficiency and accumulated deficitof that date, the Company’s current liabilities exceeded its current assets by $1,555,450, which raise substantial doubt about its ability to continue as a going concern. Management’sManagement's plans concerningin regard to these matters are also discusseddescribed in Note 1 to the consolidated financial statements.1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Corporation'sCompany’s management. Our responsibility is to express an opinion on the Corporation'sCompany’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public CorporationCompany Accounting Oversight Board (United States) (PCAOB)(“PCAOB”) and are required to be independent with respect to the CorporationCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The CorporationCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Corporation'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Moore Stephens CPA Limited

Certified Public Accountants

We have served as the Company’s auditor since 2015.

Hong Kong

March 20, 2020

F-1

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TGS International Ltd.
Consolidated Statements of Financial Position
Stated in US dollars
As at
		February 28, 2018				February 28, 2017
ASSETS
Current
Cash		$	8,186			$	20,867
Prepaid expenses			2,473				7,548
Trade receivables			-				1,490
			10,659				29,905
Long-term
Equipment & fixtures			7,880				9,918
Total Assets		$	18,539			$	39,823
LIABILITIES
Current
Trade and other payables		$	24,976			$	19,955
Due to related parties (Note 4)			54,690				-
Total Liabilities			79,666				19,955
STOCKHOLDERS' (DEFICIENCY) EQUITY
Capital Stock
Authorized 200,000,000 common stock, voting, par value $0.0001 each 100,000,000 preferred stock, non-voting, par value $0.0001 each Issued 13,530,000 common stock (Note 5)			1,353				1,353
Additional paid in capital (Note 5)			33,094				33,094
Deficit			(95,319	)			(14,327	)
Accumulated other comprehensive income (loss)			(255	)			(252	)
Total Stockholders' (Deficiency) Equity			(61,127	)			19,868
Total Liabilities and Stockholders' Equity (Deficiency)		$	18,539			$	39,823

Going Concern (Note 1)

The accompanying notes are an integral part of these consolidated financial statementsstatements.

F-221

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TGS International Ltd.
Consolidated Statements of Loss and Comprehensive Loss
Stated in US dollars
		Year ended February 28,				Period from December 1, 2016 (inception) to February 28,
		2018				2017
Revenue		$	33,663			$	6,214
Cost of goods sold			(22,148	)			(5,214	)
Gross profit			11,515				1,000
Expenses
Depreciation			2,038				-
Filing fees			20,293				-
General & administration			8,989				3,594
Management fee			8,588				-
Professional fees			52,599				11,733
			92,507				15,327
Net loss			(80,992	)			(14,327	)
Other comprehensive income (loss)
Foreign currency adjustment			(3	)			(252	)
Comprehensive loss		$	(80,995	)		$	(14,579	)
Basic and diluted loss per common stock		$	(0.006	)		$	(0.001	)
Weighted average number of common stock outstanding			13,530,000				13,065,000